Annual report
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Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-41315 John Marshall Bancorp, Inc. (Exact Name of Registrant as Specified in its Charter) Virginia 81-5424879 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 1943 Isaac Newton Square Suite 100 Reston, VA 20190 (Address of Principal Executive Offices) (703) 584-0840 (Registrant’s telephone number) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol Name of Exchange on Which Registered Common Stock, $0.01 par value per share JMSB The Nasdaq Stock Market LLC Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically; every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.0405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☒ Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ Based on the closing price as reported on The Nasdaq Stock Market, LLC, the aggregate market value of the Registrant's Common Stock held by non-affiliates on June 30, 2025 (the last business day of the Registrant's most recently completed second fiscal quarter) was approximately $231.6 million. Shares of Common Stock held by each executive officer and director and by each shareholder affiliated with a director or an executive officer have been excluded from this calculation because such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. The number of outstanding shares of the Registrant's Common Stock as of March 5, 2026 was 14,213,556. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s definitive proxy statement to be used in conjunction with the registrant’s 2026 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.
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Table of Contents i TABLE OF CONTENTS Page Part I Item 1. Business 4 Item 1A. Risk Factors 24 Item 1B. Unresolved Staff Comments 41 Item 1C. Cybersecurity 41 Item 2. Properties 43 Item 3. Legal Proceedings 44 Item 4. Mine Safety Disclosures 44 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 44 Item 6. [Reserved] 45 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 45 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 64 Item 8. Financial Statements and Supplementary Data 64 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 108 Item 9A. Controls and Procedures 108 Item 9B. Other Information 108 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 109 Part III Item 10. Directors, Executive Officers and Corporate Governance 109 Item 11. Executive Compensation 109 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 109 Item 13. Certain Relationships and Related Transactions, and Director Independence 109 Item 14. Principal Accountant Fees and Services 110 Part IV Item 15. Exhibits and Financial Statement Schedules 110 Item 16. Form 10-K Summary 111 Signatures 112
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Table of Contents 2 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS In addition to historical information, this Form 10-K of John Marshall Bancorp, Inc. (the “Company”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “should,” “may,” “view,” “opportunity,” “potential,” or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. These forward-looking statements are based on our beliefs and assumptions and on the information available to us at the time that these disclosures were prepared, and involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from any future results expressed or implied by such forward-looking statements. Although we believe the expectations reflected in such forward-looking statements are reasonable, we can give no assurance such expectations will prove to have been correct. Should any known or unknown risks and uncertainties develop into actual events, those developments could have material adverse effects on our business, financial condition and results of operations. Factors that could have an adverse effect on the operations of the Company and its wholly-owned subsidiary, John Marshall Bank (the “Bank”), include, but are not limited to, the following: • the concentration of our business in the Washington, D.C. metropolitan area and the effect of changes in the economic, political and environmental conditions on this market, including shutdowns and potential reductions in spending by the U.S. Government, and related reductions in the federal workforce; • adequacy of our allowance for loan credit losses, allowance for unfunded commitments credit losses, and allowance for credit losses associated with our held-to-maturity and available-for-sale securities portfolios; • deterioration of our asset quality; • future performance of our loan portfolio with respect to recently originated loans; • the level of prepayments on loans and mortgage-backed securities; • liquidity, interest rate and operational risks associated with our business; • changes in our financial condition or results of operations that reduce capital; • our ability to maintain existing deposit relationships or attract new deposit relationships; • changes in consumer spending, borrowing and savings habits; • inflation and changes in interest rates that may reduce our margins or reduce the fair value of financial instruments; • changes in the monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System (the “Federal Reserve”); • additional risks related to new lines of business, products, product enhancements or services; • increased competition with other financial institutions and fintech companies; • adverse changes in the securities markets; • changes in the financial condition or future prospects of issuers of securities that we own; • our ability to maintain an effective risk management framework; • changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory structure and in regulatory fees and capital requirements; • compliance with legislative or regulatory requirements; • results of examination of us by our regulators, including the possibility that our regulators may require us to increase our allowance for credit losses or to write-down assets or take similar actions; • potential claims, damages, and fines related to litigation or government actions; • the effectiveness of our internal controls over financial reporting and our ability to remediate any future material weakness in our internal controls over financial reporting; • geopolitical conditions, including trade restrictions and tariffs, and acts or threats of terrorism and/or military conflicts, or actions taken by the U.S. or other governments in response to trade restrictions and tariffs, and acts or threats of terrorism and/or military conflicts, negatively impacting business and economic conditions in the U.S. and abroad; • the effects of weather-related or natural disasters, which may negatively affect our operations and/or our loan portfolio and increase our cost of conducting business; • public health events (such as the COVID-19 pandemic) and governmental and societal responses thereto; • technological risks and developments, and cyber threats, attacks, or events;
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Table of Contents 3 • changes in accounting policies and practices; • our ability to successfully capitalize on growth opportunities; • our ability to retain key employees; • deteriorating economic conditions, either nationally or in our market area, including higher unemployment and lower real estate values; • implications of our status as a smaller reporting company and as an emerging growth company; and • other factors discussed in Item 1A. Risk Factors in this Form 10-K. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We do not undertake, and specifically disclaim any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary note.
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Table of Contents 4 Part I Item 1. Business General Overview John Marshall Bancorp, Inc. was organized as a Virginia corporation in 2016 to serve as the holding company for John Marshall Bank. The Company and the Bank are each headquartered in Reston, Virginia (approximately 20 miles west of Washington, D.C.). The Company commenced operations as a bank holding company on March 1, 2017 following a reorganization transaction in which it became the Bank’s holding company. This transaction was treated as an internal reorganization as all shareholders of the Bank became shareholders of the Company. As a bank holding company, the Company is subject to regulation and supervision by the Federal Reserve. The Company has no material operations other than its sole ownership of the Bank. The Bank is a Virginia chartered commercial bank that commenced operations in 2006. The Bank is supervised and regulated by the Federal Reserve and the Bureau of Financial Institutions of the Virginia State Corporation Commission (the “Virginia BFI”). We primarily serve small to medium-sized businesses, their owners and employees, professional corporations, non-profits and individuals with a broad range of banking products and financial services. Some of the products and services that we offer include commercial checking, savings and money market accounts, certificates of deposit, treasury and cash management services, commercial and industrial loans, commercial real estate loans, residential and commercial construction and development loans, U.S. Small Business Administration (“SBA”) 7(a) loans, consumer mortgages, online banking, and mobile banking. As of December 31, 2025, we had total consolidated assets of $2.33 billion, gross loans of $1.97 billion, total deposits of $1.97 billion and total shareholders’ equity of $265.6 million. Market Area A key factor in our ability to achieve our strategic goals and create shareholder value is the attractiveness of our market area. The market area in which we operate has seen considerable population and economic growth over the past several decades. Recent economic data suggest that the relative economic strength of our market area will continue, enabling us to grow our customer base and find opportunities to grow our market share. The Bank’s primary service area includes Arlington, Fairfax, Loudoun and Prince William counties in Virginia, Montgomery County in Maryland and the District of Columbia. The Bank has eight full service branch offices located in these contiguous cities or counties. Our primary service area comprises the majority of the population and household income of the Washington- Arlington-Alexandria, DC-VA-MD-WV (“Washington, D.C.”) Metropolitan Statistical Area (“MSA”). The Washington, D.C. MSA, according to U.S. Bureau of Economic Analysis data, ranked sixth among all MSAs for 2023 gross domestic product. According to data sourced from S&P Global Market Intelligence, among the largest MSAs ranked by gross domestic product (New York, Los Angeles, Chicago, San Francisco, Dallas and Washington), the Washington, D.C. MSA ranked second for 2025 median household income at $123,209, second in 2026 to 2031 projected population growth at 2.8% and first in the percentage of inhabitants 25 or older with a bachelor’s degree or higher educational attainment at 55.4%. According to the U.S. Bureau of Labor Statistics, the Washington, D.C. MSA’s December 2025 unemployment rate was 4.5%, less than the average of six largest MSAs. Based upon Federal Deposit Insurance Corporation (the “FDIC”) data as of June 30, 2025, the Washington D.C. MSA housed $315 billion of deposits, with the top five financial institutions controlling 68%. At June 30, 2025, our deposits were $1.90 billion, ranked 17th in the MSA and represented a 0.6% market share. Nine of the sixteen banks ranked ahead of the Company are headquartered outside of the Washington, D.C. MSA. Our market area has experienced a significant degree of banking consolidation over the last several decades. Since the Company’s inception, banking assets in excess of $55 billion have been acquired. We believe that as financial institutions are merged with or acquired by remote, larger institutions, their customers can become further removed from the point of decision making. The consolidation trend provides an opportunity for the Company to execute a focused strategy of offering personalized services to attract potential customers who are underserved or dissatisfied.
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Table of Contents Given the Company’s proximity to Washington, D.C., the federal government has contributed to the growth and generally played a stabilizing role in our market area’s economy. In recent years, local governments have made great strides in diversifying their local economies. Virginia Tech selected the City of Alexandria as the site for its innovation campus which aims to graduate 25,000 new bachelor’s and master’s students in computer science and related fields over the next 20 years. The innovation campus opened February 28, 2025. The $1 billion, 600,000 square foot campus is expected to confer over 600 graduate degrees annually and provide talent to spur further technological growth. By 2030, Amazon’s headquarters in Arlington County is expected to occupy at least four million square feet of office space. Phase one of Amazon’s HQ2 was completed in the spring 2023. Amazon will invest more than $2 billion to establish its new headquarters, which will create at least 25,000 high-wage jobs by 2030. Fairfax County is home to ten Fortune 500 company headquarters and 17 Fortune 1000 company headquarters. Loudoun County is known as “data center alley” as it has the world’s highest concentration of data centers with more than 30 million square feet of data center space. Loudoun County is home to more than 3,500 technology companies. Prince William County has partnered with George Mason University to found the Prince William Science Accelerator, a fast- growing biotechnology cluster to foster the study of life sciences. We believe the size, growth, economic diversity and banking consolidation within the Washington, D.C. MSA, when combined with our business strategy, provide us with excellent opportunities for long-term, sustainable growth. Strengths We believe that we are well-positioned to execute our banking strategy as a result of our competitive strengths: ● Experienced management team. Our executive management team brings decades of in-market experience. Christopher W. Bergstrom, our President and Chief Executive Officer, has a banking career spanning nearly 44 years. Mr. Bergstrom joined the Company in 2018. Prior to joining the Company, Mr. Bergstrom served in executive management capacities at banks in our market area that were significantly larger than the Company. Andrew J. Peden, our Chief Banking Officer, has over 25 years of banking experience, all of it in the Washington, D.C. MSA. He joined the Company in 2018. Kent D. Carstater, our Chief Financial Officer, has over 28 years of financial services experience as a commercial banker and investment banker. He joined the Company in 2016. Jason R. McDonough, our Chief Lending Officer, has close to 20 years of banking experience, all of it in the Washington, D.C. MSA. He joined the Company in 2018. Messrs. Bergstrom, Peden, Carstater, and McDonough have deepened the management team by recruiting experienced financial services professionals who have demonstrated their ability to drive organic growth, improve operating efficiencies and establish a robust risk management framework. ● Disciplined credit culture. In originating loans, our relationship managers focus on experienced business owners with demonstrated capacity to fulfill their financial obligations. Loan officers have relatively low individual discretionary loan authority levels, which generally results in loan committee vetting to uphold appropriate structure and terms prior to approval. Loan committee meetings are held regularly and on an as-needed basis to promote prompt decisions. We utilize an independent, regionally based loan review firm, that focuses exclusively on community and regional banks, to validate our risk ratings and assess our underwriting and loan administration. We believe that our rigorous underwriting and diligent monitoring of the loan portfolio have created a “credit first” mentality that permeates the Company and is reflected in our asset quality statistics. As of December 31, 2025, the Company had no non-accrual loans and no other real estate owned (“OREO”). In each of the past five fiscal years, net charge-offs have not exceeded 0.02% of average gross loans. ● Conservative balance sheet. The Company’s balance sheet provides the foundation for prudent growth. The Bank’s capital ratios exceed the thresholds required of a well-capitalized institution. As of December 31, 2025, the Bank had the capacity to add $1.0 billion of risk-weighted assets to its balance sheet and still maintain well-capitalized status. The Company has ample liquidity to meet its obligations and fund anticipated loan growth. As of December 31, 2025, the Bank had over $233.5 million of liquid assets, defined as cash and unpledged securities, over $594 million of available secured borrowing facilities and $110 million of available unsecured borrowing facilities. Management believes the Company’s balance sheet is well-positioned for organic growth and potential acquisitions.
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Table of Contents ● Proven ability to grow. Over the long term we have demonstrated an ability to grow our loans and deposits. For the eight year period ended December 31, 2025, the Company’s compound annual growth rates in assets, gross loans, deposits and non-interest bearing deposits were 8.9%, 8.8%, 10.4% and 12.0%, respectively. Our team of professionals has been an important driver of our organic growth by developing banking relationships with current and potential customers. We believe our ability to recruit and retain talented, customer service-oriented professionals has been at the core of our growing and expanding banking relationships. ● Accelerating earnings momentum and completive returns. The Company reported net income of $21.2 million for the twelve months ended December 31, 2025, a 24.0% increase over the $17.1 million reported for the twelve months ended December 31, 2024. Net income for the fourth quarter of 2025 marked the sixth consecutive quarter of net income growth. From December 31, 2024 to December 31, 2025, the Company increased book value per share from $17.28 to $18.69. In addition to the $0.30 per share cash dividend paid in July 2025, total return to shareholders when considering the change in book value per share and cash dividend for 2025 was $1.71 per share, an increase of 9.9%. ● Attractive markets. As of June 30, 2025, the most recent FDIC data available, the Washington, D.C. MSA had $315 billion in deposits. Owing in large part to the presence of the United States government, the unemployment rate in the Washington, D.C. MSA has consistently been lower than that of the country as a whole. The Washington, D.C. MSA has undergone a significant amount of bank consolidation in the past several decades. These mergers and acquisitions can disenfranchise customers as the decision makers and procedures of the selling institutions are made to conform to those of the acquiring institutions. This dislocation creates additional opportunities for the Company to develop new business relationships with dissatisfied customers and to hire experienced banking professionals. Business Strategy The Company’s goal is to enhance its franchise and shareholder value by achieving significant growth in assets and profitability while maintaining strong asset quality and providing exceptional customer experiences. We embrace innovation and provide value-added solutions our customers need and expect. We intend to execute on this goal by focusing on the following objectives: ● Maintain financial and credit quality discipline. We are committed to being a high performing bank and will strive to continue to grow our loan and deposit portfolios in a disciplined manner. Gross loans net of unearned income grew $103.2 million or 5.5% during 2025, with $37.3 million of the growth taking place during the three months ended December 31, 2025. The Company’s asset quality remains outstanding, with no non-accrual loans and no OREO. Over the past five years, annual ROAA averaged 0.91% and annual ROAE averaged 9.16%. ● Hire experienced commercial banking officers. Our growth strategy centers around the hiring of highly experienced, local banking professionals with successful track records and established customer relationships with small to medium-sized businesses, their owners, professionals and non- profits. We anticipate that these officers will be able to attract customers with whom they have built relationships over the years, enhancing our loan and deposit production. We typically hire one or more officers for a specific target sub-market or business segment and then, if applicable, establish a branch office to support business generation once a significant market presence has been established. This strategy allows us to open branch offices that are profitable at or shortly after opening, further enhancing our franchise value as we continue to grow. ● Expand in high growth markets. The market areas in which the Company operates and those contemplated for potential expansion are characterized by high concentrations of small to medium- sized businesses, professionals or non-profits. The Company will look for opportunities to expand its franchise in these markets on a selective and opportunistic basis. While the Company has not completed any acquisitions to date, it has, on several occasions, investigated and engaged in discussion with respect to the possibility of such acquisitions, and it expects that it may do so in the future. We may seek additional branching opportunities, centered on experienced lending officers with a significant portfolio of commercial customers. We plan to increase our market share by selective expansion, and by establishing and marketing commercial loan, deposit and cash management products and services, with a high level of personal service, to our desired customer base.
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Table of Contents ● Maintain commercial bank, customer-centric orientation among specific segments in our communities. The banking market in the Washington, D.C. MSA has experienced significant consolidation among financial institutions over the last several decades. We compete against larger banks operating in our market by targeting specific customer segments and minimizing layers of management and distance between the customer and the Bank’s decision makers. The Bank is a commercially oriented bank focused on the following customer segments: small to medium-sized businesses, professional services, builders and developers, associations, government contractors, health services companies, nonprofits, private schools, property management companies, trade contractors and title companies. We leverage personal relationships established by our officers, directors and employees with our customers. We strive to provide innovative products and value- added advice to our customers. We believe that the larger financial institutions’ desire to realize efficiencies oftentimes results in more distance and delay in serving customers. Our strategic focus, coupled with the dislocation caused by bank consolidation in our market area, provides an excellent opportunity for the Company to gain market share through a more timely delivery of customer- driven products and services through a personalized sales approach. ● Continue to leverage our infrastructure and drive profitability. Since our inception, our management team has been successful in implementing its high-touch, technology focused approach to serving customers while maintaining cost consciousness throughout the organization, thereby achieving profitability and return metrics above peer averages. We are able to successfully execute this strategy because of our customers’ limited need for an expansive retail branching network. Our branch-lite strategy allows us to invest in and leverage our digital platform. We have been able to enhance the customer experience through services such as remote deposit capture, mobile banking, online banking, sophisticated internet-based cash management systems and same day Automated Clearing House (ACH), electronic funds transfers. For the year ended December 31, 2025, the Company’s overhead-to-average assets ratio was 1.48%. The Company’s overhead-to-average asset ratio is calculated by dividing non-interest expense by average assets. Competition The banking business is highly competitive, and we face competition in our market area from many other local, regional, and national financial institutions. Competition among financial institutions is based on interest rates offered on deposit accounts, interest rates charged on loans, other credit and service charges relating to loans, the quality and scope of the services rendered, the convenience of banking services, and, in the case of loans to commercial borrowers, relative lending limits. We compete with commercial banks, credit unions, savings institutions, mortgage banking firms, finance companies, including “fintech” companies, securities brokerage firms, insurance companies, money market funds and other mutual funds, as well as regional and national financial institutions that operate offices in our market area and elsewhere. The competing major commercial banks have greater resources that may provide them a competitive advantage by enabling them to maintain numerous branch offices, mount extensive advertising campaigns and invest in new technologies. The increasingly competitive environment is the result of changes in regulation, changes in technology and product delivery systems, additional financial service providers, and the accelerating pace of consolidation among financial services providers. The financial services industry could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. Banks, securities firms and insurance companies can merge under the umbrella of a financial holding company, which can offer most types of financial services, including banking, securities underwriting and insurance. Also, technology has lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. Some of our non-banking competitors, such as fintech companies, have fewer regulatory constraints and may have lower cost structures. In addition, some of our competitors have assets, capital and lending limits greater than that of the Bank, have greater access to capital markets and can offer a broader range of products and services than the Bank. These institutions may have the ability to finance wide-ranging advertising campaigns and may also be able to offer lower rates on loans and higher rates on deposits than we can offer. We compete with these institutions by focusing on our position as an independent, commercial business bank and rely upon relationships established by our officers, directors, and employees with our customers, promotional activities and specialized services tailored to meet the needs of the customers we serve. We strive to provide innovative products to our
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Table of Contents 8 customers that are value-driven. We actively cultivate relationships with our customers that extend beyond a single loan to a full suite of products that serve the needs of our commercial customers. Our goal is to develop long-standing connections with our customers and the communities that we serve. Our management believes that we can compete effectively as a result of local market knowledge, local decision making, awareness of customer needs, and by providing exceptional customer experiences. Our Products and Services We emphasize providing commercial banking services. Our dedicated relationship managers serve as direct points of contact for owners, management and employees of small and medium-sized businesses. We provide subject matter expertise in a variety of niche industries including charter and private schools, government contractors, trade contractors, health services, nonprofits and associations, professional services, property management companies, and title companies. We focus on customers living and working in and near our service area. We offer retail banking services to accommodate the needs of both corporate customers as well as individuals residing and working in the communities we serve. We also offer online banking, mobile banking and a remote deposit service, which allows customers to facilitate and expedite deposit transactions through the use of electronic devices. A sophisticated suite of treasury management products is a key feature of our customer focused, relationship driven marketing. We have partnered with experienced service providers in both insurance and merchant services to further augment the products available to our customers. Lending Services We provide a range of commercial lending services, including commercial real estate loans, residential and commercial construction and development loans, commercial and industrial loans, and residential mortgage loans to customers generally located or conducting business in our market area. Loan terms, including interest rates, loan-to-value ratios, and maturities, are tailored as much as possible to meet the needs of the borrower. A special effort is made to keep loan products as flexible as possible within the guidelines of prudent banking practices in terms of interest rate risk and credit risk. When considering loan requests, the primary factors taken into consideration are the cash flow and financial condition of the borrower, the value of the underlying collateral, if applicable, and the character and integrity of the borrower. These factors are evaluated in a number of ways including an analysis of financial statements, credit reviews, trade reviews, and visits to the borrower’s place of business. We have implemented comprehensive loan policies and procedures to provide our loan officers with term, collateral, loan-to-value and pricing guidelines. The policy and sound credit analysis, together with independent, third-party loan review, have resulted in a profitable loan portfolio with minimal delinquencies or problem loans. Our lending activities are subject to risks, with the most significant risks associated with higher credit risk related to our commercial and real estate lending focus, a high concentration of loans to a small number of borrowers, and lack of seasoning in the portfolio. Commercial business and commercial real estate loans may involve relatively large loan balances to individual or groups of related borrowers. The repayment of commercial business and commercial real estate loans depends on the successful management and operation of the borrower’s business or properties. The creditworthiness of a borrower is affected by many outside factors, including local market conditions and general economic conditions. If the overall economic climate in the United States, generally, or our market area, specifically, experiences material disruption, our borrowers may experience difficulties in repaying their loans, the collateral we hold may decrease or fluctuate in value, or become illiquid or more difficult to appraise, and the level of nonperforming loans, charge-offs and delinquencies could rise and require additional provisions for credit losses. Our 10 largest borrowing relationships by outstanding borrowings accounted for approximately 11.7% of our loans as of December 31, 2025. With this concentration of credit risk among a limited number of borrowers, we may face a greater risk of material credit losses if any one or several of these borrowers fail to perform in accordance with their loans, compared to a bank with a more diversified loan portfolio. In addition, approximately 37.5% of the loans in our loan portfolio were first originated during the past three years. While we believe our underwriting standards are designed to manage normal lending risks, it is difficult to assess the future
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Table of Contents 9 performance of our loan portfolio due to the recent origination of many of our loans. As a result, it is difficult to determine whether these loans will become non-performing or delinquent, or whether we will hold non- performing or delinquent loans that may adversely affect our future performance. Refer to the Loan Portfolio section within Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information regarding the composition of our loan portfolio as of December 31, 2025 and 2024. Our aim is to build and maintain a commercial loan portfolio consisting of term loans, demand loans, lines of credit and commercial real estate loans provided to primarily locally based borrowers. These types of loans are generally considered to have a higher degree of risk of default or loss than other types of loans, such as well underwritten, prime residential real estate loans, because repayment may be affected by general economic conditions, interest rates, the quality of management of the business and other factors which may cause a borrower to be unable to repay its obligations. Traditional installment loans and personal lines of credit are available on a selective basis. General economic conditions can directly affect the quality of a small and mid-sized business loan portfolio. Loan business is generated primarily through direct-calling efforts and referrals. Referrals of loan business come from directors, current customers and professionals such as lawyers, accountants and financial intermediaries. At December 31, 2025, the Bank’s statutory lending limit to any single borrower was approximately $46.7 million, subject to certain exceptions provided under applicable law. As of December 31, 2025, the Bank’s credit exposure to its largest borrower was $30.0 million. Commercial Loans. Commercial loans are written for any prudent business purpose, including the financing of plant and equipment, the carrying of accounts receivable, contract administration, and the acquisition and construction of real estate projects. Special attention is paid to the commercial real estate market, which is particularly active in the Washington, D.C. MSA. The Bank’s commercial loan portfolio reflects a diverse group of borrowers with no concentration in any borrower, or group of borrowers. The lending activities in which we engage carry the risk that the borrowers will be unable to perform on their obligations. As such, interest rate policies of the Federal Reserve and general economic conditions, nationally and in our primary market area, will have a significant impact on our results of operations. To the extent that economic conditions deteriorate, business and individual borrowers may be less able to meet their obligations to the Bank in full, in a timely manner, resulting in decreased earnings or losses to the Bank. To the extent that loans are secured by real estate, adverse conditions in the real estate market may reduce the ability of the borrower to generate the necessary cash flow for repayment of the loan, and reduce our ability to collect the full amount of the loan upon a default. To the extent that the Bank makes fixed rate loans, general increases in interest rates will tend to reduce our spread as the interest rates we must pay for deposits increase while interest income is flat. Economic conditions and interest rates may also adversely affect the value of property pledged as security for loans. We constantly strive to mitigate risks in the event of unforeseen threats to the loan portfolio as a result of an economic downturn or other negative influences. Plans for mitigating inherent risks in managing loan assets include carefully enforcing loan policies and procedures, evaluating each borrower’s industry and business plan during the underwriting process, identifying and monitoring primary and alternative sources for repayment, and obtaining collateral that is margined to minimize loss in the event of liquidation. Commercial real estate loans will generally be owner occupied or managed investment transactions with a principal reliance on the borrower’s ability to repay, as well as prudent guidelines for assessing real estate values. Risks inherent in managing a commercial real estate portfolio primarily relate to either sudden or gradual drops in property values as a result of a general or local economic downturn. A decline in real estate values can cause loan-to-value margins to increase and diminish the Bank’s equity cushion on both an individual and portfolio basis. The Bank attempts to mitigate commercial real estate lending risks by carefully underwriting each loan of this type to address the perceived risks in the individual transaction. Generally, the Bank requires a loan-to-value ratio of 75% of the lower of an appraisal or cost. A borrower’s ability to repay is carefully analyzed and policy generally calls for an ongoing cash flow to debt service requirement of at
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Table of Contents 10 least 1.10:1.0. An approved list of commercial real estate appraisers selected on the basis of consistent standards has been established. Each appraisal is scrutinized in an effort to ensure current comparable market values. As noted above, commercial real estate loans are generally made on owner occupied or managed investment properties where there is both a reliance on the borrower’s financial health and the ability of the borrower and the business to repay. The Bank generally requires personal guarantees on all commercial loans as a matter of policy; exceptions to policy are documented. Most borrowers are required to forward annual corporate, partnership and personal financial statements to comply with Bank policy and enforced through loan covenants. Interest rate risks to the Bank are mitigated by using either floating interest rates or by fixing rates, generally less than 10 years. While loan amortizations may be approved for up to 360 months, loans generally have a call provision (maturity date) of 10 years or less. Specific and non-specific provisions for loan credit loss reserves are generally set based upon a methodology developed by management and approved by the board of directors and described more fully under “Critical Accounting Policies and Estimates” in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this Form 10-K. At December 31, 2025, approximately 16.4% of our loan portfolio related to owner occupied commercial real estate loans, and approximately 38.5% of our loan portfolio related to managed investment commercial real estate. Stress testing remains an important component of our organization, including oversight of commercial real estate loans. We have incorporated stress testing into our traditional risk management procedures, which examine the commercial real estate portfolio for expected losses, provision levels, criticized or classified loans, and loan concentrations. Our loan level stress tests are conducted quarterly and assess the impact to capital, if any, resulting from decreased collateral value or debt service coverage under various economic scenarios. Construction and Development Loans. We offer fixed and adjustable rate residential and commercial construction loan financing to builders and developers and to consumers who wish to build their own home. The term of construction and development loans generally is limited to maximum of 24 months, although payments may be structured on a longer amortization basis. Most loans will mature and require payment in full upon the sale of the property. We believe that construction and development loans generally carry a higher degree of risk than long-term financing of stabilized, rented, and owner-occupied properties because repayment depends on the ultimate completion of the project and usually on the subsequent sale of the property. Specific risks include: ● cost overruns; ● mismanaged construction; ● inferior or improper construction techniques; ● economic changes or downturns during construction; ● a downturn in the real estate market; ● rising interest rates which may prevent sale of the property; and ● failure to sell or stabilize completed projects in a timely manner. We attempt to reduce risk associated with construction and development loans by obtaining personal guaranties and by keeping the maximum loan-to-value ratio at or below 75% of the appraised value and maximum loan-to-cost ratio at or below 85%, depending on the project type. All construction loans are administered by a centralized department within the Bank that is comprised of experienced loan administrators that specialize in residential, commercial and consumer construction project oversight. Further, all construction loans are loaded into, and managed on, a third party, nationally recognized construction loan administration platform, which is a fintech solution that provides a unique customer experience, consistency in loan administration, and risk management through portfolio monitoring, market/asset type/borrower concentration analysis, and disbursement efficiency. Finally, the Bank works with highly sophisticated sponsors that are experienced, well capitalized, and positioned to manage through a downturn. As of December 31, 2025, construction and development loans made up approximately 11.3% of our loan portfolio.
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Table of Contents Commercial Term Loans. We provide funds for equipment and general corporate needs. This loan category is designed to support borrowers who have a proven ability to service debt over a term generally not to exceed 60 months. The Bank generally requires a first lien position on all collateral and guarantees from owners having at least a 20% interest in the involved business. Interest rates on commercial term loans are generally floating or are fixed for a term not to exceed five years. Management carefully monitors industry and collateral concentrations to avoid loan exposures to a large group of similar industries and/or similar collateral. Commercial loans are evaluated for historical and projected cash flow attributes, balance sheet strength, and primary and alternate resources of personal guarantors. Commercial term loan documents require borrowers to forward regular financial information on both the business and on personal guarantors. Loan covenants require at least annual submission of complete financial information and in certain cases this information is required more frequently, depending on the degree to which the Bank requires information for monitoring a borrower’s financial condition and compliance with loan covenants. Collateral borrowing certificates may be required to monitor certain collateral categories on a monthly or quarterly basis. Key person life insurance is required as appropriate and as necessary to mitigate the risk of loss of a primary owner or manager. Commercial Lines of Credit. We finance a business borrower’s short-term credit needs and/or to finance a percentage of eligible receivables and inventory. In addition to the risks inherent in term loan facilities, line of credit borrowers typically require additional monitoring to protect the lender against increasing loan volumes and diminishing collateral values. Commercial lines of credit are generally revolving in nature and require close scrutiny. The Bank usually requires an annual out of debt period (for seasonal borrowers) or regular financial information (monthly or quarterly financial statements, borrowing base certificates, etc.) for borrowers with more growth and greater permanent working capital financing needs. Advances against collateral are generally in the same percentages as in term loan lending. Lines of credit and term loans to the same borrowers are typically cross-defaulted and cross-collateralized. Industry and collateral concentration, general and specific reserve allocation and risk rating disciplines are the same as those used in managing the commercial term loan portfolio. Interest rate charges on this group of loans generally float at a factor at or above the prime lending rate, subject in many cases to a minimum rate. Generally, personal guarantees are required on these loans. Combined, commercial term loans and lines of credit represent approximately 2.5% of our loan portfolio as of December 31, 2025. Mortgage Lending. The Bank originates, funds and services non-conforming 1-4 family residential mortgage loans for its own portfolio. Such loans are generally made at no more than the lesser of 80% loan to collateral value or cost. Mortgage loans are underwritten with full documentation, including verification of income and assets. Although the mortgage loans the Bank originates often carry amortization periods of up to 30 years, interest rate risk is controlled through balloon payments or interest rate adjustments of generally six years or less. At December 31, 2025, Bank originated 1-4 residential mortgage loans represented 8.1% of our loan portfolio. The Bank also purchases and services 5/1, 7/1 and 10/1 adjustable-rate mortgages. These mortgages are made on primary residences within our market area and are subject to a strict, uniform set of underwriting criteria. Management views purchased mortgages as a managed risk means of diversifying our earning asset portfolio and achieving a yield, net of the amortized premium, superior to that which may be available in the fixed income market. At December 31, 2025, approximately 17.1% of our loan portfolio related to purchased mortgages. Other Loans. Loans are considered for any worthwhile personal or business purpose on a case-by-case basis, such as the financing of equipment, receivables, contract administration expenses, and automobile financing. Consumer credit facilities are underwritten to focus on the borrower’s credit record, length of employment and cash flow to debt service. Car, residential real estate and similar loans generally require advances of the lesser of 80% loan to collateral value or cost. Investment Activities We manage our securities portfolio and cash to, in order of priority, ensure the safety and preservation of invested principal, maintain adequate liquidity and focus on yield and returns. Specific goals of our investment portfolio are as follows: ● provide a ready source of balance sheet liquidity, ensuring adequate availability of funds to meet fluctuations in loan demand, deposit balances and other changes in balance sheet volumes and composition;
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Table of Contents 12 ● serve as a means for diversification of our assets with respect to credit quality, maturity and other attributes; ● serve as a tool for modifying our interest rate risk profile pursuant to our established policies; and ● provide collateral to secure local governmental agency and business deposits. The securities in which the Company may invest are subject to regulation and are limited to securities which are considered investment grade securities. Our investment portfolio is comprised primarily of U.S. Treasury bonds, U.S. government agency securities and mortgage-backed or collateralized mortgage obligation securities issued by government-sponsored entities, though we may hold other securities, such as municipal bonds, certificates of deposit and corporate debt securities. Our investment policy is reviewed annually by our board of directors. The Company’s board of directors has delegated the responsibility of monitoring our investment activities to management consistent with the requirements of the Bank’s Asset Liability Management policy. Day-to-day activities pertaining to the securities portfolio are conducted under the supervision of our Chief Financial Officer and Chief Executive Officer. We actively monitor our investments on an ongoing basis to identify any material changes in the securities. We also review our securities for potential credit impairment at least quarterly. Deposit Activities Deposits sourced through our relationship managers and obtained through bank offices have traditionally been the principal source of the Bank’s funds for use in lending and for other general business purposes. In order to serve the needs of its customers, the Bank offers several types of deposit accounts including demand, NOW, money market and savings accounts as well as certificates of deposit. The Bank typically pays a competitive rate on the interest-bearing deposits. As a relationship-oriented organization, we seek to obtain deposit relationships with our loan customers. We offer a full range of consumer and commercial deposit products, including online banking with free bill pay, cash management with the means to detect and prevent fraud, sweep accounts, wire transfer, real time payments, check imaging and remote deposit capture. Through our membership in the IntraFi Network®, we can arrange FDIC insurance of up to $285 million of transaction deposits, certificates of deposits or some combination of the two. As the Bank’s overall balance sheet positions dictate, we may become more or less competitive in our interest rate structure as our liquidity position changes. Additionally, we may use wholesale or municipal deposits to augment our funding position or achieve a desired interest rate risk management position. Refer to Risks Related to Funding and Liquidity – “Our deposit portfolio includes significant concentrations and a large percentage of our deposits are attributable to a relatively small number of customers” for discussion of the concentration risk in our deposit portfolio. Other Services The Bank has an ownership interest in one of the nation’s largest privately-owned insurance agencies. Through this investment we are able to offer our customers a broad array of business and personal insurance. Also, through third- party networks, we offer our customers access credit and purchase card products. Our technology products include, among other things, remote deposit capture, sophisticated online internet- based cash management systems, mobile banking, and deposit sweep services that allow businesses to earn interest on their excess funds. Typically, we provide our remote deposit capture hardware and software to our commercial customers free of charge, which provides current and potential customers with a convenient means to bank with us. Community Reinvestment Act The Company is committed to serving the banking needs of the communities in which we are located, including low and moderate income areas, and is a supporter of the Community Reinvestment Act (“CRA”). There are several ways in which the Company attempts to fulfill this commitment, including funding no-fee checking accounts, free ATM usage worldwide, mortgage products subject to maximum income limit, small business loans, financing of affordable housing projects, and becoming involved with local groups that support community outreach programs.
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Table of Contents The Company encourages its directors and officers to participate in community, civic and charitable organizations. Management and members of our board of directors periodically review the various CRA activities of the Company, including its credit granting process and its involvement with community leaders on a personal level. Risk Management We believe that effective risk management is of primary importance. Risk management refers to the activities by which we identify, measure, monitor, evaluate and manage the risks we face in the course of our banking activities. These include liquidity, interest rate, credit, operational, compliance, cybersecurity, regulatory, strategic, financial and reputational risk exposures. Our board of directors, both directly and through its committees, is responsible for overseeing our risk management processes, including quarterly enterprise risk management assessments and annual cyber, Bank Secrecy Act (“BSA”)/anti-money laundering and third- party risk assessments, with each of the committees of our board of directors assuming a different and important role in overseeing the management of the risks we face. The Audit Committee of our board of directors is responsible for overseeing risks associated with financial matters (particularly financial reporting, accounting practices and policies, disclosure controls and procedures and internal control over financial reporting). The Compensation Committee of our board of directors has primary responsibility for risks and exposures associated with our compensation policies, plans and practices, regarding both executive compensation and our compensation structure generally. In particular, our Compensation Committee, in conjunction with our President and Chief Executive Officer, as appropriate, reviews our incentive compensation arrangements to ensure these programs are consistent with applicable laws and regulations, including safety and soundness requirements, and do not encourage imprudent or excessive risk-taking by our employees. The Governance and Nominating Committee of our board of directors oversees risks associated with the independence of our board of directors and potential conflicts of interest. Our senior management is responsible for implementing our risk management processes, including by assessing and managing the risks we face, including strategic, operational, regulatory, investment and execution risks, on a day-to-day basis, and reporting to our board of directors regarding our risk management processes. Our senior management is also responsible for creating and recommending to our board of directors for approval appropriate risk appetite metrics reflecting the aggregate levels and types of risk we are willing to accept in connection with the operation of our business and pursuit of our business objectives. The role of our board of directors in our risk oversight is consistent with our leadership structure, with our President and Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Banking Officer and the other members of senior management having responsibility for assessing and managing our risk exposure, and our board of directors and its committees providing oversight in connection with those efforts. We believe this division of risk management responsibilities presents a consistent, systemic and effective approach for identifying, managing and mitigating risks throughout our operations. We believe a disciplined and conservative underwriting approach has been the key to our strong asset quality. Credit risk is the risk that borrowers or counterparties will be unable or unwilling to repay their obligations in accordance with the underlying contractual terms and the risk that credit assets will suffer significant deterioration in market value. We manage and control credit risk in our loan portfolio by adhering to well- defined underwriting criteria and account administration standards established by management, and approved by the board of directors. Our written loan policies document underwriting standards, approval levels, exposure limits and other limits or standards deemed necessary and prudent. Portfolio diversification is actively managed to mitigate concentration risk. In addition, credit risk management includes an independent credit review process that assesses compliance with policies, risk rating standards and other critical credit information. In addition to implementing risk management practices that are based upon established and sound lending practices, we adhere to sound credit principles. We evaluate our customers’ borrowing needs and capacity to repay, in conjunction with their character and history. Our management and board of directors place significant focus on maintaining a healthy risk profile and ensuring sustainable growth. Our risk appetite seeks to balance the risks necessary to achieve our strategic goals while ensuring that our risks are appropriately managed and remain within our defined limits. Our management of interest rate and liquidity risk is overseen by our Asset and Liability Committee, based on a risk management infrastructure approved by our board of directors that outlines reporting and measurement requirements. In particular, this infrastructure reviews financial performance, trends and significant variances to budget; reviews and
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Table of Contents 14 recommends for board approval risk limits and tolerances; reviews ongoing monitoring and reporting regarding our performance with respect to these areas of risk, including compliance with board-approved risk limits and stress-testing; ensures annual back-testing and independent validation of models at a frequency commensurate with risk level; reviews and recommends our contingency funding plan; establishes wholesale borrowing limits to be submitted to the board of directors; and reviews information and reports submitted for the purpose of identifying, investigating, and assuring remediation, to its satisfaction, of errors or irregularities, if any. Emerging Growth Company Status We qualify as an “emerging growth company” under the JOBS Act and as defined in Section 2(a) of the Securities Act. For as long as we are an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies. As an emerging growth company: ● we may present as few as two years of audited financial statements and two years of related management discussion and analysis of financial condition and results of operations, in contrast to other reporting companies which must provide audited financial statements for three fiscal years; ● we are exempt from the requirement to obtain an attestation and report from our auditors on management’s assessment of our internal control over financial reporting under the Sarbanes-Oxley Act of 2002; ● we are permitted to provide less extensive disclosure about our executive compensation arrangements; and ● we are permitted to include less extensive narrative disclosures than required of other reporting companies, including with respect to executive compensation. We could remain an emerging growth company for up to five years, or until the earliest of (i) the end of the first fiscal year during which we have total annual gross revenues of $1.235 billion or more, (ii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt and (iii) the date on which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition to the relief described above, the JOBS Act permits us an extended transition period for complying with new or revised accounting standards affecting public companies. We have elected not to take advantage of this extended transition period, which means that the financial statements included in this Form 10-K, as well as any financial statements that we file in the future, will be subject to all new or revised accounting standards generally applicable to public companies. See Item 1A, Risk Factors, of this Form 10-K for more information on emerging growth companies. Employees As of December 31, 2025, we had 138 full-time employees and 2 part-time employees. None of our employees are covered by a collective bargaining agreement. We consider our relationship with our employees to be good and have not experienced interruptions of operations due to labor disagreements. We provide a competitive compensation and benefits program to our employees. In addition to salaries, these programs include annual bonus opportunities, a 401(k) plan with an employer matching contribution, healthcare and insurance benefits, profit sharing, flexible spending accounts, paid time off and an employee assistance program. General Corporate Information Our principal executive offices are located at 1943 Isaac Newton Square, Suite 100, Reston, Virginia 20190 and our telephone number at that address is (703) 584-0840. Additional information can be found on our website:
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Table of Contents 15 www.johnmarshallbank.com. Information on our website or any other website is not incorporated by reference herein and does not constitute a part of this Form 10-K. Public Information Our Securities and Exchange Commission (“SEC”) filings are available to the public on the SEC’s Internet site at http://www.sec.gov. You may also obtain these documents, free of charge, from the investor relations section of our website at http://www.johnmarshallbank.com. Supervision and Regulation The Company and the Bank are highly regulated under both federal and state laws. The following description briefly addresses certain provisions of federal and state laws and regulations, and their potential effects on the Company and the Bank. To the extent statutory or regulatory provisions or proposals are described in this Form 10-K, the description is qualified in its entirety by reference to the particular statutory or regulatory provisions or proposals. The Company General. As a bank holding company registered under the Bank Holding Company Act of 1956 (the “BHCA”), the Company is subject to supervision, regulation and examination by the Federal Reserve. The Company is also registered under the bank holding company laws of Virginia and is subject to supervision, regulation and examination by the Virginia BFI. Permitted Activities. The permitted activities of a bank holding company are limited to managing or controlling banks, furnishing services to or performing services for its subsidiaries, and engaging in other activities that the Federal Reserve determines by regulation or order to be closely related to banking or managing or controlling banks. In determining whether a particular activity is permissible, the Federal Reserve must consider whether the performance of such an activity reasonably can be expected to produce benefits to the public that outweigh possible adverse effects. Possible benefits include greater convenience, increased competition, and gains in efficiency. Possible adverse effects include undue concentration of resources, decreased or unfair competition, conflicts of interest, and unsound banking practices. Despite prior approval, the Federal Reserve may order a bank holding company or its subsidiaries to terminate any activity or to terminate ownership or control of any subsidiary when the Federal Reserve has reasonable cause to believe that a serious risk to the financial safety, soundness, or stability of any bank subsidiary of that bank holding company may result from such an activity. Banking Acquisitions; Changes in Control. The BHCA and related regulations require, among other things, the prior approval of the Federal Reserve in any case where a bank holding company proposes to (i) acquire direct or indirect ownership or control of more than 5% of the outstanding voting stock of any bank or bank holding company (unless it already owns a majority of such voting shares), (ii) acquire all or substantially all of the assets of another bank or bank holding company, or (iii) merge or consolidate with any other bank holding company. In determining whether to approve a proposed bank acquisition, the Federal Reserve will consider, among other factors, the effect of the acquisition on competition, the public benefits expected to be received from the acquisition, any outstanding regulatory compliance issues of any institution that is a party to the transaction, the projected capital ratios and levels on a post-acquisition basis, the financial condition of each institution that is a party to the transaction and of the combined institution after the transaction, the parties’ managerial resources and risk management and governance processes and systems, the parties’ compliance with the BSA and anti-money laundering requirements, and the acquiring institution’s performance under the Community Reinvestment Act of 1977 and compliance with fair housing and other consumer protection laws. Subject to certain exceptions, the BHCA and the Change in Bank Control Act, together with the applicable regulations, require Federal Reserve approval (or, depending on the circumstances, no notice of disapproval) prior to any person or company’s acquiring “control” of a bank or bank holding company. A conclusive presumption of control exists if an individual or company acquires the power, directly or indirectly, to direct the management or policies of an insured depository institution or to vote 25% or more of any class of voting securities of any insured depository institution. A rebuttable presumption of control exists if a person or company acquires 10% or more but less than 25% of any class of voting securities of an insured depository institution and either the institution has registered its securities with the SEC
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Table of Contents 16 under Section 12 of the Exchange Act or no other person will own a greater percentage of that class of voting securities immediately after the acquisition. In addition, Virginia law requires prior approval from the Virginia BFI for (i) the acquisition by a Virginia bank holding company of more than 5% of the voting shares of a Virginia bank or any holding company that controls a Virginia bank, or (ii) the acquisition by a Virginia bank holding company of a bank or its holding company domiciled outside Virginia. Source of Strength. Federal Reserve policy has historically required bank holding companies to act as a source of financial and managerial strength to their subsidiary banks. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) codified this policy as a statutory requirement. Under this requirement, the Company is expected to commit resources to support the Bank, including at times when the Company may not be in a financial position to provide such resources. Any capital loans by a bank holding company to any of its subsidiary banks are subordinate in right of payment to depositors and to certain other indebtedness of such subsidiary banks. In the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment. Safety and Soundness. There are a number of obligations and restrictions imposed on bank holding companies and their subsidiary banks by law and regulatory policy that are designed to minimize potential loss to the depositors of such depository institutions and the FDIC insurance fund in the event of a depository institution insolvency, receivership, or default. For example, under the Federal Deposit Insurance Corporation Improvement Act of 1991, to avoid receivership of an insured depository institution subsidiary, a bank holding company is required to guarantee the compliance of any subsidiary bank that may become “undercapitalized” with the terms of any capital restoration plan filed by such subsidiary with its appropriate federal bank regulatory agency up to the lesser of (i) an amount equal to 5% of the institution’s total assets at the time the institution became undercapitalized, or (ii) the amount that is necessary (or would have been necessary) to bring the institution into compliance with all applicable capital standards as of the time the institution fails to comply with such capital restoration plan. Under the Federal Deposit Insurance Act (“FDIA”), federal bank regulatory agencies have adopted guidelines prescribing safety and soundness standards. These guidelines establish general standards relating to capital management, internal controls and information systems, data security, loan documentation, credit underwriting, interest rate exposure, risk management, vendor management, corporate governance, asset growth, and compensation, fees and benefits. In general, the guidelines require, among other things, appropriate systems and practices to identify and manage the risk and exposures specified in the guidelines. Capital Requirements. Pursuant to the Federal Reserve’s Small Bank Holding Company Policy Statement, qualifying bank holding companies with total consolidated assets of less than $3 billion, such as the Company, are not subject to consolidated regulatory capital requirements. Certain capital requirements applicable to the Bank are described below under “The Bank – Capital Requirements.” Subject to capital requirements and certain other restrictions, the Company is able to borrow money to make a capital contribution to the Bank, and such loans may be repaid from dividends paid by the Bank to the Company. Limits on Dividends and Other Payments. The Company is a legal entity, separate and distinct from its subsidiary. A significant portion of the revenues of the Company result from dividends paid to it by the Bank. There are various legal limitations applicable to the payment of dividends by the Bank to the Company and to the payment of dividends by the Company to its shareholders. The Bank is subject to various statutory and regulatory restrictions on its ability to pay dividends to the Company. Under current regulations, prior approval from the Federal Reserve is required if cash dividends declared by the Bank in any given year exceed net income for that year plus retained net profits of the two preceding years. The payment of dividends by the Bank or the Company may be limited by other factors, such as requirements to maintain capital above regulatory guidelines. Bank regulatory agencies have the authority to prohibit the Bank and the Company from engaging in unsafe or unsound practices in conducting their respective businesses. The payment of dividends, depending on the financial condition of the Bank or the Company, could be deemed to constitute such an unsafe or unsound practice. Under the FDIA, insured depository institutions, such as the Bank, are prohibited from making capital distributions, including the payment of dividends, if after making such distributions the institution would become “undercapitalized” (as
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Table of Contents 17 such term is used in the statute). Any non-bank subsidiaries of the Company may pay dividends to the Company periodically, subject to certain statutory restrictions. The Company may receive fees from or pay fees to its affiliated companies for expenses incurred related to certain activities performed by or for the Company for the benefit of its affiliated companies or for its benefit. These fees are charged to/received from each affiliated company based upon various specific allocation methods measuring the estimated usage of such services by that company. The fees are eliminated from reported financial statements in the consolidation process. The Bank General. The Bank is supervised and regularly examined by the Federal Reserve and the Virginia BFI. The various laws and regulations administered by the bank regulatory agencies affect corporate practices, such as the payment of dividends, incurrence of debt, and the acquisition of financial institutions and other companies. These laws and regulations also affect business practices, such as the payment of interest on deposits, the charging of interest on loans, credit policies, the types of business conducted, and the location of offices. Certain of these laws and regulations are referenced above under “The Company.” Capital Requirements. The Federal Reserve and the other federal banking agencies have issued risk-based and leverage capital guidelines applicable to U.S. banking organizations. Those regulatory agencies may from time to time require that a banking organization maintain capital above the minimum levels because of its financial condition or actual or anticipated growth. The Federal Reserve has adopted final rules regarding capital requirements and calculations of risk-weighted assets to implement the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. These rules require the Bank to comply with the following minimum capital ratios: (i) a minimum ratio of common equity Tier 1 to risk-weighted assets of 4.5%, plus a 2.5% capital conservation buffer, resulting in a minimum ratio of common equity Tier 1 to risk- weighted assets of 7.0%, (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0%, plus the 2.5% capital conservation buffer, resulting in a minimum Tier 1 capital ratio of 8.5%, (iii) a minimum ratio of total risk-based capital to risk-weighted assets of 8.0%, plus the 2.5% capital conservation buffer, resulting in a minimum total risk-based capital ratio of 10.5%, and (iv) a minimum leverage ratio of 4.0%, calculated as the ratio of Tier 1 capital to average assets. The capital conservation buffer, is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of common equity Tier 1 to risk-weighted assets above the minimum but below the conservation buffer will face constraints on dividends, equity repurchases, and discretionary compensation paid to certain officers, based on the amount of the shortfall. As of December 31, 2025 and 2024, the capital ratios of the Bank were in excess of the requirements. As discussed below, the Basel III capital reforms also integrated the new capital requirements into the prompt corrective action provisions under Section 38 of the FDIA. The Federal Reserve’s final rules (i) introduced a common equity Tier 1 capital ratio requirement at each level (other than critically undercapitalized), with the required ratio being 6.5% for well capitalized status, (ii) increased the minimum Tier 1 capital ratio requirement for each category, with the minimum ratio for well capitalized status being 8.0%, and (iii) eliminated the provision that provided that a bank with a composite supervisory rating of 1 may have a 3.0% Tier 1 leverage ratio and still be well capitalized. The minimum total capital to risk-weighted assets ratio (10.0%) and minimum leverage ratio (5.0%) for well capitalized status were unchanged by the final rules. Prompt Corrective Action. Federal banking regulators are authorized and, under certain circumstances, required to take certain actions against banks that fail to meet their capital requirements. The federal bank regulatory agencies have additional enforcement authority with respect to undercapitalized depository institutions. As described above, the final rules to implement the Basel III regulatory capital framework also integrated new requirements into the prompt corrective action framework. “Well capitalized” institutions may generally operate without additional supervisory restriction. With respect to “adequately capitalized” institutions, such banks cannot normally pay dividends or make any capital contributions that would leave the bank undercapitalized; they cannot pay a management fee to a controlling person if after paying the fee, it would be undercapitalized; and they cannot accept, renew, or rollover any brokered deposit unless the bank has applied for and been granted a waiver by the FDIC.
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Table of Contents Immediately upon becoming “undercapitalized,” a depository institution becomes subject to the provisions of Section 38 of the FDIA, which: (i) restrict payment of capital distributions and management fees; (ii) require that the appropriate federal banking agency monitor the condition of the institution and its efforts to restore its capital; (iii) require submission of a capital restoration plan; (iv) restrict the growth of the institution’s assets; and (v) require prior approval of certain expansion proposals. The appropriate federal banking agency for an undercapitalized institution also may take any number of discretionary supervisory actions if the agency determines that any of these actions is necessary to resolve the problems of the institution at the least possible long-term cost to the Deposit Insurance Fund of the FDIC (“DIF”), subject in certain cases to specified procedures. These discretionary supervisory actions include: (i) requiring the institution to raise additional capital; (ii) restricting transactions with affiliates; (iii) requiring divestiture of the institution or the sale of the institution to a willing purchaser; and (iv) any other supervisory action that the agency deems appropriate. These and additional mandatory and permissive supervisory actions may be taken with respect to significantly undercapitalized and critically undercapitalized institutions. The Bank met the definition of being “well capitalized” as of December 31, 2025 and 2024. Deposit Insurance. The deposits of the Bank are insured up to applicable limits by the DIF. The basic limit on FDIC deposit insurance coverage is $250,000 per depositor. Under the FDIA, the FDIC may terminate deposit insurance upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations as an insured depository institution, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC, subject to administrative and potential judicial hearing and review processes. The Bank is subject to deposit insurance assessments to maintain the DIF. Deposit insurance pricing is based on CAMELS composite ratings and certain other financial ratios to determine assessment rates for small- established institutions with less than $10 billion in assets. The CAMELS rating system is a supervisory rating system designed to take into account and reflect all financial and operational risks that a bank may face, including capital adequacy, asset quality, management capability, earnings, liquidity, and sensitivity to market risk (“CAMELS”). CAMELS composite ratings set a maximum insurance assessment for CAMELS 1 and 2 rated banks and set minimum assessments for lower rated institutions. The Company recorded an expense of $1.0 million for FDIC insurance premiums for each of the years ended December 31, 2025 and 2024. Transactions with Affiliates. Pursuant to Sections 23A and 23B of the Federal Reserve Act and Regulation W, the authority of the Bank to engage in transactions with related parties or “affiliates,” or to make loans to insiders, is limited. Loan transactions with an affiliate generally must be collateralized and certain transactions between the Bank and its affiliates, including the sale of assets, the payment of money or the provision of services, must be on terms and conditions that are substantially the same, or at least as favorable to the Bank, as those prevailing for comparable nonaffiliated transactions. In addition, the Bank generally may not purchase securities issued or underwritten by affiliates. Loans to executive officers, directors, or to any person who directly or indirectly, or acting through or in concert with one or more persons, owns, controls, or has the power to vote more than 10% of any class of voting securities of a bank are subject to Sections 22(g) and 22(h) of the Federal Reserve Act and their corresponding regulations (Regulation O) and Section 13(k) of the Exchange Act, relating to the prohibition on personal loans to executives (which exempts financial institutions in compliance with the insider lending restrictions of Section 22(h) of the Federal Reserve Act). Among other things, these loans must be made on terms substantially the same as those prevailing on transactions made to unaffiliated individuals and certain extensions of credit to those persons must first be approved in advance by a disinterested majority of the entire board of directors. Section 22(h) of the Federal Reserve Act prohibits loans to any of those individuals where the aggregate amount exceeds an amount equal to 15% of an institution’s unimpaired capital and surplus plus an additional 10% of unimpaired capital and surplus in the case of loans that are fully secured by readily marketable collateral, or when the aggregate amount on all of the extensions of credit outstanding to all of these persons would exceed the bank’s unimpaired capital and unimpaired surplus. Section 22(g) of the Federal Reserve Act identifies limited circumstances in which a bank is permitted to extend credit to executive officers. Community Reinvestment Act. The Bank is subject to the requirements of the Community Reinvestment Act of 1977. The CRA imposes on financial institutions an affirmative and ongoing obligation to meet the credit needs of the local communities they serve, including low and moderate income neighborhoods. The CRA requires the appropriate federal banking agency, in connection with its examination of a bank, to assess the bank’s record in meeting such credit needs.
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Table of Contents Furthermore, such assessment is also required of banks that have applied, among other things, to merge or consolidate with or acquire the assets or assume the liabilities of an insured depository institution, or to open or relocate a branch. In the case of a bank holding company applying for approval to acquire a bank or another bank holding company, the record of each subsidiary bank of the applicant bank holding company is subject to assessment in considering the application. Under the CRA, institutions are assigned a rating of “outstanding,” “satisfactory,” “needs to improve,” or “substantial non-compliance.” The Bank received a “satisfactory” CRA rating in its most recent examination. On October 24, 2023, the federal bank regulatory agencies issued a final rule to modernize their respective CRA regulations. The revised rules would have substantially altered the methodology for assessing compliance with the CRA, and likely would have made it more challenging and/or costly for the Bank to maintain its “satisfactory” rating. Following its finalization on March 29, 2024, the 2023 modernization rule became subject to an ongoing injunction. On July 16, 2025, the federal bank regulatory agencies issued a joint proposal to rescind the 2023 modernization rule. The agencies continue to apply the CRA rules as they existed before the 2023 modernization, considering the injunction and pending finalization of the rescission of the modernization rule. Anti-Money Laundering Laws and Regulations. The Bank is subject to several federal laws that are designed to combat money laundering, terrorist financing, and transactions with persons, companies or foreign governments designated by U.S. authorities (“AML laws”). This category of laws includes the BSA, the Money Laundering Control Act of 1986, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”), and the Anti-Money Laundering Act of 2020. The AML laws and their implementing regulations require insured depository institutions, broker-dealers, and certain other financial institutions to have policies, procedures, and controls to detect, prevent, and report money laundering and terrorist financing. The AML laws and their regulations also provide for information sharing, subject to conditions, between federal law enforcement agencies and financial institutions, as well as among financial institutions, for counter-terrorism purposes. Federal banking regulators are required, when reviewing bank holding company acquisition and bank merger applications, to take into account the effectiveness of the anti-money laundering activities of the applicants. To comply with these obligations, the Bank has implemented appropriate internal practices, procedures, and controls. Reporting Terrorist Activities. The Office of Foreign Assets Control (“OFAC”), which is a division of the Department of the Treasury, is responsible for helping to ensure that United States entities do not engage in transactions with “enemies” of the United States, as defined by various executive orders and acts of Congress. OFAC has sent, and will send, our bank regulatory agencies lists of names of persons and organizations suspected of aiding, harboring or engaging in terrorist acts. If the Bank finds a name on any transaction, account or wire transfer that is on an OFAC list, it must freeze such account, file a suspicious activity report and notify the Federal Bureau of Investigation. The Bank has appointed an OFAC compliance officer to oversee the inspection of its accounts and the filing of any notifications. The Bank actively checks high-risk OFAC areas such as new accounts, wire transfers and customer files. The Bank performs these checks utilizing software, which is updated each time a modification is made to the lists provided by OFAC and other agencies of Specially Designated Nationals and Blocked Persons. Consumer Financial Protection. The Bank is subject to a number of federal and state consumer protection laws that extensively govern its relationship with its customers. These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, the Service Members Civil Relief Act, laws governing flood insurance, federal and state laws prohibiting unfair and deceptive business practices, foreclosure laws, and various regulations that implement some or all of the foregoing. These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must deal with customers when taking deposits, making loans, collecting loans, and providing other services. If the Bank fails to comply with these laws and regulations, it may be subject to various penalties. Failure to comply with consumer protection requirements may also result in failure to obtain any required bank regulatory approval for merger or acquisition transactions the Bank may wish to pursue or being prohibited from engaging in such transactions even if approval is not required. The Dodd-Frank Act centralized responsibility for consumer financial protection by creating a new agency, the Consumer Financial Protection Bureau (the “CFPB”), and giving it responsibility for implementing, examining, and enforcing
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Table of Contents compliance with federal consumer protection laws. The CFPB focuses on (i) risks to consumers and compliance with the federal consumer financial laws, (ii) the markets in which firms operate and risks to consumers posed by activities in those markets, (iii) depository institutions that offer a wide variety of consumer financial products and services, and (iv) non-depository companies that offer one or more consumer financial products or services. The CFPB is responsible for implementing, examining, and enforcing compliance with federal consumer financial laws for institutions with more than $10 billion of assets. While the Bank, like all banks, is subject to federal consumer protection rules enacted by the CFPB, because the Company and the Bank have total consolidated assets of less than $10 billion, the Federal Reserve oversees most consumer protection aspects of the Dodd-Frank Act and other laws and regulations applicable to the Bank. The CFPB has broad rulemaking authority for a wide range of consumer financial laws that apply to all banks, including, among other things, the authority to prohibit “unfair, deceptive or abusive” acts and practices. Abusive acts or practices are defined as those that materially interfere with a consumer’s ability to understand a term or condition of a consumer financial product or service or take unreasonable advantage of a consumer’s (i) lack of financial savvy, (ii) inability to protect himself in the selection or use of consumer financial products or services, or (iii) reasonable reliance on a covered entity to act in the consumer’s interests. The CFPB can issue cease-and-desist orders against banks and other entities that violate consumer financial laws. The CFPB may also institute a civil action against an entity in violation of federal consumer financial law in order to impose a civil penalty or injunction. Further regulatory positions taken by the CFPB may influence how other regulatory agencies may apply the subject consumer financial protection laws and regulations. During 2025, the CFPB reduced its staff by over 80%. The reduction in force is the subject of litigation, and the staffing cuts are currently stayed pending the federal circuit court’s rehearing of the case. The impact of these developments on banking organizations is uncertain. States and state attorneys general may increase regulatory, investigative and enforcement activity with respect to consumer protection, in response to changes in regulation, supervision and enforcement of consumer protection laws by federal regulators. Notwithstanding ongoing, legal, budgetary and structural challenges affecting the CFPB, the CFPB remains an active federal regulatory agency with continuing supervisory and enforcement authority and retains its broad authority to pursue enforcement actions, including investigations, civil actions and cease and desist proceedings. The Bank is also subject to other federal and state consumer protection laws and regulations that, among other things, prohibit unfair, deceptive and abusive, corrupt or fraudulent business practices, untrue or misleading advertising and unfair competition. Privacy Legislation. Several laws, including the Right to Financial Privacy Act and the Gramm-Leach-Bliley Act (“GLB Act”), and related regulations issued by the federal bank regulatory agencies, provide protections against the transfer and use of customer information by financial institutions. A financial institution must provide its customers information regarding its policies and procedures with respect to the handling of customers’ personal information. Each institution must conduct an internal risk assessment of its ability to protect customer information. These privacy provisions generally prohibit a financial institution from providing a customer’s personal financial information to unaffiliated parties without prior notice to and approval from the customer. In October 2024, the CFPB issued a final rule regarding personal financial data rights that is designed to promote “open banking.” The final rule requires, among other things, that data providers, including any financial institution, make available to consumers and certain authorized third parties, upon request, certain covered transaction, account, and payment information. Institutions with at least $1.5 billion but less than $3 billion in total assets, including the Company, are required to comply with the final rule by April 1, 2029. On the same day the final rule was released, certain industry participants filed a complaint against the CFPB challenging the final rule. This legal challenge has since been paused to allow time for the CFPB to assess the rule and determine whether it aligns with the agency’s current policy objectives. In September 2025, the CFPB solicited public comment to reconsider the implementation of “open banking.” Cybersecurity. The federal bank regulatory agencies have adopted guidelines for establishing information security standards and cybersecurity programs for implementing safeguards under the supervision of a financial institution’s board of directors. These guidelines, along with related regulatory materials, increasingly focus on risk management and processes related to information technology and the use of third parties in the provision of financial products and services. The federal bank regulatory agencies expect financial institutions to establish lines of defense and to ensure that their risk management processes address the risk posed by compromised customer credentials, and also expect financial institutions to maintain sufficient business continuity planning processes to ensure rapid recovery, resumption and maintenance of the
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Table of Contents 21 institution’s operations after a cyberattack. If the Company or the Bank fails to meet the expectations set forth in this regulatory guidance, the Company or the Bank could be subject to various regulatory actions and any remediation efforts may require significant resources of the Company or the Bank. On November 18, 2021, the federal bank regulatory agencies issued a final rule, effective April 1, 2022, imposing new notification requirements for cybersecurity incidents. The rule requires financial institutions to notify their primary federal regulator as soon as possible and no later than 36 hours after the institution determines that a cybersecurity incident has occurred that has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the institution’s: (i) ability to carry out banking operations, activities, or processes, or deliver banking products and services to a material portion of its customer base, in the ordinary course of business, (ii) business line(s), including associated operations, services, functions, and support, that upon failure would result in a material loss of revenue, profit, or franchise value, or (iii) operations, including associated services, functions and support, as applicable, the failure or discontinuance of which would pose a threat to the financial stability of the United States. In July 2023, the SEC issued a final rule to enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance, and incident reporting by public companies that are subject to the reporting requirements of the Exchange Act. Specifically, the final rule requires current reporting about material cybersecurity incidents, periodic disclosures about a registrant’s policies and procedures to identify and manage cybersecurity risk, management’s role in implementing cybersecurity policies and procedures, and the board of directors’ cybersecurity expertise, if any, and its oversight of cybersecurity risk. See Item 1C. Cybersecurity of this Form 10-K for a discussion of the Company’s cybersecurity risk management, strategy and governance. To date, neither the Company nor the Bank has experienced a significant compromise, significant data loss, or material financial losses related to cybersecurity attacks, but its systems and those of its customers and third- party service providers are under constant threat, and it is possible that the Company or the Bank could experience a significant event in the future. Risks and exposures related to cybersecurity attacks are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of Internet banking, mobile banking, and other technology-based products and services by the Company and the Bank and its customers. Incentive Compensation. The federal bank regulatory agencies have issued comprehensive final guidance on incentive compensation policies intended to ensure that the incentive compensation policies of financial institutions do not undermine the safety and soundness of such institutions by encouraging excessive risk- taking. The Interagency Guidance on Sound Incentive Compensation Policies, which covers all employees that have the ability to materially affect the risk profile of financial institutions, either individually or as part of a group, is based upon the key principles that a financial institution’s incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the institution’s ability to effectively identify and manage risks, (ii) be compatible with effective internal controls and risk management, and (iii) be supported by strong corporate governance, including active and effective oversight by the financial institution’s board of directors. The Federal Reserve will review, as part of the regular, risk-focused examination process, the incentive compensation arrangements of financial institutions, such as the Company and the Bank, that are not “large, complex banking organizations.” These reviews will be tailored to each financial institution based on the scope and complexity of the institution’s activities and the prevalence of incentive compensation arrangements. The findings of the supervisory initiatives will be included in reports of examination. Deficiencies will be incorporated into the institution’s supervisory ratings, which can affect the institution’s ability to make acquisitions and take other actions. Enforcement actions may be taken against a financial institution if its incentive compensation arrangements or related risk-management control or governance processes pose a risk to the institution’s safety and soundness, and the financial institution is not taking prompt and effective measures to correct the deficiencies. At December 31, 2025, the Company and the Bank have not been made aware of any instances of noncompliance with this guidance. The Nasdaq Stock Market, LLC, the exchange on which our common stock is listed, enacted a listing rule that became effective in 2023 requiring listed companies to adopt policies mandating the recovery or “clawback” of excess incentive compensation earned by a current or former executive officer during the three fiscal years preceding the date the listed company is required to prepare an accounting restatement, including to correct an error that would result in a material
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Table of Contents 22 misstatement if the error were corrected in the current period or left uncorrected in the current period. A copy of our clawback policy is included as Exhibit 97 to this Annual Report on 10-K. Mortgage Banking Regulation. In connection with making mortgage loans, the Bank is subject to rules and regulations that, among other things, establish standards for loan origination, prohibit discrimination, provide for inspections and appraisals of property, require credit reports on prospective borrowers, in some cases restrict certain loan features and fix maximum interest rates and fees, require the disclosure of certain basic information to mortgagors concerning credit and settlement costs, limit payment for settlement services to the reasonable value of the services rendered and require the maintenance and disclosure of information regarding the disposition of mortgage applications based on race, gender, geographical distribution and income level. The Bank is also subject to rules and regulations that require the collection and reporting of significant amounts of information with respect to mortgage loans and borrowers. The Bank’s mortgage origination activities are subject to Regulation Z, which implements the Truth in Lending Act. Certain provisions of Regulation Z require creditors to make a reasonable and good faith determination based on verified and documented information that a consumer applying for a mortgage loan has a reasonable ability to repay the loan according to its terms. Fair Access to Financial Services. In August 2025, President Trump signed Executive Order 14331, “Guaranteeing Fair Banking Access for All Americans,” which states that it is the policy of the United States that no American should be denied access to financial services because of their constitutionally or statutorily protected beliefs, affiliations, or political views. The Executive Order directs the Treasury Secretary and federal banking regulators to address politicized or unlawful debanking activities. In recent years, certain states have also enacted, or have proposed to enact, statutes, regulations or policies that prohibit financial institutions from denying or canceling products or services to a person or business, or otherwise discriminating against a person or business in making available products or services, on the basis of certain social or political factors or other activities. Artificial Intelligence. CFPB and other federal regulatory guidance reiterates that creditors are not excused from the adverse action notice requirements under the Equal Credit Opportunity Act if they rely on complex algorithmic underwriting models. States have also started to regulate the use of artificial intelligence technologies. In July 2024, the federal banking agencies issued a final rule that requires, among other things, financial institutions to ensure that their automated valuation models for property valuation follow certain quality control standards, including a requirement that such valuation models comply with nondiscrimination laws. Effect of Governmental Monetary Policies The Company’s operations are affected not only by general economic conditions but also by the policies of various regulatory authorities. In particular, the Federal Reserve regulates money and credit conditions and interest rates to influence general economic conditions. These policies have a significant effect on overall growth and distribution of loans, investments, and deposits, and they affect interest rates charged on loans or paid for deposits. Federal Reserve monetary policies have had significant effects on the operating results of commercial banks, including the Bank, in the past and are expected to do so in the future. Future Legislation and Regulation Congress may enact legislation from time to time that affects the regulation of the financial services industry, and state legislatures may enact legislation from time to time affecting the regulation of financial institutions chartered by or operating in those states. Federal and state regulatory agencies also periodically propose and adopt changes to their regulations or change the manner in which existing regulations are applied. The substance or effect of pending or future legislation or regulation, or the application thereof, cannot be predicted, although enactment of the proposed legislation could affect the regulatory structure under which the Company and the Bank operate and may significantly increase costs, impede the efficiency of internal business processes, require an increase in regulatory capital, require modifications to business strategies, and limit the ability to pursue business opportunities in an efficient manner. A change in statutes, regulations, or regulatory policies applicable to the Company or the Bank could have a material, adverse effect on the business, financial condition, and results of operations of the Company and the Bank.
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Table of Contents 23 Reporting Obligations under Securities Laws The Company is subject to the periodic and other reporting requirements of the Exchange Act, including the filing of annual, quarterly, and other reports with the SEC. The Company’s SEC filings are posted and available at no cost on its website as soon as reasonably practicable after the reports are filed electronically with the SEC. The Company’s website address is www.johnmarshallbank.com. The information on the Company’s website is not incorporated into this report or any other filing the Company makes with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.
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Table of Contents 24 Item 1A. Risk Factors In addition to the other information set forth in this Annual Report on Form 10-K, including the information addressed under “Cautionary Note Regarding Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and the related notes, you should carefully consider the factors discussed below. These factors could adversely affect our future business, financial condition, liquidity and results of operations, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward- looking statements contained in this Annual Report on Form 10-K, in which case the trading price of our common stock could decline. Our business, financial condition, liquidity or results of operations could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material. References to past events in these risk factors are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future. Risks Related to Our Lending Activities We may not be able to measure and limit our credit risk adequately, which could adversely affect our profitability. Our business depends on our ability to successfully measure and manage credit risk. As a lender, we are exposed to the risk that the principal of, or interest on, a loan will not be paid timely or at all or that the value of any collateral supporting a loan will be insufficient to cover our outstanding exposure. In addition, we are exposed to risks with respect to the period of time over which the loan may be repaid, risks relating to proper loan underwriting, risks resulting from changes in economic and industry conditions, and risks inherent in dealing with individual loans and borrowers. The creditworthiness of a borrower is affected by many factors, including local market conditions and general economic conditions. Many of our loans are made to small to medium-sized businesses that are less able to withstand competitive, economic and financial pressures than larger borrowers. If the overall economic climate in the United States, generally, or in our market specifically, experiences material disruption, our borrowers may experience difficulties in repaying their loans, the collateral we hold may decrease in value or become illiquid, and the level of nonperforming loans, charge- offs and delinquencies could rise and require significant additional provisions for loan credit losses. Additional factors related to the credit quality of multifamily residential, real estate construction and other commercial real estate loans include the quality of management of the business and tenant vacancy rates. Our risk management practices, such as monitoring the concentration of our loans within specific markets and our credit approval, review and administrative practices, may not adequately reduce credit risk, and our credit administration personnel, policies and procedures may not adequately adapt to changes in economic or any other conditions affecting customers and the quality of the loan portfolio. A failure to effectively measure and limit the credit risk associated with our loan portfolio may result in loan defaults, foreclosures and additional charge-offs, and may necessitate that we significantly increase our allowance for loan credit losses, each of which could adversely affect our net income. As a result, our inability to successfully manage credit risk could have an adverse effect on our business, financial condition and results of operations. Our allowance for loan credit losses may be inadequate to absorb expected losses inherent in the loan portfolio. Experience in the banking industry indicates that a portion of our loans will become delinquent, and that some may only be partially repaid or may never be repaid at all. We may experience losses for reasons beyond our control, such as the impact of general economic conditions on customers and their businesses. Accordingly, we maintain an allowance for loan credit losses that represents management’s judgment of expected losses and risks inherent in our loan portfolio. In determining the size of our allowance for loan credit losses, we rely on an analysis of our loan portfolio considering historical loss experience, volume and types of loans, trends in classification, volume and trends in delinquencies and nonaccruals, economic conditions and other pertinent information. The determination of the appropriate level of the allowance for loan credit losses is inherently highly subjective and requires us to use significant judgment to estimate the level of credit risk and expected losses of the institution based on an evaluation the factors and circumstances that exist as of the applicable measurement date, all of which may change materially. Although we endeavor to maintain our allowance for loan credit losses at a level adequate to absorb any inherent expected losses in the loan portfolio, these estimates of
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Table of Contents 25 loan credit losses are necessarily subjective and their accuracy depends on the outcome of future events. As of December 31, 2025, the allowance for loan credit losses was $19.8 million or 1.00% of total loans, net of unearned income. Deterioration of economic conditions affecting borrowers, new information regarding existing loans, inaccurate management assumptions, identification of additional problem loans, temporary modifications, loan forgiveness, automatic forbearance and other factors, both within and outside of our control, may result in our experiencing higher levels of nonperforming assets and charge-offs, and incurring loan credit losses in excess of our current allowance for loan credit losses, requiring us to make material additions to our allowance for loan credit losses, which could have an adverse effect on our business, financial condition and results of operations. Additionally, federal and state banking regulators, as an integral part of their supervisory function, periodically review the allowance for loan credit losses. These regulatory agencies may require us to increase our provision for loan credit losses or to recognize further loan charge-offs based upon their judgments, which may be different from ours. If we need to make significant and unanticipated increases in the loss allowance in the future, or to take additional charge-offs for which we have not established adequate reserves, our business, financial condition and results of operations could be adversely affected at that time. If our non-performing assets increase, our earnings will be adversely affected. At December 31, 2025, we had one loan that was 90 days past due and still accruing interest. We had no non- accrual loans and no OREO at December 31, 2025 or 2024. Non-performing assets held by the Company adversely affect our net income in various ways: ● we record interest income only on the cash basis or cost-recovery method for non-accrual loans and we do not record interest income for other real estate owned; ● we must provide for loan credit losses through a current period charge to the provision for loan credit losses; ● non-interest expense increases when we write down the value of properties in our other real estate owned portfolio to reflect changing market values; ● there are legal fees associated with the resolution of problem assets, as well as carrying costs, such as taxes, insurance, and maintenance fees; and ● the resolution of non-performing assets requires the active involvement of management, which can distract them from more profitable activity. If additional borrowers become delinquent and do not pay their loans and we are unable to successfully manage our non-performing assets, our losses and troubled assets could increase, which could have an adverse effect on our financial condition and results of operations. Our focus on lending to small to medium-sized businesses may increase our credit risk. We target our business development and marketing strategy primarily to serve the banking and financial services needs of small to medium-sized businesses. These businesses generally have fewer financial resources in terms of capital or borrowing capacity than larger entities, frequently have smaller market shares than their competition, may be more vulnerable to economic downturns, often need substantial additional capital to expand or compete, and may experience substantial volatility in operating results, any of which may impair their ability as a borrower to repay a loan. If general economic conditions in the markets in which we operate negatively impact this customer segment, our results of operations and financial condition and the value of our common stock may be adversely affected. Moreover, a portion of these loans have been made by us in recent years and the borrowers may not have experienced a complete business or economic cycle. The deterioration of our borrowers’ businesses may hinder their ability to repay their loans with us, which could have an adverse effect on our financial condition and results of operations.
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Table of Contents A substantial portion of our loans are and will continue to be real estate related loans in the Washington, D.C. metropolitan area. Adverse changes in the real estate market or economy in this area could lead to higher levels of problem loans and charge-offs, adversely affecting our earnings and financial condition. We make loans primarily to borrowers in the Washington, D.C. MSA, focusing on the Virginia counties of Arlington, Fairfax, Loudoun and Prince William and the independent cities located within those counties, and Washington D.C. and its Maryland suburbs, and have a substantial portion of our loans secured by real estate. These concentrations expose us to the risk that adverse developments in the real estate market, or in the general economic conditions in such areas, or the continuation of such adverse developments, could increase the levels of nonperforming loans and charge-offs, and reduce loan demand and deposit growth. Prolonged or repeated shutdowns and actual and proposed spending cuts by the U.S. Government, particularly those resulting in job losses in the Washington, D.C. MSA, could have a negative impact on the markets we serve, which could adversely affect our business, financial condition, and results of operations. Additionally, if economic conditions in the area deteriorate, or there is significant volatility or weakness in the economy or any significant sector of the area’s economy, our ability to develop our business relationships may be diminished, the quality and collectability of our loans may be adversely affected, our provision for loan credit losses may increase, the value of collateral may decline and loan demand may be reduced. We are exposed to higher credit risk by commercial real estate, commercial and industrial and construction and development-based lending as well as relationship exposure with a number of large borrowers. Commercial real estate, commercial and industrial and construction and development based lending usually involve higher credit risks than 1-4 family residential real estate lending. As of December 31, 2025, the following loan types accounted for the stated percentages of our loan portfolio: commercial real estate (both owner-occupied and non-owner occupied) – 59.6%; commercial and industrial – 2.5%; and construction and land – 11.3%. These types of loans also involve larger loan balances to a single borrower or groups of related borrowers. These higher credit risks are further heightened when the loans are concentrated in a small number of larger borrowers leading to relationship exposure. As of December 31, 2025, we had 29 relationships with over $10 million of outstanding loan principal balances with us. While we are not dependent on any of these relationships and while none of these large relationships have directly impacted our allowance for loan credit losses, a deterioration of any of these large credits could require us to increase our allowance for loan credit losses or result in significant losses to us. Non-owner occupied commercial real estate loans may be affected to a greater extent than residential loans by adverse conditions in real estate markets or the economy because commercial real estate borrowers’ ability to repay their loans depends on successful development of their properties, in addition to the factors affecting residential real estate borrowers. These loans also involve greater risk because they generally are not fully amortizing over the loan period, but have a balloon payment due at maturity. A borrower’s ability to make a balloon payment typically will depend on being able to either refinance the loan or sell the underlying property in a timely manner. Commercial and industrial loans and owner-occupied commercial real estate loans are typically based on the borrowers’ ability to repay the loans from the cash flow of their businesses. These loans may involve greater risk because the availability of funds to repay each loan depends substantially on the success of the business itself. In addition, the assets securing the loans have the following characteristics: (i) they depreciate over time, (ii) they are difficult to appraise and liquidate, and (iii) they fluctuate in value based on the success of the business. Real estate construction and development loan lending involves additional risks because funds are advanced based on the security of the project, which is of uncertain value prior to its completion, and costs may exceed realizable values in declining real estate markets. Because of the uncertainties inherent in estimating construction costs and the realizable market value of the completed project and the effects of governmental regulation of real property, it is relatively difficult to evaluate accurately the total funds required to complete a project and the related loan-to-value ratio. As a result, construction loans often involve the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project and the ability of the borrower to sell or lease the property, rather than the ability of the borrower or guarantor to repay principal and interest. If our appraisal of the value of the completed project proves to be overstated or market values or rental rates decline, we may have inadequate security for the repayment of the loan upon completion of construction of the project. If we are forced to foreclose on a project prior to or at completion due to a default, we may not be able to recover all of the unpaid balance of, and accrued interest on, the loan as well as related foreclosure and
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Table of Contents 27 holding costs. In addition, we may be required to fund additional amounts to complete the project and may have to hold the property for an unspecified period of time while we attempt to dispose of it. Additionally, commercial real estate loans, commercial and industrial loans and construction and development loans are more susceptible to a risk of loss during a downturn in the business cycle. Some degree of instability in the commercial real estate markets is expected in the coming quarters as loans are refinanced in markets with higher vacancy rates under current economic conditions. The outlook for commercial real estate remains dependent on the broader economic environment and, specifically, how major subsectors respond to a higher interest rate environment and higher prices for commodities, goods and services. Our underwriting, review and monitoring cannot eliminate all of the risks related to these loans. We engage in lending secured by real estate and may be forced to foreclose on the collateral and own the underlying real estate, subjecting us to the costs and potential risks associated with the ownership of real property, or consumer protection initiatives or changes in state or federal law may substantially raise the cost of foreclosure or prevent us from foreclosing at all. Since we originate loans secured by real estate, we may have to foreclose on the collateral property to protect our investment and may thereafter own and operate such property, in which case we would be exposed to the risks inherent in the ownership of real estate. The amount that we, as a mortgagee, may realize after a foreclosure depends on factors outside of our control, including, but not limited to, general or local economic conditions, environmental cleanup liabilities, assessments, interest rates, real estate tax rates, operating expenses of the mortgaged properties, our ability to obtain and maintain adequate occupancy of the properties, zoning laws, governmental and regulatory rules, and natural disasters. Our inability to manage the amount of costs or size of the risks associated with the ownership of real estate, or write-downs in the value of OREO could have an adverse effect on our business, financial condition and results of operations. The Company did not have any OREO as of December 31, 2025. Additionally, consumer protection initiatives or changes in state or federal law may substantially increase the time and expenses associated with the foreclosure process or prevent us from foreclosing at all. A number of states in recent years have either considered or adopted foreclosure reform laws that make it substantially more difficult and expensive for lenders to foreclose on properties in default. Additionally, federal and state regulators have prosecuted or pursued enforcement action against a number of mortgage servicing companies for alleged consumer law violations. If new federal or state laws or regulations are ultimately enacted that significantly raise the cost of foreclosure or raise outright barriers to foreclosure, they could have an adverse effect on our business, financial condition and results of operations. A significant percentage of our loans are attributable to a relatively small number of borrowers. Our 10 largest borrowing relationships by outstanding borrowings accounted for approximately 11.7% of our loans at December 31, 2025. Our largest single borrowing relationship accounted for approximately 1.5% of our loans at December 31, 2025. The loss of any combination of these borrowers, or a significant decline in their borrowings due to fluctuations related to their business needs, could adversely affect our results of operations if we are unable to replace their borrowings with similarly priced new loans or investments. In addition, with this concentration of credit risk among a limited number of borrowers, we may face a greater risk of material credits losses if any one or several of these borrowers fail to perform in accordance with their loans, compared to a bank with a more diversified loan portfolio. Lack of seasoning of our loan portfolio could increase risk of credit defaults in the future. As a result of our organic growth over the past several years, as of December 31, 2025, approximately $738.6 million, or 37.5%, of the loans in our loan portfolio were first originated during the past three years. The average age by loan type for loans originated in the past three years is: commercial real estate loans— 1.23 years; commercial and industrial loans— 1.26 years; commercial construction loans— 0.97 years; and residential mortgage loans— 1.33 years. In general, loans do not begin to show signs of credit deterioration or default until they have been outstanding for some period of time, a process referred to as “seasoning.” As a result, a portfolio of older loans will usually behave more predictably than a newer portfolio. Therefore, the recent and current level of delinquencies and defaults may not represent the level that may prevail as the portfolio becomes more seasoned and may not serve as a reliable basis for predicting the health and nature of our loan portfolio, including net charge-offs and the ratio of nonperforming assets in the future. Our limited experience with
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Table of Contents 28 these loans may not provide us with a significant history with which to judge future collectability or performance. However, we believe that our stringent credit underwriting process, our ongoing credit review processes, and our history of successful management of our loan portfolio, mitigate these risks. Nevertheless, if delinquencies and defaults increase, we may be required to increase our provision for loan credit losses, which could have an adverse effect on our business, financial condition and results of operations. The appraisals and other valuation techniques we use in evaluating and monitoring loans secured by real property and other real estate owned may not accurately reflect the net value of the asset. In considering whether to make a loan secured by real property, we generally require an appraisal of the property. However, an appraisal is only an estimate of the value of the property at the time the appraisal is made, and, as real estate values may change significantly in value in relatively short periods of time (especially in periods of heightened economic uncertainty), this estimate may not accurately reflect the net value of the collateral after the loan is made. As a result, we may not be able to realize the full amount of any remaining indebtedness when we foreclose on and sell the relevant property. In addition, we rely on appraisals and other valuation techniques to establish the value of OREO that we acquire through foreclosure proceedings and to determine loan impairments. If any of these valuations are inaccurate, our consolidated financial statements may not reflect the correct value of our OREO, if any, and our allowance for loan credit losses may not reflect accurate loan impairments. Inaccurate valuation of OREO or inaccurate provisioning for loan credit losses could have an adverse effect on our business, financial condition and results of operations. The Company did not have any OREO as of December 31, 2025. Risks Related to Funding and Liquidity Our deposit portfolio includes significant concentrations and a large percentage of our deposits are attributable to a relatively small number of customers. We rely on a small number of large deposit customers, including high-average balance municipal deposits, as a source of funds. Our 10 largest depositor relationships accounted for approximately 16.7% of our deposits at December 31, 2025. Our largest depositor relationship accounted for approximately 3.6% of our deposits at December 31, 2025. These deposits can and do fluctuate substantially. The loss of any combination of these depositors, or a significant decline in the deposit balances due to ordinary course fluctuations related to these customers’ operations, could adversely affect our liquidity and require us to raise deposit rates to attract new deposits, purchase federal funds or borrow funds on a short-term basis to replace such deposits. Depending on the interest rate environment and competitive factors, low cost deposits may need to be replaced with higher cost funding, resulting in a decrease in net interest income and net income. Limits on our ability to use brokered deposits as part of our funding strategy may adversely affect our ability to grow. A “brokered deposit” is any deposit that is obtained from, or through the mediation or assistance of, a deposit broker. These deposit brokers attract deposits from individuals and companies throughout the country and internationally whose deposit decisions are based almost exclusively on obtaining the highest interest rates. Legislation excludes reciprocal deposits of up to the lesser of $5 billion or 20.0% of an institution’s total liabilities from the definition of brokered deposits, where the institution is well capitalized and has a composite supervisory rating of 1 or 2. We have used brokered deposits in the past, and we may continue to use brokered deposits as one of our funding sources to support future growth. As of December 31, 2025, brokered deposits represented approximately 15.3% of our total deposits. Reciprocal deposits represented an additional 18.3% of total deposits at December 31, 2025. There are risks associated with using brokered deposits. In order to continue to maintain our level of brokered deposits, we may be forced to pay higher interest rates than those contemplated by our asset-liability pricing strategy which could have an adverse effect on our net interest margin. In addition, banks that become less than “well capitalized” under applicable regulatory capital requirements may be restricted in their ability to accept or renew, or prohibited from accepting or renewing, brokered deposits. If this funding source becomes more difficult to access, we will have to seek alternative funding sources in order to continue to fund our growth. This may include increasing our reliance on Federal Home Loan Bank of Atlanta (“FHLB”) borrowing, attempting to attract additional non-brokered deposits, and selling loans. There can be no assurance that brokered deposits will be available, or if available, sufficient to support our future growth. The
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Table of Contents unavailability of a sufficient volume of brokered deposits could have an adverse effect on our business, financial condition and results of operations. Liquidity risk could impair our ability to fund operations and meet our obligations as they become due. Liquidity is essential to our business and we monitor our liquidity and manage our liquidity risk at the holding company and bank level. We require sufficient liquidity to fund asset growth, meet customer loan requests, customer deposit maturities and withdrawals, payments on our debt obligations as they come due and other cash commitments under both normal operating conditions and other unpredictable circumstances, including events causing industry or general financial market stress. Liquidity risk can increase due to a number of factors, which include, but are not limited to, an over-reliance on a particular source of funding, changes in the liquidity needs of our depositors, an increase in borrowing by our customers, adverse regulatory actions against us, or a downturn in the markets in which our loans are concentrated. Our inability to raise funds through deposits, borrowings, the sale of loans, and other sources could have an adverse effect on our business, financial condition and results of operations, and could result in the closure of the Bank. Our access to funding sources in amounts adequate to finance our activities or on acceptable terms could be impaired by factors that affect our organization specifically or the financial services industry or economy in general. Our access to funding sources could also be affected by a decrease in the level of our business activity as a result of a downturn in our primary market or by one or more adverse regulatory actions against us. Any substantial, unexpected, and/or prolonged change in the level or cost of liquidity could impair our ability to fund operations and meet our obligations as they become due and could have an adverse effect on our business, financial condition and results of operations. Although we have historically been able to replace maturing deposits and advances if desired, we may not be able to replace such funds in the future if our financial condition, the financial condition of the FHLB or market conditions change. FHLB borrowings and other current sources of liquidity may not be available or, if available, sufficient to provide adequate funding for operations and to support our future growth. The unavailability of a sufficient funding could have an adverse effect on our business, financial condition and results of operations. The proportion of our deposit account balances that exceed FDIC insurance limits may expose the Bank to enhanced liquidity risk in times of financial distress. In the wake of the 2023 regional bank failures, which the FDIC concluded were generated by, in significant part, a high volume of uninsured deposits, many large depositors withdrew deposits in excess of applicable deposit insurance limits and deposited these funds in other financial institutions. In many instances, depositors moved these funds into money market mutual funds or other similar securities accounts in an effort to diversify the risk of further bank failure(s). Deposits that were not insured or not collateralized by securities represented 35.1% of our total deposits as of December 31, 2025. If a significant portion of our deposits were to be withdrawn within a short period of time such that additional sources of funding would be required to meet withdrawal demands, we may be unable to obtain funding at favorable terms, which may have an adverse effect on our net interest margin. Moreover, obtaining adequate funding to meet our deposit obligations may be more challenging during periods of elevated prevailing interest rates, such as the present period. Our ability to attract depositors during a time of actual or perceived distress or instability in the marketplace may be limited. Further, interest rates paid for borrowings generally exceed the interest rates paid on deposits. This spread may be exacerbated by higher prevailing interest rates. In addition, because our available-for-sale investment securities lose value when interest rates rise, after-tax proceeds resulting from the sale of such assets may be diminished during periods when interest rates are elevated. Under such circumstances, we may be required to access funding from sources such as the Federal Reserve’s discount window in order to manage our liquidity risk. Unrealized losses in our securities portfolio could affect liquidity. As market interest rates increase, we may experience significant unrealized losses on our available-for-sale securities portfolio. Unrealized losses related to available-for-sale securities are reflected in accumulated other comprehensive income in our consolidated balance sheets and reduce the level of our book capital and tangible common equity. However, such unrealized losses do not affect our regulatory capital ratios. We actively monitor our available-for-sale securities portfolio and we do not currently anticipate the need to sell securities for liquidity purposes. Furthermore, we believe it is
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Table of Contents 30 unlikely that we would be required to sell any such securities before recovery of their amortized cost bases, which may be at maturity. Nonetheless, our access to liquidity sources could be affected by unrealized losses if securities must be sold at a loss; tangible capital ratios continue to decline from an increase in unrealized losses or realized credit losses; the FHLB or other funding sources reduce capacity; or bank regulators impose restrictions on us that impact the level of interest rates we may pay on deposits or our ability to access brokered deposits. Additionally, significant unrealized losses could negatively impact market and/or customer perceptions of our company, which could lead to a loss of depositor confidence and an increase in deposit withdrawals, particularly among those with uninsured deposits. Risks Related to Our Business, Industry and Markets We operate in a highly competitive market and face increasing competition from a variety of traditional and new financial services providers. We have many competitors. Our principal competitors are commercial and community banks, credit unions, savings and loan associations, mortgage banking firms and online mortgage lenders and consumer finance companies, including large national financial institutions that operate in our market. Many of these competitors are larger than us, have significantly more resources, greater brand recognition and more extensive and established branch networks or geographic footprints than we do, and may be able to attract customers more effectively than we can. Because of their scale, many of these competitors can be more aggressive than we can on loan and deposit pricing, and may better afford and make broader use of media advertising, support services and electronic technology than we do. Also, many of our non-bank competitors have fewer regulatory constraints and may have lower cost structures. We compete with these other financial institutions both in attracting deposits and making loans. We expect competition to continue to increase as a result of legislative, regulatory and technological changes, the continuing trend of consolidation in the financial services industry and the emergence of alternative banking sources. Our profitability in large part depends upon our continued ability to compete successfully with traditional and new financial services providers, some of which maintain a physical presence in our market and others of which maintain only a virtual presence. Increased competition could require us to increase the rates we pay on deposits or lower the rates that we offer on loans, which could reduce our profitability. Failure to keep up with the rapid technological changes in the financial services industry could have an adverse effect on our competitive position and profitability. The financial services industry is undergoing rapid technological changes, with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and reduce costs. Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements than we have. We may not be able to implement new technology-driven products and services effectively or be successful in marketing these products and services to our customers. Failure to keep pace successfully with technological change affecting the financial services industry could harm our ability to compete effectively and could have an adverse effect on our business, financial condition and results of operations. As these technologies improve in the future, we may be required to make significant capital expenditures in order to remain competitive, which may increase our overall expenses and have an adverse effect on our business, financial condition and results of operations. Interest rate shifts may reduce net interest income and otherwise negatively impact our financial condition and results of operations. The majority of our banking assets are monetary in nature and subject to risk from changes in interest rates. Like most financial institutions, our earnings are significantly dependent on our net interest income, the principal component of our earnings, which is the difference between interest earned by us from our interest- earning assets, such as loans and investment securities, and interest paid by us on our interest-bearing liabilities, such as deposits and borrowings. We expect that we will periodically experience “gaps” in the interest rate sensitivities of our assets and liabilities, meaning that either our interest-bearing liabilities will be more sensitive to changes in market interest rates than our interest-earning assets, or vice versa. In either event, if market interest rates should move contrary to our position, this “gap” will negatively impact
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Table of Contents 31 our earnings. Many factors impact interest rates, including governmental monetary policies, inflation, recession, changes in unemployment, the money supply, and international disorder and instability in domestic and foreign financial markets. Interest rate increases often result in larger payment requirements for our borrowers, which increase the potential for default. At the same time, the marketability of the property securing a loan may be adversely affected by any reduced demand resulting from higher interest rates. In a declining interest rate environment, there may be an increase in prepayments on loans as borrowers refinance their loans at lower rates. Although we believe that we have implemented effective asset and liability management strategies to mitigate the potential adverse effects of changes in interest rates on our results of operations, any substantial or unexpected change in, or prolonged change in market interest rates could have an adverse effect on our financial condition and results of operations. The fair value of our investment securities can fluctuate due to factors outside of our control. We maintain an investment portfolio consisting of various high-quality liquid fixed-income securities. The total carrying value of the available-for-sale securities portfolio as of December 31, 2025 was $123.9 million and the estimated duration of the portfolio was approximately 3.1 years. The nature of fixed-income securities is such that changes in market interest rates impact the value of these assets. Based on the duration of our AFS securities portfolio, a one percent increase or decrease in market rates is projected to negatively or positively impact the market value of the AFS securities portfolio by approximately $3.2 million in either instance. Other factors beyond our control including, but are not limited to, rating agency actions in respect of the securities, defaults by the issuer or with respect to the underlying securities, and instability in the capital markets can also significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities. Any of these factors, among others, could cause expected credit losses and realized and/or unrealized losses in future periods and declines in other comprehensive income, which could materially and adversely affect our business, financial condition or results of operations. The process for determining whether expected credit losses exist usually requires complex, subjective judgments about the future financial performance and liquidity of the issuer and collateral underlying the security. Our failure to correctly and timely assess any expected credit losses with respect to our securities could have an adverse effect on our business, financial condition or results of operations. Inflation can have an adverse impact on our business and on our customers. Prevailing price-wage inflation may cause us to give higher than normal raises to employees and start new employees at a higher wage. Furthermore, our clients are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us. Higher interest rates reduce the demand for loans and increase the attractiveness of alternative investment and savings products, like U.S. Treasury securities and money market funds, which can make it difficult to attract and retain deposits. Monetary policies and regulations of the Federal Reserve could have an adverse effect on our business, financial condition and results of operations. Our earnings and growth are affected by the policies of the Federal Reserve. An important function of the Federal Reserve is to regulate the money supply and credit conditions. Among the instruments used by the Federal Reserve to implement these objectives are open market purchases and sales of U.S. government securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits. The monetary policies and regulations of the Federal Reserve have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future. The effects of such policies upon our business, financial condition and results of operations cannot be predicted.
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Table of Contents Risks Related to Our Operations We are subject to certain operational risks, including, but not limited to, customer or employee fraud and data processing system failures and errors. Employee errors and employee and customer misconduct could subject us to financial losses or regulatory sanctions and seriously harm our reputation. Misconduct by our employees could include hiding unauthorized activities from us, improper or unauthorized activities on behalf of our customers or improper use of confidential information. It is not always possible to prevent employee errors and misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases. Employee errors could also subject us to financial claims for negligence. We maintain a system of internal controls and insurance coverage to mitigate against operational risks, including data processing system failures and errors and customer or employee fraud. If our internal controls fail to prevent or detect an occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could have an adverse effect on our business, financial condition and results of operations. In addition, we rely heavily upon information supplied by third parties, including the information contained in credit applications, property appraisals, title information, equipment pricing and valuation and employment and income documentation, in deciding which loans we will originate, as well as the terms of those loans. In deciding whether to extend credit, we may rely upon customers’ representations that their financial statements conform to GAAP and present fairly the financial condition, results of operations and cash flows of the customer. We also may rely on customer representations and certifications, or other audit or accountants’ reports, with respect to the business and financial condition of our customers. If any of the information upon which we rely is misrepresented, either fraudulently or inadvertently, and the misrepresentation is not detected prior to asset funding, the value of the asset may be significantly lower than expected, or we may fund a loan that we would not have funded or on terms we would not have extended. Whether a misrepresentation is made by the customer or another third party, we generally bear the risk of loss associated with the misrepresentation. A loan subject to a material misrepresentation is typically unsellable or subject to repurchase if it is sold prior to detection of the misrepresentation. The sources of the misrepresentations are often difficult to locate, and it is often difficult to recover any of the monetary losses we may suffer. As a result, our business, financial condition and results of operations could be adversely affected if we rely on misleading, false, inaccurate or fraudulent information. We rely on third parties to provide key components of our business infrastructure. We rely on third parties to provide key components for our business operations, such as data processing and storage, recording and monitoring transactions, online banking interfaces and services, internet connections, and network access. While we select these third-party vendors carefully, we do not control their actions. Any problems caused by these third parties, including those resulting from breakdowns or other disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes, cyber- attacks and security breaches at a vendor, failure of a vendor to provide services for any reason, or poor performance of services by a vendor, could adversely affect our ability to deliver products and services to our customers and otherwise conduct our business. Financial or operational difficulties of a third-party vendor could also hurt our operations if those difficulties interfere with the vendor’s ability to serve us. Replacing these third-party vendors could create significant delays and expense that adversely affect our business and performance. We follow a relationship-based operating model and our ability to maintain our reputation is critical to the success of our business and the failure to do so may materially adversely affect our performance. We are a community bank, and our reputation is one of the most valuable components of our business. As such, we strive to conduct our business in a manner that enhances our reputation. This is done, in part, by recruiting, hiring and retaining bankers and other associates who share our core values of being an integral part of the communities we serve, delivering superior service to our customers and caring about our customers and associates. Furthermore, maintaining our reputation also depends on our ability to protect our brand name and associated trademarks. However, reputation risk, or the risk to our business, earnings and capital from negative public opinion surrounding our Company and the financial institutions industry generally, is inherent in our business. Negative public opinion can result from our actual or alleged conduct in any number of activities, including business and lending practices, corporate
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Table of Contents 33 governance and acquisitions, and from actions taken by government regulators and community organizations in response to those activities. Negative public opinion can adversely affect our ability to keep and attract customers and employees and can expose us to litigation and regulatory action. Although we take steps to minimize reputation risk in dealing with our customers and communities, this risk will always be present given the nature of our business. If our reputation is negatively affected by the actions of our employees or otherwise, our business and operating results may be materially adversely affected. We may be adversely affected by the lack of soundness of other financial institutions or market utilities. Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services companies may be interrelated as a result of trading, clearing, counterparty, and other relationships. We have exposure to different industries and counterparties, and through transactions with counterparties in the financial services industry, including broker-dealers, commercial banks, investment banks, and other financial intermediaries. As a result, defaults by, declines in the financial condition of, or even rumors or questions about, one or more financial services companies, or the financial services industry generally, could lead to market-wide liquidity problems and losses or defaults by us or other institutions. These losses could have an adverse effect on our business, financial condition and results of operations. External and internal risk has proliferated in recent years. The shift in recent years to digital, mobile, and online platforms have resulted in a large volume of payment transactions being executed more quickly leaving banks less time to identify and counteract fraud, and recover the funds misappropriated by fraudulent actors. Moreover, the level of sophistication of fraud has increased in part due to greater collaboration among bad actors, including the exchange of stolen data, new techniques and expertise available on the dark web. The financial services industry is continually developing and forcing countermeasures to prevent, detect and remediate the ever-shifting fraud landscape and the ability to quickly adapt to new threats is a critical element of fraud prevention. Our risk management framework may not be effective in mitigating risks and/or losses to us. Our risk management framework is comprised of various processes, systems and strategies, and is designed to manage the types of risk to which we are subject, including, among others, credit, market, liquidity, interest rate and compliance. Our framework also includes financial or other modeling methodologies that involve management assumptions and judgment. Our risk management framework may not be effective under all circumstances. Our risk management framework may not adequately mitigate any risk or loss to us. If our risk management framework is not effective, we could suffer unexpected losses and our business, financial condition and results of operations could be adversely affected. We may also be subject to potentially adverse regulatory consequences. System failure or breaches of our network security, including as a result of cyber-attacks or data security breaches, could subject us to increased operating costs as well as litigation and other liabilities. The computer systems and network infrastructure we use may be vulnerable to physical theft, fire, power loss, telecommunications failure or a similar catastrophic event, as well as security breaches, denial of service attacks, viruses, worms and other disruptive problems caused by hackers. Any damage or failure that causes breakdowns or disruptions in our customer relationship management, general ledger, deposit, loan and other systems could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny for failure to comply with required information security standards, or expose us to civil litigation and possible financial liability, any of which could have an adverse effect on us. Computer break-ins, phishing and other disruptions could also jeopardize the security of information stored in and transmitted through our computer systems and network infrastructure. Information security risks have generally increased in recent years in part because of the proliferation of new technologies, the use of the Internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists, activists, and other external parties. Our operations rely on the secure processing, transmission and storage of
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Table of Contents 34 confidential information in our computer systems and networks. In addition, to access our products and services, our customers may use devices that are beyond our control systems. Although we believe we have robust information security procedures and controls, our technologies, systems, networks, and our customers’ devices may become the target of cyber-attacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of the Bank’s or our customers’ confidential, proprietary and other information, or otherwise disrupt the Bank’s or our customers’ or other third parties’ business operations. As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities. The Bank is under continuous threat of loss due to hacking and cyber-attacks especially as we continue to expand customer capabilities to utilize internet and other remote channels to transact business. We cannot assure that we will not be the victim of successful hacking or cyberattacks in the future that could cause us to suffer material losses. The occurrence of any cyber-attack or information security breach could result in potential liability to customers, reputational damage and the disruption of our operations, and regulatory concerns, all of which could adversely affect our business, financial condition or results of operations. The Company’s business continuity plans or data security systems could prove to be inadequate, resulting in a material interruption in, or disruption to, its business and a negative impact on results of operations. The Company relies heavily on communications and information systems to conduct its business. Any failure, interruption or breach in security of these systems, whether due to severe weather, natural disasters, cyber- attack, acts of war or terrorism, criminal activity or other factors, could result in failures or disruptions in general ledger, deposit, loan, customer relationship management and other systems. While the Company has disaster recovery and other policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of its information systems, there can be no assurance that any such failures, interruptions or security breaches will not occur or, if they do occur, that they will be adequately addressed. The occurrence of any failures, interruptions or security breaches of the Company’s information systems could damage its reputation, result in a loss of customer business, subject it to additional regulatory scrutiny or expose it to civil litigation and possible financial liability, any of which could have a material adverse effect on results of operations. We are dependent on the use of data and modeling in both our management’s decision-making generally and in meeting regulatory expectations in particular. The use of statistical and quantitative models and other quantitatively-based analyses is endemic to bank decision making and regulatory compliance processes, and the employment of such analyses is becoming increasingly widespread in our operations. Liquidity stress testing, interest rate sensitivity analysis, allowance for loan credit losses measurement, portfolio stress testing and the identification of possible violations of anti- money laundering regulations are examples of areas in which we are dependent on models and the data that underlie them. We anticipate that model-derived insights will be used more widely in our decision making in the future. While these quantitative techniques and approaches improve our decision making, they also create the possibility that faulty data or flawed quantitative approaches could yield adverse outcomes or regulatory scrutiny. Secondarily, because of the complexity inherent in these approaches, misunderstanding or misuse of their outputs could similarly result in suboptimal decision making, which could have an adverse effect on our business, financial condition and results of operations. We are exposed to risk of environmental liabilities with respect to properties to which we obtain title. A significant portion of our loan portfolio is secured by real estate. In the course of our business, we may foreclose and take title to real estate and could be subject to environmental liabilities with respect to these properties. We may be held liable to a government entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or may be required to clean up hazardous or toxic substances, or chemical releases at a property. The costs associated with investigation and remediation activities could be substantial. In addition, if we are the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. These costs and claims could adversely affect our business, results of operations and prospects.
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Table of Contents 35 Risks Related to our Regulatory Environment Our industry is highly regulated, and the regulatory framework, together with any future legislative or regulatory changes, may have a materially adverse effect on our operations. The banking industry is highly regulated and supervised under both federal and state laws and regulations that are intended primarily for the protection of depositors, customers, the public, the banking system as a whole or the DIF, not for the protection of our shareholders and creditors. We are subject to regulation and supervision by the Federal Reserve, and our Bank is subject to regulation and supervision by the Federal Reserve, the FDIC, and the Virginia BFI. These regulatory agencies periodically examine our business, including our compliance with laws and regulations, and have the power take a number of different remedial actions if they discover violations of law or regulations, or they determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of our operations have become unsatisfactory. Compliance with these laws and regulations can be difficult and costly, and changes to laws and regulations can impose additional compliance costs. We must obtain approval from our regulators before engaging in certain activities, and there is risk that such approvals may not be granted, either in a timely manner or at all. These requirements may constrain our operations, and the adoption of new laws and changes to, or repeal of, existing laws may have an adverse effect on our business, financial condition and results of operations. Also, the burden imposed by those federal and state regulations may place banks in general, including our Bank in particular, at a competitive disadvantage compared to their non-bank competitors. Compliance with current and potential regulation, as well as supervisory scrutiny by our regulators, may significantly increase our costs, impede the efficiency of our internal business processes, require us to increase our regulatory capital, and limit our ability to pursue business opportunities in an efficient manner by requiring us to expend significant time, effort and resources to ensure compliance and respond to any regulatory inquiries or investigations. Our failure to comply with any applicable laws or regulations, or regulatory policies and interpretations of such laws and regulations, could result in sanctions by regulatory agencies, civil money penalties or damage to our reputation, all of which could have an adverse effect on our business, financial condition and results of operations. Applicable laws, regulations, interpretations, enforcement policies and accounting principles have been subject to significant changes in recent years, and may be subject to significant future changes. Additionally, federal and state regulatory agencies may change the manner in which existing regulations are applied. We cannot predict the substance or effect of pending or future legislation or regulation or changes to the application of laws and regulations to us. Future changes may have an adverse effect on our business, financial condition and results of operations. We are subject to stringent capital requirements, which could have an adverse effect on our operations. Federal regulations establish minimum capital requirements for insured depository institutions, including minimum risk-based capital and leverage ratios, and defines “capital” for calculating these ratios. The Federal Reserve requires a bank holding company to act as a source of financial and managerial strength to its subsidiary banks and to commit resources to support its subsidiary banks. Under the “source of strength” doctrine that was codified by the Dodd-Frank Act, the Federal Reserve may require a bank holding company to make capital injections into a subsidiary bank at times when the bank holding company may not be inclined to do so and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to such a subsidiary bank. Accordingly, we could be required to provide financial assistance to the Bank if it experiences financial distress. A capital injection may be required at a time when our resources are limited, and we may be required to borrow the funds or raise capital to make the required capital injection. Any new or revised standards adopted in the future may require us to maintain materially more capital, with common equity as a more predominant component, or manage the configuration of our assets and liabilities to comply with formulaic capital requirements. We may not be able to raise additional capital at all, or on terms acceptable to us. Failure to maintain capital to meet current or future regulatory requirements could have an adverse effect on our business, financial condition and results of operations.
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Table of Contents 36 Our use of third party vendors and our other ongoing third party business relationships are subject to increasing regulatory requirements and attention. We regularly use third party vendors in our business and we rely on some of these vendors for critical functions including, but not limited to, our core processing function. Third party relationships are subject to increasingly demanding regulatory requirements and attention by bank regulators. We expect our regulators to hold us responsible for deficiencies in our oversight or control of our third party vendor relationships and in the performance of the parties with which we have these relationships. As a result, if our regulators conclude that we have not exercised adequate oversight and control over our third party vendors or that such vendors have not performed adequately, we could be subject to administrative penalties or fines as well as requirements for consumer remediation, any of which could have an adverse effect on our business, financial condition and results of operations. Regulatory requirements affecting our loans secured by commercial real estate could limit our ability to leverage our capital and adversely affect our growth and profitability. The federal banking agencies have issued guidance regarding concentrations in commercial real estate lending for institutions that are deemed to have particularly high concentrations of commercial real estate loans within their lending portfolios. Under this guidance, an institution that has (i) total reported loans for construction, land development, and other land which represent 100% or more of the institution’s total risk- based capital; or (ii) total commercial real estate loans representing 300% or more of the institution’s total risk-based capital, where the outstanding balance of the institution’s commercial real estate loan portfolio has increased 50% or more during the prior 36 months, is identified as having potential commercial real estate concentration risk. An institution that is deemed to have concentrations in commercial real estate lending is expected to employ heightened levels of risk management with respect to its commercial real estate portfolios, and may be required to maintain higher levels of capital. As of December 31, 2025, commercial real estate loans represented 344.6% of our total risk-based capital and had increased 13.3 % during the prior 36 months. We cannot guarantee that any risk management practices we implement will be effective to prevent losses relating to our commercial real estate portfolio. Management has extensive experience in commercial real estate lending, and has implemented and continues to maintain heightened portfolio monitoring and reporting, and strong underwriting criteria with respect to our commercial real estate portfolio. Nevertheless, we could be required to maintain higher levels of capital as a result of our commercial real estate concentration, which could limit our growth, require us to obtain additional capital, and have an adverse effect on our business, financial condition and results of operations. Changes in accounting standards could materially impact our financial statements. From time to time, the Financial Accounting Standards Board or the SEC may change the financial accounting and reporting standards that govern the preparation of our financial statements. Such changes may result in us being subject to new or changing accounting and reporting standards. In addition, the bodies that interpret the accounting standards (such as banking regulators or outside auditors) may change their interpretations or positions on how these standards should be applied. These changes may be beyond our control, can be hard to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retrospectively, or apply an existing standard differently, also retrospectively, in each case resulting in our needing to revise or restate prior period financial statements. Climate change and related legislative and regulatory initiatives may result in operational changes and expenditures that could significantly impact our business. The current and anticipated effects of climate change are creating an increasing level of concern for the state of the global environment. The U.S. Congress has continued to propose and advance numerous legislative and regulatory initiatives seeking to mitigate the effects of climate change. The leadership of the Federal Reserve has emphasized that their supervisory charge is not to regulate climate concerns, but rather focus on climate- related risks that are faced by banking organizations of all types and sizes, specifically including physical and transition risks, and are in the process of enhancing supervisory expectations through the implementation of climate related regulations and guidelines governing banks' risk management practices, which could result in increased compliance costs and other compliance-related risks.
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Table of Contents The above measures may also result in the imposition of taxes and fees, the required purchase of emission credits, and the implementation of significant operational changes, each of which may require us to expend significant capital and incur compliance, operating, maintenance and other costs. Given the lack of empirical data on the credit and other financial risks posed by climate change, it is impossible to predict how climate change may impact our financial condition and operations; however, as a banking organization, the physical effects of climate change may present certain unique risks to us. Risks Related to an Investment in Our Common Stock We currently qualify as an “emerging growth company” and a “smaller reporting company,” and the reduced disclosures and relief from certain other significant disclosure requirements that are available to emerging growth companies and smaller reporting companies may make our common stock less attractive to investors. We are an “emerging growth company,” as defined in the federal securities laws, and we intend to take advantage of certain exemptions from various reporting requirements that apply to other public companies that are not emerging growth companies. These exemptions include not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, less extensive disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements to hold non-binding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved. We are also a “smaller reporting company,” as defined in the federal securities laws. Similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations, such as an exemption from providing selected financial data and an ability to provide simplified executive compensation information and only two years of audited financial statements. If we qualify as a smaller reporting company at the time we cease to qualify as an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Investors and securities analysts may find it more difficult to evaluate our common stock because we will rely on one or more of these exemptions. If, as a result, some investors find our common stock less attractive, there may be a less active trading market for our common stock, which could result in reductions and greater volatility in the prices of our common stock. If we fail to design, implement and maintain effective internal control over financial reporting or remediate any future material weakness in our internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of the financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Effective internal control over financial reporting is necessary for us to provide reliable reports and prevent fraud. We may not be able to identify all significant deficiencies and/or material weaknesses in our internal control over financial reporting in the future, and our failure to maintain effective internal control over financial reporting could have an adverse effect on our business, financial condition and results of operations. In the normal course of our operations, we may identify deficiencies that would have to be remediated to satisfy the SEC rules for certification of our internal control over financial reporting. A material weakness is defined by the standards issued by the Public Company Accounting Oversight Board, as a deficiency, or combination of deficiencies, in internal control over financial reporting that results in a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As a consequence, we would have to disclose in periodic reports we file with the SEC any material weakness in our internal control over financial reporting. The existence of a material weakness would preclude management from concluding that our internal control over financial reporting is effective and, when we cease to be an emerging growth company under the JOBS Act, preclude our independent registered public accounting firm from rendering their report addressing an assessment of the effectiveness of our internal control over financial reporting. In addition, disclosures of deficiencies of this type in our SEC reports could cause investors to lose confidence in our financial reporting, and may negatively affect the market price of our common stock, and could result in the delisting of our securities from the securities exchanges on which they trade. Moreover, effective internal
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Table of Contents 38 controls are necessary to produce reliable financial reports and to prevent fraud. If we have deficiencies in our disclosure controls and procedures or internal control over financial reporting, such deficiencies may adversely affect us. We may issue additional equity securities, or engage in other transactions, which could affect the priority of our common stock, which may adversely affect the market price of our common stock. Our board of directors may determine from time to time that we need to raise additional capital by issuing additional shares of our common stock or other securities. Sales of substantial amounts of our common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of our common stock. We are not restricted from issuing additional shares of common stock, including securities that are convertible into or exchangeable for, or that represent the right to receive, common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any future offerings, or the prices at which such offerings may be effected. Such offerings could be dilutive to common shareholders. We may also issue shares of preferred stock that will provide new investors with rights, preferences and privileges that are senior to, and that adversely affect, our then current common shareholders. Additionally, if we raise additional capital by making additional offerings of debt or preferred equity securities, upon liquidation, holders of our debt securities and shares of preferred stock, and lenders with respect to other borrowings, will receive distributions of our available assets prior to the holders of our common stock. Additional equity offerings may dilute the holdings of our existing shareholders or reduce the market price of our common stock, or both. Holders of our common stock are not entitled to preemptive rights or other protections against dilution. Our common stock is subordinate to our existing and future indebtedness. Shares of our common stock are equity interests and do not constitute indebtedness. As such, our common stock ranks junior to all our customer deposits and indebtedness, and other non-equity claims on us, with respect to assets available to satisfy claims. In addition, the shares of common stock rank junior to the noteholders of the $25.0 million in subordinated debt that we issued in June 2022. Our corporate governance documents, and corporate and banking laws applicable to us, could make a takeover more difficult and adversely affect the market price of our common stock. Certain provisions of our articles of incorporation and bylaws, and Virginia corporate and federal banking laws, could delay, defer, or prevent a third party from acquiring control of our organization or conducting a proxy contest, even if those events were perceived by many of our shareholders as beneficial to their interests. These provisions and regulations applicable to us: ● enable our board of directors to issue additional shares of authorized, but unissued capital stock; ● enable our board of directors to issue “blank check” preferred stock with such designations, rights and preferences as may be determined from time to time by the board; ● do not provide for cumulative voting rights; ● enable our board of directors to amend certain provisions of our bylaws without shareholder approval; ● limit the right of shareholders to call a special meeting; ● require advance notice for director nominations and other shareholder proposals; ● require prior regulatory application and approval of any transaction involving control of our organization; ● may limit the ability of the Company to enter into certain business combination transactions with affiliated shareholders, without prior board and shareholder approval; and ● may limit the ability of holders of more than 20% of our common stock from voting certain of their shares. These provisions may discourage potential acquisition proposals and could delay or prevent a change in control, including under circumstances in which our shareholders might otherwise receive a premium over the market price of our shares.
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Table of Contents 39 An investment in our common stock is not an insured deposit and is not guaranteed by the FDIC, so you could lose some or all of your investment. An investment in our common stock is not a deposit account or other obligation of the Bank and, therefore, is not insured against loss or guaranteed by the FDIC, any other deposit insurance fund or by any other governmental, public or private entity. An investment in our common stock is inherently risky for the reasons described herein. As a result, if you acquire our common stock, you could lose some or all of your investment. We currently intend to pay dividends on our common stock; however, our future ability to pay dividends is subject to restrictions. There are a number of restrictions on our ability to pay dividends. It is the policy of the Reserve Bank that bank holding companies should pay cash dividends on common stock only out of income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. The policy provides that bank holding companies should not maintain a level of cash dividends that undermines the bank holding company’s ability to serve as a source of strength to its banking subsidiaries. Our principal source of funds to pay dividends on our common stock is cash dividends that we receive from the Bank. The payment of dividends by the Bank to us is subject to certain restrictions imposed by federal banking laws, regulations and authorities. The federal banking statutes prohibit federally insured banks from making any capital distributions (including a dividend payment) if, after making the distribution, the institution would be "under capitalized" as defined by statute. In addition, the relevant federal regulatory agencies have authority to prohibit an insured bank from engaging in an unsafe or unsound practice, as determined by the agency, in conducting an activity. The payment of dividends could be deemed to constitute such an unsafe or unsound practice, depending on the financial condition of the Bank. Regulatory authorities could impose administratively stricter limitations on the ability of the Bank to pay dividends to us if such limits were deemed appropriate to preserve certain capital adequacy requirements. While the Company’s common stock is currently listed on the Nasdaq Capital Market, it has less liquidity than stocks for larger companies listed on national securities exchanges. The trading volume in the Company’s common stock on the Nasdaq Capital Market has been relatively low when compared with larger companies listed on national securities exchanges. There is no assurance that a more active and liquid trading market for the common stock will exist in the future. Consequently, shareholders may not be able to sell a substantial number of shares for the same price at which shareholders could sell a smaller number of shares. In addition, the Company cannot predict the effect, if any, that future sales of its common stock in the market, or the availability of shares of common stock for sale in the market, will have on the market price of the common stock. Sales of substantial amounts of common stock in the market, or the potential for large amounts of sales in the market, could cause the price of the Company’s common stock to decline, or reduce the Company’s ability to raise capital through future sales of common stock. Moreover, the overall market and the price of our common stock may experience volatility due to this lack of liquidity. The market price for our common stock has fluctuated during the twelve months ended December 31, 2025, ranging between $21.37 and $14.19 per share. General risk factors If we are not able to continue our historical levels of growth, we may not be able to maintain our historical revenue trends. Since inception, we have focused on organic growth to achieve our past levels of revenue growth. We may not be able to sustain our historical rate of growth or may not be able to grow at all. Various factors, such as economic conditions, regulatory and other governmental concerns, and competition, may impede our business development efforts. Further, we may be unable to attract and retain experienced bankers, which could adversely affect our organic growth. If we are not able to continue our historical levels of growth, we may not be able to maintain our historical revenue trends.
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Table of Contents 40 In addition, the Company periodically evaluates acquisition opportunities as an additional means to achieve growth. While we have not made any acquisitions to date, we may do so in the future. Should we consummate an acquisition, we can provide no assurance the transaction will be approved. Specifically, any enhanced regulatory scrutiny of bank mergers and acquisitions and revision of the framework for merger application review may adversely affect the marketplace for such transactions, could result in future applications being delayed, impeded or restricted in certain respects. Scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to the Company’s environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks. We face scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance (“ESG”) practices and disclosure. Investor advocacy groups, investment funds and influential investors may also focus on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights. Increased ESG-related compliance costs for the Company as well as among our suppliers, vendors and various other parties within our supply chain could result in increases to our overall operational costs. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact the Company’s reputation, ability to do business with certain partners, access to capital, and our stock price. New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure. We are dependent on our management team and key employees. We believe that our growth and future success will depend on the retention of our management team and key employees. Our management team and other key employees, including those who conduct our loan origination and other business development activities, have significant industry experience. We cannot ensure that we will be able to retain the services of any members of our management team or other key employees. Though we have employment agreements in place with certain members of our management team they may still elect to leave at any time. The loss of any of our management team or our key employees could adversely affect our ability to execute our business strategy, and we may not be able to find adequate replacements on a timely basis, or at all. Our future success also depends on our continuing ability to attract, develop, motivate and retain key employees. Qualified individuals are in high demand, and we may incur significant costs to attract and retain them. Because the market for qualified individuals is highly competitive, we may not be able to attract and retain qualified officers or candidates. Failure to attract and retain a qualified management team and qualified key employees could have an adverse effect on our business, financial condition and results of operations. The development and use of Artificial Intelligence (“AI”) presents risks and challenges that may adversely impact the Company’s business. The Company or its third-party vendors, clients, or counterparties may develop or incorporate AI technology in certain business processes, services, or products. The development and use of AI presents a number of risks and challenges to the Company’s business. The legal and regulatory environment relating to AI is uncertain and rapidly evolving, and includes regulatory schemes targeted specifically at AI as well as provisions in intellectual property, privacy, consumer protection, employment, and other laws applicable to the use of AI. These evolving laws and regulations could require changes in the Company’s implementation of AI technology and increase the Company’s compliance costs and the risk of non-compliance. AI models, particularly generative AI models, may produce outputs or take actions that are incorrect, that reflect biases included in the data on which they are trained, that result in the release of private, confidential, or proprietary information, that infringe on the intellectual property rights of others, or that are otherwise harmful. In addition, the complexity of many AI models makes it difficult to understand why they are generating particular outputs. This limited transparency increases the challenges associated with assessing the proper operation of AI models, understanding and monitoring the capabilities of the AI models, reducing erroneous outputs, eliminating bias, and complying with regulations that require documentation or explanation of the basis on which decisions are made. Further, the Company may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models and the effectiveness of the steps these third parties have taken to limit the risks associated
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Table of Contents 41 with the outputs of their models, matters over which the Company may have limited visibility. Any of these risks could expose the Company to liability or adverse legal or regulatory consequences and harm the Company’s reputation and the public perception of its business or the effectiveness of its security measures. We are subject to the potential adverse effects of a U.S. federal government shutdown. A prolonged or repeated shutdown of the U.S. federal government could adversely affect our business, financial condition, liquidity, and results of operations. Funding gaps or lapses in federal appropriations may disrupt the operations of government agencies that provide critical economic data, administer regulatory functions, or directly support our customers and counterparties. During a shutdown, federal agencies such as the Internal Revenue Service, Small Business Administration, and various supervisory bodies may suspend or significantly curtail their activities, which can delay loan originations, hinder verification processes, impede regulatory approvals, and reduce the availability of government-guaranteed lending programs. A shutdown may also impair the financial capacity of borrowers who depend on federal salaries, contracts, reimbursements, or benefit programs, including government employees, federal contractors, and recipients of government-funded services. Reduced or delayed income to these borrowers could increase delinquencies, reduce loan demand, negatively affect deposit inflows, and increase our credit risk exposure. In addition, disruptions to federal economic data releases or fiscal operations may create volatility in financial markets, affecting interest rates, liquidity conditions, and the valuation of securities in our investment portfolio. The duration and economic impact of any government shutdown are inherently uncertain, and any such event could, individually or in the aggregate, have a material adverse effect on our business, financial condition and results of operations. Item 1B. Unresolved Staff Comments None. Item 1C. Cybersecurity Cybersecurity risk is a significant operational risk facing our business. Cybersecurity risks result from intentional malicious attacks or unintentional acts that result in an impact to the confidentiality, integrity or availability of our clients’ or third parties' operations, systems or data. Cybersecurity risk management is an integral element of the Company’s overall risk management strategy. Management assesses and manages material risks from cybersecurity threats through designated management positions and committees that are responsible for overseeing technology and information security. Our Chief Technology and Information Security Officer ensures the coordinated and consistent implementation of risk management initiatives and strategies on a frequent basis with our Chief Operating Officer and Chief Financial Officer. Results of the information and cybersecurity efforts and recommendations are reported by the Chief Technology and Information Security Officer to the IT Steering Committee, Risk Management Committee and Board of Directors no less than quarterly. The Audit Committee is primarily responsible for overseeing risk management, including risks associated with cybersecurity and potential threats thereto. Our management is directly involved in assessing and managing cybersecurity risks. The Company uses the National Institute of Standards and Technology Cybersecurity framework (“NIST CF”) for improving critical infrastructure by measuring and evaluating the effectiveness of information and cybersecurity controls. We utilize Payment Card Industry Data Security Standards, and other applicable standards, laws, and regulations. We have various processes for risk assessment, vulnerability management, threat management, independent penetration testing, security architecture, access management, network security management, and security event monitoring and security awareness. Certain processes involve the use of third parties. Risk Assessment Process. On an annual basis, a risk assessment and maturity analysis is performed for the Company based on the NIST CSF Framework. The risk assessment takes into consideration a combination of risks related to the
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Table of Contents identification, prevention, detection, response, and recovery from cyber events. The risk assessment considers the inherent risk and controls implemented at the Company and measures the residual risk to ensure it is within the Company’s risk tolerance. Vulnerability Management Process. Regular internal and external vulnerability scanning is conducted at varying intervals to proactively identify configuration weaknesses, missing patches and other vulnerabilities in the Company’s information systems environment. Identified vulnerabilities are classified and scored based on severity, known exploitation or malware impacting the vulnerability, and the age in the environment. We prioritize the patching of critical and severe vulnerabilities. Threat Management Process. In addition to the regular and routine vulnerability scanning, the Company relies on various threat intelligence feeds for the identification and awareness of potential threats that could impact the Company’s environment. Using third party vendors to assist, threats are integrated into our monitoring solutions, email filtering, web-browsing controls, malware detection, and perimeter firewalls to proactively prevent, detect and deter threats with the capability to impact the Company environment. We continually enhance the cybersecurity capabilities based on evolving threats. We have adopted an incident response plan that applies in the event of a cybersecurity threat or incident. Independent Penetration Testing. On an annual basis, we engage with an independent third-party provider to perform various penetration tests of the environment. The penetration tests look at our customer facing applications, how we respond to social engineering activities, overall external attack surface and internal vulnerabilities. Issues identified from the penetration tests are tracked and escalated to ensure appropriate remediation occurs before closure. Security Architecture. To ensure the secure configuration, design, and implementation of our internally hosted and third-party hosted systems, security architecture reviews are conducted. The architecture reviews entail utilizing best practices and the involvement of third party experts, as well as internal Information Security personnel and third-party vendor contacts to ensure the implementation is meeting policies, is configured with strong security practices, and utilizes appropriate access controls. Access Management. Utilizing a least privilege, need-to-know access methodology, access is controlled through a centralized user access management function responsible for the provisioning, transfer and de- provisioning of users’ access. Access management also performs routine reviews of application and systems access to ensure access remains appropriate. For third-party hosted environments, access management works with security architecture to ensure single sign-on controls are employed or additional factors are utilized to prevent unauthorized access to these environments. Network Security Management. The security of the Company’s network infrastructure is maintained via • internal and perimeter firewalls with intrusion detection, • the use of some network segmentation to isolate access to certain applications and systems, • virtual local area networks, • email filtering to identify spam, malware, and phishing messages in received email messages, • malware detection, • data loss prevention controls to prevent the theft, or mass exfiltration of data, • Virtual Private Networks to control remote access to our network, • intrusion detection capabilities, • network access controls are in place to prevent unauthorized assets from connecting to the network, and • web filtering. Security Event Monitoring. The Chief Technology and Information Security Officer and Information Security personnel work together as centralized security monitoring team and are responsible for the response to alerts generated from a consolidated log collection system. Log collection occurs from various assets and hosted environments. The 24 x 7 monitoring is third-party provided security information and event management tool, and enables threat identification,
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Table of Contents 43 detects suspicious activity in the environment using a nationally recognized, third-party framework, performs user behavior analytics, and endpoint detection and response. Alerts are investigated to ascertain whether a cyber-incident is occurring or not. Security Awareness. Quarterly training is conducted for continuing education for all employees and monthly phishing tests are administered. We also email and post articles on our intranet of common attack schemes for our employees awareness. An annual cyber report is presented to the Board of Directors with monthly cyber reports. Our Vendor Management Policy contains policies and procedures to follow when utilizing external third- parties and due diligence is performed over new vendors prior to engaging in services. Vendor Management ensures key risk components are mitigated based on acceptable Company standards. Any third parties used in any cybersecurity processes are vetted through our vendor management process. Risks from Cybersecurity threats or previous incidents have not materially affected business strategy, results of operations, or financial condition. A vendor management report is presented to the Board of Directors on an annual basis by the Chief Technology and Information Security Officer. Item 2. Properties The Company is headquartered in Reston, Virginia and conducts business through its headquarters office and eight full-service bank branches. The following table sets forth information regarding our offices, which are all leased. Location Year Leased Headquarters: 1943 Isaac Newton Sq. E, Suites 100, 125, 200, and 220 Reston, VA 20190 20111 Other Properties: Reston Branch 1943 Isaac Newton Sq. E, Ste. 150 Reston, VA 20190 2011 Alexandria Branch 700 South Washington St. Suites 120 and 230 Alexandria, VA 22314 2013 Arlington Branch 2300 Wilson Blvd., Ste. 120 Arlington, VA 22201 2014 Washington, D.C. Branch 1625 K St., NW, Ste. 1050 Washington, DC 20006 2023 Loudoun Branch 540 Fort Evans Road NE, Suite 100 Leesburg, VA 20176 2024 Prince William Branch 12701 Marblestone Dr., Ste. 150 Woodbridge, VA 22192 2021 Rockville Branch 11 N. Washington St., Ste. 100 Rockville, MD 20850 2010 Tysons Branch 8229 Boone Blvd., Ste. 102 Tysons, VA 22182 2016 (1) Suite 200 of the Company’s headquarters was leased starting in 2016.
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Table of Contents 44 We believe that the current facilities are adequate to meet our present and foreseeable needs, subject to possible future expansion. We believe that upon expiration of each lease we will be able to extend the lease on satisfactory terms or relocate to another acceptable location. Item 3. Legal Proceedings In the ordinary course of our operations, the Company and its subsidiary are parties to various claims and lawsuits. Currently, we are not party to any material legal proceedings, and no such proceedings are, to management’s knowledge, threatened against us. Although the ultimate outcome of legal proceedings cannot be ascertained at this time, it is the opinion of management that the liabilities (if any) resulting from such legal proceedings will not have an adverse effect on the Company’s business, including its consolidated financial position, results of operations, or cash flows. Item 4. Mine Safety Disclosures Not applicable. Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Holders of Record Our common stock is currently listed on the Nasdaq Capital Market under the symbol "JMSB." As of February 18, 2026, there were 434 holders of record of our common stock and approximately 3,506 total beneficial shareholders. Dividends On January 27, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.09 per share on the Company’s common stock. The dividend is payable on March 4, 2026 to shareholders of record at the close of business on February 11, 2026. The declaration of future dividends by the Company is subject to the discretion of our Board, and we can provide no assurance that we will continue to declare dividends. Holders of our common stock are only entitled to receive dividends when, as and if declared by the Board of Directors out of funds legally available for dividends. As the Company is a bank holding company and does not engage directly in business activities of a material nature, its ability to pay dividends depends, in large part, upon the receipt of dividends from the Bank. Any future determination relating to our dividend policy will be made by the Board of Directors and will depend on a number of factors, including general and economic conditions, industry standards, our financial condition and operating results, our available cash and current and anticipated cash needs, capital requirements, our ability to service debt obligations senior to our common stock, banking regulations, contractual, legal, tax and regulatory restrictions, and limitations on the payment of dividends by the Company to its shareholders or by the Bank, and such other factors as the Board of Directors may deem relevant. A discussion of applicable regulatory restrictions on dividends by the Company and the Bank is provided in Item 1 (“Business”) under “Supervision and Regulation – The Company – Limits on Dividends and Other Payments.” On August 18, 2021, the Company’s Board of Directors approved a share repurchase plan (the “Plan”) of up to 700,000 shares of its common stock, par value of $0.01 per share, or approximately 5% of outstanding shares of common stock. As announced in the Current Report of Form 8-K filed with the SEC on August 19, 2025, the Plan, which was set to expire August 31, 2025, was extended to August 31, 2026.
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Table of Contents 45 The following table reflects share repurchase activity during the three months ended December 31, 2025: Total Number ofSharesRepurchased Average PricePaid PerShare(1) Total Number of SharesPurchasedas Part of Publicly AnnouncedPlan Maximum Number of Shares thatMay Yet Be Purchased Under thePlan October 2025 9,000 $ 19.00 9,000 592,894 November 2025 31,102 18.85 31,102 561,792 December 2025 435 20.26 435 561,357 40,537 $ 18.90 40,537 (1) The average price paid per share is calculated on a trade date basis for all open market transactions and excludes commissions and other transaction expenses. Item 6. [Reserved] Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of the consolidated financial condition and results of operations of the Company and its subsidiary should be read in conjunction with the consolidated financial statements and related notes presented in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. Historical results of operations and the percentage relationships among any amounts included, and any trends that may appear, may not be indicative of results of operations or trends in operations for any future periods. Use of Non-GAAP Financial Measures This discussion and analysis contains financial information determined by methods other than in accordance with GAAP. Management believes that the supplemental non-GAAP information provides a better comparison of period-to-period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. Non-GAAP measures used in this report consist of tax-equivalent net interest income and net interest margin. These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Where the non-GAAP financial measure is used, the comparable GAAP financial measure, as well as reconciliation to that comparable GAAP financial measure, a statement of the company’s reasons for utilizing the non-GAAP financial measure, can be found within this discussion and analysis. Overview John Marshall Bancorp, Inc. is a bank holding company headquartered in Reston, Virginia primarily serving the Washington, D.C. metropolitan area. The material business operations of the Company are performed through its only subsidiary, John Marshall Bank. As a result, the discussion and analysis within this section primarily relate to activities conducted at the Bank. As with most community banks, the Bank derives a significant portion of its income from interest received on loans and investments. The Bank’s primary source of funding is deposits, both interest-bearing and non- interest-bearing. To account for credit risk inherent in all loans, the Bank maintains an allowance for loan credit losses to absorb lifetime losses on existing loans. The Bank establishes and maintains this allowance by recording a provision for loan credit losses against earnings. In addition to net interest income, the Bank also generates income through service charges on deposits, insurance commission income, merchant services fee income, swap fee income and gain on sale of the guaranteed portion of U.S. Small Business Administration (“SBA”) 7(a) loans. Net income for the year ended December 31, 2025 was $21.2 million ($1.49 per diluted common share) compared to $17.1 million ($1.20 per diluted common share) for the year ended December 31, 2024, representing a 24.0% and 24.2% increase in net income and earnings per diluted common share, respectively. The increase during 2025 was driven by a $9.5 million increase in net interest income, which was partially offset by a $2.1 million increase in provision for credit losses and a $1.8 million increase in non-interest expense. The increase in net interest income was driven primarily by the decrease in
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Table of Contents 46 rates of interest-bearing deposits coupled with increases in average balances and yields of the loan portfolio. The net interest margin for the twelve months ended December 31, 2025 was 2.68% as compared to 2.28% for the same period in the prior year. An improvement in net interest margin during the current year was attributable to management’s proactive approach in repricing deposits concurrently with each of the three federal funds rate cuts totaling 75 basis points since September 2025 through December 2025. Higher provision for credit losses during the twelve months ended December 31, 2025 was primarily a result of the growth in the loan portfolio and the related changes in the portfolio mix, coupled with the impact of the charge-off of the unguaranteed portion of one commercial business SBA 7(a) loan during the fourth quarter of 2025 and management’s assessment of the qualitative adjustments reflecting changing local economic conditions monitored throughout the year. An increase in non-interest expense during the current year as compared to the prior year was primarily attributable to an increase in salaries and employee benefits, which was mainly associated with the higher headcount within the Company and an increase in incentive compensation tied to the Company’s operating performance. The investments made to expand the headcount during the current year are expected to contribute to the future growth of the Company and subsequent increases in revenues. The increase in incentive compensation reflected the 24% year-over-year increase in net income and the fact that the Company’s operating performance for 2025 exceeded the budget and strategic plan. The results for 2025 reflect the following: ● At December 31, 2025, total assets were $2.33 billion, a 4.4% increase compared to $2.23 billion at December 31, 2024. ● Total loans, net of unearned income, increased by $103.2 million or 5.5% to $1.98 billion at December 31, 2025 compared to $1.87 billion at December 31, 2024. The increase in loans from December 31, 2025, was primarily attributable to growth in construction & development loans and residential mortgage loans, partially offset by a decline in commercial owner-occupied real estate loans. All other portfolios remained relatively unchanged during the most recent year. ● Deposits increased by $79.9 million or 4.2% to $1.97 billion at December 31, 2025 compared to $1.89 billion at December 31, 2024. During the year, interest-bearing deposits increased by $80.4 million or 5.5%, while non-interest bearing deposits remained relatively unchanged. Growth in interest-bearing deposits during the current year was driven by core time deposits, interest-bearing demand deposits and money market accounts, which increased by $24.5 million, $24.2 million and $16.0 million, respectively. ● Net interest income for 2025 increased $9.5 million or 18.6% compared to 2024. The declining interest rate environment during the current year resulted in a $6.4 million decrease in interest expense, while interest income grew by $3.1 million. ● The net interest margin for 2025 was 2.68% compared to 2.28% for 2024. An expansion of the net interest margin for the current year reflects the lower rate paid on interest-bearing liabilities in combination with a higher yield on interest-earning assets. As compared to the prior year, the rate paid on interest-bearing liabilities declined by 41 basis points, while the yield on interest-earning assets rose 10 basis points, resulting in a net interest margin expansion of 40 basis points. ● The provision for credit losses for 2025 amounted to a charge of $1.7 million as compared to a $0.4 million recovery of a provision for credit losses for 2024. The provision for credit losses for 2025 was mainly a reflection of growth of the loan portfolio and the related changes in the portfolio mix along with the management’s assessment of the qualitative adjustments reflecting changing economic conditions and portfolio concentrations monitored throughout the year. ● Non-interest income for 2025 decreased $0.2 million or 8.7% to $2.1 million compared to $2.3 million for 2024, driven by a $198 thousand decrease in the recorded gain on sale of the government guaranteed portion of the SBA 7(a) loans due to lower sale activity along with the $88 thousand decrease in insurance commissions. ● Non-interest expense increased $1.8 million or 5.5% during the twelve months ended December 31, 2025 compared to the same period in 2024 primarily resulting from increases in salaries and employee benefits and other expense, predominantly due to higher data processing service fees and professional fees. The $1.5 million or 7.7% increase in salaries and employee benefits was mainly associated with the higher headcount within the Company and an increase in incentive compensation tied to the Company’s operating performance. The investments made to expand the headcount during the current year are expected to contribute to the future growth
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Table of Contents 47 of the Company and subsequent increases in revenues. The increase in incentive compensation reflected the 24% year-over-year increase in net income and the fact that the Company’s operating performance for 2025 exceeded the budget and strategic plan. ● Return on average assets (“ROAA”) for the year was 0.93% and return on average equity (“ROAE”) was 8.26% compared to 0.76% and 7.16%, respectively, for the prior year. ● For the year ended December 31, 2025, the efficiency ratio was 53.6% compared to 59.7% for 2024. The improvement in the efficiency ratio was due to a 17.5% growth in total revenue, which outpaced a 5.5% increase in non-interest expense over the period. At December 31, 2025, the allowance for credit losses was $19.8 million or 1.00% of outstanding loans compared to $18.7 million or 1.00% of outstanding loans at the end of 2024. The increase in the allowance during the year compared to the previous year was primarily driven by the growth of the loan portfolio along with management’s adjustments of qualitative factors related to economy and loan portfolio concentrations. As of December 31, 2025, the Company had no non-accrual loans and no other real estate owned assets. FHLB advances remained unchanged at $56.0 million as of December 31, 2025 compared to December 31, 2024. The three FHLB advances have a weighted average fixed interest rate of 3.99%. In addition to outstanding FHLB advances, total borrowings as of December 31, 2025 included subordinated debt totaling $24.9 million. The Company’s balance sheet remains highly liquid. The Company’s liquidity position, defined as the sum of cash, unencumbered securities and available secured borrowing capacity, totaled $827.0 million as of December 31, 2025 compared to $727.3 million as of December 31, 2024, respectively. In addition to available secured borrowing capacity, the Bank had available federal funds lines of $110.0 million at December 31, 2025. At December 31, 2025, total cash and cash equivalents were $130.0 million, an increase of $7.5 million or 6.1% compared to December 31, 2024. Shareholders’ equity increased $19.0 million or 7.7% to $265.6 million at December 31, 2025 compared to $246.6 million at December 31, 2024. Book value per share was $18.69 as of December 31, 2025 compared to $17.28 as of December 31, 2024, an increase of 8.2%. The ratio of common equity to assets increased to 12.2% at December 31, 2025, compared to 11.9% at December 31, 2024. At December 31, 2025, the Company had a total risk-based capital ratio of 16.3%, a common equity tier 1 risk-based capital ratio of 15.2%, a tier 1 risk-based capital ratio of 15.2%, and a tier 1 leverage ratio of 12.5%, all above the “well- capitalized” regulatory requirement levels.
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Table of Contents 48 Selected Financial Data The following table contains selected historical consolidated financial data as of the dates and for the periods shown. The selected balance sheet data as of December 31, 2025 and 2024 and the selected income statement data for the years ended December 31, 2025 and 2024 have been derived from our audited consolidated financial statements included elsewhere in this Form 10-K and should be read in conjunction with the other information contained in this Form 10-K, including the information contained within this “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8 – Financial Statements and Supplementary Data.” As of or for the Twelve Months Ended (Dollars in thousands, except per share data) December 31, 2025 December 31, 2024 Balance Sheet Data: Loans, net of unearned income $ 1,975,360 $ 1,872,173 Allowance for loan credit losses 19,805 18,715 Total assets 2,332,550 2,234,947 Deposits 1,972,285 1,892,415 Shareholders’ equity 265,638 246,614 Asset Quality Data: Net (charge-offs) recoveries to average total loans, net of unearned income (0.02)% 0.00% Allowance for loan credit losses to nonperforming assets 18.3x 1.9x Allowance for loan credit losses to total gross loans net of unearned income 1.00% 1.00% Non-performing assets to total assets 0.05% 0.45% Non-performing loans to total loans 0.05% 0.53% Capital Ratios (Bank level): Equity-to-total assets ratio 12.2% 11.9% Total risk-based capital ratio 16.3% 16.2% Tier 1 risk-based capital ratio 15.2% 15.2% Common equity tier 1 ratio 15.2% 15.2% Leverage ratio 12.5% 12.4% Income Statement Data: Interest and dividend income $ 113,257 $ 110,133 Interest expense 52,693 59,086 Net interest income $ 60,564 $ 51,047 Provision for (recovery of) credit losses 1,688 (370) Non-interest income 2,074 2,271 Non-interest expense 33,567 31,809 Income before taxes $ 27,383 $ 21,879 Income tax expense 6,150 4,758 Net income $ 21,233 $ 17,121 Per Share Data and Shares Outstanding: Weighted average common shares (basic) 14,189,522 14,172,166 Weighted average common shares (diluted) 14,194,603 14,206,109 Common shares outstanding 14,214,603 14,269,469 Earnings per share, basic $ 1.49 $ 1.20 Earnings per share, diluted $ 1.49 $ 1.20 Book value per share $ 18.69 $ 17.28 Performance Ratios: Return on average assets(1) 0.93% 0.76% Return on average equity (2) 8.26% 7.16% Net interest margin 2.68% 2.28% Non-interest expense to average assets(3) 1.48% 1.41% Efficiency ratio(4) 53.6% 59.7%
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Table of Contents (1) ROAA is calculated by dividing net income by year-to-date average assets. (2) ROAE is calculated by dividing net income by year-to-date average equity. (3) Non-interest expense to average assets is calculated by dividing non-interest expense by average assets. (4) The efficiency ratio is calculated by dividing non-interest expense by the sum of net interest income and non-interest income. Critical Accounting Policies and Estimates The Company’s accounting and reporting policies conform to GAAP, as well as general practices within the banking industry. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements may reflect different estimates, assumptions, and judgments. Certain policies inherently rely more extensively on the use of estimates, assumptions, and judgments and as such may have a greater possibility of producing results that could be materially different than originally reported. The following is a discussion of a critical accounting policy and significant estimate that require us to make complex and subjective judgments. Additional information about this policy can be found in Note 1 of our consolidated financial statements included in Item 8 of this Form 10-K. Allowance for Loan Credit Losses The allowance for loan credit losses represents an amount which, in management's judgment, is adequate to absorb the lifetime expected losses that may be sustained on outstanding loans at the balance sheet date based on the evaluation of the size and current risk characteristics of the loan portfolio, past events, current conditions, reasonable and supportable forecasts of future economic conditions, and prepayment experience. The allowance for loan credit losses is measured and recorded upon the initial recognition of a financial asset. The allowance for loan credit losses is reduced by charge-offs, net of recoveries of previous charge-offs, and is increased or decreased by a provision for (or recovery of) credit losses, which is recorded in the Consolidated Statements of Income. The Company utilizes a discounted cash flow model to estimate its current expected credit losses. For the purposes of calculating its quantitative reserves, the Company has segmented its loan portfolio based on loans which share similar risk characteristics. Within the quantitative portion of the calculation, the Company utilizes at least one or a combination of economic variables, such as unemployment rates, home price indices, and/or gross domestic product, to adjust its loss rates over a reasonable and supportable forecast period of one year. A straight-line reversion technique is used for the following four quarters, at which time the Company reverts to historical averages. To further adjust the allowance for credit losses for expected losses not already included within the quantitative component of the calculation, the Company may consider qualitative factors, including but not limited to: variability in the economic forecast, changes in volume and severity of adversely classified loans, changes in concentrations of loan portfolio, changes in the nature and volume of the loan segments, factors related to credit administration, and other idiosyncratic risks not embedded in the data used in the model. Loans that do not share similar risk characteristics are evaluated on an individual basis. The Company designates individually evaluated loans on nonaccrual status as collateral dependent loans, as well as other loans that management of the Company designates as having higher risk and loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses. Under the current expected credit loss model (“CECL,”) for collateral dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required. Accounting Pronouncements Adopted During the Current Year For further information regarding accounting pronouncements adopted during the current year, refer to Note 1 — Nature of Business and Summary of Significant Accounting Policy in the Notes to the Consolidated Financial Statements.
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Table of Contents 50 Pending Accounting Pronouncements Refer to Note 1— Nature of Business and Summary of Significant Accounting Policy in the Notes to the Consolidated Financial Statements for more details regarding pending accounting pronouncements. Results of Operations – Years Ended December 31, 2025 and December 31, 2024 Net Interest Income and Net Interest Margin Net interest income is the excess of interest earned on loans and investments over the interest paid on deposits and borrowings, and is the Company’s primary revenue source. Net interest income is affected by overall balance sheet growth, changes in interest rates and changes in the mix of investments, loans, deposits and borrowings. The Company’s interest-earning assets include loans, investment securities and interest-bearing deposits in other banks, while our interest-bearing liabilities include interest-bearing deposits and borrowings. Net interest margin represents the difference between interest received and interest paid as a percentage of average total interest-earning assets. Management seeks to maximize net interest income without exposing the Company to an excessive level of interest rate risk through management’s asset and liability management policies. Interest rate risk is managed by monitoring the pricing, maturity, and repricing options of all classes of interest-earning assets and interest-bearing liabilities. Management expects net interest income and net interest margin to fluctuate based on changes in interest rates and changes in the amount and composition of the Company’s interest-earning assets and interest-bearing liabilities.
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Table of Contents 51 The following table presents the average balance for each principal balance sheet category, and the amount of interest income or expense associated with that category, as well as corresponding average yields earned and rates paid for the years ended December 31, 2025 and 2024. Average Balance Sheets and Interest Rates on Interest-Earning Assets and Interest-Bearing Liabilities For the Year Ended For the Year EndedDecember 31, 2025 December 31, 2024 Interest Income / Average Interest Income / Average (Dollars in thousands) Average Balance Expense Rate Average Balance Expense Rate Assets: Securities: Taxable $ 224,275 $ 4,682 2.09 % $ 253,421 $ 5,083 2.01 % Tax-exempt(1) 1,378 45 3.27 % 1,379 45 3.26 % Total securities $ 225,653 $ 4,727 2.09 % $ 254,800 $ 5,128 2.01 % Loans, net of unearnedincome(2): Taxable 1,881,636 102,086 5.43 % 1,807,547 95,770 5.30 % Tax-exempt(1) 17,428 716 4.11 % 18,389 712 3.87 % Total loans, net ofunearned income $ 1,899,064 $ 102,802 5.41 % $ 1,825,936 $ 96,482 5.28 % Interest-bearing depositsin other banks $ 135,714 $ 5,888 4.34 % $ 162,165 $ 8,682 5.35 % Total interest-earningassets $ 2,260,431 $ 113,417 5.01 % $ 2,242,901 $ 110,292 4.91 % Total non-interest earningassets 13,288 15,630 Total assets $ 2,273,719 $ 2,258,531 Liabilities &Shareholders’ Equity: Interest-bearing deposits: NOW accounts $ 353,556 $ 8,115 2.30 % $ 322,028 $ 8,848 2.75 % Money market accounts 352,226 9,383 2.66 % 342,057 10,707 3.13 % Savings accounts 41,227 422 1.02 % 48,466 664 1.37 % Time deposits 733,433 31,107 4.24 % 757,494 34,273 4.52 % Total interest-bearingdeposits $ 1,480,442 $ 49,027 3.31 % $ 1,470,045 $ 54,492 3.71 % Federal funds purchased 46 2 4.35 % 28 2 7.14 % Subordinated debt 24,831 1,396 5.62 % 24,747 1,396 5.64 % Federal Reserve Bankborrowings — — N/M 51,314 2,451 4.78 % Federal Home Loan Bankadvances 56,000 2,268 4.05 % 18,361 745 4.06 % Total interest-bearingliabilities $ 1,561,319 $ 52,693 3.37 % $ 1,564,495 $ 59,086 3.78 % Demand deposits 438,171 437,694 Other liabilities 17,322 17,261 Total liabilities $ 2,016,812 $ 2,019,450 Shareholders’ equity $ 256,907 $ 239,081 Total liabilities andshareholders’ equity $ 2,273,719 $ 2,258,531 Tax-equivalent net interestincome and spread (Non-GAAP)(1) $ 60,724 1.64 % $ 51,206 1.13 %Less: tax-equivalentadjustment 160 159Net interest income andspread (GAAP) $ 60,564 1.64 % $ 51,047 1.13 % Interest income/earningsassets 5.01 % 4.91 %Interest expense/earningassets 2.33 % 2.63 % Net interest margin 2.68 % 2.28 % Tax-equivalent interestincome/earnings assets(Non-GAAP)(1) 5.01 % 4.91 %Interest expense/earningassets 2.33 % 2.63 %Tax-equivalent net interestmargin (Non-GAAP)(3) 2.68 % 2.28 % (1) Income and yields for all periods presented are reported on a tax-equivalent basis using the federal statutory tax rate of 21%. (2) The Company did not have any loans on non-accrual as of December 31, 2025 or December 31, 2024. (3) Tax-equivalent net interest margin adjusts for differences in tax treatment of interest income sources. The entire tax- equivalent adjustment is attributable to interest income on earning assets. Interest expense and the related cost of interest-bearing liabilities and cost of funds ratios are not affected by the tax-equivalent components.
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Table of Contents 52 Net interest margin as presented above is calculated by dividing tax-equivalent net interest income by total average earning assets. Net interest income, on a tax equivalent basis, is a financial measure that the Company believes provides a more accurate picture of the interest margin for comparative purposes. Tax- equivalent net interest income is calculated by adding the tax benefit on certain securities and loans, whose interest is tax-exempt, to total interest income then subtracting total interest expense. The following table, “Tax-Equivalent Net Interest Income,” reconciles net interest income to tax-equivalent net interest income, which is a non-GAAP measure. Tax-Equivalent Net Interest Income Year endedDecember 31, (Dollars in thousands) 2025 2024 GAAP Financial Measurements: Interest Income - Loans $ 102,651 $ 96,332 Interest Income - Securities and Other Interest-Earning Assets 10,606 13,801 Interest Expense - Deposits 49,027 54,492 Interest Expense - Borrowings 3,666 4,594 Total Net Interest Income (GAAP) $ 60,564 $ 51,047 Non-GAAP Financial Measurements: Add: Tax Benefit on Tax-Exempt Interest Income - Loans 151 150 Add: Tax Benefit on Tax-Exempt Interest Income - Securities 9 9 Total Tax Benefit on Tax-Exempt Interest Income (1) $ 160 $ 159 Tax-Equivalent Net Interest Income (Non-GAAP) $ 60,724 $ 51,206 (1) Tax benefit was calculated using the federal statutory tax rate of 21%. Net interest income increased $9.5 million or 18.6% on a fully tax-equivalent basis for the year ended December 31, 2025. The net interest margin for the year ended December 31, 2025 was 2.68% as compared to 2.28% for the same period in the prior year. These increases in net interest income and net interest margin were driven primarily by the decrease in rates of interest-bearing deposits coupled with increases in average balances and yields of the loan portfolio. The cost of interest-bearing liabilities was 3.37% for the year ended December 31, 2025 compared to 3.78% for the year ended December 31, 2024. The decrease in the cost of interest-bearing liabilities was primarily due to a 40 basis points decrease in the cost of interest-bearing deposits as a result of the repricing of the Company’s time deposits coupled with a decrease in rates offered on money market, interest-bearing demand deposits and savings deposit accounts since the fourth quarter of 2024. The yield on interest-earning assets was 5.01% for the twelve months ended December 31, 2025 compared to 4.91% for the same period in 2024. The increase in yield on interest-earning assets was primarily due to a 13 basis point increase in loan yield and an eight basis point increase in securities yield, as a result of higher prevailing interest rates as assets repriced subsequent to the fourth quarter of 2024. Average loans increased $73.1 million between the twelve months ended December 31, 2025 and 2024, which was primarily attributable to origination volume in the construction & development and residential mortgage loan portfolios subsequent to December 31, 2024. These positive contributing factors to the year-over-year increase in the net interest margin were partially offset by lower yields and average balances of interest-bearing deposits in other banks. The following table presents the effects of changing rates and volumes on net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column
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Table of Contents 53 represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated to volume. Rate/Volume Analysis For the Year Ended December 31, 2025 and 2024 Increase(Decrease) Due to (Dollars in thousands) Volume Rate Total Increase (Decrease) Interest-earning Assets: Securities: Taxable $ (603) $ 202 $ (401) Tax-exempt(1) — — — Total securities $ (603) $ 202 $ (401) Loans, net of unearned income: Taxable 4,019 2,297 6,316 Tax-exempt(1) (39) 43 4 Total loans, net of unearned income(2) $ 3,980 $ 2,340 $ 6,320 Interest-bearing deposits in other banks $ (1,146) $ (1,648) $ (2,794) Total interest-earning assets $ 2,231 $ 894 $ 3,125 Interest-bearing Liabilities: Interest-bearing deposits: NOW accounts $ 773 $ (1,506) $ (733) Money market accounts 464 (1,788) (1,324) Savings accounts (75) (167) (242) Time deposits (915) (2,251) (3,166) Total interest-bearing deposits $ 247 $ (5,712) $ (5,465) Federal funds purchased — — — Subordinated debt 5 (5) — Federal Reserve Bank borrowings (2,451) — (2,451) Federal Home Loan Bank advances 1,523 — 1,523 Total interest-bearing liabilities $ (676) $ (5,717) $ (6,393) Change in tax-equivalent net interest income (Non-GAAP) $ 2,907 $ 6,611 $ 9,518 (1) Income and yields for all periods presented are reported on a tax-equivalent basis using the federal statutory tax rate of 21%. (2) The Company did not have any loans on non-accrual as of December 31, 2025 or December 31, 2024. Interest Income Interest income increased by $3.1 million or 2.8% to $113.4 million on a fully tax-equivalent basis for the year ended December 31, 2025 compared to $110.3 million for the year ended December 31, 2024, driven by an increase in volume and rates on interest-earning assets. The increase in rates and volume on interest- earning assets was primarily attributable to the Company’s loan portfolio, which was partially offset by the decrease in rate and volume of interest-bearing deposits in other banks. Fully tax-equivalent interest income on loans increased by approximately $6.3 million or 6.6% primarily as a result of higher volume and rates. Average loans increased approximately $73.1 million, primarily attributable to growth in the construction & development and residential loan portfolios, while loan yields increased 13 basis points between the years ended December 31, 2025 and December 31, 2024. Interest income on interest-bearing deposits with other banks decreased by approximately $2.8 million or 32.2% primarily as a result of lower rates and volume. Average balances declined approximately $26.5 million, mainly due to fundings of
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Table of Contents the new loan originations, while yields decreased 101 basis points as a result of three fed funds rate cuts totaling 75 basis points since December 31, 2024. Fully tax-equivalent interest income on investment securities decreased by approximately $0.4 million. This decrease was primarily the result of volume decreasing from the amortization and maturities of securities. Average investment securities decreased approximately $29.1 million between the years ended December 31, 2025 and December 31, 2024. Interest Expense Interest expense decreased by $6.4 million to $52.7 million for the year ended December 31, 2025 compared to $59.1 million for the year ended December 31, 2024, primarily due to a decrease in rates on interest- bearing deposits coupled with lower average balance of borrowings. The decrease in rates on interest-bearing deposits was mainly due to repricing of the Company’s time deposits as a result of three fed funds rate cuts since December 31, 2024. The decline in average balance of borrowings was driven by the full pay-off of Federal Reserve’s Bank Term Funding Program advance during the third quarter of 2024, which was replaced by lower cost FHLB advances. Provision Expense The Company recorded a $1.7 million provision for credit losses for the year ended December 31, 2025 compared to a $0.4 million recovery of provision for the year ended December 31, 2024. The provision for credit losses during the year ended December 31, 2025 was primarily a result of growth of the loan portfolio and the related changes in the portfolio mix, coupled with the impact of the charge-off of the unguaranteed portion of one commercial business SBA 7(a) loan during the fourth quarter of 2025 and management’s assessment of the qualitative adjustments reflecting changing local economic conditions monitored throughout the year. Non-interest Income The Company’s recurring sources of non-interest income consist primarily of interchange income, service charges on deposit accounts, gain on sale of government guaranteed loans, and insurance commissions. Generally speaking, loan fees are included in interest income on the loan portfolio and not reported as non- interest income. The following table summarizes non-interest income for the years ended December 31, 2025 and December 31, 2024. Year ended December 31, (Dollars in thousands) 2025 2024 $ Change % Change Service charges on deposit accounts Overdrawn account fees $ 81 $ 84 $ (3) (3.6)% Account service fees 255 265 (10) (3.8)% Other service charges and fees Interchange income 327 363 (36) (9.9)% Other charges and fees 244 292 (48) (16.4)% Net gain (loss) on premises and equipment (3) 1 (4) N/M Insurance commissions 328 416 (88) (21.2)% Gain on sale of government guaranteed loans 322 520 (198) (38.1)% Non-qualified deferred compensation plan asset gains, net 402 236 166 70.3% Other operating income 118 94 24 25.5% Total non-interest income $ 2,074 $ 2,271 $ (197) (8.7)% Non-interest income decreased $197 thousand or 8.7% during the year ended December 31, 2025 compared to the same period of 2024. The decrease was primarily driven by a $198 thousand decrease in the recorded gain on sale of the government guaranteed portion of the SBA 7(a) loans due to lower sale activity along with the $88 thousand decrease in insurance commissions. These decreases were partially offset by a $166 thousand increase to the mark-to-market adjustments on the Company’s NQDC plan and a $37 thousand increase in swap fee income.
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Table of Contents 55 Non-interest Expense Generally, non-interest expense is composed of all employee expenses and costs associated with operating our facilities, obtaining and retaining customer relationships and providing banking services. The largest component of non-interest expense is salaries and employee benefits. Non-interest expense also includes operational expenses, such as occupancy and equipment expenses, data processing expenses, professional fees, advertising expenses and other general and administrative expenses, including FDIC assessments, and Virginia state franchise taxes. The following table summarizes non-interest expense for the years ended December 31, 2025 and December 31, 2024. Year ended December 31, (Dollars in thousands) 2025 2024 $ Change % Change Salaries and employee benefits expense $ 20,729 $ 19,240 $ 1,489 7.7% Occupancy expense of premises 1,544 1,760 (216) (12.3)% Furniture and equipment expenses 1,285 1,220 65 5.3% Advertising expense 381 386 (5) (1.3)% Data processing 2,360 2,192 168 7.7% FDIC insurance 992 1,000 (8) (0.8)% Professional fees 1,146 1,001 145 14.5% State franchise tax 2,520 2,405 115 4.8% Bank insurance 243 238 5 2.1% Vendor services 649 640 9 1.4% Supplies, printing, and postage 148 152 (4) (2.6)% Director costs 667 776 (109) (14.0)% Other operating expenses 903 799 104 13.0% Total non-interest expense $ 33,567 $ 31,809 $ 1,758 5.5% Non-interest expense increased $1.8 million or 5.5% during the year ended December 31, 2025 compared to the same period in 2024 primarily resulting from increases in salaries and employee benefits, data processing service fees, professional fees, and other operating expenses. The $1.5 million or 7.7% increase in salaries and employee benefits was mainly associated with the higher headcount within the Company and an increase in incentive compensation tied to the Company’s operating performance. The investments made to expand the headcount during the current year are expected to contribute to the future growth of the Company and subsequent increases in revenues. Increase in incentive compensation reflected the 24% year-over-year increase in net income and the fact that the Company’s operating performance for 2025 exceeded the budget and strategic plan. The $168 thousand or 7.7% increase in data processing service fees was primarily due to contractual increases and volume-based activity. Professional fees increased $145 thousand or 14.5% for the period, driven primarily by higher consulting fees. These increases were partially offset by a decrease in the Company’s occupancy expense, which declined by $216 thousand or 12.3%, due to a decrease in office rent as a result of the renegotiation of more favorable terms on certain leases. Income Taxes Income tax expense increased $1.4 million or 29.3% to $6.2 million for the year ended December 31, 2025 compared to $4.8 million for the year ended December 31, 2024. Our effective tax rate for the year ended December 31, 2025 was 22.5% compared to 21.7% for the year ended December 31, 2024. The increase in the effective tax rate between the comparative periods was primarily driven by higher permanent differences, the most significant component of which was the increased disallowance of compensation under Internal Revenue Code Section 162(m).
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Table of Contents 56 Discussion and Analysis of Financial Condition – Years Ended December 31, 2025 and December 31, 2024 Assets, Liabilities, and Shareholders’ Equity The Company’s total assets increased $97.6 million or 4.4% to $2.33 billion at December 31, 2025 compared to $2.23 billion at December 31, 2024. The increase in total assets is primarily attributable to the growth of the loan portfolio, which increased $103.2 million or 5.5% since December 31, 2024. The Company’s total liabilities increased $78.6 million or 4.0% to $2.07 billion at December 31, 2025 compared to $1.99 billion at December 31, 2024, which was driven by the $49.9 million and $40.2 million increases in time deposits and interest-bearing demand deposits, respectively. Shareholders’ equity increased $19.0 million or 7.7% to $265.6 million at December 31, 2025 compared to $246.6 million at December 31, 2024. Book value per share was $18.69 as of December 31, 2025 compared to $17.28 as of December 31, 2024, an increase of 8.2%. The year-over-year change in book value per share was primarily due to the Company’s earnings over the previous twelve months and a decrease in accumulated other comprehensive loss, resulting from an increase in the market value of our available-for-sale investment portfolio. This increase was partially offset by the cash dividend paid and the increased share count from shareholder option exercises and restricted share award issuances. The share issuances were partially offset by the Company’s share repurchases during the period. Investment Securities The Company maintains a primarily fixed income investment securities portfolio that had a total carrying value of $212.3 million at December 31, 2025 and $222.3 million at December 31, 2024. The investment portfolio is used as a source of liquidity, interest income, and credit risk diversification, as well as to manage rate sensitivity and provide collateral for secured public funds and secured credit lines. Investment securities are classified as available-for-sale or held-to-maturity based on management’s investment strategy and management’s assessment of the intent and ability to hold the securities until maturity. Investment securities that we may sell prior to maturity in response to changes in management’s investment strategy, liquidity needs, interest rate risk profile or for other reasons are classified as available-for-sale. The Company also had restricted stock and equity securities within its investment securities portfolio with total carrying values of $7.6 million and $2.8 million, respectively, at both December 31, 2025 and December 31, 2024. The Company purchased $32.3 million of investment securities during the year ended December 31, 2025, which were comprised of $30.3 million of mortgage-backed securities, $1.0 million of collateralized mortgage obligation securities and $1.0 million of U.S. agency securities. The Company did not sell any investment securities during the year ended December 31, 2025. The Company had $47.0 million in maturities and principal repayments on securities during the year ended December 31, 2025. Maturities consisted of $14.8 million in U.S. treasuries, $5.0 million in U.S. agency securities, and $0.3 million in municipal-taxable securities. Principal repayments consisted of $19.3 million of mortgage-backed securities and $7.6 million of collateralized mortgage obligation securities.
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Table of Contents 57 The following table summarizes the amortized cost and fair value of the Company’s fixed income investment portfolio as of December 31, 2025 and December 31, 2024, respectively. December 31, 2025 December 31, 2024 Amortized Fair Amortized Fair(Dollars in thousands) Cost Value Cost Value Held-to-maturity U.S. Treasuries $ 6,002 $ 5,694 $ 6,001 $ 5,418 U.S. government and federal agencies 35,314 32,380 35,349 30,606 U.S. agency collateralized mortgage obligations 16,163 13,157 17,805 13,857 Taxable municipal 6,024 5,270 6,041 4,952 U.S. agency mortgage-backed 24,918 21,074 26,813 21,437 Total Held-to-maturity Securities $ 88,421 $ 77,575 $ 92,009 $ 76,270 Available-for-sale U.S. Treasuries $ 13,244 $ 13,132 $ 27,920 $ 27,137 U.S. government and federal agencies 6,976 6,820 10,966 10,581 Corporate bonds 3,000 2,820 3,000 2,739 U.S. agency collateralized mortgage obligations 31,019 25,693 36,032 29,611 Tax-exempt municipal 1,378 1,236 1,379 1,171 Taxable municipal — — 270 263 U.S. agency mortgage-backed 77,306 74,151 64,274 58,755 Total Available-for-sale Securities $ 132,923 $ 123,852 $ 143,841 $ 130,257 In the prevailing rate environments as of both December 31, 2025 and December 31, 2024, the Company’s investment portfolio had an estimated weighted average remaining life of approximately 3.9 years and 4.2 years, respectively. The Company’s available-for-sale investment portfolio had an estimated weighted average remaining life of approximately 3.1 years in the prevailing rate environments at both December 31, 2025 and December 31, 2024. The held-to-maturity investment portfolio had an estimated weighted average remaining life of approximately 5.2 years and 6.0 years as of December 31, 2025 and December 31, 2024, respectively. The following table summarizes the maturity composition of our investment securities as of December 31, 2025, including the weighted average yield of each maturity range. Maturities are based on the final contractual payment date, and do not reflect the effect of scheduled principal repayments, prepayments, or early redemptions that may occur. The weighted-average yield below represents the effective yield for the investment securities and is calculated based on the amortized cost of each security. December 31, 2025 Amortized Fair Weighted-Average (Dollars in thousands) Cost Value Yield Held-to-maturity Due in one year or less $ — $ — — Due after one year through five years 34,754 32,532 1.21% Due after five years through ten years 15,208 13,340 1.82% Due after ten years 38,459 31,703 1.44% Total Held-to-maturity Securities $ 88,421 $ 77,575 1.41% Available-for-sale Due in one year or less $ 17,400 $ 17,280 1.34% Due after one year through five years 21,600 21,079 2.79% Due after five years through ten years 42,717 42,158 3.71% Due after ten years 51,206 43,335 1.62% Total Available-for-sale Securities $ 132,923 $ 123,852 2.45% Loan Portfolio Gross loans net of unearned income increased $103.2 million or 5.5% to $1.98 billion as of December 31, 2025 compared to $1.87 billion as of December 31, 2024. The increase in loans from December 31, 2025, was primarily attributable to
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Table of Contents growth in construction & development loans and residential mortgage loans, partially offset by a decline in commercial owner-occupied real estate loans. All other portfolios remained relatively unchanged during 2025. The Company continues to maintain its disciplined underwriting standards while prudently pursuing loan growth opportunities that provide acceptable risk-adjusted returns. The following table presents the Company’s composition of loans held for investment, net of deferred fees and costs, in dollar amounts and as a percentage of total gross loans as of December 31, 2025 and December 31, 2024. December 31, 2025 December 31, 2024 (Dollars in thousands) Amount Percent Amount Percent Real Estate Loans: Commercial $ 1,173,617 59.57% $ 1,181,090 63.24% Construction and land development 222,659 11.30% 164,988 8.83% Residential 522,990 26.54% 472,932 25.32% Commercial - Non Real Estate: Commercial loans 49,967 2.54% 47,736 2.56% Consumer - Non-Real Estate: Consumer loans 1,043 0.05% 906 0.05% Total Gross Loans $ 1,970,276 100.00% $ 1,867,652 100.00% Allowance for loan credit losses (19,805) (18,715) Net deferred loan costs 5,084 4,521 Total net loans $ 1,955,555 $ 1,853,458 The following table summarizes the contractual maturities of the loans as of December 31, 2025 by loan type. Maturities are based on the final contractual payment date, and do not reflect the effect of scheduled principal repayments, prepayments, or early redemptions that may occur. The table also summarizes the fixed and floating rate composition of loans held for investment for contractual maturities greater than one year. December 31, 2025 After 1 After 5 Year years MaturingWithin 1 Within 5 Within 15 After 15(Dollars in thousands) Year Years Years Years Total Real Estate Loans: Commercial $ 48,062 $ 540,879 $ 574,168 $ 10,508 $ 1,173,617 Construction and land development 117,948 72,096 29,232 3,383 222,659 Residential 14,572 36,447 35,887 436,084 522,990 Commercial - Non-Real Estate: Commercial loans 18,684 16,412 14,871 — 49,967 Consumer - Non-Real Estate: Consumer loans 351 678 — 14 1,043 Total Gross Loans $ 199,617 $ 666,512 $ 654,158 $ 449,989 $ 1,970,276 For Maturities Over One Year: Floating rate loans $ 246,096 $ 305,818 $ 448,305 $ 1,000,219 Fixed rate loans 420,416 348,340 1,684 770,440 $ 666,512 $ 654,158 $ 449,989 $ 1,770,659 Asset Quality The Company maintains policies and procedures to promote sound underwriting and mitigate credit risk. The Chief Credit Officer is responsible for establishing credit risk policies and procedures, including underwriting
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58 and hold guidelines and credit approval authority, and monitoring credit exposure and performance of the Company’s lending-related transactions.
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Table of Contents 59 The Company’s asset quality remained strong during the year ended December 31, 2025. The Company had no non accrual loans and OREO as of December 31, 2025 and December 31, 2024. During the twelve months ended December 31, 2025, the Company charged-off one commercial business SBA 7(a) loan in the total amount of $361 thousand. The charged-off amount represented the unguaranteed portion of the loan. The Company has submitted a reimbursement claim to the SBA for the guaranteed portion of the loan in the amount of $1.1 million and expects to be paid in full by the end of the first quarter of 2026. The guaranteed portion of the loan was 90 days past due and still accruing interest as of December 31, 2025. The Company had one loan that was 90 days past due and still accruing interest as of December 31, 2024. The loan paid off, in full, on January 7, 2025. The Company did not have any nonaccrual loans as of December 31, 2025 or December 31, 2024 nor were there any loans placed on nonaccrual during those periods. A loan is placed on nonaccrual status when (i) the Company is advised by the borrower that scheduled principal or interest payments cannot be met, (ii) when management’s best judgment indicates that payment in full of principal and interest can no longer be expected, or (iii) when any such loan or obligation becomes delinquent for 90 days, unless it is both well- secured and in the process of collection. As a result, the Company did not have any interest income that would have been recognized on nonaccrual loans for the years ended December 31, 2025 or December 31, 2024. The Company did not make any loan modifications to borrowers experiencing financial difficulty during the twelve months ended December 31, 2025. The following table summarizes the Company’s asset quality as of December 31, 2025 and December 31, 2024. (Dollars in thousands) December 31, 2025 December 31, 2024 Nonaccrual loans $ — $ — Loans past due 90 days and accruing interest 1,084 9,978 Other real estate owned and repossessed assets — — Total nonperforming assets $ 1,084 $ 9,978 Allowance for loan credit losses to nonperforming assets 18.3x 1.9x Nonaccrual loans to total loans 0.00% 0.00% Nonperforming loans to total loans 0.05% 0.53% Allowance for Loan Credit Losses Refer to the discussion in the “Critical Accounting Policies and Estimates” section above for management’s approach to estimating the allowance for loan credit losses. The Company recorded net charge-offs of $359 thousand during the year ended December 31, 2025 compared to net recoveries of $2 thousand during the year ended December 31, 2024. At December 31, 2025, the allowance for loan credit losses was $19.8 million, or 1.00% of outstanding loans, net of unearned income, compared to $18.7 million, or 1.00% of outstanding loans, net of unearned income, at December 31, 2024. The increase in the allowance for loan credit losses during the current year is predominantly attributable to the growth of the loan portfolio along with the impact of management’s assessment of qualitative factors, mainly related to the evaluation of the existing local economic conditions, as well as considerations of the concentrations of the Company’s loan segments. These factors contributing to an increase in allowance for credit losses were partially offset by the previously mentioned charge-off of the commercial business SBA 7(a) loan. The following table summarizes the Company’s loan credit loss experience by loan portfolio for the years ended December 31, 2025 and December 31, 2024.
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Table of Contents 60 Year Ended December 31, 2025 December 31, 2024 Net Net Net Net (charge-offs) (charge-off) (charge-offs) (charge-off) (Dollars in thousands) recoveries recovery rate (1) recoveries recovery rate (1) Real estate loans: Commercial $ — — $ — — Construction and land development — — — — Residential — — — — Commercial loans (359) (0.84)% 2 0.01 % Consumer loans — — — — Total $ (359) $ 2 Average loans outstanding during the period $ 1,899,064 $ 1,825,936 Allowance coverage ratio (2) 1.00% 1.00% Total net (charge-off) recovery rate (0.02)% 0.00 % Allowance to nonaccrual loans ratio (3) N/M N/M NM – Not meaningful (1) The net (charge-off) recovery rate is calculated by dividing total net (charge-offs) recoveries during the period by average gross loans outstanding during the period. (2) The allowance coverage ratio is calculated by dividing the allowance for loan credit losses at the end of the period by gross loans, net of unearned income at the end of the period. (3) The allowance to nonaccrual loans ratio is calculated by dividing the allowance for loan credit losses at the end of the period by nonaccrual loans at the end of the period. The following table summarizes the allowance for loan credit losses by portfolio with a comparison of the percentage composition in relation to total allowance for loan credit losses and total loans as of December 31, 2025 and December 31, 2024. December 31, 2025 Allowance Percent of Allowance Percent of Loans in for Loan Credit in Each Category to Each Category to Total (Dollars in thousands) Losses Total Allocated Allowance Loans Real Estate Loans: Commercial $ 11,177 56.43% 59.57% Construction and land development 3,014 15.22% 11.30% Residential 5,018 25.34% 26.54% Commercial - Non-Real Estate: Commercial loans 564 2.85% 2.54% Consumer - Non-Real Estate: Consumer loans 32 0.16% 0.05% Total $ 19,805 100.00% 100.00%
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Table of Contents 61 December 31, 2024 Allowance Percent of Allowance Percent of Loans in for Loan Credit in Each Category to Each Category to Total (Dollars in thousands) Losses Total Allocated Allowance Loans Real Estate Loans: Commercial $ 11,732 62.69% 63.24% Construction and land development 1,761 9.41% 8.83% Residential 4,594 24.54% 25.32% Commercial - Non-Real Estate: Commercial loans 548 2.93% 2.56% Consumer - Non-Real Estate: Consumer loans 80 0.43% 0.05% Total $ 18,715 100.00% 100.00% Management believes that the allowance for loan credit losses is adequate to absorb lifetime credit losses inherent in the portfolio as of December 31, 2025. There can be no assurance, however, that adjustments to the provision for (recovery of) credit losses will not be required in the future. Changes in the economic assumptions underlying management’s estimates and judgments; adverse developments in the economy, on a national basis or in the Company’s market area; or changes in the circumstances of particular borrowers are criteria that could change and make adjustments to the provision for (recovery of) credit losses necessary. Deposits Total deposits increased $79.9 million or 4.2% to $1.97 billion as of December 31, 2025 compared to $1.89 billion as of December 31, 2024. Non-interest bearing demand deposits decreased $0.6 million or 0.1% to $432.7 million as of December 31, 2025 compared to $433.3 million at December 31, 2024. Non-interest bearing demand deposits represented 21.9% and 22.9% of total deposits at December 31, 2025 and December 31, 2024, respectively. Interest-bearing deposits, which include NOW accounts, savings accounts, money market accounts, and time deposits, increased $80.4 million or 5.5% to $1.54 billion as of December 31, 2025 compared to $1.46 billion as of December 31, 2024. Interest-bearing deposits represented 78.1% and 77.1% of total deposits at December 31, 2025 and December 31, 2024, respectively. The Company focuses on funding asset growth with deposit accounts, with an emphasis on core deposit growth, as its primary source of deposits. Core deposits consist of checking accounts, NOW accounts, money market accounts, savings accounts, time deposits, reciprocal IntraFi Demand® deposits, IntraFi Money Market® deposits and IntraFi CD® deposits. Core deposits totaled $1.67 billion or 84.7% of total deposits and $1.62 billion or 85.4% of total deposits at December 31, 2025 and December 31, 2024, respectively.
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Table of Contents The following table sets forth the average balances of deposits and the average interest rates paid for the years ended December 31, 2025 and 2024. December 31, 2025 December 31, 2024 Average Average (Dollars in thousands) Amount Rate Amount Rate Non-interest bearing $ 438,171 $ 437,694 Interest bearing: NOW accounts 353,556 2.30% 322,028 2.75% Money market accounts 352,226 2.66% 342,057 3.13% Savings accounts 41,227 1.02% 48,466 1.37% Time deposits 733,433 4.24% 757,494 4.52% Total interest-bearing 1,480,442 3.31% 1,470,045 3.71% Total $ 1,918,613 2.56% $ 1,907,739 2.86% The following table sets forth the maturity ranges of certificates of deposit with balances of $250,000 or more as of December 31, 2025. December 31, 2025 (Dollars in thousands) Total Uninsured Three months or less $ 57,048 $ 41,548 Over three through 6 months 124,531 96,031 Over 6 through 12 months 49,690 35,190 Over 12 months 106,395 97,145 Total $ 337,664 $ 269,914 The total amount of our uninsured deposits (deposits in excess of $250,000, as calculated in accordance with FDIC regulations) was estimated at $853.4 million at December 31, 2025 and $816.7 million at December 31, 2024. Included in these amounts were $161.8 million and $157.4 million of public fund deposits that are collateralized by securities as of December 31, 2025 and December 31, 2024, respectively. Deposits that were not insured or not collateralized by securities represented 35.1% of total deposits at both December 31, 2025 and December 31, 2024. Capital Resources The Company is a bank holding company with less than $3 billion in assets and does not (i) have significant off balance sheet exposure, (ii) engage in significant non-banking activities, or (iii) have a material amount of securities registered under the Exchange Act. As a result, the Company qualifies as a small bank holding company under the Federal Reserve’s Small Bank Holding Company Policy Statement and is currently not subject to consolidated regulatory requirements. The Bank is subject to capital adequacy standards adopted by the Federal Reserve, including the capital rules that implemented the Basel III regulatory capital reforms developed by the Basel Committee on Banking Supervision. Note 16 to the Consolidated Financial Statements, included in Item 8 of this Form 10-K, contains additional discussion and analysis regarding the Company and Bank’s regulatory capital requirements. Shareholders’ equity increased $19.0 million or 7.7% to $265.6 million at December 31, 2025 compared to $246.6 million at December 31, 2024. Book value per share was $18.69 as of December 31, 2025 compared to $17.28 as of December 31, 2024, an increase of 8.2%. The year-over-year change in book value per share was primarily due to the Company’s earnings over the previous twelve months and a decrease in accumulated other comprehensive loss, resulting from an increase in the market value of our available-for-sale investment portfolio. This increase was partially offset by the cash dividend paid and increased share count from shareholder option exercises and restricted share award issuances. The share issuances were partially offset by the Company’s share repurchases during the period. In August of 2025, the Company’s Board of Directors authorized the extension of the Company’s stock repurchase program that was originally adopted in August of 2021. Under the stock repurchase program, the Company may repurchase
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Table of Contents 63 up to 700,000 shares of its common stock, par value of $0.01 per share, or approximately 5% of its outstanding shares of common stock. The stock repurchase program will expire on August 31, 2026, or earlier if all the authorized shares have been repurchased. During the twelve months ended December 31, 2025, the Company repurchased 135,640 shares of its outstanding common stock at a weighted average price of $17.80. The aggregate repurchase activity was accretive to the Company’s book value per share. Liquidity Liquidity reflects a financial institution’s ability to fund assets and meet current and future financial obligations. Liquidity is essential in all banks to meet customer withdrawals, compensate for balance sheet fluctuations, and provide funds for growth. Monitoring and managing both liquidity measurements is critical in developing prudent and effective balance sheet management. Management conducts liquidity stress testing on a quarterly basis to prepare for unexpected adverse scenarios and contemporaneously develops mitigating strategies to reduce losses in the event of an economic downturn. The Company’s principal source of liquidity and funding is its deposit base. The level of deposits necessary to support the Company’s lending and investment activities is determined through monitoring loan demand. In addition to the liquidity provided by balance sheet cash flows, the Company supplements its liquidity with additional sources such as secured borrowing credit lines with the FHLB and the Federal Reserve Bank. Specifically, the Company has pledged a portion of its loan portfolio to the FHLB and the Federal Reserve Bank. Based on collateral pledged as of December 31, 2025, the total FHLB available borrowing capacity was $454.8 million. Additional borrowing capacity with the Federal Reserve Bank was approximately $139.5 million as of December 31, 2025. In addition to available secured borrowing capacity, the Bank had available federal funds lines of $110.0 million at December 31, 2025. FHLB advances remained unchanged at $56.0 million as of December 31, 2025 compared to December 31, 2024. The three FHLB advances have a weighted average fixed interest rate of 3.99%. In addition to outstanding FHLB advances, total borrowings as of December 31, 2025 included subordinated debt totaling $24.9 million. Total liquidity, defined as cash and cash equivalents, unencumbered securities at fair value, and available secured borrowing capacity, was $827.0 million at December 31, 2025 compared to $727.3 million at December 31, 2024. The Company’s liquidity position represented 119.6% of uninsured, non-collateralized deposits at December 31, 2025. Liquidity is a core pillar of the Company’s operations. Conditions may arise in the future that could negatively impact the Company’s future liquidity position resulting in funding mismatches. These include market constraints on the ability to convert assets into cash or accessing sources of funds (i.e., market liquidity) and contingent liquidity events. Changes in economic conditions or exposure to credit, market, operational, legal, and reputation risks also can affect a bank’s liquidity. Management maintains that the Company has a strong liquidity position, but any of the factors referenced above could materially impact that in the future. The Company has various contractual obligations that affect its cash flows and liquidity. For information regarding material contractual obligations, please see Note 7, Note 8 and Note 11 to the Consolidated Financial Statements, included in Item 8 of this Form 10-K. Off-Balance Sheet Arrangements The Company enters into certain off-balance sheet arrangements in the normal course of business to meet the financing needs of its customers. These off-balance sheet arrangements include commitments to extend credit, standby letters of credit and financial guarantees which would impact the Company’s liquidity and capital resources to the extent customers accept and or use these commitments. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. With the exception of these off-balance sheet arrangements, the Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources, that is material to investors. For further information, see Note 11 to the Consolidated Financial Statements, included in Item 8 of this Form 10-K, for further discussion of the nature, business purpose and elements of risk involved with these off-balance sheet arrangements.
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Table of Contents 64 Item 7A. Quantitative and Qualitative Disclosures About Market Risk Not required for smaller reporting companies. Item 8. Financial Statements and Supplementary Data John Marshall Bancorp, Inc. Audited Consolidated Financial Statements: Page Report of Independent Registered Public Accounting Firm 65 Consolidated Balance Sheets as of December 31, 2025 and December 31, 2024 66 Consolidated Statements of Income for the Years Ended December 31, 2025 and 2024 67 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2025 and 2024 68 Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2025 and 2024 69 Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024 70 Notes to the Consolidated Financial Statements 71
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Table of Contents 65 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors John Marshall Bancorp, Inc. Reston, Virginia Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of John Marshall Bancorp, Inc. and its subsidiary (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Yount, Hyde & Barbour, P.C. We have served as the Company's auditor since 2008. Richmond, Virginia March 13, 2026
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Table of Contents 66 John Marshall Bancorp, Inc. and Subsidiary Consolidated Balance Sheets December 31, 2025 and 2024 (In thousands, except share and per share data) December 31, 2025 December 31, 2024 Assets Cash and due from banks $ 6,492 $ 5,945 Interest-bearing deposits in other banks 123,482 116,524 Total cash and cash equivalents 129,974 122,469 Securities available-for-sale, at fair value 123,852 130,257 Securities held-to-maturity at amortized cost, fair value of $77,575 and $76,270 as of December 31, 2025 and December 31, 2024, respectively 88,421 92,009 Restricted securities, at cost 7,644 7,634 Equity securities, at fair value 2,843 2,832 Loans, net of unearned income 1,975,360 1,872,173 Less: Allowance for loan credit losses (19,805) (18,715) Loans, net 1,955,555 1,853,458 Bank premises and equipment, net 1,315 1,318 Accrued interest receivable 5,890 5,996 Right of use assets 4,551 5,013 Other assets 12,505 13,961 Total assets $ 2,332,550$ 2,234,947 Liabilities and Shareholders’ Equity Liabilities Deposits: Non-interest bearing demand deposits $ 432,733$ 433,288 Interest-bearing demand deposits 745,323 705,097 Savings deposits 34,683 44,367 Time deposits 759,546 709,663 Total deposits 1,972,285 1,892,415 Federal Home Loan Bank advances 56,000 56,000 Subordinated debt 24,875 24,791 Accrued interest payable 2,124 2,394 Lease liabilities 4,819 5,369 Other liabilities 6,809 7,364 Total liabilities $ 2,066,912$ 1,988,333 Commitments and contingencies (Note 11) Shareholders’ Equity Preferred stock, par value $0.01 per share; authorized 1,000,000 shares; none issued $ — $ — Common stock, nonvoting, par value $0.01 per share; authorized 1,000,000 shares; none issued — — Common stock, voting, par value $0.01 per share; authorized 30,000,000 shares; issued and outstanding, 14,214,603 shares at December 31, 2025, including 68,547 unvested shares, 14,269,469 shares at December 31, 2024, including 54,388 unvested shares 141 142 Additional paid-in capital 95,699 97,173 Retained earnings 176,913 159,951 Accumulated other comprehensive loss (7,115) (10,652) Total shareholders’ equity $ 265,638$ 246,614 Total liabilities and shareholders’ equity $ 2,332,550$ 2,234,947 See Notes to Consolidated Financial Statements.
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Table of Contents 67 John Marshall Bancorp, Inc. and Subsidiary Consolidated Statements of Income Years Ended December 31, 2025 and 2024 (In thousands, except per share data) Year ended December 31, 2025 2024 Interest and Dividend Income Interest and fees on loans $ 102,651 $ 96,332 Interest on investment securities, taxable 4,198 4,692 Interest on investment securities, tax-exempt 36 36 Dividends 484 391 Interest on deposits in banks 5,888 8,682 Total interest and dividend income $ 113,257 $ 110,133 Interest Expense Deposits $ 49,027 $ 54,492 Federal funds purchased 2 2 Federal Home Loan Bank advances 2,268 745 Federal Reserve Bank borrowings — 2,451 Subordinated debt 1,396 1,396 Total interest expense $ 52,693 $ 59,086 Net Interest Income $ 60,564 $ 51,047 Provision for (recovery of) credit losses 1,688 (370) Net interest income after provision for (recovery of) credit losses $ 58,876 $ 51,417 Non-interest Income Service charges on deposit accounts $ 336 $ 349 Other service charges and fees 571 655 Insurance commissions 328 416 Gain on sale of government guaranteed loans 322 520 Non-qualified deferred compensation plan asset gains, net 402 236 Other income 115 95 Total non-interest income $ 2,074 $ 2,271 Non-interest Expenses Salaries and employee benefits $ 20,729 $ 19,240 Occupancy expense of premises 1,544 1,760 Furniture and equipment expenses 1,285 1,220 Other operating expenses 10,009 9,589 Total non-interest expenses $ 33,567 $ 31,809 Income before income taxes $ 27,383 $ 21,879 Income Tax Expense 6,150 4,758 Net income $ 21,233 $ 17,121 Earnings per share, basic $ 1.49 $ 1.20 Earnings per share, diluted $ 1.49 $ 1.20 See Notes to Consolidated Financial Statements.
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Table of Contents 68 John Marshall Bancorp, Inc. and Subsidiary Consolidated Statements of Comprehensive Income Years Ended December 31, 2025 and 2024 (In thousands) Year ended December 31, 2025 2024 Net Income $ 21,233 $ 17,121 Other comprehensive income: Unrealized gains on available-for-sale securities, net of tax of $948 and $444 for the twelve months ended December 31, 2025 and December 31, 2024, respectively. 3,566 1,668 Amortization of unrealized gains on securities transferred to held-to-maturity, net of tax of $(8) and $(18) for the twelve months ended December 31, 2025 and December 31, 2024, respectively. (29) (69) Total other comprehensive income $ 3,537 $ 1,599 Total comprehensive income $ 24,770 $ 18,720 See Notes to Consolidated Financial Statements.
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Table of Contents 69 John Marshall Bancorp, Inc. and Subsidiary Consolidated Statements of Changes in Shareholders’ Equity Years Ended December 31, 2025 and December 31, 2024 (In thousands, except share and per share data) Accumulated Other TotalAdditional Paid- In Retained Comprehensive Shareholders’Shares Common Stock Capital Earnings (Loss) Equity Balance, December 31, 2023 14,101,215 $ 141 $ 95,636 $146,388 $ (12,251) $ 229,914 Net income — — — 17,121 — 17,121 Other comprehensive income — — — — 1,599 1,599 Repurchase of common stock (3,003) — (49) — — (49) Dividend declared on common stock ($0.25 per share) — — — (3,558) — (3,558) Exercise of stock options, net of 7,840 shares surrendered 94,522 1 1,052 — — 1,053 Restricted stock vesting, net of 973 shares surrendered 22,347 — (21) — — (21) Share-based compensation — — 555 — — 555 Balance, December 31, 2024 14,215,081 $ 142 $ 97,173 $159,951 $ (10,652) $ 246,614 Balance, December 31, 2024 14,215,081 $ 142 $ 97,173 $159,951 $ (10,652) $ 246,614 Net income — — — 21,233 — 21,233 Other comprehensive income — — — — 3,537 3,537 Repurchase of common stock (135,640) (1) (2,418) — — (2,419) Dividend declared on common stock ($0.30 per share) — — — (4,271) — (4,271) Exercise of stock options, net of 12,683 shares surrendered 43,541 — 446 — — 446 Restricted stock vesting, net of 1,437 shares surrendered 23,074 — (29) — — (29) Share-based compensation — — 527 — — 527 Balance, December 31, 2025 14,146,056 $ 141 $ 95,699 $176,913 $ (7,115) $ 265,638 See Notes to Consolidated Financial Statements.
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Table of Contents 70 John Marshall Bancorp, Inc. and Subsidiary Consolidated Statements of Cash Flows Years Ended December 31, 2025 and 2024 (In thousands) Year ended December 31, 2025 2024 Cash Flows from Operating Activities Net income $ 21,233 $ 17,121Adjustment to reconcile net income to net cash provided by operating activities: Depreciation 507 447Right of use asset amortization 1,011 1,235Provision for (recovery of) credit losses 1,688 (370)Share-based compensation expense 527 555Net accretion of securities (203) (302)Fair value adjustment on equity securities (402) (236)Amortization of debt issuance costs 84 83Net loss (gain) on premises and equipment 3 (1)Deferred tax benefit (162) (284)Gain on sale of government guaranteed loans (322) (520)Changes in assets and liabilities: Decrease in accrued interest receivable 106 114Decrease in other assets 677 4,150Decrease in accrued interest payable (270) (2,165) Decrease in other liabilities (1,893) (2,568) Net cash provided by operating activities $ 22,584 $ 17,259 Cash Flows from Investing Activities Net increase in loans $ (107,552) $ (17,780)Proceeds from sale of government guaranteed loans originally classified as held for investment 4,329 6,096Purchase of available-for-sale securities (32,320) —Proceeds from maturities, calls and principal repayments of available-for-sale securities 43,514 42,222Proceeds from maturities, calls and principal repayments of held-to-maturity securities 3,479 3,336Net purchases of restricted securities (10) (2,622)Net proceeds from equity securities 391 196Proceeds from sale of premises and equipment 47 — Purchases of bank premises and equipment (554) (483) Net cash (used in) provided by investing activities $ (88,676) $ 30,965 Cash Flows from Financing Activities Net increase (decrease) in deposits $ 79,870 $ (14,185)Net proceeds of Federal Home Loan Bank advances — 56,000 Repayment of Federal Reserve Bank borrowings — (54,000)Cash dividends paid (4,271) (3,558)Repayment of federal funds purchased — (10,000)Issuance of common stock for share options exercised 446 1,053Repurchase of shares for tax withholding on share-based compensation (29) (21)Repurchase of common stock (2,419) (49) Net cash provided by (used in) financing activities $ 73,597 $ (24,760) Net increase in cash and cash equivalents $ 7,505 $ 23,464 Cash and cash equivalents, beginning of period 122,469 99,005 Cash and cash equivalents, end of period $ 129,974 $ 122,469 Supplemental Disclosures of Cash Flow Information Cash payments for: Interest $ 52,879 $ 61,169Income taxes - U.S. Federal 5,195 1,320Income taxes - U.S. State and Local - Maryland 346 — Income taxes - U.S. State and Local - Other 192 — Total income taxes paid 5,733 1,320 Supplemental Disclosures of Noncash Transactions Unrealized gain on securities available-for-sale $ 4,514 $ 2,112Right of use asset obtained in exchange for new operating lease liability 563 2,072 See Notes to Consolidated Financial Statements.
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Table of Contents 71 Note 1— Nature of Business and Summary of Significant Accounting Policy Nature of Banking Activities John Marshall Bancorp, Inc. (the “Company”), headquartered in Reston, Virginia, became the registered bank holding company under the Bank Holding Company Act of 1956 for its wholly-owned subsidiary, John Marshall Bank (the “Bank”), on March 1, 2017. This reorganization was completed through a one-for-one share exchange in which the Bank’s shareholders received one share of voting common stock of the Company in exchange for each share of the Bank’s voting common stock. The Company was formed on April 21, 2016 under the laws of the Commonwealth Virginia. The Bank formed on April 5, 2005 under the laws of the Commonwealth of Virginia and was chartered as a bank on February 9, 2006, by the Virginia Bureau of Financial Institutions. The Bank is a member of the Federal Reserve System and is subject to the rules and regulations of the Virginia Bureau of Financial Institutions, the Board of Governors of the Federal Reserve System (the “Federal Reserve”) and the Federal Deposit Insurance Corporation (“FDIC”). The Bank opened for business on April 17, 2006 and provides banking services to its customers primarily in the Washington, D.C. metropolitan area. The accounting and reporting policies of John Marshall Bancorp, Inc. conform to generally accepted accounting principles in the United States of America and reflect practices of the banking industry. The significant accounting policies are summarized below. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany accounts and transactions between the Company and the Bank have been eliminated. Segment Reporting The Company has one operating segment, the Bank, and has determined that it meets the aggregation criteria of ASC 280 Segment Reporting, as its current operating model is structured whereby all product offerings are managed through similar processes and platforms that are collectively reviewed by the Company’s President/Chief Executive Officer and Chief Financial Officer, who have been identified as the chief operating decision makers (“CODMs”). The CODMs regularly assesses performance of the aggregated single operating and reporting segment and decide how to allocate resources based on net income calculated on the same basis as is reported in the Company’s consolidated statements of income and comprehensive income. The CODMs are also regularly provided with expense information at a level consistent with that disclosed in the Company’s statements of income and comprehensive income. Restriction on Dividends The Bank is subject to certain restrictions on the amount of dividends that it may pay to the Company without prior regulatory approval. At December 31, 2025, the Bank had $27.8 million available to distribute in the form of dividends to the Company. Significant Accounting Policies Use of Estimates In preparing financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan credit losses.
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Table of Contents 72 Reclassifications Certain items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior year net income or shareholders’ equity. Concentration of Credit Risk Most of the Company’s activities are with customers located in the Washington, D.C. metropolitan area. Real estate loans, including commercial, construction and land development, and residential loans, represented 97% of the total loan portfolio at both December 31, 2025 and December 31, 2024. The Company does not have any significant concentrations to any one industry or customer. Cash and Cash Equivalents For the purposes of the statements of cash flows, cash and cash equivalents include cash and balances due from banks and interest-bearing deposits in banks (items with an original maturity of three months or less). Securities Certain debt securities that management has the positive intent and ability to hold-to-maturity are classified as “held-to-maturity” and recorded at amortized cost. Debt securities not classified as held-to-maturity or trading, are classified as “available-for-sale” and recorded at fair value, with unrealized gains and losses excluded from earnings and reported net of deferred tax in accumulated other comprehensive income (loss) within shareholders’ equity. Purchase premiums and discounts on debt securities are recognized in interest income using the interest method over the terms of the securities. Transfers of debt securities into the held-to-maturity classification from the available-for-sale classification are made at fair value on the date of transfer. The unrealized holding gain or loss on the date of the transfer is reported in accumulated other comprehensive income (loss) and in the carrying value of the held-to-maturity securities. Such amounts are amortized over the remaining contractual lives of the securities. Equity securities with readily determinable fair values are carried at fair value, with changes in fair value reported in net income. Any equity securities without readily determinable fair values are carried at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments. Restricted equity securities are carried at cost and are periodically evaluated for impairment based on the ultimate recovery of par value. The entirety of any impairment on the equity securities is recognized in earnings. Gains and losses on sales of securities are recorded on the trade date and determined using the specific identification method. Allowance for Credit Losses - Held-to-Maturity Securities The Company estimates expected credit losses on held-to-maturity securities on an individual basis based on a Probability of Default/Loss Given Default (“PD/LGD”) methodology primarily using security-level credit ratings. The primary indicators of credit quality for the Company’s held-to-maturity portfolio are security type and credit rating, which are influenced by a number of factors including obligor cash flow, geography, seniority, among other factors. The Company’s held-to-maturity securities with credit risk are municipal bonds, which had a credit rating of AA or better as of December 31, 2025. All other held-to-maturity securities are covered by the explicit or implied guarantee of the United States government or one of its agencies. Changes in the allowance for credit loss are recorded as provision for (or recovery of) credit losses in the Consolidated Statements of Income. Allowance for Credit Losses - Available-for-Sale Securities Management evaluates all available-for-sale securities in an unrealized loss position on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. If the Company has the intent to sell the security
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Table of Contents 73 or it is more likely than not that the Company will be required to sell the security, the security is written down to fair value and the entire loss is recorded in earnings. If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors. In making the assessment, the Company may consider various factors including the extent to which fair value is less than amortized cost, downgrades in the ratings of the security by a rating agency, the failure of the issuer to make scheduled interest or principal payments and adverse conditions specific to the security. If the assessment indicates that a credit loss exists, the present value of cash flows expected to be collected are compared to the amortized cost basis of the security and any deficiency is recorded as an allowance for credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any amount of unrealized loss that has not been recorded through an allowance for credit loss is recognized in other comprehensive income. Changes in the allowance for credit loss are recorded as a provision for (or recovery of) credit losses in the Consolidated Statements of Income. Losses are charged against the allowance for credit loss when management believes an available-for-sale security is confirmed to be uncollectible or when either of the criteria regarding intent or requirement to sell is met. Accrued interest receivable on available-for-sale securities totaled $347 thousand at December 31, 2025 and was excluded from the estimate of credit losses. Loans The Company grants real estate, commercial and consumer loans to customers (representing the Company’s loan segments). A substantial portion of the loan portfolio is represented by commercial real estate loans in the Washington, D.C. metropolitan area. Within the real estate segment, the Company has also identified the residential, commercial and construction classes. The ability of the Company’s debtors to honor their real estate loan contracts is dependent upon the real estate market and general economic conditions in this area, among other factors. Underwriting and risk characteristics of each loan class are summarized as follows: ● Real estate residential mortgage loans carry risks associated with the continued creditworthiness of the borrower and changes in the value of the collateral. ● Real estate commercial mortgage loans carry risks associated with the successful operation of a business, the continued creditworthiness of the borrower and any related guarantors and changes in the value of the collateral. In the case of investor-owned commercial real estate, risks are expanded to include the financial strength of the tenants occupying the property and the stability of occupancy and lease rates. ● Real estate construction and land development loans carry risks that the project will not be finished according to schedule, the project will not be finished according to budget and the value of the collateral may, at any point in time, be less than the principal amount of the loan. Construction loans also bear the risk that the general contractor, who may or may not be a customer of the Company, may be unable to finish the construction project as planned because of financial pressure unrelated to the project. ● Commercial loans carry risks associated with the successful operation of a business and the financial strength of any related guarantors. In addition, there is risk associated with the value of collateral other than real estate which may depreciate over time and cannot be appraised with as much precision. ● Consumer loans carry the risks associated with the continued creditworthiness of the borrower and the value of any collateral. Consumer loans are more likely than real estate loans to be immediately adversely affected by job loss, divorce, illness or personal bankruptcy. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for the allowance for loan credit losses and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of
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Table of Contents 74 certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method. The accrual of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days past due unless the credit is well secured and in the process of collection. Other personal loans are typically charged off no later than 180 days past due. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. The determination of days past due or delinquency status uses the first contractual payment date that has not been paid-in-full by the borrower. All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Allowance for Credit Losses - Loans The allowance for loan credit losses represents an amount which, in management's judgment, is adequate to absorb the lifetime expected losses that may be sustained on outstanding loans at the balance sheet date based on the evaluation of the size and current risk characteristics of the loan portfolio, past events, current conditions, reasonable and supportable forecasts of future economic conditions, and prepayment experience. The allowance for loan credit losses is measured and recorded upon the initial recognition of a financial asset. The allowance for loan credit losses is reduced by charge-offs, net of recoveries of previous losses, and is increased or decreased by a provision for (or recovery of) credit losses, which is recorded in the Consolidated Statements of Income. The Company is utilizing a discounted cash flow model to estimate its current expected credit losses. For the purposes of calculating its quantitative reserves, the Company has segmented its loan portfolio based on loans which share similar risk characteristics. Within the quantitative portion of the calculation, the Company utilizes at least one or a combination of loss drivers, which may include unemployment rates, home price indices, and/or gross domestic product, to adjust its loss rates over a reasonable and supportable forecast period of one year. A straight-line reversion technique is used for the following four quarters, at which time the Company reverts to historical averages. To further adjust the allowance for credit losses for expected losses not already included within the quantitative component of the calculation, the Company may consider qualitative factors, including but not limited to: variability in the economic forecast and management’s assessment of the existing economic conditions, changes in volume and severity of adversely classified loans, changes in concentrations of credit, changes in the nature and volume of the loan segments, factors related to credit administration, and other idiosyncratic risks not embedded in the data used in the model. Loans that do not share risk characteristics are evaluated on an individual basis. The Company designates individually evaluated loans on nonaccrual status as collateral dependent loans, as well as other loans that management of the Company designates as having higher risk and loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses. The Company has adopted the practical expedient to measure the allowance for credit losses for collateral dependent loans based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required. Allowance for Credit Losses – Unfunded Commitments Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit issued to meet customer financing needs. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded. The Company records an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancelable, through a charge to provision for (or recovery of) credit losses in the
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Table of Contents 75 Consolidated Statements of Income. The allowance for credit losses on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date using the same methodology as the loan portfolio, taking into consideration the likelihood that funding will occur as well as any third-party guarantees. The allowance for unfunded commitments is included in other liabilities on the Company’s Consolidated Balance Sheets. Accrued Interest Receivable The Company has elected to exclude accrued interest from the amortized cost basis in its determination of the allowance for credit losses for both loans and held-to-maturity securities, as well as elected the policy to write-off accrued interest receivable directly through the reversal of interest income. Accrued interest receivable totaled $5.1 million on loans and $245 thousand on held-to-maturity securities at December 31, 2025, and is included in “Accrued Interest Receivable” on the Company’s Consolidated Balance Sheets. Bank Premises and Equipment Bank premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is computed on the straight-line method over the useful lives of the assets, ranging from three to fifteen years, or the expected term of leases, if shorter. Expected terms include lease option periods to the extent that the exercise of such options is reasonably certain. Maintenance and repairs of property and equipment are expensed as incurred, while major improvements are capitalized and amortized over their respective useful life. Other Real Estate Owned (“OREO”) Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Operating costs after acquisition are expensed as incurred. The Company had no OREO as of December 31, 2025 and 2024. At December 31, 2025 and 2024, there were no consumer mortgage loans secured by residential real estate for which formal foreclosure proceedings were in progress. Transfers of Financial Assets Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (a) the assets have been isolated from the Company – put presumptively beyond the reach of the transferor and its creditors, even in the event of bankruptcy or other receivership, (b) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (c) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets. Loan Servicing Rights Under the U.S Small Business Administration (“SBA”) 7(a) program, the Bank can sell in the secondary market the guaranteed portion of its SBA 7(a) loans and retain the related unguaranteed portion of these loans, as well as the servicing on such loans, for which it is paid a fee. The Company generally offers SBA 7(a) loans within a range of $50 thousand to $2.0 million. SBA 7(a) loans are fixed or adjustable rate loans based on the Prime Rate. Under the SBA 7(a) program, the loans carry an SBA guaranty for up to 85% of the loan. Typical maturities for this type of loan vary but can be up to ten years. The Company holds rights to service the guaranteed portion of SBA loans sold in the secondary market. Management has elected the amortization method to account for loan servicing rights. The loan servicing spread is generally a minimum of 1.00% on all SBA 7(a) loans. Loan servicing rights are capitalized at estimated fair value when acquired through the origination of loans that are subsequently sold with the servicing rights retained. Loan servicing rights are amortized to servicing income on loans sold approximately in proportion to and over the period of estimated net servicing income. The value of loan servicing rights at the date of the sale of loans is estimated based on the discounted present value of expected future cash flows using key assumptions for servicing income and costs and expected prepayment rates on the underlying loans.
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Table of Contents 76 The carrying value of loan servicing rights are periodically evaluated for impairment by comparing actual cash flows and estimated future cash flows from the loan servicing assets to those estimated at the time that the loan servicing assets were originated. Fair values are estimated using expected future discounted cash flows based on current market rates of interest. For purposes of measuring impairment, the loan servicing rights must be stratified by one or more predominant risk characteristics of the underlying loans. The Company stratifies its capitalized loan servicing rights based on product type and term of the underlying loans. The amount of impairment recognized is the amount, if any, by which the amortized cost of the loan servicing rights exceeds their carrying value. Impairment, if deemed temporary, is recognized through a valuation allowance to the extent that fair value is less than the recorded amount. At December 31, 2025, the Bank’s SBA 7(a) loan servicing portfolio, which is not included in the Company’s consolidated financial statements, totaled $9.8 million. At December 31, 2025 and December 31, 2024, SBA servicing rights of $138 thousand and $97 thousand were recorded in other assets in the Consolidated Balance Sheets, respectively. Income Taxes Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences, operating loss carryforwards, and tax credit carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company recorded no liability for unrecognized tax benefits at December 31, 2025 or 2024. Earnings Per Common Share Earnings per common share is calculated in accordance with Accounting Standard Codification (“ASC”) 260 - Earnings Per Share, which provides that unvested share-based payment awards that contain non- forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. Under the two-class method, basic earnings per common share is computed by dividing net earnings allocated to common stock by the weighted-average number of common shares outstanding during the applicable period, excluding outstanding participating securities. Diluted earnings per common share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method. Earnings per share are restated for all stock splits and dividends through the date the financial statements are issued. Advertising Costs The Company follows the policy of charging the production costs of advertising to expense as incurred. Advertising expense was $381 thousand and $386 thousand for the years ended December 31, 2025 and 2024, respectively.
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Table of Contents Share-Based Compensation The Company recognizes the compensation cost relating to share-based payment transactions based on the grant date fair value of the equity instruments issued. The share compensation accounting guidance requires that compensation cost for all share-based awards be calculated and recognized over the vesting period. A Black-Scholes model is used to estimate the fair value of stock options. Restricted stock awards are valued using the closing stock price on the date of grant. The Company’s accounting policy is to recognize forfeitures as they occur. Comprehensive Income (Loss) Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains (losses) on securities available-for-sale and the amortization of unrealized losses or accretion of unrealized gains on securities transferred from available-for-sale to held-to- maturity, which are also recognized as a separate component of equity. Items reclassified out of accumulated other comprehensive income (loss) to net income relate solely to realized gains (losses) on sales of securities available-for-sale and appear under the caption “Gains/(losses) on sale of available-for-sale securities” in the Company’s Consolidated Statements of Income. Derivatives The Company enters into interest rate swaps (“swaps”) with commercial loan customers to provide a facility to mitigate the fluctuations in the variable rate on the respective loans. These swaps are matched in exact offsetting terms to swaps that the Company enters into with an outside third party. The swaps are reported at fair value in other assets or other liabilities in the Consolidated Balance Sheets. The Company's swaps qualify as derivatives, but are not designated as hedging instruments. As such, any net gain or loss resulting from changes in the fair value is recognized in other operating income in the Consolidated Statements of Income. Refer to Note 5 for further discussion regarding the Company’s swaps. Fair Value of Financial Instruments Fair values of various assets and liabilities are estimated using relevant market information, valuation techniques and other assumptions, as more fully disclosed in Note 12. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates. Recently Adopted Accounting Standards ASU 2023-09: In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The amendments in this ASU require an entity to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, which is greater than five percent of the amount computed by multiplying pretax income by the entity’s applicable statutory rate, on an annual basis. Additionally, the amendments in this ASU require an entity to disclose the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions that are equal to or greater than five percent of total income taxes paid (net of refunds received). Lastly, the amendments in this ASU require an entity to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign. This ASU was effective for annual periods beginning after December 15, 2024. Early adoption was permitted. The Company fully adopted the guidance for annual periods beginning after December 15, 2024, and enhanced its income tax disclosures in accordance with the requirements. The adoption was applied prospectively and did not have a material impact on the Company’s Consolidated financial statements. Recent Accounting Pronouncements ASU 2024-03: In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” ASU 2024-03 requires public companies to disclose, in the notes to the financial statements, specific information about certain costs and expenses at each interim and annual reporting period. This includes disclosing amounts related to employee compensation, depreciation, and intangible asset amortization. In addition, public companies will need to provide
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Table of Contents 78 qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. ASU 2024-03 is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Implementation of ASU 2024-03 may be applied prospectively or retrospectively. The Company does not expect the adoption of ASU 2024-03 to have a material impact on its financial statements. ASU 2025-08: In November 2025, the FASB issued ASU 2025-08, “Financial Instruments—Credit Losses (Topic 326): Purchased Loans.” The amendments in this ASU expand the population of acquired financial assets accounted for using the gross-up approach. Acquired loans (excluding credit cards) are deemed purchased seasoned loans and accounted for using the gross-up approach upon acquisition if criteria established by the new guidance are met. This change aims to enhance comparability, consistency, and better reflect the economics of acquiring financial assets. This ASU is effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within those annual reporting periods. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued or made available for issuance. If an entity adopts this ASU in an interim reporting period, it should apply it as of the beginning of that interim reporting period or the beginning of the annual reporting period that includes that interim reporting period. The Company does not expect the adoption of ASU 2025- 08 to have a material impact on its consolidated financial statements. ASU 2025-12: In December 2025, the FASB issued ASU 2025-12, “Codification Improvements.” The amendments in this ASU update the FASB Accounting Standards Codification for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. The amendments in this ASU are effective for annual periods beginning after December 15, 2026, and interim periods within those annual periods. Early adoption is permitted in both interim and annual periods in which financial statements have not yet been issued or made available for issuance. If an entity adopts the amendments in this ASU in an interim period, it must adopt them as of the beginning of the annual period that includes that interim period. An entity may elect to early adopt the amendments on an issue-by- issue basis. The Company does not expect the adoption of ASU 2025-12 to have a material impact on its consolidated financial statements. Note 2— Investment Securities Available-for-Sale Each of the securities in the Company’s available-for-sale investment portfolio is either covered by the explicit or implied guarantee of the United States government or one of its agencies or rated investment grade or higher. All available-for-sale securities were current with no securities past due or on nonaccrual as of December 31, 2025 or December 31, 2024. The following tables summarize the amortized cost and fair value of securities available-for-sale and the corresponding amounts of gross unrealized gains and losses at December 31, 2025 and December 31, 2024, respectively. December 31, 2025 Gross Gross Amortized Unrealized Unrealized Fair(Dollars in thousands) Cost Gains (Losses) Value Available-for-sale U.S. Treasuries $ 13,244 $ — $ (112) $ 13,132 U.S. government and federal agencies 6,976 2 (158) 6,820 Corporate bonds 3,000 — (180) 2,820 U.S. agency collateralized mortgage obligations 31,019 7 (5,333) 25,693 Tax-exempt municipal 1,378 — (142) 1,236 U.S. agency mortgage-backed 77,306 136 (3,291) 74,151 Total Available-for-sale Securities $132,923 $ 145 $(9,216) $123,852
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Table of Contents 79 December 31, 2024 Gross GrossAmortized Unrealized Unrealized Fair(Dollars in thousands) Cost Gains (Losses) Value Available-for-sale U.S. Treasuries $ 27,920 $ — $ (783) $ 27,137 U.S. government and federal agencies 10,966 — (385) 10,581 Corporate bonds 3,000 — (261) 2,739 U.S. agency collateralized mortgage obligations 36,032 — (6,421) 29,611 Tax-exempt municipal 1,379 — (208) 1,171 Taxable municipal 270 — (7) 263 U.S. agency mortgage-backed 64,274 — (5,519) 58,755 Total Available-for-sale Securities $143,841 $ — $(13,584) $130,257 The Company did not sell or recognize any gain or loss for any securities in either 2025 or 2024. Available-for-sale securities having a market value of $54.8 million and $48.8 million at December 31, 2025 and December 31, 2024, respectively, were pledged to secure public deposits and for other purposes required by law. These securities had an amortized cost of $58.6 million and $52.5 million at December 31, 2025 and December 31, 2024, respectively. The following tables summarize the fair value of securities available-for-sale at December 31, 2025 and December 31, 2024 and the corresponding amounts of gross unrealized losses. Management uses the valuations as of month-end in determining when securities are in an unrealized loss position. Therefore, a security’s market value could have exceeded its amortized cost on other days during the prior twelve-month period. December 31, 2025 Less than 12 Months 12 Months or Longer Total Gross Gross GrossFair Unrealized Fair Unrealized Fair Unrealized(Dollars in thousands) Value Losses Value Losses Value Losses Available-for-sale U.S. Treasuries $ — $ — $13,132 $ (112) $ 13,132 $ (112) U.S. government and federal agencies — — 5,838 (158) 5,838 (158) Corporate bonds — — 2,820 (180) 2,820 (180) U.S. agency collateralized mortgage obligations — — 24,930 (5,333) 24,930 (5,333) Tax-exempt municipal — — 1,236 (142) 1,236 (142) U.S. agency mortgage-backed 11,214 (28) 46,318 (3,263) 57,532 (3,291) Total Available-for-sale Securities $11,214 $ (28) $94,274 $(9,188) $105,488 $(9,216) December 31, 2024 Less than 12 Months 12 Months or Longer Total Gross Gross GrossFair Unrealized Fair Unrealized Fair Unrealized(Dollars in thousands) Value Losses Value Losses Value Losses Available-for-sale U.S. Treasuries $ — $ — $ 27,137 $ (783) $ 27,137 $ (783) U.S. government and federal agencies — — 10,581 (385) 10,581 (385) Corporate bonds — — 2,739 (261) 2,739 (261) U.S. agency collateralized mortgage obligations — — 29,611 (6,421) 29,611 (6,421) Tax-exempt municipal — — 1,171 (208) 1,171 (208) Taxable municipal — — 263 (7) 263 (7) U.S. agency mortgage-backed — — 58,755 (5,519) 58,755 (5,519) Total Available-for-sale Securities $ — $ — $130,257 $(13,584) $130,257 $(13,584)
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Table of Contents 80 The Company had 137 and 147 securities in an unrealized loss position as of December 31, 2025 and December 31, 2024, respectively. The Company has evaluated available-for-sale securities in an unrealized loss position for credit related impairment at December 31, 2025 and December 31, 2024 and concluded no impairment existed based on a combination of factors, which included: (1) the securities are of high credit quality, (2) unrealized losses are primarily the result of market volatility and increases in market interest rates, (3) the contractual terms of the investments do not permit the issuer(s) to settle the securities at a price less than the par value of each investment, (4) issuers continue to make timely principal and interest payments, and (5) the Company does not intend to sell any of the investments and the accounting standard of “more likely than not” has not been met for the Company to be required to sell any of the investments before recovery of its amortized cost basis. As such, there was no allowance for credit losses on available-for-sale securities at December 31, 2025. The table below summarizes the contractual maturities of our available-for-sale investment securities as of December 31, 2025. Issuers may have the right to call or prepay certain obligations and as such, the expected maturities of our securities may differ from the scheduled contractual maturities presented below. December 31, 2025 Amortized Fair(Dollars in thousands) Cost Value Available-for-sale Due in one year or less $ 17,400 $ 17,280 Due after one year through five years 21,600 21,079 Due after five years through ten years 42,717 42,158 Due after ten years 51,206 43,335 Total Available-for-sale Securities $ 132,923 $ 123,852 In the prevailing interest rate environments as of December 31, 2025 and December 31, 2024, the Company’s available-for-sale investment portfolio had an estimated weighted average remaining life of approximately 3.1 years as of both periods. Held-to-Maturity Each of the securities in the Company’s held-to-maturity investment portfolio is either rated investment grade or higher or covered by the explicit or implied guarantee of the United States government or one of its agencies. All held-to-maturity securities were current with no securities past due or on nonaccrual as of December 31, 2025 or December 31, 2024. The following tables summarize the amortized cost and fair value of securities held-to-maturity and the corresponding amounts of gross unrealized losses at December 31, 2025 and December 31, 2024, respectively. December 31, 2025 Gross GrossAmortized Unrealized Unrealized Fair(Dollars in thousands) Cost Gains (Losses) Value Held-to-maturity U.S. Treasuries $ 6,002 $ — $ (308) $ 5,694 U.S. government and federal agencies 35,314 — (2,934) 32,380 U.S. agency collateralized mortgage obligations 16,163 — (3,006) 13,157 Taxable municipal 6,024 — (754) 5,270 U.S. agency mortgage-backed 24,918 — (3,844) 21,074 Total Held-to-maturity Securities $88,421 $ — $(10,846) $77,575
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Table of Contents 81 December 31, 2024 Gross GrossAmortized Unrealized Unrealized Fair(Dollars in thousands) Cost Gains (Losses) Value Held-to-maturity U.S. Treasuries $ 6,001 $ — $ (583) $ 5,418 U.S. government and federal agencies 35,349 — (4,743) 30,606 U.S. agency collateralized mortgage obligations 17,805 — (3,948) 13,857 Taxable municipal 6,041 — (1,089) 4,952 U.S. agency mortgage-backed 26,813 — (5,376) 21,437 Total Held-to-maturity Securities $92,009 $ — $(15,739) $76,270 Held-to-maturity securities having a market value of $45.2 million and $43.0 million at December 31, 2025 and December 31, 2024, respectively, were pledged to secure public deposits and for other purposes required by law. These securities had an amortized cost of $49.8 million and $50.0 million at December 31, 2025 and December 31, 2024, respectively. The Company evaluates the credit risk of its held-to-maturity securities on at least a quarterly basis. The Company estimates expected credit losses on held-to-maturity securities on an individual basis based on a PD/LGD methodology primarily using security-level credit ratings. The primary indicators of credit quality for the Company’s held-to-maturity portfolio are security type and credit rating, which is influenced by a number of factors including obligor cash flow, geography, seniority, and others. The Company’s held-to- maturity securities with credit risk were comprised of municipal bonds and had a credit rating of AA or better as of December 31, 2025. All other held-to-maturity securities are covered by the explicit or implied guarantee of the United States government or one of its agencies. The Company did not have an allowance for credit losses on held-to-maturity securities as of December 31, 2025. The table below summarizes the contractual maturities of our held-to-maturity investment securities as of December 31, 2025. Issuers may have the right to call or prepay certain obligations and as such, the expected maturities of our securities are likely to differ from the scheduled contractual maturities presented below. December 31, 2025 Amortized Fair(Dollars in thousands) Cost Value Held-to-maturity Due in one year or less $ — $ — Due after one year through five years 34,754 32,532 Due after five years through ten years 15,208 13,340 Due after ten years 38,459 31,703 Total Held-to-maturity Securities $ 88,421 $ 77,575 In the prevailing rate environments as of December 31, 2025 and December 31, 2024, the Company’s held-to- maturity investment portfolio had an estimated weighted average remaining life of approximately 5.2 years and 6.0 years, respectively. Restricted Securities The table below summarizes the carrying amount of restricted securities as of December 31, 2025 and December 31, 2024. (Dollars in thousands) December 31, 2025 December 31, 2024 Federal Reserve Bank Stock $ 3,342 $ 3,327 Federal Home Loan Bank Stock 4,242 4,247 Community Bankers’ Bank Stock 60 60 Total Restricted Securities $ 7,644 $ 7,634
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Table of Contents 82 Equity Securities The Company held equity securities with readily determinable fair values totaling $2.8 million at December 31, 2025 and December 31, 2024, respectively. These securities consist of mutual funds held in a trust and were obtained for the purpose of economically hedging changes in the Company’s nonqualified deferred compensation liability. Changes in the fair value of these securities are reflected in earnings. A gain of $402 thousand and a gain of $236 thousand were recorded in non-qualified deferred compensation plan asset gains, net in the Consolidated Statements of Income as of December 31, 2025 and December 31, 2024, respectively. Note 3— Loans The following table presents the composition of the Company’s loan portfolio as of December 31, 2025 and December 31, 2024. Table 3.1: Loan Portfolio Composition (Dollars in thousands) December 31, 2025 December 31, 2024 Real Estate Loans: Commercial $ 1,173,617 $ 1,181,090 Construction and land development 222,659 164,988 Residential 522,990 472,932 Commercial - Non-Real Estate: Commercial loans 49,967 47,736 Consumer - Non-Real Estate: Consumer loans 1,043 906 Total Gross Loans $ 1,970,276 $ 1,867,652 Allowance for loan credit losses (19,805) (18,715) Net deferred loan costs 5,084 4,521 Total net loans $ 1,955,555 $ 1,853,458 Portfolio Segments The Company currently manages its loan products and the respective exposure to credit losses by the following specific portfolio segments which are levels at which the Company develops and documents its systematic methodology to determine the allowance for loan credit losses attributable to each respective portfolio segment. These segments are: ● Real estate - commercial loans – The real estate commercial loans category contains commercial mortgage loans secured by owner occupied, non-owner occupied, and multifamily real estate. ● Real estate - construction and land development loans – The real estate construction and land development loans category contains residential and commercial construction loan financing to builders and developers and to consumers building their own homes. ● Real estate - residential loans – The real estate residential mortgage loans category contains permanent mortgage loans principally to consumers secured by residential real estate. ● Commercial loans – The commercial loans category contains business purpose loans made to provide funds for the financing of equipment, receivables, contract administration expenses, and other general corporate needs of commercial businesses. ● Consumer loans – The consumer loans category contains personal loans such as installment loans and lines of credit. Loan Servicing Rights Under the SBA 7(a) program, the Bank can sell in the secondary market the guaranteed portion of its SBA 7(a) loans and retain the related unguaranteed portion of these loans, as well as the servicing on such loans, for which it is paid a fee. The Company generally offers SBA 7(a) loans within a range of $50 thousand to $2.0 million. SBA 7(a) loans are fixed or
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Table of Contents 83 adjustable-rate loans based on the Prime Rate. Under the SBA 7(a) program, the loans carry an SBA guaranty for up to 85% of the loan. Typical maturities for this type of loan vary but can be up to ten years. The Company holds rights to service the guaranteed portion of SBA loans sold in the secondary market. Management has elected the amortization method to account for loan servicing rights. The loan servicing spread is generally a minimum of 1.00% on all SBA 7(a) loans. Loan servicing rights are capitalized at estimated fair value when acquired through the origination of loans that are subsequently sold with the servicing rights retained. Loan servicing rights are amortized to servicing income on loans sold approximately in proportion to and over the period of estimated net servicing income. The value of loan servicing rights at the date of the sale of loans is estimated based on the discounted present value of expected future cash flows using key assumptions for servicing income and costs and expected prepayment rates on the underlying loans. The carrying value of loan servicing rights are periodically evaluated for impairment by comparing actual cash flows and estimated future cash flows from the loan servicing assets to those estimated at the time that the loan servicing assets were originated. Fair values are estimated using discounted expected future cash flows based on current market rates of interest. For purposes of measuring impairment, the loan servicing rights must be stratified by one or more predominant risk characteristics of the underlying loans. The Company stratifies its capitalized loan servicing rights based on product type and term of the underlying loans. The amount of impairment recognized is the amount, if any, by which the amortized cost of the loan servicing rights exceeds their carrying value. Impairment, if deemed temporary, is recognized through a valuation allowance to the extent that fair value is less than the recorded amount. At December 31, 2025 and December 31, 2024, the total outstanding principal balance of the Bank’s SBA 7(a) loan servicing portfolio, which is not included in the Company’s consolidated financial statements, totaled $9.8 million and $6.4 million, respectively. At December 31, 2025 and December 31, 2024, SBA servicing rights of $138 thousand and $97 thousand were recorded in other assets in the Consolidated Balance Sheets, respectively. There was no valuation allowance on loan servicing rights at December 31, 2025 or December 31, 2024. Note 4— Allowance for Loan Credit Losses The following table presents the activity for the allowance for loan credit losses for the twelve months ended December 31, 2025. Table 4.1: Allowance for Loan Credit Losses December 31, 2025 Real Estate Construction &LandDollars in thousands Commercial Development Residential Commercial Consumer Total Beginning balance, December 31, 2024 $ 11,732 $ 1,761 $ 4,594 $ 548 $ 80 $18,715Charge-offs — — — (361) — (361)Recoveries — — — 2 — 2 Provision for (recovery of) credit losses (555) 1,253 424 375 (48) 1,449 Ending balance, December 31, 2025 $ 11,177 $ 3,014 $ 5,018 $ 564 $ 32 $19,805 The following table presents the activity for the allowance for loan credit losses for the twelve months ended December 31, 2024. December 31, 2024 Real Estate Construction &LandDollars in thousands Commercial Development Residential Commercial Consumer Total Beginning balance, December 31, 2023 $ 12,841 $ 1,787 $ 4,323 $ 495 $ 97 $19,543Charge-offs — — — — — —Recoveries — — — 2 — 2 Provision for (recovery of) credit losses (1,109) (26) 271 51 (17) (830) Ending balance, December 31, 2024 $ 11,732 $ 1,761 $ 4,594 $ 548 $ 80 $18,715
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Table of Contents 84 As of December 31, 2025, there were no collateral dependent loans evaluated for the allowance for credit losses on an individual basis. There was one collateral dependent commercial owner-occupied real estate loan totaling $10.0 million in outstanding principal that was individually evaluated as of December 31, 2024. Management concluded that the real estate secured collateral value of the of the loan, minus the estimated cost to sell, exceeded the carrying value of the loan and no reserve was necessary. The loan was paid off in full on January 7, 2025. During the year ended December 31, 2025, the Company charged-off one commercial business SBA 7(a) loan in the total amount of $361 thousand. The charged-off amount represented the unguaranteed portion of the loan. As of December 31, 2025 and 2024, the Company had no non-accrual loans and no other real estate owned assets. Table 4.2: Past Due and Non-Accrual Loans Delinquency Information Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were made. As of December 31, 2025, the Company had one loan that was 90 days past due and still accruing interest. This represented the guaranteed portion of the aforementioned SBA 7(a) loan. The Company has submitted a reimbursement claim to the SBA in the total amount of $1.1 million. As of December 31, 2024, the Company had one loan that was 90 days past due and still accruing interest. The loan was well collateralized and was paid off in full on January 7, 2025. The following tables present a summary of past due and nonaccrual loans by segment as of December 31, 2025 and December 31, 2024. December 31, 2025 30-59 Days 60-89 Days 90 Days or 90 Days or MorePast Past More Total Past Total Past Due and Nonaccrual(Dollars inthousands) Due Due Past Due Due Current Loans Still Accruing Loans Real EstateLoans Commercial $ — $ — $ — $ — $1,173,617 $1,173,617 $ — $ —Constructionand landdevelopment — — — — 222,659 222,659 — — Residential 370 756 — 1,126 521,864 522,990 — —Commercial — — 1,084 1,084 48,883 49,967 1,084 —Consumer — — — — 1,043 1,043 — — Total Loans $ 370 $ 756 $ 1,084 $ 2,210 $1,968,066 $1,970,276 $ 1,084 $ — December 31, 2024 30-59 Days 60-89 Days 90 Days or 90 Days or MorePast Past More Total Past Total Past Due and Nonaccrual(Dollars inthousands) Due Due Past Due Due Current Loans Still Accruing Loans Real EstateLoans Commercial $ — $ — $ 9,978 $ 9,978 $1,171,112 $1,181,090 $ 9,978 $ —Constructionand landdevelopment — — — — 164,988 164,988 — —Residential — — — — 472,932 472,932 — —Commercial — — — — 47,736 47,736 — — Consumer — — — — 906 906 — — Total Loans $ — $ — $ 9,978 $ 9,978 $1,857,674 $1,867,652 $ 9,978 $ —
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Table of Contents 85 Credit Quality Indicators The Company assesses credit quality indicators based on internal risk rating of loans. Each loan is evaluated at least annually with more frequent evaluation of more severely criticized loans. The indicators represent the rating for loans as of the date presented is based on the most recent credit review performed. Internal risk rating definitions are: Pass: These include satisfactory loans that have acceptable levels of risk. Special Mention: Loans classified as special mention have a potential weakness that requires close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. These credits do not expose the Company to sufficient risk to warrant further adverse classification. Substandard: A substandard asset is inadequately protected by the current worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful: Loans classified as doubtful have all the weaknesses inherent in a substandard asset with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loss: Loans classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be received in the future. The Company has a portfolio of smaller homogenous loans that are not individually risk rated and include residential permanent and construction mortgages, home equity lines of credit, and consumer installment loans. For these loans, management uses payment status as the primary credit quality indicator. The payment status of these loans is then translated into an internal risk rating. The following table summarizes the translation of past due status to risk rating for loans that are not individually risk rated. Internal Days Past Due Risk Rating 0 - 29 days Pass 30-59 days Special Mention 60-89 days Substandard 90-119 days Doubtful 120+ days Loss
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Table of Contents 86 The following table presents the Company’s recorded investment in loans by credit quality indicator by year of origination as of December 31, 2025. Table 4.3: Credit Quality Information by Loan Class Term Loans by Year of Origination (Dollars in thousands) 2025 2024 2023 2022 2021 Prior Revolving Total Real Estate Loans - CommercialPass $108,904 $146,921 $67,298 $259,998 $152,295 $420,305 $ 5,224 $1,160,945Special mention — — — 12,672 — — — 12,672Substandard — — — — — — — —Doubtful — — — — — — — — Loss — — — — — — — — Total Real Estate Loans - Commercial $108,904 $146,921 $67,298 $272,670 $152,295 $420,305 $ 5,224 $1,173,617 Current period gross write-offs $ —$ —$ —$ —$ —$ —$ —$ — Real Estate Loans - Construction and land developmentPass $ 72,568 $ 66,800 $22,339 $ 14,925 $ 773 $ 13,355 $ 30,815 $ 221,575Special mention — — — — — 1,084 — 1,084Substandard — — — — — — — —Doubtful — — — — — — — — Loss — — — — — — — — Total Real Estate Loans - Construction and land development$ 72,568 $ 66,800 $22,339 $ 14,925 $ 773 $ 14,439 $ 30,815 $ 222,659 Current period gross write-offs $ —$ —$ —$ —$ —$ —$ —$ — Real Estate Loans - ResidentialPass $ 92,918 $ 27,336 $59,483 $ 99,049 $109,931 $107,162 $ 26,355 $ 522,234Special mention — — — — — — — —Substandard — — — — — 756 — 756Doubtful — — — — — — — — Loss — — — — — — — — Total Real Estate Loans - Residential $ 92,918 $ 27,336 $59,483 $ 99,049 $109,931 $107,918 $ 26,355 $ 522,990 Current period gross write-offs $ —$ —$ —$ —$ —$ —$ —$ — Commercial LoansPass $ 9,952 $ 4,277 $ 3,254 $ 2,948 $ 618 $ 6,202 $ 21,632 $ 48,883Special mention — — — 1,084 — — — 1,084Substandard — — — — — — — —Doubtful — — — — — — — — Loss — — — — — — — — Total Commercial Loans $ 9,952 $ 4,277 $ 3,254 $ 4,032 $ 618 $ 6,202 $ 21,632 $ 49,967 Current period gross write-offs $ —$ —$ —$ 361 $ —$ —$ —$ 361 Consumer LoansPass $ 463 $ 529 $ 36 $ —$ —$ —$ 15 $ 1,043Special mention — — — — — — — —Substandard — — — — — — — —Doubtful — — — — — — — — Loss — — — — — — — — Total Consumer Loans $ 463 $ 529 $ 36 $ —$ —$ —$ 15 $ 1,043 Current period gross write-offs $ —$ —$ —$ —$ —$ —$ —$ —
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Table of Contents 87 The following table presents the Company’s recorded investment in loans by credit quality indicator by year of origination as of December 31, 2024. Term Loans by Year of Origination (Dollars in thousands) 2024 2023 2022 2021 2020 Prior Revolving Total Real Estate Loans - CommercialPass $133,591 $66,453 $287,181 $176,424 $116,364 $362,135 $ 1,474 $1,143,622Special mention — — 12,702 — — 14,788 — 27,490Substandard — — — 9,978 — — — 9,978Doubtful — — — — — — — — Loss — — — — — — — — Total Real Estate Loans - Commercial $133,591 $66,453 $299,883 $186,402 $116,364 $376,923 $ 1,474 $1,181,090 Current period gross write-offs $ —$ —$ —$ —$ —$ —$ —$ — Real Estate Loans - Construction and land developmentPass $ 64,826 $40,190 $ 17,635 $ 4,395 $ 2,254 $ 11,974 $ 22,613 $ 163,887Special mention — — — — — 1,101 — 1,101Substandard — — — — — — — —Doubtful — — — — — — — — Loss — — — — — — — — Total Real Estate Loans - Construction and land development$ 64,826 $40,190 $ 17,635 $ 4,395 $ 2,254 $ 13,075 $ 22,613 $ 164,988 Current period gross write-offs $ —$ —$ —$ —$ —$ —$ —$ — Real Estate Loans - Residential Pass $ 31,815 $71,489 $110,724 $114,991 $ 81,482 $ 39,868 $ 22,563 $ 472,932Special mention — — — — — — — —Substandard — — — — — — — —Doubtful — — — — — — — —Loss — — — — — — — — Total Real Estate Loans - Residential $ 31,815 $71,489 $110,724 $114,991 $ 81,482 $ 39,868 $ 22,563 $ 472,932 Current period gross write-offs $ —$ —$ —$ —$ —$ —$ —$ — Commercial LoansPass $ 13,622 $ 4,628 $ 5,770 $ 1,351 $ 1,323 $ 7,032 $ 14,010 $ 47,736Special mention — — — — — — — —Substandard — — — — — — — —Doubtful — — — — — — — — Loss — — — — — — — — Total Commercial Loans $ 13,622 $ 4,628 $ 5,770 $ 1,351 $ 1,323 $ 7,032 $ 14,010 $ 47,736 Current period gross write-offs $ —$ —$ —$ —$ —$ —$ —$ — Consumer LoansPass $ 812 $ 72 $ —$ —$ —$ 3 $ 19 $ 906Special mention — — — — — — — —Substandard — — — — — — — —Doubtful — — — — — — — — Loss — — — — — — — — Total Consumer Loans $ 812 $ 72 $ —$ —$ —$ 3 $ 19 $ 906 Current period gross write-offs $ —$ —$ —$ —$ —$ —$ —$ — Revolving loans that are converted to term loans are treated as new originations in both tables above and are presented by year of origination.
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Table of Contents 88 Modifications with Borrowers Experiencing Financial Difficulty The allowance for loan credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination. The starting point for the estimate of the allowance for loan credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. The Company may provide concessions to borrowers experiencing financial difficulty to minimize the economic loss and improve long-term loan performance and collectability. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. The Company did not make any loan modifications to borrowers experiencing financial difficulty during the twelve months ended December 31, 2025. The Company made one loan modification to a borrower experiencing financial difficulty during the twelve months ended December 31, 2024. As of December 31, 2024, the outstanding principal balance of the loan was $1.5 million which represented 3.16% of the Commercial Non-Real Estate Loans - Commercial loan segment. The loan was modified to provide a combination of interest rate and term extension. The Company evaluates the performance of loans modified for borrowers experiencing financial difficulty during the twelve-month period following modification. For the years ended December 31, 2025 and 2024, there were no loans that defaulted within twelve months of modification. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance because of the measurement methodologies used to estimate the allowance, a change to the allowance is generally not recorded upon modification. Unfunded Commitments The Company maintains an allowance for off-balance sheet credit exposures such as unfunded balances for existing lines of credit, commitments to extend future credit, as well as both standby and commercial letters of credit when there is a contractual obligation to extend credit and when this extension of credit is not unconditionally cancellable by the Company. The allowance for off-balance sheet credit exposures is adjusted as a provision for (or recovery of) credit losses in the Consolidated Statements of Income. The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the allowance for loan credit losses. The allowance for credit losses for unfunded loan commitments of $1.3 million and $1.1 million at December 31, 2025 and December 31, 2024, respectively, is separately classified within other liabilities on the Consolidated Balance Sheets. The following table presents the balance and activity in the allowance for credit losses for unfunded loan commitments for the twelve months ended December 31, 2025 and 2024. Table 4.4: Allowance for Credit Losses – Unfunded Commitments Allowance for Credit Losses (Dollars in thousands) Unfunded Commitments Beginning balance, December 31, 2024 $ 1,083 Provision for credit losses 239 Ending balance, December 31, 2025 $ 1,322 Allowance for Credit Losses (Dollars in thousands) Unfunded Commitments Beginning balance, December 31, 2023 $ 623 Provision for credit losses 460 Ending balance, December 31, 2024 $ 1,083
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Table of Contents 89 Note 5— Derivatives The Company enters into interest rate swap agreements (“swaps”) with commercial loan customers to provide a facility for customers to mitigate the fluctuations in the variable rate on the respective loans. These swaps are matched in exact offsetting terms to swaps that the Company enters into with an outside third party. These swaps qualify as derivatives, but are not designated as hedging instruments. The following table summarizes the Company’s swaps at December 31, 2025 and December 31, 2024. Table 5.1: Derivatives December 31, 2025 Estimated Weighted Average Notional Fair Years to Receive Pay (Dollars in thousands) Amount Value Maturity Rate Rate Interest rate swap agreements: Pay fixed/receive variable swaps $ 22,823 $ (175) 4.3 years 6.00% 6.26% Pay variable/receive fixed swaps 22,823 175 4.3 years 6.26% 6.00% Total interest rate swap agreements $ 45,646 $ — 4.3 years 6.13% 6.13% December 31, 2024 Estimated Weighted Average Notional Fair Years to Receive Pay (Dollars in thousands) Amount Value Maturity Rate Rate Interest rate swap agreements: Pay fixed/receive variable swaps $ 24,195 $ 549 2.7 years 6.12% 4.09% Pay variable/receive fixed swaps 24,195 (549) 2.7 years 4.09% 6.12% Total interest rate swap agreements $ 48,390 $ — 2.7 years 5.11% 5.11% The estimated fair value of the swaps at December 31, 2025 and December 31, 2024 were recorded in other assets and other liabilities in the Consolidated Balance Sheets. The associated net gains and losses on the swaps are recorded in other income on the Consolidated Statements of Income. Note 6— Bank Premises and Equipment, Net The following table summarizes major classes of bank premises and equipment and the total accumulated depreciation as of December 31, 2025 and December 31, 2024. Table 6.1: Components of Bank Premises and Equipment, Net (Dollars in thousands) December 31, 2025 December 31, 2024 Leasehold improvements $ 3,309 $ 3,087 Furniture and equipment 7,270 7,021 Total Bank Premises and Equipment $ 10,579 $ 10,108 Less: Accumulated depreciation (9,264) (8,790) Total Bank Premises and Equipment, Net $ 1,315 $ 1,318 Depreciation expense was $507 thousand and $447 thousand for the years ended December 31, 2025 and December 31, 2024, respectively.
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Table of Contents Note 7— Deposits and Borrowings The following table shows the components of the Company’s funding sources. Table 7.1: Composition of Deposits, Short-Term Borrowings and Long-Term Debt (Dollars in thousands) December 31, 2025 December 31, 2024 Deposits: Non-interest bearing demand deposits(1) $ 432,733 $ 433,288 Interest-bearing demand deposits(1) 745,323 705,097 Savings deposits 34,683 44,367 Time deposits(2) 759,546 709,663 Total Deposits $ 1,972,285 $ 1,892,415 (1) Overdraft demand deposits reclassified to loans totaled $118 thousand at December 31, 2025 and $1 thousand at December 31, 2024. (2) The aggregate amount of certificates of deposit with a minimum denomination of $250,000 was $337.6 million and $315.5 million at December 31, 2025 and December 31, 2024, respectively. December 31, 2025 December 31, 2024(Dollars inthousands) Stated Interest Rate Range Weighted-Average Interest Rate Carrying Value Carrying Value Long-term Debt: FHLB advances 3.91% - 4.14% 3.99% $ 56,000 $ 56,000 Subordinated debt 5.25% 5.25% 24,875 24,791 Total Long-term Debt $ 80,875 $ 80,791 The Company obtains certain deposits through the efforts of third-party brokers. Brokered deposits totaled $301.9 million and $276.4 million at December 31, 2025 and December 31, 2024, respectively, and were included in time deposits on the Company’s Consolidated Balance Sheets. Reciprocal IntraFi certificates of deposit totaled $35.1 million and $34.4 million at December 31, 2025 and December 31, 2024, respectively. Reciprocal IntraFi demand and money market deposits totaled $323.0 million and $309.5 million at December 31, 2025 and December 31, 2024, respectively. At December 31, 2025, there were no depositors that represented 5% or more of the Company’s total deposits. The Company completed a private placement of a $25.0 million fixed-to-floating subordinated note on June 15, 2022 (“2022 note”). Subject to limited exceptions permitting earlier redemption, the note is callable, in whole or in part, commencing July 1, 2027. Unless redeemed earlier, the note will mature on July 1, 2032. The note bears interest at a fixed rate of 5.25% to but excluding July 1, 2027, and will bear interest at a floating rate equal to the three-month Secured Overnight Financing Rate plus 245 basis points thereafter. The note qualifies as Tier 2 capital for regulatory purposes. The note is carried at its principal amount, less unamortized issuance costs. On July 15, 2022, the earliest available call date, the Company utilized the proceeds from the 2022 note issuance to redeem its $25.0 million fixed-to-floating 5.75% subordinated notes that were issued on July 6, 2017. The Company from time to time uses Federal Home Loan Bank of Atlanta (“FHLB”) advances as a source of funding and interest rate risk management tool. FHLB advances are secured by a blanket floating lien on all real estate mortgage loans secured by 1 to 4 family residential, multi-family and commercial real estate properties. On September 3, 2024, the Company took out three fixed interest rate advances with terms of 18, 24, and 36 months. The interest rates on the advances range from 3.91% to 4.14%. At December 31, 2025, the Company had $56.0 million outstanding FHLB advances. Available borrowing capacity based on collateral value amounted to approximately $454.8 million at December 31, 2025. The Company also has the capacity to borrow up to $139.5 million at the Federal Reserve discount window with no outstanding borrowings as of December 31, 2025. The Bank had loans pledged at the Federal Reserve discount window totaling $194.1 million as of December 31, 2025.
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Table of Contents 91 The Company also has unsecured federal funds lines of credit with correspondent banks available for overnight borrowing of $110.0 million with no outstanding borrowings as of December 31, 2025. The following table shows the carrying amount of the Company’s time deposits by contractual maturity as of December 31, 2025. Table 7.2: Scheduled Maturities of Time Deposits (Dollars in thousands) December 31, 2025 2026 $ 514,853 2027 182,146 2028 59,930 2029 1,202 2030 1,415 Thereafter — Total $ 759,546 Note 8— Leases Lease liabilities represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows. Cash flows are discounted at the Company’s incremental borrowing rate in effect at the commencement date of the lease. Right-of-use assets represent the Company’s right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor. The Company’s long-term lease agreements are classified as operating leases. Certain of these leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably certain of being exercised. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations. The following table presents an overview of the Company’s leases as of December 31, 2025 and December 31, 2024. Table 8.1: Leases Overview (Dollars in thousands) December 31, 2025 December 31, 2024 Lease liabilities $ 4,819 $ 5,369 Right-of-use assets 4,551 5,013 Weighted average remaining lease term (Years) 4.26years 4.94years Weighted average discount rate 4.15% 4.13% The following table presents a composition of the Company’s lease costs for the years ended December 31, 2025 and December 31, 2024. Table 8.2: Cost of Leases (Dollars in thousands) December 31, 2025 December 31, 2024 Operating lease cost $ 1,165 $ 1,360 Variable lease cost — — Short-term lease cost — — Total Lease Cost $ 1,165 $ 1,360 The total cash paid for amounts included in the measurement of lease liabilities totaled $1.3 million for each of the years ended December 31, 2025 and December 31, 2024.
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Table of Contents 92 The following table is a maturity schedule of the Company’s future lease payments and reconciles the undiscounted total obligation to the total recorded lease liabilities as of December 31, 2025. Table 8.3: Lease Maturity Schedule (Dollars in thousands) December 31, 2025 2026 $ 1,303 2027 1,262 2028 1,159 2029 1,118 2030 350 Thereafter 80 Total Undiscounted Cash Flows $ 5,272 Discount (453) Lease Liabilities $ 4,819 Total rent expense, including building expenses and real estate taxes for certain locations, amounted to $1.2 million and $1.4 million for the years ended December 31, 2025 and 2024, respectively. Rental expenses are classified as a component of the occupancy expense of premises line item in the Consolidated Statements of Income. Note 9— Income Taxes The Company files income tax returns in the U.S. federal jurisdiction, the Commonwealth of Virginia, the District of Columbia, the State of Maryland, the State of North Carolina and the State of West Virginia. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to 2022. The following table presents the significant components of the Company’s deferred tax assets and deferred tax liabilities as of December 31, 2025 and December 31, 2024. Table 9.1: Significant Components of Deferred Tax Assets and Liabilities (Dollars in thousands) December 31, 2025 December 31, 2024 Deferred Tax Assets: Allowance for credit losses $ 4,789 $ 4,465 Lease liabilities 1,092 1,219 Share-based compensation expense 86 122 Unrealized losses on debt securities 1,891 2,831 Other 701 587 Total Deferred Tax Assets $ 8,559 $ 9,224 Deferred Tax Liabilities: Right-of-use assets 1,032 1,136 Depreciation 27 50 Net deferred loan costs 1,152 1,025 Other 211 97 Total Deferred Tax Liabilities $ 2,422 $ 2,308 Net Deferred Tax Assets $ 6,137 $ 6,916
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Table of Contents 93 The following table summarizes the Company’s provision for income taxes charged to operations for the years ended December 31, 2025 and December 31, 2024, respectively. Table 9.2: Provision for Income Taxes (Dollars in thousands) December 31, 2025 December 31, 2024 Current tax expense $ 6,312 $ 5,042 Deferred tax (benefit) expense (162) (284) Total Income Tax Expense $ 6,150 $ 4,758 Federal tax expense $ 5,614 $ 4,365 State tax expense 536 393 Total Income Tax Expense $ 6,150 $ 4,758 The following table presents the factors driving the difference between the amount of income tax determined by applying the statutory federal income tax rate to income before income taxes and the amount of income tax expense reflected in the Consolidated Statements of Income for the years ended December 31, 2025 and December 31, 2024, respectively. Table 9.3: Effective Income Tax Reconciliation (Dollars in thousands) December 31, 2025 December 31, 2024 Amount Percentageof Pre-TaxIncome Amount Percentageof Pre-TaxIncome Computed “expected” tax expense $ 5,750 21.0% $ 4,595 21.0% Increase (decrease) in income taxes resulting from: Nondeductible compensation 104 0.4 37 0.2 State income taxes, net of federal benefit (1) 424 1.6 310 1.3 Low income housing tax credit (110) (0.4) (109) (0.5) Tax-exempt interest income (25) (0.1) (19) (0.1) Excess tax benefit on share-based compensation (14) (0.1) (28) (0.1) Other, net 21 0.1 (28) (0.1) Total $ 6,150 22.5% $ 4,758 21.7% (1) The state of Maryland made up the majority (greater than 50%) of the tax effect in this category. Note 10— Restriction on Cash Prior to March 2020, the Company was required to maintain a reserve against its deposits in accordance with Regulation D of the Federal Reserve Act. In March 2020, the Federal Reserve reduced the reserve requirement to zero percent effective March 26, 2020. Prior to the change effective March 26, 2020, reserve requirement ratios on net transactions accounts differed based on the amount of net transaction accounts at the depository institution. As a result, the Company was not required to maintain a cash reserve requirement as of December 31, 2025 and December 31, 2024. Note 11— Commitments and Contingencies The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit and financial guarantees written is represented by the contractual notional amount of those instruments.
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Table of Contents The Company uses the same credit policies in making commitments and conditional obligations as it does for on balance sheet instruments. The Company does not anticipate any material losses as a result of these transactions. The following table summarizes the contract or notional amount of the Company’s exposure to off-balance sheet risk as of December 31, 2025 and December 31, 2024. Table 11.1: Unfunded Lending Commitments (Dollars in thousands) December 31, 2025 December 31, 2024 Commitments to extend credit $ 343,944 $ 316,249 Standby letters of credit $ 10,073 $ 10,767 Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property and equipment, income-producing commercial properties, and other real estate properties. Unfunded commitments under lines of credit are commitments for possible future extensions of credit to existing customers. Those lines of credit may not be drawn upon to the total extent to which the Company is committed. Standby letters of credit written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Note 12— Fair Value Measurements Determination of Fair Value The Company determines the fair values of its financial instruments based on the fair value hierarchy established by ASC Topic 820 – Fair Value Measurement, which defines fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market and in an orderly transaction between market participants on the measurement date. The fair value measurements and disclosures topic specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. Fair Value Hierarchy In accordance with this guidance, the Company groups its assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Level 1 - Valuation is based on quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 - Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.
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Table of Contents 95 Level 3 - Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Assets and Liabilities Measured at Fair Value on a Recurring Basis In accordance with ASC Topic 820, the following describes the valuation techniques used by the Company to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements. Securities Available-for-sale and Equity Securities Securities available-for-sale and equity securities with readily determinable fair values are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data (Level 2). If the inputs used to provide the evaluation for certain securities are unobservable and/or there is little, if any, market activity then the security would fall to the lowest level of the hierarchy (Level 3). The Company’s investment portfolio is primarily valued using fair value measurements that are considered to be Level 2. The Company has contracted with a third party portfolio accounting service vendor for valuation of its portfolio of debt securities. The vendor’s primary source for security valuation is ICE Data Services, which evaluates securities based on market data. ICE Data Services utilizes evaluated pricing models that vary by asset class and include available trade, bid, and other market information. Generally, the methodology includes broker quotes, proprietary models, vast descriptive terms and conditions databases, as well as extensive quality control programs. The vendor utilizes proprietary valuation matrices for valuing all municipals securities. The initial curves for determining the price, movement, and yield relationships within the municipal matrices are derived from industry benchmark curves or sourced from a municipal trading desk. The securities are further broken down according to issuer, credit support, state of issuance and rating to incorporate additional spreads to the industry benchmark curves. Interest Rate Swap Agreements Interest rate swap agreements are measured by alternative pricing sources using a discounted cash flow method that incorporates current market interest rates. Based on the complex nature of interest rate swap agreements, the markets these instruments trade in are not as efficient and are less liquid than that of the more mature Level 1 markets. These characteristics classify interest rate swap agreements as Level 2 in the fair value hierarchy.
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Table of Contents 96 The following table summarizes the fair value of assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and December 31, 2024. Table 12.1: Assets and Liabilities Measured at Fair Value on a Recurring Basis Fair Value Measurements at December 31, 2025 Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs (Dollars in thousands) December 31, 2025 (Level 1) (Level 2) (Level 3) Assets: Securities available-for-sale: U.S. Treasuries $ 13,132 $ — $ 13,132 $ — U.S. government and federal agencies 6,820 — 6,820 — Corporate bonds 2,820 — 2,820 — U.S. agency collateralized mortgage obligations 25,693 — 25,693 — Tax-exempt municipal 1,236 — 1,236 — Taxable municipal — — — — U.S. agency mortgage-backed 74,151 — 74,151 — Equity securities, at fair value 2,843 2,843 — — Interest rate swap agreements 175 — 175 — Total assets at fair value $ 126,870 $ 2,843 $ 124,027 $ — Liabilities: Interest rate swap agreements $ 175 $ — $ 175 $ — Total liabilities at fair value $ 175 $ — $ 175 $ — Fair Value Measurements at December 31, 2024 Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs (Dollars in thousands) December 31, 2024 (Level 1) (Level 2) (Level 3) Assets: Securities available-for-sale: U.S. Treasuries $ 27,137 $ — $ 27,137 $ — U.S. government and federal agencies 10,581 — 10,581 — Corporate bonds 2,739 — 2,739 — Collateralized mortgage obligations 29,611 — 29,611 — Tax-exempt municipal 1,171 — 1,171 — Taxable municipal 263 — 263 — Mortgage-backed 58,755 — 58,755 — Equity securities, at fair value 2,832 2,832 — — Interest rate swap agreements 549 — 549 — Total assets at fair value $ 133,638 $ 2,832 $ 130,806 $ — Liabilities: Interest rate swap agreements $ 549 $ — $ 549 $ — Total liabilities at fair value $ 549 $ — $ 549 $ —
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Table of Contents 97 Assets Measured at Fair Value on a Nonrecurring Basis Under certain circumstances, the Company makes adjustments to fair value for assets and liabilities although they are not measured at fair value on an ongoing basis. The following describes the valuation techniques used by the Company to measure certain assets recorded at fair value on a nonrecurring basis in the financial statements: Collateral Dependent Loans In accordance with ASC 326, loans that do not share risk characteristics are evaluated on an individual basis. The Company designates individually evaluated loans on nonaccrual status as collateral dependent loans, as well as other loans that management of the Company designates as having higher risk and loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral. The measurement of loss associated with collateral dependent loans can be based on either the observable market price of the loan or the fair value of the collateral. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The vast majority of the Company’s collateral is real estate. The value of real estate collateral is determined utilizing a market valuation approach based on an appraisal, of one year or less, conducted by an independent, licensed appraiser using observable market data (Level 2). However, if the collateral is a house or building in the process of construction, or if an appraisal of the property is more than one-year-old and not solely based on observable market comparables, or management determines the fair value of the collateral is further impaired below the appraised value, then a Level 3 valuation is considered to measure the fair value. The value of business equipment is based upon an outside appraisal, of one year or less, if deemed significant, or the net book value on the applicable business’s financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). Any fair value adjustments are recorded in the period incurred as provision for loan credit losses on the Consolidated Statements of Income. As of December 31, 2025, there were no collateral dependent loans evaluated for the allowance for credit losses on an individual basis. The Company had one collateral dependent commercial owner-occupied real estate loan totaling $10.0 million in outstanding principal with no recorded reserve as of December 31, 2024. The loan paid off, in full, on January 7, 2025. Other Real Estate Owned OREO is carried at the lower of cost or fair value less selling costs. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value using observable market data, the Company records the property as Level 2. When an appraised value using observable market data is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the property as Level 3 valuation. Any fair value adjustments are recorded in the period incurred and expensed against current earnings. The Company had no OREO as of December 31, 2025 and 2024. The following tables present the carrying value and estimated fair value, including the level within the fair value hierarchy, of the Company’s financial instruments as of December 31, 2025 and December 31, 2024.
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Table of Contents Table 12.2: Fair Value of Financial Instruments Fair Value Measurements at December 31, 2025 Using Quoted Prices in Active Markets Significant for Identical Significant Other Unobservable Carrying Value as of Assets Observable Inputs Inputs Fair Value as of (Dollars in thousands) December 31, 2025 (Level 1) (Level 2) (Level 3) December 31, 2025 Assets: Cash and cash equivalents $ 129,974 $ 129,974 $ — $ — $ 129,974 Securities: Available-for-sale 123,852 — 123,852 — 123,852 Held-to-maturity 88,421 — 77,575 — 77,575 Equity securities, at fair value 2,843 2,843 — — 2,843 Restricted securities, at cost 7,644 — 7,644 — 7,644 Loans, net of allowance 1,955,555 — — 1,889,187 1,889,187 Interest rate swap agreements 175 — 175 — 175 Accrued interest receivable 5,890 — 5,890 — 5,890 Liabilities: Time deposits $ 759,546 $ — $ 762,056 $ — $ 762,056 Other deposits 1,212,739 1,212,739 — — 1,212,739 Federal Home Loan Bank advances 56,000 — 55,922 — 55,922 Subordinated debt 24,875 — — 23,142 23,142 Interest rate swap agreements 175 — 175 — 175 Accrued interest payable 2,124 — 2,124 — 2,124 Fair Value Measurements at December 31, 2024 Using Quoted Prices in Active Markets Significant for Identical Significant Other Unobservable Carrying Value as of Assets Observable Inputs Inputs Fair Value as of (Dollars in thousands) December 31, 2024 (Level 1) (Level 2) (Level 3) December 31, 2024 Assets: Cash and cash equivalents $ 122,469 $ 122,469 $ — $ — $ 122,469 Securities: Available-for-sale 130,257 — 130,257 — 130,257 Held-to-maturity 92,009 — 76,270 — 76,270 Equity securities, at fair value 2,832 2,832 — — 2,832 Restricted securities, at cost 7,634 — 7,634 — 7,634 Loans, net of allowance 1,853,458 — — 1,749,721 1,749,721 Interest rate swap agreements 549 — 549 — 549 Accrued interest receivable 5,996 — 5,996 — 5,996 Liabilities: Time deposits $ 709,663 $ — $ 712,366 $ — $ 712,366 Other deposits 1,182,752 1,182,752 — — 1,182,752 Federal Home Loan Bank advances 56,000 — 56,000 — 56,000 Subordinated debt 24,791 — — 22,126 22,126
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98 Interest rate swap agreements 549 — 549 — 549 Accrued interest payable 2,394 — 2,394 — 2,394
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Table of Contents 99 Note 13— Earnings per Common Share Earnings per common share is calculated in accordance with ASC 260 - Earnings Per Share, which provides that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. Under the two-class method, basic earnings per common share is computed by dividing net earnings allocated to common stock by the weighted-average number of voting common shares outstanding during the applicable period, excluding outstanding participating securities. Diluted earnings per common share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method. The following table summarizes the computation of earnings per share for the years December 31, 2025 and December 31, 2024. Table 13.1: Computation of Basic and Diluted Earnings per Common Share Year ended December 31, 2025 2024 Earnings per common share - basic: Income available to common shareholders (in thousands): Net income $ 21,233 $ 17,121 Less: Income attributable to unvested restricted stock awards (77) (56) Net income available to common shareholders $ 21,156 $ 17,065 Weighted average shares outstanding: Common shares outstanding, including unvested restricted stock 14,241,246 14,218,507 Less: Unvested restricted stock (51,724) (46,341) Weighted-average common shares outstanding - basic 14,189,522 14,172,166 Earnings per common share - basic $ 1.49 $ 1.20 Earnings per common share - diluted: Income available to common shareholders (in thousands): Net income $ 21,233 $ 17,121 Less: Income attributable to unvested restricted stock awards (77) (56) Net income available to common shareholders $ 21,156 $ 17,065 Weighted average shares outstanding: Common shares outstanding, including unvested restricted stock 14,241,246 14,218,507 Less: Unvested restricted stock (51,724) (46,341) Plus: Effect of dilutive options 5,081 33,943 Weighted-average common shares outstanding - diluted 14,194,603 14,206,109 Earnings per common share - diluted $ 1.49 $ 1.20 Outstanding options to purchase common stock were considered in the computation of diluted earnings per share for the periods presented. All stock options outstanding as of December 31, 2025 and December 31, 2024 were included as none had anti-dilutive effects.
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Table of Contents 100 Note 14— Stock Based Compensation Plan The Company’s share-based compensation plan, approved by stockholders on June 17, 2025 (“2025 Plan”), provides for the grant of share-based awards in the form of incentive stock options, non-incentive stock options, restricted stock awards and restricted stock units to directors and employees. The Company reserved 425,000 shares of voting common stock for issuance under the 2025 Plan, of which 383,113 was available for grant in future periods as of December 31, 2025. Under the 2025 Plan, the exercise price of options may not be less than 100% of fair market value at the grant date with a maximum term for an option award of 10 years from the grant date. The Company’s Compensation Committee administers the 2025 Plan and has the authority to determine the terms and conditions of each award thereunder. The Company’s previous share-based compensation plan, the 2015 Stock Option Plan (“2015 Plan”), provided for the grant of share-based awards in the form of incentive stock options, non-incentive stock options, restricted stock and restricted stock units to directors and employees. The 2015 Plan provided for awards of up to 976,211 shares of voting common stock. The 2015 Plan expired on April 28, 2025 and was replaced by the 2025 Plan. Share-based awards outstanding prior to April 28, 2025 were granted under the 2015 Plan and are subject to the provisions of the 2015 Plan. The table below provides a summary of the stock options activity for the year ended December 31, 2025. December 31, 2025 Weighted Average Aggregate Intrinsic Shares Exercise Price Value Outstanding at January 1, 2025 58,660 $ 11.77 Granted — — Exercised (56,224) 11.77 Forfeited or expired (2,436) 11.77 Outstanding at December 31, 2025 — — $ — Exercisable December 31, 2025 — $ — $ — The intrinsic value of options exercised was $253 thousand for the year ended December 31, 2025 and $654 thousand for the year ended December 31, 2024. These amounts change based on changes in the market value of the Company’s voting common stock. There were no options granted during the years ended December 31, 2025 and 2024. The Company did not have share-based compensation expense applicable to the Company’s share-based compensation plans for stock options for the year ended December 31, 2025 or December 31, 2024. The table below provides a summary of the restricted stock awards activity for the year ended December 31, 2025. December 31, 2025 Weighted Average Shares Grant Date Fair Value Nonvested at January 1, 2025 54,388 $ 21.97 Granted 43,137 20.93 Vested (24,511) 21.98 Forfeited (4,467) 22.42 Nonvested at December 31, 2025 68,547 21.28 Compensation expense for restricted stock grants is recognized over the vesting period of the awards based on the fair value of the Company’s voting common stock at issue date. The fair value of the stock was determined using the closing stock price on the day of grant. The restricted stock grants vest over two to five years. The Company awarded 43,137 restricted stock grants during the year ended December 31, 2025 with a weighted average grant date fair value of $20.93 per share.
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Table of Contents 101 Share-based compensation expense applicable to the Company’s share-based compensation plans for restricted stock grants was $527 thousand and $555 thousand for the years ended December 31, 2025 and December 31, 2024, respectively. The total fair value of the shares, which vested during 2025 and 2024, was $515 thousand and $493 thousand, respectively. Unrecognized share-based compensation expense related to nonvested restricted stock grants amounted to $1.2 million as of December 31, 2025. This amount is expected to be recognized over a weighted-average period of 1.9 years. Note 15— Employee Benefit Plans Effective August 1, 2006, the Company adopted a contributory 401(k) savings plan (the “401(k) Plan”) covering substantially all employees. Eligible employees may elect to defer a portion of their compensation to the 401(k) Plan. The Board of Directors may elect to match a portion of each employee’s contribution. The Company made contributions of $494 thousand and $480 thousand during the years ended December 31, 2025 and December 31, 2024, respectively. The costs associated with the Company’s 401(k) Plan are included in the salaries and employee benefits line item in the Consolidated Statements of Income. The Company approved a deferred compensation plan in 2017 that provides key employees an additional way to defer their salary on a pre-tax basis. Key employees are highly compensated employees as defined by the Internal Revenue Service (“IRS”). Board members may also participate in the plan to defer their board fees. The plan is voluntary and not subject to IRS/Department of Labor discrimination testing. The deferred compensation liability was $2.7 million and $2.4 million at December 31, 2025 and December 31, 2024, respectively, and was included in other liabilities on the Consolidated Balance Sheets. The Company incurred expenses for discretionary contributions of $466 thousand and $360 thousand for the years ended December 31, 2025 and December 31, 2024, respectively. These discretionary contributions vest for the participants over a period of three years unless years of service and age criteria are met. The costs associated with the Company’s deferred compensation plan are included in the Salaries and employee benefits line item in the Consolidated Statements of Income. Note 16— Regulatory Capital The Company is a bank holding company with less than $3 billion in assets and does not (i) have significant off balance sheet exposure, (ii) engage in significant non-banking activities, or (iii) have a material amount of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As a result, the Company qualifies as a small bank holding company under the Federal Reserve’s Small Bank Holding Company Policy Statement and is currently not subject to consolidated regulatory requirements. The Bank is subject to capital adequacy standards adopted by the Federal Reserve, including the capital rules that implemented the Basel III regulatory capital reforms developed by the Basel Committee on Banking Supervision. Failure to meet minimum capital requirements can initiate certain mandatory – possibly additional discretionary – actions by regulators that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines, the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Management believes that the Bank met all capital adequacy requirements to which it was subject as of December 31, 2025 and December 31, 2024. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets, common equity Tier 1 to risk-weighted assets, and Tier 1 capital to average assets. In addition to the minimum regulatory capital required for capital adequacy purposes, the Bank is required to maintain a minimum capital conservation buffer above those minimums in the form of common equity. The capital conservation buffer, which was phased in ratably over a four year period beginning January 1, 2016, is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of common equity Tier 1 to risk-weighted assets above the minimum but below the conservation buffer will face constraints on dividends, equity repurchases, and discretionary
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Table of Contents 102 compensation paid to certain officers, based on the amount of the shortfall. The capital conservation buffer was 2.5% at December 31, 2025, and is applicable for the common equity Tier 1, Tier 1, and total capital ratios. On January 1, 2023, the Company adopted ASC 326, which replaced the incurred loss methodology with the CECL methodology for estimating credit losses and generally applies to financial assets measured at amortized cost. The Federal Reserve and FDIC have adopted rules to identify which credit loss allowances under the CECL model are eligible for inclusion in regulatory capital and to provide banking organizations the option to phase in over a three-year transition period ending January 1, 2026 the day-one impact on regulatory capital that may result from the adoption of the CECL model. The Company implemented the CECL model on January 1, 2023 and elected to apply the provisions of the CECL deferral transition in the determination of its risk based capital ratios. The impact of the application of this deferral transition on the ratios was not significant. As of December 31, 2025, the most recent notification from the Federal Reserve Bank of Richmond categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the institution must maintain minimum total risk-based, common equity Tier 1, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table below. There are no conditions or events since the notification that management believes have changed the Bank’s category. The table below provides a summary of the Bank’s capital ratios as of December 31, 2025 and December 31, 2024. Table 16.1: Capital Ratios Minimum To Be WellMinimum Capitalized Under Prompt Capital Requirement(1) Corrective Action (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio As of December 31, 2025 Total capital (to risk weighted assets) $311,288 16.3% $ 201,106 10.5% $ 191,529 10.0% Tier 1 capital (to risk weighted assets) 290,735 15.2% 162,800 8.5% 153,224 8.0% Common equity tier 1 capital (to risk weighted assets) 290,735 15.2% 134,071 7.0% 124,494 6.5% Tier 1 capital (to average assets) 290,735 12.5% 93,144 4.0% 116,430 5.0% As of December 31, 2024 Total capital (to risk weighted assets) $295,119 16.2% $ 191,088 10.5% $ 181,989 10.0% Tier 1 capital (to risk weighted assets) 276,468 15.2% 154,690 8.5% 145,591 8.0% Common equity tier 1 capital (to risk weighted assets) 276,468 15.2% 127,392 7.0% 118,293 6.5% Tier 1 capital (to average assets) 276,468 12.4% 89,438 4.0% 111,798 5.0% (1) Including Capital Conservation Buffer Note 17— Revenue Certain of the Company’s non-interest revenue streams are derived from short-term contracts associated with services provided to deposit account holders as well as other ancillary services, which are accounted for in accordance with ASC 606 – Revenue Recognition. For most of these revenue streams, the duration of the contract does not extend beyond the services performed. Due to the short duration of most customer contracts that generate non-interest income, no significant judgments must be made in the determination of the amount and timing of revenue recognized.
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Table of Contents 103 The following table shows the components of non-interest income for the years ended December 31, 2025 and December 31, 2024. Table 17.1: Components of Non-Interest Income Year ended December 31, (Dollars in thousands) 2025 2024 Service charges on deposit accounts (1) Overdrawn account fees $ 81 $ 84 Account service fees 255 265 Other service charges and fees (1) Interchange income 327 363 Other charges and fees 244 292 Net gain (loss) on premises and equipment (1) (3) 1 Insurance commissions (1) 328 416 Gain on sale of government guaranteed loans 322 520 Non-qualified deferred compensation plan asset gains, net 402 236 Other operating income (2) 118 94 Total non-interest income $ 2,074 $ 2,271 (1) Income within the scope of ASC 606 – Revenue Recognition. (2) Includes other operating income within the scope of ASC 606 amounting to $17 thousand for the year ended December 31, 2025. Includes other operating income of $101 thousand related to swap fee income on a back-to-back loan swaps for the year ended December 31, 2025, which is outside the scope of ASC 606. Includes other operating income within the scope of ASC 606 amounting to $30 thousand for the year ended December 31, 2024. Includes other operating income of $64 thousand related to swap fee income on a back-to-back loan swaps for the year ended December 31, 2024, which is outside the scope of ASC 606. A description of the Company’s revenue streams accounted for under ASC 606 follows: Service charges on deposit accounts Service charges on deposit accounts consist of overdrawn account fees and account service fees. Overdrawn account fees are recognized at the point in time that the overdraft occurs. Account service fees consist primarily of account analysis and other maintenance fees and are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Payment for service charges on deposit accounts is received immediately or in the following month through a direct charge to customers’ accounts. Other service charges and fees Other service charges and fees are primarily comprised of interchange income and other charges and fees. Interchange income is earned whenever the Company’s debit and credit cards are processed through card payment networks such as Visa. Other charges and fees include revenue from processing wire transfers, cashier’s checks, and other transaction based services. The Company’s performance obligation for these charges and fees are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. The Company acts as an agent in these transactions and recognizes generated income on a net basis. Payment is typically received immediately or in the following month. Net gains (losses) on premises and equipment The Company records a gain or loss on the disposition of premises and equipment when control of the property transfers or is involuntarily converted to a monetary asset (e.g., insurance proceeds). This income is reflected in other income on the Company’s Consolidated Statements of Income.
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Table of Contents 104 Insurance commissions The Company performs the function of an insurance intermediary by introducing the policyholder and insurer and is compensated in the form of a commission for placement of an insurance policy based on a percentage of premiums issued and maintained during the period. Revenue is recognized when received. Note 18— Other Operating Expenses The following table shows the components of other operating expenses for the years ended December 31, 2025 and December 31, 2024. Table 18.1: Components of Other Operating Expenses Year ended December 31, (Dollars in thousands) 2025 2024 Advertising expense $ 381 $ 386 Data processing 2,360 2,192 FDIC insurance 992 1,000 Professional fees 1,146 1,001 State franchise tax 2,520 2,405 Director costs 667 776 Other operating expenses 1,943 1,829 Total other operating expenses $ 10,009 $ 9,589 Note 19— Low Income Housing Tax Credit Investments The Company has invested in seven separate housing equity funds as of December 31, 2025. The general purpose of these funds is to encourage and assist with participation in investing in low-income residential rental properties primarily located in the Commonwealth of Virginia, develop and implement strategies to maintain projects as low-income housing, deliver Federal Low Income Housing Credits to investors, allocate tax losses and other possible tax benefits to investors, and to preserve and protect project assets. The investments in these funds were recorded as other assets on the Company’s Consolidated Balance Sheets and were $3.5 million and $4.0 million at December 31, 2025 and December 31, 2024, respectively. The expected terms of these investments and the related tax benefits run between 2029 through 2039. The net impact of amortization of the investments, tax credits and other tax benefits recognized as a component of income tax expense in the Consolidated Statements of Income during the years ended December 31, 2025 and December 31, 2024 was a benefit of $110 thousand and $112 thousand, respectively. Additional capital calls expected for the funds totaled $0.6 million at December 31, 2025 and $1.5 million at December 31, 2024 and are included in other liabilities on the Company’s Consolidated Balance Sheets.
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Table of Contents 105 Note 20— Accumulated Other Comprehensive Income (Loss) The following table presents the changes in accumulated other comprehensive income (loss), by category, net of tax for the years ended December 31, 2025 and December 31, 2024. Table 20.1: Changes in Accumulated Other Comprehensive Income (Loss), Net of Tax December 31, 2025 Unrealized Gains onSecurities Transferred fromUnrealized Loss on Available-for-sale to Accumulated Other(Dollars in thousands) Available-for-sale Securities Held-to-maturity Comprehensive Loss Beginning balance, January 1, 2025 $ (10,732) $ 80 $ (10,652) Net change during the period 3,566 (29) 3,537 Ending Balance, December 31, 2025 $ (7,166) $ 51 $ (7,115) December 31, 2024 Unrealized Gains onSecurities Transferred fromUnrealized Loss on Available-for-sale to Accumulated Other(Dollars in thousands) Available-for-sale Securities Held-to-maturity Comprehensive (Loss) Beginning balance, January 1, 2024 $ (12,400) $ 149 $ (12,251) Net change during the period 1,668 (69) 1,599 Ending Balance, December 31, 2024 $ (10,732) $ 80 $ (10,652) The Company did not have any items reclassified out of accumulated other comprehensive income (loss) to net income during the years ended December 31, 2025 and 2024. Note 21— Parent Company Financials The following tables summarize John Marshall Bancorp Inc.’s (Parent Company only) condensed financial statements as of and for the years ended December 31, 2025 and December 31, 2024. Table 21.1: Condensed Parent Company Financials Parent Company Only Condensed Balance Sheets (Dollars in thousands) December 31, 2025 December 31, 2024 Assets Cash and due from banks $ 7,253 $ 6,385 Equity securities, at fair value 2,843 2,832 Investment in subsidiary 283,047 264,671 Other assets 735 580 Total assets $ 293,878 $ 274,468 Liabilities and Shareholders’ Equity Subordinated debt, net of unamortized issuance costs $ 24,875 $ 24,791 Accrued interest payable 657 656 Other liabilities 2,708 2,406 Total liabilities $ 28,240 $ 27,853 Total shareholders’ equity $ 265,638 $ 246,615 Total liabilities and shareholders’ equity $ 293,878 $ 274,468
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Table of Contents 106 Parent Company Only Condensed Statements of Income Year ended (Dollars in thousands) December 31, 2025 December 31, 2024 Income: Other income $ 402 $ 236 Dividends from subsidiary 8,720 6,000 Total income 9,122 6,236 Expense: Subordinated debt interest expense 1,396 1,396 Salaries and employee benefits 819 624 Other operating expenses 465 404 Total expense 2,680 2,424 Net income before income tax expense and equity in undistributed earnings of subsidiary 6,442 3,812 Income tax benefit 479 459 Equity in undistributed earnings of subsidiary 14,312 12,850 Net income $ 21,233 $ 17,121 Parent Company Only Statements of Cash Flows Year ended (Dollars in thousands) December 31, 2025 December 31, 2024 Cash Flows from Operating Activities Net income $ 21,233 $ 17,122 Adjustment to reconcile net income to net cash provided by operating activities: Equity in undistributed earnings of subsidiary (14,312) (12,850) Fair value adjustment on equity securities (402) (236) Amortization of debt issuance costs 84 83 Deferred tax (benefit) (108) (132) Changes in assets and liabilities: Increase in other assets (47) — Increase (decrease) in other liabilities 302 (96) Net cash provided by operating activities $ 6,750 $ 3,891 Cash Flows from Investing Activities Net sales of equity securities 391 196 Net cash provided by investing activities $ 391 $ 196 Cash Flows from Financing Activities Issuance of common stock for share options exercised 446 1,052 Repurchase of shares for tax withholding on share-based compensation (29) (21) Repurchase of common stock (2,419) (49) Cash dividends paid (4,271) (3,558) Net cash used in investing activities $ (6,273) $ (2,576) Net increase in cash and cash equivalents $ 868 $ 1,511 Cash and cash equivalents, beginning of year 6,385 4,874 Cash and cash equivalents, end of year $ 7,253 $ 6,385
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Table of Contents 107 Note 22— Related Party Transactions The Company has had, and may be expected to have in the future, banking transactions in the ordinary course of business with directors, principal shareholders, executive officers, their immediate families and affiliated companies in which they are principal owners (commonly referred to as related parties), on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with parties not related to the Company. These loans totaled $11.2 million and $11.9 million as of December 31, 2025 and December 31, 2024, respectively. During 2025, there were no principal additions and principal re-payments totaled $673 thousand with respect to such loans. Deposits of directors, executive officers and other related parties totaled $21.6 million and $21.4 million at December 31, 2025 and December 31, 2024, respectively.
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Table of Contents 108 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures As of December 31, 2025, the Company, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, completed an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act. In designing and evaluating its disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that objectives of the disclosure controls and procedures are met. The design of any disclosure controls and procedures is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential conditions. Based upon their evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures as of December 31, 2025 were effective in providing reasonable assurance that information required to be disclosed in the Company’s reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified by the SEC’s rules and forms, and that such information is accumulated and communicated to management of the Company, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management’s Annual Report on Internal Control over Financial Reporting Management of the Company is also responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Because of its inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013). Based on its assessment, management believes that, as of December 31, 2025, the Company’s internal control over financial reporting was effective based on those criteria. The Company’s annual report does not include an attestation report of the Company’s independent registered public accounting firm, Yount, Hyde, & Barbour. P.C. (“YHB”), regarding internal control over financial reporting. Management’s report was not subject to attestation by YHB pursuant to rules of the SEC that permit the Company to provide only management’s report in its annual report. Changes in Internal Control over Financial Reporting There has been no change in the Company’s internal control over financial reporting during the quarter ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Item 9B. Other Information (a) None.
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Table of Contents 109 (b) During the quarter ended December 31, 2025, no director or Section 16 officer of the Company adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None. Part III Item 10.Directors, Executive Officers and Corporate Governance Pursuant to General Instruction G(3) of Form 10-K, the information contained under the captions “Election of Directors,” “The Board of Directors,” “Executive Officers,” and “Delinquent Section 16(a) Reports” in the Company's Proxy Statement for the 2026 Annual Meeting of Stockholders is incorporated by reference. The Company has adopted an insider trading policy that governs the purchase, sale, and/or other transactions of the Company’s securities by its directors, officers and employees. A copy of the Company’s insider trading policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K. In addition, with regard to the Company’s trading in its own securities, it is the Company’s policy to comply with the federal securities laws and the applicable exchange listing requirements. Item 11.Executive Compensation Pursuant to General Instruction G(3) of Form 10-K, the information contained under the captions “Executive Officer Compensation,” “The Board of Directors – Director Compensation” and “The Board of Directors – Compensation Committee Interlocks and Insider Participation” in the Company's Proxy Statement for the 2026 Annual Meeting of Stockholders is incorporated by reference. Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Equity Compensation Plan Information: The following table sets forth information as of December 31, 2025, with respect to compensation plans under which shares of our common stock are authorized for issuance. Number of SharesTo be Issued Number of Shares Upon Exercise Weighted-Average Remaining Availableof Outstanding Exercise Price of For Future IssuanceOptions, Warrants Outstanding Options, Under Equity and Rights Warrants and Rights Compensation Plans Equity compensation plans approved by shareholders — $ — 383,113Equity compensation plans not approved by shareholders — $ — — Total — $ — 383,113 Security Ownership of Certain Beneficial Owners and Management. Pursuant to General Instruction G(3) of Form 10-K, the information contained under the caption "Security Ownership of Certain Beneficial Owners and Management" in the Company's Proxy Statement for the 2026 Annual Meeting of Stockholders is incorporated by reference. Item 13.Certain Relationships and Related Transactions, and Director Independence Pursuant to General Instruction G(3) of Form 10-K, the information contained under the caption “The Board of Directors – Corporate Governance Principles and Board Matters” and “The Board of Directors – Certain Relationships and Related Transactions” in the Company's Proxy Statement for the 2026 Annual Meeting of Stockholders is incorporated by reference.
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Table of Contents Item 14.Principal Accountant Fees and Services Pursuant to General Instruction G(3) of Form 10-K, the information contained under the captions "Report of the Audit Committee" and "Independent Public Accounting Firm" in the Company's Proxy Statement for the 2026 Annual Meeting of Stockholders is incorporated by reference. Part IV Item 15.Exhibit and Financial Statement Schedules (a) FINANCIAL STATEMENTS: The following financial statements are included in Item 8 of this Form 10- K: Report of Independent Registered Public Accounting Firm (PCAOB ID: 613) Consolidated Balance Sheets as of December 31, 2025 and 2024 Consolidated Statements of Income for the years ended December 31, 2025 and 2024 Consolidated Statements of Comprehensive Income for the years ended December 31, 2025 and 2024 Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2025 and 2024 Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 Notes to Consolidated Financial Statements (b) EXHIBITS: The following exhibits are included as part of this Form 10-K: Exhibit No. Description 3.1 Articles of Incorporation of John Marshall Bancorp, Inc., as amended (incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form 10 filed on March 4, 2022). 3.2 Amended and Restated Bylaws of John Marshall Bancorp, Inc. (incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form 10 filed on March 4, 2022). 4.1 Specimen certificate for the common stock of John Marshall Bancorp, Inc., $0.01 par value (incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form 10 filed on March 4, 2022). 4.2 Form of 5.25% Fixed to Floating Rate Subordinated Note due July 1, 2032 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on June 15, 2022). 4.3† Description of John Marshall Bancorp Inc.’s Securities. 10.1 John Marshall Bancorp, Inc. 2025 Stock Incentive Plan (incorporated by reference to Appendix A to the Definitive Proxy Statement for the Company’s Annual Meeting of Shareholders held on June 17, 2025, filed on April 29, 2025).* 10.2 Amended and Restated John Marshall Bancorp, Inc. 2015 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of the Company’s Registration Statement on Form 10 filed on March 4, 2022).* 10.3† Form of Restricted Stock Award Agreement – John Marshall Bancorp, Inc. 2025 Stock Incentive Plan 10.4 Form of Restricted Stock Award Agreement – Amended and Restated John Marshall Bancorp, Inc. 2015 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 of the Company’s Registration Statement on Form 10 filed on March 4, 2022).*
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Table of Contents Exhibit No. Description 10.5 John Marshall Bancorp, Inc. Deferred Compensation Plan, as amended and restated (incorporated by reference to Exhibit 10.8 of the Company’s Registration Statement on Form 10 filed on March 4, 2022).* 10.6 Employment Agreement, dated as of April 30, 2018, by and among John Marshall Bancorp, Inc., John Marshall Bank and Christopher W. Bergstrom (incorporated by reference to Exhibit 10.9 of the Company’s Registration Statement on Form 10 filed on March 4, 2022).* 10.7 Amended and Restated Employment Agreement, dated as of August 22, 2022, by and among John Marshall Bancorp, Inc., John Marshall Bank, and Kent D. Carstater (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on August 26, 2022).* 10.8 Employment Agreement, dated as of August 22, 2022, by and among John Marshall Bancorp, Inc., John Marshall Bank, and Andrew J. Peden (incorporated by reference to Exhibit 4.2 of the Company’s Quarterly Report on Form 10-Q filed on November 9, 2022).* 10.9 Form of Subordinated Note Purchase Agreement, dated as of June 15, 2022 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on June 15, 2022). 19.1† Insider Trading Policy 21 † Subsidiaries of John Marshall Bancorp, Inc. 23.1 † Consent of Yount, Hyde, & Barbour, P.C. 31.1 † Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 † Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 † Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97 John Marshall Bancorp, Inc. Compensation Clawback Policy (incorporated by reference to Exhibit 97 of the Company’s Annual Report on Form 10-K filed on March 20, 2024). 101.0† Interactive data files formatted in Inline eXtensible Business Reporting Language pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of December 31, 2025 and 2024 (ii) the Consolidated Statements of Income for the years ended December 31, 2025 and 2024, (iii) the Consolidated Statements of Comprehensive Income for the years ended December 31, 2025 and 2024, (iv) the Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2025 and 2024, (v) the Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 and (vi) the Notes to the Consolidated Financial Statements for the years ended December 31, 2025 and 2024. 104† Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). † Filed herewith. * Indicates management contract or compensatory plan. Item 16. Form 10-K Summary Not applicable.
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Table of Contents 112 SIGNATURES Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: March 13, 2026 John Marshall Bancorp, Inc. By: /s/ Christopher W. Bergstrom Name:Christopher W. Bergstrom Title: President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 13, 2026. Signature/Name Title /s/ Christopher W. Bergstrom Christopher W. Bergstrom Director, President and Chief Executive Officer (Principal Executive Officer) /s/ Kent D. Carstater Kent D. Carstater Senior Executive Vice President, Chief Financial Officer (Principal Financial and Accounting Officer) /s/ Philip W. Allin Philip W. Allin Director /s/ Philip R. Chase Philip R. Chase Director /s/ Michael T. Foster Michael T. Foster Director /s/ Michael A. Garcia Michael A. Garcia Director /s/ Subhash K. Garg Subhash K. Garg Director /s/ Jonathan C. Kinney Jonathan C. Kinney Chairman of the Board /s/ O. Leland Mahan O. Leland Mahan Director
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Exhibit 4.3 Description of John Marshall Bancorp, Inc.’s Securities As of December 31, 2025, the common stock of John Marshall Bancorp Inc. (the “Company”) was the only class of its securities registered under Section 12 of the Securities Exchange Act of 1934. The following summary description of the material features of the voting common stock of the Company does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Company’s articles of incorporation and bylaws, each as amended. For more information, refer to the Company’s articles of incorporation and bylaws and any applicable provisions of relevant law, including the Virginia Stock Corporation Act (the “VSCA”) and federal laws governing banks and bank holding companies. General The Company is authorized to issue 30,000,000 shares of voting common stock, par value $0.01 per share, 1,000,000 shares of nonvoting common stock, par value $0.01 per share, and 1,000,000 shares of preferred stock, par value $0.01 per share. The Company’s common stock is listed on the Nasdaq Capital Market under the symbol “JMSB.” Dividends The Company’s shareholders are entitled to receive dividends or distributions that its board of directors may declare out of funds legally available for those payments. The payment of distributions by the Company is subject to the restrictions of Virginia law applicable to the declaration of distributions by a corporation. A Virginia corporation generally may not authorize and make distributions if, after giving effect to the distribution, it would be unable to meet its debts as they become due in the usual course of business or if the corporation’s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if it were dissolved at that time, to satisfy the preferential rights of shareholders whose rights are superior to the rights of those receiving the distribution. In addition, the payment of distributions to shareholders is subject to any prior rights of outstanding preferred stock. As a bank holding company, the Company’s ability to pay dividends is affected by the ability of the Bank to pay dividends to the holding company. The ability of the Bank, as well as the Company, to pay dividends is influenced by bank regulatory requirements and capital guidelines. Liquidation Rights In the event of any liquidation, dissolution or winding up of the Company, the holders of shares of its common stock will be entitled to receive, after payment of all debts and liabilities of the Company and after satisfaction of all liquidation preferences applicable to any preferred stock, all remaining assets of the Company available for distribution in cash or in kind. Voting Rights The holders of the Company’s voting common stock are entitled to one vote per share and, in general, the affirmative vote of a majority of the shares voted is sufficient to authorize action upon routine matters. Directors are elected by a plurality of the votes cast, and shareholders do not have the right to accumulate their votes in the election of directors. No Preemptive or Conversion Rights; Redemption and Assessment Holders of shares of the Company’s common stock do not have preemptive rights to purchase additional shares of common stock and have no conversion or redemption rights. The Company’s common stock is not subject to redemption or any sinking fund and the outstanding shares are fully paid and nonassessable.
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Nonvoting Common Stock Shares of nonvoting common stock, which may hereafter become outstanding, will have all of the rights and privileges of shares of voting common stock except that they will not be able to be voted except as required by Virginia law. Preferred Stock The Company’s board of directors is empowered to authorize the issuance of shares of preferred stock, in one or more classes or series, at such times, for such purposes and for such consideration as it may deem advisable without shareholder approval. The Company’s board may fix the designations, voting powers, preferences, participation, redemption, sinking fund, conversion, dividend and other relative rights, qualifications, limitations and restrictions of any such series of preferred stock. Anti-takeover Provisions Certain provisions of the Company’s articles of incorporation and bylaws, and Virginia law, may have the effect of discouraging, delaying, or preventing a change of control of the Company by means of a tender offer, a proxy fight, open market purchases of shares of its common stock, or otherwise in a transaction not approved by the Company’s board of directors. These provisions are designed to reduce, or have the effect of reducing, the Company’s vulnerability to coercive takeover practices and inadequate takeover bids. However, the existence of these provisions could prevent the Company’s shareholders from receiving a premium over the then prevailing market price of the Company’s common stock or a transaction that may otherwise be in the best interest of the Company’s shareholders. In addition, these provisions make it more difficult for the Company’s shareholders, should they choose to do so, to remove the Company’s board of directors or management. These provisions include the following: Authorized Preferred Stock. The Company’s articles of incorporation authorize the Company’s board of directors to establish one or more series of preferred stock and to determine, with respect to any series of preferred stock, the preferences, rights, and other terms of such series. Under this authority, the Company’s board could create and issue a series of preferred stock with rights, preferences, or restrictions that have the effect of discriminating against an existing or prospective holder of the Company’s common stock as a result of such holder beneficially owning or commencing a tender offer for a substantial amount of common stock. One of the effects of authorized but unissued and unreserved shares of preferred stock may be to render it more difficult for, or to discourage an attempt by, a potential acquirer to obtain control of the Company by means of a merger, tender offer, proxy contest, or otherwise, and thereby protect the continuity of the Company’s management. Board Vacancies. Virginia law and the Company’s articles of incorporation and bylaws provide that any vacancy occurring on the Company’s board may be filled by the remaining members of the board. These provisions may discourage, delay, or prevent a third party from voting to remove incumbent directors and simultaneously gaining control of the Company’s board by filling the vacancies created by that removal with its own nominees. No Cumulative Voting. the Company’s articles of incorporation do not provide for cumulative voting for any purpose. The absence of cumulative voting may afford anti-takeover protection by making it more difficult for the shareholders to elect nominees opposed by the board of directors. Shareholder Meetings. Pursuant to its bylaws, special meetings of shareholders may be called only by the Company’s secretary at the request of the chairman of the board of directors or by resolution approved by a majority vote of the board of directors. As a result, shareholders are not able to act on matters other than at annual shareholders’ meetings unless they are able to persuade the chairman or a majority of the board of directors to call a special meeting. Advance Notification Requirements. The Company’s bylaws require a shareholder who desires to raise new business or nominate a candidate for election to the board of directors at an annual meeting of shareholders to provide advance notice not later than 90 days prior to the anniversary date of the immediately preceding annual meeting. The Company’s bylaws also require shareholders who desire to raise new business to provide certain information concerning the nature of the new business, the shareholder and the shareholder’s interest in the business matter. Such requirements may discourage the shareholders from submitting nominations and proposals.
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Merger Considerations. The articles of incorporation of the Company provide that the Company’s board of directors, when evaluating a transaction that would or may involve a change in control of the Company, shall consider, among other things, the following factors: the effect of the transaction on the Company and its subsidiaries, and their respective shareholders, employees, customers and the communities which they serve; the timing of the proposed transaction; the risk that the proposed transaction will not be consummated; the reputation, management capability and performance history of the person proposing the transaction; the current market price of the Company’s capital stock; the relation of the price offered to the current value of the Company in a freely negotiated transaction and in relation to the directors’ estimate of the future value of the Company and its subsidiaries as an independent entity or entities; tax consequences of the transaction to the Company and its shareholders; and such other factors deemed by the directors to be relevant. This provision provides the Company’s board the latitude to consider additional factors, aside from the price of a proposed merger or other business combination, in determining whether the transaction is in the best interests of the Company and its shareholders. Affiliated Transactions Statute. The VSCA contains provisions governing “affiliated transactions.” These include various transactions such as mergers, share exchanges, sales, leases, or other material dispositions of assets, issuances of securities, dissolutions, and similar transactions with an “interested shareholder.” An interested shareholder is generally the beneficial owner of more than 10% of any class of a corporation’s outstanding voting shares. During the three years following the date a shareholder becomes an interested shareholder, any affiliated transaction with the interested shareholder must be approved by both a majority of the “disinterested directors” (those directors who were directors before the interested shareholder became an interested shareholder or who were recommended for election by a majority of disinterested directors) and by the affirmative vote of the holders of two-thirds of the corporation’s voting shares other than shares beneficially owned by the interested shareholder. These requirements do not apply to affiliated transactions if, among other things, a majority of the disinterested directors approve the interested shareholder’s acquisition of voting shares making such a person an interested shareholder before such acquisition. Beginning three years after the shareholder becomes an interested shareholder, the corporation may engage in an affiliated transaction with the interested shareholder if: • the transaction is approved by the holders of two-thirds of the corporation’s voting shares, other than shares beneficially owned by the interested shareholder; • the affiliated transaction has been approved by a majority of the disinterested directors; or • subject to certain additional requirements, in the affiliated transaction the holders of each class or series of voting shares will receive consideration meeting specified fair price and other requirements designed to ensure that all shareholders receive fair and equivalent consideration, regardless of when they tendered their shares. The provisions of the Affiliated Transactions Statute are only applicable to public corporations that have more than 300 shareholders. Control Share Acquisitions Statute. Under the VSCA’s control share acquisitions statute, voting rights of shares of stock of a Virginia corporation acquired by an acquiring person or other entity at ownership levels of 20%, 33 1/3%, and 50% of the outstanding shares may, under certain circumstances, be denied. The voting rights may be denied: • unless conferred by a special shareholder vote of a majority of the outstanding shares entitled to vote for directors, other than shares held by the acquiring person and officers and directors of the corporation; or • among other exceptions, unless such acquisition of shares is made pursuant to an affiliation agreement with the corporation or the corporation’s articles of incorporation or bylaws permit the acquisition of such shares before the acquiring person’s acquisition thereof.
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If authorized in the corporation’s articles of incorporation or bylaws, the statute also permits the corporation to redeem the acquired shares at the average per share price paid for them if the voting rights are not approved or if the acquiring person does not file a “control share acquisition statement” with the corporation within 60 days of the last acquisition of such shares. If voting rights are approved for control shares comprising more than 50% of the corporation’s outstanding stock, objecting shareholders may have the right to have their shares repurchased by the corporation for “fair value.” The provisions of the Control Share Acquisition Statute are only applicable to public corporations that have more than 300 shareholders. Corporations may provide in their articles of incorporation or bylaws to opt-out of the Control Share Acquisition Statute, but the Company has not done so. Transfer Agent The transfer agent for the Company’s common stock is Equiniti Trust Company, LLC, 55 Challenger Road, Floor 2, Ridgefield Park, NJ 07660.
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Exhibit 10.3 FORM OF RESTRICTED STOCK AWARD AGREEMENT JOHN MARSHALL BANCORP, INC. 2025 STOCK INCENTIVE PLAN THIS RESTRICTED STOCK AWARD AGREEMENT (“Agreement”) is made pursuant to the John Marshall Bancorp, Inc. (the “Company”) 2025 Stock Incentive Plan (the “Plan”), the terms and conditions of which are incorporated by reference herein. Capitalized terms used but not defined herein have the meaning ascribed to them in the Plan. Award. The Company hereby grants to [•] (the “Participant”) an award of [•] shares of the Company’s Common Stock, $0.01 par value. The Restriction Period for this Award of Restricted Stock is up to [•] ([•]) years, provided that the restrictions on the shares will terminate in accordance with the Vesting Schedule set forth below, and subject to the provisions of the Plan providing for acceleration of vesting. Until the lapse of the restrictions, the shares subject to this Agreement shall be referred to as “Restricted Stock”. Date of Grant. [•] (the “Grant Date”). Vesting. The restrictions will terminate, and the shares will vest in accordance with the following schedule, this Agreement, and the terms of the Plan (including provisions regarding acceleration of vesting): [•] Acceleration of Vesting; Forfeiture. Notwithstanding the above Vesting Schedule, all unvested shares of Restricted Stock subject to this Award shall automatically vest in the event of the death or Permanent and Total Disability of Participant, or in the event of the occurrence of a Change in Control. Any shares of Restricted Stock subject to this Award which have not vested as of the date of termination of Participant’s employment or service with the Company or any Affiliate which termination is not as a result of the death or Permanent and Total Disability of Participant, or an involuntary termination in contemplation of a Change in Control, shall be forfeited as of the date of the termination of Participant’s employment or service. Certificates. Shares of Restricted Stock awarded hereunder shall be credited to the account of the Participant in the direct registration or other book-entry system (“book-entry”) maintained by the Company for the Company’s Common Stock, whereupon the Participant shall become a shareholder of the Company with respect to such Restricted Stock, subject to forfeiture, and shall, to the extent not inconsistent with express provisions of the Plan, have all the rights of a shareholder, including but not limited to the right to receive all dividends paid on such shares and the right to vote such shares. The Participant agrees that the Company shall cause a notation to be included on its book-entry records to reflect the restricted character of the Restricted Stock, and the vested/unvested status of such Restricted Stock, and to enforce the terms and conditions of this Agreement and the Plan with respect to such shares of Restricted Stock, including but not limited to the forfeiture of unvested shares in accordance with the terms of this Agreement. Notwithstanding the foregoing, at the election of the Company, stock certificates may be issued in respect of shares of Restricted Stock awarded hereunder in lieu of the utilization of the book-entry system. Said stock certificates shall be deposited with the Company or its designee, together with a stock power endorsed in blank, and the following legend shall be placed upon such certificates reflecting that the shares represented thereby are subject to restrictions against transfer and forfeiture: “The transferability of this certificate and the shares of stock represented thereby are subject to the terms and conditions (including forfeiture) contained in the John Marshall Bancorp, Inc. 2025 Stock Incentive Plan, and an award agreement entered into between the registered owner and John Marshall Bancorp, Inc. Copies of such plan and agreement are on file in the offices of the Secretary of John Marshall Bancorp, Inc.” At the expiration of the Restriction Period applicable to the shares, the Company shall cause the restrictive notation to be removed from book-entry. If the above legend has been placed on any certificates for shares no longer subject to the Restriction Period, the Company shall cause such certificates to be reissued without such legend.
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2 No Cash Settlement. Upon vesting of this Award, the Participant will only have the right to receive the shares of Restricted Stock which have vested. In no event will the Participant be entitled to receive from the Company a cash payment of the value of any portion of the vested shares in lieu of such vested shares. Clawback. The Award reflected hereby, including the proceeds of the subsequent sale of the shares subject to this Award, is subject to cancellation, disgorgement and/or recovery by the Company, and the Participant agrees that he/she shall upon request by the Company, return, or consent to the return of, the Restricted Stock subject to this award, or any proceeds thereof, in the event that the award was based on materially inaccurate financial statements (which includes, but is not limited to, statements of earnings, revenues, or gains) or any other materially inaccurate performance metric criteria, or as may otherwise be required by applicable law, regulation or exchange listing standard. Other Limitations. No shares of Restricted Stock may be issued if the issuance of Common Stock upon vesting would constitute a violation of any applicable federal or state securities or other applicable law or regulation. As a condition to the Participant’s receipt of Restricted Stock, the Company may require the Participant or other person receiving the Restricted Stock to make any representation and warranty to the Company as may be required by any applicable law or regulation. Withholding. The Participant hereby agrees that the vesting of any Restricted Stock will not be effective until the Participant makes appropriate arrangements with the Company for such tax withholding as may be required of the Company under federal, state, or local law on account of such vesting. Participant may elect to provide for such withholding obligations by directing the Company to retain and withhold a number of shares of the Common Stock having a Market Value not less than the amount of such taxes and cancel any such shares so withheld in order to pay or reimburse the Company, or any of its Affiliates, for any such taxes, or may pay such taxes in cash. Participant or any successor in interest is authorized to deliver shares of the Company’s Common Stock in satisfaction of minimum statutorily required tax withholding obligations. Non-transferability. This Agreement and the Restricted Stock subject hereto may not be transferred in any manner otherwise than by will or the laws of descent or distribution, or pursuant to a “qualified domestic relations order” (within the meaning of Section 414(p) of the Code and the regulations and rulings thereunder) prior to vesting hereunder. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors, and assigns of the Participant. No Employment Right. Nothing in this Agreement or the Plan shall be construed as creating any contract of employment or as conferring on Participant any legal or equitable right to continue employment or other service with the Company or any Affiliate, or any level of compensation. Tax Election. The Participant acknowledges that the Participant may have the right, within 30 days of the Grant Date, to make an irrevocable election to include the value of the Restricted Stock in income at the time of grant, based on the Market Value of the Restricted Stock at the Grant Date, rather than including only the value of vested and earned shares at the date of vesting. The Participant acknowledges that the Company has not and is not providing any tax advice to Participant and that Participant shall make his/her own determination with respect to the Section 83 election, alone or in consultation with his/her own personal tax advisors. Construction; Compliance with 409A, Delay in Payment. (a) It is the intention of the parties hereto that this Agreement and the award provided for hereunder shall be in accordance with Section 409A, and thus avoid the imposition of any excise tax and interest on Participant pursuant to Section 409A(a)(1)(B) of the Code, and this Agreement shall be interpreted and construed consistent with this intent. Participant acknowledges and agrees that he shall be solely responsible for the payment of any excise tax or penalty which may be imposed or to which he may become subject as a result of the award under this Agreement. (b) Notwithstanding anything to the contrary contained herein, any award or payment hereunder that is considered “nonqualified deferred compensation” that is to be made to a Participant while the Participant is a “specified employee”, in each case as defined and determined for purposes of Section 409A, within six months following Participant’s “separation from service” (as determined in accordance with Section 409A), then to the extent that such award or payment is not otherwise permitted under Section 409A such that it would be exempt from the excise tax thereunder, such payment
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3 shall be delayed and shall be paid on the first business day of the seventh calendar month following Participant’s separation from service, or, if earlier upon Participant’s death. (c) The parties hereto agree that they shall take such actions as may be necessary and permissible under applicable law, regulation and guidance to amend or revise this Agreement in order to fully comply with Section 409A. Receipt Acknowledgment. The Participant hereby acknowledges that Participant has received a copy of the Plan. [Signature Block on Next Page]
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4 JOHN MARSHALL BANCORP, INC. By: Name: Kent Carstater For the Board of Directors Participant must accept this Agreement by signing below and returning the original signed Agreement to the Chief Accounting Officer no later than 60 calendar days after the Grant Date. If the original executed Agreement is not actually received by such date, this Agreement shall terminate and the Award shall be forfeited. Accepted and Agreed as of this ______ day of ______________, 20____. [•]
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Exhibit 19.1 Insider Trading Policy Approved by the Board: February 17, 2026
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2 Table of Contents Section 1.00 Background 3 Section 2.00 Definitions 3 Section 3.00 Penalties for Violation of the Insider Trading Laws 5 Section 3.01 Civil and Criminal Penalties 5 Section 3.02 Controlling Person Liability 5 Section 3.03 Company Sanctions 5 Section 4.00 Statement of Policy 5 Section 4.01 No Trading on Material Non-Public Information 5 Section 4.02 No Tipping 5 Section 4.03 No Exception for Hardship 6 Section 4.04 Black-Out and Pre-Clearance Procedures 6 Section 5.00 Pre-Approval & Reporting Requirements for Designated Officers & Directors 7 Section 6.00 Additional Guidance and Restrictions 8 Section 6.01 Short Swing Profit Recapture 8 Section 6.02 Stock Option Exercise 8 Section 6.03 401(k) Plan 8 Section 6.04 Hedging and Other Speculative Transactions 8 Section 6.05 Margin Accounts and Pledged Securities 9 Section 6.06 Confidentiality 9 Section 6.07 Open Orders with Brokers 10 Section 6.08 Questions Regarding This Policy 10 Section 6.09 Former Employees and Directors 10 Section 6.10 Distribution 11 Acknowledgement & Certification 12
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3 Section 1.00 - Background This Insider Trading Policy (the “Policy”) sets forth the policies and procedures that all employees, officers and directors (each, an “Insider”) of John Marshall Bancorp, Inc. (the “Company”) and its subsidiaries must follow in conjunction with the purchase, sale, gift (defined as the transfer of securities for nothing or less than fair market value in return), or other transfer (collectively, “trade”) of Company Securities (as defined below), as well as the securities of other public companies with which the Company has a business relationship. This Policy applies to you, as an Insider and your “immediate family members,” who consist of your family members that reside with you, anyone else who lives in your household and any family members who do not live in your household but whose transactions in Company Securities or securities of other public companies with which the Company has a business relationship are directed by you or are subject to your influence or control (such as parents or children who consult with you before they trade in Company Securities or such other securities) or other entities you may influence or control (such as an entity that you may influence or control the investment decisions of that entity, like whether to trade Company Securities). This Policy is designed to prevent insider trading or allegations of insider trading, and to protect the Company’s reputation for integrity and ethical conduct. It is your obligation to understand and comply with this Policy. Should you have any questions regarding this Policy, please contact the Compliance Officer, as defined in this Policy. A “Company Security” means the Company’s common stock, options, and any other securities that the Company may issue, such as preferred stock, warrants, notes, bonds, convertible securities, and derivative securities relating to any of the Company’s stock, whether or not issued by the Company, such as exchange traded put or call options and swaps. Federal and State securities laws prohibit the purchase or sale of a company’s securities by persons who are aware of material information about the company that is not generally known or available to the public. These laws also prohibit persons who are aware of such material non-public information from disclosing this information to others who may trade in such company’s securities or otherwise recommending the purchase or sale of such company’s securities on the basis of such material non-public information. Companies and their controlling persons are also subject to liability if they fail to take reasonable steps to prevent insider trading by company personnel. It is important that you understand the breadth of activities that constitute illegal insider trading and the consequences, which can be severe. Both the U.S. Securities and Exchange Commission (“SEC”) and Nasdaq investigate and are very effective at detecting insider trading. The SEC, together with U.S. Attorneys, pursues insider trading violations vigorously. Cases have been successfully prosecuted against trading by employees through foreign accounts, trading by family members and friends, and trading involving only a small number of shares. Section 2.00 - Definitions “Compliance Officer” The Company has appointed any of the Chief Financial Officer or the Chief Accounting Officer as the Compliance Officer for this Policy. The duties of the Compliance Officer include, but are not limited to, the following: · Assisting with implementation and enforcement of this Policy; · Circulating or delegating the circulation of this Policy to all employees and ensuring that this Policy is amended as necessary to remain up-to-date with insider trading laws; · Pre-clearing all trading in securities of the Company by Designated Officers and Directors in accordance with the procedures set forth in Section 5.00 below; and · Providing approval of any transactions under Section 5.00.
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4 “Designated Officers and Directors” is defined for the purposes of this Policy as the following: · All Directors · Chief Executive Officer · President · Chief Accounting Officer · Chief Banking Officer · Chief Credit Officer · Chief Financial Officer · Chief Lending Officer · Chief Operating Officer · Chief Risk Officer · Corporate Secretary · Director of Human Resources · Director of Sales · All employees of the Finance & Accounting Department · Any other Insiders who are notified in writing by the Corporate Secretary from time to time that they are subject to the provisions of this Policy relating to Designated Officers and Directors As set forth in more detail in Section 4.00 below, this Policy applies to an Insider’s activities when the Insider is aware or otherwise in possession of material non-public information (“Material Non-Public Information”) relating to the Company or to any other public company with which the Company has a business relationship. Information is considered material if there is a substantial likelihood that a reasonable investor would consider it important in deciding whether to buy, hold or sell a security. Some examples include, but are not limited to: · Significant changes in the Company’s prospects; · Significant write-downs in assets or increases in reserves; · developments regarding significant litigation or government agency investigations; · Liquidity problems; · Changes in earnings estimates or unusual gains or losses in major operations; · Major changes in the Company’s management or the board of directors; · Changes in dividends; · Extraordinary borrowings; · Major changes in accounting methods or policies; · Award or loss of a significant contract; · Cybersecurity risks and incidents, including vulnerabilities and breaches; · Changes in debt ratings; · Proposals, plans or agreements, even if preliminary in nature, involving mergers, acquisitions, divestitures, recapitalizations, strategic alliances, licensing arrangements, or purchases or sales of substantial assets; and · Offerings of the Company’s securities. The foregoing is merely illustrative, and not intended to be a comprehensive list of all information, which might be characterized as “material.”
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5 Information is considered non-public if it is not generally known or available to the public. One common misconception is that material information loses its “non-public” status as soon as a release is issued disclosing the information. In fact, information is considered to be available to the public only when it has been released broadly to the marketplace (such as by an SEC filing) and the investing public has had time to absorb the information thoroughly. As a general rule, information is considered non-public until the end of the second full trading day after the information is released. If you are unsure whether information is material and/or non-public, you should either consult with the Compliance Officer before disclosing such information to any third party or trading in Company Securities (or securities of any other public company to which such information relates) or assume that the information is Material Non-Public Information. Section 3.00 – Penalties for Violation of the Insider Trading Laws Section 3.01 – Civil and Criminal Penalties Potential penalties for insider trading violations include (1) imprisonment for up to 20 years, (2) criminal fines of up to $5 million, and (3) civil fines of up to three times the profit gained or loss avoided. In addition to these potential criminal and civil liabilities, in certain circumstances the Company may be able to recover all profits made by an insider who traded illegally, plus collect other damages. Section 3.02 – Controlling Person Liability If the Company fails to take appropriate steps to prevent illegal insider trading, the Company may have “controlling person” liability for a trading violation, with civil penalties of up to the greater of $1 million and three times the profit gained or loss avoided, as well as a criminal penalty of up to $25 million. The civil penalties can extend personal liability to the Company’s directors, officers and other supervisory personnel if they fail to take appropriate steps to prevent insider trading. Section 3.03 – Company Sanctions Failure to comply with this Policy may also subject you to Company-imposed sanctions, including dismissal for cause, whether or not your failure to comply with this Policy results in a violation of law. Section 4.00 – Statement of Policy Section 4.01 – No Trading on Material Non-Public Information You may not trade in Company Securities, directly or through immediate family members or other persons or entities, if you are aware or otherwise in possession of Material Non-Public Information relating to the Company. Similarly, you may not trade in the securities of any other public company if you are aware or otherwise in possession of Material Non-Public Information relating to such company which you obtained in the course of your Insider relationship with the Company. Section 4.02 – No Tipping You may not pass Material Non-Public Information relating to the Company or to any other public company with which the Company has a business relationship on to others or recommend to anyone the purchase or sale of any Company Securities or securities of any such other public company when you are aware of such Material Non-Public Information. This practice, known as “tipping,” also violates the securities laws and can result in the same civil and criminal penalties that apply to insider trading, even though you do not gain any benefit from another’s trading.
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6 Section 4.03 – No Exception for Hardship The existence of a personal financial emergency or any other exigent circumstance does not excuse you from compliance with this Policy. Section 4.04 – Black-Out and Pre-Clearance Procedures In addition to insider trading restrictions generally applicable to all Insiders, the Company’s Board of Directors has approved the following additional restrictions applicable to all Designated Officers and Directors (and their immediate family members). Designated Officers and Directors (and their immediate family members) are restricted by black-out periods during which generally NO trading of Company Securities may occur. However, exceptions may apply in limited circumstances and examples are listed further in this section. The Company’s pre-established black-out period begins on the Friday before the Board Meeting of the third month of each quarter, and ends after the second (2nd) full trading day following the release of the Company’s earnings for that quarter. Designated Officers and Directors in the normal course of doing business are expected to come into possession of Material Non-Public Information relating to the Company such as quarterly and annual earnings and other confidential material not yet disclosed to the public. These pre-determined “black-out” periods have been established to protect Designated Officers and Directors from inappropriately trading in Company Securities. From time to time, other types of Material Non-Public Information relating to the Company, such as negotiation of mergers, acquisitions, or dispositions, internal investigations, or other significant events, may be pending and may not be publicly disclosed. While such Material Non- Public Information is pending, the Company may impose special black-out periods during which Designated Officers and Directors (and such other Insiders as the Company may determine) are prohibited from trading in Company Securities (and securities of such other public companies as the Company may determine). If the Company imposes a special black-out period, it will notify the affected Insiders. In January of each year, the Compliance Officer will distribute to the Designated Officers and Directors a list of the anticipated pre-established black-out periods for the current year. In the event a pre-established blackout period needs to be modified, the Compliance Officer will provide an updated pre-established black-out periods list, as required, and such updated list shall supersede prior versions. The Compliance Officer will distribute to the Designated Officers and Directors information on special black-out periods on an as-needed basis. Any special black-out period will remain in effect until the Compliance Officer notifies the Designated Officers and Directors of its expiration. Please note that black-out notifications are for preliminary planning purposes only and subject to change as events merit. The ultimate determination of the black-out will transpire during the trade pre-approval process, as discussed in Section 5.00. Designated Officers and Directors are further restricted during any black-out periods from: · Broker-assisted cashless option exercises · Stock-for-stock option exercises · Net stock option exercises · Share withholding on option exercises · Pledges · Gifts
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7 The only allowable exceptions for trading in Company Securities during any black-out periods are: · Cash exercise of vested options granted under the Company’s equity compensation plans (however, any subsequent sale of the acquired securities may not occur during an established black-out period (either outright or in connection with a “cashless” exercise transaction through a broker)). · This Policy does not apply to the vesting of restricted stock, or the exercise of a tax withholding right pursuant to which you elect to have the Company withhold shares of stock to satisfy tax withholding requirements upon the vesting of any restricted stock. The Policy does apply, however, to any market sale of restricted stock. · Transactions under a pre-existing written contract, instruction, or plan that complies with Rule 10b5-1 under the Securities Exchange Act of 1934 (a “10b5-1 Plan”) that: · Has been reviewed and approved at least one month in advance of any trades thereunder by the Compliance Officer (or, if revised or amended, such revisions or amendments have been reviewed and approved by the Compliance Officer at least one month in advance of any subsequent trades); · Was entered into in good faith by the Designated Officer or Director at a time when the Designated Officer or Director was not in possession of Material Non-Public Information about the Company; and · Gives a third party the discretionary authority to execute such purchases and sales, outside of the control of the Designated Officer or Director, so long as such third party does not possess any Material Non-Public Information about the Company; or explicitly specifies the security or securities to be purchased or sold, the number of shares, the prices and/or dates of transactions, or other formula(s) describing such transactions. Without limiting the foregoing, no Designated Officer or Director may enter into a 10b5-1 Plan during any black-out period. Section 5.00 – Pre-Approval & Reporting Requirements for Designated Officers & Directors Regardless of whether the Company is in a black-out period, all trades of Company Securities by Designated Officers and Directors (and those of their immediate family members), whether effected through a public securities market or a private transaction, must be pre-approved by contacting the Compliance Officer. Any transaction in Company Securities by a Director or Designated Officer must be pre-approved by the Compliance Officer (or such other officer as the Compliance Officer may designate from time to time). A request for pre-approval should be submitted at least one trading day in advance of the proposed transaction. Please refer to the attached Securities Transaction Pre-Approval Request Form. The Company is under no obligation to approve a trade submitted for pre-approval, and may determine not to permit the trade for any reason. Each Director and Designated Officer must enter into the proposed transaction within five trading days of receipt of pre-approval unless notified that such pre-approval has been rescinded. If the proposed transaction has not been entered into within five trading days of receipt of pre-approval, such Director or Designated Officer must resubmit the request for pre-approval. Pre-approval of a transaction does not constitute a recommendation by the Company or any of its employees or agents that any Director or Designated Officer engage in the subject transaction. A request for pre-approval made during a black-out period will be denied. If a request for pre-approval is not granted, then the requestor should refrain from initiating any transaction in Company Securities and should not inform any other person of the denial. If pre-approval is granted, the requestor may make the trade at any time within, but not after, five trading days of receipt of pre-approval. If the requestor becomes aware of Material Non-Public Information concerning the Company before the trade is executed, the preclearance shall be void and the trade must not be completed.
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8 Trade details should be reported to the Company’s Chief Accounting Officer within one trading day of completion to ensure timely and accurate SEC filings are executed. Although the Company will file required SEC forms on behalf of a Designated Officer or Director who submits a properly completed reporting power of attorney, the responsibility for ensuring the forms are accurate and provided to the Company in a timely manner rests with the Designated Officer or Director. In the event the Compliance Officer receives overlapping pre-approval requests exceeding 10,000 shares of the Company’s stock, the Compliance Officer shall refrain from trading any of the Company’s shares such officer beneficially owns during the earlier completion of the last (i) five trading day pre-approval window or (ii) pre- approved trade. Section 6.00 – Additional Guidance and Restrictions Section 6.01 – Short Swing Profit Recapture There are special provisions of the federal securities law regarding so-called “short swing profits” which may apply to Designated Officers and Directors, as well as any beneficial owner of more than 10% of the outstanding securities of the Company. In general, the short swing profit rules provide that any profit realized on a purchase and sale of stock within a six-month period is recoverable by the Company. It does not matter whether the purchase or sale occurred first. Short swing profit rules also are applicable to short sales, in which Company Securities are not owned by the Insider at the time of the sale. Liability does not depend upon actual use, or even possession, of inside information by the Insider. Compliance with the short swing profit rules is a personal obligation of Designated Officers and Directors as well as 10% shareholders. Compliance requires a great deal of advance planning. Persons covered by the rules also must be certain that reports as to their initial stock ownership (Form 3), changes in ownership (Form 4), and annual reports of ownership (Form 5) are accurate and filed in a timely manner with the SEC. The Compliance Officer, or the Corporate Secretary, will answer any questions as to whether the short swing profit rules apply to an individual. Section 6.02 – Stock Option Exercises This Policy’s trading restrictions generally do not apply to the cash exercise of a stock option granted under the Company’s equity compensation plans. The trading restrictions do apply, however, to any sale of the underlying stock or to a cashless exercise of the option through a broker, as this entails selling a portion of the underlying stock to cover the costs of exercise. Section 6.03 – 401(k) Plan Reserved for potential future use. Section 6.04 – Hedging and Other Speculative Transactions The Company considers it inappropriate for Insiders to engage in speculative transactions in Company Securities or in certain other transactions in Company Securities that may lead to inadvertent violations of insider trading laws or that create a conflict of interest for the Insider. These transactions can be accomplished through a number of possible mechanisms that permit an Insider to continue to own Company Securities obtained through employee benefit plans or otherwise, but without full risk and rewards of ownership. When that occurs, the Insider may no longer have the same objectives as the
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9 Company’s other shareholders. Therefore, Insiders are prohibited from engaging in any of the following transactions with respect to Company Securities: · short sales; · buying or selling Company options, including puts or calls; · holding Company Securities in margin accounts or pledging Company Securities as collateral, except as expressly provided in Section 6.05; · hedging transactions, including through the use of financial instruments such as prepaid variable forward equity swaps, collars, and exchanges of funds and including with respect to any 10b5-1 Plan (as defined below); or · placing open orders with a broker to buy or sell Company Securities that have a duration in excess of five trading days (other than when such orders are made pursuant to a 10b5-1 Plan). In addition, from time to time, the Company may determine that other types of transactions by Insiders in Company Securities shall be prohibited or shall be permitted only with the prior written consent of the Compliance Officer. Section 6.05 – Margin Accounts and Pledged Securities No Insider may pledge any Company Securities that such Insider directly or indirectly owns and controls as collateral for a loan. Notwithstanding the foregoing, the Audit Committee may, in accordance with this Policy, grant an exception to this prohibition to an Insider who desires to pledge Company Securities as collateral for a loan. In making such determination, the Audit Committee shall consider relevant factors, including but not limited to: · The amount of pledged Company Securities outstanding at any time in relation to the total number of similar Company Securities outstanding and the market value and trading volume of such similar Company Securities · The financial capacity of the borrower to repay the loan without resort to the pledged Company Securities · The terms of the proposed pledge arrangement, including loan to value ratio, the name of any other collateral securing the loan and the ability to substitute collateral or similar terms; provided, however, that no Company Securities may be pledged in a margin account Section 6.06 – Confidentiality The unauthorized disclosure of internal information about the Company, whether or not for the purpose of facilitating improper trading in Company Securities, could create serious problems. Insiders should not discuss internal Company matters, developments or confidential information obtained through a relationship of confidence as through the Company with anyone outside the Company, except as required in the performance of regular corporate, contracting, or consulting duties. This prohibition applies specifically (but not exclusively) to inquiries about the Company, which may be made by the financial press, investment analysts, or others in the financial community. It is important that all communications with such parties on behalf of the Company be made by the appropriate person under carefully controlled circumstances. Unless you are expressly authorized to the contrary, if you receive any inquiries of this nature, you should decline comment and refer the inquirer to the Chief Executive Officer.
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10 When an Insider is involved in a matter or transaction which is sensitive and, if disclosed, could reasonably be expected to have an effect on the market price of the securities of the Company or any other company involved in the transaction, that individual should consider taking extraordinary precautions to prevent misuse or unauthorized disclosure of such information. Such measures include the following: · maintaining files securely and avoiding storing information on computer systems that can be accessed by other individuals; · avoiding the discussion of confidential matters in areas where the conversation could possibly be overheard; · not gossiping about the Company’s affairs; and · restricting the copying and distribution of sensitive documents within the Company. Any written or verbal statement that would be prohibited under the law or under this Policy is equally prohibited if made on the Internet or by social media. Section 6.07 – Open Orders with Brokers Always use caution when placing open orders, such as limit orders or stop orders, with brokers. Open orders may result in the execution of a trade at a time when you are aware of Material Non-Public Information or otherwise are not permitted to trade in Company Securities, which may result in inadvertent insider trading violations, violations of reporting requirements for Designated Officers and Directors, violations of this Policy and unfavorable publicity for you and the Company. As provided in Section 5.00, you may not place an open order with a broker to buy or sell Company Securities that has a duration in excess of five trading days (unless made pursuant to a 10b5-1 Plan). If you are subject to black-out periods or pre-clearance requirements, inform any broker with whom you place any open order at the time it is placed. Section 6.08 – Questions Regarding this Policy If you are considering buying, selling, gifting, or otherwise transferring Company Securities and have questions regarding your responsibilities under this Policy, you should contact the Compliance Officer. The Compliance Officer will, in consultation with the Chief Executive Officer, when necessary, determine whether the transaction might imply the improper use of confidential information or Material Non-Public Information in violation of this Policy. Section 6.09 – Former Employees and Directors Subject to additional terms, conditions or restrictions that may be set forth in an agreement between the Company and a Designated Officer or Director: · Upon termination of the status of the Designated Officer or Director with the Company, the Designated Officer or Director (and his or her immediate family members) will no longer be prohibited from engaging in transactions in Company Securities during black-out periods (as described in Section 4.04)(provided that such Designated Officer or Director (and his or her immediate family members) shall continue to be subject to any black-out period in effect at the time of such termination), but all other trading prohibitions and restrictions detailed in this Policy (including mandatory pre-approval of any transactions in Company Securities) shall apply until the later of (a) the third full trading day following the public release of earnings for the quarter in which the status of the Designated Officer or Director with the Company terminates and (ii) the third full trading day after the earlier of (a) the public disclosure of any Material Non-Public Information known to the Designated Officer or Director or (b)any Material Non-Public Information possessed by the Insider has become public or is no longer material, as determined by the Company. · Upon termination of the status of any other Insider with the Company, trading prohibitions and restrictions detailed in this Policy will continue to apply until any Material Non-Public Information possessed by the Insider has become public or is no longer material, as determined by the Company.
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11 Section 6.10 – Distribution All new Insiders will be provided a copy of this Policy upon engagement or hire and be provided an opportunity to review its contents as part of their orientation process. All employees will confirm their review and understanding of this Policy annually. Directors will review and discuss this Policy annually as a documented agenda item.
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12 Acknowledgement and Certification The undersigned does hereby acknowledge receipt of the Company’s Insider Trading Policy (the “Policy”). The undersigned has read and understands (or has had explained) such Policy and agrees to be governed by such Policy at all times in connection with the purchase and sale of securities and the confidentiality of nonpublic information. Name Signature Date
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Exhibit 21 Subsidiaries of John Marshall Bancorp, Inc. Name of Subsidiary State of Incorporation John Marshall Bank Virginia
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Exhibit 23.1 Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-268833 and No. 333-288893) and Form S-3 (No. 333-287499) of John Marshall Bancorp, Inc. of our report dated March 13, 2026, relating to the consolidated financial statements of John Marshall Bancorp, Inc., appearing in the Annual Report on Form 10-K of John Marshall Bancorp, Inc. for the year ended December 31, 2025. /s/ Yount, Hyde & Barbour, P.C. Richmond, Virginia March 13, 2026
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Exhibit 31.1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER Section 302 Certification I, Christopher W. Bergstrom, certify that: 1. I have reviewed this annual report on Form 10-K of John Marshall Bancorp, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [reserved]; (c) evaluated the effectiveness of the registrant‘s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) disclosed in this report any change in the registrant‘s internal control over financial reporting that occurred during the registrant‘s most recent fiscal quarter (the registrant‘s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant‘s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. /s/ Christopher W. Bergstrom Date: March 13, 2026 Christopher W. Bergstrom President and Chief Executive Officer
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Exhibit 31.2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER Section 302 Certification I, Kent D. Carstater, certify that: 1. I have reviewed this annual report on Form 10-K of John Marshall Bancorp, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [reserved]; (c) evaluated the effectiveness of the registrant‘s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) disclosed in this report any change in the registrant‘s internal control over financial reporting that occurred during the registrant‘s most recent fiscal quarter (the registrant‘s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant‘s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. /s/ Kent D. Carstater Date: March 13, 2026 Kent D. Carstater Senior Executive Vice President and Chief Financial Officer
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Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of John Marshall Bancorp, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Executive Officer and Chief Financial Officer of the Company hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002 that based on their knowledge and belief: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in the Report. /s/ Christopher W. Bergstrom Christopher W. Bergstrom President and Chief Executive Officer /s/ Kent D. Carstater Kent D. Carstater Senior Executive Vice President and Chief Financial Officer March 13, 2026