# EDGAR Filing Document

**Accession Number:** 0001275101
**File Stem:** 0001275101-26-000019
**Filing Date:** 2026-5
**Character Count:** 183736
**Document Hash:** faab1f65d74506b73ad64f902883856a
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001275101-26-000019.hdr.sgml**: 20260512

**ACCESSION NUMBER**: 0001275101-26-000019

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 62

**CONFORMED PERIOD OF REPORT**: 20260331

**FILED AS OF DATE**: 20260512

**DATE AS OF CHANGE**: 20260512

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** BANK OF THE JAMES FINANCIAL GROUP INC
- **CENTRAL INDEX KEY:** 0001275101
- **STANDARD INDUSTRIAL CLASSIFICATION:** STATE COMMERCIAL BANKS [6022]
- **ORGANIZATION NAME:** 02 Finance
- **EIN:** 200500300
- **STATE OF INCORPORATION:** VA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-35402
- **FILM NUMBER:** 26969241

**BUSINESS ADDRESS:**
- **STREET 1:** P O BOX 1200
- **CITY:** LYNCHBURG
- **STATE:** VA
- **ZIP:** 24505
- **BUSINESS PHONE:** 4348462000

?xml version='1.0' encoding='ASCII'? botj-20260331x10q

[<u>**Table of Contents**</u>](#TOC)

## UNITED STATES

## SECURITIES AND EXCHANGE COMMISSION
**Washington, D.C. 20549**

**______________________**

**Form 10-Q**

**______________________**

(Mark one)

☒**QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** 

For the Quarterly Period Ended March 31, 2026

☐**TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

For the transition period from

## BANK OF THE JAMES FINANCIAL GROUP, INC.
**(Exact Name of Registrant as Specified in Its Charter)**

______________________

---

| | | |
|:---|:---|:---|
| **Virginia** | **001-35402** | **20-0500300** |
| **(State or other jurisdiction of**<br>**incorporation or organization)** | **(Commission file number)** | **(I.R.S.** **Employer**<br>**Identification No.)** |
| **828 Main Street, Lynchburg, VA** |  | **24504** |
| **(Address of principal executive offices)** |  | **(Zip Code)** |

---

**(434) 846-2000**

**(Registrant's telephone number, including area code)**

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 (§ 232.405 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, 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.

<u>Large accelerated filer</u>   <u>☐</u>   <u>Accelerated filer</u>   <u>☐</u> <br> <u>Non-accelerated filer</u>   <u>☒</u>   <u>Smaller reporting company</u>   <u>☒</u> <br> <u>Emerging growth company</u>   <u>☐</u>        

**______________________**

**Securities registered or to be registered pursuant to Section 12(b) of the Act**

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading**<br>**Symbol(s)** | **Name of each exchange**<br>**on which registered** |
| **Common Stock, $2.14 per share par value** | **BOTJ** | **The NASDAQ Stock Market LLC** |

---

------

[<u>**Table of Contents**</u>](#TOC)

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 is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 4,543,338 shares of Common Stock, par value $2.14 per share, were outstanding at May 12, 2026.

‎

------

[<u>**Table of Contents**</u>](#TOC)

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| [<u>PART I – FINANCIAL INFORMATION</u>](#FinInfo) |  |
| &nbsp;&nbsp;&nbsp;[<u>Item 1. Consolidated Financial Statements</u>](#Fin_Statements) | 1 |
| &nbsp;&nbsp;&nbsp;[<u>Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations</u>](#mda) | 37 |
| &nbsp;&nbsp;&nbsp;[<u>Item 3. Quantitative and Qualitative Disclosures About Market Risk</u>](#MarketRisk) | 54 |
| &nbsp;&nbsp;&nbsp;[<u>Item 4. Controls and Procedures</u>](#ControlsAndProcedures) | 54 |
| [<u>PART II – OTHER INFORMATION</u>](#OtherInfo) |  |
| &nbsp;&nbsp;&nbsp;[<u>Item 1. Legal Proceedings</u>](#LegalProceedings) | 54 |
| &nbsp;&nbsp;&nbsp;[<u>Item 1A. Risk Factors</u>](#RiskFactors) | 54 |
| &nbsp;&nbsp;&nbsp;[<u>Item 2. Unregistered Sales of Equity Securities, Use of Proceeds</u>](#UnregisteredSales)<u>, and Issuer Purchases of Equity Securities</u> | 54 |
| &nbsp;&nbsp;&nbsp;[<u>Item 3. Defaults Upon Senior Securities</u>](#SeniorSecurities) | 54 |
| &nbsp;&nbsp;&nbsp;[<u>Item 4. Mine Safety Disclosures</u>](#MineSafety) | 54 |
| &nbsp;&nbsp;&nbsp;[<u>Item 5. Other Information</u>](#Other_Information) | 55 |
| &nbsp;&nbsp;&nbsp;[<u>Item 6. Exhibits</u>](#Exhibits) | 55 |
| [<u>SIGNATURES</u>](#Signatures) | 56 |

---

------

[<u>**Table of Contents**</u>](#TOC)

**PART I – FINANCIAL INFORMAT** **ION**

**Item 1. Consolidated Financial Statem** **ents**

**Bank of the James Financial Group, Inc. and Subsidiaries**

**Consolidated Balance Sheets**

**(dollar amounts in thousands, except share and per share amounts) (2026 unaudited)**

---

| | | |
|:---|:---|:---|
| **Assets** | **March 31, <br>‎2026** | **December 31, 2026** |
| Cash and due from banks | $25097 | $28538 |
| Federal funds sold | 62894 | 55937 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total cash and cash equivalents | 87991 | 84475 |
| Securities held-to-maturity, at amortized cost (fair value of $3,290 as of March 31, 2026 and $3,315 as of December 31, 2025) | 3586 | 3590 |
| Securities available-for-sale, at fair value | 244699 | 214128 |
| Restricted stock, at cost | 1828 | 1828 |
| Loans, net of allowance for credit losses of $6,201 as of March 31, 2026 and $6,450 as of December 31, 2025 | 649133 | 661357 |
| Loans held for sale | 2877 | 3472 |
| Premises and equipment, net | 19167 | 19132 |
| Interest receivable  | 3200 | 3380 |
| Cash value - bank owned life insurance | 23887 | 23676 |
| Customer relationship intangible | 6024 | 6164 |
| Goodwill | 2054 | 2054 |
| Other assets | 16743 | 15768 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total assets** | $1061189 | $1039024 |
| **Liabilities and Stockholders' Equity** |  |  |
| Deposits |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Noninterest bearing demand | $144762 | $131456 |
| &nbsp;&nbsp;&nbsp;&nbsp;NOW, money market and savings | 576899 | 570345 |
| &nbsp;&nbsp;&nbsp;&nbsp;Time | 234891 | 235328 |
| Total deposits | 956552 | 937129 |
| Other borrowings | 8729 | 8796 |
| Interest payable | 1125 | 1167 |
| Other liabilities | 13499 | 11884 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities** | 979905 | 958976 |
| Stockholders' equity |  |  |
| Common stock $2.14 par value; authorized 10,000,000 shares; issued and outstanding 4,543,338 as of March 31, 2026 and December 31, 2025 | 9723 | 9723 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in-capital | 35253 | 35253 |
| &nbsp;&nbsp;&nbsp;&nbsp;Retained earnings | 52328 | 50009 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | (16020) | (14937) |
| **Total stockholders' equity** | 81284 | 80048 |
| **Total liabilities and stockholders' equity** | $1061189 | $1039024 |

---

See accompanying notes to these consolidated financial statements

------

[<u>**Table of Contents**</u>](#TOC)

**Bank of the James Financial Group, Inc. and Subsidiaries**

**Consolidated Statements of Income**

**(dollar amounts in thousands, except per share amounts) (unaudited)**

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** |
|  | **March 31,** | **March 31,** |
| **Interest income** | **2026** | **2025** |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9427 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8906 |
| &nbsp;&nbsp;&nbsp;&nbsp;Securities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;US Government and agency obligations | 633 | 454 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgage backed securities | 450 | 387 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Municipals - taxable | 398 | 311 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Municipals - tax exempt | 63 | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends | 11 | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporates | 145 | 135 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest bearing deposits | 98 | 123 |
| &nbsp;&nbsp;&nbsp;&nbsp;Federal Funds sold | 624 | 887 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total interest income** | 11849 | 11234 |
| **Interest expense** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Deposits |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, money market savings | 1028 | 1248 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Time deposits | 1954 | 2079 |
| &nbsp;&nbsp;&nbsp;&nbsp;Finance leases | 14 | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other borrowings | 119 | 89 |
| &nbsp;&nbsp;&nbsp;&nbsp;Capital notes | - | 82 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total interest expense** | 3115 | 3515 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net interest income** | 8734 | 7719 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Recovery of) provision for credit losses | (146) | 137 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net interest income after (recovery of) provision for credit losses** | 8880 | 7582 |
| **Noninterest income** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Gains on sale of loans held for sale | 1196 | 837 |
| &nbsp;&nbsp;&nbsp;&nbsp;Service charges, fees and commissions | 994 | 981 |
| &nbsp;&nbsp;&nbsp;&nbsp;Wealth management fees | 1413 | 1255 |
| &nbsp;&nbsp;&nbsp;&nbsp;Life insurance income | 211 | 188 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income from small business investment company | 131 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 19 | 22 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total noninterest income** | 3964 | 3283 |
| **Noninterest expenses** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Salaries and employee benefits | 5500 | 4777 |
| &nbsp;&nbsp;&nbsp;&nbsp;Occupancy | 608 | 570 |
| &nbsp;&nbsp;&nbsp;&nbsp;Equipment | 747 | 670 |

---

See accompanying notes to these consolidated financial statements

------

[<u>**Table of Contents**</u>](#TOC)

&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | |
|:---|:---|:---|
| Supplies | 160 | 142 |
| &nbsp;&nbsp;&nbsp;&nbsp;Professional and other outside expense | 770 | 1715 |
| &nbsp;&nbsp;&nbsp;&nbsp;Data processing | 475 | 820 |
| &nbsp;&nbsp;&nbsp;&nbsp;Marketing | 189 | 198 |
| &nbsp;&nbsp;&nbsp;&nbsp;Credit expense | 190 | 186 |
| &nbsp;&nbsp;&nbsp;&nbsp;FDIC insurance expense | 136 | 142 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of intangibles | 140 | 140 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 450 | 466 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total noninterest expenses** | 9365 | 9826 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Income before income taxes** | 3479 | 1039 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Income tax expense** | 705 | 197 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net income** | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2774 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 842 |
| Weighted average shares outstanding - basic and diluted | 4543338 | 4543338 |
| Earnings per common share - basic and diluted | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.61 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.19 |

---

 **‎** 

See accompanying notes to these consolidated financial statements

------

[<u>**Table of Contents**</u>](#TOC)

**Bank of the James Financial Group, Inc. and Subsidiaries**

**Consolidated Statements of Comprehensive Income**

**(dollar amounts in thousands) (unaudited)**

---

| | | |
|:---|:---|:---|
|  | **For the Three Months** | **For the Three Months** |
|  | **Ended March 31,** | **Ended March 31,** |
|  | **2026** | **2025** |
| Net income | $2774  | $842  |
| Other comprehensive (loss) income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized (loss) gain on securities available-for-sale | (1371) | 3918  |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax effect | 288  | (822) |
| Other comprehensive (loss) income, net of tax | (1083) | 3096  |
| Comprehensive income | $1691  | $3938  |

---

‎

See accompanying notes to these consolidated financial statements

------

[<u>**Table of Contents**</u>](#TOC)

**Bank of the James Financial Group, Inc. and Subsidiaries**

**Consolidated Statements of Cash Flows**

**(dollar amounts in thousands) (unaudited)**

---

| | | |
|:---|:---|:---|
|  | **For the Three Months Ended March 31,** | **For the Three Months Ended March 31,** |
|  | **2026** | **2025** |
| **Cash flows from operating activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net Income | $2774  | $842  |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 346  | 324  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net amortization and accretion of premiums and discounts on securities | 4  | 88  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt issuance costs | - | 1  |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on disposal of equipment | 1  | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on sales of loans held for sale | (1196) | (837) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sales of loans held for sale | 44966  | 33436  |
| &nbsp;&nbsp;&nbsp;&nbsp;Origination of loans held for sale | (43175) | (33722) |
| &nbsp;&nbsp;&nbsp;&nbsp;(Recovery of) provision for credit losses | (146) | 137  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of intangibles | 140  | 140  |
| &nbsp;&nbsp;&nbsp;&nbsp;Bank owned life insurance income | (211) | (188) |
| &nbsp;&nbsp;&nbsp;&nbsp;Decrease in accrued interest receivable | 180  | 95  |
| &nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in other assets | (687) | 572  |
| &nbsp;&nbsp;&nbsp;&nbsp;Decrease in accrued interest payable | (42) | (34) |
| &nbsp;&nbsp;&nbsp;&nbsp;Increase (decrease) in other liabilities | 1785  | (91) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided by operating activities** | 4739  | 763  |
| **Cash flows from investing activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of securities available-for-sale | (33628) | (16482) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from maturities, calls and paydowns of securities available-for-sale | 1686  | 15453  |
| &nbsp;&nbsp;&nbsp;&nbsp;Origination of loans, net of principal collected | 12315  | (5864) |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of premises and equipment | (382) | (622) |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase of SBIC fund | - | (150) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash used in investing activities** | (20009) | (7665) |
| **Cash flows from financing activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net increase in deposits | 19423  | 29279  |
| &nbsp;&nbsp;&nbsp;&nbsp;Principal payments on finance lease obligations | (115) | (111) |
| &nbsp;&nbsp;&nbsp;&nbsp;Repayment of other borrowings | (67) | (154) |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividends paid to common stockholders | (455) | (455) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided by financing activities** | 18786  | 28559  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Increase in cash and cash equivalents** | 3516  | 21657  |
| **Cash and cash equivalents at beginning of period** | 84475  | 73309  |
| **Cash and cash equivalents at end of period** | $87991  | $94966  |
| **Supplemental schedule of noncash investing and financing activities** |  |  |

---

See accompanying notes to these consolidated financial statements

------

[<u>**Table of Contents**</u>](#TOC)

---

| | | |
|:---|:---|:---|
| Noncash transactions |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized (losses) gains on securities available-for-sale | $(1371) | $3918  |
| **Supplemental disclosures of cash flow information** |  |  |
| Cash transactions |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest | $3157  | $3549  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash paid for income taxes | - | - |

---

See accompanying notes to these consolidated financial statements

------

[<u>**Table of Contents**</u>](#TOC)

**Bank of the James Financial Group, Inc. and Subsidiaries**

**Consolidated Statements of Changes in Stockholders' Equity**

**For the Three Months Ended March 31, 2026 and 2025**

**(dollar amounts in thousands, except share amounts) (unaudited)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  | **Accumulated** |  |
|  |  |  | **Additional** |  | **Other** |  |
|  | **Shares** | **Common** | **Paid-in** | **Retained** | **Comprehensive** |  |
|  | **Outstanding** | **Stock** | **Capital** | **Earnings** | **Loss** | **Total** |
| **Balance at December 31, 2024** | 4543338 | $9723 | $35253 | $42804 | $(22915) | $64865 |
| **Net Income** | - | - | - | 842 | - | 842 |
| **Dividends paid on common stock ($0.10 per share)** | - | - | - | (455) | - | (455) |
| **Other comprehensive income** | - | - | - | - | 3096 | 3096 |
| **Balance at March 31, 2025** | 4543338 | $9723 | $35253 | $43191 | $(19819) | $68348 |
| **Balance at December 31, 2025** | 4543338 | $9723 | $35253 | $50009 | $(14937) | $80048 |
| **Net Income** | - | - | - | 2774 | - | 2774 |
| **Dividends paid on common stock ($0.10 per share)** | - | - | - | (455) | - | (455) |
| **Other comprehensive loss** | - | - | - | - | (1083) | (1083) |
| **Balance at March 31, 2026** | 4543338 | $9723 | $35253 | $52328 | $(16020) | $81284 |

---

 **‎** 

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[<u>**Table of Contents**</u>](#TOC)

**Notes to Consolidated Financial Statements**

**Note 1 – Basis of Presentation**

Bank of the James Financial Group, Inc. (the "Company") operates primarily in the area commonly referred to as Region 2000, which encompasses the Town of Altavista, Amherst County, Appomattox County, the Town of Bedford, Bedford County, Campbell County, and the City of Lynchburg. In addition to its primary market area, the Company serves markets including Charlottesville, Roanoke, Blacksburg, Harrisonburg, Lexington, Buchanan, Nellysford, and Wytheville, Virginia.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for interim financial reporting. In the opinion of management, all adjustments, consisting solely of normal recurring accruals, considered necessary for a fair presentation of the Company's financial position as of March 31, 2026 and December 31, 2025, and the results of its operations for the three months ended March 31, 2026 and 2025, have been included. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the full year.

Additional information concerning the Company's organization and business, accounting policies, and other related information is contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in that report.

**Note 2 –** **Significant Accounting Policies and Estimates**

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Material estimates that are particularly susceptible to significant change in the near term include the allowance for credit losses on loans ("ACL").

**Significant Accounting Policies and Estimates**

The preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions, and judgments that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, actual results could differ from those estimates, and such differences may be material. Certain accounting policies inherently require a greater degree of judgment and are more susceptible to change.

The Company's significant accounting policies are described in the notes to the audited consolidated financial statements for the year ended December 31, 2025 included in the Company's Annual Report on Form 10-K. There have been no material changes in the Company's significant accounting policies or their application since December 31, 2025.

‎

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[<u>**Table of Contents**</u>](#TOC)

**Note 3 – Earnings Per Common Share (EPS)**

The following is a summary of the earnings per share calculation for the three months ended March 31, 2026 and 2025 (dollars in thousands, except share data):

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** |
|  | **March 31,** | **March 31,** |
|  | **2026** | **2025** |
| Net income | $2774 | $842 |
| Weighted average number of shares outstanding - basic and diluted | 4543338 | 4543338 |
| Earnings per common share - basic and diluted | $0.61 | $0.19 |

---

There were no potentially dilutive common shares outstanding for the three months ended March 31, 2026 and 2025. Accordingly, basic and diluted earnings per common share were the same for each period.

**Note 4 – Debt**

**Capital Notes**

On April 13, 2020, the Company commenced a private placement of unregistered, unsecured notes (the "2020 Offering"). Between April 13, 2020 and July 8, 2020, the Company issued an aggregate principal amount of $10.05 million of 3.25% fixed-rate subordinated notes (the "2020 Notes"). Interest on the 2020 Notes was payable quarterly in arrears.

The 2020 Notes matured on June 30, 2025, at which time the Company repaid the entire outstanding principal balance of $10.05 million, together with accrued interest of approximately $82,000. The repayment of the principal balance is reflected as a financing activity in the Consolidated Statements of Cash Flows.

There were no subordinated notes outstanding at March 31, 2026 or December 31, 2025.

**Other Long Term Debt**

On December 29, 2021, the Company borrowed $11.0 million from National Bank of Blacksburg ("NBB") pursuant to a secured promissory note (the "NBB Note"). The NBB Note originally bore interest at a rate of 4.00% and was amortized over a fifteen-year period, with a balloon payment of approximately $9.4 million due on December 31, 2024. The NBB Note is secured by a first-priority lien on approximately 4.95% of the Bank's common stock. A portion of the proceeds was used to finance the acquisition of Pettyjohn, Wood & White, Inc., the Company's wholly-owned investment advisory subsidiary.

On June 30, 2022, the Company entered into a modification agreement with NBB, effective July 1, 2022, pursuant to which the balloon payment date was extended to December 31, 2026 from December 31, 2024, and the interest rate was reduced to 3.90% from 4.00%.

On August 18, 2025, the Company entered into a Second Note Modification Agreement and Allonge (the "Second Allonge") with NBB, effective September 30, 2025. Under the terms of the Second Allonge, the maturity date of the NBB Note was extended to August 31, 2030, the interest rate was increased to 5.65% per annum from 3.90%, and the repayment terms were modified to require 60 equal monthly installments of principal and interest of approximately $62,000, beginning September 30, 2025, with a final balloon payment of approximately $7.4 million due at maturity. The Second Allonge also provides the Company with the option, upon any prepayment of principal of $1.0 million or more, to

**Note 4 – Debt (continued)**

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[<u>**Table of Contents**</u>](#TOC)

request a one-time recast of the amortization schedule over the remaining term of the loan without changing the maturity date or interest rate.

At March 31, 2026 and December 31, 2025, the outstanding principal balance of the NBB Note was approximately $8.7 million and $8.8 million, respectively.

The Company evaluated the Second Allonge in accordance with applicable accounting guidance and concluded that the modification should be accounted for as a debt modification rather than a debt extinguishment. Accordingly, the carrying amount of the NBB Note continues to be reported as "Other borrowings" in the Consolidated Balance Sheets.

**Note 5 – Fair Value Measurements**

**Determination of Fair Value**

The Company uses fair value measurements to record adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurement, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an "exit price") in the principal or most advantageous market in an orderly transaction between market participants at the measurement date.

Fair value is best determined using quoted market prices. However, in many instances, quoted market prices are not available for the Company's financial instruments. In such cases, fair value is estimated using present value or other valuation techniques, which are significantly affected by the assumptions used, including discount rates and estimates of future cash flows. Accordingly, the estimated fair values may not be realized in an immediate settlement of the instrument.

The fair value guidance establishes a consistent framework for measuring fair value and requires consideration of market participant assumptions under current market conditions. In situations where there has been a significant decrease in the volume or level of activity for an asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such cases, determining fair value requires the use of significant judgment, and the selected value represents management's best estimate within a range of reasonable outcomes.

**Fair Value Hierarchy**

In accordance with ASC Topic 820, Fair Value Measurement, the Company categorizes financial assets and financial liabilities measured at fair value into a three-level hierarchy based on the observability of inputs used in the valuation techniques. The hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable inputs.

Level 1 — Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company can access.

Level 2 — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets.

Level 3 — Unobservable inputs that are significant to the fair value measurement. The Company's Level 3 measurements consist of IRLCs measured on a recurring basis and certain collateral-dependent loans measured on a non-recurring basis, each described below.

 **‎** 

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[<u>**Table of Contents**</u>](#TOC)

**Note 5 – Fair Value Measurements (continued)**

**Fair Value on a Recurring Basis**

<u>Securities Available-for-Sale</u>

The fair values of securities available-for-sale are primarily determined using quoted market prices or, when such prices are not available, by using valuation models, quoted prices of securities with similar characteristics, or discounted cash flow analyses.

Securities are classified within the fair value hierarchy based on the observability of inputs used in the valuation. Securities for which quoted prices in active markets are available for identical assets would be classified within Level 1 of the fair value hierarchy. However, the Company's securities generally do not trade in active markets on a daily basis.

Accordingly, the Company's securities available-for-sale are classified within Level 2 of the fair value hierarchy. Level 2 securities include U.S. agency securities, mortgage-backed agency securities, obligations of states and political subdivisions, and certain corporate, asset-backed, and other securities. These valuations are based on observable inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, and benchmark securities.

In limited circumstances, where significant inputs are unobservable, securities would be classified within Level 3 of the fair value hierarchy. The Company had no securities classified as Level 3 at March 31, 2026 or December 31, 2025.

<u>Derivatives Assets/Liabilities – Interest Rate Lock Commitments (IRLCs)</u>

The Company recognizes interest rate lock commitments ("IRLCs") at fair value. The fair value of IRLCs is estimated based on the price of the underlying loans obtained from investors for loans expected to be delivered on a best-efforts basis, adjusted for the probability that the commitments will fund.

IRLCs are classified within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs, including the estimated pull-through rate.

The below tables summarize the Company's financial assets that were measured at fair value on a recurring basis during the period presented.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | **Carrying Value at March 31, 2026** | **Carrying Value at March 31, 2026** | **Carrying Value at March 31, 2026** |
|  |  | **Quoted Prices** | **Significant** |  |
|  |  | **in Active** | **Other** | **Significant** |
|  | **Balance as of** | **Markets for** | **Observable** | **Unobservable** |
| *(dollars in thousands)* | **Mar 31,** | **Identical Assets** | **Inputs** | **Inputs** |
| **Description** | **2026** | **(Level 1)** | **(Level 2)** | **(Level 3)** |
| US agency obligations | $86169 | $- | $86169 | $- |
| Mortgage-backed securities | 88617 | - | 88617 | - |
| Municipals | 54901 | - | 54901 | - |
| Corporates | 15012 | - | 15012 | - |
| Total available-for-sale securities | $244699 | $- | $244699 | $- |
| IRLCs - asset | 13 | - | - | 13 |
| Total assets at fair value | $244712 | $- | $244699 | $13 |

---

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[<u>**Table of Contents**</u>](#TOC)

**Note 5 – Fair Value Measurements (continued)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | **Carrying Value at December 31, 2025** | **Carrying Value at December 31, 2025** | **Carrying Value at December 31, 2025** |
|  |  | **Quoted Prices** | **Significant** |  |
|  |  | **in Active** | **Other** | **Significant** |
|  | **Balance as of** | **Markets for** | **Observable** | **Unobservable** |
| *(dollars in thousands)* | **Dec 31,** | **Identical Assets** | **Inputs** | **Inputs** |
| **Description** | **2025** | **(Level 1)** | **(Level 2)** | **(Level 3)** |
| US agency obligations | $85363 | $- | $85363 | $- |
| Mortgage-backed securities | 61040 | - | 61040 | - |
| Municipals | 55163 | - | 55163 | - |
| Corporates | 12562 | - | 12562 | - |
| Total available-for-sale securities | $214128 | $- | $214128 | $- |
| IRLCs - asset | 99 | - | - | 99 |
| Total assets at fair value | $214227 | $- | $214128 | $99 |

---

The following table provides additional quantitative information about assets measured at fair value on a recurring basis and for which we utilize Level 3 inputs to determine fair value (dollars in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Quantitative information about Level 3 Fair Value Measurements at March 31, 2026** | **Quantitative information about Level 3 Fair Value Measurements at March 31, 2026** | **Quantitative information about Level 3 Fair Value Measurements at March 31, 2026** | **Quantitative information about Level 3 Fair Value Measurements at March 31, 2026** | **Quantitative information about Level 3 Fair Value Measurements at March 31, 2026** |
|  | **Fair Value** | **Valuation Technique(s)** | **Unobservable Input** | **Range (Weighted Average) (1)** |
| IRLCs- asset | $13  | Market Approach | Range of pull through rate | 70% - 100% (85%) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Weighted based on the relative value of the instruments

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Quantitative information about Level 3 Fair Value Measurements at December 31, 2025** | **Quantitative information about Level 3 Fair Value Measurements at December 31, 2025** | **Quantitative information about Level 3 Fair Value Measurements at December 31, 2025** | **Quantitative information about Level 3 Fair Value Measurements at December 31, 2025** | **Quantitative information about Level 3 Fair Value Measurements at December 31, 2025** |
|  | **Fair Value** | **Valuation Technique(s)** | **Unobservable Input** | **Range (Weighted Average) (1)** |
| IRLCs- asset | $99  | Market Approach | Range of pull through rate | 70% - 100% (85%) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Weighted based on the relative value of the instruments

There were no transfers of financial assets between hierarchy levels during the three months ended March 31, 2026.

During the three months ended March 31, 2026, the fair value of Level 3 assets consisted entirely of IRLCs, which decreased from $99,000 at December 31, 2025 to $13,000 at March 31, 2026; there were no purchases, sales, or settlements of Level 3 instruments during the period. The change reflects the net effect of new rate lock commitments issued and existing commitments closed or expired during the period.

Fair Value on a Non-recurring Basis

<u>Collateral Dependent Loans with an ACL</u>

In accordance with ASC 326, the Company may determine that an individual loan exhibits unique risk characteristics which differentiate it from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific allocations of the allowance for credit losses are determined by analyzing the borrower's ability to repay, collateral deficiencies, the relative risk grade of the loan, and economic conditions affecting the borrower's industry, among other factors.

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[<u>**Table of Contents**</u>](#TOC)

**Note 5 – Fair Value Measurements (continued)**

A loan is considered collateral dependent when, based on management's assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral.

In these cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The Company reevaluates the fair value of collateral supporting collateral dependent loans on a quarterly basis. The fair value of real estate collateral supporting such loans is evaluated by appraisal services using methodologies consistent with the Uniform Standards of Professional Appraisal Practice.

Based on management's evaluation, a $1 thousand fair value adjustment was recorded on collateral-dependent loans during the quarter ended March 31, 2026. As of March 31, 2026 and December 31, 2025, the Company had $10.42 million and $10.24 million, respectively, in collateral-dependent loans with associated allowances for credit losses of $73 thousand and $72 thousand, respectively.

The following table provides additional quantitative information about assets measured at fair value on a nonrecurring basis and for which we utilize Level 3 inputs to determine fair value (dollars in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Quantitative information about Level 3 Fair Value Measurements for**  | **Quantitative information about Level 3 Fair Value Measurements for**  | **Quantitative information about Level 3 Fair Value Measurements for**  | **Quantitative information about Level 3 Fair Value Measurements for**  |
|  | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
|  | ***(dollars in thousands)*** | ***(dollars in thousands)*** | ***(dollars in thousands)*** | ***(dollars in thousands)*** |
|  | **Fair Value** | **Valuation Technique(s)** | **Unobservable Input** | **Range (Weighted Average)** |
| Loans individually evaluated\* | $137 | Discounted appraised value | Selling cost | 0% - 10% (8%) |
|  |  |  | Discount for lack of marketability and age of appraisal | 0% - 20% (6%) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Quantitative information about Level 3 Fair Value Measurements for**  | **Quantitative information about Level 3 Fair Value Measurements for**  | **Quantitative information about Level 3 Fair Value Measurements for**  | **Quantitative information about Level 3 Fair Value Measurements for**  |
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
|  | ***(dollars in thousands)*** | ***(dollars in thousands)*** | ***(dollars in thousands)*** | ***(dollars in thousands)*** |
|  | **Fair Value** | **Valuation Technique(s)** | **Unobservable Input** | **Range (Weighted Average)** |
| Loans individually evaluated\* | $136 | Discounted appraised value | Selling cost | 0% - 10% (8%) |
|  |  |  | Discount for lack of marketability and age of appraisal | 0% - 20% (6%) |

---

\*Includes loans charged down to the net realizable value of the collateral.

<u>Loans Held for Sale</u>

Loans held for sale are carried at the lower of cost or fair value. These loans consist primarily of one-to-four family residential mortgage loans originated for sale in the secondary market. Fair value is based on prices currently offered by secondary market investors for similar loans using observable market data. Due to the short duration between origination and sale, the carrying value of loans held for sale approximates fair value. These loans are classified within Level 2 of the fair value hierarchy. At March 31, 2026 and December 31, 2025, the Company had loans held for sale of $2.88 million and $3.47 million, respectively. No nonrecurring fair value adjustments were recorded on loans held for sale at March 31,

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[<u>**Table of Contents**</u>](#TOC)

**Note 5 – Fair Value Measurements (continued)**

2026 or December 31, 2025. Gains and losses on the sale of loans are recorded in "Gain on sales of loans held for sale" in the Consolidated Statements of Income.

<u>Financial Instruments</u>

ASC Topic 825, *Financial Instruments*, requires disclosure of the estimated fair value of financial instruments, including those financial assets and financial liabilities that are not measured at fair value on a recurring or nonrecurring basis. ASC 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

The estimated fair values, and related carrying or notional amounts, of the Company's financial instruments and their placement in the fair value hierarchy at March 31, 2026, and December 31, 2025, were as follows (dollars in thousands):

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | Fair Value Measurements at March 31, 2026 using | Fair Value Measurements at March 31, 2026 using | Fair Value Measurements at March 31, 2026 using | Fair Value Measurements at March 31, 2026 using |
|  |  | Quoted Prices | Significant |  |  |
|  |  | in Active | Other | Significant |  |
|  |  | Markets for | Observable | Unobservable |  |
|  | Carrying | Identical Assets | Inputs | Inputs |  |
| Assets | Amounts | (Level 1) | (Level 2) | (Level 3) | Balance |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and due from banks | $25097 | $25097 | $- | $- | $25097 |
| &nbsp;&nbsp;&nbsp;&nbsp;Federal funds sold | 62894 | 62894  | - | - | 62894 |
| &nbsp;&nbsp;&nbsp;&nbsp;Securities |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Available-for-sale | 244699 | - | 244699 | - | 244699 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Held-to-maturity, net | 3586 | - | 3290 | - | 3290 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted stock | 1828 | - | 1828 | - | 1828 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans, net (1) | 649133 | - | - | 638384 | 638384 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans held for sale | 2877 | - | 2877 | - | 2877 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest receivable | 3200 | - | 3200 | - | 3200 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash value - bank owned life insurance | 23887 | - | 23887 | - | 23887 |
| &nbsp;&nbsp;&nbsp;&nbsp;Derivatives - IRLCs | 13 | - | - | 13 | 13 |
| Liabilities |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Deposits | $956552 | $- | $955885 | $- | $955885 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other borrowings | 8729 | - | 8506 | - | 8506 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest payable | 1125 | - | 1125 | - | 1125 |

---

(1) Carrying amount is net of unearned income and the ACL.

‎

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[<u>**Table of Contents**</u>](#TOC)

**Note 5 – Fair Value Measurements (continued)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **Fair Value Measurements at December 31, 2025 using** | **Fair Value Measurements at December 31, 2025 using** | **Fair Value Measurements at December 31, 2025 using** | **Fair Value Measurements at December 31, 2025 using** |
|  |  | **Quoted Prices** | **Significant** |  |  |
|  |  | **in Active** | **Other** | **Significant** |  |
|  |  | **Markets for** | **Observable** | **Unobservable** |  |
|  | **Carrying** | **Identical Assets** | **Inputs** | **Inputs** |  |
| **Assets** | **Amounts** | **(Level 1)** | **(Level 2)** | **(Level 3)** | **Balance** |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and due from banks | $28538 | $28538 | $- | $- | $28538 |
| &nbsp;&nbsp;&nbsp;&nbsp;Federal funds sold | 55937 | 55937 | - | - | 55937 |
| &nbsp;&nbsp;&nbsp;&nbsp;Securities |  |  |  |  | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Available-for-sale | 214128 | - | 214128 | - | 214128 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Held-to-maturity | 3590 | - | 3315 | - | 3315 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted stock | 1828 | - | 1828 | - | 1828 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans, net (1) | 661357 | - |  | 652335 | 652335 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans held for sale | 3472 | - | 3472 | - | 3472 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest receivable | 3380 | - | 3380 | - | 3380 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash value - bank owned life insurance | 23676 | - | 23676 | - | 23676 |
| &nbsp;&nbsp;&nbsp;&nbsp;Derivatives - IRLCs | 99 | - | - | 99 | 99 |
| **Liabilities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Deposits | $937129 | $- | $936880 | $- | $936880 |
| &nbsp;&nbsp;&nbsp;&nbsp;Capital notes | - | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Other borrowings | 8796 | - | 8511 | - | 8511 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest payable | 1167 | - | 1167 | - | 1167 |

---

(1) Carrying amount is net of unearned income and the ACL.

**Note 6 – Securities**

The following tables summarize the Bank's holdings for securities held-to-maturity and available-for-sale as of March 31, 2026 and December 31, 2025 (dollars in thousands) are summarized below:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | March 31, 2026 | March 31, 2026 | March 31, 2026 | March 31, 2026 |
|  | Amortized | Gross Unrealized | Gross Unrealized |  |
|  | Costs | Gains | (Losses) | Fair Value |
| Held to Maturity |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;US Gov't & Agency obligations | $3586  | $-  | $(296) | $3290  |
| Available for Sale |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;US Gov't & Agency obligations | $90326  | $276  | $(4433) | $86169  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgage-backed securities | 96077  | 36  | (7496) | 88617  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Municipals | 63074  | 171  | (8344) | 54901  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporates | 15500  | - | (488) | 15012  |
|  | $264977  | $483  | $(20761) | $244699  |

---

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[<u>**Table of Contents**</u>](#TOC)

**Note 6 – Securities (continued)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | December 31, 2025 | December 31, 2025 | December 31, 2025 | December 31, 2025 |
|  | Amortized | Gross Unrealized | Gross Unrealized |  |
|  | Costs | Gains | (Losses) | Fair Value |
| Held to Maturity |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;US Gov't & Agency obligations | $3590  | $-  | $(275) | $3315  |
| Available for Sale |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;US Gov't & Agency obligations | $89047  | $480  | $(4164) | $85363  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgage-backed securities | 67892  | 61  | (6913) | 61040  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Municipals | 63096  | 250  | (8183) | 55163  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporates | 13000  | 34  | (472) | 12562  |
|  | $233035  | $825  | $(19732) | $214128  |

---

The following tables present the fair value of securities available-for-sale as of March 31, 2026 and December 31, 2025, and the related unrealized losses. Management uses month-end valuations in determining whether securities are in an unrealized loss position (dollars in thousands).

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Less than 12 months | Less than 12 months | More than 12 months | More than 12 months | Total | Total |
|  | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized |
| **March 31, 2026** | Value | Losses | Value | Losses | Value | Losses |
| **Description of securities** |  |  |  |  |  |  |
| <u>Available-for-sale</u> |  |  |  |  |  |  |
| U.S. agency obligations | $17025  | $(305) | $51800  | $(4128) | $68825  | $(4433) |
| Mortgage-backed securities | 33368  | (592) | 51318  | (6904) | 84686  | (7496) |
| Municipals | 3415  | (25) | 41790  | (8319) | 45205  | (8344) |
| Corporates | 3434  | (67) | 11578  | (421) | 15012  | (488) |
| Total securities in an unrealized loss position | $57242  | $(989) | $156486  | $(19772) | $213728  | $(20761) |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Less than 12 months | Less than 12 months | More than 12 months | More than 12 months | Total | Total |
|  | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized |
| **December 31, 2025** | Value | Losses | Value | Losses | Value | Losses |
| **Description of securities** |  |  |  |  |  |  |
| <u>Available-for-sale</u> |  |  |  |  |  |  |
| U.S. agency obligations | $8873  | $(141) | $51972  | $(4023) | $60845  | $(4164) |
| Mortgage-backed securities | 4048  | (25) | 52979  | (6888) | 57027  | (6913) |
| Municipals | 2254  | (9) | 41961  | (8174) | 44215  | (8183) |
| Corporates | - | - | 11527  | (472) | 11527  | (472) |
| Total securities in an unrealized loss position | $15175  | $(175) | $158439  | $(19557) | $173614  | $(19732) |

---

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[<u>**Table of Contents**</u>](#TOC)

**Note 6 – Securities (continued)**

At March 31, 2026, the Company held 134 securities (all of which are securities available-for-sale) in an unrealized loss position. Of these securities, 27 were rated AAA, 91 were rated AA, 3 were rated A, 4 were rated BBB, and 9 were not rated. In addition, 58 of these securities were municipal obligations, 64 were backed directly or indirectly by the U.S. government or its agencies, 10 were issued by publicly traded U.S. corporations, and 2 were issued by non-publicly traded U.S. corporations.

The Company monitors the credit quality of its municipal and corporate securities through periodic reviews of the issuers' financial condition, including cash flow and revenue performance, as well as other economic factors that may affect the issuers' ability to service and repay the debt.

The Company evaluated available-for-sale securities in an unrealized loss position at March 31, 2026 and determined that the decline in fair value was not attributable to credit-related factors. This conclusion was based on several factors, including: (i) the high credit quality of the securities; (ii) unrealized losses being primarily attributable to changes in

**Note 6 – Securities (continued)**

market interest rates; (iii) the contractual terms of the securities do not permit settlement at amounts less than amortized cost; (iv) issuers continuing to make timely principal and interest payments; and (v) the Company's intent and ability to hold the securities until recovery of their amortized cost basis. Accordingly, no allowance for credit losses was recorded on available-for-sale securities at March 31, 2026.

The Company's held-to-maturity securities consist primarily of obligations issued or guaranteed by the U.S. government or its agencies and are rated investment grade or higher. Accordingly, no allowance for credit losses was recorded on held-to-maturity securities at March 31, 2026 or December 31, 2025.

At March 31, 2026 and December 31, 2025, all held-to-maturity and available-for-sale securities were current, with no securities past due or on nonaccrual. There were no sales of available-for-sale securities during the three months ended March 31, 2026 and 2025.

As of March 31, 2026 and December 31, 2025, the Company had approximately (market values):

$50,086,000 and $50,500,000, respectively, of available-for-sale securities pledged as collateral for public deposits;

$38,697,000 and $38,893,000 of our available-for-sale securities as collateral with correspondent banks, including the FHLBA, for collateralized lines of credit; and

$25,626,000 and $26,342,000 of our available-for-sale securities as collateral for advances at the Federal Reserve Bank's discount window.

‎

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[<u>**Table of Contents**</u>](#TOC)

**Note 6 – Securities (continued)**

The amortized costs and fair values of securities at March 31, 2026, by contractual maturity, are shown below (dollars in thousand). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

---

| | | |
|:---|:---|:---|
| **Investment Portfolio in Maturities** | **March 31, 2026** | **March 31, 2026** |
|  | **Amortized** |  |
|  | **Costs** | **Fair Value** |
| Held to Maturity: |  |  |
| Due in one year or less | $-  | $-  |
| Due after one year through five years | 400  | 384  |
| Due after five years through ten years | 2016  | 1886  |
| Due after ten years | 1170  | 1020  |
| Total securities held to maturity | $3586  | $3290  |
|  | **Amortized** |  |
|  | **Costs** | **Fair Value** |
| Available for Sale: |  |  |
| Due in one year or less | $5231  | $5158  |
| Due after one year through five years | 66394  | 63126  |
| Due after five years through ten years | 66830  | 63023  |
| Due after ten years | 126522  | 113392  |
| Total securities available for sale | $264977  | $244699  |

---

**Note 7 – Business Segments**

### **Segment Overview** 
The Company reports three business segments:

&nbsp;&nbsp;&nbsp;&nbsp;1.**Community Banking** – Provides loans, deposits, and related banking services to retail and commercial customers primarily in Central Virginia. Revenue is primarily from net interest income.

&nbsp;&nbsp;&nbsp;&nbsp;2.**Mortgage Banking** – Originates residential mortgage loans for sale into the secondary market, typically with servicing released. Revenue consists mainly of gains on loan sales.

&nbsp;&nbsp;&nbsp;&nbsp;3.**Investment Advisory** – Offers investment advisory and financial planning services through Pettyjohn, Wood & White, Inc. Revenue is primarily fee-based, tied to assets under management (AUM).

Segments refer business to one another when appropriate. Robert R. Chapman III, President of the Company, is the Chief Operating Decision Maker (CODM). The CODM evaluates performance and allocates resources based on segment profit (pre-tax income). Supplemental data regularly reviewed by the CODM includes total loans held for investment, total deposits, and AUM, as these metrics provide additional insights into segment performance. Segment accounting policies are consistent with those in the consolidated financial statements.

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[<u>**Table of Contents**</u>](#TOC)

**Note 7 – Business Segments (continued)**

**Significant Expense Categories.**

Significant segment expenses are reviewed regularly by the CODM and included in segment profit measures are separately presented. For the three months ended March 31, 2026 and 2025, these significant approximate expenses included:

**Community Banking:** Salaries and employee benefits ($4.33 million and $3.74 million in 2026 and 2025, respectively); data processing ($475 thousand and $820 thousand); professional and other outside expenses ($711 thousand and $1.66 million); equipment ($723 thousand and $646 thousand); and occupancy ($573 thousand and $535 thousand).

**Mortgage Banking:** Salaries and employee benefits ($720 thousand and $622 thousand in 2026 and 2025, respectively); credit-related expenses ($120 thousand and $131 thousand); and occupancy costs ($32 thousand in both periods).

**Investment Advisory:** Salaries and employee benefits ($450 thousand and $417 thousand in 2026 and 2025, respectively); and amortization of intangible assets ($140 thousand in both periods).

Expenses not identified as significant are presented within "Other segment items" and include general and administrative costs that support the segments' operations, including travel, liability and property insurance, and contribution expenses.

**Supplemental Segment Data**

Supplemental data regularly reviewed by the CODM includes total loans held for investment, total deposits, and AUM, as these metrics provide additional insights into segment performance:

**Community Banking**: Total loans held for investment, net of allowance, were $649.1 million at March 31, 2026, compared to $661.4 million at December 31, 2025 and $642.4 million at March 31, 2025. Deposits totaled $959.2 million at March 31, 2026, compared to $944.1 million at December 31, 2025 and $918.5 million at March 31, 2025.

**Investment Advisory**: AUM were $1.01 billion at March 31, 2026, compared to $1.03 billion at December 31, 2025 and $886.9 million at March 31, 2025.

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[<u>**Table of Contents**</u>](#TOC)

**Note 7 – Business Segments (continued)**

Segment financial information, including significant expense categories and supplemental metrics, is presented in the tables below, along with reconciliations to consolidated financial statements for the three months ended March 31, 2026 and 2025 (dollars in thousands).

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Business Segments as of the Three Months Ended** | **Business Segments as of the Three Months Ended** | **Business Segments as of the Three Months Ended** | **Business Segments as of the Three Months Ended** | **Business Segments as of the Three Months Ended** | **Business Segments as of the Three Months Ended** |
|  | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
| **Dollars in Thousands** | **Community Banking** | **Mortgage Banking** | **Investment Advisory** | **Holding Company** | **Eliminations (1)** | **Consolidated** |
| Interest income | $11849  | $-  | $-  | $-  | $-  | $11849  |
| Interest expense | 2996  | - | - | 119  | - | 3115  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest income | 8853  | - | - | (119) | - | 8734  |
| Gains on sales of loans | - | 1196  | - | - | - | 1196  |
| Other noninterest income | 1355  | - | 1413  | 1013  | (1013) | 2768  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net revenue | 10208  | 1196  | 1413  | 894  | (1013) | 12698  |
| Less: |  |  |  |  |  |  |
| Recovery of credit losses | (146) | - | - | - | - | (146) |
| Noninterest expense: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Salaries and employee benefits | 4330  | 720  | 450  | - | - | 5500  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Occupancy | 573  | 32  | 33  | - | (30) | 608  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equipment | 723  | 14  | 9  | 1  | - | 747  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Supplies | 148  | 4  | 8  | - | - | 160  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Professional and other outside expenses | 711  | - | 37  | 22  | - | 770  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Data processing | 475  | - | - | - | - | 475  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Marketing | 173  | 2  | 3  | 11  | - | 189  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Credit expense | 70  | 120  | - | - | - | 190  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FDIC insurance expense | 136  | - | - | - | - | 136  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of intangibles | - | - | 140  | - | - | 140  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other | 400  | 15  | 35  | - | - | 450  |
| Total noninterest expense | 7739  | 907  | 715  | 34  | (30) | 9365  |
| Segment income before income taxes | 2615  | 289  | 698  | 860  | (983) | 3479  |
| Allocated income tax expense | 308  | - | 297  | 100  | - | 705  |
| **Segment net income** | $2307  | $289  | $401  | $760  | $(983) | $2774  |
| **Segment assets at March 31, 2026** | $1048012  | $2977  | $10200  | $109000  | $(109000) | $1061189  |
| Supplemental Data at March 31, 2026: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total loans held for investment, net | $649133  | $-  | $-  | $&nbsp;&nbsp;&nbsp;&nbsp; -  | $-  | $649133  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deposits | $959221  | $-  | $-  | $&nbsp;&nbsp;&nbsp;&nbsp; -  | $(2669) | $956552  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assets under management | $-  | $-  | $1010000  | $&nbsp;&nbsp;&nbsp;&nbsp; -  | $-  | $1010000  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Primarily intercompany service fees and dividends eliminated in consolidation.

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[<u>**Table of Contents**</u>](#TOC)

**Note 7 – Business Segments (continued)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Business Segments as of the Three Months Ended** | **Business Segments as of the Three Months Ended** | **Business Segments as of the Three Months Ended** | **Business Segments as of the Three Months Ended** | **Business Segments as of the Three Months Ended** | **Business Segments as of the Three Months Ended** |
|  | **March 31, 2025** | **March 31, 2025** | **March 31, 2025** | **March 31, 2025** | **March 31, 2025** | **March 31, 2025** |
| **Dollars in Thousands** | **Community Banking** | **Mortgage Banking** | **Investment Advisory** | **Holding Company** | **Eliminations** | **Consolidated** |
| Interest income | $11234  | $-  | $-  | $-  | $-  | $11234  |
| Interest expense | 3344  | - | - | 171  | - | 3515  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net interest income | 7890  | - | - | (171) | - | 7719  |
| Gains on sales of loans | - | 837  | - | - | - | 837  |
| Other noninterest income | 1221  | - | 1255  | 992  | (1022) | 2446  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net revenue | 9111  | 837  | 1255  | 821  | (1022) | 11002  |
| Less: |  |  |  |  |  |  |
| Provision for credit losses | 137  | - | - | - | - | 137  |
| Noninterest expense: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Salaries and employee benefits | 3738  | 622  | 417  | - | - | 4777  |
| &nbsp;&nbsp;&nbsp;&nbsp;Occupancy | 535  | 32  | 33  | - | (30) | 570  |
| &nbsp;&nbsp;&nbsp;&nbsp;Equipment | 646  | 14  | 9  | 1  | - | 670  |
| &nbsp;&nbsp;&nbsp;&nbsp;Supplies | 130  | 4  | 8  | - | - | 142  |
| &nbsp;&nbsp;&nbsp;&nbsp;Professional and other outside expenses | 1656  | - | 37  | 22  | - | 1715  |
| &nbsp;&nbsp;&nbsp;&nbsp;Data processing | 820  | - | - | - | - | 820  |
| &nbsp;&nbsp;&nbsp;&nbsp;Marketing | 180  | 2  | 3  | 13  | - | 198  |
| &nbsp;&nbsp;&nbsp;&nbsp;Credit expense | 55  | 131  | - | - | - | 186  |
| &nbsp;&nbsp;&nbsp;&nbsp;FDIC insurance expense | 142  | - | - | - | - | 142  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of intangibles | - | - | 140  | - | - | 140  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 400  | 31  | 35  | - | - | 466  |
| Total noninterest expense | 8302  | 836  | 682  | 36  | (30) | 9826  |
| Segment income before income taxes | 672  | 1  | 573  | 785  | (992) | 1039  |
| Allocated income tax expense | 98  | - | 155  | (56) | - | 197  |
| Segment net income | $574  | $1  | $418  | $841  | $(992) | $842  |
| Segment assets at March 31, 2025 | $998304  | $3992  | $9989  | $107644  | $(108203) | $1011726  |
| Supplemental Data at March 31, 2025: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total loans held for investment, net | $642388  | $-  | $-  | $-  | $-  | $642388  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total deposits | $918503  | $-  | $-  | $-  | $(6820) | $911683  |
| &nbsp;&nbsp;&nbsp;&nbsp;Assets under management | $-  | $-  | $886882  | $-  | $-  | $886882  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Primarily intercompany service fees and dividends eliminated in consolidation.

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[<u>**Table of Contents**</u>](#TOC)

**Note 8 – Loans and allowance for credit losses**

The Company's primary portfolio segments align with the methodology applied in estimating the allowance for credit losses and are reflected in the disclosures as of and for the periods indicated, as set forth below. Management has determined that the classifications presented below are appropriate for identifying and managing risk within the loan portfolio.

---

| | |
|:---|:---|
| **Loan Segments:** | **Loan Classes:** |
| Commercial | Commercial and Industrial Loans |
| Commercial Real Estate | Commercial Mortgages – Owner Occupied |
|  | Commercial Mortgages – Non-Owner Occupied |
|  | Commercial Construction/Land |
| Consumer | Consumer Open-End |
|  | Consumer Closed-End |
| Residential | Residential Mortgages |
|  | Residential Consumer Construction/Land |

---

Commercial and Commercial Real Estate

Commercial loans are primarily underwritten based on the identified cash flows of the borrower, and secondarily on the underlying collateral provided. Borrower cash flows may not meet expectations, and the value of collateral securing these loans can fluctuate. Most commercial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and may include personal guarantees. Short-term loans may be made on an unsecured basis. For loans secured by accounts receivable, the availability of funds for repayment may substantially depend on the borrower's ability to collect amounts due from its customers.

Commercial real estate loans are viewed primarily as cash flow loans, with the collateral serving as a secondary source of repayment. Commercial real estate lending typically involves higher loan principal amounts, with repayment generally dependent on the successful operation of the property or the business conducted on the property. These loans may be more adversely affected by conditions in the real estate markets or the general economy. The properties securing the Company's commercial real estate portfolio are diverse but are geographically concentrated almost entirely within the Company's market area. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria. In general, the Company avoids financing single-purpose projects unless other underwriting factors are present to help mitigate risk. Management also tracks the level of owner-occupied versus non-owner-occupied commercial real estate loans.

Consumer and Residential

Consumer and residential segments consist of residential mortgage loans and personal loans. The consumer loan segment includes home equity lines of credit (HELOCs) and other second mortgages. Home equity loans are typically secured by a subordinate interest in 1–4 family residences, while consumer personal loans may be secured by personal assets such as automobiles or recreational vehicles, or may be unsecured, such as small installment loans and certain lines of credit.

For residential mortgage loans secured by 1–4 family, generally owner-occupied residences, the Company typically establishes a maximum loan-to-value ratio. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be affected by economic conditions in the market area, such as unemployment levels. Repayment can also be impacted by changes in property values. Risk is mitigated by the smaller individual loan amounts and the diversification provided by a large number of borrowers.

‎

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[<u>**Table of Contents**</u>](#TOC)

**Note 8 – Loans and allowance for credit losses (continued)**

A summary of loans, net of deferred costs of $672,000 and $629,000 as of March 31, 2026 and December 31, 2025**,** respectively, is as follows (dollars in thousands):

---

| | | |
|:---|:---|:---|
|  | **As of** | **As of** |
|  | **March 31, 2026** | **December 31, 2025** |
| Commercial | $62031 | $66394 |
| Commercial Real Estate: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Mortgages-Owner Occupied | 149020 | 150085 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Mortgages-Non-Owner Occupied | 213638 | 215301 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Construction/Land | 17618 | 16339 |
| Consumer: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer Open-End | 59878 | 63070 |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer Closed-End | 24072 | 25092 |
| Residential: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential Mortgages | 105977 | 105927 |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential Consumer Construction/Land | 23100 | 25599 |
| Total loans | 655334 | 667807 |
| Less allowance for credit losses | 6201 | 6450 |
| Net loans | $649133 | $661357 |

---

The following table presents the amortized cost basis of collateral dependent loans by loan segment:

---

| | | |
|:---|:---|:---|
| **Collateral Dependent Loans** | **March 31, 2026** | **March 31, 2026** |
| *(dollars in thousands)* | **Business/Other Assets** | **Real Estate** |
| Commercial | $3195 | $- |
| Commercial Real Estate | - | 5118 |
| Consumer | - | 694 |
| Residential | - | 1409 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $3195 | $7221 |
| **Collateral Dependent Loans** | **December 31, 2025** | **December 31, 2025** |
| *(dollars in thousands)* | **Business/Other Assets** | **Real Estate** |
| Commercial | $2661 | $- |
| Commercial Real Estate | - | 5434 |
| Consumer | - | 566 |
| Residential | - | 1577 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $2661 | $7577 |

---

‎

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[<u>**Table of Contents**</u>](#TOC)

**Note 8 – Loans and allowance for credit losses (continued)**

The following tables present the activity in the allowance for credit losses for the three-month periods ended and the distribution of the allowance by segment as of March 31, 2026, and 2025 (dollars in thousands).

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Allowance for Credit Losses on Recorded Investment in Loans** | **Allowance for Credit Losses on Recorded Investment in Loans** | **Allowance for Credit Losses on Recorded Investment in Loans** | **Allowance for Credit Losses on Recorded Investment in Loans** | **Allowance for Credit Losses on Recorded Investment in Loans** |
|  | **As of and For the Three Months Ended March 31, 2026** | **As of and For the Three Months Ended March 31, 2026** | **As of and For the Three Months Ended March 31, 2026** | **As of and For the Three Months Ended March 31, 2026** | **As of and For the Three Months Ended March 31, 2026** |
|  |  | **Commercial** |  |  |  |
| **2026** | **Commercial** | **Real Estate** | **Consumer** | **Residential** | **Total** |
| **Allowance for Credit Losses:** |  |  |  |  |  |
| Beginning Balance, December 31, 2025 | $697  | $3262  | $839  | $1652  | $6450  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Charge-Offs | - | - | (222) | - | (222) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recoveries | 53  | - | 11  | - | 64  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for (recovery of) credit losses | (72) | (58) | 108  | (69) | (91) |
| Ending Balance, March 31, 2026 | $678  | $3204  | $736  | $1583  | $6201  |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Allowance for Credit Losses on Recorded Investment in Loans** | **Allowance for Credit Losses on Recorded Investment in Loans** | **Allowance for Credit Losses on Recorded Investment in Loans** | **Allowance for Credit Losses on Recorded Investment in Loans** | **Allowance for Credit Losses on Recorded Investment in Loans** |
|  | **As of and For the Three Months Ended March 31, 2025** | **As of and For the Three Months Ended March 31, 2025** | **As of and For the Three Months Ended March 31, 2025** | **As of and For the Three Months Ended March 31, 2025** | **As of and For the Three Months Ended March 31, 2025** |
|  |  | **Commercial** |  |  |  |
| **2025** | **Commercial** | **Real Estate** | **Consumer** | **Residential** | **Total** |
| **Allowance for Credit Losses:** |  |  |  |  |  |
| Beginning Balance, December 31, 2024 | $686  | $3719  | $842  | $1797  | $7044  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Charge-Offs | - | - | (53) | (9) | $(62) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recoveries | 4  | - | 7  | - | 11  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for (recovery of) | (158) | 196  | 41  | (51) | 28  |
| Ending Balance, March 31, 2025 | $532  | $3915  | $837  | $1737  | $7021  |

---

‎

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[<u>**Table of Contents**</u>](#TOC)

**Note 8 – Loans and allowance for credit losses (continued)**

In the second quarter of 2025, the Company, in collaboration with its third-party model vendor and as part of ongoing model governance, implemented updates to the quantitative CECL loss models for collectively evaluated loan segments that use discounted cash flow techniques (all segments other than agricultural loans, which uses the weighted-average remaining life method). The updates (i) revised certain maximum loss-rate parameters and (ii) incorporated additional post-COVID historical loss data into the loss history used to estimate expected credit losses. As a result of these updates, expected loss rates declined across affected segments, most notably in the commercial real estate and consumer segments, contributing to a reduction in the allowance for credit losses as a percentage of loans in those segments. The updated model specifications were first reflected in the second quarter 2025 provision for credit losses and have remained in use through March 31, 2026, with no further specification changes. Economic forecasts are refreshed each quarter as part of the Company's standard CECL process. Provision activity for the first quarter of 2026 reflected the ongoing application of these models, together with normal portfolio dynamics, updated economic forecasts, and changes in loan composition and balances.

**Credit Quality Indicators**

The Bank's internal risk rating system is in place to grade commercial and commercial real estate loans. Category ratings are reviewed periodically by lenders and the credit review area of the Bank based on the borrower's individual situation. Additionally, internal and external monitoring and review of credits are conducted on an annual basis.

Below is a summary and definition of the Bank's risk rating categories:

---

| | |
|:---|:---|
| RATING 1 | Excellent |
| RATING 2 | Above Average |
| RATING 3 | Satisfactory |
| RATING 4 | Acceptable / Low Satisfactory |
| RATING 5 | Monitor |
| RATING 6 | Special Mention |
| RATING 7 | Substandard |
| RATING 8 | Doubtful |
| RATING 9 | Loss |

---

We segregate commercial and commercial real estate loans into the above categories based on the following criteria and we review the characteristics of each rating at least annually, generally during the first quarter. The characteristics of these ratings are as follows:

"Pass." These are loans having risk ratings of 1 through 4. Pass loans are to persons or business entities with an acceptable financial condition, appropriate collateral margins, appropriate cash flow to service the existing loan, and an appropriate leverage ratio. The borrower has paid all obligations as agreed and it is expected that this type of payment history will continue. When necessary, acceptable personal guarantors support the loan.

"Monitor." These are loans having a risk rating of 5. Monitor loans have currently acceptable risk but may have the potential for a specific defined weakness in the borrower's operations and the borrower's ability to generate positive cash flow on a sustained basis. The borrower's recent payment history may currently or in the future be characterized by late payments. The Bank's risk exposure is mitigated by collateral supporting the loan. The collateral is considered to be well-margined, well maintained, accessible and readily marketable.

"Special Mention." These are loans having a risk rating of 6. Special Mention loans have weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Bank's credit position at some future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. These loans do warrant more than routine monitoring due to a weakness caused by adverse events.

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**Note 8 – Loans and allowance for credit losses (continued)**

"Substandard." These are loans having a risk rating of 7. Substandard loans are considered to have specific and well-defined weaknesses that jeopardize the viability of the Bank's credit extension. The payment history for the loan has been inconsistent and the expected or projected primary repayment source may be inadequate to service the loan. The estimated net liquidation value of the collateral pledged and/or ability of the personal guarantor(s) to pay the loan may not adequately protect the Bank. There is a distinct possibility that the Bank will sustain some loss if the deficiencies associated with the loan are not corrected in the near term. A substandard loan would not automatically meet our definition of impaired unless the loan is significantly past due and the borrower's performance and financial condition provides evidence that it is probable that the Bank will be unable to collect all amounts due.

"Doubtful." These are loans having a risk rating of 8. Doubtful rated loans have all the weaknesses inherent in a loan that is classified substandard but 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. The possibility of loss is extremely high.

"Loss." These are loans having a risk rating of 9. Loss rated loans are not considered collectible under normal circumstances and there is no realistic expectation for any future payment on the loan. Loss rated loans are fully charged off.

There were no loans classified as doubtful or loss at March 31, 2026 or December 31, 2025.

 **‎** 

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**Note 8 – Loans and allowance for credit losses (continued)**

The table below details the amortized cost of the classes of loans by credit quality indicator and year of origination as of March 31, 2026 (dollars in thousands).

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **<u>Term Loans Amortized Cost Basis by Origination Year</u>** | **<u>Term Loans Amortized Cost Basis by Origination Year</u>** | **<u>Term Loans Amortized Cost Basis by Origination Year</u>** | **<u>Term Loans Amortized Cost Basis by Origination Year</u>** | **<u>Term Loans Amortized Cost Basis by Origination Year</u>** | **<u>Term Loans Amortized Cost Basis by Origination Year</u>** |  |  |  |
|  | **2026** | **2025** | **2024** | **2023** | **2022** | **Prior** | **Revolving Loans Amortized Cost Basis** | **Revolving Loans Converted to Term** | **Total** |
| **Commercial:** |  |  |  |  |  |  |  |  |  |
| Risk Rating |  |  |  |  |  |  |  |  |  |
| Pass | $3977  | $8921  | $4527  | $2263  | $1006  | $17853  | $20158  | $13  | $58718  |
| Special Mention | - | - | - | - | - | - | - | - | - |
| Substandard | - | - | - | 909  | 41  | 432  | 1786  | 145  | 3313  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $3977  | $8921  | $4527  | $3172  | $1047  | $18285  | $21944  | $158  | $62031  |
| **Commercial Real Estate:** |  |  |  |  |  |  |  |  |  |
| **Commercial Mort. - Owner Occupied** |  |  |  |  |  |  |  |  |  |
| Risk Rating |  |  |  |  |  |  |  |  |  |
| Pass | $4963  | $20197  | $17723  | $7346  | $17342  | $75608  | $1860  | $-  | $145039  |
| Special Mention | - | - | - | - | - | 86  | - | - | 86  |
| Substandard | - | 151  | - | 90  | - | 3654  | - | - | 3895  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $4963  | $20348  | $17723  | $7436  | $17342  | $79348  | $1860  | $-  | $149020  |
| **Commercial Mort. - Non-Owner Occupied** |  |  |  |  |  |  |  |  |  |
| Risk Rating |  |  |  |  |  |  |  |  |  |
| Pass | $2009  | $33102  | $45048  | $12283  | $38196  | $74960  | $7124  | $-  | $212722  |
| Special Mention | - | - | - | - | - | - | - | - | - |
| Substandard | - | - | - | - | 916  | - | - | - | 916  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $2009  | $33102  | $45048  | $12283  | $39112  | $74960  | $7124  | $-  | $213638  |
| **Commercial Construction/Land** |  |  |  |  |  |  |  |  |  |
| Risk Rating |  |  |  |  |  |  |  |  |  |
| Pass | $144  | $1370  | $10178  | $537  | $365  | $4238  | $479  | $-  | $17311  |
| Special Mention | - | - | - | - | - | - | - | - | - |
| Substandard | - | - | - | - | - | 307  | - | - | 307  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $144  | $1370  | $10178  | $537  | $365  | $4545  | $479  | $-  | $17618  |
| **Consumer:** |  |  |  |  |  |  |  |  |  |
| **Consumer - Open-End** |  |  |  |  |  |  |  |  |  |
| Risk Rating |  |  |  |  |  |  |  |  |  |
| Pass | $-  | $-  | $-  | $-  | $-  | $-  | $57853  | $1496  | $59349  |
| Special Mention | - | - | - | - | - | - | - | - | - |
| Substandard | - | - | - | - | - | - | - | 529  | 529  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $-  | $-  | $-  | $-  | $-  | $-  | $57853  | $2025  | $59878  |

---

------

[<u>**Table of Contents**</u>](#TOC)

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Consumer - Closed-End** |  |  |  |  |  |  |  |  |  |
| Risk Rating |  |  |  |  |  |  |  |  |  |
| Pass | $350  | $1994  | $5415  | $3101  | $7645  | $5306  | $-  | $-  | $23811  |
| Special Mention | - | - | - | - | - | - | - | - | - |
| Substandard | - | - | 27  | - | 101  | 133  | - | - | 261  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $350  | $1994  | $5442  | $3101  | $7746  | $5439  | $-  | $-  | $24072  |
| **Residential:** |  |  |  |  |  |  |  |  |  |
| **Residential Mortgages** |  |  |  |  |  |  |  |  |  |
| Risk Rating |  |  |  |  |  |  |  |  |  |
| Pass | $5095  | $10504  | $16633  | $15256  | $19162  | $37609  | $-  | $-  | $104259  |
| Special Mention | - | - | - | - | - | - | - | - | - |
| Substandard | - | - | - | 28  | 328  | 1362  | - | - | 1718  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $5095  | $10504  | $16633  | $15284  | $19490  | $38971  | $-  | $-  | $105977  |
| **Residential Consumer Construction/Land** |  |  |  |  |  |  |  |  |  |
| Risk Rating |  |  |  |  |  |  |  |  |  |
| Pass | $1094  | $15580  | $1631  | $344  | $1268  | $2813  | $300  | $-  | $23030  |
| Special Mention | - | - | - | - | - | - | - | - | - |
| Substandard | - | - | - | - | - | 70  | - | - | 70  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $1094  | $15580  | $1631  | $344  | $1268  | $2883  | $300  | $-  | $23100  |
| **Totals:** |  |  |  |  |  |  |  |  |  |
| Risk Rating |  |  |  |  |  |  |  |  |  |
| Pass | $17632  | $91668  | $101155  | $41130  | $84984  | $218387  | $87774  | $1509  | $644239  |
| Special Mention | - | - | - | - | - | 86  | - | - | 86  |
| Substandard | - | 151  | 27  | 1027  | 1386  | 5958  | 1786  | 674  | 11009  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $17632  | $91819  | $101182  | $42157  | $86370  | $224431  | $89560  | $2183  | $655334  |

---

‎

------

[<u>**Table of Contents**</u>](#TOC)

**Note 8 – Loans and allowance for credit losses (continued)**

The table below details the amortized cost of the classes of loans by credit quality indicator and year of origination as of December 31, 2025 (dollars in thousands).

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **<u>Term Loans Amortized Cost Basis by Origination Year</u>** | **<u>Term Loans Amortized Cost Basis by Origination Year</u>** | **<u>Term Loans Amortized Cost Basis by Origination Year</u>** | **<u>Term Loans Amortized Cost Basis by Origination Year</u>** | **<u>Term Loans Amortized Cost Basis by Origination Year</u>** | **<u>Term Loans Amortized Cost Basis by Origination Year</u>** |  |  |  |
|  | **2025** | **2024** | **2023** | **2022** | **2021** | **Prior** | **Revolving Loans Amortized Cost Basis** | **Revolving Loans Converted to Term** | **Total** |
| **Commercial** |  |  |  |  |  |  |  |  |  |
| Risk Rating |  |  |  |  |  |  |  |  |  |
| Pass | $9761  | $6431  | $2628  | $2565  | $3920  | $14677  | $23694  | $16  | $63692  |
| Special Mention | - | - | - | - | - | - | - | - | - |
| Substandard | - | - | 878 | 8 | 33 | 459 | 1179 | 145 | 2702 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $9761  | $6431  | $3506  | $2573  | $3953  | $15136  | $24873  | $161  | $66394  |
| **Commercial Real Estate:** |  |  |  |  |  |  |  |  |  |
| **Commercial Mort. - Owner Occupied** |  |  |  |  |  |  |  |  |  |
| Risk Rating |  |  |  |  |  |  |  |  |  |
| Pass | $21687  | $19783  | $7408  | $17560  | $43009  | $34709  | $1734  | $-  | $145890  |
| Special Mention | - | - | - | - | - | - | - | - | - |
| Substandard | - | - | 91 | - | 2708 | 1396 | - | - | 4195 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $21687  | $19783  | $7499  | $17560  | $45717  | $36105  | $1734  | $-  | $150085  |
| **Commercial Mort. - Non-Owner Occupied** |  |  |  |  |  |  |  |  |  |
| Risk Rating |  |  |  |  |  |  |  |  |  |
| Pass | $31054  | $41199  | $12425  | $45772  | $24705  | $52485  | $6738  | $-  | $214378  |
| Special Mention | - | - | - | - | - | - | - | - | - |
| Substandard | - | - | - | 923 | - | - | - | - | 923 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $31054  | $41199  | $12425  | $46695  | $24705  | $52485  | $6738  | $-  | $215301  |
| **Commercial Construction/Land** |  |  |  |  |  |  |  |  |  |
| Risk Rating |  |  |  |  |  |  |  |  |  |
| Pass | $4056  | $6236  | $543  | $369  | $2595  | $1734  | $490  | $-  | $16023  |
| Special Mention | - | - | - | - | - | - | - | - | - |
| Substandard | - | - | - | - | 316 | - | - | - | 316 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $4056  | $6236  | $543  | $369  | $2911  | $1734  | $490  | $-  | $16339  |
| **Consumer:** |  |  |  |  |  |  |  |  |  |
| **Consumer - Open-End** |  |  |  |  |  |  |  |  |  |
| Risk Rating |  |  |  |  |  |  |  |  |  |
| Pass | $-  | $-  | $-  | $-  | $-  | $-  | $61048  | $1415  | $62463  |
| Special Mention | - | - | - | - | - | - | - | - | - |
| Substandard | - | - | - | - | - | - | - | 607 | 607 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $-  | $-  | $-  | $-  | $-  | $-  | $61048  | $2022  | $63070  |

---

------

[<u>**Table of Contents**</u>](#TOC)

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Consumer - Closed-End** |  |  |  |  |  |  |  |  |  |
| Risk Rating |  |  |  |  |  |  |  |  |  |
| Pass | $2205  | $5579  | $3204  | $8256  | $246  | $5359  | $-  | $-  | $24849  |
| Special Mention | - | - | - | - | - | - | - | - | - |
| Substandard | - | 29 | - | 104 | - | 110 | - | - | 243 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $2205  | $5608  | $3204  | $8360  | $246  | $5469  | $-  | $-  | $25092  |
| **Residential:** |  |  |  |  |  |  |  |  |  |
| **Residential Mortgages** |  |  |  |  |  |  |  |  |  |
| Risk Rating |  |  |  |  |  |  |  |  |  |
| Pass | $11007  | $16741  | $17196  | $20278  | $7312  | $31432  | $-  | $-  | $103966  |
| Special Mention | - | - | - | - | - | 66 | - | - | 66 |
| Substandard | - | - | 29 | 493 | - | 1373 | - | - | 1895 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $11007  | $16741  | $17225  | $20771  | $7312  | $32871  | $-  | $-  | $105927  |
| **Residential Consumer Construction/Land** |  |  |  |  |  |  |  |  |  |
| Risk Rating |  |  |  |  |  |  |  |  |  |
| Pass | $17834  | $2550  | $350  | $1285  | $812  | $2398  | $300  | $-  | $25529  |
| Special Mention | - | - | - | - | - | - | - | - | - |
| Substandard | - | - | - | - | - | 70 | - | - | 70 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $17834  | $2550  | $350  | $1285  | $812  | $2468  | $300  | $-  | $25599  |
| **Totals:** |  |  |  |  |  |  |  |  |  |
| Risk Rating |  |  |  |  |  |  |  |  |  |
| Pass | $97604  | $98519  | $43753  | $96085  | $82599  | $142795  | $94005  | $1430  | $656790  |
| Special Mention | - | - | - | - | - | 66 | - | - | 66 |
| Substandard | - | 29 | 997 | 1528 | 3058 | 3407 | 1180 | 752 | 10951 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $97604  | $98548  | $44750  | $97613  | $85657  | $146268  | $95185  | $2182  | $667807  |

---

 **‎** 

------

[<u>**Table of Contents**</u>](#TOC)

**Note 8 – Loans and allowance for credit losses (continued)**

The following table details the gross charge-offs of loans by year of origination for the three months ended March 31, 2026 and March 31, 2025 (dollars in thousands).

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **<u>Current Period Gross Charge-Offs by Origination Year</u>** | **<u>Current Period Gross Charge-Offs by Origination Year</u>** | **<u>Current Period Gross Charge-Offs by Origination Year</u>** | **<u>Current Period Gross Charge-Offs by Origination Year</u>** | **<u>Current Period Gross Charge-Offs by Origination Year</u>** | **<u>Current Period Gross Charge-Offs by Origination Year</u>** | **<u>Current Period Gross Charge-Offs by Origination Year</u>** | **<u>Current Period Gross Charge-Offs by Origination Year</u>** | **<u>Current Period Gross Charge-Offs by Origination Year</u>** | **<u>Current Period Gross Charge-Offs by Origination Year</u>** |
| **As of March 31, 2026** | **2026** | **2025** | **2024** | **2023** | **2022** | **Prior** | **Revolving Loans Amortized Cost Basis** | **Revolving Loans Converted to Term** | **Total** |
| Commercial | $- | $- | $- | $- | $- | $- | $- | $- | $- |
| Commercial Real Estate: | - | - | - | - | - | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Mortgages-Owner Occupied | - | - | - | - | - | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Mortgages-Non-Owner Occupied | - | - | - | - | - | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Construction/Land | - | - | - | - | - | - | - | - | - |
| Consumer: | - | - | - | - | - | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer Open-End | - | 1 | - | - | - | - | - | - | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer Closed-End | - | - | - | - | 221 | - | - | - | 221 |
| Residential: | - | - | - | - | - | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential Mortgages | - | - | - | - | - | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential Consumer Construction/Land | - | - | - | - | - | - | - | - | - |
| Total | $- | $1 | $- | $- | $221 | $- | $- | $- | $222 |
| **As of March 31, 2025** | **2025** | **2024** | **2023** | **2022** | **2021** | **Prior** | **Revolving Loans Amortized Cost Basis** | **Revolving Loans Converted to Term** | **Total** |
| Commercial | $- | $- | $- | $- | $- | $- | $- | $- | $- |
| Commercial Real Estate: |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Mortgages-Owner Occupied | - | - | - | - | - | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Mortgages-Non-Owner Occupied | - | - | - | - | - | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Construction/Land | - | - | - | - | - | - | - | - | - |
| Consumer: |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer Open-End | - | - | - | - | - | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer Closed-End | - | - | - | 49 | - | 5 | - | - | 54 |
| Residential: |  |  |  |  |  |  |  |  |  |

---

------

[<u>**Table of Contents**</u>](#TOC)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;Residential Mortgages | - | - | - | 9 | - | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential Consumer Construction/Land | - | - | - | - | - | - |
| Total | $- | $49 | $- | $14 | $- | $63 |

---

The following tables present loans on nonaccrual status by class as of March 31, 2026 and December 31, 2025 (dollars in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
|  | **Nonaccrual Loans**  | **Nonaccrual Loans**  | **Nonaccrual Loans**  |
|  | **With No Allowance** | **With an Allowance** | **Total** |
| **Commercial** | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 326 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 72 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 398 |
| **Commercial Real Estate:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Mortgages-Owner Occupied | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Mortgages-Non-Owner Occupied | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Construction/Land | 307 | - | 307 |
| **Consumer** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer Open-End | 129 | 1 | 130 |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer Closed-End | 127 | - | 127 |
| **Residential:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential Mortgages | 418 | - | 418 |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential Consumer Construction/Land | 70 | - | 70 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1377 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 73 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1450 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
|  | **Nonaccrual Loans**  | **Nonaccrual Loans**  | **Nonaccrual Loans**  |
|  | **With No Allowance** | **With an Allowance** | **Total** |
| **Commercial** | $387  | $72  | $459  |
| **Commercial Real Estate:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Mortgages-Owner Occupied | 30  | - | 30  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Mortgages-Non-Owner Occupied | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Construction/Land | 316  | - | 316  |
| **Consumer** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer Open-End | 255  | - | 255  |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer Closed-End | 80  | - | 80  |
| **Residential:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential Mortgages | 494  | - | 494  |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential Consumer Construction/Land | 70  | - | 70  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $1632 | $72 | $1704 |

---

Interest income on nonaccrual loans is recognized only when received in cash. The Company did not record any interest income on nonaccrual loans during the three months ended March 31, 2026 or 2025. The Company also reversed all previously accrued but unpaid interest on nonaccrual loans during the three months ended March 31, 2026 and 2025. If interest on these loans had been accrued, such income would have been approximately $86,000 for the three months ended March 31, 2026 and $37,000 for the same period in 2025.

‎

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[<u>**Table of Contents**</u>](#TOC)

**Note 8 – Loans and allowance for credit losses (continued)**

The following tables present an aging analysis of the loan portfolio by class and past due as of March 31, 2026 and December 31, 2025 (dollars in thousands):

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Age Analysis of Past Due Loans as of March 31, 2026** | **Age Analysis of Past Due Loans as of March 31, 2026** | **Age Analysis of Past Due Loans as of March 31, 2026** | **Age Analysis of Past Due Loans as of March 31, 2026** | **Age Analysis of Past Due Loans as of March 31, 2026** | **Age Analysis of Past Due Loans as of March 31, 2026** | **Age Analysis of Past Due Loans as of March 31, 2026** | **Age Analysis of Past Due Loans as of March 31, 2026** |
|  |  |  |  |  |  |  | **Recorded**  |
|  |  |  |  |  |  |  | **Investment** |
| **2026** | **30-59 Days** | **60-89 Days** | **Greater than** | **Total Past** |  | **Total**  | **> 90 Days &** |
|  | **Past Due** | **Past Due** | **90 Days** | **Due** | **Current** | **Loans** | **Accruing** |
| Commercial | $98 | $- | $398 | 496 | $61535 | $62031 | $- |
| Commercial Real Estate: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Mortgages-Owner Occupied | 61 | - | - | 61 | 148959 | 149020 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Mortgages-Non-Owner Occupied | - | - | - | - | 213638 | 213638 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Construction/Land | 40 | - | - | 40 | 17578 | 17618 | - |
| Consumer: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer Open-End | 54 | 130 | - | 184 | 59694 | 59878 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer Closed-End | 5 | 23 | 103 | 131 | 23941 | 24072 | - |
| Residential: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential Mortgages | 683 | 63 | 117 | 863 | 105114 | 105977 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential Consumer Construction/Land | - | - | 70 | 70 | 23030 | 23100 | - |
| Total | $941 | $216 | $688 | $1845 | $653489 | $655334 | $- |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Age Analysis of Past Due Loans as of December 31, 2025**  | **Age Analysis of Past Due Loans as of December 31, 2025**  | **Age Analysis of Past Due Loans as of December 31, 2025**  | **Age Analysis of Past Due Loans as of December 31, 2025**  | **Age Analysis of Past Due Loans as of December 31, 2025**  | **Age Analysis of Past Due Loans as of December 31, 2025**  | **Age Analysis of Past Due Loans as of December 31, 2025**  | **Age Analysis of Past Due Loans as of December 31, 2025**  |
|  |  |  |  |  |  |  | **Recorded**  |
|  |  |  |  |  |  |  | **Investment** |
| **2025** | **30-59 Days** | **60-89 Days** | **Greater than** | **Total Past** |  | **Total**  | **> 90 Days &** |
|  | **Past Due** | **Past Due** | **90 Days** | **Due** | **Current** | **Loans** | **Accruing** |
| Commercial | $118 | $13 | 446 | $577 | $65817 | $66394 | $- |
| Commercial Real Estate: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Mortgages-Owner Occupied | 47 | - | 30 | 77 | 150008 | 150085 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Mortgages-Non-Owner Occupied | - | - | - | - | 215301 | 215301 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial Construction/Land | - | - | - | - | 16339 | 16339 | - |
| Consumer: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer Open-End | 217 | 132 | 75 | 424 | 62646 | 63070 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer Closed-End | 42 | 93 | 80 | 215 | 24877 | 25092 | - |
| Residential: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential Mortgages | 1698 | 183 | 29 | 1910 | 104017 | 105927 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential Consumer Construction/Land | - | - | 70 | 70 | 25529 | 25599 | - |
| Total | $2122 | $421 | $730 | $3273 | $664534 | $667807 | $- |

---

 **‎** 

------

[<u>**Table of Contents**</u>](#TOC)

**Note 8 – Loans and allowance for credit losses (continued)**

Occasionally, the Bank modifies loans for borrowers experiencing financial difficulties by providing principal forgiveness, term extensions, interest rate reductions, or payment deferrals. Because the effect of most modifications is already included in the allowance for credit losses due to the measurement methodologies used in its estimate, the allowance is typically not adjusted upon modification. When principal forgiveness is provided, the amount forgiven is charged against the allowance for credit losses.

There were no loan modifications for borrowers experiencing financial difficulty during the three months ended March 31, 2026 or March 31, 2025. As of March 31, 2026, no previously modified loans had defaulted within the past twelve months.

**ACL on Unfunded Commitments**

The Company maintains an allowance for credit losses on off-balance sheet credit exposures, including unfunded loan commitments, letters of credit, and other commitments to extend credit, to the extent that such commitments are not unconditionally cancellable by the Company. The allowance for credit losses on unfunded commitments is recorded as a liability and is adjusted through a provision for (or recovery of) credit losses in the Consolidated Statements of Income.

The estimate of the allowance for credit losses on unfunded commitments includes consideration of the likelihood that funding will occur, which is based on historical funding experience derived from internal data, as well as an estimate of expected credit losses on commitments expected to be funded over their estimated lives. The Company applies the same loss rates used in estimating the allowance for credit losses on loans to the portion of commitments expected to be funded.

The allowance for credit losses on unfunded commitments was $619,000 at March 31, 2026 and $674,000 at December 31, 2025, and is included in other liabilities in the Consolidated Balance Sheets.

The following table presents the activity in the allowance for credit losses on unfunded commitments for the three months ended March 31, 2026 and 2025 (dollars in thousands):

---

| | |
|:---|:---|
| **Allowance for Credit Losses on Unfunded Commitments**  | *(in thousands)* |
| Balance, December 31, 2025 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 674 |
| (Recovery of) credit losses | (55) |
| **Balance March 31, 2026** | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 619 |
| Balance, December 31, 2024 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 543 |
| Provision for credit losses | 108 |
| **Balance March 31, 2025** | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 651 |

---

**Other Real Estate Owned**

At March 31, 2026 and December 31, 2025, the Company had no consumer mortgage loans secured by residential real estate for which foreclosure proceedings were in process. The Bank had no Other Real Estate Owned ("OREO") at March 31, 2026 or December 31, 2025.

 **‎** 

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**Note 9 – Recent accounting pronouncements and other authoritative guidance**

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, *Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses*. The amendments require public business entities to provide additional disaggregated disclosures of certain expense categories included in the income statement captions, along with related qualitative information, in both interim and annual reporting periods.

In January 2025, the FASB issued ASU 2025-01, which clarifies the effective date of ASU 2024-03. The amendments are effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either prospectively to financial statements issued for periods after the effective date or retrospectively to all prior periods presented.

The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial statement disclosures; however, the adoption is not expected to have a material impact on the Company's financial position, results of operations, or cash flows.

**Note 10 - Subsequent Events**

Subsequent events are events or transactions that occur after the balance sheet date but before the financial statements are issued. Recognized subsequent events are those that provide additional evidence about conditions that existed as of the balance sheet date, including the estimates inherent in the preparation of the financial statements. Non-recognized subsequent events are those that provide evidence about conditions that did not exist at the balance sheet date but arose after that date.

<u>Community Bank Leverage Ratio Final Rule</u>

On April 23, 2026, the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation jointly adopted a final rule modifying the community bank leverage ratio ("CBLR") framework. The final rule lowers the CBLR requirement from greater than 9% to greater than 8% and extends the grace period during which a qualifying community banking organization that temporarily fails to satisfy the qualifying criteria may continue to use the CBLR framework from two consecutive quarters to four consecutive quarters, subject to a limit of eight quarters in any rolling five-year period and provided the institution maintains a leverage ratio greater than 7%. The final rule does not change existing eligibility criteria. The final rule is effective July 1, 2026. The Bank has not elected to use the CBLR framework and continues to calculate its regulatory capital ratios under the generally applicable risk-based capital rules. Management is evaluating whether to opt into the CBLR framework when the final rule becomes effective. The adoption of the final rule is not expected to have a material impact on the Company's financial position, results of operations, or cash flows.

<u>Other Subsequent Events</u>

Management has reviewed events occurring through the date the financial statements were available to be issued and has determined that no other subsequent events occurred requiring accrual or disclosure, other than those already disclosed in the footnotes to the Company's unaudited consolidated financial statements as of March 31, 2026.

 **‎** 

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**Item 2. Management's Discussion and Analysis of Financial Condition and Resu** **lts of Operations**

**CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS**

This report contains statements that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Statements made in this document and in any documents incorporated by reference that are not purely historical are forward-looking statements, including statements regarding management's plans, objectives, or goals for future operations, products or services, and forecasts of revenues, earnings, or other performance measures. Forward-looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. These statements generally may be identified by words such as "believe," "expect," "anticipate," "plan," "estimate," "should," "will," "intend," or similar expressions. Shareholders should note that many factors, some of which are discussed elsewhere in this document and in our Annual Report on Form 10-K for the year ended December 31, 2025, could affect the future financial results of the Company and could cause those results to differ materially from those expressed in forward-looking statements. These factors, many of which are beyond the Company's control, include, but are not limited to, the following:

Problems with technology utilized by us, including potential exposure to fraud, negligence, computer theft, cyber-crime, cyber-threats, and the Company's ability to maintain the security of its data processing and information technology systems.

Operating, legal, and regulatory risks, including the effects of legislative or regulatory developments affecting the financial industry generally or the Company specifically, such as government legislation and policies (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and its related regulations), which change from time to time and over which we have no control, and increased competition from other providers of financial services due to such regulations.

Economic, market, political, and competitive forces affecting the Company's banking and other businesses, including changes in interest rates, monetary policy, and general economic conditions, which may impact net interest income, credit quality, loan demand, or overall conditions in our market area.

Geopolitical conflicts, international tensions, and related economic sanctions, including the potential impact of tariffs, trade restrictions, or changes in U.S. trade policy on businesses in our market area and our business and agricultural borrowers, all of which may have a destabilizing effect on financial markets and economic activity and could indirectly affect credit quality, loan demand, or overall economic conditions in our market area.

The ability to maintain adequate liquidity by retaining deposit customers and secondary funding sources, especially if the Company's or banking industry's reputation becomes damaged.

The adequacy of the level of the Company's allowance for credit losses, the amount of credit loss provisions required in future periods, and the failure of assumptions underlying the allowance for credit losses.

Reliance on our management team, including our ability to attract and retain key personnel.

Changes in the value of real estate securing loans made by the Bank.

Adoption of new accounting standards or changes in existing standards.

Compliance or operational risks related to new products, services, ventures, or lines of business, if any, that the Company may pursue or implement.

The risk that the Company's analysis of these risks and forces is incorrect or that the strategies developed to address them are unsuccessful.

The stability of the overall banking industry in the United States.

Prolonged U.S. federal government shutdowns (lapses in appropriations), which may disrupt economic activity, delay or reduce federal payments and guaranty programs (including small-business lending), constrain capital markets or regulatory processes, and reduce the availability of government economic data relied upon by market participants and monetary policymakers.

Developments related to digital assets, including cryptocurrencies and stablecoins, and changes in related laws, supervisory expectations, capital or accounting frameworks, customer adoption, or payment rails,

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any of which could affect deposit flows, liquidity management, third-party relationships, operational resiliency, compliance obligations, or reputational risk.

Our ability to pay dividends, repurchase shares, or otherwise return capital to shareholders, which is subject to our capital position and earnings, applicable laws and regulations (including capital buffer and stress-testing requirements), regulatory approvals or supervisory actions, and the discretion of our Board of Directors.

Changes in federal, state, or local tax laws, regulations, rates, or administrative interpretations and the timing of regulatory guidance or implementation that could affect our effective tax rate, deferred tax assets, capital planning, or after-tax earnings.

Other risks and uncertainties set forth in this Quarterly Report on Form 10-Q, in our Annual Report on Form 10-K for the year ended December 31, 2025, and, from time to time, in our other filings with the Securities and Exchange Commission ("SEC").

Other risks, uncertainties, and factors could cause our actual results to differ materially from those projected in any forward-looking statements we make. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

These factors should be considered when evaluating the forward-looking statements, and you should not place undue reliance on such statements. This discussion and analysis should be read in conjunction with the description of our "Risk Factors" in Item 1A of the most recently filed Form 10-K.

**GENERAL**

*Critical Accounting Policies*

Bank of the James Financial Group, Inc.'s ("Financial" or the "Company") financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). As a community bank primarily serving central Virginia, the financial information contained within our statements is, to a significant extent, based on measures of the financial effects of transactions and events that have already occurred, such as lending activities tied to local real estate markets and small business operations. A variety of factors, particularly regional economic conditions, fluctuations in interest rates, and changes in real estate values in our market area, could affect the ultimate value obtained when earning income, recognizing an expense, recovering an asset, or relieving a liability. In addition, GAAP itself may evolve from one previously acceptable method to another, potentially altering the timing of how these events impact our transactions, even if the underlying economics remain unchanged.

The Allowance for Credit Losses on Loans ("ACL") is management's estimate of the current expected credit losses in our loan portfolio and held-to-maturity securities portfolio. With the exception of loans related to agriculture, the Company uses a discounted cash flow model to estimate its current expected credit losses in our loan portfolio and held-to-maturity securities portfolio. Actual losses could differ significantly from the historical factors that we use in estimating risk. For information on the Company's policies on the ACL, please refer to Note 2 – "Allowance for Credit Losses - Loans" in the Company's Form 10-K for the year ended December 31, 2025. See "Management's Discussion and Analysis Results of Operations – Allowance and Provision for Credit losses" below for further discussion of the allowance for credit losses.

*Overview*

The following overview of our business has not materially changed since our Annual Report on Form 10-K for the year ended December 31, 2025.

The Company is a bank holding company headquartered in Lynchburg, Virginia. Our primary business is retail banking which we conduct through our wholly-owned subsidiary, Bank of the James (which we refer to as the "Bank"). We conduct four other business activities: mortgage banking through the Bank's Mortgage Division (which we refer to as "Mortgage"), investment services through the Bank's Investment division (which we refer to as "Investment Division"), insurance activities through BOTJ Insurance, Inc., a subsidiary of the Bank, (which we refer to as "Insurance Business"),

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and as of December 31, 2021, investment advisory services through the Company's wholly-owned subsidiary, Pettyjohn, Wood & White, Inc. (which we refer to as "PWW").

The Bank is a Virginia banking corporation headquartered in Lynchburg, Virginia. The Bank was incorporated under the laws of the Commonwealth of Virginia as a state-chartered bank in 1998 and began banking operations in July 1999. The Bank was organized to engage in general retail and commercial banking business. The Bank is a community-oriented financial institution that provides varied banking services to individuals, small and medium-sized businesses, and professional concerns. Historically, our primary market area has been the Central Virginia, Region 2000 area, which encompasses the seven jurisdictions of the Town of Altavista, Amherst County, Appomattox County, the Town of Bedford, Bedford County, Campbell County, and the City of Lynchburg. The Bank has expanded to other areas in Virginia, specifically Roanoke, Charlottesville, Harrisonburg, Blacksburg, Lexington, Rustburg, Buchanan, and Nellysford. The Bank strives to provide its customers with products comparable to statewide regional banks located in its market areas, while maintaining the prompt response time and level of service of a community bank. Management believes this operating strategy has particular appeal in the Bank's market areas.

PWW is a Lynchburg, Virginia-based investment advisory firm that generates revenue primarily through investment advisory fees and had approximately $1,010,000,000 in assets under management and advisement as of March 31, 2026.

The Bank's principal office is located at 828 Main Street, Lynchburg, Virginia 24504 and its telephone number is (434) 846-2000. The Bank also maintains a website at www.bankofthejames.bank.

Our operating results depend primarily upon the Bank's net interest income, which is determined by the difference between (i) interest and dividend income on earning assets—consisting primarily of loans, investment securities, and other investments—and (ii) interest expense on interest-bearing liabilities, consisting principally of deposits and other borrowings. The Bank's net income is also affected by its provision for credit losses, as well as the level of its noninterest income (including gains on sales of loans held for sale, service charges, and investment advisory fees) and its noninterest expenses (including salaries and employee benefits, occupancy expense, data processing expenses, Federal Deposit Insurance Corporation premiums, expenses in complying with regulatory requirements, miscellaneous other expenses, franchise taxes, and income taxes).

The Bank intends to enhance its profitability by increasing its market share in its service areas, providing additional services to customers, and controlling costs.

The Bank services its banking customers through the following locations in Virginia:

<u>Full-Service Branches</u>

The main office located at 828 Main Street in Lynchburg, Virginia (the "Main Street Office"),

A branch located at 5204 Fort Avenue in Lynchburg, Virginia (the "Fort Avenue Branch"),

A branch located at 4935 Boonsboro Road, Suites C and D in Lynchburg, Virginia (the "Boonsboro Branch"),

A branch located at 4105 Boonsboro Road in Lynchburg, Virginia (the "Peakland Branch"),

A branch located at 4698 South Amherst Highway in Amherst County, Virginia (the "Madison Heights Branch"),

A branch located at 17000 Forest Road in Forest, Virginia (the "Forest Branch"),

A branch located at 164 South Main Street, Amherst, Virginia (the "Amherst Branch"),

A branch located at 1405 Ole Dominion Boulevard in the Town of Bedford, Virginia, located off of Independence Boulevard (the "Bedford Branch"),

A branch located at 1110 Main Street, Altavista, Virginia (the "Altavista Branch"),

A branch located at 1391 South High Street, Harrisonburg, Virginia (the "Harrisonburg Branch"),

A branch located at 1745 Confederate Blvd, Appomattox, Virginia (the "Appomattox Branch"),

A branch located at 225 Merchant Walk Avenue, Charlottesville, Virginia (the "5th Street Station Branch"),

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A branch located at 3562 Electric Road, Roanoke, Virginia (the "Roanoke Branch"),

A branch located at 45 South Main St., Lexington, Virginia (the "Lexington Branch"),

A branch located at 550 Water St., Charlottesville, Virginia (the "Water Street Branch"),

A branch located at 2101 Electric Rd, Roanoke, Virginia (the "Oak Grove Branch"),

A branch located at 13 Village Highway, Rustburg, Virginia (the "Rustburg Branch"),

A branch located at 19792 Main Street, Buchanan, Virginia (the "Buchanan Branch");

A branch located at 2935 Rockfish Valley Highway, Nellysford, Virginia (the "Nellysford Branch"); and

A branch located at 20795 Timberlake Road, Lynchburg, Virginia (the "Timberlake Branch").

<u>Limited Service Branches</u>

Westminster-Canterbury facilities located at 501 VES Road, Lynchburg, Virginia, and

Westminster-Canterbury facilities located at 250 Pantops Mountain Road, Charlottesville, Virginia.

<u>Loan Production Offices</u>

Residential mortgage loan production office located at the Forest Branch,

Residential mortgage loan production office located at 570 West Main St., Wytheville, Virginia,

Residential mortgage loan production office located at 2001 South Main Street, Blacksburg, Virginia, and

Commercial, consumer and residential mortgage loan production office located at the Water Street Branch.

The Investment division and the Insurance Business operate primarily out of offices located at the Main Street Office. PWW operates the Company's investment advisory business primarily from its offices at 1925 Atherholt Road in Lynchburg.

In September 2025, the Bank opened its full-service branch in Nellysford, Virginia and closed the temporary branch it had been operating.

The Bank continuously evaluates areas within our service areas to identify viable branch locations. Based on this evaluation, the Bank may acquire additional suitable sites.

<u>Interest in Additional Properties</u>

1925 Atherholt Road, Lynchburg, Virginia currently serves as the office for the Company's wholly-owned subsidiary, PWW, which leases the space from the Bank on a month-to-month basis. The property is held for possible future branch expansion, although the Bank does not currently have a timeline for opening a branch at this location.

The Bank also owns two additional properties in its market area, one held for possible future expansion or sale and one under contract for sale, subject to due diligence and other customary closing conditions.

The Bank may acquire suitable properties for branch expansion as opportunities arise. Future branch openings are subject to regulatory approval.

The Bank continues to evaluate suitable branch locations and may acquire properties for expansion in the next 12 months. Future branch openings are subject to regulatory approval.

**OFF-BALANCE SHEET ARRANGEMENTS**

The Bank is party to various financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit and standby letters of credit. Such commitments involve, to varying degrees, elements of credit risk and interest rate risk exceeding the

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amount recognized in the balance sheets and could impact the overall liquidity and capital resources to the extent customers accept or use these commitments.

The Bank'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 is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. A summary of the Bank's commitments follows (dollars in thousands):

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| | | |
|:---|:---|:---|
|  | **March 31, 2026** | **December 31, 2025** |
|  | **(in thousands)** | **(in thousands)** |
| Commitments to extend credit | $177081 | $181358 |
| Letters of Credit | 1529 | 2086 |
| Total | $178610 | $183444 |

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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. Because many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on the Bank's credit evaluation of the customer.

Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. These letters of credit are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on the Bank's credit evaluation of the customer.

The Bank has rate lock commitments to originate mortgage loans through its Mortgage Division. The Bank has entered into corresponding commitments with third-party investors to sell each of these loans that close. No other obligation exists. As a result of these contractual relationships with these investors, the Bank is not exposed to losses, nor will it ultimately realize gains related to its rate lock commitments due to changes in interest rates.

**SUMMARY OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

The following discussion and analysis presents management's assessment of the financial condition of the Company as of March 31, 2026 and December 31, 2025, and the results of operations for the three-month periods ended March 31, 2026 and 2025. This discussion should be read in conjunction with the Company's consolidated financial statements and related notes included elsewhere in this report. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

**Financial Condition Summary**

**March 31, 2026 as Compared to December 31, 2025**

Total assets were $1,061,189,000 on March 31, 2026, compared with $1,039,024,000 at December 31, 2025, an increase of 2.13%. The increase in total assets was primarily due to growth in federal funds sold and securities available-for-sale, reflecting deployment of available liquidity, partially offset by a decline in loans (net of the allowance for credit losses).

Total deposits increased from $937,129,000 at December 31, 2025, to $956,552,000 at March 31, 2026, an increase of $19,423,000, or 2.07%. The growth was driven primarily by an increase in noninterest-bearing demand deposits of $13,306,000 and an increase in NOW, money market, and savings deposits of $6,554,000, while time deposit balances declined modestly by $437,000. The Company continues to utilize the reciprocal portion of the Insured Cash Sweep (ICS) program for customers requiring full FDIC insurance, and may redeploy the non-reciprocal option as market and liquidity conditions warrant.

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Total loans, excluding loans held for sale, decreased to $655,334,000 at March 31, 2026, from $667,807,000 at December 31, 2025, a decrease of $12,473,000, or 1.85%. The decline was concentrated in the commercial portfolio, which decreased $4,363,000 (primarily reflecting loan payoffs), and in the consumer portfolio, where consumer open-end and closed-end balances declined $3,192,000 and $1,020,000, respectively. Residential mortgage balances were essentially flat, while residential consumer construction/land balances declined $2,499,000 as construction loans converted to permanent financing or paid off. Within commercial real estate, modest growth in commercial construction/land (an increase of $1,279,000) was more than offset by declines in owner-occupied and non-owner-occupied commercial mortgages, resulting in a net decrease of $1,448,000 in the commercial real estate portfolio.

The following summarizes the position of the Bank's loan portfolio as of the dates indicated by dollar amounts and percentages (dollar in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** | **December 31, 2025** |
|  | **Amount** | **Percentage** | **Amount** | **Percentage** |
| Commercial | $62031 | 9.47% | $66394 | 9.94% |
| Commercial Real Estate | 380276 | 58.03% | 381725 | 57.16% |
| Consumer | 83950 | 12.81% | 88162 | 13.20% |
| Residential | 129077 | 19.70% | 131526 | 19.70% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total loans | $655334 | 100.00% | $667807 | 100.00% |

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Total loans, excluding loans held for sale and net of the allowance for credit losses, decreased to $649,133,000 at March 31, 2026 from $661,357,000 at December 31, 2025, a decrease of 1.85%. The decline was primarily attributable to loan payoffs. While the Company experienced growth in certain commercial and commercial real estate portfolios, these increases were more than offset by the aforementioned paydowns, and residential and consumer lending levels remained relatively stable.

Loans held for sale totaled $2,877,000 at March 31, 2026 compared to $3,472,000 at December 31, 2025, a decrease of 17.14%, due primarily to normal quarterly fluctuations in mortgage production and secondary market sales.

Subsegments of the loan portfolio are set forth in Note 8 to the consolidated financial statements. As of March 31, 2026, non-owner occupied commercial real estate loans and commercial construction and land development loans totaled $231,256,000 representing approximately 35.3% of total loans.

The Bank closely monitors concentrations within its commercial real estate loan portfolio. As of March 31, 2026, non-owner occupied commercial real estate loans totaled $213,638,000, or approximately 32.6% of total loans. The Bank's exposure to higher-risk property types remains limited, with loans secured by large office buildings or shopping centers comprising less than 5% of the non-owner occupied commercial real estate portfolio. The portfolio is primarily secured by smaller, multi-tenant properties that are diversified across industries and geographic markets within the Bank's footprint. The Bank does not have material exposure to loans secured by properties in major metropolitan central business districts, and delinquency levels within the commercial real estate portfolio remained stable during the period.

In addition, to help manage risk, the Bank actively monitors its commercial real estate portfolio through the following, as appropriate:

**Origination and Analysis**

We have a thorough loan origination process. For all CRE loans secured by real estate collateral, we require an appraisal or valuation at the time of origination. We generally do not approve loans with a loan-to-value ratio exceeding 80%. An individual property cash flow analysis is performed, and, if appropriate, a global cash flow analysis is also conducted. We generally require a debt service coverage ratio of at least 1.2x.

**Ongoing Risk Management**

Following origination, we continue to manage risk. Our ongoing risk management includes:

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Utilizing enhanced risk rating systems specific to CRE exposures;

Obtaining regular third-party loan reviews of the CRE portfolio;

Obtaining subsequent appraisals when either required by regulations or dictated by our internal policies;

Stress testing of property cash flows using various vacancy and rate scenarios during underwriting;

Regularly monitoring local market conditions and property sector trends;

Meeting at least annually with clients to which the Bank has significant exposure, along with market-level monitoring of vacancy rates and rental trends;

Performing annual reviews, including the review of current financial information, rate shocking, and collecting and analyzing rent rolls and operating statements at least annually; and

Utilizing a risk rating system that incorporates both property and borrower performance metrics.

**Credit Enhancements**

Where appropriate, we mitigate risk by obtaining credit enhancements. Typical enhancements to CRE loans include personal guarantees, secondary collateral, and liquid collateral.

The following table sets forth information for non-owner occupied CRE loans for the five largest categories of loans (classified by purpose code and collateral description) having the highest current principal balance (dollars in thousands):

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Non-Owner Occupied CRE** | **Non-Owner Occupied CRE** | **Non-Owner Occupied CRE** | **Non-Owner Occupied CRE** | **Non-Owner Occupied CRE** |
|  | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
| **Collateral Description** | **Total Number of Loans** | **Current Balance** | **% of Total Loans** | **Average Balance** | **Weighted Avg LTV of Top 5 Loans (1)** |
| Multi-Family (5 or more) | 42 | $51537 | 7.90% | $1257 | 60.50% |
| Office Building | 35 | 40025 | 6.13% | 1144 | 52.38% |
| Hotel/Motel | 10 | 37114 | 5.69% | 3711 | 55.58% |
| Retail Store | 21 | 11322 | 1.74% | 539 | 50.76% |
| Medical Building | 5 | 8202 | 1.26% | 1640 | 53.50% |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Loan-to-value is based on collateral valuation at origination date against current bank-owned principal.

The following table sets forth information for owner-occupied CRE loans for the four largest categories of loans, classified by purpose code and collateral description, having the highest current principal balance (dollars in thousands):

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Owner Occupied CRE** | **Owner Occupied CRE** | **Owner Occupied CRE** | **Owner Occupied CRE** | **Owner Occupied CRE** |
|  | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
| **Collateral Description** | **Total Number of Loans** | **Current Balance** | **% of Total Loans** | **Average Balance** | **Weighted Avg LTV of Top 5 Loans (1)** |
| Industrial | 31 | $32411 | 4.97% | $1046 | 56.06% |
| Office Building | 78 | 31136 | 4.77% | 399 | 55.35% |
| Retail Store | 31 | 14036 | 2.15% | 453 | 54.40% |
| Medical Building | 22 | 12952 | 1.98% | 589 | 73.64% |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Loan-to-value is based on collateral valuation at origination date against current bank-owned principal.

Total nonperforming assets, which consist of nonperforming loans and other real estate owned, were $1,450,000 at March 31, 2026, compared with $1,704,000 at December 31, 2025. As discussed under "Results of Operations—Allowance and Provision for Credit Losses," management believes the allowance for credit losses is adequate to absorb estimated losses inherent in the loan portfolio.

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When a loan is placed on nonaccrual status, all accrued but unpaid interest is reversed and the accrual of interest is discontinued until repayment is reasonably assured. Payments received on nonaccrual loans are generally applied to principal, and additional provisions may be recorded as necessary to reflect expected credit losses.

Other real estate owned ("OREO") represents real property acquired by the Bank for debts previously contracted, including through foreclosure or deeds in lieu of foreclosure. The Company had no OREO at March 31, 2026 or December 31, 2025, and did not acquire or dispose of any OREO during the three months ended March 31, 2026.

Cash and cash equivalents increased to $87,991,000 at March 31, 2026 from $84,475,000 at December 31, 2025. Cash and cash equivalents consist of cash due from correspondents, cash in vault, and overnight investments, including federal funds sold. The increase was primarily attributable to higher federal funds sold balances, which rose to $62,894,000 at March 31, 2026 compared to $55,937,000 at December 31, 2025, reflecting the deployment of excess liquidity generated from deposit inflows and loan payoffs.

Securities held-to-maturity decreased slightly to $3,586,000 at March 31, 2026 from $3,590,000 at December 31, 2025, due to normal amortization of premiums.

Securities available-for-sale, carried at fair value, increased to $244,699,000 at March 31, 2026 from $214,128,000 at December 31, 2025, an increase of $30,571,000. The increase reflects $33,628,000 of securities purchases funded by the reinvestment of excess liquidity from deposit inflows, partially offset by $1,686,000 of maturities, calls, and paydowns and a $1,371,000 decline in the pre-tax fair value of the portfolio resulting from changes in market interest rates during the quarter, which contributed to a $1,083,000 increase in after-tax accumulated other comprehensive loss. As of March 31, 2026, unrealized losses on securities available-for-sale totaled $20,278,000 pre-tax and $16,020,000 after tax. These unrealized losses are primarily attributable to changes in market interest rates, and management does not expect to realize such losses, as the Bank has the intent and ability to hold these securities until recovery of fair value or maturity.

Restricted stock, consisting of stock in the Federal Reserve, the Federal Home Loan Bank of Atlanta (FHLBA), and correspondent banks, totaled $1,828,000 at March 31, 2026 and December 31, 2025. These holdings are carried at cost and evaluated for impairment based on par value recoverability.

*Liquidity and Capital*

Liquid assets, on a consolidated basis, totaled $332,690,000 at March 31, 2026, consisting of cash, interest-bearing and noninterest-bearing deposits with banks, federal funds sold, and available-for-sale securities. This represents an increase from $298,603,000 at December 31, 2025, primarily reflecting higher balances in federal funds sold and securities available-for-sale due to the deployment of excess liquidity generated from deposit inflows.

The Bank has pledged (market values):

approximately $38,697,000 of our available-for-sale securities as collateral with correspondent banks, including the FHLBA, for collateralized lines of credit;

approximately $50,086,000 of our available-for-sale securities as security for public deposits; and

approximately $25,626,000 of our available-for-sale securities as collateral for advances at the Federal Reserve Bank's discount window.

If additional liquidity is needed, the Bank can purchase up to $58,000,000 of Fed funds through correspondent relationships. In addition, the Bank has total borrowing capacity with the Federal Home Loan Bank of Atlanta ("FHLBA") of approximately $46,593,000 based on pledged collateral, consisting of approximately $16,893,000 supported by pledged loans and approximately $29,700,000 supported by pledged investment securities. The Bank may obtain additional FHLBA capacity by pledging additional eligible loans or investment securities. As of March 31, 2026, the Bank had no borrowings from any of these sources. Management believes that liquid assets were adequate at March 31, 2026 and anticipates additional liquidity from deposit growth and loan repayments.

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Stockholders' equity totaled $81,284,000 at March 31, 2026, compared with $80,048,000 at December 31, 2025, an increase of 1.54%. The increase primarily reflected net income of $2,774,000, partially offset by dividends paid to common stockholders of $455,000 and a $1,083,00 increase in accumulated other comprehensive loss related to unrealized losses on available-for-sale securities during the period.

At March 31, 2026, deposits in accounts with balances exceeding the FDIC insurance limit of $250,000 totaled approximately $299,728,000 (31.34% of total deposits), compared with $289,069,000 (30.85% of total deposits) at December 31, 2025. Excluding collateralized public deposits, uninsured deposits totaled approximately $259,615,000 (27.14% of total deposits) at March 31, 2026, compared with $252,818,000 (26.98% of total deposits) at December 31, 2025. These amounts are based on account balances without applying FDIC aggregation rules across accounts or ownership capacities and may differ from the actual uninsured portion. The Bank had no brokered deposits or other uninsured deposit-like instruments at March 31, 2026 or December 31, 2025.

The Tier 1 risk-based capital ratio increased from December 31, 2025, primarily due to net income of $2,774,000 for the three months ended March 31, 2026, partially offset by the $455,000 dividend paid to common stockholders.

**Bank Level Only Capital Ratios**

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Analysis of Capital for Bank of the James (Bank only)** | **Analysis of Capital for Bank of the James (Bank only)** | **Analysis of Capital for Bank of the James (Bank only)** |  |  |
| **(dollars in thousands)** | **(dollars in thousands)** | **(dollars in thousands)** |  |  |
|  | March 31, | December 31, |  |  |
| Analysis of Capital | 2026 | 2025 |  |  |
| Tier 1 capital |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Common Stock | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3743 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3743 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Surplus | 22325 | 22325 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Retained earnings | 69660 | 67680 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Tier 1 capital | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 95728 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;93748 |  |  |
| Common Equity Tier 1 Capital (CET1) | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 95728 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;93748 |  |  |
| Tier 2 capital |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Allowance for credit losses | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6201 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6450 |  |  |
| Total Tier 2 capital: | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6201 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6450 |  |  |
| Total risk-based capital | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 101929 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 100198 |  |  |
| Risk weighted assets | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 790153  | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 799304  |  |  |
| Average total assets | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1043135 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1035821 |  |  |
|  | Actual | Actual | Regulatory Benchmarks | Regulatory Benchmarks |
|  |  |  | For Capital | For Well |
|  | March 31, | December 31, | Adequacy | Capitalized |
|  | 2026 | 2025 | Purposes (1) | Purposes |
| Capital Ratios: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Tier 1 capital to average total assets | 9.18% | 9.05% | 4.000% | 5.000% |
| &nbsp;&nbsp;&nbsp;&nbsp;Common Equity Tier 1 capital | 12.12% | 11.73% | 7.000% | 6.500% |
| &nbsp;&nbsp;&nbsp;&nbsp;Tier 1 risk-based capital ratio | 12.12% | 11.73% | 8.500% | 8.000% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total risk-based capital ratio | 12.90% | 12.54% | 10.500% | 10.000% |

---

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&nbsp;&nbsp;&nbsp;&nbsp;(1)Includes the capital conservation buffer of 2.50% for all ratios, excluding the Tier 1 capital to average total assets ratio.

The above tables set forth the capital position and analysis for the Bank only. Because total assets on a consolidated basis are less than $3,000,000,000, The Company is not subject to the capital requirements imposed by the Bank Holding Company Act. Consequently, The Company does not calculate its financial ratios on a consolidated basis. If calculated, management expects that the capital ratios for the Company on a consolidated basis at March 31, 2026 would be substantially equivalent to those of the Bank.

In July 2013, the Federal Reserve Board approved a final rule establishing a regulatory capital framework for smaller, less complex financial institutions. The rule was fully implemented on January 1, 2019, and established a capital conservation buffer of 2.5%. As a result, the Bank is required to maintain a minimum ratio of Tier 1 capital to average total assets of 4.00% (exclusive of the capital conservation buffer), a minimum ratio of common equity Tier 1 capital to risk-weighted assets of 7.0% (inclusive of the capital conservation buffer), and a Tier 1 risk-based capital ratio of 8.5% (inclusive of the capital conservation buffer). Failure to maintain the capital conservation buffer will limit the ability of the Bank and The Company to pay dividends, repurchase shares, or pay discretionary bonuses. The rule also raised the minimum ratio of Tier 1 capital to risk-weighted assets from 4% to 6% and includes a minimum leverage ratio of 4% for all banking organizations.

On April 23, 2026, the federal banking agencies jointly adopted a final rule modifying the community bank leverage ratio ("CBLR") framework, effective July 1, 2026, as further described in Note 10 to the consolidated financial statements. The Bank has not elected to use the CBLR framework and continues to calculate its regulatory capital ratios under the generally applicable risk-based capital rules described above. Management is evaluating whether to opt into the CBLR framework when the final rule becomes effective.

**Results of Operations**

**Comparison of the Three Months Ended March 31, 2026 and 2025**

*Earnings Summary*

For the three months ended March 31, 2026, the Company reported net income of $2,774,000, compared with net income of $842,000 for the same period in 2025, an increase of $1,932,000, or 229.5%.

Basic and diluted earnings per common share were each $0.61 for the three months ended March 31, 2026, compared with $0.19 for the same period in 2025.

The increase in net income for the three months ended March 31, 2026, compared with the same period in 2025, was primarily attributable to higher net interest income, growth in noninterest income, a reduction in noninterest expense, and a recovery of credit losses in the current period compared to a provision for credit losses in the prior year period.

A more detailed analysis of the components that impacted net income for the three-month period ended March 31, 2026, compared with the same period in 2025, follows:

Net interest income increased to $8,734,000 for the three months ended March 31, 2026, from $7,719,000 for the same period in 2025, reflecting higher yields on earning assets and a lower cost of interest-bearing liabilities, including the impact of deposit repricing and the elimination of interest expense on capital notes following their retirement in the second quarter of 2025.

The Company recorded a recovery of credit losses of $146,000 for the three months ended March 31, 2026, compared with a provision for credit losses of $137,000 for the same period in 2025.

Noninterest income increased to $3,964,000 for the three months ended March 31, 2026, compared with $3,283,000 for the same period in 2025, driven by higher wealth management fees, increased gains on sales of loans held for sale, and income from an SBIC fund investment.

Noninterest expense decreased to $9,365,000 for the three months ended March 31, 2026, from $9,826,000 for the same period in 2025, primarily reflecting decreases in data processing and professional services expenses associated with the renegotiation of the Bank's core processing contract, partially offset

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by increases in salaries and employee benefits related to higher production volumes and incentive compensation.

These operating results produced an annualized return on average stockholders' equity of 13.87% for the three-month period ended March 31, 2026, compared with 5.27% for the same period in 2025. The annualized return on average assets was 1.07% for the three-month period ended March 31, 2026, compared with 0.33% for the same period in 2025.

See "*Noninterest Income"* below for mortgage business and wealth management segment discussions.

*Interest Income, Interest Expense, and Net Interest Income*

The annualized return on average assets was 1.07% for the three months ended March 31, 2026, compared with 0.33% for the same period in 2025. The improvement reflects the increase in net income driven by higher net interest income, growth in noninterest income, lower noninterest expense, and a recovery of credit losses in the current period.

For the three months ended March 31, 2026, total interest income was $11,849,000, compared with $11,234,000 for the same period in 2025, an increase of 5.5%. The increase was primarily attributable to higher yields on earning assets, partially offset by lower average balances of, and yields on, federal funds sold. The yield on average earning assets increased to 4.84% for the three months ended March 31, 2026, from 4.73% for the same period in 2025, primarily reflecting higher yields on loans (5.73% compared with 5.56%) and on the taxable securities portfolio (2.81% compared with 2.41%), as proceeds from lower-yielding maturities and paydowns were reinvested at current market rates. Average earning assets grew to $994,286,000 from $963,688,000, supported by deposit inflows that funded growth in the securities portfolio.

For the three months ended March 31, 2026, interest expense was $3,115,000, compared with $3,515,000 for the same period in 2025, a decline of 11.4%. The decrease was driven by a lower cost of interest-bearing liabilities, which declined to 1.54% for the three months ended March 31, 2026, from 1.78% for the same period in 2025, a reduction of 24 basis points. The decline was attributable to (i) lower rates paid on interest-bearing deposits, with the average rate on total interest-bearing deposits decreasing to 1.49% from 1.73%, reflecting the repricing of NOW, money market, and savings accounts (0.66% and 0.90% for the three months ended March 31, 2026, compared with 0.75% and 1.36% for the same period in 2025) and the repricing of maturing time deposits (3.37% compared with 3.82%); and (ii) the elimination of interest expense on the Company's $10,050,000 of capital notes, which were retired at maturity in the second quarter of 2025. These benefits were partially offset by a higher rate paid on other borrowings (5.50% compared with 3.91%) following the Second Allonge to the NBB Note effective September 30, 2025.

Net interest income for the three months ended March 31, 2026, was $8,734,000, compared with $7,719,000 for the same period in 2025, an increase of 13.2%.

The net interest margin was 3.57% for the three months ended March 31, 2026, compared with 3.25% for the same period in 2025, an increase of 32 basis points. The expansion in net interest margin was primarily attributable to the 24 basis point reduction in the cost of interest-bearing liabilities described above, with the balance reflecting the 11 basis point increase in the yield on earning assets. Although short-term interest rates have stabilized, future rate movements could continue to influence the margin depending on loan repricing and deposit rate competition. For example,

While management does not currently anticipate a need to increase deposit rates, increases in market interest rates or competitive pressures could result in higher deposit costs, which would adversely impact net interest margin and profitability.

A stable interest rate environment may support net interest margin through continued repricing of interest-bearing liabilities and the maintenance of asset yields; however, margin performance will depend on competitive factors and balance sheet dynamics.

In the event of declining interest rates, net interest margin could come under pressure, particularly in the short term, as earning asset yields may reprice more quickly than funding costs given the Company's asset-sensitive position.

Other financial impacts could occur, though such potential impacts are unknown at this time.

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The Company's net interest margin analysis and average balance sheets are shown in Schedule I below.

*Noninterest Income* 

Noninterest income is primarily comprised of fees and charges on transactional deposit accounts, gains on sales of mortgage loans held for sale, commissions on sales of investments, fees generated from treasury management services, fees from the Company's investment advisory business, and bank-owned life insurance income.

Noninterest income totaled $3,964,000 for the three months ended March 31, 2026, compared to $3,283,000 for the same period in 2025, representing an increase of 20.8%. The increase for the quarter was primarily attributable to higher gains on sales of loans held for sale, increased wealth management fees, and income from an SBIC fund investment, while service fee income remained relatively stable.

The major components of noninterest income for the three months ended March 31, 2026, as compared to the comparable period in 2025, were as follows:

****Gains on sale of loans held for sale, primarily through the Mortgage Division, totaled $1,196,000, compared with $837,000 for the same period in 2025.

****Wealth management fees increased to $1,413,000, compared with $1,255,000 for the same period in 2025, reflecting continued growth in client assets under management.

****Service charges, fees, and commissions were $994,000, compared with $981,000 for the same period in 2025, reflecting relatively stable transactional and deposit account activity.

****Life insurance income increased to $211,000 from $188,000, reflecting continued growth in the cash surrender value of bank-owned life insurance policies.

****Income from an SBIC fund investment totaled $131,000 for the three months ended March 31, 2026, with no comparable income in the prior year period.

There were no gains on sales of available-for-sale securities for the three months ended March 31, 2026 or March 31, 2025.

Management believes the growth in noninterest income for the first quarter of 2026, particularly in wealth management and mortgage banking, reflects the diversification of the Company's revenue sources. Future levels of noninterest income will depend on a number of factors, including market conditions affecting wealth management assets under management, mortgage origination and sales volumes, and other items that may not recur in future periods.

The Bank, through its Mortgage division, originates both conforming and non-conforming consumer residential mortgage loans in the markets we serve. As part of the Bank's overall risk management strategy, all loans originated and closed by the Mortgage Division are presold to major national mortgage banking or financial institutions. The Mortgage Division's primary source of revenue is gains on sale of loans held for sale. The Mortgage Division assumes no credit or interest rate risk on these mortgages, except in limited circumstances such as first payment default.

Purchase mortgage originations totaled approximately $29,323,336, or 58.90%, of total mortgage loans originated in the three months ended March 31, 2026, as compared to approximately $28,323,336, or 83.99%, of the total mortgage loans originated in the same period in 2025. The decrease in the purchase share reflects a modest increase in refinance activity in the first quarter of 2026 relative to the prior-year period, consistent with the moderation in mortgage interest rates that has occurred since the highs reached during 2022 and 2023.

Mortgage interest rates remain elevated relative to the historic lows that prevailed during 2020 and 2021, and overall mortgage origination volume remains below pre-2022 levels. As a result, a substantial portion of existing residential mortgages carries a rate below current market rates, which management believes will continue to constrain the population of borrowers with an economic incentive to refinance. Due to the uncertainty surrounding current and near-term economic conditions, including inflation, geopolitical developments, and other macroeconomic factors, management cannot predict the future direction of mortgage rates. Management anticipates that, in the near term, purchase originations will continue to represent a significant portion of total mortgage activity, and that elevated interest rates relative to pre-2022 levels may continue to put pressure on revenue from the mortgage segment. Future levels of mortgage origination

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and refinance activity will depend on prevailing interest rates, housing market conditions, and other factors, many of which are outside the Company's control.

Our Investment division provides brokerage services through an agreement with a third-party broker-dealer. Pursuant to this arrangement, the third-party broker-dealer operates a service center adjacent to one of the Bank's branches. The center is staffed by two dual employees of the Bank and the broker-dealer. Investment receives commissions on transactions generated and, in some cases, ongoing management fees such as mutual fund 12b-1 fees. The Investment division's financial impact on our consolidated revenue has been minimal. Although management cannot predict the financial impact of Investment with certainty, management anticipates that the Investment division's revenue as a percentage of our overall noninterest income will remain minimal in 2026.

We conduct our investment advisory business through PWW, which The Company acquired on December 31, 2021. PWW, based in Lynchburg, Virginia, had approximately $1,010,000,000 in assets under management and advisement as of March 31, 2026, as compared to $886,882,000 on March 31, 2025. This increase was due to both the inflow of new assets during the period and investment returns on the assets under management. PWW operates as a subsidiary of The Company and generates revenue primarily through investment advisory fees, which vary based on the value of assets under management. These assets may fluctuate due to client action and market conditions. Despite potential fluctuations, we anticipate that PWW will continue to contribute meaningfully to the Company's consolidated net income.

The Bank provides insurance and annuity products to its customers and others through its Insurance subsidiary. The Bank has two employees licensed to sell insurance products through Insurance. Insurance generates minimal revenue, and its financial impact on our consolidated revenue has been immaterial. Management anticipates that Insurance's impact on noninterest income will remain immaterial for the remainder of 2026.

*Noninterest Expense*

Noninterest expense for the three months ended March 31, 2026, decreased to $9,365,000 from $9,826,000 for the same period in 2025, representing a decrease of 4.7%. The decrease primarily resulted from lower professional and outside services and data processing expenses associated with the renegotiation of the Company's core processing contract, partially offset by higher salaries and employee benefits.

Total personnel expense (salaries and employee benefits) was $5,500,000 for the three months ended March 31, 2026, compared to $4,777,000 for the same period in 2025. The increase reflects higher commission expense associated with increased production volumes, performance-based incentive compensation accruals, and market compensation adjustments.

Professional and other outside expenses totaled $770,000 for the three months ended March 31, 2026, compared to $1,715,000 for the same period in 2025. The decrease was primarily attributable to consulting fees incurred in the prior year period in connection with the renegotiation of the Company's core processing contract, which were concentrated in that period.

Data processing expense totaled $475,000 for the three months ended March 31, 2026, compared to $820,000 for the same period in 2025. The decrease reflects lower ongoing costs under the Company's amended core processing contract.

Occupancy and equipment expenses were $608,000 for the three months ended March 31, 2026, compared to $570,000 for the same period in 2025, reflecting modest increases associated with facility maintenance and operational needs.

Other noninterest expenses, including supplies, marketing, credit-related costs, FDIC insurance, and amortization of intangibles, totaled $1,265,000 for the three months ended March 31, 2026, compared to $1,274,000 for the same period in 2025, reflecting generally stable operating costs across these categories.

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The Company expects that the amended core processing contract, which commenced April 1, 2025 and has a 65-month term, will continue to result in lower ongoing data processing and related costs compared to the prior arrangement.

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*Allowance and Provision for Credit Losses*

The allowance for credit losses represents management's estimate of expected credit losses inherent in the loan portfolio. The provision for (or recovery of) credit losses adjusts the allowance to a level deemed appropriate by management, while net charge-offs reduce the allowance. The determination of the allowance considers historical loss experience, current conditions, and reasonable and supportable forecasts, as well as loan-specific factors for individually evaluated loans.

The Company recorded a recovery of credit losses of $146,000 for the three months ended March 31, 2026, compared with a provision for credit losses of $137,000 for the same period in 2025. The recovery for the current period consisted of a $91,000 recovery related to the loan portfolio and a $55,000 recovery related to unfunded loan commitments (the latter recorded in other liabilities). The recovery on the loan portfolio reflects (i) a $12,473,000 decline in total loans during the quarter, (ii) continued favorable credit quality, with nonperforming loans declining to $1,450,000 at March 31, 2026 from $1,704,000 at December 31, 2025, and (iii) updated economic forecasts and other inputs to the Company's CECL models. As discussed in Note 8, in the second quarter of 2025 the Company implemented updates to the quantitative CECL loss models for collectively evaluated loan segments, which revised certain maximum loss-rate parameters and incorporated additional post-COVID historical loss data. The updated model specifications, which contributed to a reduction in expected loss rates most notably in the commercial real estate and consumer segments, have remained in use through March 31, 2026, with no further specification changes.

At March 31, 2026, the allowance for credit losses was $6,201,000, or 0.95% of total loans, compared with $6,450,000, or 0.97%, at December 31, 2025, and $7,021,000, or 1.08%, at March 31, 2025. The decrease from year-end reflects the decline in loan balances, continued favorable credit quality, and limited net charge-offs (see Note 8 for additional detail).

Net charge-offs totaled $158,000 for the three months ended March 31, 2026, compared with $51,000 for the same period in 2025.

At March 31, 2026, nonperforming loans totaled $1,450,000, compared with $1,704,000 at December 31, 2025 and $1,799,000 at March 31, 2025. Nonperforming loans represented 0.22% of total loans at March 31, 2026, compared with 0.26% at December 31, 2025.

If interest on nonaccrual loans had been accrued, such income would have been approximately $86,000 for the three months ended March 31, 2026 and $37,000 for the three months ended March 31, 2025.

The allowance for credit losses to total loans ratio was 0.95% at March 31, 2026, and the allowance for credit losses to nonperforming loans ratio was 427.66%, indicating a strong coverage position.

Management believes the allowance for credit losses is appropriate to absorb expected losses inherent in the loan portfolio at March 31, 2026.

*Income Taxes*

The Company recorded income tax expense of $705,000 for the three months ended March 31, 2026, compared to $197,000 for the same period in 2025. This represents an effective tax rate of approximately 20.3% for the three months ended March 31, 2026, compared with 19.0% for the same period in 2025.

The effective tax rate for both periods was below the statutory rate, primarily due to the impact of tax-exempt income from municipal securities and earnings on bank-owned life insurance ("BOLI"). The increase in the effective tax rate for the current period compared to the prior year period reflects normal variability in the mix of taxable and tax-exempt income.

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**Schedule I**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Net Interest Margin Analysis** |  |  |  |  |  |  |
| **Average Balance Sheets** |  |  |  |  |  |  |
| **For the Three Months Ended March 31,** | **For the Three Months Ended March 31,** |  |  |  |  |  |
| ***(dollars in thousands)*** |  |  |  |  |  |  |
|  | **2026** | **2026** | **2026** | **2025** | **2025** | **2025** |
|  |  |  | **Average** |  |  | **Average** |
|  | **Average** | **Interest** | **Rates** | **Average** | **Interest** | **Rates** |
|  | **Balance** | **Income/** | **Earned/** | **Balance** | **Income/** | **Earned/** |
|  | **Sheet** | **Expense** | **Paid** | **Sheet** | **Expense** | **Paid** |
| **ASSETS** |  |  |  |  |  |  |
| Loans, including fees (1)(2) | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 663461 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9377 | 5.73% | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 646788 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8861 | 5.56% |
| Loans held for sale | 2979 | 50 | 6.81% | 2391 | 45 | 7.63% |
| Federal funds sold | 69091 | 624 | 3.66% | 81460 | 887 | 4.42% |
| Interest-bearing bank balances | 14938 | 98 | 2.66% | 11678 | 123 | 4.27% |
| Securities, taxable | 234528 | 1626 | 2.81% | 216159 | 1287 | 2.41% |
| Securities, tax-exempt (3) | 7461 | 79 | 4.29% | 3391 | 23 | 2.75% |
| Federal agency equities | 1461 | 11 | 3.05% | 1454 | 13 | 3.63% |
| Correspondent equity | 367 | - | - % | 367 | - | - % |
| Total earning assets | 994286 | 11865 | 4.84% | 963688 | 11239 | 4.73% |
| Allowance for credit losses | (6390) |  |  | (7038) |  |  |
| Non-earning assets | 63085 |  |  | 65116 |  |  |
| Total assets | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1050981 |  |  | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1021766 |  |  |
| **LIABILITIES AND STOCKHOLDERS' EQUITY** |  |  |  |  |  |  |
| Deposits |  |  |  |  |  |  |
| &nbsp;&nbsp;Demand interest bearing | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 419537 | 683 | 0.66% | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 412249 | 762 | 0.75% |
| &nbsp;&nbsp;Savings | 154870 | 345 | 0.90% | 145143 | 486 | 1.36% |
| &nbsp;&nbsp;Time deposits | 235419 | 1954 | 3.37% | 220960 | 2079 | 3.82% |
| Total interest bearing deposits | 809826 | 2982 | 1.49% | 778352 | 3327 | 1.73% |
| Other borrowed funds |  |  |  |  |  |  |
| &nbsp;&nbsp;Other borrowings | 8767 | 119 | 5.50% | 9237 | 89 | 3.91% |
| &nbsp;&nbsp;Financing leases | 2168 | 14 | 2.62% | 2612 | 17 | 2.64% |
| &nbsp;&nbsp;Capital Notes | - | - | - % | 10048 | 82 | 3.31% |
| Total interest-bearing liabilities | 820761 | 3116 | 1.54% | 800249 | 3515 | 1.78% |
| Noninterest bearing deposits  | 137258 |  |  | 143855 |  |  |
| Other liabilities | 11824 |  |  | 12884 |  |  |
| Total liabilities | 969843 |  |  | 956988 |  |  |
| Stockholders' equity | 81138 |  |  | 64778 |  |  |
| Total liabilities and  |  |  |  |  |  |  |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;Stockholders' equity | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1050981 |  |  | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1021766 |  |  |
| Net interest earnings |  | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8750 |  |  | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7724 |  |
| Net interest margin |  |  | 3.57% |  |  | 3.25% |
| Interest spread |  |  | 3.30% |  |  | 2.95% |

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&nbsp;&nbsp;&nbsp;&nbsp;(1) Nonaccrual loans are included in the average balances of loans.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Interest income on loans includes loan fees.

&nbsp;&nbsp;&nbsp;&nbsp;(3) The interest income and yields calculated on securities have been tax affected to reflect any tax-exempt interest on municipal securities using the Company's applicable federal tax rate of 21% for each year.

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## **Item 3. Quantitative and Qualitative Disclosures About Mark** **et Risk** 
Not applicable

**Item 4. Controls and Pro** **cedures**

**EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES**

The Company's management, including The Company's principal executive officer and principal financial officer, have evaluated the effectiveness of the Company's "disclosure controls and procedures," as such term is defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the "Exchange Act"). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, The Company's disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that The Company files or submits under the Exchange Act with the Securities and Exchange Commission (the "SEC") (1) is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and (2) is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

There have been no significant changes during the quarter ended March 31, 2026, in the Company's internal controls over financial reporting (as defined in Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934) or in other factors that could have significantly affected those controls subsequent to the date of our most recent evaluation of internal controls over financial reporting.

**PART II – OTHER INFORMATI** **ON**

**Item 1. Legal Procee** **dings**

The Company is not involved in any pending legal proceedings at this time, other than routine litigation incidental to its business.

**Item 1A. Risk Fact** **ors**

For information regarding the Company's risk factors, see Part I, Item 1A "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on March 27, 2026. There have been no material changes to the risk factors as previously disclosed in Part I, Item 1A of the Company's Form 10-K for the year ended December 31, 2025.

## **Item 2. Unregistered Sales of Equity Securities, Use of** **Proceeds , and Issuer Purchases of Equity Securities** 
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Not applicable.

**Item 3. Defaults Upon Senior Secur** **ities**

Not applicable

**Item 4. Mine Safety Disclo** **sures** 

Not applicable

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[<u>**Table of Contents**</u>](#TOC)

**Item 5. Other Informat** **ion**

Not applicable

**Item 6. Exhib** **its**

---

| | |
|:---|:---|
| <u>Exhibit No.</u> | <u>Description of Exhibit</u> |
| 31.1 | [<u>Certification of Robert R. Chapman III Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated May 12, 2026</u>](botj-20260331xex31_1.htm) |
| 31.2 | [<u>Certification of Eric J. Sorenson, Jr. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated May 12, 2026</u>](botj-20260331xex31_2.htm) |
| 32.1 | [<u>Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act of 2002, dated May 12, 2026</u>](botj-20260331xex32_1.htm) |
| 101 | The following materials from Bank of the James Financial Group, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets (unaudited) as of March 31, 2026 and December 31, 2025; (ii) Consolidated Statements of Income (unaudited) for the three months ended March 31, 2026 and 2025; (iii) Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three months ended March 31, 2026 and 2025; (iv) Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2026 and 2025; (v) Consolidated Statements of Changes in Stockholders' Equity (unaudited) for the three months ended March 31, 2026 and 2025; and (vi) Notes to Unaudited Consolidated Financial Statements. |

---

 **‎** 

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[<u>**Table of Contents**</u>](#TOC)

**SIGNATUR** **ES** 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | |
|:---|:---|
|  | BANK OF THE JAMES FINANCIAL GROUP, INC.<br>|
| Date: May 12 2026 | &nbsp;&nbsp;&nbsp;&nbsp;By <u>/S/ Robert R. Chapman III</u><br>Robert R. Chapman III, President<br>(Principal Executive Officer)<br>|
| Date: May 12, 2026 | &nbsp;&nbsp;&nbsp;&nbsp;By <u>/S/ Eric J. Sorenson, Jr.</u><br>Eric J. Sorenson, Jr., Secretary and Treasurer<br>(Principal Financial Officer and Principal Accounting Officer) |

---

## Exhibit 31.1

**Exhibit 31.1**

**Certification—Principal Executive Officer**

I, Robert R. Chapman III, President of Bank of the James Financial Group, Inc. certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (1) I have reviewed this Form 10-Q of Bank of the James Financial Group, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (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 issuer as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (4) The issuer's other certifying officer(s) 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (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 issuer, 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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c) Evaluated the effectiveness of the issuer'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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d) Disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the issuer's most recent fiscal quarter (the issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (5) The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (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 issuer's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

---

| | |
|:---|:---|
| &nbsp;&nbsp; Date: May 12, 2026 | &nbsp;&nbsp; By /S/ Robert R. Chapman III |
|  | &nbsp;&nbsp; Robert R. Chapman III, President |
|  | &nbsp;&nbsp; (Principal Executive Officer) |

---

------

## Exhibit 31.2

**Exhibit 31.2**

**Certification—Principal Financial Officer and Principal Accounting Officer**

I, Eric J. Sorenson, Jr., Secretary and Treasurer of Bank of the James Financial Group, Inc., certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (1) I have reviewed this Form 10-Q of Bank of the James Financial Group, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (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 issuer as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (4) The issuer's other certifying officer(s) 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (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 issuer, 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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c) Evaluated the effectiveness of the issuer'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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d) Disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the issuer's most recent fiscal quarter (the issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (5) The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (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 issuer's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

---

| | |
|:---|:---|
| &nbsp;&nbsp; Date: May 12, 2026 | &nbsp;&nbsp; By /S/ Eric J. Sorenson, Jr. |
|  | &nbsp;&nbsp; Eric J. Sorenson, Jr., Secretary and Treasurer |
|  | &nbsp;&nbsp; (Principal Financial Officer and Principal Accounting Officer) |

---

------

## Exhibit 32.1

**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**

Each of the undersigned hereby certifies that this Quarterly Report on Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of Bank of the James Financial Group, Inc.

---

| | |
|:---|:---|
|  | &nbsp;&nbsp; BANK OF THE JAMES FINANCIAL GROUP, INC. |
| &nbsp;&nbsp; Date: May 12, 2026 | &nbsp;&nbsp; By /S/ Robert R. Chapman III |
|  | &nbsp;&nbsp; Robert R. Chapman III, President |
|  | &nbsp;&nbsp; (Principal Executive Officer) |

---

---

| | |
|:---|:---|
| &nbsp;&nbsp; Date: May 12, 2026 | &nbsp;&nbsp; By /S/ Eric J. Sorenson, Jr. |
|  | &nbsp;&nbsp; Eric J. Sorenson, Jr, Secretary and Treasurer |
|  | &nbsp;&nbsp; (Principal Financial Officer and Principal Accounting Officer) |

---

------