# EDGAR Filing Document

**Accession Number:** 0001693577
**File Stem:** 0001437749-26-007948
**Filing Date:** 2026-3
**Character Count:** 280535
**Document Hash:** 802aa32484f62330bfdbc4b166a7d812
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-26-007948.hdr.sgml**: 20260312

**ACCESSION NUMBER**: 0001437749-26-007948

**CONFORMED SUBMISSION TYPE**: 10-K/A

**PUBLIC DOCUMENT COUNT**: 141

**CONFORMED PERIOD OF REPORT**: 20241231

**FILED AS OF DATE**: 20260312

**DATE AS OF CHANGE**: 20260312

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** MainStreet Bancshares, Inc.
- **CENTRAL INDEX KEY:** 0001693577
- **STANDARD INDUSTRIAL CLASSIFICATION:** STATE COMMERCIAL BANKS [6022]
- **ORGANIZATION NAME:** 02 Finance
- **EIN:** 812871064
- **STATE OF INCORPORATION:** VA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K/A
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38817
- **FILM NUMBER:** 26747334

**BUSINESS ADDRESS:**
- **STREET 1:** 10089 FAIRFAX BOULEVARD
- **CITY:** FAIRFAX
- **STATE:** VA
- **ZIP:** 22030
- **BUSINESS PHONE:** (703) 481-4567

**MAIL ADDRESS:**
- **STREET 1:** 10089 FAIRFAX BOULEVARD
- **CITY:** FAIRFAX
- **STATE:** VA
- **ZIP:** 22030

?xml version='1.0' encoding='ASCII'? main20241231e_10ka.htm

--12-31FY2024

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**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION** 

**Washington, D.C. 20549** 

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**FORM 10-K/A**

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**(Amendment No. 3)**

**(Mark One)** 

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

**For the fiscal year ended December 31, 2024**

**OR** 

**☐** **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **TO** 

**Commission File Number 001-38817** 

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MainStreet Bancshares, Inc.

**(Exact name of Registrant as specified in its Charter)** 

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| | |
|:---|:---|
| **Virginia** | **81-2871064** |

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| | |
|:---|:---|
| **(State or other jurisdiction of**<br> **incorporation or organization)** | **(I.R.S. Employer**<br> **Identification No.)** |

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| | |
|:---|:---|
| **10089 Fairfax Boulevard**<br> **Fairfax, VA**  | **22030** |

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|:---|:---|
| **(Address of principal executive offices)** | **(Zip Code)** |

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**Registrant**'**s telephone number, including area code: (703) 481-4567** 

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Securities registered pursuant to Section 12(b) of the Act:

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| | | |
|:---|:---|:---|
| **Title of each class** | **Trading** <br> **Symbol(s)** | **Name of each exchange on which registered** |
| **Common Stock** | **MNSB** | **The Nasdaq Stock Market LLC** |
| **Depositary Shares (each representing a 1/40<sup>th</sup>** <br> **interest in a share of 7.50% Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock)** | **MNSBP** | **The Nasdaq Stock Market LLC** |

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Securities registered pursuant to Section 12(g) of the Act: **None** 

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. yes ☐ No ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. yes ☐ No ☒

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ no ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 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.

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| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☒ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☒ |
| Emerging growth company | ☐ |  |  |

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If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the Registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the Registrant's executive officers during the relevant recovery period pursuant to section 240.10D-1(b). ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). yes ☐ no ☒

As of June 30, 2024, the last business day of the Registrant's most recently completed second fiscal quarter, the aggregate market value of the shares of common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on The NASDAQ Stock Market, was $134,721,919. The number of shares of Registrant's Common Stock outstanding as of March 10, 2025 was 7,728,106.

DOCUMENTS INCORPORATED BY REFERENCE:

The information required by Part III of this Annual Report on Form 10-K will be found in portions of the Registrant's definitive proxy statement for its 2025 Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, and such information is incorporated herein by this reference.

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| | | |
|:---|:---|:---|
| Auditor Firm ID: 613 | Auditor Name: Yount, Hyde & Barbour, P.C. | &nbsp;&nbsp;&nbsp;&nbsp; Auditor Location: Winchester, Virginia, USA |

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**EXPLANATORY NOTE**

MainStreet Bancshares, Inc. ("we" or the "Company") is filing this Amendment No. 3 on Form 10-K/A (the "Amendment") to its Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the United States Securities and Exchange Commission on March 14, 2025 (the "Original Report"). Although referenced in the opinion of the Company's independent auditors with respect to the financial statements, the full text of the opinion of the Company's independent auditor with respect to its internal control over financial reporting was inadvertently omitted from the Original Report. Additionally, Item 9A of the Original Report is amended to disclose the opinion of the Company's independent auditor with respect to its internal control over financial reporting.

Pursuant to Rule 12b-15 promulgated under the Securities and Exchange Act of 1934, as amended, we have included the entire text of Part II, Item 8 and Item 9A in this Form 10-K/A. Part IV, Item 15 includes the consent of Yount, Hyde & Barbour, P.C. and updated certifications of the Company's Chief Executive Officer and Chief Financial Officer.

Except as expressly set forth herein, this Amendment does not reflect events occurring after the date of the Original Report or modify or update any of the other disclosures contained therein in any way other than as required to reflect the amendments referred to above. Accordingly, this Amendment should be read in conjunction with the Original Report and the Company's other filings with the SEC.

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**Item 8. Financial Statements and Supplementary Data**

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Stockholders and the Board of Directors

MainStreet Bancshares, Inc.

Fairfax, Virginia

**Opinion on the Financial Statements**

We have audited the accompanying consolidated statements of financial condition of MainStreet Bancshares, Inc. and Subsidiary (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income (loss), comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 14, 2025 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

**Basis for Opinion**

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matters**

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

***Allowance for Credit Losses*** – ***Loans Collectively Evaluated for Losses***

As described in Note 1 – Organization, Basis of Presentation and Impact of Recently Issued Accounting Pronouncements and Note 5 – Allowance for Credit Losses in the consolidated financial statements, the Company accounts for its allowance for credit losses on loans (ACLL) in accordance with ASC 326. The ACLL is a valuation allowance that represents management's best estimate of expected credit losses on loans measured at amortized cost considering available information, from internal and external sources, relevant to assessing collectability over the loans' contractual terms. Loans which share common risk characteristics are pooled and collectively evaluated by the Company using historical data, as well as assessments of current conditions and reasonable and supportable forecasts of future conditions. The Company's ACLL related to collectively evaluated loans made up the total recorded ACLL of $19.5 million as of December 31, 2024. The collectively evaluated ACLL consists of quantitative and qualitative components.

The quantitative component consists of loss estimates derived from a weighted average remaining maturity ("WARM") model using external observations of historical loan losses adjusted for estimated attrition and forecasts of future conditions over a reasonable and supportable period. These estimates consider large amounts of data in tabulating loss and attrition rates and require complex calculations as well as management judgment in the selection of appropriate inputs.

In addition to the quantitative component, the collectively evaluated ACLL also includes a qualitative component which aggregates management's assessment of available information relevant to assessing collectability that is not captured in the quantitative loss estimation process. Factors considered by management in developing its qualitative estimates include: changes in lending policies and procedures; changes in international, national, regional and local economic conditions; changes in the nature and volume of the portfolio and terms of loans; changes in the experience, depth, and ability of lending management; changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified loans; changes in the quality of the Company's loan review system; changes in the value of underlying collateral for collateral-dependent loans; the existence and effect of any concentrations of credit and changes in the level of such concentrations; and the effect of other external factors (i.e. competition, legal and regulatory requirements, etc.) on the level of credit losses.

Management exercised significant judgment when estimating the ACLL on collectively evaluated loans. We identified the estimation of the collectively evaluated ACLL as a critical audit matter as auditing the collectively evaluated ACLL involved especially complex and subjective auditor judgment in evaluating management's assessment of the inherently subjective estimates.

The primary audit procedures we performed to address this critical audit matter included:

● Substantively testing management's process for measuring the collectively evaluated ACLL, including:

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|:---|:---|
| o | Evaluating conceptual soundness, assumptions, and key data inputs of the Company's WARM methodology, including the identification of loan pools, the calculation of loss rate inputs, and the calculation of attrition rate inputs for each pool. |

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|:---|:---|
| o | Evaluating the methodology and testing the accuracy of incorporating reasonable and supportable forecasts in the collectively evaluated ACLL estimate. |

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|:---|:---|
| o | Evaluating the completeness and accuracy of data inputs used as a basis for the qualitative factors. |

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|:---|:---|
| o | Evaluating the qualitative factors for directional consistency in comparison to prior periods and for reasonableness in comparison to underlying supporting data. |

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|:---|:---|
| o | Testing the mathematical accuracy of the ACLL for collectively evaluated loans including both the quantitative and qualitative components of the calculation. |

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/s/ YOUNT, HYDE & BARBOUR, P.C.

We have served as the Company's auditor since 2008.

Owings Mills, Maryland

March 14, 2025

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1

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**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Stockholders and the Board of Directors

MainStreet Bancshares, Inc.

Fairfax, Virginia

**Opinion on the Internal Control Over Financial Reporting**

We have audited MainStreet Bancshares, Inc. and Subsidiary's (the Company) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial condition as of December 31, 2024 and 2023, the related consolidated statements of income (loss), comprehensive income (loss), stockholders' equity, and cash flows for the three years ended December 31, 2024, and the related notes to the consolidated financial statements (collectively, the financial statements) of the Company and our report dated March 14, 2025 expressed an unqualified opinion.

**Basis for Opinion**

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying financial statements. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

**Definition and Limitations of Internal Control Over Financial Reporting**

A company's internal control over financial reporting is a process designed 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. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ YOUNT, HYDE & BARBOUR, P.C.

Owings Mills, Maryland

March 14, 2025

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2

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**Item 8** – **Financial Statements and Supplementary Data**

**Consolidated Financial Statements** 

Consolidated Statements of Financial Condition as of December 31, 2024 and December 31, 2023 (Dollars in thousands, except per share data)

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| | | |
|:---|:---|:---|
|  | ***At December 31, 2024*** | ***At December 31, 2023*** |
| **Assets** |  |  |
| Cash and due from banks | $47553 | $53581 |
| Federal funds sold | 160155 | 60932 |
| Cash and cash equivalents | 207708 | 114513 |
| Investment securities available-for-sale (AFS), at fair value | 55747 | 59928 |
| Investment securities held-to-maturity (HTM), at amortized cost, net of allowance for credit losses of $0 and $0, respectively. | 16078 | 17275 |
| Restricted securities, at amortized cost | 30623 | 24356 |
| Loans, net of allowance for credit losses of $19,450 and $16,506, respectively | 1810556 | 1705137 |
| Premises and equipment, net | 13287 | 13944 |
| Accrued interest and other receivables | 11311 | 12390 |
| Computer software, net of amortization |  | 14657 |
| Bank owned life insurance | 39507 | 38318 |
| Other assets | 43281 | 34914 |
| **Total Assets** | $2228098 | $2035432 |
| **Liabilities and Stockholders' Equity** |  |  |
| **Liabilities** |  |  |
| Non-interest bearing deposits | $324307 | $364606 |
| Interest bearing demand deposits | 139780 | 137128 |
| Savings and NOW deposits | 64337 | 45878 |
| Money market deposits | 560082 | 442179 |
| Time deposits | 819288 | 696336 |
| Total deposits | 1907794 | 1686127 |
| Federal funds purchased |  | 15000 |
| Subordinated debt, net | 73039 | 72642 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for credit losses on off-balance sheet credit exposure | 287 | 1009 |
| Other liabilities | 38987 | 39137 |
| **Total Liabilities** | 2020107 | 1813915 |
| **Commitments and contingencies (Note 13)** |  |  |
| **Stockholders' Equity** |  |  |
| Preferred stock, $1.00 par value, 2,000,000 shares authorized non-cumulative perpetual; 28,750 issued and outstanding as of December 31, 2024 and December 31, 2023 | 27263 | 27263 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock, $4.00 par value, 15,000,000 shares authorized; issued and outstanding 7,603,765 shares (including 237,717 nonvested shares) for December 31, 2024 and 7,527,415 shares (including 228,300 nonvested shares) for December 31, 2023 | 29466 | 29198 |
| Capital surplus | 67823 | 65985 |
| Retained earnings | 91150 | 106549 |
| Accumulated other comprehensive (loss) | (7711) | (7478) |
| **Total Stockholders' Equity** | 207991 | 221517 |
| **Total Liabilities and Stockholders' Equity** | $2228098 | $2035432 |

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**See Notes to the Consolidated Financial Statements**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3

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Consolidated Statements of Income (Loss) for the Years Ended December 31, 2024, 2023, and 2022 (Dollars in thousands, except per share data).

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| | | | |
|:---|:---|:---|:---|
|  | ***For the Year Ended December 31,*** | ***For the Year Ended December 31,*** | ***For the Year Ended December 31,*** |
|  | ***2024*** | ***2023*** | ***2022*** |
| **Interest Income** |  |  |  |
| Interest and fees on loans | $125177 | $116482 | $79045 |
| Interest and dividends on investments securities |  |  |  |
| U.S. government agencies and corporations | 151 |  | 37 |
| Mortgage-backed securities | 374 | 395 | 438 |
| Tax-exempt obligations of states and political subdivisions | 1093 | 1065 | 1058 |
| Taxable obligations of states and political subdivisions | 256 | 256 | 254 |
| Other | 912 | 1185 | 874 |
| Interest on federal funds sold | 6652 | 5038 | 2312 |
| **Total Interest Income** | 134615 | 124421 | 84018 |
| **Interest Expense** |  |  |  |
| Interest on interest bearing demand deposits | 8661 | 1786 | 494 |
| Interest on savings and NOW deposits | 754 | 546 | 203 |
| Interest on money market deposits | 21386 | 13631 | 1380 |
| Interest on time deposits | 37364 | 26905 | 8009 |
| Interest on federal funds purchased | 575 | 299 |  |
| Interest on Federal Home Loan Bank advances | 46 | 1224 | 347 |
| Interest on subordinated debt | 3255 | 3288 | 2936 |
| **Total Interest Expense** | 72041 | 47679 | 13369 |
| **Net Interest Income** | 62574 | 76742 | 70649 |
| **Provision For Credit Losses - Loans** | 7485 | 1943 | 2398 |
| **Recovery of Credit Losses - Off-Balance Sheet Credit Exposure** | (722) | (301) |  |
| **Net interest income after provision for (recovery of) credit losses** | 55811 | 75100 | 68251 |
| **Non-Interest Income** |  |  |  |
| Deposit account service charges | 1996 | 2149 | 2420 |
| Bank owned life insurance income | 1189 | 1069 | 1008 |
| Loan swap fee income |  |  | 619 |
| Net gain (loss) on securities called or matured | (48) |  | 4 |
| Net loss on sale of loans |  |  | (168) |
| Other fee income | 115 | 122 | 778 |
| **Total Non-Interest Income** | 3252 | 3340 | 4661 |
| **Non-Interest Expense** |  |  |  |
| Salaries and employee benefits | 30475 | 28267 | 23801 |
| Furniture and equipment expenses | 3636 | 2787 | 2786 |
| Advertising and marketing | 2199 | 2343 | 2304 |
| Occupancy expenses | 1614 | 1684 | 1471 |
| Outside services | 3627 | 2044 | 2075 |
| Franchise tax | 2226 | 1835 | 1430 |
| FDIC insurance | 1342 | 1131 | 637 |
| Data processing | 1354 | 1328 | 1303 |
| Administrative expenses | 929 | 922 | 872 |
| Other real estate expenses, net |  |  | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Computer software intangible impairment | 19721 |  |  |
| Other operating expenses | 5844 | 3275 | 2807 |
| **Total Non-Interest Expense** | 72967 | 45616 | 39524 |
| **Income (Loss) before income taxes** | (13904) | 32824 | 33388 |
| **Income Tax Expense (Benefit)** | (3924) | 6239 | 6714 |
| **Net Income (Loss)** | $(9980) | $26585 | $26674 |
| **Preferred Stock Dividends** | 2156 | 2156 | 2156 |
| **Net Income (Loss) available to common shareholders** | $(12136) | $24429 | $24518 |
| **Earnings (loss) per common share:** |  |  |  |
| Basic | $(1.60) | $3.25 | $3.26 |
| Diluted | $(1.60) | $3.25 | $3.26 |

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**See Notes to the Consolidated Financial Statements**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4

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Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2024, 2023, and 2022 (Dollars in thousands).

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| | | | |
|:---|:---|:---|:---|
|  | ***For the Year Ended December 31,*** | ***For the Year Ended December 31,*** | ***For the Year Ended December 31,*** |
|  | ***2024*** | ***2023*** | ***2022*** |
| **Comprehensive Income (Loss), net of taxes** |  |  |  |
| Net Income (Loss) | $(9980) | $26585 | $26674 |
| Other comprehensive income (loss), net of tax expense (benefit): |  |  |  |
| Unrealized gains (losses) on available for sale securities arising during the period (net of tax expense (benefit), ($44), $309 and ($2.6 million), respectively) | (233) | 1062 | (8759) |
| Add: reclassification adjustment for amortization of unrealized losses on securities transferred from available for sale to held to maturity (net of tax, $0, $2, and $4 respectively) |  | 6 | 16 |
| Other comprehensive income (loss) | (233) | 1068 | (8743) |
| **Comprehensive Income (Loss)** | $(10213) | $27653 | $17931 |

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**See Notes to the Consolidated Financial Statements**

Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2024, 2023, and 2022 (Dollars in thousands).

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  | ***Accumulated Other*** |  |
|  | ***Preferred*** | ***Common*** | ***Capital*** | ***Retained*** | ***Comprehensive*** |  |
|  | ***Stock*** | ***Stock*** | ***Surplus*** | ***Earnings*** | ***Income (Loss)*** | ***Total*** |
| **Balance, December 31, 2021** | $27263 | $29466 | $67668 | $64194 | $197 | $188788 |
| Vesting of restricted stock |  | 407 | (407) |  |  |  |
| Stock based compensation expense |  |  | 2519 |  |  | 2519 |
| Common stock repurchased |  | (1137) | (5781) |  |  | (6918) |
| Dividends on preferred stock - ($0.47 per depositary share) |  |  |  | (2156) |  | (2156) |
| Dividends on common stock - ($0.25 per share) |  |  |  | (1882) |  | (1882) |
| Net income |  |  |  | 26674 |  | 26674 |
| Other comprehensive loss |  |  |  |  | (8743) | (8743) |
| **Balance, December 31, 2022** | $27263 | $28736 | $63999 | $86830 | $(8546) | $198282 |
| Cumulative change in accounting principle (Note 3) |  |  |  | (1699) |  | (1699) |
| Vesting of restricted stock |  | 470 | (470) |  |  |  |
| Stock based compensation expense |  |  | 2491 |  |  | 2491 |
| Common stock repurchased |  | (8) | (35) |  |  | (43) |
| Dividends on preferred stock - ($0.47 per depositary share) |  |  |  | (2156) |  | (2156) |
| Dividends on common stock - ($0.40 per share) |  |  |  | (3011) |  | (3011) |
| Net income |  |  |  | 26585 |  | 26585 |
| Other comprehensive gain |  |  |  |  | 1068 | 1068 |
| **Balance, December 31, 2023** | $27263 | $29198 | $65985 | $106549 | $(7478) | $221517 |
| Cumulative change in accounting principle (Note 1) |  |  |  | (217) |  | (217) |
| Vesting of restricted stock |  | 434 | (434) |  |  |  |
| Stock based compensation expense |  |  | 2838 |  |  | 2838 |
| Common stock repurchased |  | (166) | (566) |  |  | (732) |
| Dividends on preferred stock - ($0.47 per depositary share) |  |  |  | (2156) |  | (2156) |
| Dividends on common stock - ($0.40 per share) |  |  |  | (3046) |  | (3046) |
| Net income (loss) |  |  |  | (9980) |  | (9980) |
| Other comprehensive gain (loss) |  |  |  |  | (233) | (233) |
| **Balance, December 31, 2024** | $27263 | $29466 | $67823 | $91150 | $(7711) | $207991 |

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**See Notes to the Consolidated Financial Statements**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5

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Consolidated Statements of Cash Flows (Dollars in thousands)

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| | | | |
|:---|:---|:---|:---|
| **Year Ended December 31,** | ***2024*** | ***2023*** | ***2022*** |
| **Cash Flows from Operating Activities** |  |  |  |
| Net income (loss) | $(9980) | $26585 | $26674 |
| Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |
| Depreciation, amortization, and accretion, net | 3683 | 2268 | 2083 |
| Amortization of right-of-use assets | 504 | 477 | 496 |
| Amortization of intangible assets | 447 |  |  |
| Deferred income tax benefit | (4528) | (191) | (894) |
| Loss on sale of other real estate owned |  |  | 4 |
| Loss on valuation of other real estate owned |  |  | 70 |
| Loss on loans held for sale |  |  | 168 |
| Loss on New Market Tax Credit investment operations |  | 251 |  |
| Gain on disposal of premises and equipment | (99) | (129) |  |
| Realized (Gain) loss on securities (AFS/HTM) | 48 |  | (4) |
| Provision for credit losses, net | 6763 | 1642 | 2398 |
| Stock based compensation expense | 2838 | 2491 | 2519 |
| Income from bank owned life insurance | (1189) | (1069) | (1008) |
| Subordinated debt amortization expense | 397 | 397 | 328 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Computer software intangible impairment | 19721 |  |  |
| Change in: |  |  |  |
| Accrued interest receivable and other receivables | 1079 | (2803) | (1861) |
| Other assets | (4794) | 4912 | (22407) |
| Other liabilities | (150) | (3198) | 24978 |
| Net cash provided by operating activities | 14740 | 31633 | 33544 |
| **Cash Flows from Investing Activities** |  |  |  |
| Activity in available-for-sale securities: |  |  |  |
| Payments | 2540 | 3696 | 6634 |
| Maturities, sales, called, refunded | 1445 |  | 245000 |
| Purchases | (445) |  | (226215) |
| Activity in held-to-maturity securities: |  |  |  |
| Purchases | (400) |  |  |
| Maturities, called, refunded | 1520 | 265 | 2595 |
| Purchases of equity securities | (8241) | (4174) | (3916) |
| Purchases of restricted investment in bank stock | (1624) | (7059) | (9123) |
| Redemption of restricted investment in bank stock | 1425 | 10425 | 4125 |
| Net increase in loan portfolio | (142482) | (128025) | (240756) |
| Proceeds from sale of other real estate owned |  |  | 701 |
| Proceeds from sale of loans | 29578 |  |  |
| Proceeds from sale of premises and equipment | 195 | 129 |  |
| Purchases of premises and equipment | (909) | (497) | (1125) |
| Computer software developed | (4880) | (5508) | (6656) |
| Net cash used in investing activities | (122278) | (130748) | (228736) |
| **Cash Flows from Financing Activities** |  |  |  |
| Net increase (decrease) in non-interest deposits | (40299) | (186084) | 20012 |
| Net increase in interest bearing demand, savings, and time deposits | 261966 | 359322 | 80914 |
| Net increase (decrease) in Federal Home Loan Bank advances |  | (100000) | 100000 |
| Net increase (decrease) in federal funds purchased | (15000) | 15000 |  |
| Net increase in subordinated debt |  |  | 42623 |
| Repurchase of common stock | (732) | (43) | (6918) |
| Cash dividends paid on preferred stock | (2156) | (2156) | (2156) |
| Cash dividends paid on common stock | (3046) | (3011) | (1882) |
| Net cash provided by financing activities | 200733 | 83028 | 232593 |
| **Increase (decrease) in Cash and Cash Equivalents, net** | 93195 | (16087) | 37401 |
| **Cash and Cash Equivalents, beginning of period** | 114513 | 130600 | 93199 |
| **Cash and Cash Equivalents, end of period** | $207708 | $114513 | $130600 |
| **Supplementary Disclosure of Cash Flow Information** |  |  |  |
| Cash paid during the period for interest | $70893 | $45534 | $12639 |
| Cash paid during the period for income taxes | $1275 | $7280 | $6381 |
| Transfers from loans receivable to loans held for sale, at carrying value | $— | $— | $715 |
| Net unrealized gain (loss) on securities available-for-sale | $(277) | $1371 | $(11373) |

---

**See Notes to the Consolidated Financial Statements**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6

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**MAINSTREET BANCSHARES, INC. AND SUBSIDIARY**

**Notes to Unaudited Consolidated Financial Statements**

**Note *1.* Organization, Basis of Presentation and Impact of Recently Issued Accounting Pronouncements**

**Organization**

MainStreet Bancshares Inc. (the "Company") is a financial holding company incorporated under the laws of the Commonwealth of Virginia whose principal activity is the ownership and management of MainStreet Bank. On *May 18, 2016,* the stockholders of MainStreet Bank (the "Bank") approved a Reorganization Agreement and Plan of Share Exchange ("Reorganization") whereby the Bank would reorganize into a holding company structure. The Plan of Share Exchange called for each outstanding share of Bank common stock to be automatically converted into and exchanged for *one* share of the Company's common stock, and the common stockholders of the Bank would become the common stockholders of the Company on the effective date of the Reorganization. On *July 15, 2016,* the Reorganization became effective, and the Bank became a wholly-owned subsidiary of the Company. The holding company is regulated under the Bank Holding Company Act of *1956,* as amended, and is subject to inspection, examination, and supervision by the Federal Reserve Board. On *October 12, 2021,* the Company filed an election with the Federal Reserve Board to be a financial holding company in order to engage in a broader range of financial activities than are permitted for bank holding companies generally. The Company is authorized to issue 15,000,000 shares of common stock with a par value of $4.00 per share. Additionally, the Company is authorized to issue 2,000,000 shares of preferred stock at a par value $1.00 per share. There are currently 28,750 shares of preferred stock outstanding.

On *April 18, 2019,* the Company completed the registration of its common stock with the Securities Exchange Commission through its filing of a General Form for Registration of Securities on Form *10* ("Form *10"*), pursuant to Section *12*(b) of the Securities Exchange Act of *1934.* The Company was considered to be an "emerging growth company" under the Jumpstart Our Business Startups Act of *2012,* or the "JOBS Act," and as defined in Section *2*(a) of the Securities Act of *1933,* as amended, or the "Securities Act," through the quarter ended *September 30, 2024.* The Company is *no* longer considered an emerging growth company and will be an accelerated filer effective with this filing.

We were approved to list shares of our common stock on the Nasdaq Capital Market under our current symbol "MNSB" as of *April 22, 2019.* We were approved to list depositary shares of preferred stock on the Nasdaq Capital Market on the symbol "MNSBP" as of *September 16, 2020.* Each depositary share represents a 1/40<sup>th</sup> interest in a share of 7.50% Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock.

In *September 2021,* MainStreet Bancshares, Inc. established MainStreet Community Capital, LLC, a wholly owned subsidiary, to be a community development entity ("CDE"). This CDE will be an intermediary vehicle for the provision of loans and investments in Low-Income Communities ("LICs"). In *January 2022,* the Community Development Financial Institutions Fund ("CDFI") of the United States Department of the Treasury certified MainStreet Community Capital, LLC as a registered CDE. MainStreet Community Capital's primary business objective will be to apply for and receive New Market Tax Credit ("NMTC") allocations that are awarded and distributed annually.

On *October 25, 2021,* MainStreet Bancshares, Inc. formally introduced Avenu, a division of MainStreet Bank. Avenu provides an embedded Banking as a Service (BaaS) solution that connects our partners (fintechs, application developers, money movers, and entrepreneurs) directly and seamlessly to our Software as a Service (SaaS) solution. Our SaaS software program was deployed in *October 2024.* Refer to Note *8* for additional information around the computer software intangible asset. The Avenu division is classified within our Financial Technology reportable segment outlined in Note *26.* Additional information can be found in our investor presentations filed quarterly.

MainStreet Bank is headquartered in Fairfax, Virginia where it also operates a branch. The Bank was incorporated on *March 28, 2003,* and received its charter from the Bureau of Financial Institutions of the Commonwealth of Virginia (the "Bureau") on *March 16, 2004.* The Bank commenced regular operations on *May 26, 2004,* and is supervised by the Bureau and the Federal Reserve Bank of Richmond. The Bank is a member of the Federal Reserve System and the Federal Deposit Insurance Corporation. The Bank places special emphasis on serving the needs of individuals, and small and medium-sized businesses and professionals in the Washington, D.C. metropolitan area.

**Basis of Presentation** 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("US GAAP").

*Principles of Consolidation* – The consolidated financial statements include accounts of the Company and its wholly-owned subsidiaries, the Bank and MainStreet Community Capital, LLC. All significant intercompany transactions and balances have been eliminated in consolidation.

*Cash and cash equivalents* – For the purpose of presentation in the Consolidated Statements of Cash Flows, the Bank has defined cash and cash equivalents as those amounts included in the statement of financial condition captions "Cash and due from banks" and "Federal funds sold."

*Investment securities* – The Bank's investment debt securities are classified as either held-to-maturity, available-for-sale, or trading. At *December 31, 2024* and *December 31, 2023*, the Bank held approximately $16.1 million and $17.3 million, respectively, in securities classified as held-to-maturity. The Bank held *no* securities classified as trading.

Debt securities which are *not* classified as held-to-maturity or trading are classified as securities available-for-sale (AFS). Debt securities available-for-sale are reported at fair value. Any unrealized gain or loss, net of applicable income taxes, is reported as a separate addition to or reduction from stockholders' equity. Gains and losses arising from the sale of debt securities available-for-sale are recognized based on the specific identification method on a trade-date basis and included in results of operations. Debt securities held-to-maturity includes securities purchased with the ability and positive intent to hold to maturity. Debt securities are stated at historical cost adjusted for amortization of premiums and accretion of discount, and net of any allowance for credit losses.

Purchase premiums and discounts are amortized using the interest method over the term or *first* call date of each security.

*Allowance for Credit Losses - Held-to-Maturity Securities* - The Company measures expected credit losses on held-to-maturity (HTM) securities on an individual basis. Accrued interest receivable on these securities are excluded from the estimate of credit losses. For HTM securities, the Company evaluates the credit risk of its securities on at least a quarterly basis. The primary indicators of credit quality for the Company's HTM portfolio are security type and credit rating, which is influenced by a number of factors including obligor cash flow, geography, seniority, and others. The Company's HTM securities ACL was immaterial at *December 31, 2024.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *7*

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*Allowance for Credit Losses - Available-for-Sale Securities* - For AFS debt securities in an unrealized loss position, the Company *first* assesses whether it intends to sell, or it is more likely than *not* that it will be required to sell the security before the recovery of its amortized cost basis. If either criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value with a charge to current operations. For AFS debt securities that do *not* meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If the assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has *not* been recorded through an allowance for credit losses is recognized in other comprehensive income.

*Restricted Equity Securities* - Restricted equity securities consist of the Federal Reserve Bank and Federal Home Loan Bank of Atlanta ("FHLB") stock in the amount of $5.3 million and $1.4 million respectively, as of *December 31, 2024*, compared to $5.2 million and $1.3 million, respectively, as of *December 31, 2023*. Restricted equity securities also consisted of $126,800 in Community Bankers Bank stock at *December 31, 2024* and *December 31, 2023*. This restricted stock is recorded at cost because its ownership is restricted and it lacks a market for resale. The Bank is required to maintain Federal Reserve Bank stock at a level of 6% of capital and surplus. The FHLB requires the Bank to maintain stock, at a minimum, in an amount equal to 4.5% of outstanding borrowings and 0.20% of total assets. When evaluating restricted stock for impairment, its value is based on ultimate recoverability of the par value rather than by recognizing temporary declines in value. The Bank does *not* consider these investments to be impaired at *December 31, 2024* or *December 31, 2023* and *no* previous impairment has been recognized as of *December 31, 2024*. Restricted equities include $7.6 million in Low-Income Housing Tax Credits ("LIHTC") and $9.4 million of New Market Tax Credits ("NMTC") that are both carried at amortized cost through the proportional amortization method. Restricted equities also include $6.7 million of nonmarketable securities as of *December 31, 2024* that do *not* qualify for equity method accounting. As of *December 31, 2023* restricted equities include $8.2 million in LIHTC, $3.1 million in NMTC, and $6.4 million of nonmarketable securities that do *not* qualify for equity method accounting. These investments are recorded at cost because the ownership is restricted and lacks a market for resale.

*Loans* - The Bank makes commercial and consumer loans to customers. Our recorded investment in loans that management has the intent and ability to hold for the foreseeable future, or until maturity or pay-off, generally are reported at their unpaid principal balances adjusted for charge-offs, unearned discounts, any deferred fees or costs on originated loans, and the allowance for credit losses on loans. Interest on loans is credited to operations based on the principal amount outstanding. Loan fees and origination costs are deferred and the net amount is amortized as an adjustment of the related loan's yield using the effective interest method. The Bank is amortizing these amounts over the contractual life of the related loans.

A loan's past due status is based on the contractual due date of the most delinquent payment due. All loans which are *30* or more days past due at the end of the month are reported to the Board of Directors. Commercial loans are generally placed on nonaccrual status when the collection of principal or interest is *90* days or more past due, or earlier, if collection is uncertain based on an evaluation of the net realizable value of the collateral and the financial strength of the borrower. Consumer loans are generally placed on nonaccrual status when the collection of principal or interest is *120* days or more past due, or earlier, if collection is uncertain based on an evaluation of the net realizable value of the collateral and the financial strength of the borrower. Loans greater than *90* days past due *may* remain on accrual status if management determines it has adequate collateral to cover the principal and interest. For those loans that are carried on nonaccrual status, payments are *first* applied to principal outstanding. A loan *may* be returned to accrual status if the borrower has demonstrated a sustained period of repayment performance in accordance with the contractual terms of the loan and there is reasonable assurance the borrower will continue to make payments as agreed. It is Bank policy to charge-off loans whose collectability is sufficiently questionable and can *no* longer be justified as an asset on the statement of financial condition. To determine if a loan should be charged-off, all possible sources of repayment are analyzed, including: (*1*) the potential for future cash flow, (*2*) the value of the Bank's collateral, and (*3*) the strength of co-makers or guarantors. All principal and previously accrued interest is charged to the allowance for credit losses. All future payments received on the loan are credited to the allowance for credit losses as a recovery. These policies are applied consistently across our loan portfolio.

The Company designates individually evaluated loans on nonaccrual status as collateral-dependent loans, as well as other loans that management of the Company designates as having differing risk. Collateral-dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. These loans do *not* share common risk characteristics and are *not* included within the collectively evaluated loans for determining the allowance for credit losses. Under CECL, for collateral-dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, *no* allowance is required.

*Allowance for Credit Losses* 

On *January 1, 2023,* the Company adopted ASU *2016*-*13* Financial Instruments - Credit Losses (Topic *326*): Measurement of Credit Losses on Financial Instruments, as amended, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures *not* accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by the lessor in accordance with Topic *842* on leases. In addition, ASC *326* made changes to the accounting for available-for-sale debt securities. One such changes is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities management does *not* intend to sell or believes that is more likely than *not* they will be required to sell.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *8*

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The Company adopted ASC *326* and all the subsequent amendments thereto effective *January 1, 2023* using the modified retrospective method for all financial assets measured at amortized cost, and off-balance-sheet credit exposures. Results for reporting periods beginning after *January 1, 2023* are presented under ASC *326* while prior periods amounts continue to be reported in accordance with previously applicable GAAP. The Company recorded a net decrease to retained earnings of $1.7 million as of *January 1, 2023* for the cumulative effect of adopting ASC *326.* The transition adjustment includes an increase in allowance for credit losses of $2.2 million and an increase in net deferred tax assets of $506,000.

The Company adopted ASC *326* using the prospective transition approach for debt securities for which other-than-temporary impairment had been recognized prior to *January 1, 2023.* As of *December 31, 2022,* the Company did *not* have any other-than-temporarily impaired investment securities. Therefore, upon adoption of ASC *326,* the Company determined that an allowance for credit losses on available-for-sale securities was *not* deemed material.

The following table illustrates the impact of ASC *326.*

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| | | | |
|:---|:---|:---|:---|
|  | ***January 1, 2023*** | ***January 1, 2023*** | ***January 1, 2023*** |
| ***(Dollars in thousands)*** | ***As Reported Under ASC 326*** | ***Pre-ASC 326 Adoption*** | ***Impact of ASC 326 Adoption*** |
| Assets: |  |  |  |
| Allowance for Credit Losses |  |  |  |
| Residential Real Estate | $2205 | $2146 | $59 |
| Commercial Real Estate | 7773 | 7159 | 614 |
| Construction and Land Development | 3366 | 3347 | 19 |
| Commercial & Industrial | 1590 | 1418 | 172 |
| Consumer | 75 | 44 | 31 |
| Total Allowance for Credit Losses on Loans | $15009 | $14114 | $895 |
| Liabilities: |  |  |  |
| Allowance for Credit Losses Off-Balance Sheet Credit Exposure | 1310 |  | 1310 |
| Total Allowance for Credit Losses | $16319 | $14114 | $2205 |

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The Company elected *not* to measure an allowance for credit losses for accrued interest receivable and instead elected to reverse interest income on loans or securities that are placed on nonaccrual status, which is generally when the instrument is *90* days past due, or earlier if the Company believes the collection of interest is doubtful. The Company has concluded that this policy results in the timely reversal of uncollectible interest.

*Allowance for Credit Losses - Loans -* The allowance for credit losses on loans is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectability of a loan balance is confirmed. Expected recoveries do *not* exceed the aggregate of amounts previously charged-off. Accrued interest receivable is excluded from the estimate of credit losses.

The allowance for credit losses represents management's estimate of lifetime credit losses inherent in the loans as of the balance sheet date. Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency levels, concentrations or term as well as for changes in environmental conditions, such as changes in unemployment rates, property values or vacancy rates, consumer price index and projected federal funds target rate and future unemployment rates.

The allowance for credit losses on loans is measured on a collective (pool) basis when similar risk characteristics exist. The Company has identified the following portfolio segments and measures the allowance for credit losses on loans using the following methods: Portfolio segments are grouped in homogenous pools that mirror the loan pools described in Federal Financial Institutions Examination Council Call Report however we are able to group these pools into the following segments:

• Commercial real estate loans carry risks of the client's ability to repay the loan from the cash flow derived from the underlying real estate. Risks inherent in managing a commercial real estate portfolio relate to sudden or gradual drops in property values as well as changes in the economic climate. Real estate security diminishes risks only to the extent that a market exists for the subject collateral. These risks are attempted to be mitigated by carefully underwriting loans of this type and by following appropriate loan-to-value standards

• Construction and land development loans carry risks that the project will *not* be finished according to schedule, the project will *not* be finished according to budget and the value of the collateral *may,* at any point in time, be less than the principal amount of the loan. Construction loans also bear the risk that the general contractor, who *may* or *may not* be a loan customer, *may* be unable to finish the construction project as planned because of financial pressure unrelated to the project.

• Residential real estate mortgage loans, including equity lines of credit, carry risks associated with the continued creditworthiness of the borrower and the changes in the value of the collateral.

• Commercial and industrial loans carry risks associated with the successful operation of a business or a real estate project, in addition to other risks associated with the ownership of real estate, because the repayment of these loans *may* be dependent upon the profitability and cash flows of the business or project. In addition, there is risk associated with the value of collateral other than real estate which *may* depreciate over time and cannot be appraised with as much precision.

• Consumer secured loans (indirect lending) carry risks associated with the continued creditworthiness of the borrower and the value of the collateral (e.g., rapidly depreciating assets such as automobiles). These risks are attempted to be mitigated by following appropriate loan-to-value standards and an experienced management team for this type of portfolio.

• Consumer unsecured loans carry risks associated with the continued credit-worthiness of the borrower. Consumer unsecured loans are more likely to be immediately adversely affected by job loss, divorce, illness or personal bankruptcy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *9*

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For each homogenous loan pool, the Company elected to use the Weighted Average Remaining Life ("WARM") methodology for calculating historical and future loss reserves. The WARM methodology calculates the average annual historical charge-off rate of a homogenous loan pool and multiplies that rate by the pool's remaining life to estimate the allowance for credit losses. Quantitative assumptions included are below:

<u>Remaining life</u> - For amortizing assets, the remaining life is calculated by taking the contractual life and adjusting it by any expected scheduled payments as well as prepayments. An important assumption in the calculation of remaining life is an "exit event" which would be deemed as the end of life of a loan. Examples of exit events included in our model are: *1*). A change in maturity date of *90* days or more and *2*). A loan changing its loan pool classification.

<u>Loss Rate</u> - Loss rates are calculated quarterly and aggregated to determine an annual loss rate. Our methodology uses actual Company data utilizing a straight average over the time periods included. Recoveries are netted against charge-offs and loss rates are floored at *0%* with *no* ability to have "negative" loss rates.

<u>Loss Rate Lookback</u> - By utilizing the WARM method, management is also evaluating future economic conditions. Using historical loan portfolio performance data in certain economic conditions, gives us an idea of how to adjust for potential credit exposure in similar future environments. While subject to change at each quarterly meeting, we have elected to make our base case scenario for future economic environments. This evaluation will be subject to change given the circumstances evaluated at each quarter.

<u>Historical Losses</u> - Quantitative loss estimation models have been developed based largely on call report data from *2004* through the current period and the economic conditions during the same time period. Within our historical losses calculation, the Company projects out the loss environment for the subsequent *two* quarters, based largely on the preceding *twelve* quarters. After that period, the historical loss percentage reverts back to the lifetime historical mean over a *four* quarter progression.

Additionally, the allowance for credit losses on loans calculation includes subjective adjustments for qualitative risk factors that are likely to cause estimated credit losses to differ from historical experience. These qualitative adjustments *may* increase or reduce reserve levels and include adjustments for lending management experience and risk tolerance, loan review and audit results, asset quality and portfolio trends, loan portfolio growth, industry concentrations, trends in underlying collateral, external factors and economic conditions *not* already captured.

Loans that do *not* share risk characteristics are evaluated on an individual basis. When management determines that foreclosure is probable and the borrower is experiencing financial difficulty, the expected credit losses are based on the fair value of collateral at the reporting date unadjusted for selling costs as appropriate.

*Other Real Estate Owned (*"*OREO*"*) -* Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less costs to sell at the date of foreclosure, establishing a new cost basis. Any required initial write-downs are charged to allowance for credit losses. Subsequent to foreclosure, management periodically performs valuations of the foreclosed assets based on updated appraisals, general market conditions, and recent sales of like properties, length of time the properties have been held and our ability and intention with regard to continued ownership of the properties. The Bank *may* incur additional write-downs of foreclosed assets to fair value less costs to sell if valuations indicate a further deterioration in market values. Revenue and expenses from operations and changes in the valuation allowance are included in net expenses from foreclosed assets and improvements are capitalized.

*Interest income on loans* – Interest on loans is accrued and credited to income on daily balances of the principal amount outstanding. The accrual of interest on loans is discontinued when, in the opinion of management, there is an indication that the borrower *may* be unable to meet payments as they become due. Upon such discontinuance, all unpaid accrued interest is reversed.

Generally, the Bank will return a loan to accrual status when all delinquent interest and principal becomes current and remains current for *six* consecutive months under the terms of the loan agreement or the loan is well-secured or in process of collection. Upon returning to accrual status, interest payments applied to the principal balance of a loan while in nonaccrual status are recognized as a yield adjustment over the remaining life.

*Loan origination and commitment fees and certain related direct costs* **-** Loan origination and commitment fees charged by the Bank and certain direct loan origination costs are deferred and the net amount is amortized as a yield adjustment. The Bank amortizes these net amounts over the life of the related loans or, in the case of demand loans, over the estimated life. Net fees related to standby letters of credit are recognized over the commitment period.

*Premises and equipment* – Land is carried at cost. Premises and equipment are stated at cost, less accumulated depreciation and amortization computed principally on the straight-line basis over the estimated useful life of each asset, which ranges from 3 to 39 years. Leasehold improvements are amortized over the shorter of the related lease term or the estimated useful lives of the improvements. Construction in progress includes assets which will be reclassified and depreciated once placed into service.

*Computer software development* - The Company capitalizes new product development costs incurred for software to be sold from the point at which technological feasibility has been established through the point at which the product is ready for general availability. Software development costs that are capitalized are evaluated annually for impairment and are assigned an estimated economic life based on the type of product, market characteristics, and maturity of the market for that particular product. These costs are amortized on a straight-line basis. All of this amortization expense is included within components of operating income.

During the *three* months ended *December 31, 2024,* Management performed the annual impairment assessment and determined that a triggering event had occurred. The resulting calculations indicated that the fair value did *not* exceed the carrying amount of the Company's computer software intangible which resulted in a determination that the intangible had become fully impaired. The impairment charge of $19.7 million reduced fully the carrying value of the Company's intangible asset of $19.1 million and the related prepaid asset of $631,000, consisting of the enhanced value of cloud development expenses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *10*

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*Income taxes* – The Bank uses an asset and liability approach in financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future. The principal items relate primarily to differences between the allowance for credit losses, deferred loan fees, and accumulated depreciation and amortization. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense (benefit) is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than *not* that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are *not* offset or aggregated with other positions. Tax positions that meet the more-likely-than-*not* recognition threshold are measured as the largest amount of tax benefit that is more than *50%* likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. As of *December 31, 2024*, and *December 31, 2023*, there were no such liabilities recorded.

Interest and penalties associated with unrecognized tax benefits, if any, would be classified as additional income taxes in the statement of income.

*Comprehensive income* – Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although, certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income.

*Stock compensation plans* – Stock compensation accounting guidance (FASB ASC *718,* "Compensation – Stock Compensation") requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued.

The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees' service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Sholes model is used to estimate the fair value of stock options, while the market price of the Company's common stock at the date of grant is used for restricted stock awards. No stock options were granted during *2024* and *2023*.

*Earnings per common share* – Earnings per common share has been determined under the provisions of FASB ASC *260,* "Earnings Per Share" and has been computed based on the weighted average common shares outstanding during the year ended *December 31,* (7,606,391 for *2024*, 7,522,913 for *2023*, and 7,529,382 for *2022*). Diluted earnings per share reflect additional potential common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance.

The only potential dilutive stock of the Bank as defined in FASB ASC *260* would be stock options granted to various directors, officers, and employees of the Bank. There were no such options outstanding during the years ended *December 31, 2024*, *2023,* or *2022.* Restricted stock is included in the computation of basic earnings per share as the holder is entitled to full benefits of a stockholder during the vesting period and is thus considered a participating security.

*Off-balance sheet instruments* – In the ordinary course of business, the Bank has entered into off-balance sheet financial instruments consisting of commitments to extend credit, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded in the financial statements when they are funded, or related fees are incurred or received.

*Allowance for Credit Losses - Off-Balance Sheet Credit Exposures -* The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on off-balance sheet credit exposures is adjusted through credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The Company classified off-balance sheet exposure in similar pools as the funded loan portfolio and determined that qualitative and quantitative risk factors assessed to the funded loan pool are also evident for the unfunded loan pool of similar type, adjusted for likelihood of funding and any other relevant metrics. The allowance for unfunded commitments is identified separately on the Company's consolidated statement of financial condition.

*Advertising and marketing expense* – Advertising and marketing costs are expensed as incurred.

*Use of estimates* – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from the estimates.

The Company's critical accounting policies relate to (*1*) the allowance for credit losses, (*2*) fair value of financial instruments, and (*3*) derivative financial instruments. These critical accounting policies require the use of estimates, assumptions and judgments which are based on information available as of the date of the financial statements. Accordingly, as this information changes, future financial statements could reflect the use of different estimates, assumptions and judgments. Certain determinations inherently have a greater reliance on the use of estimates, assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. In connection with the determination of the allowances for credit losses on loans, management obtains independent appraisals for significant properties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *11*

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*Fair value of financial instruments* – Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note *20.* Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates.

*Derivative Financial Instruments* – The Bank recognizes derivative financial instruments at fair value as either an other asset or other liability in the consolidated statement of financial condition. The Bank's derivative financial instruments include interest rate swaps with certain qualifying commercial loan customers and dealer counterparties. Because the interest rate swaps with loan customers and dealer counterparties are *not* designated as hedging instruments, adjustments to reflect unrealized gains and losses resulting from changes in fair value of these instruments are reported as noninterest income or noninterest expense, as applicable. The Bank's interest rate swaps with loan customers and dealer counterparties are described more fully in Note *19.*

*Transfers of financial assets* – Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (*1*) the assets have been isolated from the Bank – put presumptively beyond reach of the transferor and its creditors, even in bankruptcy or other receivership, (*2*) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (*3*) the Bank does *not* maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

*Revenue Recognition* - Most revenue associated with the Company's financial instruments, including interest income and gains/losses on investment securities, derivatives and sales of financial instruments are outside the scope of ASC Topic *606.* The Company's services that fall within the scope of ASC Topic *606* are presented within noninterest income and are recognized as revenue. A description of the primary revenue streams accounted for under ASC Topic *606* follows:

*Deposit Account Service Charges.* The Company earns fees from its deposit customers for overdraft and account maintenance services. Overdraft fees are recognized when the overdraft occurs. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the company satisfies the performance obligation.

*Other Service Charges and Fees.* The Company earns fees from its customers for transaction-based services. Such services include safe deposit box, ATM, stop payment, wire transfer, mortgage origination and interest rate swap fees. In each case, these service charges and fees are recognized in income at the time or within the same period that the Company's performance obligation is satisfied.

*Interchange Income.* The Company earns interchange fees from debit and credit cardholder transactions conducted through various payment networks. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services.

**Recently Adopted Accounting Developments**

On *March 29, 2023,* the Financial Accounting Standards Board (FASB) issued ASU *2023*-*02,* "Investments—Equity Method and Joint Ventures (Topic *323*): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method." These amendments allow entities to account for qualifying tax equity investments using the proportional amortization method regardless of the program giving rise to the related income tax credits, as opposed to only being allowed to apply this method to qualifying tax equity investments in low-income housing tax credit structures as was the case under previous guidance. ASU *2023*-*02* was effective for fiscal years beginning after *December 15, 2023,* including interim periods within those fiscal years. On *January 1, 2024,* the Company adopted ASU *2023*-*02* using the modified retrospective approach. The Company transitioned from the equity method of accounting and began applying the proportional amortization method of accounting to its qualifying new markets tax credit investments in addition to its low income housing tax credit partnerships already subject to the proportional amortization method. The cumulative change in accounting principle was approximately *$217,000.*

In *November 2023,* the Financial Accounting Standards Board (FASB) issued ASU *2023*-*07,* "Segment Reporting (Topic *280*): Improvements to Reportable Segment Disclosures." The amendments in this ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosure about significant segment expenses. This ASU requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (CODM), an amount for other segment items by reportable segment and a description of its composition, all annual disclosures about a reportable segment profit or loss and assets currently required by FASB ASU Topic *280* in interim periods, and the title and position of the CODM and how the CODM uses the reportable measures. Additionally, this ASU requires that at least *one* of the reportable segment profit and loss measures should be the measure that is most consistent with the measurement principals used in an entity's consolidated financial statements. Lastly, this ASU requires public business entities with a single reportable segment to provide all disclosures required by these amendments in this ASU and all existing segment disclosures in Topic *280.* This ASU is effective for fiscal years beginning after *December 15, 2023,* and interim periods within fiscal years beginning after *December 15, 2024.* Early adoption is permitted. The amendments should be applied retroactively. On *December 31, 2024,* the Company adopted ASU *2023*-*07.* Refer to Note *26* for updated disclosures due to the adoption of ASU *2023*-*07.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *12*

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**Impact of Recently Issued Accounting Pronouncements**

In *July 2023,* the Financial Accounting Standards Board (FASB) issued ASU *2023*-*03,* "Presentation of Financial Statements (Topic *205*), Income Statement—Reporting Comprehensive Income (Topic *220*), Distinguishing Liabilities from Equity (Topic *480*), Equity (Topic *505*), and Compensation—Stock Compensation (Topic *718*)". This ASU amends the FASB Accounting Standards Codification for SEC paragraphs pursuant to SEC Staff Accounting Bulletin *No. 120,* SEC Staff Announcement at the *March 24, 2022* EITF Meeting, and Staff Accounting Bulletin Topic *6.B,* Accounting Series Release *280—General* Revision of Regulation S-*X:* Income or Loss Applicable to Common Stock. ASU *2023*-*03* is effective upon addition to the FASB Codification. The Company does *not* expect the adoption of ASU *2023*-*03* to have a material impact on its consolidated financial statements.

In *October 2023,* the Financial Accounting Standards Board (FASB) issued ASU *2023*-*06,* "Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative." This ASU incorporates certain U.S. Securities and Exchange Commission (SEC) disclosure requirements into the FASB Accounting Standards Codification. The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC's existing disclosures with those entities that were *not* previously subject to the requirements, and align the requirements in the Codification with the SEC's regulations. For entities subject to the SEC's existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are *not* subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules. For all other entities, the amendments will be effective *two* years later. However, if by *June 30, 2027,* the SEC has *not* removed the related disclosure from its regulations, the amendments will be removed from the Codification and *not* become effective for any entity. The Company does *not* expect the adoption of ASU *2023*-*06* to have a material impact on its consolidated financial statements.

In *December 2023,* the Financial Accounting Standards Board (FASB) issued ASU *2023*-*09,* "Income Taxes (Topic *740*): Improvements to Income Tax Disclosures." The amendments in this ASU require an entity to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, which is greater than *five* percent of the amount computed by multiplying pretax income by the entity's applicable statutory rate, on an annual basis. Additionally, the amendments in this ASU require an entity to disclose the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions that are equal to or greater than *five* percent of total income taxes paid (net of refunds received). Lastly, the amendments in this ASU require an entity to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign. This ASU is effective for annual periods beginning after *December 15, 2024.* Early adoption is permitted. The amendments should be applied on a prospective basis; however, retrospective application is permitted. The Company does *not* expect the adoption of ASU *2023*-*09* to have a material impact on its consolidated financial statements.

In *March 2024,* the Financial Accounting Standards Board (FASB) issued ASU *2024*-*01,* "Compensation – Stock Compensation (Topic *718*): Scope Application of Profits Interest and Similar Awards". This ASU provides an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with Topic *718.* This ASU is effective for annual periods beginning after *December 15, 2024,* and interim periods within those annual periods. Early adoption is permitted. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the annual period that includes that interim period. Transition can be done either retrospectively or prospectively. The Company does *not* expect the adoption of ASU *2024*-*01* to have a material impact on its consolidated financial statements.

In *March 2024,* the Financial Accounting Standards Board (FASB) issued ASU *2024*-*02,* "Codification Improvements – Amendments to Remove References to the Concepts Statements". This ASU contains amendments to the Codification that remove references to various Concepts Statements. In most instances, the references are extraneous and *not* required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas. This ASU is effective for fiscal years beginning after *December 15, 2024.* Early adoption is permitted. The amendments should be applied prospectively to all new transactions recognized on or after the date that the entity *first* applies the amendments or retrospectively to the beginning of the earliest comparative period presented in which the amendments were *first* applied. If an entity adopts the amendments retrospectively, it should adjust the opening balance of retained earnings as of the beginning of the earliest comparative period presented. The Company does *not* expect the adoption of ASU *2024*-*02* to have a material impact on its consolidated financial statements.

In *November 2024,* the Financial Accounting Standards Board (FASB) issued ASU *2024*-*03,* "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic *220*-*40*): Disaggregation of Income Statement Expenses." ASU *2024*-*03* requires public companies to disclose, in the notes to the financial statements, specific information about certain costs and expenses at each interim and annual reporting period. This includes disclosing amounts related to employee compensation, depreciation, and intangible asset amortization. In addition, public companies will need to provide qualitative description of the amounts remaining in relevant expense captions that are *not* separately disaggregated quantitatively. The FASB subsequently issued ASU *2025*-*01,* "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic *220*-*40*): Clarifying the Effective Date", which amends the effective date of ASU *2024*-*03* to clarify that all public business entities are required to adopt the guidance in ASU *2024*-*03* in annual reporting periods beginning after *December 15, 2026,* and interim periods within annual reporting periods beginning after *December 15, 2027.* Early adoption of ASU *2024*-*03* is permitted. Implementation of ASU *2024*-*03 may* be applied prospectively or retrospectively. The Company does *not* expect the adoption of ASU *2024*-*03* to have a material impact on its consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *13*

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**Note *2.* Restrictions on Cash**

On *March 15, 2020,* the Federal Reserve reduced reserve requirement ratios to zero percent effective *March 26, 2020.* This action eliminated reserve requirements for all depository institutions. Prior to the change, reserve requirement ratios on net transactions accounts differed based on the amount of net transactions accounts at the depository institution.

A certain amount of net transaction accounts, known as the "reserve requirement exemption amount," was subject to a reserve requirement ratio of *zero* percent. Net transaction account balances above the reserve requirement exemption amount and up to a specified amount, known as the "low reserve tranche," were subject to a reserve requirement ratio of *3* percent. Net transaction account balances above the low reserve tranche were subject to a reserve requirement ratio of 10 percent. The reserve requirement exemption amount and the low reserve tranche are indexed each year pursuant to formulas specified in the Federal Reserve Act.

**Note *3.* Investment Securities**

Investment securities available-for-sale was comprised of the following:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** |
| ***<u>(Dollars in thousands)</u>*** | ***Amortized Cost*** | ***Gross Unrealized Gains*** | ***Gross Unrealized Losses*** | ***Fair Value*** |
| Collateralized Mortgage Backed | $21298 | $— | $(4105) | $17193 |
| Subordinated Debt | 8971 |  | (1064) | 7907 |
| Preferred Stock | 453 |  |  | 453 |
| Municipal Securities |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Taxable | 10623 |  | (2422) | 8201 |
| &nbsp;&nbsp;&nbsp; Tax-exempt | 22024 |  | (2403) | 19621 |
| U.S. Governmental Agencies | 2392 | 4 | (24) | 2372 |
| Total | $65761 | $4 | $(10018) | $55747 |

---

Investment securities held-to-maturity was comprised of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** |
| ***<u>(Dollars in thousands)</u>*** | ***Amortized Cost*** | ***Gross Unrealized Gains*** | ***Gross Unrealized Losses*** | ***Fair Value*** |
| Municipal Securities |  |  |  |  |
| Tax-exempt | $13578 | $1 | $(200) | $13379 |
| Subordinated Debt | 2500 |  | (14) | 2486 |
| Total | $16078 | $1 | $(214) | $15865 |

---

Investment securities available-for-sale was comprised of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***December 31, 2023*** | ***December 31, 2023*** | ***December 31, 2023*** | ***December 31, 2023*** |
| ***<u>(Dollars in thousands)</u>*** | ***Amortized Cost*** | ***Gross Unrealized Gains*** | ***Gross Unrealized Losses*** | ***Fair Value*** |
| Collateralized Mortgage Backed | $23446 | $— | $(3931) | $19515 |
| Subordinated Debt | 9970 |  | (1503) | 8467 |
| Municipal Securities |  |  |  |  |
| Taxable | 10649 |  | (2342) | 8307 |
| Tax-exempt | 22668 | 23 | (1949) | 20742 |
| U.S. Governmental Agencies | 2932 | 3 | (38) | 2897 |
| Total | $69665 | $26 | $(9763) | $59928 |

---

Investment securities held-to-maturity was comprised of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***December 31, 2023*** | ***December 31, 2023*** | ***December 31, 2023*** | ***December 31, 2023*** |
| ***<u>(Dollars in thousands)</u>*** | ***Amortized Cost*** | ***Gross Unrealized Gains*** | ***Gross Unrealized Losses*** | ***Fair Value*** |
| Municipal Securities |  |  |  |  |
| Tax-exempt | $14775 | $19 | $(121) | $14673 |
| Subordinated Debt | 2500 |  | (10) | 2490 |
| Total | $17275 | $19 | $(131) | $17163 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *14*

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For HTM securities, the Company evaluates the credit risk of its securities on at least a quarterly basis. The Company estimates expected credit losses on HTM debt securities on an individual basis using security-level credit ratings. The Company's HTM securities ACL was immaterial at *December 31, 2024*. The primary indicators of credit quality for the Company's HTM portfolio are security type and credit rating, which is influenced by a number of factors including obligor cash flow, geography, seniority, and others. The majority of the Company's HTM securities with credit risk are obligations of states and political subdivisions.

The following table presents the amortized cost of HTM securities as of *December 31, 2024* and *December 31, 2023* by security type and credit rating according to Moody's and Standard and Poor's:

---

| | | | |
|:---|:---|:---|:---|
| ***<u>(Dollars in thousands)</u>*** | ***Municipal Securities*** | ***Subordinated Debt*** | ***Total HTM securities*** |
| **<u>December 31, 2024</u>** |  |  |  |
| Credit Rating: |  |  |  |
| AAA/AA/A | $13578 | $— | $13578 |
| Not Rated - Non Agency |  | 2500 | $2500 |
| Total | $13578 | $2500 | $16078 |
| **<u>December 31, 2023</u>** |  |  |  |
| Credit Rating: |  |  |  |
| AAA/AA/A | $14775 | $— | $14775 |
| Not Rated - Non Agency |  | 2500 | 2500 |
| Total | $14775 | $2500 | $17275 |

---

At *December 31, 2024*, the Company had *no* securities held-to-maturity that were past due *30* days or more as to principal or interest payments. The Company had no securities held-to-maturity classified as nonaccrual for the year ended *December 31, 2024*, *2023,* or *2022.*

The scheduled maturities of securities available-for-sale and held-to-maturity at *December 31, 2024* were as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** |
|  | ***Available-for-Sale*** | ***Available-for-Sale*** | ***Held-to-Maturity*** | ***Held-to-Maturity*** |
| ***<u>(Dollars in thousands)</u>*** | ***Amortized Cost*** | ***Fair Value*** | ***Amortized Cost*** | ***Fair Value*** |
| Due in one year or less | $1000 | $993 | $370 | $370 |
| Due from one to five years |  |  | 4017 | 3973 |
| Due from after five to ten years | 14430 | 12997 | 5945 | 5886 |
| Due after ten years | 50331 | 41757 | 5746 | 5636 |
| Total | $65761 | $55747 | $16078 | $15865 |

---

Securities with a fair value of $394,000 and $16.1 million at *December 31, 2024* and *December 31, 2023*, respectively, were pledged as collateral to secure public funds, loans swaps, and funding through the bank term funding program. The Company has *not* drawn upon or utilized the bank term funding program.

As of *December 31, 2024* and *December 31, 2023*, there were *no* holdings of securities of any *one* issuer in an amount greater than *10%* of stockholders' equity.

There were *no* securities sold from the available-for-sale portfolio during the years ended *December 31, 2024*, *2023,* and *2022.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *15*

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The following tables summarize the fair value and unrealized losses at *December 31, 2024* and *December 31, 2023*, aggregated by investment category and length of time that individual securities have been in a continuous loss position:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** |
|  | ***Less than 12 Months*** | ***Less than 12 Months*** | ***12 Months or Longer*** | ***12 Months or Longer*** | ***Total*** | ***Total*** |
| ***<u>(Dollars in thousands)</u>*** | ***Estimated Fair Value*** | ***Unrealized Loss*** | ***Estimated Fair Value*** | ***Unrealized Loss*** | ***Estimated Fair Value*** | ***Unrealized Loss*** |
| Available-for-sale: |  |  |  |  |  |  |
| Collateralized Mortgage Backed | $— | $— | $17105 | $(4105) | $17105 | $(4105) |
| Subordinated Debt | 215 | (35) | 7191 | (1029) | 7406 | (1064) |
| Municipal Securities |  |  |  |  |  |  |
| Taxable |  |  | 8201 | (2422) | 8201 | (2422) |
| Tax-exempt | 2658 | (36) | 16593 | (2367) | 19251 | (2403) |
| U.S Governmental Agencies |  |  | 614 | (24) | 614 | (24) |
| Total | $2873 | $(71) | $49704 | $(9947) | $52577 | $(10018) |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | ***December 31, 2023*** | ***December 31, 2023*** | ***December 31, 2023*** | ***December 31, 2023*** | ***December 31, 2023*** | ***December 31, 2023*** |
|  | ***Less than 12 Months*** | ***Less than 12 Months*** | ***12 Months or Longer*** | ***12 Months or Longer*** | ***Total*** | ***Total*** |
| ***<u>(Dollars in thousands)</u>*** | ***Fair Value*** | ***Unrealized Loss*** | ***Fair Value*** | ***Unrealized Loss*** | ***Fair Value*** | ***Unrealized Loss*** |
| Available-for-sale: |  |  |  |  |  |  |
| Collateralized Mortgage Backed | $— | $— | $19440 | $(3931) | $19440 | $(3931) |
| Subordinated Debt |  |  | 7717 | (1503) | 7717 | (1503) |
| Municipal Securities |  |  |  |  |  |  |
| Taxable |  |  | 8307 | (2342) | 8307 | (2342) |
| Tax-exempt | 1986 | (34) | 16510 | (1915) | 18496 | (1949) |
| U.S Government Agencies | 1515 | (1) | 845 | (37) | 2360 | (38) |
| Total | $3501 | $(35) | $52819 | $(9728) | $56320 | $(9763) |

---

The factors considered in evaluating securities for impairment include whether the Bank intends to sell the security, whether it is more likely than *not* that the Bank will be required to sell the security before recovery of its amortized cost basis, and whether the Bank expects to recover the security's entire amortized cost basis. These unrealized losses are primarily attributable to current financial market conditions for these types of investments, particularly changes in interest rates, causing bond prices to decline, and are *not* attributable to credit deterioration.

At *December 31, 2024*, there were five tax-exempt municipal securities with a fair value of $2.7 million and one subordinated debt security with a fair value of $215,000 in an unrealized loss position of less than *12* months. At *December 31, 2024*, there were six U.S. government agencies with fair values totaling approximately $614,000, twenty-two collateralized mortgage backed securities with a fair value totaling $17.1 million, nineteen subordinated debt securities with fair values of $7.2 million, eleven taxable municipal securities with a fair value of $8.2 million, and twenty-eight tax-exempt municipal securities with a fair value of $16.6 million that were in an unrealized loss position of more than *12* months. There were *no* securities sold during *2024*, *2023*, or *2022.*

All municipal securities originally purchased as available-for-sale were transferred to held-to-maturity during *2013.* The unrealized loss on the securities transferred to held-to-maturity is being amortized over the expected life of the securities. The unamortized, unrealized loss, before tax, at *December 31, 2024* and *December 31, 2023* was $0, respectively.

For held-to-maturity securities, an allowance for credit losses is required to absorb estimated lifetime credit losses. The Company has assessed the risk of credit loss and has determined that no allowance for credit losses for held-to-maturity securities was necessary as of *December 31, 2024* and *2023*. The evaluation of credit risk includes consideration of the credit ratings of the issuers, the effects of interest rate changes since purchase and observable market information such as issuer-specific credit spreads.

The Company periodically invests in New Market Tax Credit (NMTC) opportunities, related primarily to certain community development projects. The Company receives tax credits related to these investments, for which the Company typically acts as a limited partner and therefore does *not* exert control over the operating or financial policies of the partnerships. These tax credits are subject to recapture by taxing authorities based on compliance features required to be met at the project level. On *January 1, 2024,* the Company transitioned from the equity method of accounting and began applying the proportional amortization method of accounting to its qualifying new markets tax credit investments in addition to its low income housing tax credit partnerships already subject to the proportional amortization method. At *December 31, 2024* and *2023,* the balance of the investments in new market tax credits was $9.4 million and $3.1 million. These balances are reflected in the restricted securities at amortized cost line on the consolidated statements of financial condition. During the years ended *December 31, 2024, 2023,* and *2022,* the Company recognized amortization expense of $911,000, $0, and $0, respectively, which was included within the income tax expense (benefit) line item on the consolidated statements of income (loss) and the depreciation, amortization, and accretion, net line item on the consolidated statements of cash flows.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *16*

------

**Note *4.* Loans Receivable**

Loans receivable were comprised of the following:

---

| | | |
|:---|:---|:---|
| ***<u>(Dollars in thousands)</u>*** | ***December 31, 2024*** | ***December 31, 2023*** |
| Residential Real Estate: |  |  |
| Single family | $204357 | $203417 |
| Multifamily | 234884 | 271040 |
| Farmland | 240 | 145 |
| Commercial Real Estate: |  |  |
| Owner-occupied | 357724 | 282052 |
| Non-owner occupied | 560056 | 461775 |
| Construction and Land Development | 393385 | 429637 |
| Commercial – Non Real-Estate: |  |  |
| Commercial & industrial | 82778 | 75415 |
| Consumer – Non Real Estate: |  |  |
| Unsecured | 343 | 271 |
| Secured | 1231 | 3339 |
| Total Gross Loans | 1834998 | 1727091 |
| Less: unearned fees | (4992) | (5448) |
| Less: allowance for credit losses on loans | (19450) | (16506) |
| Net Loans | $1810556 | $1705137 |

---

The unsecured consumer loans above include $343,000 and $271,000 of overdrafts reclassified as loans as of *December 31, 2024* and *December 31, 2023*, respectively.

There were nonaccrual loans of $21.7 million and $1.0 million as of *December 31, 2024* and *December 31, 2023*, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *17*

------

The following tables present the segments of the loan portfolio summarized by aging categories as of *December 31, 2024* and *December 31, 2023*:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** |
| ***<u>(Dollars in thousands)</u>*** | ***30-59 Days Past Due*** | ***60-89 Days Past Due*** | ***Greater than 90 Days Past Due and Still Accruing*** | ***Nonaccrual*** | ***Current Loans*** | ***Total Loans Receivable*** |
| Residential Real Estate: |  |  |  |  |  |  |
| Single Family | $— | $62 | $— | $1162 | $203133 | $204357 |
| Multifamily |  |  |  |  | 234884 | 234884 |
| Farmland |  |  |  |  | 240 | 240 |
| Commercial Real Estate: |  |  |  |  |  |  |
| Owner occupied |  |  |  |  | 357724 | 357724 |
| Non-owner occupied |  |  |  | 11160 | 548896 | 560056 |
| Construction & Land Development |  |  |  | 4235 | 389150 | 393385 |
| Commercial – Non Real Estate: |  |  |  |  |  |  |
| Commercial & industrial |  |  |  | 5093 | 77685 | 82778 |
| Consumer – Non Real Estate: |  |  |  |  |  |  |
| Unsecured |  |  |  |  | 343 | 343 |
| Secured |  |  |  |  | 1231 | 1231 |
| Total | $— | $62 | $— | $21650 | $1813286 | $1834998 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | ***December 31, 2023*** | ***December 31, 2023*** | ***December 31, 2023*** | ***December 31, 2023*** | ***December 31, 2023*** | ***December 31, 2023*** |
| ***<u>(Dollars in thousands)</u>*** | ***30-59 Days Past Due*** | ***60-89 Days Past Due*** | ***Greater than 90 Days Past Due and Still Accruing*** | ***Nonaccrual*** | ***Current Loans*** | ***Total Loans Receivable*** |
| Residential Real Estate: |  |  |  |  |  |  |
| Single Family | $— | $— | $— | $149 | $203268 | $203417 |
| Multifamily |  |  |  |  | 271040 | 271040 |
| Farmland |  |  |  |  | 145 | 145 |
| Commercial Real Estate: |  |  |  |  |  |  |
| Owner occupied |  |  |  |  | 282052 | 282052 |
| Non-owner occupied |  |  |  |  | 461775 | 461775 |
| Construction & Land Development |  |  |  |  | 429637 | 429637 |
| Commercial – Non Real Estate: |  |  |  |  |  |  |
| Commercial & industrial |  |  |  | 851 | 74564 | 75415 |
| Consumer – Non Real Estate: |  |  |  |  |  |  |
| Unsecured |  |  |  |  | 271 | 271 |
| Secured | 25 |  | 4 |  | 3310 | 3339 |
| Total | $25 | $— | $4 | $1000 | $1726062 | $1727091 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *18*

------

**Note *5.* Allowance for Credit Losses**

The following tables summarize the activity in the allowance for credit losses by loan class for the *twelve* months ended *December 31, 2024*, *2023*, and *2022:*

**Allowance for Credit Losses By Portfolio Segment**

**For the *twelve* months ended *December 31, 2024***

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | ***Real Estate*** | ***Real Estate*** | ***Real Estate*** |  |  |  |
|  | ***Residential*** | ***Commercial*** | ***Construction*** | ***Commercial*** | ***Consumer*** | ***Total*** |
| Beginning Balance | $2594 | $8888 | $3575 | $1435 | $14 | $16506 |
| Charge-offs | (132) | (740) | (3684) | (4) | (9) | (4569) |
| Recoveries |  |  |  | 19 | 9 | 28 |
| Provision (recovery) | 16 | 3173 | 4757 | (457) | (4) | 7485 |
| Ending Balance | $2478 | $11321 | $4648 | $993 | $10 | $19450 |

---

**Allowance for Credit Losses By Portfolio Segment**

**For the *twelve* months ended *December 31, 2023***

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | ***Real Estate*** | ***Real Estate*** | ***Real Estate*** |  |  |  |
|  | ***Residential*** | ***Commercial*** | ***Construction*** | ***Commercial*** | ***Consumer*** | ***Total*** |
| Beginning Balance, prior to adoption of ASC 326 | $2146 | $7159 | $3347 | $1418 | $44 | $14114 |
| Impact of adopting ASC 326 | 59 | 614 | 19 | 172 | 31 | 895 |
| Charge-offs |  |  |  | (462) | (6) | (468) |
| Recoveries | 7 |  |  |  | 15 | 22 |
| Provision (recovery) | 382 | 1115 | 209 | 307 | (70) | 1943 |
| Ending Balance | $2594 | $8888 | $3575 | $1435 | $14 | $16506 |

---

**Allowance for Loan Losses By Portfolio Segment**

**For the *twelve* months ended *December 31, 2022***

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | ***Real Estate*** | ***Real Estate*** | ***Real Estate*** |  |  |  |
|  | ***Residential*** | ***Commercial*** | ***Construction*** | ***Commercial*** | ***Consumer*** | ***Total*** |
| Beginning Balance | $1672 | $5689 | $2697 | $1540 | $99 | $11697 |
| Charge-offs |  |  |  |  | 19 | 19 |
| Recoveries |  |  |  |  |  |  |
| Provision (recovery) | 474 | 1470 | 650 | (122) | (74) | 2398 |
| Ending Balance | $2146 | $7159 | $3347 | $1418 | $44 | $14114 |
| Individually evaluated for Impairment | $— | $— | $— | $— | $— | $— |
| Collectively evaluated for Impairment | $2146 | $7159 | $3347 | $1418 | $44 | $14114 |

---

The Company maintains a general allowance for credit losses based on evaluating known and inherent risks in the loan portfolio, including management's continuing analysis of the factors underlying the quality of the loan portfolio. These factors include changes in the size and composition of the loan portfolio, actual loan loss experience, and current and anticipated economic conditions. The reserve is an estimate based upon factors and trends identified by management at the time the financial statements are prepared.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *19*

------

The following table is a summary of the Company's nonaccrual loans by major categories for the periods indicated.

---

| | | | |
|:---|:---|:---|:---|
|  | ***CECL*** | ***CECL*** | ***CECL*** |
|  | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** |
| ***<u>(Dollars in thousands)</u>*** | ***Nonaccrual Loans with No Allowance*** | ***Nonaccrual Loans with an Allowance*** | ***Total Nonaccrual Loans*** |
| Residential Real Estate: |  |  |  |
| Single Family | $1162 | $— | $1162 |
| Commercial Real Estate: |  |  |  |
| Non-owner occupied | 11160 |  | 11160 |
| Construction and Land Development | 4235 |  | 4235 |
| Commercial & industrial | 5093 |  | 5093 |
| Total | $21650 | $— | $21650 |
|  | ***CECL*** | ***CECL*** | ***CECL*** |
|  | ***December 31, 2023*** | ***December 31, 2023*** | ***December 31, 2023*** |
| ***<u>(Dollars in thousands)</u>*** | ***Nonaccrual Loans with No Allowance*** | ***Nonaccrual Loans with an Allowance*** | ***Total Nonaccrual Loans*** |
| Residential Real Estate: |  |  |  |
| Single Family | $149 | $— | $149 |
| Commercial & industrial | 851 |  | 851 |
| Total | $1000 | $— | $1000 |

---

The Company recognized $2.8 million and $57,792 of interest income on nonaccrual loans during the year ended *December 31, 2024* and *2023.*

The following table represents the accrued interest receivables written off by reversing interest income during the year ended *December 31, 2024* and *2023:*

---

| | | |
|:---|:---|:---|
|  | ***For the Years Ended December 31,*** | ***For the Years Ended December 31,*** |
| ***<u>(Dollars in thousands)</u>*** | ***2024*** | ***2023*** |
| Residential Real Estate: |  |  |
| Single Family | $103 | $5 |
| Multifamily | 176 |  |
| Commercial Real Estate: |  |  |
| Non-owner occupied | 481 |  |
| Construction & Land Development | 965 |  |
| Commercial – Non Real Estate: |  |  |
| Commercial & industrial | 180 | 128 |
| Total | $1905 | $133 |

---

The Company has certain loans for which repayment is dependent upon the operation or sale of collateral, as the borrower is experiencing financial difficulty. The underlying collateral can vary based upon the type of loan. The following provides more detail about the types of collateral that secure collateral-dependent loans:

• &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate loans can be secured by either owner-occupied commercial real estate or non-owner-occupied investment commercial real estate. Typically, owner-occupied commercial real estate loans are secured by office buildings, warehouses, manufacturing facilities and other commercial and industrial properties occupied by operating companies. Non-owner-occupied commercial real estate loans are generally secured by office buildings and complexes, retail facilities, multifamily complexes, land under development, industrial properties, as well as other commercial or industrial real estate where our borrower is the lessor.

• &nbsp;&nbsp;&nbsp;&nbsp;Residential real estate mortgage loans, including equity lines of credit, are typically secured by *first* mortgages, and in some cases could be secured by a *second* mortgage.

• &nbsp;&nbsp;&nbsp;&nbsp;Home equity lines of credit are generally secured by *second* mortgages on residential real estate property.

• &nbsp;&nbsp;&nbsp;&nbsp;Consumer loans are generally secured by automobiles, motorcycles, recreational vehicles and other personal property. Some consumer loans are unsecured and have *no* underlying collateral.

• &nbsp;&nbsp;&nbsp;&nbsp;Construction and land development loans are secured by real property where loan funds will be used to acquire land and to construct or improve appropriately zoned real property for the creation of income producing or owner-user commercial properties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *20*

------

The following table details the amortized cost of collateral dependent loans:

---

| | | |
|:---|:---|:---|
| ***<u>(Dollars in thousands)</u>*** | ***As of December 31, 2024*** | ***As of December 31, 2023*** |
| Residential Real Estate: |  |  |
| Single Family | $5494 | $346 |
| Multifamily | 3206 |  |
| Commercial Real Estate: |  |  |
| Owner occupied |  | 1120 |
| Non-owner occupied | 11488 |  |
| Construction & Land Development | 28608 |  |
| Commercial & industrial | 8877 | 851 |
| Total | $57673 | $2317 |

---

The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. The Company uses a weighted average remaining life model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification.

Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally *not* recorded upon modification. Occasionally, the Company modifies loans by providing principal forgiveness on certain loans. When principal forgiveness is provided, the amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.

In some cases, the Company will modify a certain loan by providing multiple types of concessions. Typically, *one* type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, *may* be granted.

The following table shows the amortized cost basis as of *December 31, 2024* of the loans modified to borrowers experiencing financial difficulty, disaggregated by class of loans and type of concession granted and describes the financial effect of the modifications made to borrowers experiencing financial difficulty during the *twelve*-month period ended *December 31, 2024:*

---

| | | | |
|:---|:---|:---|:---|
|  | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** |
| ***<u>(Dollars in thousands)</u>*** | ***Amortized Cost Basis*** | ***% of Total Loan Type*** | ***Financial Effect*** |
| Residential Real Estate: |  |  |  |
| Single Family | 3813 | 1.9% | Extended term on interest only payments for six months. Deferred loan payment for three months. |
| Multifamily | 9570 | 4.1% | *Interest rate reduction.* |
| Construction and Land Development | 31153 | 7.9% | Interest rate reduction and extended term on interest only payments for two years. Extended amortization term for five years. Extended term on interest only payments for six months. |
| Commercial – Non Real-Estate: |  |  |  |
| Commercial & industrial | 3998 | 4.8% | Extended term on interest only payments for seven months |
| Total | $48534 |  |  |

---

---

| | | | |
|:---|:---|:---|:---|
|  | ***December 31, 2023*** | ***December 31, 2023*** | ***December 31, 2023*** |
| ***<u>(Dollars in thousands)</u>*** | ***Amortized Cost Basis*** | ***% of Total Loan Type*** | ***Financial Effect*** |
| Commercial Real Estate: |  |  |  |
| Non-owner occupied | $16000 | 3.5% | Extended term on interest only payments for six months. |
| Commercial & industrial | 315 | 0.4% | Extended term for three months. |
| Total | $16315 |  |  |

---

The Company monitors loan payments on performing and non-performing loans on an ongoing basis to determine if a loan is considered to have a payment default. The loans that were modified in the *twelve*-month periods ended *December 31, 2024* and *December 31, 2023* are current on contractual payments, except for *one* loan for $364,000 as of *December 31, 2024* and *one* loan for $315,000 as of *December 31, 2023,* that are both on nonaccrual and are individually evaluated, respectively.

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Credit quality risk ratings include regulatory classifications of Pass, Watch, Criticized (Special Mention), Classified (Substandard), Doubtful, and Loss. Loans classified as Pass have quality metrics to support that the loan will be repaid according to the terms established. Loans classified as Watch have similar characteristics as Pass loans with some emerging signs of financial weaknesses that should be monitored closer. Loans classified as Watch are included in the Pass totals in the following tables. Loans classified as Criticized (Special Mention) have potential weaknesses that deserve management's close attention. If uncorrected, the potential weaknesses *may* result in deterioration of prospects for repayment. Loans classified as Classified (Substandard) have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They include loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans classified as a Loss are considered uncollectible and are charged to the allowance for loan losses. Loans *not* classified are rated Pass.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *21*

------

The following table presents the risk category of loans by credit quality indicators by year of origination as of *December 31, 2024*:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | ***Term Loans Amortized Cost Basis by Origination Year*** | ***Term Loans Amortized Cost Basis by Origination Year*** | ***Term Loans Amortized Cost Basis by Origination Year*** | ***Term Loans Amortized Cost Basis by Origination Year*** | ***Term Loans Amortized Cost Basis by Origination Year*** | ***Term Loans Amortized Cost Basis by Origination Year*** |  |  |  |
| **<u>December 31, 2024</u>** |  |  |  |  |  |  |  |  |  |
| ***<u>(Dollars in thousands)</u>*** | ***2024*** | ***2023*** | ***2022*** | ***2021*** | ***2020*** | ***Prior*** | ***Revolving Loans*** | ***Revolving Loans converted to Term*** | ***Total*** |
| Residential Real Estate - Single Family |  |  |  |  |  |  |  |  |  |
| Pass | $18439 | $44460 | $17803 | $26055 | $29482 | $32065 | $24643 | $— | $192947 |
| Criticized | 500 |  | 393 | 1596 | 3436 |  |  |  | 5925 |
| Classified | 200 |  |  | 3507 | 1338 |  | 440 |  | 5485 |
| Total Residential Real Estate - Single Family | $19139 | $44460 | $18196 | $31158 | $34256 | $32065 | $25083 | $— | $204357 |
| Current period gross write-offs | $— | $— | $— | $— | $— | $132 | $— | $— | $132 |
| Residential Real Estate - Multifamily |  |  |  |  |  |  |  |  |  |
| Pass | $12163 | $5314 | $69629 | $24693 | $38226 | $23199 | $390 | $— | $173614 |
| Criticized |  | 26250 |  | 11703 | 606 | 19514 |  |  | 58073 |
| Classified |  |  |  | 3197 |  |  |  |  | 3197 |
| Total Residential Real Estate - Multifamily | $12163 | $31564 | $69629 | $39593 | $38832 | $42713 | $390 | $— | $234884 |
| Current period gross write-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| Residential Real Estate - Farmland |  |  |  |  |  |  |  |  |  |
| Pass | $106 | $— | $— | $— | $— | $134 | $— | $— | $240 |
| Total Residential Real Estate - Farmland | $106 | $— | $— | $— | $— | $134 | $— | $— | $240 |
| Current period gross write-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| Commercial Real Estate - Owner Occupied |  |  |  |  |  |  |  |  |  |
| Pass | $23633 | $64924 | $81427 | $41167 | $38446 | $78706 | $24921 | $— | $353224 |
| Criticized |  | 4500 |  |  |  |  |  |  | 4500 |
| Total Commercial Real Estate - Owner Occupied | $23633 | $69424 | $81427 | $41167 | $38446 | $78706 | $24921 | $— | $357724 |
| Current period gross write-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| Commercial Real Estate - Non-Owner Occupied |  |  |  |  |  |  |  |  |  |
| Pass | $75392 | $9668 | $154994 | $58931 | $46057 | $153682 | $34180 | $— | $532904 |
| Criticized |  |  |  |  | 15664 |  |  |  | 15664 |
| Classified |  | 11160 |  |  | 328 |  |  |  | 11488 |
| Total Commercial Real Estate - Non-Owner Occupied | $75392 | $20828 | $154994 | $58931 | $62049 | $153682 | $34180 | $— | $560056 |
| Current period gross write-offs | $— | $740 | $— | $— | $— | $— | $— | $— | $740 |
| Construction & Land Development |  |  |  |  |  |  |  |  |  |
| Pass | $3149 | $5358 | $19680 | $8849 | $718 | $234 | $325885 | $— | $363873 |
| Criticized |  |  |  |  |  |  | 1138 |  | 1138 |
| Classified |  |  | 1950 |  |  |  | 26424 |  | 28374 |
| Total Construction & Land Development | $3149 | $5358 | $21630 | $8849 | $718 | $234 | $353447 | $— | $393385 |
| Current period gross write-offs | $— | $289 | $— | $259 | $3136 | $— | $— | $— | 3684 |
| Commercial & Industrial |  |  |  |  |  |  |  |  |  |
| Pass | $15470 | $7197 | $10237 | $3793 | $2026 | $7550 | $27625 | $— | $73898 |
| Classified | 319 |  |  | 3712 |  | 1600 | 3249 |  | 8880 |
| Total Commercial & Industrial | $15789 | $7197 | $10237 | $7505 | $2026 | $9150 | $30874 | $— | $82778 |
| Current period gross write-offs | $4 | $— | $— | $— | $— | $— | $— | $— | $4 |
| Consumer - Unsecured |  |  |  |  |  |  |  |  |  |
| Pass | $— | $— | $— | $— | $— | $— | $343 | $— | $343 |
| Total Consumer - Unsecured | $— | $— | $— | $— | $— | $— | $343 | $— | $343 |
| Current period gross write-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| Consumer - Secured |  |  |  |  |  |  |  |  |  |
| Pass | $187 | $41 | $184 | $— | $13 | $721 | $85 |  | $1231 |
| Total Consumer - Secured | $187 | $41 | $184 | $— | $13 | $721 | $85 | $— | $1231 |
| Current period gross write-offs | $— | $— | $— | $— | $— | $9 | $— | $— | $9 |
| Total |  |  |  |  |  |  |  |  |  |
| Pass | $148539 | $136962 | $353954 | $163488 | $154968 | $296291 | $438072 | $— | $1692274 |
| Criticized | 500 | 30750 | 393 | 13299 | 19706 | 19514 | 1138 |  | 85300 |
| Classified | 519 | 11160 | 1950 | 10416 | 1666 | 1600 | 30113 |  | 57424 |
| Total loans | $149558 | $178872 | $356297 | $187203 | $176340 | $317405 | $469323 | $— | $1834998 |
| Current period gross write-offs | $4 | $1029 | $— | $259 | $3136 | $141 | $— | $— | $4569 |

---

The following table presents the risk category of loans by credit quality indicators as of *December 31, 2023*:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | ***Term Loans Amortized Cost Basis by Origination Year*** | ***Term Loans Amortized Cost Basis by Origination Year*** | ***Term Loans Amortized Cost Basis by Origination Year*** | ***Term Loans Amortized Cost Basis by Origination Year*** | ***Term Loans Amortized Cost Basis by Origination Year*** | ***Term Loans Amortized Cost Basis by Origination Year*** |  |  |  |
| **<u>December 31, 2023</u>** |  |  |  |  |  |  |  |  |  |
| ***<u>(Dollars in thousands)</u>*** | ***2023*** | ***2022*** | ***2021*** | ***2020*** | ***2019*** | ***Prior*** | ***Revolving Loans*** | ***Revolving Loans converted to Term*** | ***Total*** |
| Residential Real Estate - Single Family |  |  |  |  |  |  |  |  |  |
| Pass | $50101 | $17502 | $26434 | $34453 | $20610 | $20542 | $33217 | $— | $202859 |
| Classified |  |  |  |  | 409 |  | 149 |  | 558 |
| Total Residential Real Estate - Single Family | $50101 | $17502 | $26434 | $34453 | $21019 | $20542 | $33366 | $— | $203417 |
| Current period gross write-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| Residential Real Estate - Multifamily |  |  |  |  |  |  |  |  |  |
| Pass | $28346 | $81180 | $60156 | $39286 | $27270 | $10797 | $24005 | $— | $271040 |
| Total Residential Real Estate - Multifamily | $28346 | $81180 | $60156 | $39286 | $27270 | $10797 | $24005 | $— | $271040 |
| Current period gross write-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| Residential Real Estate - Farmland |  |  |  |  |  |  |  |  |  |
| Pass | $— | $— | $— | $— | $— | $145 | $— | $— | $145 |
| Total Residential Real Estate - Farmland | $— | $— | $— | $— | $— | $145 | $— | $— | $145 |
| Current period gross write-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| Commercial Real Estate - Owner Occupied |  |  |  |  |  |  |  |  |  |
| Pass | $70476 | $55222 | $43576 | $39621 | $32044 | $37360 | $2633 | $— | $280932 |
| Classified |  |  |  |  | 1120 |  |  |  | 1120 |
| Total Commercial Real Estate - Owner Occupied | $70476 | $55222 | $43576 | $39621 | $33164 | $37360 | $2633 | $— | $282052 |
| Current period gross write-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| Commercial Real Estate - Non-Owner Occupied |  |  |  |  |  |  |  |  |  |
| Pass | $23091 | $101617 | $51291 | $48692 | $30595 | $150629 | $32122 | $— | $438037 |
| Criticized |  |  |  | 16000 |  |  |  |  | 16000 |
| Classified |  |  |  |  | 7738 |  |  |  | 7738 |
| Total Commercial Real Estate - Non-Owner Occupied | $23091 | $101617 | $51291 | $64692 | $38333 | $150629 | $32122 | $— | $461775 |
| Current period gross write-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| Construction & Land Development |  |  |  |  |  |  |  |  |  |
| Pass | $6416 | $32544 | $13612 | $2455 | $— | $8118 | $355689 | $— | $418834 |
| Classified |  | 1454 |  |  |  |  | 9349 |  | 10803 |
| Total Construction & Land Development | $6416 | $33998 | $13612 | $2455 | $— | $8118 | $365038 | $— | $429637 |
| Current period gross write-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| Commercial & Industrial |  |  |  |  |  |  |  |  |  |
| Pass | $10150 | $5271 | $13530 | $3495 | $1230 | $10466 | $27299 | $— | $71441 |
| Criticized |  |  |  |  |  |  | 2997 |  | 2997 |
| Classified |  |  |  |  | 536 | 353 | 88 |  | 977 |
| Total Commercial & Industrial | $10150 | $5271 | $13530 | $3495 | $1766 | $10819 | $30384 | $— | $75415 |
| Current period gross write-offs | $— | $— | $— | $— | $261 | $201 | $— | $— | $462 |
| Consumer - Unsecured |  |  |  |  |  |  |  |  |  |
| Pass | $— | $— | $— | $— | $— | $— | $271 | $— | $271 |
| Total Consumer - Unsecured | $— | $— | $— | $— | $— | $— | $271 | $— | $271 |
| Current period gross write-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |
| Consumer - Secured |  |  |  |  |  |  |  |  |  |
| Pass | $55 | $252 | $3 | $51 | $1400 | $1497 | $81 | $— | $3339 |
| Total Consumer - Secured | $55 | $252 | $3 | $51 | $1400 | $1497 | $81 | $— | $3339 |
| Current period gross write-offs | $— | $— | $— | $— | $— | $6 | $— | $— | $6 |
| Total |  |  |  |  |  |  |  |  |  |
| Pass | $188635 | $293588 | $208602 | $168053 | $113149 | $239554 | $475317 | $— | $1686898 |
| Criticized |  |  |  | 16000 |  |  | 2997 |  | 18997 |
| Classified |  | 1454 |  |  | 9803 | 353 | 9586 |  | 21196 |
| Total loans | $188635 | $293588 | $208602 | $168053 | $113149 | $239560 | $475317 | $— | $1727091 |
| Current period gross write-offs | $— | $— | $— | $— | $261 | $207 | $— | $— | $468 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *22*

------

The Company maintains an allowance for off-balance sheet credit exposures such as unfunded balances for existing lines of credit, commitments to extend future credit, as well as both standby and commercial letters of credit when there is a contractual obligation to extend credit and when this extension of credit is *not* unconditionally cancellable (i.e., the commitment cannot be canceled at any time). The allowance for off-balance sheet credit exposures is adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the allowance for credit losses on loans, and are discussed in Note *1.* The allowance for credit losses for unfunded loan commitments of $287,000 and $1 million at *December 31, 2024* and *December 31, 2023,* is separately classified on the balance sheet within Other Liabilities.

The following table presents the balance and activity in the allowance for credit losses for unfunded loan commitments for the year ended *December 31, 2024* and *2023.* The decline in the balance of the allowance for credit losses for unfunded loan commitments during the year ended *December 31, 2024,* was due to the decline in the balance of unfunded commitments.

---

| | | |
|:---|:---|:---|
|  | ***Total Allowance for Credit Losses on Off-Balance Sheet Credit Exposure*** | ***Total Allowance for Credit Losses on Off-Balance Sheet Credit Exposure*** |
| ***<u>(Dollars in thousands)</u>*** | ***2024*** | ***2023*** |
| Beginning Balance | $1009 | $— |
| Adjustment to allowance for off-balance sheet credit losses upon adoption of ASU 2016-13 |  | 1310 |
| Recovery of off-balance sheet credit losses, net | (722) | (301) |
| Ending Balance | $287 | $1009 |

---

**Note *6.* Related Party Transactions**

The Bank grants loans and letters of credit to its executive officers, directors and their affiliated entities. Such loans are made in the ordinary course of business on substantially the same terms and conditions, including interest rates and collateral, as those prevailing at the same time for comparable transactions with unrelated persons, and, in the opinion of management, do *not* involve more than normal risk or present other unfavorable features.

---

| | | |
|:---|:---|:---|
| ***(Dollars in thousands)*** | ***December 31, 2024*** | ***December 31, 2023*** |
| Beginning Balance | $281 | $556 |
| New Loans | 16 | 75 |
| Repayments | (255) | (350) |
| Ending Balance | $42 | $281 |

---

The Bank maintains deposit accounts with some of its executive officers, directors, and their affiliated entities. Such deposit accounts at *December 31, 2024* and *December 31, 2023* amounted to approximately $21.3 million and $2.2 million, respectively.

**Note *7.* Premises and Equipment** 

Premises and equipment are summarized as follows at *December 31:*

---

| | | |
|:---|:---|:---|
| ***<u>(Dollars in thousands)</u>*** | ***2024*** | ***2023*** |
| Cost |  |  |
| Building | $13050 | $13005 |
| Land | 2856 | 2856 |
| Leasehold improvements | 1091 | 1091 |
| Furniture, fixtures and equipment | 4690 | 4500 |
| Computer software and equipment | 2128 | 1931 |
|  | 23815 | 23383 |
| Less accumulated depreciation | (10528) | (9439) |
| Premises and equipment, net | $13287 | $13944 |

---

Depreciation and amortization charged to operations were $1.5 million, $1.3 million, and $1.3 million during the years ended *December 31, 2024*, *December 31, 2023*, and *December 31, 2022,* respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *23*

------

**Note *8.* Intangible Assets**

The carrying amount of computer software developed was $0 and $14.7 million at *December 31, 2024* and *December 31, 2023*, respectively. The following table presents the changes in the carrying amount of computer software developed during the years ended *December 31, 2024* and *2023*.

---

| | | | | |
|:---|:---|:---|:---|:---|
| ***<u>(Dollars in thousands)</u>*** | ***Gross Intangible Asset*** | ***Accumulated Amortization*** | ***Impairment*** | ***Net Intangible Asset*** |
| December 31, 2024: |  |  |  |  |
| Computer software | $19537 | $(447) | $(19090) | $— |
| Total | $19537 | $(447) | $(19090) | $— |
| December 31, 2023: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Computer software | $14657 | $— | $— | $14657 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $14657 | $— | $— | $14657 |

---

The Company was still in the development stage of computer software where costs were capitalized as of *September 30, 2024.* Capitalization ceases when the software is substantially complete and ready for its intended use. The asset was deemed ready for its intended use and deployed to customers in *October 2024.* The intangible asset should be amortized on a straight-line basis over the estimated useful life of the asset, which was expected to be ten years. As of *December 31, 2024,* the Company had recorded $447,000 of amortization on its intangible computer software. There was no amortization recorded for the years ended *December 31, 2023* and *2022.*

During the *three* months ended *December 31, 2024,* management performed the annual impairment assessment and determined that a triggering event had occurred. The resulting calculations indicated that the fair value did *not* exceed the carrying amount of the Company's computer software intangible which resulted in a determination that the intangible had become fully impaired. The impairment charge of $19.7 million reduced fully the carrying value of the Company's intangible asset of $19.1 million and the related prepaid asset of $631,000, consisting of the enhanced value of cloud development expenses.

**Note *9.* Deposits**

Time deposits in denominations of *$250,000* or more totaled approximately $535.7 million and $445.6 million at *December 31, 2024* and *2023*, respectively.

At *December 31, 2024*, maturities of time deposits are as follows:

---

| | |
|:---|:---|
| ***<u>(Dollars in thousands)</u>*** | ***Year ended December 31,*** |
| 2025 | $615709 |
| 2026 | 120645 |
| 2027 | 28080 |
| 2028 | 54854 |
| Thereafter |  |
| Total | $819288 |

---

Wholesale deposits, as defined by the FDIC and pursuant to rule *12* CFR *337.6*(e), totaled approximately $702.8 million and $574.9 million at *December 31, 2024* and *December 31, 2023*, respectively.

**Note *10.* Borrowed Funds**

The Bank has unsecured borrowing lines with various institutions. The Bank also has a credit availability agreement with the FHLB based on a percentage of total assets. This credit availability agreement provides the Bank with access to a myriad of advance products offered by the FHLB. The rate of interest charged is based on market conditions. At *December 31, 2024*, there were commercial real estate, residential *1*-*4* and multi-family loans totaling $1.6 billion used to collateralize FHLB advances.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| ***<u>(Dollars in thousands)</u>*** | ***Outstanding Borrowings*** | ***Average balance*** | ***Weighted average interest rate paid during the year*** | ***Weighted average interest rate paid at December 31*** | ***Credit Availability*** |
| December 31, 2024 |  |  |  |  |  |
| Federal funds purchased | $— | $9941 | 5.78% | 0.00% | $144000 |
| Federal Home Loan Bank advances |  | 820 | 5.61% | 0.00% | 544648 |
| Total | $— | $10761 | 5.77% | 0.00% | $688648 |
| December 31, 2023 |  |  |  |  |  |
| Federal funds purchased | $15000 | $5583 | 5.36% | 5.65% | $114000 |
| Federal Home Loan Bank advances |  | 24959 | 4.90% | 0.00% | 504640 |
| Total | $15000 | $30542 | 4.99% | 5.65% | $618640 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *24*

------

**Note *11.* Income Taxes**

The Company files tax returns in the U.S. federal jurisdiction and required states. With few exceptions, the Bank is *no* longer subject to tax examination by tax authorities for years prior to *2020.*

The Commonwealth of Virginia assesses a Bank Franchise Tax on banks instead of a state income tax. The Bank Franchise Tax expense is reported in non-interest expense and the tax's calculation is unrelated to taxable income.

The provision for income taxes consists of the following components:

---

| | | | |
|:---|:---|:---|:---|
| ***<u>(Dollars in thousands)</u>*** | ***2024*** | ***2023*** | ***2022*** |
| Current expense | $604 | $6430 | $7608 |
| Deferred (benefit) | (4528) | (191) | (894) |
| Total | $(3924) | $6239 | $6714 |

---

Income tax expense for the years ended *December 31, 2024*, *2023*, and *2022* differed from the federal statutory rate applied to income before income taxes for the following reasons:

---

| | | | |
|:---|:---|:---|:---|
|  | ***Year ended December 31,*** | ***Year ended December 31,*** | ***Year ended December 31,*** |
| ***<u>(Dollars in thousands)</u>*** | ***2024*** | ***2023*** | ***2022*** |
| Computed "expected" income tax expense | $(2921) | $6893 | $7012 |
| Increase (decrease)in income taxes resulting from: |  |  |  |
| Tax exempt Interest | (112) | (136) | (200) |
| BOLI Income | (250) | (225) | (211) |
| Low Income Housing Investment amortization | 1700 | 386 | 130 |
| State Income Taxes | (279) | 649 | 637 |
| Restricted Stock Adjustment | (36) | (100) | (119) |
| Federal tax credits | (2363) | (1317) | (472) |
| Other Adjustments | 337 | 89 | (63) |
| Total | $(3924) | $6239 | $6714 |

---

The tax effects of temporary differences result in deferred tax assets and liabilities as presented below:

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
| ***<u>(Dollars in thousands)</u>*** | ***2024*** | ***2023*** |
| **Deferred tax assets:** |  |  |
| Allowance for credit losses | $4475 | $3798 |
| Restricted stock | 625 | 533 |
| Net loan fees | 1148 | 1253 |
| Right-of-use liability | 1490 | 1588 |
| Accrued compensation | 354 | 638 |
| Unrealized losses on securities available-for-sale | 2303 | 2240 |
| Internally developed software costs | 3612 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 209 | 320 |
| Gross deferred tax assets | 14216 | 10370 |
| **Deferred tax liabilities:** |  |  |
| Depreciation | 110 | 253 |
| Prepaid expense | 16 | 12 |
| Right-of-use asset | 1326 | 1429 |
| Internally developed software costs |  | 527 |
| Other | 110 | 215 |
| Gross deferred tax liabilities | 1562 | 2436 |
| **Net deferred tax asset** | $12654 | $7934 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *25*

------

N**ote *12.* Earnings Per Common Share**

Basic earnings per share excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock which then shared in the earnings of the Bank. There were no such potentially dilutive securities outstanding in *2024*, *2023*, or 2022.

The weighted average number of shares used in the calculation of basic and diluted earnings per share includes unvested restricted shares of the Company's common stock outstanding. Applicable guidance requires that outstanding unvested share-based payment awards that contain voting rights and rights to non-forfeitable dividends participate in undistributed earnings with common stockholders.

---

| | | | |
|:---|:---|:---|:---|
|  | ***For the Year Ended December 31,*** | ***For the Year Ended December 31,*** | ***For the Year Ended December 31,*** |
| ***<u>(Dollars in thousands)</u>*** | ***2024*** | ***2023*** | ***2022*** |
| Net income (loss) | $(9980) | $26585 | $26674 |
| Preferred stock dividends | (2156) | (2156) | $(2156) |
| Net income (loss) available to common shareholders | $(12136) | $24429 | $24518 |
| Weighted average number of shares issued, basic and diluted | 7606391 | 7522913 | 7529382 |
| Earnings (loss) per common share: |  |  |  |
| Basic and diluted earnings (loss) per common share | $(1.60) | $3.25 | $3.26 |

---

**Note *13.* Commitments and Contingencies**

The Bank's financial statements do *not* reflect various commitments and contingent liabilities which arise in the normal course of business and which involve elements of credit risk, interest risk and liquidity risk. These commitments and contingent liabilities are commitments to extend credit and standby letters of credit.

The amounts of loan commitments and standby letters of credit are set forth in the following table as of *December 31, 2024* and *2023*:

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
| ***<u>(Dollars in thousands)</u>*** | ***2024*** | ***2023*** |
| Loan commitments | $232623 | $359373 |
| Standby letters of credit | $241 | $471 |

---

Commitments to extend credit and standby letters of credit all include exposure to some credit loss in the event of nonperformance of the customer. The Bank's credit policies and procedures for credit commitments and financial guarantees are the same as those for extensions of credit that are recorded on the statements of financial condition. Because these instruments have fixed maturity dates, and because many of them expire without being drawn upon, they do *not* generally present any significant liquidity risk to the Bank. The Bank has *not* incurred any losses on commitments in *2024*, *2023*, or *2022.*

During *2020,* the Bank made a commitment of $5.0 million to the Housing Equity Fund of Virginia XXIV, L.L.C. This commitment will be funded through capital calls from the fund and we expect our investment to be fully funded by *December 31, 2025.*

During *2020,* the Bank made a commitment of $2.0 million to the Washington Housing Initiative Impact Pool, LLC. This commitment will be funded through capital calls from the fund. As of *December 31, 2024*, approximately $1.5 million has been deployed, with a remaining unfunded balance of approximately $500,000.

During *2022,* the Bank made a commitment of $2.0 million to the VCDC Equity Fund *26,* LLC. This commitment will be funded through capital calls from the fund and we expect our investment to be fully funded by *December 31, 2028.*

During *2023,* the Bank made a commitment of $2.0 million to the VCDC Equity Fund *27,* LLC. This commitment will be funded through capital calls from the fund and we expect our investment to be fully funded by *December 31, 2029.*

From time to time, we are a party to various litigation matters incidental to our ordinary conduct of our business. Management believes that *none* of these legal proceedings, individually or in the aggregate, will have a material adverse impact on the results of operations or financial condition of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *26*

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**Note *14.* Leases**

*Lessee Arrangements -* The right-of-use assets and lease liabilities are included in other assets and other liabilities, respectively, in the Consolidated Statements of Financial Condition.

Lease liabilities represent the Company's obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows. Cash flows are discounted at the Company's incremental borrowing rate in effect at the commencement date of the lease. The incremental borrowing rate was equal to the rate of borrowing from the FHLB that aligned with the term of the lease contract. Right-of-use assets represent the Company's right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor.

The Company's long-term lease agreements are classified as operating leases. Certain of these leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably assured of being exercised. The lease agreements do *not* provide for residual value guarantees and have *no* restrictions or covenants that would impact dividends or require incurring additional financial obligations.

Information regarding the Company's leases as of and for the years ended *December 31, 2024* and *2023* were as follows:

---

| | | |
|:---|:---|:---|
|  | ***As of December 31,*** | ***As of December 31,*** |
| ***<u>(Dollars in thousands)</u>*** | ***2024*** | ***2023*** |
| Lease liabilities | $6474 | $6902 |
| Right-of-use assets | $5761 | $6211 |
| Weighted-average remaining lease term – operating leases (in months). | 134.9 | 155.9 |
| Weighted-average discount rate – operating leases | 2.61% | 2.80% |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **For the year ended December 31,** | **For the year ended December 31,** | **For the year ended December 31,** |
| <u>***(Dollars in thousands)***</u> | **2024** | **2023** | **2022** |
| Lease Cost |  |  |  |
| Operating lease cost | $693 | $677 | $677 |
| Total lease costs | $693 | $677 | $677 |
| Cash paid for amounts included in measurement of lease liabilities | $671 | $639 | $623 |

---

As of *December 31, 2024*, all of the Company's lease obligations are classified as operating leases. The Company does not have any finance lease obligations.

A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total of operating lease liabilities as of *December 31, 2024* is as follows:

---

| | |
|:---|:---|
| ***<u>(Dollars in thousands)</u>*** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2025 | $691 |
| 2026 | 709 |
| 2027 | 589 |
| 2028 | 594 |
| 2029 | 605 |
| Thereafter | 4363 |
| Total undiscounted cash flows | 7551 |
| Discount | (1077) |
| Lease liabilities | $6474 |

---

*Lessor Arrangements -* The Company is the lessor for five operating leases. One lease is extended on a month-to-month basis while *four* of these leases have arrangements for over *twelve* months with an option to extend the lease terms. The lease agreements do *not* provide for residual value guarantees and have *no* restrictions or covenants that would impact dividends or require incurring additional financial obligations. The Company's leases generally do *not* contain non-lease components. Total rent income on these operating leases is approximately $10,000 per month.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *27*

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**Note *15.* Significant Concentrations of Credit Risk**

Substantially all the Bank's loans, commitments and standby letters of credit have been granted to customers located in the greater Washington, D.C. Metropolitan area. The concentrations of credit by type of loan are set forth in Note *4.*

The Bank maintains its cash and federal funds sold in correspondent bank deposit accounts. The amount on deposit at *December 31, 2024* exceeded the insurance limits of the Federal Deposit Insurance Corporation by $161.7 million. The Bank has *not* experienced any losses in such accounts and believes it is *not* exposed to any significant credit risks.

**Note *16.* Regulatory Matters**

Information presented for *December 31, 2024* and *December 31, 2023*, reflects the Basel III capital requirements that became effective *January 1, 2015* for the Bank. Under these capital requirements and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk- weightings and other factors.

The Basel III Capital Rules, a comprehensive capital framework for U.S. banking organizations, became effective for the Bank on *January 1, 2015* (subject to a phase-in period for certain provisions). Under the Basel III rules, the Bank must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer for *2023* and *2024* is 2.50%. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of Total capital, Common Equity Tier *1* capital, and Tier *1* capital (as defined in the regulations) to risk weighted assets (as defined), and of Tier *1* capital (as defined) to average assets (as defined). Management believes, as of *December 31, 2024*, the Bank meets all capital adequacy requirements to which it is subject.

The Bank's actual capital amounts and ratios are presented in the table (dollars in thousands):

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Actual** | **Actual** | **Capital Adequacy Purposes** | **Capital Adequacy Purposes** | **To Be Well Capitalized Under the Prompt Corrective Action Provision** | **To Be Well Capitalized Under the Prompt Corrective Action Provision** |
| <u>***(Dollars in thousands)***</u> | **Amount** | **Ratio** | **Amount** | **Ratio** | **Amount** | **Ratio** |
| **As of December 31, 2024** |  |  |  |  |  |  |
| Total capital (to risk-weighted assets) | $296584 | 15.69% | $151269 | ≥ 8.0% | $189086 | ≥ 10.0% |
| Common equity tier 1 capital (to risk-weighted assets) | $276847 | 14.64% | $85089 | ≥ 4.5% | $122906 | ≥ 6.5% |
| Tier 1 capital (to risk-weighted assets) | $276847 | 14.64% | $113451 | ≥ 6.0% | $151269 | ≥ 8.0% |
| Tier 1 capital (to average assets) | $276847 | 12.08% | $91708 | ≥ 4.0% | $114635 | ≥ 5.0% |
| **As of December 31, 2023** |  |  |  |  |  |  |
| Total capital (to risk-weighted assets) | $312069 | 17.18% | $145300 | ≥ 8.0% | $181625 | ≥ 10.0% |
| Common equity tier 1 capital (to risk-weighted assets) | $294553 | 16.22% | $81731 | ≥ 4.5% | $118056 | ≥ 6.5% |
| Tier 1 capital (to risk-weighted assets) | $294553 | 16.22% | $108975 | ≥ 6.0% | $145300 | ≥ 8.0% |
| Tier 1 capital (to average assets) | $294553 | 14.66% | $80375 | ≥ 4.0% | $100469 | ≥ 5.0% |

---

**Note *17.* Defined Contribution Benefit Plan**

The Bank adopted a *401*(k) defined contribution plan on *October 1, 2004,* which is administered by Principal Investments. Participants have the right to contribute up to a maximum of 15% of pretax annual compensation or the maximum allowed by the Internal Revenue Code, whichever is less. The Bank began making a matching contribution to the plan on *January 1, 2010.* The Bank matches dollar for dollar up to 5% of eligible compensation up to the employee contribution of 5% of eligible compensation. The total amount the Bank matched during *2024*, *2023*, and *2022* was $1.1 million, $901,513, and $616,721, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *28*

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**Note *18.* Stock Based Compensation Plan**

ASC Topic *718, Compensation* – *Stock Compensation,* requires the Company to recognize expense related to the fair value of share-based compensation awards in net income. Total compensation expense for restricted stock recorded for the years ended *December 31, 2024*, *December 31, 2023*, and *December 31, 2022* were $2.8 million, $2.5 million, and $2.5 million, respectively.

On *July 17, 2019,* the Board of Directors of the Company adopted, and the Company's shareholders subsequently approved, the MainStreet Bank *2019* Equity Incentive Plan (the *"2019* Plan"), to provide officers, other selected employees and directors of the Company with additional incentives to promote the growth and performance of the Company. During the year ended *December 31, 2024*, there were 119,681 restricted shares awarded, 1,746 restricted shares were forfeited, and no stock options were awarded under the *2019* Plan. The restricted shares awarded during *2024* vest equally on an annual basis over a three, five, or ten year period. As a result of the stockholders' approval of the *2019* Plan, *no* additional awards have been or will be made under the Company's *2016* Plan, although all awards that were outstanding under the *2016* Plan as of *July 17, 2019* remained outstanding in accordance with their terms.

A summary of the status of the Bank's nonvested restricted stock shares as of *December 31, 2024* and changes during the year ended *December 31, 2024* is presented below:

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **<u>Nonvested Restricted Stock Shares</u>** | ***Shares*** | ***Weighted Average Grant Date Fair Value*** |
| Nonvested at January 1, 2024 | 228300 | $24.15 |
| Granted | 119681 | 21.55 |
| Vested | (108518) | 22.48 |
| Forfeited | (1746) | 21.96 |
| Nonvested at December 31, 2024 | 237717 | $23.62 |

---

As of *December 31, 2024*, there was $3.0 million of total unrecognized compensation cost related to nonvested restricted stock awards. The cost is expected to be recognized over approximately five years. The total fair value of shares vested during the years ended *December 31, 2024*, *2023*, and *2022* was $2.0 million, $2.9 million, and $2.0 million, respectively.

**Note *19.* Derivatives and Risk Management Activities**

The Bank uses derivative financial instruments (or "derivatives") primarily to assist customers with their risk management objectives. The Bank classifies these items as free standing derivatives consisting of customer accommodation interest rate loan swaps (or "interest rate loan swaps"). The Bank enters into interest rate swaps with certain qualifying commercial loan customers to meet their interest rate risk management needs. The Bank simultaneously enters into interest rate swaps with dealer counterparties, with identical notional amounts and terms. The net result of these interest rate swaps is that the customer pays a fixed rate of interest and the Bank receives a floating rate. These back-to-back interest rate loan swaps qualify as financial derivatives with fair values reported in "Other assets" and "Other liabilities" in the consolidated financial statements. Changes in fair value are recorded in other noninterest expense and net to *zero* because of the identical amounts and terms of the interest rate loan swaps.

The following tables summarize key elements of the Banks's derivative instruments as of *December 31, 2024* and *December 31, 2023*.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| ***<u>December 31, 2024</u>*** |  |  |  |  |  |
| **Customer-related interest rate contracts** |  |  |  |  |  |
| ***<u>(Dollars in thousands)</u>*** | ***Notional Amount*** | ***Positions*** | ***Assets*** | ***Liabilities*** | ***Collateral Pledges*** |
| Matched interest rate swap with borrower | $230417 | 43 | $— | $21715 | $— |
| Matched interest rate swap with counterparty | $230417 | 43 | $21715 | $— | $— |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| ***<u>December 31, 2023</u>*** |  |  |  |  |  |
| **Customer-related interest rate contracts** |  |  |  |  |  |
| ***<u>(Dollars in thousands)</u>*** | ***Notional Amount*** | ***Positions*** | ***Assets*** | ***Liabilities*** | ***Collateral Pledges*** |
| Matched interest rate swap with borrower | $224008 | 42 | $— | $18569 | $— |
| Matched interest rate swap with counterparty | $224008 | 42 | $18569 | $— | $— |

---

The Company is able to recognize fee income upon execution of the interest rate swap contract. Interest rate swap fee income for the *twelve* months ended *December 31, 2024*, *2023*, and *2022* was $0, $0, and $619,000, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *29*

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**Note *20.* Fair Value Presentation**

In accordance with FASB ASC *820,* "Fair Value Measurements and Disclosure", the Bank uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The fair value of a financial instrument is 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 for the asset or liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are *no* quoted market prices for the Bank's various financial instruments. In cases where quoted market prices are *not* available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates *may not* be realized in an immediate settlement of the instrument.

The fair value guidance provides a consistent definition of fair value, which focuses on exit price in the principal or most advantageous market for the asset or liability in an orderly transaction (that is, *not* a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques *may* be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is the most representative of fair value under current market conditions.

In accordance with the guidance, a hierarchy of valuation techniques is based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Bank's market assumptions. The *three* levels of the fair value hierarchy under FASB ASC *820* based on these *two* types of inputs are as follows:

Level *1* –Valuation is based on quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.

Level *2* –Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market.

Level *3* –Valuation is based on model-based techniques that use *one* or more significant inputs or assumptions that are unobservable in the market.

The following describes the valuation techniques used by the Bank to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements:

**Securities available for sale**

Securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level *1*). If quoted market prices are *not* available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Third party vendors compile prices from various sources and *may* determine the fair value of identical or similar securities by using pricing models that consider observable market data (Level *2*). In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level *3* of the valuation hierarchy. As of *December 31, 2024* and *December 31, 2023*, the Bank's entire portfolio of available for sale securities are considered to be Level *2* securities, with the exception of *one* subordinated debt security and *one* preferred stock security, which are considered to be level *3* securities.

**Derivative asset (liability)** – **interest rate swaps on loans**

As discussed in "Note *19:* Derivatives and Risk Management Activities", the Bank recognizes interest rate swaps at fair value on a recurring basis. The Bank has contracted with a *third* party vendor to provide valuations for these interest rate swaps using standard valuation techniques and therefore classifies such interest rate swaps as Level *2.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *30*

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The following tables provide the fair value for assets required to be measured and reported at fair value on a recurring basis as of *December 31, 2024* and *December 31, 2023*:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** |
| ***<u>(Dollars in thousands)</u>*** | ***Level 1*** | ***Level 2*** | ***Level 3*** | ***Total*** |
| ***<u>Assets:</u>*** |  |  |  |  |
| Investment securities available-for-sale: |  |  |  |  |
| Collateralized Mortgage Backed | $— | $17193 | $— | $17193 |
| Subordinated Debt |  | 7657 | 250 | 7907 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Preferred Stock |  |  | 453 | 453 |
| Municipal Securities |  |  |  |  |
| Taxable |  | 8201 |  | 8201 |
| Tax-exempt |  | 19621 |  | 19621 |
| U.S. Government Agencies |  | 2372 |  | 2372 |
| Derivative asset – interest rate swap on loans |  | 21715 |  | 21715 |
| Total | $— | $76759 | $703 | $77462 |
| ***<u>Liabilities:</u>*** |  |  |  |  |
| Derivative liability – interest rate swap on loans |  | 21715 |  | 21715 |
| Total | $— | $21715 | $— | $21715 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***December 31, 2023*** | ***December 31, 2023*** | ***December 31, 2023*** | ***December 31, 2023*** |
| ***<u>(Dollars in thousands)</u>*** | ***Level 1*** | ***Level 2*** | ***Level 3*** | ***Total*** |
| ***<u>Assets:</u>*** |  |  |  |  |
| Investment securities available-for-sale: |  |  |  |  |
| Collateralized Mortgage Backed | $— | $19515 | $— | $19515 |
| Subordinated Debt |  | 8217 | 250 | 8467 |
| Municipal Securities |  |  |  |  |
| Taxable |  | 8307 |  | 8307 |
| Tax-exempt |  | 20742 |  | 20742 |
| U.S. Government Agencies |  | 2897 |  | 2897 |
| Derivative asset – interest rate swap on loans |  | 18569 |  | 18569 |
| Total | $— | $78247 | $250 | $78497 |
| ***<u>Liabilities:</u>*** |  |  |  |  |
| Derivative liability – interest rate swap on loans |  | 18569 |  | 18569 |
| Total | $— | $18569 | $— | $18569 |

---

---

| | |
|:---|:---|
| **<u>*Reconciliation of Level 3 Inputs*</u>** | **<u>*Reconciliation of Level 3 Inputs*</u>** |
| ***<u>Dollars in thousands</u>*** | ***Subordinated Debt*** |
| December 31, 2023 fair value | $250 |
| Additions | 453 |
| December 31, 2024 fair value | $703 |

---

Certain assets are measured at fair value on a nonrecurring basis in accordance with GAAP. Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets.

The following describes the valuation techniques used by the Bank to measure certain assets recorded at fair value on a nonrecurring basis in the financial statements:

**Individually evaluated**

Loans are individually evaluated when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will *not* be collected when due. The measurement of loss associated with individually evaluated loans can be based on either the observable market price of the loan or the fair value of the collateral. Collateral *may* be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The vast majority of the collateral is real estate. The value of real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Bank using observable market data (Level *2*). However, if the collateral value is significantly adjusted due to differences in the comparable properties, or is discounted by the Bank because of marketability, then the fair value is considered Level *3.* The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business' financial statements if *not* considered significant. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level *3*). Individually evaluated loans allocated to the Allowance for Credit Losses are measured at fair value on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as provision for credit losses on the Consolidated Statements of Income.

**Other real estate owned**

Other real estate owned ("OREO") is measured at fair value less cost to sell, based on an appraisal conducted by an independent, licensed appraiser outside of the Bank. If the collateral value is significantly adjusted due to differences in the comparable properties, or is discounted by the Bank because of marketability, then the fair value is considered Level *3.* OREO is measured at fair value on a nonrecurring basis. Any initial fair value adjustment is charged against the Allowance for Credit Losses. Subsequent fair value adjustments are recorded in the period incurred and included in other non-interest expense on the Consolidated Statements of Income.

The Bank did not have any other real estate owned assets or individually evaluated loans measured at fair value as of *December 31, 2024* and *December 31, 2023*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *31*

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**Fair Value of Financial Instruments**

FASB ASC *825,* Financial Instruments, requires disclosure about fair value of financial instruments, including those financial assets and financial liabilities that are *not* required to be measured and reported 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. Additionally, in accordance with ASU *2016*-*01,* the Company uses the exit price notion, rather than the entry price notion, in calculating the fair values of financial instruments *not* measured at fair value on a recurring basis.

The following tables reflect the carrying amounts and estimated fair values of the Company's financial instruments whether or *not* recognized on the Consolidated Statements of Financial Condition at fair value.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **December 31, 2024** | ***Carrying*** | ***Estimated*** | ***Quoted Prices in Active Markets for Identical Assets*** | ***Significant Other Observable Inputs*** | ***Significant Unobservable Inputs*** |
| ***(Dollars in thousands)*** | ***Amount*** | ***Fair Value*** | ***Level 1*** | ***Level 2*** | ***Level 3*** |
| Assets: |  |  |  |  |  |
| Cash and cash equivalents | $207708 | $207708 | $207708 | $— | $— |
| Restricted equity securities | 30623 | 30623 |  | 30623 |  |
| Securities: |  |  |  |  |  |
| Available-for-sale | 55747 | 55747 |  | 55747 |  |
| Held-to-maturity | 16078 | 15865 |  | 15865 |  |
| Loans, net | 1810556 | 1806846 |  |  | 1806846 |
| Derivative asset – interest rate swap on loans | 21715 | 21715 |  | 21715 |  |
| Bank owned life insurance | 39507 | 39507 |  | 39507 |  |
| Accrued interest receivable | 9059 | 9059 |  | 9059 |  |
| Liabilities: |  |  |  |  |  |
| Deposits | $1907794 | $1910018 | $— | $1088506 | $821512 |
| Subordinated debt, net | 73039 | 67239 |  | 67239 |  |
| Derivative liability – interest rate swaps on loans | 21715 | 21715 |  | 21715 |  |
| Accrued interest payable | 3362 | 3362 |  | 3362 |  |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **December 31, 2023** | ***Carrying*** | ***Estimated*** | ***Quoted Prices in Active Markets for Identical Assets*** | ***Significant Other Observable Inputs*** | ***Significant Unobservable Inputs*** |
| ***(Dollars in thousands)*** | ***Amount*** | ***Fair Value*** | ***Level 1*** | ***Level 2*** | ***Level 3*** |
| Assets: |  |  |  |  |  |
| Cash and cash equivalents | $114513 | $114513 | $114513 | $— | $— |
| Restricted equity securities | 24356 | 24356 |  | 24356 |  |
| Securities: |  |  |  |  |  |
| Available-for-sale | 59928 | 59928 |  | 59928 |  |
| Held-to-maturity | 17275 | 17163 |  | 17163 |  |
| Loans, net | 1705137 | 1701418 |  |  | 1701418 |
| Derivative asset – interest rate swap on loans | 18569 | 18569 |  | 18569 |  |
| Bank owned life insurance | 38318 | 38318 |  | 38318 |  |
| Accrued interest receivable | 10725 | 10725 |  | 10725 |  |
| Liabilities: |  |  |  |  |  |
| Deposits | $1686127 | $1685487 | $— | $989791 | $695696 |
| Subordinated debt, net | 72642 | 56513 |  | 56513 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal funds purchased | 15000 | 14968 |  |  | 14968 |
| Derivative liability – interest rate swaps on loans | 18569 | 18569 |  | 18569 |  |
| Accrued interest payable | 2845 | 2845 |  | 2845 |  |

---

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do *not* reflect any premium or discount that could result from offering for sale at *one* time the Bank's entire holdings of a particular financial instrument. Because *no* market exists for a significant portion of the Bank's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment, and therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on-balance sheet and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are *not* considered financial instruments. Significant assets that are *not* considered financial assets include deferred income taxes and bank premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have *not* been considered in the estimates.

The above information should *not* be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company's assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company's disclosures and those of other companies *may not* be meaningful. There were *no* changes in methodologies or transfers between levels at *December 31, 2024* from *December 31, 2023*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *32*

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**Note *21.* Other Real Estate Owned**

At *December 31, 2024* and *2023*, the Company did not have other real estate owned. Expenses applicable to other real estate owned during the years ended *December 31, 2024*, *2023*, and *2022* include the following:

---

| | | | |
|:---|:---|:---|:---|
| ***<u>(Dollars in thousands)</u>*** | ***2024*** | ***2023*** | ***2022*** |
| Net loss on sales of real estate | $– $|  | $4 |
| Loss on valuation, net | – |  | 70 |
| Operating expenses (income), net of rental income | – |  | (36) |
| Balance, end of year | $– $|  | $38 |

---

As of *December 31, 2024*, there were no real estate loans in the process of foreclosure.

**Note *22.* Accumulated Other Comprehensive Loss**

The following table presents the cumulative balances of the components of accumulated other comprehensive loss net of deferred taxes, as of *December 31, 2024* and *December 31, 2023*:

---

| | | |
|:---|:---|:---|
| ***<u>(Dollars in thousands)</u>*** | ***2024*** | ***2023*** |
| Unrealized loss on available-for-sale securities | $(10014) | $(9737) |
| Unrealized loss on securities transferred to HTM |  | (6) |
| Tax effect | 2303 | 2265 |
| Total accumulated other comprehensive loss | $(7711) | $(7478) |

---

**Note *23.* Capital** 

On *September 15, 2020,* the Company issued 1,000,000 depositary shares, each representing a *1/40th* interest in a share of the Company's Fixed Rate Series A Noncumulative Perpetual Preferred Stock, par value $1.00 per share, with a liquidation preference of $1,000 per share (equivalent to $25 per depositary share). Dividends will accrue on the depositary shares at a fixed rate equal to 7.50% per annum. On *September 25, 2020,* the Company completed the sale of an additional 150,000 depositary shares, pursuant to the underwriters' full exercise of their over-allotment option to purchase additional depositary shares.

On *October 22, 2020,* the Board of Directors of the Company authorized a common stock repurchase program to repurchase up to $17.0 million of the Company's common stock at the discretion of management. The new common stock repurchase program replaced the Company's previous repurchase plan which was authorized on *September 18, 2019.* The Company repurchased approximately $12.8 million of common stock during the year ended *December 31, 2020* and $4.0 million of common stock during the year ended *December 31, 2022,* under this plan. The Company did not repurchase any common stock during the year ended *December 31, 2021.*

On *May 18, 2022,* the Board of Directors of the Company authorized a common stock repurchase program to repurchase up to $7.5 million of the Company's common stock at the discretion of management. The new common stock repurchase program replaced the Company's previous repurchase plan which was authorized on *October 22, 2020.* The Company repurchased approximately $732,000, $43,000, and $6.9 million of common stock during the years ended *December 31, 2024*, *2023,* and 2022, respectively.

At the Annual Meeting of shareholders held on *May 15, 2024,* the Company's common shareholders approved a proposal to increase the number of shares of authorized common stock from 650,000 to 1,150,000 shares.

**Note *24.* Subordinated Notes**

On *April 6, 2021,* the Company completed the issuance of $30.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes in a private placement transaction to various accredited investors. The net proceeds of the offering are intended to retire the subordinated debt issued in *2016,* to support growth and be used for other general business purposes. The notes have a maturity date of *April 15, 2031* and have an annual fixed interest rate of 3.75% until *April 15, 2026.* Thereafter, the notes will have a floating interest rate based on *three*-month SOFR rate plus *302* basis points (3.02%) (computed on the basis of a *360*-day year of *twelve 30*-day months) from and including *April 15, 2026* to the maturity date or any early redemption date. Interest will be paid semi-annually, in arrears, on *April 15* and *October 15* of each year during the time that the notes remain outstanding through the fixed interest rate period or earlier redemption date. Interest will be paid quarterly, in arrears, on *April 15, July 15, October 15* and *January 15* throughout the floating interest rate period or earlier redemption date.

On *March 1, 2022,* the Company completed the issuance of $43.8 million in aggregate principal amount of fixed-to-floating rate subordinated notes in a private placement transaction to various accredited investors. The net proceeds of the offering will be used to support growth and for other general business purposes. The notes have a maturity date of *March 15, 2032* and have an annual fixed interest rate of 4.00% until *March 15, 2027.* Thereafter, the notes will have a floating interest rate based on *three*-month SOFR rate plus *233* basis points (2.33%) (computed on the basis of a *360*-day year of *twelve 30*-day months) from and including *March 15, 2027* to the maturity date or any early redemption date. Interest will be paid semi-annually, in arrears, on *March 15* and *September 15* of each year during the time that the notes remain outstanding through the fixed interest rate period or earlier redemption date. Interest will be paid quarterly, in arrears, on *March 15, June 15, September 15* and *December 15* throughout the floating interest rate period or earlier redemption date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 33

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**Note *25.* Condensed Parent Company Financial Statements**

Condensed financial statements pertaining only to the Company are presented below. The investment in subsidiary is accounted for using the equity method of accounting.

The payment of dividends by the subsidiary is restricted by various regulatory limitations. Banking regulations also prohibit extensions of credit to the parent company unless appropriately secured by assets.

**Condensed Parent Company Only**

**Condensed Statements of Financial Condition**

**(Dollars in thousands)**

---

| | | |
|:---|:---|:---|
| **December 31,** | ***2024*** | ***2023*** |
| **ASSETS** |  |  |
| Cash on deposit with subsidiary | $5356 | $3616 |
| Restricted securities, at cost | 5362 | 3123 |
| Investment in subsidiary | 269239 | 287075 |
| Other assets | 1902 | 1190 |
| **Total Assets** | $281859 | $295004 |
| **Liabilities:** |  |  |
| Other liabilities | $829 | $845 |
| Subordinated debt, net of debt issuance costs | 73039 | 72642 |
| Stockholders' equity | 207991 | 221517 |
| **Total Liabilities and Stockholders' Equity** | $281859 | $295004 |

---

**Condensed Statements of Income (Loss)**

**(Dollars in thousands)**

---

| | | | |
|:---|:---|:---|:---|
| **For the Year Ended December 31,** | ***2024*** | ***2023*** | ***2022*** |
| **Income** |  |  |  |
| Dividends from subsidiary | $5203 | $5166 | $4038 |
| **Expenses** |  |  |  |
| Subordinated debt interest expense | 3255 | 3288 | 2936 |
| Non-interest expense | 103 | 42 | 26 |
| Total expenses | 3358 | 3330 | 2962 |
| Undistributed earnings of subsidiary | (12733) | 23546 | 24797 |
| **Net income (loss) before income taxes** | $(10888) | $25382 | $25873 |
| Income tax (benefit) expense | (908) | 1203 | 801 |
| **Net income (loss)** | $(9980) | $26585 | $26674 |
| Less: preferred stock dividends | (2156) | (2156) | (2156) |
| **Net income (loss) available to common shareholders** | $(12136) | $24429 | $24518 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 34

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**Condensed Statements of Cash Flows**

**(Dollars in thousands)**

---

| | | | |
|:---|:---|:---|:---|
| **Year Ended December 31,** | ***2024*** | ***2023*** | ***2022*** |
| **CASH FLOWS FROM OPERATING ACTIVITIES:** |  |  |  |
| Net income (loss) | $(9980) | $26585 | $26674 |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |  |  |
| Equity in undistributed earnings (losses) of subsidiary | 12733 | (23546) | (24797) |
| Stock based compensation | 2838 | 2491 | 2519 |
| Depreciation, amortization, and accretion, net | 1308 | 397 | 328 |
| Decrease (increase) in other assets | 295 | (1063) | 2014 |
| Increase (decrease) in other liabilities | (16) | 829 | (274) |
| **Net cash provided by operating activities** | 7178 | 5693 | 6464 |
| **CASH FLOWS FROM INVESTING ACTIVITIES:** |  |  |  |
| Purchase of restricted equities | (3504) | (1944) | (1430) |
| Investment in bank subsidiary | 4000 |  | (32000) |
| **Net cash (used in) provided by investing activities** | 496 | (1944) | (33430) |
| **CASH FLOWS FROM FINANCING ACTIVITIES:** |  |  |  |
| Repurchase of common stock | (732) | (43) | (6918) |
| Cash dividends paid on preferred stock | (2156) | (2156) | (2156) |
| Cash dividend paid on common stock | (3046) | (3011) | (1882) |
| Net increase in subordinated debt |  |  | 42623 |
| **Net cash provided by (used in) financing activities** | (5934) | (5210) | 31667 |
| **NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS** | 1740 | (1461) | 4701 |
| **CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR** | 3616 | 5077 | 376 |
| **CASH AND CASH EQUIVALENTS, END OF YEAR** | $5356 | $3616 | $5077 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 35

------

**Note *26.* Segment Information** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Company's reportable segments are determined by the CFO and the President of Avenu, who are the designated chief operating decision makers, based upon information provided about the Company's products and services offered, primarily distinguished between core banking and financial technology operations. They are also distinguished by the level of information provided to the chief operating decision makers, who use such information to review performance of various components of the business, which are then aggregated if operating performance, products/services, and customers are similar. The chief operating decision makers evaluate the financial performance of the Company's business components such as by evaluating revenue streams, significant expenses, and budget to actual results in assessing the performance of the Company's segments and in the determination of allocating resources. The chief operating decision makers use revenue streams to evaluate product pricing and significant expenses to assess performance of each segment to evaluate compensation of certain employees. Segment pretax profit or loss is used to assess the performance of the core banking segment by monitoring the margin between interest income and interest expense. Financial technology segment pretax profit or loss is used to assess the performance of the financial technology segment by monitoring the service charge income received on customer transactions. Loans and investments provide the revenues in the core banking segment, and service charges provide the revenues in the financial technology segment. Interest expense, provisions for credit losses, and salaries and employee benefits provide the significant expenses in the core banking segment. Salaries and employee benefits and outside services provide the significant expenses in the financial technology segment. Additionally, the intangible impairment is a significant expense in the financial technology segment for *2024.* All operations are domestic.

Accounting policies for segments are the same as those described in Note *1.* Segment performance is evaluated using income before income taxes. Indirect expenses are allocated on revenue. Transactions among segments are made at fair value. Information reported internally for performance assessment by the chief operating decision makers follows, inclusive of reconciliations of significant segment totals to the financial statements:

---

| | | | |
|:---|:---|:---|:---|
|  | ***For the Year ended December 31, 2024*** | ***For the Year ended December 31, 2024*** | ***For the Year ended December 31, 2024*** |
| <u>2024</u> | ***Core Banking*** | ***Financial Technology*** | ***Consolidated*** |
| Interest income - loans, including fees - (1) | $123609 | $1568 | $125177 |
| Interest income - investments, other | 9438 |  | 9438 |
| Service charge income | 1298 | 698 | 1996 |
| Other fee income | 1256 |  | 1256 |
| Total | $135601 | $2266 | $137867 |
| Less: |  |  |  |
| Interest expense - deposits | 68062 | 103 | 68165 |
| Interest expense - subordinated debt, other | 3876 |  | 3876 |
| Total consolidated interest expense | 71938 | 103 | 72041 |
| Segment gross profit | $63663 | $2163 | $65826 |
| Less: |  |  |  |
| Provision for credit losses | 6763 |  |  |
| Salaries and employee benefits | 28207 | 2268 |  |
| Furniture and equipment expenses | 2944 | 692 |  |
| Advertising and marketing | 2058 | 141 |  |
| Outside services | 1753 | 1874 |  |
| Computer software intangible impairment |  | 19721 |  |
| Other operating expenses | 12473 | 836 |  |
| Total non-interest expense | 54198 | 25532 |  |
| Segment profit (loss) | $9465 | $(23369) | $(13904) |
| Other segment disclosures |  |  |  |
| Interest income | 133047 | 1568 | 134615 |
| Interest expense | 71938 | 103 | 72041 |
| Depreciation | 1450 | 20 | 1470 |
| Amortization | 2717 | 447 | 3164 |
| Other significant noncash items: |  |  |  |
| Provision for credit losses | 6763 |  | 6763 |
| Computer software intangible impairment |  | 19721 | 19721 |
| Segment assets | 2228036 | 62 | 2228098 |
| Expenditures for segment assets | 158263 | 4880 | 163143 |

---

(*1*) - Includes transfer pricing on average deposits outstanding for the period

Other operating expenses for the core banking segment are occupancy expenses, franchise taxes, FDIC insurance, data processing expenses, administrative expenses and other operating expenses, which can all be seen on the Consolidated Statements of Income. Additionally, board expenses, shareholder expenses, settlement costs, workout expenses, and fees for brokered deposits, makeup the other operating expense line item on the Consolidated Statements of Income. Other operating expenses for the financial technology segment are administrative expenses, armored car services, and computer software amortization.

The core banking segment reported segment profit before income taxes of $9.5 million for the year ended *December 31, 2024,* compared to $32.9 million for the year ended *December 31, 2023.* The decrease in core banking segment profit or loss was primarily related to:

• &nbsp;&nbsp;&nbsp;&nbsp;higher interest expense due primarily to higher rates on deposits and higher balances of interest bearing deposits, specifically money market and time deposits;

• higher provision for credit losses due primarily to loan growth, charge offs taken in *2024,* as well as increasing qualitative factors within our model assumptions for increased levels of past dues and potential weaknesses in underlying collateral for certain asset classes;

• higher other operating expenses due primarily to increases in meals and entertainment, board and shareholder expenses, settlement and workout costs, DDA losses, and brokered deposits fees.

The financial technology segment reported segment loss before income taxes of $23.4 million for the year ended *December 31, 2024,* compared to segment loss of $71,000 for the year ended *December 31, 2023.* The increase in financial technology segment loss was primarily related to:

• &nbsp;&nbsp;&nbsp;&nbsp;impairment of the computer software intangible asset. The impairment charge of $19.7 million reduced fully the carrying value of the Company's intangible asset of $19.1 million and the related prepaid asset of $621,000, consisting of the enhanced value of cloud development expenses;

• &nbsp;&nbsp;&nbsp;&nbsp;higher salaries and employee benefits as well as outside services, primarily due to the development of the Avenu SaaS software program;

• &nbsp;&nbsp;&nbsp;&nbsp;lower transfer pricing income for *2024* due primarily to lower deposit balances in the financial technology segment in *2024* compared to *2023.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *36*

------

---

| | | | |
|:---|:---|:---|:---|
|  | ***For the Year ended December 31, 2023*** | ***For the Year ended December 31, 2023*** | ***For the Year ended December 31, 2023*** |
| <u>2023</u> | ***Core Banking*** | ***Financial Technology*** | ***Consolidated*** |
| Interest income - loans, including fees - (1) | $114120 | $2362 | $116482 |
| Interest income - investments, other | 7939 |  | 7939 |
| Service charge income | 1281 | 868 | 2149 |
| Other fee income | 1191 |  | 1191 |
| Total | $124531 | $3230 | $127761 |
| Less: |  |  |  |
| Interest expense - deposits | 42850 | 18 | 42868 |
| Interest expense - subordinated debt, other | 4811 |  | 4811 |
| Total consolidated interest expense | 47661 | 18 | 47679 |
| Segment gross profit | $76870 | $3212 | $80082 |
| Less: |  |  |  |
| Provision for credit losses | 1642 |  |  |
| Salaries and employee benefits | 26688 | 1579 |  |
| Furniture and equipment expenses | 2431 | 356 |  |
| Advertising and marketing | 2208 | 135 |  |
| Outside Services | 1206 | 838 |  |
| Other Operating expenses | 9800 | 375 |  |
| Total Non-Interest Expense | 43975 | 3283 |  |
| Segment profit (loss) | $32895 | $(71) | $32824 |
| Other segment disclosures |  |  |  |
| Interest income | 122059 | 2362 | 124421 |
| Interest expense | 47661 | 18 | 47679 |
| Depreciation | 1242 | 20 | 1262 |
| Amortization | 1483 |  | 1483 |
| Other significant noncash items: |  |  |  |
| Provision for credit losses | 1642 |  | 1642 |
| Segment assets | 2020693 | 14739 | 2035432 |
| Expenditures for segment assets | 138761 | 5508 | 144269 |

---

(*1*) Includes transfer pricing on average deposits outstanding for the period

Other operating expenses for the core banking segment are occupancy expenses, franchise taxes, FDIC insurance, data processing expenses, administrative expenses and other operating expenses, which can all be seen on the Consolidated Statements of Income. Additionally, board expenses, shareholder expenses, and settlement costs, makeup the other operating expense line item on the Consolidated Statements of Income. Other operating expenses for the financial technology segment are administrative expenses and armored car services.

The core banking segment reported segment profit before income taxes of $32.9 million for the year ended *December 31, 2023,* compared to $33.8 million for the year ended *December 31, 2022.* The decrease in core banking segment profit was primarily related to:

• lower provision for credit losses in *2023* due primarily to less loan growth in *2023* compared to *2022.* Loan originations for the years ended *December 31, 2023* and *December 31, 2022* were $447.6 million and $599.9 million.

The financial technology segment reported segment loss before income taxes of $71,000 for the year ended *December 31, 2023,* compared to segment loss of $439,000 for the year ended *December 31, 2022.* The decrease in financial technology segment loss was primarily related to:

• &nbsp;&nbsp;&nbsp;&nbsp;higher transfer pricing income for *2023* due primarily to the increasing federal funds rate in *2023;*

• &nbsp;&nbsp;&nbsp;&nbsp;higher salaries and employee benefits as well as outside services, primarily due to the development of the Avenu SaaS software program.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *37*

------

---

| | | | |
|:---|:---|:---|:---|
|  | ***For the Year ended December 31, 2022*** | ***For the Year ended December 31, 2022*** | ***For the Year ended December 31, 2022*** |
| <u>2022</u> | ***Core Banking*** | ***Financial Technology*** | ***Consolidated*** |
| Interest income - loans, including fees - (1) | $77954 | $1091 | $79045 |
| Interest income - investments, other | 4973 |  | 4973 |
| Service charge income | 1414 | 1006 | 2420 |
| Other fee income | 2241 |  | 2241 |
| Total | $86582 | $2097 | $88679 |
| Less: |  |  |  |
| Interest expense - deposits | 10080 | 6 | 10086 |
| Interest expense - subordinated debt, other | 3283 |  | 3283 |
| Total consolidated interest expense | 13363 | 6 | 13369 |
| Segment gross profit | $73219 | $2091 | $75310 |
| Less: |  |  |  |
| Provision for loan losses | 2398 |  |  |
| Salaries and employee benefits | 22623 | 1178 |  |
| Furniture and equipment expenses | 2658 | 128 |  |
| Advertising and marketing | 1993 | 311 |  |
| Outside services | 1532 | 543 |  |
| Other operating expenses | 8188 | 370 |  |
| Total non-interest expense | 39392 | 2530 |  |
| Segment profit (loss) | $33827 | $(439) | $33388 |
| Other segment disclosures |  |  |  |
| Interest income | 82927 | 1091 | 84018 |
| Interest expense | 13363 | 6 | 13369 |
| Depreciation | 1274 | 5 | 1279 |
| Amortization | 1300 |  | 1300 |
| Other significant noncash items: |  |  |  |
| Provision for loan losses | 2398 |  | 2398 |
| Segment assets | 1868944 | 9253 | 1878197 |
| Expenditures for segment assets | 503542 | 6656 | 510198 |

---

(*1*) Includes transfer pricing on average deposits outstanding for the period

Other operating expenses for the core banking segment are occupancy expenses, franchise taxes, FDIC insurance, data processing expenses, administrative expenses and other operating expenses, which can all be seen on the Consolidated Statements of Income. Additionally, board expenses, shareholder expenses, armored car services, and ATM expenses, makeup the other operating expense line item on the Consolidated Statements of Income. Other operating expenses for the financial technology segment are administrative expenses and armored car services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *38*

------

**Item 9A. Controls and Procedures**

*Disclosure Controls and Procedures.* Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of December 31, 2024. Based on their evaluation of the Company's disclosure controls and procedures, the Company's Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and regulations are designed and operating in an effective manner.

*Management*'*s Report on Internal Control over Financial Reporting.* Management of the Company is also responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management, including the Company's principal executive and principal financial officer, assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in *Internal Control* – *Integrated Framework (2013)*. Based on our assessment, we believe that, as of December 31, 2024, the Company's internal control over financial reporting was effective based on those criteria.

The effectiveness of the Company's internal control over financial reporting as of December 31, 2024 has been audited by Yount, Hyde & Barbour, P.C. (YHB), the independent registered public accounting firm that also audited the Company's consolidated financial statements included in this 10-K/A. YHB's attestation report on the Company's internal control over financial reporting is included in this amendment to Form 10-K/A.

The 2024 consolidated financial statements have been audited by the independent registered public accounting firm of Yount, Hyde, & Barbour. P.C. Personnel from YHB were given unrestricted access to all financial records and related data, including minutes of all meetings of the Board of Directors and Committees thereof. Management believes that all representation made to the independent auditors were valid and appropriate. The resulting report from YHB accompanies the consolidated financial statements.

*Changes in Internal Controls.* There were no changes in the Company's internal control over financial reporting during the Company's fourth quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 39

------

**Item 15. Exhibits and Financial Statement Schedules** 

---

| | |
|:---|:---|
| **Exhibit**<br> **Number** | **Description** |
| 2.1 | [Agreement and Plan of Reorganization (incorporated by reference to Exhibit 2.1 to the Company's Form 10-12B filed on February 15, 2019)](http://www.sec.gov/Archives/edgar/data/1693577/000119312519042520/d704065dex21.htm) |
| 3.1 | [Restated Articles of Incorporation](ex_931661.htm) |
| 3.2 | [Bylaws (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed on November 16, 2023)](http://www.sec.gov/Archives/edgar/data/1693577/000143774922027837/ex_448322.htm) |
| 4.1 | [Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company's Form 10-12B filed on February 15, 2019)](http://www.sec.gov/Archives/edgar/data/1693577/000119312519042520/d704065dex41.htm) |
| 4.2 | [Description of the Registrant's Securities Registered pursuant to section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.3 to the Company's Form 10-K filed on March 23, 2021)](http://www.sec.gov/Archives/edgar/data/1693577/000156459022011471/mnsb-ex43_6.htm) |
| 4.3 | [Deposit Agreement, dated as of September 15, 2020, by and among the Company, American Stock Transfer and Trust Company, LLC, and the holder from time to time of the Depositary Receipts decided therein (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed on September 15, 2020)](http://www.sec.gov/Archives/edgar/data/1693577/000119312520246076/d67591dex41.htm) |
| 4.4 | [Form of Depositary Receipt representing the Depositary Shares (incorporated by reference to Exhibit 4.2 to the Company's Form 8-K filed on September 15, 2020)](http://www.sec.gov/Archives/edgar/data/1693577/000119312520246076/d67591dex41.htm) |
| 4.5 | [Form of Fixed-to-Floating Rate Subordinated Notes Due 2031 (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed on April 7, 2021)](http://www.sec.gov/Archives/edgar/data/0001693577/000156459021017898/mnsb-ex41_8.htm) |
| 4.6 | [Form of 4.00% Fixed-to-Floating Rate Subordinated Notes Due 2032 (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed on March 2, 2022)](http://www.sec.gov/Archives/edgar/data/1693577/000156459022008334/mnsb-ex41_8.htm) |
| 10.1 | [2016 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Form 10-12B filed on February 15, 2019)](http://www.sec.gov/Archives/edgar/data/1693577/000119312519042520/d704065dex101.htm) |
| 10.2 | [Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.2 to the Company's Form 10-12B filed on February 15, 2019)](http://www.sec.gov/Archives/edgar/data/1693577/000119312519042520/d704065dex102.htm) |
| 10.3 | [Employment Agreement with Jeff W. Dick (incorporated by reference to Exhibit 10.3 to the Company's Form 10-12B filed on February 15, 2019)](http://www.sec.gov/Archives/edgar/data/1693577/000119312519042520/d704065dex103.htm) |
| 10.4 | [Employment Agreement with Abdulhamid Hersiburane (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on November 21, 2022)](http://www.sec.gov/Archives/edgar/data/1693577/000143774922027837/ex_449395.htm) |
| 10.5 | [Employment Agreement with Thomas J. Chmelik (incorporated by reference to Exhibit 10.5 to the Company's Form 10-12B filed on February 15, 2019)](http://www.sec.gov/Archives/edgar/data/1693577/000119312519042520/d704065dex105.htm) |
| 10.6 | [2019 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on May 16, 2024)](http://www.sec.gov/Archives/edgar/data/1693577/000143774924017296/ex_675301.htm) |
| 10.7 | [Subordinated Note Purchase Agreement Dated as of April 6, 2021 (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on April 7, 2021)](http://www.sec.gov/Archives/edgar/data/0001693577/000156459021017898/mnsb-ex101_9.htm) |
| 10.8 | [Form of Subordinated Note Purchase Agreement, dated March 1, 2022, between the Company and certain accredited investors and qualified institutional buyers (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on March 2, 2022)](http://www.sec.gov/Archives/edgar/data/1693577/000156459022008334/mnsb-ex101_9.htm) |
| 10.9 | [Form of Indemnification Agreement with each of Jeff W. Dick, Thomas J. Chmelik and Abdul Hersiburane (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on November 21, 2022)](http://www.sec.gov/Archives/edgar/data/1693577/000143774922027837/ex_449394.htm) |
| 10.10 | [Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.10 to the Company's Form 10-K filed on March 23, 2023).](http://www.sec.gov/Archives/edgar/data/1693577/000143774923007608/ex_489639.htm) |
| 19 | [Insider Trading Policies and Procedures](ex_931662.htm) |
| 21.1 | [Subsidiaries of the Registrant](ex_931663.htm) |
| 23.1 | [Consent of Yount, Hyde & Barbour, P.C.](ex_930805.htm) |
| 31.1 | [Rule 13a-14(a) Certification of the Chief Executive Officer](ex_930414.htm) |
| 31.2 | [Rule 13a-14(a) Certification of the Chief Financial Officer](ex_930415.htm) |
| 32.0 | [Section 1350 Certification](ex_931664.htm) |
| 97.1 | [Policy Relating to the Recovery of Erroneously Awarded Compensation (incorporated by reference to Exhibit 97.1 to the Company's Form 10-K filed on March 20, 2024](http://www.sec.gov/Archives/edgar/data/1693577/000143774924008676/ex_641541.htm) |
| 101.INS | Inline XBRL Instance Document: The XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
| 101.SCH | Inline XBRL Taxonomy Extension Schema |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase |
| 101 | The following materials from the Company's Annual Report on Form 10-K for the year ended December 31, 2024 formatted in Inline XBRL, filed herewith: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income (Loss), (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Stockholders' Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements |
| 104 | Cover Page Interactive Data File: The cover page XBRL tags are embedded within the Inline XBRL document and are contained within the Exhibit 101. |

---

**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized.

**MAINSTREET BANCSHARES, INC.**

---

| | |
|:---|:---|
| Date: March 12, 2026 | /s/ Richard A. Vari |
|  | Richard A. Vari |
|  | Executive Vice President and |
|  | Chief Financial Officer |
|  | *(Principal Financial Officer and Principal Accounting Officer)* |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 40

## Exhibit 3.1

**Exhibit 3.1**

**ARTICLES OF INCORPORATION**<br> **(AS AMENDED)**

**OF**

**MAINSTREET BANCSHARES, INC.**

**ARTICLE I**<br> **NAME**

The name of the Corporation is: **MainStreet Bancshares, Inc.**

**ARTICLE II**<br> **PURPOSES**

The purpose of the Corporation is to conduct the business of a corporation and bank holding company and to conduct any and all business, including trust business, and to have any and all corporate powers, which are permitted to corporations organized to conduct the business of a corporation and bank holding company pursuant to the laws of the Commonwealth of Virginia, including such powers as may be granted from time to time by the State Corporation Commission to corporations organized to conduct, and authorized to engage in, the business of a corporation and bank holding company.

**ARTICLE III**<br> **AUTHORIZED STOCK**

1. ***Number.*** The aggregate number of shares of stock which the Corporation shall have the authority to issue, and the par value per share, is as follows:

---

| | | |
|:---|:---|:---|
| **<u>Class</u>** | **<u>Number of Shares</u>** | **<u>Par Value</u>** |
| Common Stock | 15000000 | $4.00 |
| Preferred Stock | 2000000 | $1.00 |

---

2. ***Preemptive Rights.*** No holder of any class of stock of the Corporation shall have any preemptive rights with respect to any subscriptions, warrants, rights or options to purchase any shares of any class of stock of the Corporation, or obligations convertible into any shares of any class of stock of the Corporation or into subscriptions, warrants, rights or options to purchase any shares of any class of stock of the Corporation.

3. ***Voting; Liquidation.*** The holders of the Common Stock shall, to the exclusion of the holders of any other class of stock of the Corporation, have the sole and full power to vote for the election of directors and for all other purposes without limitation except only as otherwise provided in any articles of amendment applicable to any series of Preferred Stock, and as otherwise expressly provided by the then existing statutes of Virginia. The holders of the Common Stock shall have one vote for each share of Common Stock held by them. Except as may be set forth in any articles of amendment applicable to shares of Preferred Stock, the holders of the Common Stock shall be entitled to receive the net assets of the Corporation upon liquidation, dissolution or winding up.

4. ***Establishing Preferred Stock.*** Authority is expressly vested in the Board of Directors to divide the Preferred Stock into and issue the same in series and, to the fullest extent permitted by law, to fix and determine the preferences, limitations and relative rights of the shares of any series so established, and to provide for the issuance thereof. Prior to the issuance of any share of a series of Preferred Stock, the Board of Directors shall establish such series by adopting an amendment of the articles of incorporation setting forth the designation and number of shares of the series and the preferences, limitations and relative rights thereof, and the Corporation shall file with the State Corporation Commission articles of amendment as required by law, and the State Corporation Commission shall have issued a certificate of amendment.

**5. *7.50% Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock***

&nbsp;&nbsp;&nbsp;&nbsp;A. <u>Designation and Number of Shares</u>

This series of Preferred Stock shall be designated as the 7.50% Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share (the "Series A Preferred Stock"), with a liquidation preference of $1,000 per share of Series A Preferred Stock. The number of authorized shares constituting this series shall be 28,750.

&nbsp;&nbsp;&nbsp;&nbsp;B. <u>Definitions</u>.

(1) "Board of Directors" means the board of directors of the Corporation or any committee thereof duly authorized to act on behalf of such board of directors.

(2) "Business Day" means any weekday that is not a legal holiday in New York, New York and that is not a day on which banking institutions in New York, New York are closed.

(3) "Bylaws" means the Bylaws of the Corporation, as may be amended from time to time.

(4) "Common Stock" means the Corporation's common stock, par value $4.00 per share.

(5) "Federal Reserve Board" means the Board of Governors of the Federal Reserve System.

(6) "DTC" means The Depository Trust Company.

(7) "Original issue date" means the first date of issuance of the Series A Preferred Stock.

(8) "Preferred Stock" means any and all series of preferred stock of the Corporation, including the Series A Preferred Stock.

(9) "Regulatory Capital Treatment Event" means the good faith determination by the Corporation that, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws or regulations of the United States or any political subdivision of or in the United States that is enacted or becomes effective after the initial issuance of any share of the Series A Preferred Stock; (b) any proposed change in those laws or regulations that is announced or becomes effective after the initial issuance of any share of the Series A Preferred Stock; or (c) any official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws or regulations that is announced after the initial issuance of any share of the Series A Preferred Stock, there is more than an insubstantial risk that the Corporation will not be entitled to treat the full liquidation value of the shares of the Series A Preferred Stock then outstanding as "Tier 1 Capital" (or its equivalent) for purposes of Regulation Q, the capital adequacy regulation of the Federal Reserve Board (or, as and if applicable, the capital adequacy rules of any successor federal banking regulator or agency), as then in effect and applicable, for as long as any share of the Series A Preferred Stock is outstanding.

(10) "Series A Dividend Payment Date" has the meaning set forth in Section D(2).

(11) "Series A Dividend Period" means the period from and including a Series A Dividend Payment Date to, but excluding, the next Series A Dividend Payment Date, except that the initial Series A Dividend Period will commence on and include the original issue date of the Series A Preferred Stock.

(12) "Series A Junior Securities" has the meaning set forth in Section C(1).

(13) "Series A Parity Securities" has the meaning set forth in Section C(2).

C. <u>Ranking</u>.

The shares of Series A Preferred Stock shall rank:

(1) senior, as to dividends and upon liquidation, dissolution and winding up of the Corporation, to the Common Stock, and to any other class or series of capital stock of the Corporation now or hereafter authorized, issued or outstanding that, by its terms, does not expressly provide that it ranks senior to or *pari passu* with the Series A Preferred Stock as to dividends and upon liquidation, dissolution and winding up, as the case may be (collectively, "<u>Series A Junior Securities</u>"); and

(2) on a parity, as to dividends and upon liquidation, dissolution and winding up of the Corporation, with any class or series of capital stock of the Corporation now or hereafter authorized, issued or outstanding that, by its terms, expressly provides that it ranks *pari passu* with the Series A Preferred Stock as to dividends and upon liquidation, dissolution and winding up, as the case may be (collectively, "<u>Series A Parity Securities</u>").

(3) The Corporation may authorize and issue additional shares of Series A Junior Securities and Series A Parity Securities without the consent of the holders of the Series A Preferred Stock.

D. <u>Dividends</u>.

(1) Holders of Series A Preferred Stock will be entitled to receive, when, as and if declared by the Board of Directors, out of assets legally available for the payment of dividends under Virginia law, non-cumulative cash dividends based on the liquidation preference of the Series A Preferred Stock at a rate equal to 7.50% per annum for each Series A Dividend Period from the original issue date of the Series A Preferred Stock to, and including, the redemption date of the Series A Preferred Stock, if any. If the Corporation issues additional shares of the Series A Preferred Stock after the original issue date, dividends on such shares will accrue from the date such additional shares are issued.

(2) If declared by the Board of Directors, dividends will be payable on the Series A Preferred Stock (each such date, a "<u>Series A Dividend Payment Date</u>") quarterly in arrears, on March 30, June 30, September 30 and December 30 of each year, beginning on December 30, 2020. If any date on which dividends would otherwise be payable is not a Business Day, then the Series A Dividend Payment Date will be the next Business Day, without any adjustment to the amount of dividends paid.

(3) Dividends will be payable to holders of record of Series A Preferred Stock as they appear on the Corporation's books on the applicable record date, which shall be the 15th calendar day before the applicable Series A Dividend Payment Date, or such other record date, no earlier than 30 calendar days before the applicable Series A Dividend Payment Date, as shall be fixed by the Board of Directors.

(4) Dividends payable on Series A Preferred Stock will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dollar amounts resulting from that calculation will be rounded to the nearest cent, with one-half cent being rounded upwards. Dividends on the Series A Preferred Stock will cease to accrue on the redemption date, if any, unless the Corporation defaults in the payment of the redemption price of the Series A Preferred Stock called for redemption.

(5) Dividends on the Series A Preferred Stock will not be cumulative. If the Board of Directors does not declare a dividend on the Series A Preferred Stock in respect of a Series A Dividend Period, then no dividend shall be deemed to have accrued for such dividend period, be payable on the applicable Series A Dividend Payment Date or be cumulative, and the Corporation will have no obligation to pay any dividend for that Series A Dividend Period, whether or not the Board of Directors declares a dividend for any subsequent Series A Dividend Period with respect to the Series A Preferred Stock.

(6) So long as any share of Series A Preferred Stock remains outstanding:

(a) no dividend shall be declared or paid or set aside for payment, and no distribution shall be declared or made or set aside for payment, on any Series A Junior Securities, other than (i) a dividend payable solely in Series A Junior Securities or (ii) any dividend in connection with the implementation of a shareholders' rights plan, or the redemption or repurchase of any rights under any such plan;

(b) no shares of Series A Junior Securities shall be repurchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than (i) as a result of a reclassification of Series A Junior Securities for or into other Series A Junior Securities, (ii) the exchange or conversion of one share of Series A Junior Securities for or into another share of Series A Junior Securities, (iii) through the use of the proceeds of a substantially contemporaneous sale of other shares of Series A Junior Securities, (iv) purchases, redemptions or other acquisitions of shares of Series A Junior Securities in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants, (v) purchases of shares of Series A Junior Securities pursuant to a contractually binding requirement to buy Series A Junior Securities existing prior to the preceding Series A Dividend Period, including under a contractually binding stock repurchase plan, (vi) the purchase of fractional interests in shares of Series A Junior Securities pursuant to the conversion or exchange provisions of such stock or the security being converted or exchanged, or (vii) the acquisition by the Corporation or any of the Corporation's subsidiaries of record ownership in Series A Junior Securities for the beneficial ownership of any other persons (other than for the beneficial ownership by the Corporation or any of the Corporation's subsidiaries), including as trustees or custodians), nor shall any monies be paid to or made available for a sinking fund for the redemption of any Series A Junior Securities by the Corporation; and

(c) no shares of Series A Parity Securities shall be repurchased, redeemed or otherwise acquired for consideration by the Corporation, directly or indirectly (other than (i) pursuant to *pro rata* offers to purchase all, or a *pro rata* portion, of the Series A Preferred Stock and such Series A Parity Securities, if any, (ii) as a result of a reclassification of Series A Parity Securities for or into other Series A Parity Securities, (iii) the exchange or conversion of Series A Parity Securities for or into other Series A Parity Securities or Series A Junior Securities, (iv) through the use of the proceeds of a substantially contemporaneous sale of other shares of Series A Parity Securities, (v) purchases of shares of Series A Parity Securities pursuant to a contractually binding requirement to buy Series A Parity Securities existing prior to the preceding Series A Dividend Period, including under a contractually binding stock repurchase plan, (vi) the purchase of fractional interests in shares of Series A Parity Securities pursuant to the conversion or exchange provisions of such stock or the security being converted or exchanged, or (vii) the acquisition by the Corporation or any of the Corporation's subsidiaries of record ownership in Series A Parity Securities for the beneficial ownership of any other persons (other than for the beneficial ownership by the Corporation or any of the Corporation's subsidiaries), including as trustees or custodians), nor shall any monies be paid to or made available for a sinking fund for the redemption of any Series A Parity Securities by the Corporation;

unless, in each case, the full dividends for the preceding Series A Dividend Period on all outstanding shares of Series A Preferred Stock have been paid in full or declared and a sum sufficient for the payment thereof has been set aside for payment.

(7) The Corporation will not declare or pay or set apart funds for the payment of dividends on any Series A Parity Securities unless the Corporation has paid or set apart funds for the payment of dividends on the Series A Preferred Stock. When dividends are not paid in full upon the shares of Series A Preferred Stock and any Series A Parity Securities, all dividends declared upon shares of Series A Preferred Stock and any Series A Parity Securities will be declared on a proportional basis so that the amount of dividends declared per share will bear to each other the same ratio that accrued dividends for the Series A Preferred Stock, and accrued dividends, including any accumulations, on any Series A Parity Securities, bear to each other for the then-current Series A Dividend Period.

(8) Subject to the foregoing, and not otherwise, dividends (payable in cash, stock or otherwise), as may be determined by the Board of Directors, may be declared and paid on the Common Stock and any other class of any Series A Junior Securities or Series A Parity Securities from time to time out of any assets legally available for such payment, and the holders of Series A Preferred Stock shall not be entitled to participate in any such dividend.

(9) Dividends on the Series A Preferred Stock will not be declared, paid or set aside for payment to the extent such act would cause the Corporation to fail to comply with applicable laws and regulations, including applicable capital adequacy rules.

E. <u>Liquidation</u>.

(1) Upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, holders of Series A Preferred Stock are entitled to receive out of assets of the Corporation available for distribution to stockholders, after satisfaction of liabilities to creditors and subject to the rights of holders of any securities ranking senior to the Series A Preferred Stock, before any distribution of assets is made to holders of Common Stock or any Series A Junior Securities, a liquidating distribution in the amount of the liquidation preference of $1,000 per share plus any declared and unpaid dividends, without accumulation of any undeclared dividends. Holders of Series A Preferred Stock will not be entitled to any other amounts from the Corporation after they have received their full liquidating distribution.

(2) In any such distribution, if the assets of the Corporation are not sufficient to pay the liquidation preferences plus declared and unpaid dividends in full to all holders of Series A Preferred Stock and all holders of any Series A Parity Securities, the amounts paid to the holders of Series A Preferred Stock and to the holders of all Series A Parity Securities will be paid *pro rata* in accordance with the respective aggregate liquidating distribution owed to those holders. If the liquidation preference plus declared and unpaid dividends has been paid in full to all holders of Series A Preferred Stock and any Series A Parity Securities, the holders of the Corporation's Series A Junior Securities shall be entitled to receive all remaining assets of the Corporation according to their respective rights and preferences.

(3) For purposes of this Section E, the merger or consolidation of the Corporation with any other entity, including a merger or consolidation in which the holders of Series A Preferred Stock receive cash, securities or property for their shares, or the sale, lease or exchange of all or substantially all of the assets of the Corporation for cash, securities or other property, shall not constitute a liquidation, dissolution or winding up of the Corporation.

F. <u>Redemption</u>.

(1) The Series A Preferred Stock is not subject to any mandatory redemption, sinking fund or other similar provisions. The Series A Preferred Stock is not redeemable prior to September 30, 2025. On and after that date, Series A Preferred Stock will be redeemable at the option of the Corporation, in whole or in part, on any Series A Dividend Payment Date, at a redemption price equal to $1,000 per share, plus any declared and unpaid dividends on the shares of Series A Preferred Stock called for redemption up to the redemption date. Holders of Series A Preferred Stock will have no right to require the redemption or repurchase of the Series A Preferred Stock. Notwithstanding the foregoing, within 90 days following the occurrence of a Regulatory Capital Treatment Event, the Corporation, at its option, may redeem, at any time, all (but not less than all) of the shares of the Series A Preferred Stock at the time outstanding, at a redemption price equal to $1,000 per share, plus any declared and unpaid dividends on the shares of Series A Preferred Stock called for redemption up to the redemption date, upon notice given as provided in Subsection (2) below.

(2) If shares of Series A Preferred Stock are to be redeemed, the notice of redemption shall be sent to the holders of record of Series A Preferred Stock to be redeemed, not less than 30 days nor more than 60 days prior to the date fixed for redemption thereof (provided that, if any depositary shares representing Series A Preferred Stock are held in book-entry form through DTC, the Corporation may give such notice in any manner permitted by DTC). Each notice of redemption will include a statement setting forth: (i) the redemption date; (ii) the number of shares of Series A Preferred Stock to be redeemed and, if fewer than all the shares held by the holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the redemption price; (iv) the place or places where the certificates evidencing shares of Series A Preferred Stock, if applicable, are to be surrendered for payment of the redemption price; and (v) that dividends on the shares of Series A Preferred Stock to be redeemed will cease to accrue on the redemption date. Upon the redemption date, dividends will cease to accrue on shares of the Series A Preferred Stock, and such shares of Series A Preferred Stock shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, including rights described under Section G, except the right to receive the redemption price plus any declared and unpaid dividends on the shares of Series A Preferred Stock called for redemption up to the redemption date.

(3) In case of any redemption of only part of the shares of Series A Preferred Stock at the time outstanding, the shares to be redeemed shall be selected *pro rata* or by lot (provided that, if any depositary shares representing Series A Preferred Stock are held in book-entry form through DTC, the shares may be selected in any manner permitted by DTC).

(4) Any redemption of the Series A Preferred Stock is subject to receipt by the Corporation of any required prior approval by the Federal Reserve Board and to the satisfaction of any conditions applicable to redemption of the Series A Preferred Stock set forth in the capital adequacy rules of the Federal Reserve Board (or, as and if applicable, the capital adequacy rules of any successor federal banking regulator or agency).

G. <u>Voting Rights</u>.

(1) Except as provided below or as expressly required by law, the holders of shares of Series A Preferred Stock shall have no voting power, and no right to vote on any matter at any time, either as a separate series or class or together with any other series or class of shares of capital stock, and shall not be entitled to call a meeting of such holders for any purpose, nor shall they be entitled to participate in any meeting of the holders of the Common Stock.

(2) So long as any shares of Series A Preferred Stock remain outstanding, the affirmative vote or consent of the holders of at least two-thirds of all of the shares of Series A Preferred Stock at the time outstanding, voting separately as a class, shall be required to: (i) authorize or increase the authorized amount of, or issue shares of, any class or series of stock ranking senior to the Series A Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up of the Corporation, or issue any obligation or security convertible into or evidencing the right to purchase, any class or series of stock ranking senior to Series A Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up of the Corporation; (ii) amend the provisions of the Corporation's amended and restated articles of incorporation, as amended, so as to adversely affect the powers, preferences, privileges or rights of the Series A Preferred Stock, taken as a whole, provided, however, that any increase in the amount of the authorized or issued shares of Series A Preferred Stock or authorized Common Stock or Preferred Stock or the creation and issuance, or an increase in the authorized or issued amount, of other series of Preferred Stock ranking equally with or junior to Series A Preferred Stock with respect to the payment of dividends or the distribution of assets upon liquidation, dissolution or winding up of the Corporation will not be deemed to adversely affect the powers, preferences, privileges or rights of Series A Preferred Stock; and (iii) consummate a binding share-exchange or reclassification involving the Series A Preferred Stock, or a merger or consolidation of the Corporation with or into another entity unless the shares of the Series A Preferred Stock remain outstanding or are converted into or exchanged for preferred securities of the surviving entity and the shares of the remaining Series A Preferred Stock or the new preferred securities of the surviving entity have terms that are not materially less favorable than the Series A Preferred Stock. The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series A Preferred Stock shall have been redeemed.

(3) If the Corporation fails to pay, or to declare and set apart for payment, dividends on outstanding shares of the Series A Preferred Stock for six quarterly dividend periods, whether or not consecutive (a "Nonpayment"), the number of members of the Board of Directors shall be increased by two directors and the holders of outstanding shares of the Series A Preferred Stock, voting as a single class with holders of shares of any equally ranked series of Preferred Stock for which dividends have not been paid and upon which voting rights have been conferred and are exercisable ("Voting Parity Stock"), shall be entitled to vote for the election of two additional members of the Board of Directors as set forth below. At any time after such voting power has vested, the holders of the Series A Preferred Stock shall have the right, voting as a single class together with the holders of Voting Parity Stock, to elect such two additional directors at a special meeting called by the Chief Executive Officer of the Corporation or by a majority of the Board of Directors upon the written request of the holders of record of at least 20% of the outstanding shares of the Series A Preferred Stock or any series of Voting Parity Stock (unless such request is received by the Corporation less than 90 days before the date publicly announced for the Corporation's next annual meeting or fixed for a special meeting of shareholders, in which event such election shall be held at such next annual or special meeting of shareholders), with each series having a number of votes proportionate to the aggregate liquidation preferences of the outstanding shares of such series; provided that (i) the Board of Directors shall at no time include more than two additional directors elected by holders of Series A Preferred Stock and holders of any series of Voting Parity Stock, voting together as one class, and (ii) any such election of directors would not cause the Corporation to violate the applicable corporate governance requirements of the Nasdaq Capital Market (or any other exchange on which the Corporation's securities may be listed) regarding the independence of directors or other similar requirements. Notice for any such special meeting will be given in a similar manner to that provided in the Bylaws for a special meeting of shareholders of the Corporation, which the Corporation will provide upon request.

(4) The two additional directors elected in accordance with Section G(3) shall hold office until the next annual meeting of shareholders of the Corporation, unless their term has been previously terminated pursuant to Section G(5). At each subsequent annual meeting of shareholders until continuous noncumulative dividends shall have been paid in full on all outstanding shares of Series A Preferred Stock entitled thereto for a period of one year following a Nonpayment, the holders of the Series A Preferred Stock shall have the right, voting as a single class together with the holders of any series of Voting Parity Stock, with each series having a number of votes proportionate to the aggregate liquidation preference of the outstanding shares of such class, to elect two directors, each to hold office for a term of one year. In case any vacancy occurs among such two directors, a successor will be elected by the Board of Directors to serve until the next annual meeting of shareholders and until his or her successor is duly elected and qualified upon the nomination by the remaining director or, if none remains in office, by the vote of the holders of record of the outstanding shares of Series A Preferred Stock and any series of Voting Parity Stock, voting as a single class, with each series having a number of votes proportionate to the aggregate liquidation preference of the outstanding shares of such class. Each of the two additional directors shall each be entitled to one vote per director on any matter.

(5) Upon payment in full of continuous noncumulative dividends on the Series A Preferred Stock for a period of one year following a Nonpayment, the terms of the two additional directors elected in accordance with this Section G shall forthwith terminate, the number of directors shall be reduced by two, and such voting rights of the holders of shares of Series A Preferred Stock shall cease, subject to an increase in the number of directors and to revesting of such voting rights in the event of any future Nonpayment. In addition, if and when the rights of holders of Series A Preferred Stock terminate for any reason, including under circumstances described above under Section F, such voting rights shall terminate along with the other rights (except, if applicable, the right to receive the redemption price plus any declared and unpaid dividends as provided for in Section F), and the terms of any additional directors elected by the holders of Series A Preferred Stock and any series of Voting Parity Stock, if any, shall terminate automatically and the number of directors shall be reduced by two, assuming that the rights of holders of such series of Voting Parity Stock have similarly terminated.

H. <u>Information Rights</u>.

During any period in which the Corporation is not subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and any shares of the Series A Preferred Stock are outstanding, the Corporation shall use its best efforts to (i) make available on its website at https://www.mstreetbank.com (or any successor website) current information specified in Rule 144(c)(2) under the Securities Act of 1933, as amended; and (ii) promptly, upon request, supply such information to any holder or prospective holder of the Series A Preferred Stock.

I. <u>Conversion Rights</u>.

The holders of shares of Series A Preferred Stock shall not have any rights to convert such shares into shares of any other class or series of securities of the Corporation.

J. <u>Preemptive Rights</u>.

The holders of shares of Series A Preferred Stock will have no preemptive rights with respect to any shares of the Corporation's capital stock or any of its other securities convertible into or carrying rights or options to purchase any such capital stock.

K. <u>Certificates</u>.

The Corporation may at its option issue shares of Series A Preferred Stock without certificates.

L. <u>Transfer Agent</u>.

The duly appointed transfer agent for the Series A Preferred Stock shall be American Stock Transfer & Trust Company, LLC. The Corporation may, in its sole discretion, remove the transfer agent in accordance with the agreement between the Corporation and the transfer agent; provided that the Corporation shall appoint a successor transfer agent who shall accept such appointment prior to the effectiveness of such removal. Upon any such removal or appointment, the Corporation shall send notice thereof to the holders of the Series A Preferred Stock.

M. <u>Registrar</u>.

The duly appointed registrar for the Series A Preferred Stock shall be American Stock Transfer & Trust Company, LLC. The Corporation may, in its sole discretion, remove the registrar in accordance with the agreement between the Corporation and the registrar; provided that the Corporation shall appoint a successor registrar who shall accept such appointment prior to the effectiveness of such removal.

**ARTICLE IV**<br> **DIRECTORS**<br> **CLASSIFIED BOARD**

1. ***Number.*** The management, control and government of the Corporation shall be vested in the Board of Directors, which shall be composed of no fewer than five (5) nor more than fifteen (15) directors which minimum and maximum number of directors may not be changed except by amendment to the Articles of Incorporation.

2. ***Classified Board.*** The Board of Directors shall be divided into three groups of directors that shall be designated Group I, Group II, and Group III. The members of each group shall be elected for a term of three years and until their successors are duly elected by the shareholders and qualified. Such groups shall be as nearly equal in number as the then total number of directors constituting the entire Board of Directors shall permit, with the term of office of Group I to expire at the first annual meeting of shareholders, the term of office of Group II to expire at the annual meeting of shareholders one year thereafter, and the term of office of Group III to expire at the annual meeting of shareholders two years thereafter. At each annual meeting of shareholders following such initial classification and election, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of shareholders after their election.

Whenever the holders of any one or more series of Preferred Stock of the Corporation shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the Board of Directors shall consist of said directors so elected in addition to the number of directors fixed as provided above in this Article.

**ARTICLE V**<br> **QUORUM AT SHAREHOLDERS MEETINGS**<br> **SHAREHOLDER APPROVAL OF CERTAIN TRANSACTIONS**

1. ***Quorum at Shareholder Meetings.*** Unless otherwise required by the Code of Virginia, or these Articles, one-third (1/3) of the votes entitled to be cast on a matter by a voting group at a shareholder meeting shall constitute a quorum of that voting group for action on a matter presented at a shareholder meeting. Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or shall be set for that adjourned meeting.

2. ***Shareholder Approval of Certain Actions.*** An amendment of the Corporation's Articles of Incorporation, a plan of merger or share exchange, a transaction involving the sale of all or substantially all the Corporation's assets other than in the regular course of business, and a plan of dissolution shall be approved by the vote of a majority of all the votes entitled to be cast on such transactions by each voting group entitled to vote on the transaction at a meeting at which a quorum of the voting group is present, provided that the transaction has been approved and recommended by at least two-thirds (2/3) of the Directors in office at the time of such approval and recommendation. If the transaction is not so approved and recommended by at least two-thirds (2/3) of the Directors in office, then the transaction shall be approved by the vote of eighty percent (80%) or more of all the votes entitled to be cast on such transactions by each voting group entitled to vote on the transaction.

**ARTICLE VI**<br> **INDEMNIFICATION AND ELIMINATION OF LIABILITY**

1. ***Indemnification of Directors and Officers.*** Except as provided in Section 2 of this Article, the Corporation shall indemnify every individual made a party to a proceeding because he is or was a director or officer against liability incurred in the proceeding if: (i) he conducted himself in good faith; and (ii) he believed, in the case of conduct in his official capacity with the Corporation, that his conduct was in its best interests and, in all other cases, that his conduct was at least not opposed to its best interests (or in the case of conduct with respect to an employee benefit plan, that his conduct was for a purpose he believed to be in the interests of the participants of and beneficiaries of the plan); and (iii) he had no reasonable cause to believe, in the case of any criminal proceeding, that his conduct was unlawful.

2. ***Indemnification Not Permitted.*** The Corporation shall not indemnify any individual against his willful misconduct or a knowing violation of the criminal law or against any liability incurred by him in any proceeding charging improper personal benefit to him, whether or not by or in the right of the Corporation or involving action in his official capacity, in which he was adjudged liable by a court of competent jurisdiction on the basis that personal benefit was improperly received by him.

3. ***Effect of Judgment or Conviction.*** The termination of a proceeding by judgment, order, settlement or conviction is not, of itself, determinative that an individual did not meet the standard of conduct set forth in Section 1 of this Article or that the conduct of such individual constituted willful misconduct or a knowing violation of the criminal law.

4. ***Determination and Authorization.*** Unless ordered by a court of competent jurisdiction, any indemnification under Section 1 of this Article shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the individual is permissible in the circumstances because: (i) he met the standard of conduct set forth in Section 1 of this Article and, with respect to a proceeding by or in the right of the Corporation in which such individual was adjudged liable to the Corporation, he is fairly and reasonably entitled to indemnification in view of all of the relevant circumstances even though he was adjudged liable; and (ii) the conduct of such individual did not constitute willful misconduct or a knowing violation of the criminal law.

Such determination shall be made: (i) by the board of directors by a majority vote of a quorum consisting of directors not at the time parties to the proceeding; or (ii) if such a quorum cannot be obtained, by a majority vote of a committee duly designated by the board of directors (in which designation directors who are parties may participate), consisting solely of two or more directors not at the time parties to the proceeding; or (iii) by special legal counsel selected by the board of directors or its committee in the manner heretofore provided or, if such a quorum of the board of directors cannot be obtained and such a committee cannot be designated, selected by a majority vote of the board of directors (in which selection directors who are parties may participate); or (iv) by the shareholders, but shares owned by or voted under the control of individuals who are at the time parties to the proceeding may not be voted on the determination. Authorization of indemnification, evaluation as to reasonableness of expenses and determination and authorization of advancements for expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those selecting such counsel.

5. ***Advance for Expenses.*** If permitted by applicable law, the Corporation shall pay for or reimburse the reasonable expenses incurred by any individual who is a party to a proceeding in advance of final disposition of the proceeding if: (i) he furnished the Corporation a written statement of his good faith belief that he has met the standard of conduct described in Section 1 of this Article and a written undertaking, executed personally or on his behalf, to repay the advance if it is ultimately determined that indemnification of such individual in the specific case is not permissible; and (ii) a determination is made that the facts then known to those making the determination would not preclude indemnification under this Article.

6. ***Indemnification of Employees and Agents.*** The Corporation may, but shall not be required to, indemnify and advance expenses to employees and agents of the Corporation to the same extent as provided in this Article with respect to directors and officers.

7. ***Elimination of Liability of Directors and Officers.*** Except as provided in Section 8 of this Article, in any proceeding brought by or in the right of the Corporation or brought by or on behalf of shareholders of the Corporation, a director or officer of the Corporation shall not be liable in any monetary amount for damages arising out of or resulting from a single transaction, occurrence or course of conduct.

8. ***Liability of Directors and Officers Not Eliminated.*** The liability of a director or officer shall not be eliminated in accordance with the provisions of Section 7 of this Article if the director or officer engaged in willful misconduct or a knowing violation of the criminal law or of any federal or state securities law, including without limitation, any claim of unlawful insider trading or manipulation of the market for any security.

9. ***Definitions.*** In this Article:

"Director" and "officer" mean an individual who is or was a director or officer of the Corporation, as the case may be, or who, while a director or officer of the Corporation is or was serving at the Corporation's request as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. A director or officer shall be considered to be serving an employee benefit plan at the Corporation's request if his duties to the Corporation also impose duties on, or otherwise involve services by, him to the plan or to participants in or beneficiaries of the plan.

"Individual" includes, unless the context requires otherwise, the estate, heirs, executors, personal representatives and administrators of an individual.

"Corporation" means the Corporation and any domestic or foreign predecessor entity of the Corporation in a merger or other transaction in which the predecessor's existence ceased upon the consummation of the transaction.

"Expenses" includes but is not limited to reasonable counsel fees.

"Liability" means the obligation to pay a judgment, settlement, penalty, fine, including any excise tax assessed with respect to an employee benefit plan, or reasonable expenses incurred with respect to a proceeding.

"Official capacity" means: (i) when used with respect to a director, the office of director in the Corporation; (ii) when used with respect to an officer, the office in the Corporation held by him; or (iii) when used with respect to an employee or agent, the employment or agency relationship undertaken by him on behalf of the Corporation. "Official capacity" does not include service for any foreign or domestic corporation or other partnership, joint venture, trust, employee benefit plan or other enterprise.

"Party" includes an individual who was, is or is threatened to be made a named defendant or respondent in a proceeding.

"Proceeding" means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal.

10. ***Provisions Not Exclusive****.* As authorized by the Virginia Stock Corporation Act, the provisions of this Article are in addition to and not in limitation of the specific powers of a corporation to indemnify directors and officers set forth therein. If any provision of this Article shall be adjudicated invalid or unenforceable by a court of competent jurisdiction, such adjudication shall not be deemed to invalidate or otherwise affect any other provision hereof or any power of indemnity which the Corporation may have under the Virginia Stock Corporation Act or other laws of the Commonwealth of Virginia.

## Exhibit 19.0

**Exhibit 19.0**

![ex_782524img001.jpg](ex_782524img001.jpg)

**Policy Statement on Insider Trading and Confidentiality** <br> Adopted July 17, 2024

To: All directors, officers, and other employees of, and consultants and other service providers to, the Company.

This Policy Statement confirms procedures that such persons at every level must follow, arising from our responsibilities as a public company.

MainStreet Bancshares, Inc. and MainStreet Bank (collectively, the "Company") hereby restate our guidelines with respect to transactions in securities of MainStreet Bancshares, Inc. based on material non-public (or "inside") information and disclosure of confidential information, separate and apart from our Code of Ethics. This Policy Statement applies to all transactions involving common stock and other securities the Company may issue, including preferred stock, debt and derivative securities (*e.g.,* depositary shares) relating to the Company's securities.

Violations of applicable insider trading laws, inadvertent or otherwise, can result in severe civil and criminal penalties for the culpable individuals, Company management and the Company itself. Such violations can also severely damage the Company's reputation for integrity and professionalism. Even the appearance of an improper transaction must be avoided to preserve the Company's reputation for adhering to the highest standards of ethical conduct. This Policy Statement establishes procedures to be followed to prevent both intentional and unintentional acts of prohibited insider trading and acts that facilitate such trading.

The Company's policy against insider trading and disclosure of confidential information applies to directors, officers, other employees, consultants and other service providers, and the Company does not intend for anything in this Policy Statement to supersede or alter the Company's Code of Ethics. Such persons are also responsible for ensuring that their spouses and other family members residing in their households adhere to the requirements of this Policy Statement.

**Prohibition against trading on material non-public information.** If you are aware of material information relating to the Company that has not yet been available to the public for at least two full trading days ("material non-public information"), you are prohibited from trading (*i.e.*, buying or selling) the Company's securities or directly or indirectly disclosing such information to any other person who may trade in the Company's securities. You must also refrain from recommending the purchase or sale of the Company's securities while in possession of material non-public information, or from knowingly assisting anyone who is engaged in any of the activities prohibited by this Policy Statement.

For example, if the Company makes an announcement before the commencement of trading on a Monday, you may trade in the Company's securities starting on Wednesday of that week, because two full trading days would have elapsed by then (all of Monday and Tuesday). If the announcement is made on Monday after trading begins, you may not trade in the Company's securities until Thursday. If the announcement is made on Friday after trading begins, you may not trade in the Company's securities until Wednesday of the following week.

***Material Information*.** It is difficult to describe exhaustively what constitutes "material" information, but you should assume that any information relating to the business and affairs of the Company, positive or negative (including a change in previous information or facts), which, if disclosed, might have a significant effect on the market price of the Company's securities or might be of significance to a reasonable investor in determining whether to purchase, sell or hold the Company's securities, is material. Information may be significant for this purpose even if it would not by itself determine the investor's decision. Examples of information that <u>may</u> be material, depending on the circumstances, include a potential business acquisition, quarterly or annual results, dividends, stock splits, management changes, important product developments, major litigation developments and internal financial information. We emphasize that these examples are illustrative and do not constitute a complete list of the types of information that are "material."

***Non-public Information.*** "Non-public (or "inside") information" is information that has not been generally disclosed in a manner sufficient to ensure its availability to the investing public. Information should be regarded as non-public until it has been disseminated widely to the investing public (*e.g.*, in a press release distributed through a widely circulated news or wire service or in a Current Report on Form 8-K) for at least two full trading days.

**When in doubt, information should be presumed to be both non-public and material.**

**<u>Confidentiality</u>.** Serious problems could be caused for the Company by unauthorized disclosure of internal information about the Company, whether for the purpose of facilitating improper trading in the Company's securities or not. You should not discuss internal Company matters or developments with anyone outside the Company, except as required in the performance of regular corporate duties.

This prohibition applies specifically (but not exclusively) to inquiries about the Company which may be made by the financial press, investment analysts or others in the financial community. It is important that all such communications made on behalf of the Company be through an appropriately designated officer under carefully controlled circumstances. Unless you are expressly authorized to the contrary, if you receive any inquiries of this nature, you should decline to comment and refer the inquirer to Jeff W. Dick or, in his absence, Thomas J. Chmelik.

**Applicability of Policy to Inside Information Regarding Other Companies**. This Policy Statement and the guidelines described herein also apply to material non-public information regarding other companies, including the Company's customers, vendors, or suppliers ("business partners"), when that information is obtained in the course of employment with, or other services performed on behalf of, the Company. Civil and criminal penalties, and termination of employment, may result from trading on material non-public information regarding the Company's business partners. You should treat material non-public information about the Company's business partners with the same care required for information related directly to the Company.

**If you have any doubt as to your responsibilities under these guidelines, seek clarification and guidance from Jeff W. Dick or, in his absence, Thomas J. Chmelik, before you act. Do not try to resolve uncertainties on your own.**

**<u>Violations of the Policy Statement</u>.** Applicable federal laws impose severe monetary and criminal penalties for insider trading violations. We expect the strictest compliance with these procedures by directors and all personnel at every level. Failure to observe them may result in serious legal difficulties for you (including disgorgement of profits earned or losses avoided, civil fines, private actions by other investors, and criminal prosecution), as well as for the Company. A failure to follow the letter (or the spirit) of these policies will be considered a matter of extreme seriousness and grounds for disciplinary action.

Each director, officer, other employee, consultant, and other service provider must certify by signing and returning the attached certification, that he or she has read, understands and will abide by this Policy Statement.

**<u>CERTIFICATION</u>** 

I have read the attached Policy Statement on Insider Trading and Confidentiality, understand the applicability of the Policy Statement to me and my family and agree to abide by the Policy Statement.

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Date Signature

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Name (Printed)

**<u>Trading Restrictions</u>**. **To provide assistance in preventing inadvertent violations and avoiding even the appearance of an improper transaction, all** "**Covered Persons**" **must comply with this Supplement to the Policy Statement on Insider Trading and Confidentiality.**

**MainStreet Bancshares, Inc.**

**Supplement to the Policy Statement on Insider Trading and Confidentiality**

*The law in this area changes frequently, but very often is difficult to apply to individual fact situations. This Supplement contains basic guidelines only. Accordingly, advice should be sought promptly whenever there is any question about proposed or completed actions or statements.*

Investment by Covered Persons (as defined below) in securities of MainStreet Bancshares, Inc. is generally desirable and not to be discouraged. However, such investments should be made with caution, and with recognition of the legal prohibitions against the use by Company "insiders" of confidential information for their own profit. The following are guidelines to aid officers and directors and others who have access to "inside" information in determining when trading in the Company's securities is inappropriate. These guidelines are intended to serve as a supplement to the Company's Policy Statement on Insider Trading and Confidentiality.

The Company is providing this Supplement to the Policy Statement on Insider Trading and Confidentiality ("Supplemental Policy Statement") to those persons who, because of the nature of their employment or position, are most likely to have access to material non-public and confidential information regarding the Company. This Supplemental Policy Statement applies to transactions in securities of MainStreet Bancshares, Inc. by (i) members of the Board of Directors (the "Board") and (ii) officers of MainStreet Bancshares, Inc. who are subject to the reporting requirements under Section 16 of the Securities Exchange Act of 1934, as amended (collectively referred to herein as "Covered Persons"). Covered Persons are also responsible for ensuring that their spouses and other family members residing in their households adhere to the requirements of this Supplemental Policy Statement.

**General Trading Restrictions**

Consistent with the Company's Policy Statement on Insider Trading and Confidentiality, Covered Persons may not trade in securities of MainStreet Bancshares, Inc. if they have knowledge of material information about the Company that has not been made widely available to the investing public. If you have any questions whether information that you possess may be or may become material, we urge that you discuss the matter with Jeff W. Dick or, in his absence, Thomas J. Chmelik, promptly. Once information has been released by the Company, Covered Persons must refrain from trading in the Company's securities until sufficient time has passed to ensure that the information has been widely distributed to the investing public. In most cases, Covered Persons must refrain from trading until <u>two full trading days after release</u> by the Company of the information, but if circumstances warrant, it may be advisable to wait a longer period. If you have any questions as to whether it is appropriate to trade in a given circumstance, contact Jeff W. Dick or, in his absence Thomas J. Chmelik, for advice prior to trading. Additionally, except for bona fide gifts and exercises of Company-granted stock option for cash, Covered Persons may not trade, without prior permission for reasons of exceptional personal hardship, during any period that has been designated as a Trading Blackout period, whether they possess any material non-public information about the Company.

**Notice & Pre-Clearance of Transactions**

All Covered Persons must notify Jeff W. Dick or, in his absence, Thomas J. Chmelik, at least three business days prior to engaging in any transaction in Company securities (including bona fide gifts and stock option exercises). In addition, all Covered Persons must <u>pre-clear</u> any such transactions in Company securities with Jeff W. Dick, or, in his absence, Thomas J. Chmelik. Unless renewed, a pre-clearance for any proposed trade will be valid for [five business days] unless a shorter period is specified in such pre-clearance or unless such pre-clearance is revoked prior to that time.

**Quarterly and Event Specific Blackout Periods**

A Covered Person generally may trade in Company securities if he or she does not possess any material information about the Company that has not been publicly disclosed, <u>and</u> no limitation on trading (a "Trading Blackout") has been declared.

Trading by a Covered Person will generally be appropriate <u>outside</u> of a Trading Blackout, <u>as long as he or she does not possess any material nonpublic information</u>, provided that prior to trading the Covered Person contacts Jeff W. Dick or, in his absence, Thomas J. Chmelik, to pre-clear the transaction.

**Quarterly Trading Blackout Period**. Covered Persons may not purchase or sell Company securities during the period beginning on and including the 15th day of the last month of each fiscal quarter and ending two full trading days after the Company's public release (*i.e*., distributed through a widely circulated news or wire service or reported in a Quarterly Report on Form 10-Q) of earnings results for such quarter.

The safest period for trading in the Company's securities, assuming the absence of material non-public information, is generally the first ten days following the end of a quarterly Trading Blackout. This is because Covered Persons will, as any quarter progresses, be increasingly likely to possess material non-public information about the expected financial results for the quarter.

**Event-Specific Trading Blackout Period**. The Company may also impose event-specific trading bans from time to time in the event of material developments. Depending on the circumstances, these event-specific trading bans may be announced or unannounced. If unannounced, Covered Persons will be informed that trading is not permitted when they contact Jeff W. Dick or, in his absence, Thomas J. Chmelik, to pre-clear the applicable transaction.

The purpose behind the Trading Blackouts is to help establish a diligent effort to avoid any improper transactions in Company securities. It should be noted that <u>even outside of the Trading Blackouts any person possessing material non-public information concerning the Company should not engage in any transactions in the Company</u><u>'</u><u>s securities</u> until such information has been known publicly for at least two full trading days. Although the Company may from time to time impose event-specific blackouts because of developments known to the Company and not yet disclosed to the public, each person is always individually responsible for compliance with the prohibitions against trading based on material non-public information. Covered Persons are expected to always use good judgment.

**10b5-1 Plans**

In accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, Covered Persons may establish written trading plans that would permit (i) automatic trading of the Company's securities through a third-party broker or (ii) trading of the Company's securities by an independent person (*e.g.,* a qualified brokerage firm or trustee) who is not aware of material non-public information at the time of a trade. A Rule 10b5-1 trading plan must be established outside of a Blackout Period and during a time when the Covered Person is not aware of material non-public information. Trades made pursuant to a Rule 10b5-1 compliant trading plan would not be subject to the limitations and restrictions set forth in this Supplemental Policy Statement. Trading pursuant to a Rule 10b5-1 plan may occur during a Trading Blackout or even when the Covered Person is aware of material non-public information, if the independent person administering the Rule 10b5-1 plan is not aware of material non-public information. However, any purchase or sale of shares or changes to a Rule 10b5-1 trading plan based on material non-public information is prohibited.

Each Rule 10b5-1 trading plan (or the form of a plan established by a qualified brokerage firm or other third party) must be reviewed by Jeff W. Dick or, in his absence, Thomas J. Chmelik, prior to establishment in order to confirm compliance with this policy and the applicable securities laws.

**Option Exercises**

Covered Persons may exercise <u>for cash only Company-granted</u> stock options at any time, even during a Trading Blackout or while in possession of material non-public information about the Company. While the exercise of an option is considered a purchase of Company stock, the prohibition on the purchase or sale of Company securities while in possession of material non-public information is limited to transactions with third parties, where there is an injured party on the other end of the transaction. In the context of a Company-granted option exercise pursuant to the terms and conditions of a previously awarded stock option agreement (with no broker or other third-party involvement), there is no potentially injured third party. Therefore, Covered Persons may exercise Company-granted stock options at any time (if there is no broker or other third party involved).

While Covered Persons are permitted to exercise Company-granted stock options in the above circumstances, from a public relations standpoint a Covered Person may choose to not exercise Company-granted stock options during a Trading Blackout to avoid public scrutiny. Therefore, the Company requests that Covered Persons limit exercising Company-granted stock options during a Trading Blackout to instances where the options are about to expire, or some hardship exists.

Covered Persons may not, however, exercise a call option (an option purchased from a third-party) while in possession of material non-public information or during a Trading Blackout. Such an exercise would be a violation of securities laws. In addition, because sales of the underlying securities through a brokerage firm in connection with cashless exercises of options involve sales outside of the stock option agreement (not with the Company or a Company benefit plan), Covered Persons <u>may not</u> exercise a Company-granted stock option by means of a cashless exercise during a Trading Blackout or while in possession of material non-public information about the Company. Although Covered Persons may <u>exercise for cash only</u> Company-granted stock options during a Trading Blackout or while in possession of material non-public information, Covered Persons may <u>not</u> while in possession of material non-public information sell the Company securities acquired upon such option exercise.

**Policy Against Pledging Company Stock**

**Purpose.** The Board believes that ownership of the Company's common stock by Covered Persons promotes alignment of interest with shareholders. The Board recognizes that pledging by Covered Persons of the Company's securities as collateral for indebtedness creates the risk of an unplanned sale that may occur at a time when the Covered Person is aware of material nonpublic information or is otherwise not permitted to trade in the Company's securities.

**Guidelines**. Covered Persons shall not, directly, or indirectly, pledge, hypothecate, or otherwise encumber securities of MainStreet Bancshares, Inc. as collateral for indebtedness. This prohibition includes, but is not limited to, holding such securities in a margin account or any other account that could cause the securities to be subject to a margin call or otherwise be available as collateral for a margin loan.

The foregoing prohibition applies to securities that (i) a Covered Person owns directly or indirectly or (ii) are granted as part of a Covered Person's compensation.

**Compliance**. Each Covered Person will be expected to certify compliance with this Policy annually and otherwise from time to time upon request by the Board or a committee of the Board.

**Timing.** Covered Persons shall, within 60 days, unwind or otherwise terminate any transaction existing as of the time such Covered Person became subject to this Supplemental Policy Statement that would otherwise violate this policy.

**Administration**. This Supplemental Policy Statement will be administered and interpreted by the Compensation Committee of the Board. Any determination by the Compensation Committee with respect to this Supplemental Policy Statement shall be final, conclusive and binding on all interested parties.

**Prohibited Transactions.** To avoid the perception of impropriety, Covered Persons must not speculate in the Company's securities, at any time. For the purposes of this Policy, "speculate" means the purchase or sale of the Company's securities with the intention of reselling or buying back such securities in a relatively short period of time, with the expectation of a rise or fall in the market price. Additionally, certain types of transactions are by their nature regarded as speculative. Therefore, Covered Persons must not at any time:

● Sell the Company's securities that are not owned or fully paid for (otherwise known as a "short sale");

● Buy or sell a call or a put option on the Company's securities or enter into any equity monetization transaction that would have an equivalent effect; or

● Enter into any other financial instrument designed to hedge or offset a decrease in the market value of the Company's securities, including without limitation, pre-paid variable forward contracts, equity swaps, collars or units of exchange funds.

**Supplemental Policy Statement Compliance with Code of Ethics and Business Conduct** When trading in securities of MainStreet Bancshares, Inc., in addition to the notice and pre-clearance requirements described above, a Covered Person must also adhere to the Company's Code of Ethics and Business Conduct and its general policy prohibiting trading based on material non-public information.

**Termination of Employment or Departure from the Board**

Covered Persons must comply with these trading restrictions for a period of <u>6 months</u> following termination of employment or departure from the Board.

**Certification**

Each Covered Person must certify by signing and returning the attached Certification that he or she has read, understands, and will abide by this Supplemental Policy Statement.

**\* \* \***

***If you have any questions about whether you should be trading in the Company***'***s securities, contact Jeff W. Dick at (703) 481-4555 or, in his absence, Thomas J. Chmelik at (703) 481***-***4540.***

**<u>CERTIFICATION</u>** 

I have read the Company's Supplement to the Policy Statement on Insider Trading and Confidentiality for Covered Persons, understand the applicability of the Supplemental Policy Statement to me and my family and agree to abide by the terms and conditions of Supplemental Policy Statement.

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Date Signature

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Name (Printed)

## Exhibit 21.1

**EXHIBIT 21.1**

**Subsidiaries of the Registrant**

**<u>Parent</u>**

MainStreet Bancshares, Inc.

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| | | |
|:---|:---|:---|
|  | **State or Other Jurisdiction of <u>Incorporation</u>** |  |
| **<u>Subsidiaries</u>** |  | **Percentage**<br> **<u>Ownership</u>** |
| MainStreet Bank | Virginia | 100% |
| MainStreet Community Capital, LLC | Virginia | 100% |

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## Exhibit 23.1

**Exhibit 23.1**

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-241000 and 333-279617) and Form S-8 (No. 333-233077, 333-233078, 333-256477 and 333-279618) of MainStreet Bancshares, Inc. of our reports dated March 14, 2025, relating to the consolidated financial statements and internal control over financial reporting of MainStreet Bancshares, Inc., which appear in this Annual Report on Form 10-K/A of MainStreet Bancshares, Inc. for the year ended December 31, 2024.

/s/ YOUNT, HYDE & BARBOUR, P.C.

Roanoke, Virginia

March 12, 2026

## Exhibit 31.1

**Exhibit 31.1**

**Certification**

I, Jeff W. Dick, certify that:

1. I have reviewed this annual report on Form 10-K/A of MainStreet Bancshares, Inc.;

&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;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

&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 registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&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 registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

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

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

&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 registrant'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 registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| Dated: March 12, 2026 | /s/ Jeff W. Dick |
|  | Jeff W. Dick |
|  | Chairman and Chief Executive Officer |
|  | (principal executive officer) |

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## Exhibit 31.2

**Exhibit 31.2**

**Certification**

I, Richard A. Vari, certify that:

1. I have reviewed this annual report on Form 10-K/A of MainStreet Bancshares, Inc.;

&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;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))) for the registrant and have:

&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 registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&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;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

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

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

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

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| | |
|:---|:---|
| Dated: March 12, 2026 | /s/ Richard A. Vari |
|  | Richard A. Vari |
|  | Executive Vice President and<br> Chief Financial Officer |
|  | (principal financial officer and principal accounting officer) |

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## Exhibit 32.0

**Exhibit 32.0**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the annual report on Form 10-K/A of MainStreet Bancshares, Inc. (the "Company") for the fiscal year ended December 31, 2024 as filed with the Securities and Exchange Commission (the "Report"), I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

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| |
|:---|
| /s/ Jeff W. Dick |
| Jeff W. Dick |
| Chairman and Chief Executive Officer |
| (principal executive officer) |
| March 12, 2026 |

---

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| | |
|:---|:---|
| By: | /s/ Richard A. Vari |
|  | Richard A. Vari |
|  | Executive Vice President and |
|  | Chief Financial Officer |
|  | (principal financial officer and principal accounting officer) |
|  | March 12, 2026 |

---