{"url_path":"/sec/nwpp/10-q/2026/item-1f","section_key":"item-1f","section_title":"Item 1F inancial Statements","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-13","source_url":"https://www.sec.gov/Archives/edgar/data/1163389/0001903596-26-000215-index.html","accession_number":"0001903596-26-000215","cik":"0001163389","ticker":"NWPP","issuer_name":"NEW PEOPLES BANKSHARES INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/1163389/0001903596-26-000215-index.html","primary_entity_key":"0001163389","primary_entity_name":"NEW PEOPLES BANKSHARES INC"},"word_count":8397,"has_tables":true,"body_markdown":"Item 1Financial Statements\n\n \n\n**NEW PEOPLES BANKSHARES, INC. **\n\n**CONSOLIDATED BALANCE\nSHEETS** \n\n**MARCH 31, 2026 AND DECEMBER 31, 2025** \n\n(IN THOUSANDS EXCEPT PER SHARE AND SHARE\nDATA) \n\n(UNAUDITED)\n\n \n\n  \n   \n  \n\n  \nMarch 31,  \nDecember 31, \n\n  \n2026  \n2025 \n\nASSETS \n    \n   \n\n  \n    \n   \n\nCash and due from banks \n$16,540  \n$13,849 \n\nInterest-bearing deposits with banks \n 76,197  \n 63,109 \n\nFederal funds sold \n 156  \n 252 \n\nTotal cash and cash equivalents \n 92,893  \n 77,210 \n\n  \n    \n   \n\nInvestment securities available-for-sale, at fair\nvalue \n 96,860  \n 96,433 \n\nRestricted stock, at cost \n 2,636  \n 2,598 \n\nLoans receivable \n 723,305  \n 709,587 \n\nAllowance for credit losses \n (8,116) \n (8,107)\n\nNet loans \n 715,189  \n 701,480 \n\n  \n    \n   \n\nBank premises and equipment, net \n 16,124  \n 16,400 \n\nOther real estate owned \n 184  \n 89 \n\nAccrued interest receivable \n 3,910  \n 3,451 \n\nDeferred taxes, net \n 4,066  \n 3,895 \n\nRight-of-use assets – operating leases \n 2,879  \n 2,998 \n\nOther assets \n 4,828  \n 5,146 \n\nTotal assets \n$939,569  \n$909,700 \n\n  \n    \n   \n\nLIABILITIES \n    \n   \n\n  \n    \n   \n\nDeposits: \n    \n   \n\nNoninterest bearing \n$242,598  \n$220,829 \n\nInterest-bearing \n 585,056  \n 577,437 \n\nTotal deposits \n 827,654  \n 798,266 \n\n  \n    \n   \n\nBorrowed funds \n 18,986  \n 18,986 \n\nLease liabilities – operating leases \n 2,879  \n 2,998 \n\nAccrued interest payable \n 1,316  \n 1,507 \n\nAccrued expenses and other\nliabilities \n 5,617  \n 5,088 \n\nTotal liabilities \n 856,452  \n 826,845 \n\n  \n    \n   \n\nSHAREHOLDERS’ EQUITY \n    \n   \n\n  \n    \n   \n\nCommon stock - $2.00 par value; 50,000,000 shares\nauthorized; 23,555,517 and 23,567,013 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively \n 47,111  \n 47,134 \n\nAdditional paid-in-capital \n 14,360  \n 14,378 \n\nRetained earnings \n 30,152  \n 29,210 \n\nAccumulated other comprehensive\nloss \n (8,506) \n (7,867)\n\nTotal shareholders’\nequity \n 83,117  \n 82,855 \n\nTotal liabilities and shareholders’\nequity \n$939,569  \n$909,700 \n\n \n\nThe accompanying notes are an integral\npart of these consolidated financial statements.\n\n3\n\n \n\n \n\n**NEW PEOPLES BANKSHARES, INC.** \n\nCONSOLIDATED STATEMENTS\nOF INCOME \n\n**FOR THE THREE MONTHS ENDED MARCH 31,\n2026 AND 2025** \n\n(IN THOUSANDS EXCEPT SHARE AND PER SHARE\nDATA) \n\n(UNAUDITED)\n\n \n\n  \n    \n   \n\n  \nFor the Three Months Ended \n\n  \nMarch 31, \n\n  \n   \n  \n\nINTEREST\nAND DIVIDEND INCOME \n2026  \n2025 \n\nLoans including fees \n$11,215  \n$9,912 \n\nFederal funds sold \n 4  \n 2 \n\nInterest-earning deposits with banks \n 638  \n 692 \n\nInvestments \n 698  \n 702 \n\nDividends on equity securities\n(restricted) \n 42  \n 43 \n\nTotal interest and dividend\nincome \n 12,597  \n 11,351 \n\n  \n    \n   \n\nINTEREST EXPENSE \n    \n   \n\nDeposits \n 3,534  \n 3,449 \n\nBorrowed funds \n 246  \n 292 \n\nTotal interest expense \n 3,780  \n 3,741 \n\n  \n    \n   \n\nNET INTEREST INCOME \n 8,817  \n 7,610 \n\n  \n    \n   \n\nPROVISION\nFOR CREDIT LOSSES \n 240  \n 259 \n\n  \n    \n   \n\nNET INTEREST\nINCOME AFTER PROVISION FOR CREDIT LOSSES \n 8,577  \n 7,351 \n\n  \n    \n   \n\nNONINTEREST INCOME \n    \n   \n\nService charges and fees \n 837  \n 877 \n\nCard processing and interchange \n 986  \n 865 \n\nFinancial services fees \n 419  \n 318 \n\nOther noninterest income \n 388  \n 353 \n\nTotal noninterest income \n 2,630  \n 2,413 \n\n  \n    \n   \n\nNONINTEREST EXPENSES \n    \n   \n\nSalaries and employee benefits \n 3,884  \n 3,798 \n\nOccupancy and equipment expense \n 891  \n 984 \n\nData processing and telecommunications \n 639  \n 634 \n\nOther operating expenses \n 1,819  \n 1,856 \n\nTotal noninterest expenses \n 7,233  \n 7,272 \n\n  \n    \n   \n\nINCOME BEFORE INCOME TAXES \n 3,974  \n 2,492 \n\n  \n    \n   \n\nINCOME\nTAX EXPENSE \n 912  \n 584 \n\n  \n    \n   \n\nNET INCOME \n$3,062  \n$1,908 \n\n  \n    \n   \n\nEarnings per share \n    \n   \n\nBasic and diluted \n$0.13  \n$0.08 \n\n  \n    \n   \n\nAverage Weighted Shares of Common\nStock \n    \n   \n\nBasic and diluted \n 23,563,034  \n 23,626,617 \n\n \n\nThe accompanying notes are an integral\npart of these consolidated financial statements.\n\n \n\n4\n\n \n\n \n\n**NEW PEOPLES BANKSHARES, INC. **\n\n**CONSOLIDATED STATEMENTS\nOF COMPREHENSIVE INCOME** \n\n**FOR THE THREE MONTHS ENDED MARCH 31,\n2026 AND 2025** \n\n(IN THOUSANDS) \n\n(UNAUDITED)\n\n \n\n  \n    \n   \n\n  \nFor the Three Months Ended\nMarch 31, \n\n  \n2026  \n2025 \n\n  \n   \n  \n\nNET INCOME \n$3,062  \n$1,908 \n\n  \n    \n   \n\nOther comprehensive income (loss): \n    \n   \n\nInvestment securities activity \n    \n   \n\nUnrealized gains (losses) arising during the period \n (808) \n 2,380 \n\nRelated tax (expense) benefit \n 169  \n (500)\n\nTOTAL OTHER COMPREHENSIVE INCOME (LOSS) \n (639) \n 1,880 \n\nTOTAL COMPREHENSIVE INCOME \n$2,423  \n$3,788 \n\n \n\nThe accompanying notes are an integral\npart of these consolidated financial statements.\n\n \n\n5\n\n \n\n \n\n**NEW PEOPLES BANKSHARES, INC. **\n\n**CONSOLIDATED STATEMENTS\nOF CHANGES IN SHAREHOLDERS’ EQUITY** \n\n**FOR THE THREE MONTHS ENDED MARCH 31,\n2026 AND 2025** \n\n(IN THOUSANDS EXCEPT PER SHARE DATA) \n\n(UNAUDITED)\n\n \n\n  \n    \n    \n    \n    \n    \n   \n\n  \nShares of\n\nCommon\n\nStock  \nCommon\n\nStock  \nAdditional\n\nPaid-in-\n\nCapital  \nRetained\n\nEarnings  \nAccumulated\n\nOther\n\nComprehensive\n\nLoss  \nTotal\n\nShareholders’\n\nEquity \n\nBalance, December 31, 2024 \n 23,637  \n$47,273  \n$14,451  \n$21,001  \n$(11,984) \n$70,741 \n\nNet income \n —  \n —  \n —  \n 1,908  \n —  \n 1,908 \n\nOther comprehensive income, net of tax \n —  \n —  \n —  \n —  \n 1,880  \n 1,880 \n\nCash dividend declared ($0.08 per share) \n —  \n —  \n —  \n (1,889) \n —  \n (1,889)\n\nRepurchase of common stock \n (23) \n (45) \n (23) \n —  \n —  \n (68)\n\nBalance, March 31, 2025 \n 23,614  \n$47,228  \n$14,428  \n$21,020  \n$(10,104) \n$72,572 \n\n  \n    \n    \n    \n    \n    \n   \n\n  \n    \n    \n    \n    \n    \n   \n\n  \n    \n    \n    \n    \n    \n   \n\nBalance, December 31, 2025 \n 23,567  \n$47,134  \n$14,378  \n$29,210  \n$(7,867) \n$82,855 \n\nNet income \n —  \n —  \n —  \n 3,062  \n —  \n 3,062 \n\nOther comprehensive loss, net of tax \n —  \n —  \n —  \n —  \n (639) \n (639)\n\nCash dividend declared ($0.09 per share) \n —  \n —  \n —  \n (2,120) \n —  \n (2,120)\n\nRepurchase of common stock \n (11) \n (23) \n (18) \n —  \n —  \n (41)\n\nBalance, March 31, 2026 \n 23,556  \n$47,111  \n$14,360  \n$30,152  \n$(8,506) \n$83,117 \n\n \n\nThe accompanying notes are an integral\npart of these consolidated financial statements.\n\n \n\n6\n\n \n\n \n\n**NEW PEOPLES BANKSHARES, INC. **\n\n**CONSOLIDATED STATEMENTS OF CASH FLOWS** \n\nFOR THE THREE MONTHS ENDED MARCH 31, 2026\nAND 2025 \n\n(IN THOUSANDS) \n\n(UNAUDITED)\n\n \n\n  \n   \n  \n\n  \n2026  \n2025 \n\nCASH FLOWS FROM OPERATING ACTIVITIES \n    \n   \n\nNet income \n$3,062  \n$1,908 \n\nAdjustments to reconcile net income to net cash\nprovided by operating activities:\n \n    \n   \n\nDepreciation and amortization \n 309  \n 374 \n\nProvision for credit losses \n 240  \n 259 \n\nGain on sale of mortgage loans \n —  \n (9)\n\nGain on sale or disposal of premises and equipment \n —  \n (2)\n\nLoans originated for sale \n (112) \n (380)\n\nProceeds from sales of loans originated for sale \n 112  \n 389 \n\nNet amortization/accretion of bond premiums/discounts \n 16  \n 15 \n\nDeferred tax benefit \n (2) \n (1)\n\nNet change in: \n    \n   \n\nAccrued interest receivable \n (459) \n (189)\n\nOther assets \n 407  \n (365)\n\nAccrued interest payable \n (191) \n (94)\n\nAccrued expenses and other liabilities \n 421  \n 125 \n\nNet cash provided by operating\nactivities \n 3,803  \n 2,030 \n\n  \n    \n   \n\nCASH FLOWS FROM INVESTING ACTIVITIES \n    \n   \n\nNet increase in loans \n (14,055) \n (13,214)\n\nPurchase of securities available-for-sale \n (4,186) \n (2,939)\n\nProceeds from repayments and maturities of securities\navailable-for-sale \n 2,935  \n 2,663 \n\nNet purchase of equity securities (restricted) \n (38) \n (20)\n\nPayments for the purchase of premises and equipment \n (3) \n (268)\n\nProceeds from sale of premises and equipment \n —  \n 2 \n\nProceeds from sale of other real estate owned \n —  \n 30 \n\nProceeds from bank owned life\ninsurance benefit \n —  \n 5,417 \n\nNet cash used in investing\nactivities \n (15,347) \n (8,329)\n\n  \n    \n   \n\nCASH FLOWS FROM FINANCING ACTIVITIES \n    \n   \n\nRepayment of long-term debt \n —  \n (3,000)\n\nNet change in noninterest bearing deposits \n 21,769  \n 9,156 \n\nNet change in interest-bearing deposits \n 7,619  \n 17,712 \n\nDividends paid \n (2,120) \n (1,889)\n\nRepurchase of common stock \n (41) \n (68)\n\nNet cash provided by financing\nactivities \n 27,227  \n 24,911 \n\n  \n    \n   \n\nNet increase in cash and cash equivalents \n 15,683  \n 15,612 \n\nCash and cash equivalents,\nbeginning of the period \n 77,210  \n 67,668 \n\nCash and cash equivalents,\nend of the period \n$92,893  \n$83,280 \n\n  \n    \n   \n\nSupplemental disclosure of cash paid during the\nperiod for: \n    \n   \n\nInterest \n$3,971  \n$3,835 \n\nTaxes \n —  \n — \n\nSupplemental disclosure of non-cash transactions: \n    \n   \n\nChange in unrealized losses on securities available-for-sale \n (808) \n 2,380 \n\nTransfer of loans to other real estate owned \n 95  \n 164 \n\n \n\nThe accompanying\nnotes are an integral part of these consolidated financial statements.\n\n \n\n7\n\n \n\n \n\n**NEW PEOPLES BANKSHARES, INC. **\n\n**NOTES TO CONSOLIDATED FINANCIAL\nSTATEMENTS**\n\n \n\nNOTE 1 NATURE OF OPERATIONS\n\n \n\n**Nature of Operations –**New\nPeoples Bankshares, Inc. (New Peoples or the Company) is a financial holding company whose principal activity is the ownership\nand management of a community bank, New Peoples Bank, Inc. (the Bank). New Peoples and the Bank are organized and incorporated\nunder the laws of the Commonwealth of Virginia. As a state-chartered member bank, the Bank is subject to regulation by the Virginia\nBureau of Financial Institutions, the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve\nSystem (the Federal Reserve). The Bank provides general banking services to individuals, small and medium size businesses and\nthe professional community of southwest Virginia, southern West Virginia, western North Carolina and northeastern Tennessee. These\nservices include commercial and consumer loans along with traditional deposit products such as checking and savings accounts.\n\n \n\n**NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING\nPOLICIES**\n\n \n\nThese consolidated financial statements\nconform to U. S. generally accepted accounting principles (GAAP) and to general industry practices. In the opinion of management,\nthe accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary\nto present fairly the Company’s financial position as of March 31, 2026 and December 31, 2025, and the results of operations\nfor the three-month periods ended March 31, 2026 and 2025. The Notes included herein should be read in conjunction with the notes\nto the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December\n31, 2025. The results of operations for interim periods are not necessarily indicative of the results of operations that may be\nexpected for a full year or any future period.\n\n \n\nThe consolidated financial statements\ninclude New Peoples, the Bank, NPB Insurance Services, Inc., and NPB Web Services, Inc. (hereinafter, collectively referred to\nas the Company, we, us or our). All significant intercompany balances and transactions have been eliminated. In accordance with\nAccounting Standards Codification (ASC) 942, Financial Services – Depository and Lending, NPB Capital Trust I and 2 are\nnot included in the consolidated financial statements.\n\n \n\nThe preparation of financial statements\nin conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,\ndisclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and\nexpenses during the reporting period. Actual results could differ from those estimates. The determination of the adequacy of the\nallowance for credit losses is based on estimates that are particularly susceptible to significant changes in the economic environment\nand market conditions.\n\n \n\nCertain reclassifications have been made\nto prior period amounts to conform to current period presentation. None of these reclassifications are considered material and\nhave no impact on net income or shareholders’ equity.\n\n \n\nThe Company’s significant accounting\npolicies followed in the preparation of the unaudited consolidated financial statements are disclosed in the Company’s Annual\nreport on Form 10-K. There have been no significant changes to the application of significant accounting policies since December\n31, 2025.\n\n \n\n**NOTE 3 EARNINGS PER SHARE**\n\n \n\nBasic earnings per share computations\nare based on the weighted average number of shares outstanding during each period. Diluted earnings per share reflect the additional\ncommon shares that would have been outstanding if dilutive potential common shares had been issued. For the three-month periods\nended March 31, 2026 and 2025, there were no potential common shares. Basic and diluted net income per common share calculations\nfollow:\n\n \n\nSchedule of basic and diluted net loss per common share calculations \n    \n   \n\n(Dollars in thousands, except \n\nper share data) \nFor the three months \nended March 31, \n\n  \n2026  \n2025 \n\nNet income \n$3,062  \n$1,908 \n\nWeighted average shares outstanding \n 23,563,034  \n 23,626,617 \n\nWeighted average dilutive shares outstanding \n 23,563,034  \n 23,626,617 \n\n  \n    \n   \n\nBasic and diluted earnings per share \n$0.13  \n$0.08 \n\n \n\n8\n\n \n\n \n\n**NOTE 4 CAPITAL**\n\n \n\n**Capital Requirements and Ratios**\n\n \n\nBanks and bank holding companies are subject\nto regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for\nbanks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet\nitems calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments\nby regulators. Failure to meet capital requirements can initiate regulatory action.\n\n \n\nTo qualify as a \"Small Bank Holding\nCompany\" under federal regulations, a bank must have consolidated assets of $3.0 billion or less. The primary benefit of\nbeing deemed a \"Small Bank Holding Company\" is the exemption from the requirement to maintain consolidated regulatory\ncapital ratios; instead, regulatory capital ratios only apply at the subsidiary bank level.\n\n \n\nThe final rules implementing Basel Committee\non Banking Supervision’s capital guidelines for U.S. banks (BASEL III rules) became fully phased in on January 1, 2019.\nUnder the BASEL III rules, the Bank must hold a capital conservation buffer above the adequately capitalized risk-based capital\nratios. The capital conservation buffer required is 2.50%. At March 31, 2026, the Bank had a capital conservation buffer of 8.38%.\nAmounts recorded to accumulated other comprehensive income (loss) are not included in computing regulatory capital. Management\nbelieves as of March 31, 2026, the Bank met all capital adequacy requirements to which it was subject.\n\n \n\nPrompt corrective action regulations provide\nfive classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically\nundercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory\napproval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and\nexpansion, and capital restoration plans are required. At March 31, 2026, the most recent regulatory notifications categorized\nthe Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since\nthat notification that management believes have changed the institution's category.\n\n \n\nThe Bank’s actual capital amounts\nand ratios are presented in the following table as of March 31, 2026 and December 31, 2025, respectively.\n\n \n\nSchedule of bank’s\nactual capital amounts and ratios presented \n    \n    \n    \n    \n    \n   \n\n  \nActual  \nMinimum Capital Requirement  \nMinimum to Be Well\n\nCapitalized Under\n\nPrompt Corrective\n\nAction Provisions \n\n(Dollars in thousands) \nAmount  \nRatio  \nAmount  \nRatio  \nAmount  \nRatio \n\nMarch 31, 2026:\n\nTotal capital to risk weighted assets \n$111,325  \n 16.38% \n$54,372  \n 8.00% \n$67,965  \n 10.00%\n\nTier 1 capital to risk weighted assets \n 102,828  \n 15.13% \n 40,779  \n 6.00% \n 54,372  \n 8.00%\n\nTier 1 capital to average assets \n 102,828  \n 11.00% \n 37,394  \n 4.00% \n 46,743  \n 5.00%\n\nCommon equity Tier 1 capital to risk weighted assets \n 102,828  \n 15.13% \n 30,584  \n 4.50% \n 44,177  \n 6.50%\n\n  \n    \n    \n    \n    \n    \n   \n\n**December 31, 2025: **\n \n    \n    \n    \n    \n    \n   \n\nTotal capital to risk weighted assets \n$110,354  \n 16.51% \n$53,467  \n 8.00% \n 66,834  \n 10.00%\n\nTier 1 capital to risk weighted assets \n 101,997  \n 15.26% \n 40,100  \n 6.00% \n 53,467  \n 8.00%\n\nTier 1 capital to average assets \n 101,997  \n 10.93% \n 37,344  \n 4.00% \n 46,680  \n 5.00%\n\nCommon equity Tier 1 capital to risk weighted assets \n 101,997  \n 15.26% \n 30,075  \n 4.50% \n 43,442  \n 6.50%\n\n \n\n9\n\n \n\n \n\n**NOTE 5 INVESTMENT SECURITIES**\n\n \n\nThe amortized cost and estimated fair value of available-for-sale\n(“AFS”) securities as of March 31, 2026 and December 31, 2025 are as follows:\n\n \n\nSchedule of securities amortized cost and estimated fair value \n    \n    \n    \n   \n\n  \nGross  \nGross  \nEstimated \n\n  \nAmortized  \nUnrealized  \nUnrealized  \nFair \n\n(Dollars in thousands) \nCost  \nGains  \nLosses  \nValue \n\nMarch 31, 2026\n\nU.S. Treasuries \n$6,583  \n$2  \n$146  \n$6,439 \n\nU.S. Government agencies \n 8,713  \n 32  \n 400  \n 8,345 \n\nMunicipal securities \n 24,206  \n 1  \n 4,409  \n 19,798 \n\nCorporate bonds \n 2,500  \n 1  \n 124  \n 2,377 \n\nMortgage-backed securities \n 50,528  \n 53  \n 5,121  \n 45,460 \n\nCollateralized mortgage obligations\nguaranteed \n 15,097  \n 29  \n 685  \n 14,441 \n\nTotal securities available-for-sale \n$107,627  \n$118  \n$10,885  \n$96,860 \n\nDecember 31, 2025\n\nU.S. Treasuries \n$5,597  \n$16  \n$153  \n$5,460 \n\nU.S. Government agencies \n 9,482  \n 49  \n 372  \n 9,159 \n\nMunicipal securities \n 24,217  \n 4  \n 4,224  \n 19,997 \n\nCorporate bonds \n 2,500  \n 6  \n 127  \n 2,379 \n\nMortgage-backed securities \n 50,742  \n 134  \n 4,797  \n 46,079 \n\nCollateralized mortgage obligations\nguaranteed \n 13,854  \n 70  \n 565  \n 13,359 \n\nTotal securities available-for-sale \n$106,392  \n$279  \n$10,238  \n$96,433 \n\n \n\nThe following table details unrealized\nlosses and related fair values in the AFS portfolio. This information is aggregated by the length of time that individual securities\nhave been in a continuous unrealized loss position as of March 31, 2026 and December 31, 2025.\n\n \n\nSchedule of fair value and gross unrealized losses on investment securities \n    \n    \n    \n    \n    \n   \n\n  \nLess than 12 Months  \n12 Months or More  \nTotal \n\n(Dollars\nin thousands) \nFair Value  \nUnrealized \nLosses  \nFair \nValue  \nUnrealized \nLosses  \nFair \nValue  \nUnrealized \nLosses \n\nMarch 31, 2026 \n   \n   \n   \n   \n   \n  \n\nU.S. Treasuries \n$—  \n$—  \n$4,442  \n$146  \n$4,442  \n$146 \n\nU.S. Government agencies \n 1,714  \n 13  \n 4,199  \n 387  \n 5,913  \n 400 \n\nMunicipal securities \n 1,620  \n 122  \n 17,851  \n 4,287  \n 19,471  \n 4,409 \n\nCorporate bonds \n —  \n —  \n 1,876  \n 124  \n 1,876  \n 124 \n\nMortgage-backed securities \n 5,150  \n 69  \n 33,423  \n 5,053  \n 38,573  \n 5,121 \n\nCollateralized mortgage obligations\nguaranteed \n 3,114  \n 33  \n 4,030  \n 651  \n 7,144  \n 685 \n\nTotal \n$11,598  \n$237  \n$65,821  \n$10,648  \n$77,419  \n$10,885 \n\n  \n    \n    \n    \n    \n    \n   \n\nDecember 31, 2025 \n    \n    \n    \n    \n    \n   \n\nU.S. Treasuries \n$—  \n$—  \n$4,444  \n$153  \n$4,444  \n$153 \n\nU.S. Government agencies \n 814  \n 1  \n 4,469  \n 371  \n 5,283  \n 372 \n\nMunicipal securities \n 946  \n 110  \n 18,036  \n 4,114  \n 18,982  \n 4,224 \n\nCorporate bonds \n —  \n —  \n 1,873  \n 127  \n 1,873  \n 127 \n\nMortgage-backed securities \n 744  \n 5  \n 37,156  \n 4,792  \n 37,900  \n 4,797 \n\nCollateralized mortgage obligations\nguaranteed \n 3,076  \n 5  \n 3,699  \n 560  \n 6,775  \n 565 \n\nTotal \n$5,580  \n$121  \n$69,677  \n$10,117  \n$75,257  \n$10,238 \n\n \n\nAs of March 31, 2026, the available-for-sale\nportfolio included 172 investments for which the fair market value was less than amortized cost. As of December 31, 2025, the\navailable-for-sale portfolio included 165 investments for which the fair market value was less than amortized cost. Management\nbelieves that all unrealized losses have resulted from temporary changes in the interest rates and current market conditions and\nare not a result of credit deterioration. Management does not plan to sell, and it is not likely that the Bank will be required\nto sell any of the securities referenced in the table above before recovery of their amortized cost. None of the individual securities\nare past due as to principal or interest payments and a number of these securities have explicit or implicit payment guarantees.\nThe remaining securities have credit ratings at or above that necessary to be considered “bank qualified.”\n\n \n\n10\n\n \n\n \n\nInvestment securities with a carrying\nvalue of $31.8 million and $32.5 million as of March 31, 2026 and December 31, 2025, respectively, were pledged as collateral\nto secure public deposits and for other purposes required or permitted by law.\n\n \n\nThere were no sales of available-for-sale\ninvestment securities during the three months ended March 31, 2026 and 2025.\n\n \n\nThe amortized cost and fair value of investment\nsecurities as of March 31, 2026, by contractual maturity, are shown in the following schedule. Expected maturities will differ\nfrom contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment\npenalties.\n\n \n\nSchedule of amortized cost and fair value of investment securities contractual maturity \n   \n   \n  \n\n  \nWeighted \n\n(Dollars in thousands) \nAmortized  \nFair  \nAverage \n\nSecurities Available-for-Sale \nCost  \nValue  \nYield \n\nDue in one year or less \n$4,946  \n$4,888  \n 1.62%\n\nDue after one year through five years \n 11,142  \n 10,831  \n 3.29%\n\nDue after five years through ten years \n 25,390  \n 23,968  \n 3.19%\n\nDue after ten years \n 66,149  \n 57,173  \n 2.48%\n\nTotal \n$107,627  \n$96,860  \n 2.69%\n\n \n\nThe Bank, as a member bank of the Federal\nReserve Bank of Richmond (“Federal Reserve Bank”) and the Federal Home Loan Bank of Atlanta (FHLB), is required to\nhold stock in each. The Bank also owns stock in CBB Financial Corp., which is a correspondent of the Bank. These equity securities\nare restricted from trading and are recorded at a cost of $2.6 million as of March 31, 2026 and December 31, 2025. The stock has\nno quoted market value and no ready market exists. When evaluating these securities for impairment, their value is determined\nbased on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. Equity securities\nare viewed as long-term investments and management believes the Company has the ability and the intent to hold these securities\nuntil their value is recovered.\n\n \n\n**NOTE 6 LOANS**\n\n \n\nLoans receivable outstanding as of March\n31, 2026, and December 31, 2025, are summarized as follows:\n\n \n\nSchedule of loans receivable outstanding \n    \n   \n\n(Dollars in thousands) \nMarch 31, \n2026  \nDecember 31,\n2025 \n\nReal estate secured: \n    \n   \n\nCommercial \n$255,596  \n$255,707 \n\nConstruction and land development \n 50,383  \n 42,826 \n\nResidential 1-4 family \n 254,383  \n 252,624 \n\nMultifamily \n 49,715  \n 45,964 \n\nFarmland \n 24,139  \n 23,385 \n\nTotal real estate loans \n 634,216  \n 620,506 \n\nCommercial \n 52,641  \n 53,175 \n\nAgriculture \n 5,075  \n 4,384 \n\nConsumer installment and all\nother loans \n 31,373  \n 31,522 \n\nTotal loans \n$723,305  \n$709,587 \n\n  \n    \n   \n\nAlso included in total loans above are\ndeferred loan fees of $2.2 million as of March 31, 2026 and December 31, 2025. Deferred loan costs were $1.9 million and $2.1\nmillion, as of March 31, 2026 and December 31, 2025, respectively. Income from net deferred fees and costs is recognized over\nthe lives of the respective loans as a yield adjustment. If loans repay prior to scheduled maturities any unamortized fee or costs\nis recognized at that time.\n\n \n\n11\n\n \n\n \n\nLoans receivable on nonaccrual status\nas of March 31, 2026, and December 31, 2025, are summarized as follows:\n\n \n\nSchedule\nof loans receivable nonaccrual status \n    \n    \n    \n    \n    \n   \n\n  \nMarch 31, 2026  \nDecember 31, 2025 \n\n  \nWith No\n\nAllowance  \nWith an\n\nAllowance  \nTotal  \nWith No\n\nAllowance  \nWith an\n\nAllowance  \nTotal \n\n(Dollars in thousands) \n   \n   \n   \n   \n   \n  \n\nReal estate secured: \n    \n    \n    \n    \n    \n   \n\nCommercial \n$191  \n$—  \n$191  \n$—  \n$415  \n$415 \n\nConstruction and land development \n —  \n 20  \n 20  \n —  \n 23  \n 23 \n\nFarmland \n —  \n 15  \n 15  \n —  \n 16  \n 16 \n\nResidential 1-4 family \n 715  \n 1,393  \n 2,108  \n 960  \n 1,323  \n 2,283 \n\nTotal real estate loans \n 906  \n 1,428  \n 2,334  \n 960  \n 1,777  \n 2,737 \n\nCommercial \n —  \n 84  \n 84  \n —  \n 25  \n 25 \n\nAgriculture \n 630  \n —  \n 630  \n 446  \n 305  \n 751 \n\nConsumer installment loans\nand all other loans \n —  \n 83  \n 83  \n —  \n 85  \n 85 \n\n  \n    \n    \n    \n    \n    \n   \n\nTotal loans receivable on\nnonaccrual status \n$1,536  \n$1,595  \n$3,131  \n$1,406  \n$2,192  \n$3,598 \n\n  \n    \n    \n    \n    \n    \n   \n\nTotal interest income not recognized on\nnonaccrual loans for the three months ended March 31, 2026 and March 31, 2025, was $38,000.\n\n \n\nThe Company evaluates loans that do not\nshare risk characteristics on an individual basis utilizing the collateral or discounted cash flow methods. The following table\npresents the unpaid principal balance of collateral dependent loans, which are individually evaluated to determine expected credit\nlosses, and the related ACL allocated to those loans as March 31, 2026 and December 31, 2025:\n\n \n\nSchedule\nof summary of impaired loans \n    \n    \n    \n   \n\n  \nMarch 31, 2026  \nDecember 31, 2025 \n\n  \nUnpaid\n\nPrincipal\nBalance  \nRelated\n\nAllowance  \nUnpaid\n\nPrincipal\nBalance  \nRelated\n\nAllowance \n\n(Dollars in thousands) \n    \n    \n    \n   \n\nReal estate secured: \n    \n    \n    \n   \n\nCommercial \n$191  \n$—  \n$408  \n$108 \n\nResidential 1-4 family \n 1,200  \n 39  \n 998  \n 39 \n\nTotal real estate loans \n 1,391  \n 39  \n 1,406  \n 147 \n\nAgriculture \n 630  \n —  \n 752  \n 54 \n\nConsumer installment loans\nand other loans \n —  \n —  \n —  \n — \n\n  \n    \n    \n    \n   \n\nTotal \n$2,021  \n$39  \n$2,158  \n$201 \n\n \n\n12\n\n \n\n \n\nThe following table is an age analysis\nof past due loans receivable as of March 31, 2026, segregated by class:\n\n \n\nSchedule of analysis of past due loans receivable \n    \n    \n    \n    \n    \n   \n\n**March 31, 2026** \n\n*(Dollars\nin thousands)* \n \nLoans \n30-59\nDays\nPast\nDue  \nLoans \n60-89\nDays\nPast\nDue  \nLoans \n90 or\nMore\nDays \nPast \n\nDue  \nTotal \nPast \nDue \nLoans  \nCurrent\nLoans  \nTotal\nLoans \n\nReal estate secured: \n    \n    \n    \n    \n    \n   \n\nCommercial \n$—  \n$—  \n$191  \n$191  \n$255,405  \n$255,596 \n\nConstruction and land development\n \n —  \n —  \n —  \n —  \n 50,383  \n 50,383 \n\nResidential 1-4 family \n 2,666  \n 220  \n 631  \n 3,517  \n 250,866  \n 254,383 \n\nMultifamily \n —  \n —  \n —  \n —  \n 49,715  \n 49,715 \n\nFarmland \n —  \n —  \n —  \n —  \n 24,139  \n 24,139 \n\nTotal real estate loans \n 2,666  \n 220  \n 822  \n 3,708  \n 630,508  \n 634,216 \n\nCommercial \n 5  \n 96  \n 18  \n 119  \n 52,522  \n 52,641 \n\nAgriculture \n —  \n —  \n 630  \n 630  \n 4,445  \n 5,075 \n\nConsumer installment and all\nother loans \n 150  \n 259  \n 19  \n 428  \n 30,945  \n 31,373 \n\nTotal loans \n$2,821  \n$575  \n$1,489  \n$4,885  \n$718,420  \n$723,305 \n\n \n\nThe following table is an age analysis of past due loans receivable\nas of December 31, 2025, segregated by class:\n\n \n\n**December 31, 2025 **\n\n*(Dollars\nin thousands)* \n \nLoans \n30-59 \nDays \nPast \n\nDue  \nLoans \n60-89 \nDays \nPast\n\nDue  \nLoans \n90 or\nMore \nDays \n\nPast \nDue  \nTotal\nPast\nDue\nLoans  \nCurrent\nLoans  \nTotal\nLoans \n\nReal estate secured: \n    \n    \n    \n    \n    \n   \n\nCommercial \n$468  \n$—    \n$423  \n$891  \n$254,816  \n$255,707 \n\nConstruction\nand land development \n —    \n —    \n —    \n —    \n 42,826  \n 42,826 \n\nResidential\n1-4 family \n 2,140  \n 1,631  \n 828  \n 4,599  \n 248,025  \n 252,624 \n\nMultifamily \n —    \n —    \n —    \n —    \n 45,964  \n 45,964 \n\nFarmland \n —    \n —    \n —    \n —    \n 23,385  \n 23,385 \n\nTotal\nreal estate loans \n 2,608  \n 1,631  \n 1,251  \n 5,490  \n 615,016  \n 620,506 \n\nCommercial \n 203  \n 26  \n —    \n 229  \n 52,946  \n 53,175 \n\nAgriculture \n 110  \n —    \n 802  \n 912  \n 3,472  \n 4,384 \n\nConsumer\ninstallment and all other loans \n 272  \n 26  \n 307  \n 605  \n 30,917  \n 31,522 \n\nTotal\nloans \n$3,193  \n$1,683  \n$2,360  \n$7,236  \n$702,351  \n$709,587 \n\n \n\nThe Company categorizes loans receivable\ninto risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial\ninformation, historical payment experience, credit documentation, public information, and current economic trends, among other\nfactors. The Company analyzes loans individually by classifying the loans receivable as to credit risk. The Company uses the following\ndefinitions for risk ratings:\n\n \n\n**Pass** - Loans in this category are\nconsidered to have a low likelihood of loss based on relevant information analyzed about the ability of the borrowers to service\ntheir debt and other factors.\n\n \n\n**Special Mention** - Loans in this\ncategory are currently protected but are potentially weak, including adverse trends in borrower’s operations, credit quality\nor financial strength. Those loans constitute an undue and unwarranted credit risk but not to the point of justifying a substandard\nclassification. The credit risk may be relatively minor yet constitute an unwarranted risk in light of the circumstances.  Special\nmention loans have potential weaknesses which may, if not checked or corrected, weaken the loan or inadequately protect the Company’s\ncredit position at some future date.\n\n \n\n**Substandard** - A\nsubstandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral\npledged, if any. Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation\nof the debt; they are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies\nare not corrected.\n\n \n\n**Doubtful**- Loans classified doubtful have all the weaknesses inherent in loans classified as substandard, plus the added characteristic\nthat the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly\nquestionable and improbable.\n\n \n\n13\n\n \n\n \n\nThe following table presents the credit risk grade of loans by origination year as of March 31, 2026: \n\n \n\nSchedule of credit risk grade of loans \n    \n    \n    \n    \n    \n    \n    \n   \n\nAs of March 31, 2026 \n   \n   \n   \n   \n   \n   \n   \n  \n\n(Dollars in thousands) \n2026  \n2025  \n2024  \n2023  \n2022  \nPrior  \nRevolving  \nTotal \n\nCommercial Real Estate \n   \n   \n   \n   \n   \n   \n   \n  \n\nPass \n$4,478  \n$29,336  \n$20,754  \n$41,633  \n$43,057  \n$104,469  \n$11,678  \n$255,405 \n\nSubstandard \n —  \n —  \n —  \n —  \n —  \n 191  \n —  \n 191 \n\nTotal commercial real estate \n$4,478  \n$29,336  \n$20,754  \n$41,633  \n$43,057  \n$104,660  \n$11,678  \n$255,596 \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nCurrent period gross charge-offs \n —  \n —  \n —  \n —  \n —  \n$(103) \n —  \n$(103)\n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nConstruction and Land Development \n    \n    \n    \n    \n    \n    \n    \n   \n\nPass \n$2,270  \n$15,508  \n$23,633  \n$1,969  \n$2,078  \n$3,784  \n$1,121  \n$50,363 \n\nSubstandard \n —  \n —  \n 20  \n —  \n —  \n —  \n —  \n 20 \n\nTotal construction and land development \n$2,270  \n$15,508  \n$23,653  \n$1,969  \n$2,078  \n$3,784  \n$1,121  \n$50,383 \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nCurrent period gross charge-offs \n —  \n —  \n —  \n —  \n —  \n —  \n —  \n — \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nResidential 1-4 Family \n    \n    \n    \n    \n    \n    \n    \n   \n\nPass \n$9,652  \n$33,278  \n$18,159  \n$20,532  \n$23,281  \n$107,420  \n$39,055  \n$251,377 \n\nSpecial Mention \n —  \n —  \n —  \n —  \n —  \n 468  \n —  \n 468 \n\nSubstandard \n 443  \n —  \n 104  \n 189  \n 194  \n 1,608  \n —  \n 2,538 \n\nTotal residential 1-4 family \n$10,095  \n$33,278  \n$18,263  \n$20,721  \n$23,475  \n$109,496  \n$39,055  \n$254,383 \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nCurrent period gross charge-offs \n —  \n —  \n —  \n —  \n —  \n —  \n —  \n — \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nMultifamily \n    \n    \n    \n    \n    \n    \n    \n   \n\nPass \n$4,432  \n$18,058  \n$1,036  \n$2,504  \n$9,170  \n$13,560  \n$955  \n$49,715 \n\nTotal Multifamily \n$4,432  \n$18,058  \n$1,036  \n$2,504  \n$9,170  \n$13,560  \n$955  \n$49,715 \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nCurrent period gross charge-offs \n —  \n —  \n —  \n —  \n —  \n —  \n —  \n — \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nFarmland \n    \n    \n    \n    \n    \n    \n    \n   \n\nPass \n$73  \n$7,003  \n$2,497  \n$1,119  \n$1,770  \n$8,103  \n$3,444  \n$24,009 \n\nSpecial Mention \n —  \n —  \n —  \n —  \n —  \n 115  \n —  \n 115 \n\nSubstandard \n —  \n —  \n —  \n —  \n —  \n 15  \n —  \n 15 \n\nTotal farmland \n$73  \n$7,003  \n$2,497  \n$1,119  \n$1,770  \n$8,233  \n$3,444  \n$24,139 \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nCurrent period gross charge-offs \n —  \n —  \n —  \n —  \n —  \n —  \n —  \n — \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nCommercial \n    \n    \n    \n    \n    \n    \n    \n   \n\nPass \n$6,140  \n$12,560  \n$9,600  \n$6,404  \n$1,995  \n$3,939  \n$11,865  \n$52,503 \n\nSpecial Mention \n —  \n —  \n —  \n —  \n —  \n 2  \n —  \n 2 \n\nSubstandard \n —  \n 56  \n 3  \n 18  \n —  \n 41  \n 18  \n 136 \n\nTotal commercial \n$6,140  \n$12,616  \n$9,603  \n$6,422  \n$1,995  \n$3,982  \n$11,883  \n$52,641 \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nCurrent period gross charge-offs \n —  \n$(38) \n —  \n —  \n —  \n —  \n —  \n$(38)\n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nAgriculture \n    \n    \n    \n    \n    \n    \n    \n   \n\nPass \n$50  \n$680  \n$654  \n$124  \n$160  \n$58  \n$2,612  \n$4,338 \n\nSpecial Mention \n —  \n —  \n —  \n 29  \n —  \n —  \n —  \n 29 \n\nSubstandard \n —  \n 442  \n 188  \n —  \n —  \n 78  \n —  \n 708 \n\nTotal agriculture \n$50  \n$1,122  \n$842  \n$153  \n$160  \n$136  \n$2,612  \n$5,075 \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nCurrent period gross charge-offs \n —  \n —  \n$(117) \n —  \n —  \n —  \n —  \n$(117)\n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nConsumer Installment Loans \n    \n    \n    \n    \n    \n    \n    \n   \n\nPass \n$3,005  \n$14,054  \n$6,771  \n$3,022  \n$989  \n$1,968  \n$1,471  \n$31,280 \n\nSubstandard \n —  \n 32  \n 47  \n 13  \n 1  \n —  \n —  \n 93 \n\nTotal consumer installment loans \n$3,005  \n$14,086  \n$6,818  \n$3,035  \n$990  \n$1,968  \n$1,471  \n$31,373 \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nCurrent period gross charge-offs \n —  \n$(6) \n$(9) \n$(9) \n —  \n$(56) \n —  \n$(80)\n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nTotal \n$30,543  \n$131,007  \n$83,466  \n$77,556  \n$82,695  \n$245,819  \n$72,219  \n$723,305 \n\nTotal current period gross charge-offs \n —  \n$(44) \n$(126) \n$(9) \n —  \n$(159) \n —  \n$(338)\n\n \n\n14\n\n \n\n \n\nThe following table presents the credit\nrisk grade of loans by origination year as of December 31, 2025:\n\n \n\n**As of December 31, 2025**** **\n** **** **\n** **** **\n** **** **\n** **** **\n** **** **\n** **** **\n** **** **\n** **\n\n(Dollars\nin thousands) \n2025 \n2024 \n2023 \n2022 \n2021 \nPrior \nRevolving \nTotal\n\nCommercial\nreal estate \n    \n    \n    \n    \n    \n    \n    \n   \n\nPass \n$33,892  \n$22,565  \n$43,005  \n$44,828  \n$42,021  \n$69,031  \n$358  \n$255,700 \n\nSubstandard \n —    \n —    \n —    \n —    \n —    \n 7  \n —    \n 7 \n\nTotal\ncommercial real estate \n$33,892  \n$22,565  \n$43,005  \n$44,828  \n$42,021  \n$69,038  \n$358  \n$255,707 \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nCurrent\nperiod gross charge-offs \n$—    \n$—    \n$—    \n$(1) \n$—    \n$—    \n$—    \n$(1)\n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nConstruction and land development \n    \n    \n    \n   \n\nPass \n$12,676  \n$21,666  \n$2,448  \n$2,113  \n$2,122  \n$1,778  \n$0  \n$42,803 \n\nSubstandard \n —    \n 23  \n —    \n —    \n —    \n —    \n —    \n 23 \n\nTotal\nconstruction and land development \n$12,676  \n$21,689  \n$2,448  \n$2,113  \n$2,122  \n$1,778  \n$0  \n$42,826 \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nCurrent\nperiod gross charge-offs \n$—    \n$—    \n$—    \n$—    \n$—    \n$—    \n$—    \n$—   \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nResidential\n1-4 family \n    \n    \n    \n    \n    \n    \n    \n   \n\nPass \n$35,441  \n$18,703  \n$24,178  \n$24,318  \n$35,543  \n$76,674  \n$34,842  \n$249,699 \n\nSpecialMention \n —    \n —    \n —    \n —    \n —    \n 476  \n —    \n 476 \n\nSubstandard \n —    \n 104  \n 197  \n 50  \n —    \n 2,020  \n 78  \n 2,449 \n\nTotal\nresidential 1-4 family \n$35,441  \n$18,807  \n$24,375  \n$24,368  \n$35,543  \n$79,170  \n$34,920  \n$252,624 \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nCurrent\nperiod gross charge-offs \n$—    \n$—    \n$(138) \n$—    \n$—    \n$(1) \n$—    \n$(139)\n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nMultifamily \n    \n    \n    \n    \n    \n    \n    \n   \n\nPass \n$17,668  \n$1,464  \n$3,197  \n$9,874  \n$6,444  \n$7,317  \n$—    \n$45,964 \n\nTotal\nmultifamily \n$17,668  \n$1,464  \n$3,197  \n$9,874  \n$6,444  \n$7,317  \n$—    \n$45,964 \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nCurrent\nperiod gross charge-offs \n$—    \n$—    \n$—    \n$—    \n$—    \n$—    \n$—    \n$—   \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nFarmland \n    \n    \n    \n    \n    \n    \n    \n   \n\nPass \n$9,005  \n$2,610  \n$1,142  \n$1,830  \n$2,641  \n$6,020  \n$—    \n$23,248 \n\nSpecialMention \n —    \n —    \n —    \n —    \n —    \n 121  \n —    \n 121 \n\nSubstandard \n —    \n —    \n —    \n —    \n —    \n 16  \n —    \n 16 \n\nTotal\nfarmland \n$9,005  \n$2,610  \n$1,142  \n$1,830  \n$2,641  \n$6,157  \n$—    \n$23,385 \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nCurrent\nperiod gross charge-offs \n$—    \n$—    \n$—    \n$—    \n$—    \n$—    \n$—    \n$—   \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nCommercial \n    \n    \n    \n    \n    \n    \n    \n   \n\nPass \n$14,653  \n$10,852  \n$8,745  \n$2,628  \n$1,284  \n$3,106  \n$11,880  \n$53,148 \n\nSpecialMention \n —    \n —    \n —    \n —    \n —    \n 2  \n —    \n 2 \n\nSubstandard \n —    \n —    \n —    \n —    \n —    \n —    \n 25  \n 25 \n\nTotal\ncommercial \n$14,653  \n$10,852  \n$8,745  \n$2,628  \n$1,284  \n$3,108  \n$11,905  \n$53,175 \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nCurrent\nperiod gross charge-offs \n$—    \n$(59) \n$—    \n$—    \n$(23) \n$(15) \n$—    \n$(97)\n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nAgriculture \n    \n    \n    \n    \n    \n    \n    \n   \n\nPass \n$1,437  \n$683  \n$162  \n$176  \n$104  \n$98  \n$942  \n$3,602 \n\nSpecialMention \n —    \n —    \n —    \n —    \n —    \n —    \n 31  \n 31 \n\nSubstandard \n —    \n —    \n —    \n —    \n —    \n —    \n —    \n —   \n\nDoubtful \n —    \n 305  \n —    \n —    \n —    \n —    \n 446  \n 751 \n\nTotal\nagriculture \n$1,437  \n$988  \n$162  \n$176  \n$104  \n$98  \n$1,419  \n$4,384 \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nCurrent\nperiod gross charge-offs \n$—    \n$—    \n$—    \n$—    \n$—    \n$—    \n$(50) \n$(50)\n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nConsumer\nand all other \n    \n    \n    \n    \n    \n    \n    \n   \n\nPass \n$16,111  \n$7,607  \n$3,599  \n$1,311  \n$845  \n$1,617  \n$372  \n$31,462 \n\nSubstandard \n 18  \n 30  \n 10  \n 2  \n —    \n 0  \n —    \n 60 \n\nTotal\nconsumer and all other \n$16,129  \n$7,637  \n$3,609  \n$1,313  \n$845  \n$1,617  \n$372  \n$31,522 \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nCurrent\nperiod gross charge-offs \n$(14) \n$(47) \n$(25) \n$(5) \n$(5) \n$(280) \n$—    \n$(376)\n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nTotal \n$140,901  \n$86,612  \n$86,683  \n$87,130  \n$91,004  \n$168,283  \n$48,974  \n$709,587 \n\nTotal\ncurrent period gross charge-offs \n$(14) \n$(106) \n$(163) \n$(6) \n$(28) \n$(296) \n$(50) \n$(663)\n\n \n\n15\n\n \n\n \n\n**NOTE\n7 ALLOWANCE FOR CREDIT LOSSES FOR LOANS (“ACLL”)**** **\n\n \n\nIn\ndetermining the amount of our allowance for credit losses, we rely on an analysis of our loan portfolio, our experience and our evaluation\nof general economic conditions. If our assumptions prove to be incorrect, our current allowance may not be sufficient to cover future\nloan losses and we may experience significant increases to our provision. \n\n \n\nThe\nfollowing table presents a disaggregated analysis of activity in the allowance for credit losses for loans as of March 31, 2026 and December\n31, 2025: \n\n \n\nSchedule\nof allowance for credit losses for loans \n   \n   \n   \n   \n   \n   \n   \n   \n   \n\n  \nReal\nestate secured \n  \n  \n  \n  \n\n  \n  \nConstruction \n  \n  \n  \n  \n  \nConsumer \n  \n\n  \n  \nand\nLand \nResidential \n  \n  \n  \n  \nand\nAll \n  \n\n(Dollars\nare in thousands) \nCommercial \nDevelopment \n1-4\nfamily \nMultifamily \nFarmland \nCommercial \nAgriculture \nOther \nTotal \n\nThree\nmonths ended March 31, 2026 \n  \n  \n  \n  \n  \n  \n  \n  \n  \n\nBeginning\nbalance \n$2,856 \n$411 \n$2,799 \n$559 \n$166 \n$602 \n$82 \n$632 \n$8,107 \n\nCharge-offs\n \n (103)\n — \n — \n — \n — \n (38)\n (117)\n (80)\n (338)\n\nRecoveries \n — \n — \n 36 \n 3 \n 9 \n — \n — \n 48 \n 96 \n\nProvision\nfor credit losses \n 19 \n 77 \n (1)\n 26 \n 4 \n 82 \n 72 \n (28)\n 251 \n\nEnding\nbalance \n$2,772 \n$488 \n$2,834 \n$588 \n$179 \n$646 \n$37 \n$572 \n$8,116 \n\n  \n  \n  \n  \n  \n  \n\n  \nReal\nestate secured \n  \n  \n  \n  \n\n  \n  \nConstruction \n  \n  \n  \n  \n  \nConsumer \n  \n\n  \n  \nand\nLand \nResidential \n  \n  \n  \n  \nand\nAll \n  \n\n(Dollars\nare in thousands) \nCommercial \nDevelopment \n1-4\nfamily \nMultifamily \nFarmland \nCommercial \nAgriculture \nOther \nTotal \n\nYear\nended December 31, 2025 \n  \n  \n  \n  \n  \n  \n  \n  \n  \n\nBeginning\nbalance \n$2,565 \n$322 \n$2,923 \n$382 \n$149 \n$751 \n$36 \n$556 \n$7,684 \n\nCharge-offs \n (1)\n — \n (139)\n — \n — \n (97)\n (50)\n (376)\n (663)\n\nRecoveries \n — \n 54 \n 60 \n 12 \n 3 \n 8 \n — \n 207 \n 347 \n\nProvision\nfor credit losses \n 292 \n 35 \n (45)\n 165 \n 14 \n (60)\n 93 \n 245 \n 739 \n\nEnding\nbalance \n$2,856 \n$411 \n$2,799 \n$559 \n$166 \n$602 \n$82 \n$632 \n$8,107 \n\n \n\nAllocation\nof a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.\n\n \n\n**NOTE\n8 MODIFICATIONS MADE TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY**\n\n \n\nAn\nassessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. Because the effect of most\nmodifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the\nmeasurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon\nmodification. Occasionally, the Company modifies loans by providing principal forgiveness on certain of its real estate loans. When principal\nforgiveness is provided, the amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is\nwritten off, against the allowance for credit losses, resulting in a reduction of the amortized cost basis and a corresponding adjustment\nto the allowance for credit losses.\n\n \n\nIn\nsome cases, the Company will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such\nas a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as\nprincipal forgiveness, may be granted.\n\n \n\nOn\nFebruary 15, 2025, severe flash flooding occurred in Tazewell and Buchanan, Counties Virgina. On September 27, 2024, Hurricane Helene\npassed through western North Carolina, southwest Virginia and northeast Tennessee, causing flood and wind damage in its path. To assist\nborrowers impacted by these natural disasters, we offered short-term payment deferrals of 3 to 6 months. As of March 31, 2026, 43 loans\ntotaling $6.3 million\nare participating in the deferral program. One loan totaling $13,000\nwas in default, and another loan totaling $178,000\nwas extended beyond the terms of the short-term deferral program.\nAs of December 31, 2025, 48 loans totaling $6.6\nmillion were participating in the deferral program. One of\nthese loans, a residential mortgage loan totaling $178,000,\nreceived an additional 3-month deferral, due to the extent of damage to the property. There were no loans modified to borrowers experiencing\nfinancial difficulties in the three-month period ended March 31, 2026, other than those impacted by the natural disasters.\n\n \n\n16\n\n \n\n \n\n**NOTE\n9 CREDIT ALLOWANCE FOR UNFUNDED COMMITMENTS**\n\n \n\nThe\nCompany maintains a separate allowance for credit losses on off-balance-sheet credit exposures, including unfunded loan commitments,\nwhich is included in other liabilities on the consolidated balance sheet. The allowance for credit losses for off-balance-sheet credit\nexposures is adjusted through a provision for credit losses in the income statement. The estimate includes consideration of the likelihood\nthat funding will occur and an estimate of expected credit losses on commitments expected to be funded over their estimated lives, utilizing\nthe same models and approaches for the Company’s other loan portfolio segments described above, as these unfunded commitments share\nsimilar risk characteristics as its loan portfolio segments. The Company has identified the unfunded portion of certain lines of credit\nas unconditionally cancellable credit exposures, meaning the Company can cancel the unfunded commitment at any time, and those commitments\nare excluded from the credit loss estimate. \n\n \n\nAs\nof March 31, 2026 and December 31, 2025, the liability for credit losses on off-balance-sheet credit exposures included in other liabilities\nwas $460,000 and\n$471,000,\nrespectively. During the three months ended March 31, 2026, a negative provision of $11,000\nwas included in the Provision for Credit Losses. \n\n \n\n**NOTE\n10 OTHER REAL ESTATE OWNED**** **\n\n \n\nThe\nfollowing table summarizes the activity in other real estate owned for the three months ended March 31, 2026, and the year ended December\n31, 2025: \n\n \n\nSchedule\nof activity in other real estate owned \n    \n   \n\n(Dollars\nin thousands) \nMarch\n31,\n2026  \nDecember 31,\n\n2025 \n\nBalance, beginning\nof period \n$89  \n$87 \n\nAdditions \n 95  \n 46 \n\nProceeds\nfrom sales \n —  \n (50)\n\nNet\ngains from sales \n —  \n 6 \n\nBalance,\nend of period \n$184  \n$89 \n\n \n\nAs\nof March 31, 2026 one loan secured by residential real estate, totaling $95,000 was in the process of foreclosure.\n\n \n\n**NOTE\n11 FAIR VALUES**\n\n \n\nThe\nCompany uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.\nIn accordance with the Fair Value Measurements and Disclosures topic of Financial Accounting Standards Board (the FASB) ASC, the fair\nvalue of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability (an exit price)\nin the principal or most advantageous market and in an orderly transaction between market participants at the measurement date. Fair\nvalue is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s\nvarious financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present\nvalue or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate\nand estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.\n\n \n\nThe\nfair value guidance provides a consistent definition of fair value, which focuses on exit price in the principal or most advantageous\nmarket and in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement\ndate under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability,\na change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price\nat which willing market participants would transact at the measurement date under current market conditions depends on the facts and\ncircumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative\nof fair value under current market conditions.\n\n \n\nIn\naccordance with this guidance, the Company groups its financial assets and financial liabilities generally measured at fair value in\nthree levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine\nfair value.\n\n \n\n17\n\n \n\n \n\nLevel\n1: Quoted prices are available in active markets for identical assets or liabilities as of the reported date.\n\n \n\nLevel\n2: Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported\ndate. The nature of these assets and liabilities include items for which quoted prices are available but traded less frequently, and\nitems that are valued using other financial instruments, the parameters of which can be directly observed.\n\n \n\nLevel\n3: Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets\nand are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require\nsignificant management judgment or estimation.\n\n \n\nA\ndescription of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such\ninstruments pursuant to the valuation hierarchy are as follows:\n\n \n\nInvestment\nSecurities Available-for-sale - Investment securities AFS are recorded at fair value on a recurring basis. Fair value measurement is\nbased upon quoted prices. The Company’s AFS securities, totaling $96.9 million and $96.4 million as of March 31, 2026 and December\n31, 2025, respectively, are the only assets whose fair values are measured on a recurring basis using Level 2 inputs from an independent\npricing service.\n\n \n\nCollateral\nDependent Loans with an ACL - In accordance with ASC 326, we may determine that an individual loan exhibits unique risk characteristics\nwhich differentiate it from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an\nindividual basis and excluded from the collective evaluation. Specific allocations of the allowance for credit losses are determined\nby analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic\nconditions affecting the borrower’s industry, among other things. A loan is considered to be collateral dependent when, based upon\nmanagement’s assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially\nthrough the operation or sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral\nat the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. We reevaluate\nthe fair value of collateral supporting collateral dependent loans on a quarterly basis. The fair value of real estate collateral supporting\ncollateral dependent loans is evaluated by appraisal services using a methodology that is consistent with the Uniform Standards of Professional\nAppraisal Practice. \n\n \n\nOther\nReal Estate Owned –Other real estate owned is adjusted to fair value upon transfer of the loans, or former bank premises, to other\nreal estate owned. These assets are carried at the lower of their carrying value or fair value. Fair value is based upon observable market\nprices, when available, reduced by estimated disposition costs, which the Company considers to be nonrecurring Level 2 inputs. When observable\nmarket prices are not available, management determines the fair value of the foreclosed asset using independent third-party appraisals,\nevaluated to determine whether or not the property is further impaired below the appraised value, and adjusts for estimated costs of\ndisposition. The Company records foreclosed assets as nonrecurring Level 3.\n\n \n\n18\n\n \n\n \n\nAssets\nand liabilities measured at fair value are as follows as of March 31, 2026 and December 31, 2025:\n\nSchedule of summary of assets\nand liabilities measured at fair value \n   \n   \n  \n\nMarch\n31, 2026\n\n(Dollars in thousands) \nQuoted\nmarket\n\nprice in active\n\nmarkets\n(Level 1)  \nSignificant\nother\n\nobservable inputs\n(Level 2)  \nSignificant\n\nunobservable\n\ninputs\n(Level 3) \n\n(On a recurring basis)\n\nAvailable-for-sale investments \n    \n    \n   \n\nU.S.\nTreasuries \n$—  \n$6,439  \n$— \n\nU.S.\nGovernment agencies \n —  \n 8,345  \n — \n\nMunicipal\nsecurities \n —  \n 19,798  \n — \n\nCorporate\nbonds \n —  \n 2,377  \n — \n\nMortgage-backed\nsecurities \n —  \n 45,460  \n — \n\nCollateralized\nmortgage obligations -guaranteed \n —  \n 14,441  \n — \n\n  \n    \n    \n   \n\n(On a\nnon-recurring basis)\nOther real estate owned \n —  \n —  \n 184 \n\nTotal \n$—  \n$96,860  \n$184 \n\n \n\nDecember\n31, 2025\n(Dollars in thousands) \nQuoted\nmarket\n\nprice in active\n\nmarkets\n(Level 1)  \nSignificant\nother\n\nobservable inputs\n(Level 2)  \nSignificant\n\nunobservable\n\ninputs\n(Level 3) \n\n(On a recurring basis)\n\nAvailable-for-sale investments \n    \n    \n   \n\nU.S.\nTreasuries \n$—  \n$5,460  \n — \n\nU.S.\nGovernment agencies \n —  \n 9,159  \n$— \n\nMunicipal\nsecurities \n —  \n 19,997  \n — \n\nCorporate\nbonds \n —  \n 2,379  \n — \n\nMortgage-backed\nsecurities \n —  \n 46,079  \n — \n\nCollateralized\nmortgage obligations - guaranteed \n —  \n 13,359  \n — \n\n  \n    \n    \n   \n\n(On a non-recurring basis)\n\nOther real estate owned \n —  \n —  \n 89 \n\nCollateral dependent loans\nwith ACL: \n —  \n —  \n   \n\nAgriculture \n —  \n —  \n 251 \n\nCommercial\nReal Estate \n —  \n —  \n 300 \n\nTotal \n$—  \n$96,433  \n$640 \n\n \n\nNot\nincluded in the tables above as of March 31, 2026 and December 31, 2025 is a residential 1-4 family mortgage loan totaling approximately\n$39,000\nthat has a specific allowance for credit loss allocation of\n100% due to the destruction of the collateral.\n\n \n\n 19\n\n \n\n \n\nFor\nLevel 3 assets measured at fair value on a recurring or non-recurring basis as of March 31, 2026 and December 31, 2025, the significant\nunobservable inputs used in the fair value measurements were as follows:\n\n \n\nSchedule of significant unobservable\ninputs In level 3 assets\n \n \n \n \n \n \n \n \n \n \n\n(Dollars\nin thousands)\n \nFair\nValue at\n\nMarch 31,\n\n2026\n \nFair\nValue at\n\nDecember 31,\n\n2025\n \nValuation\n\nTechnique\n \nSignificant\n\nUnobservable Inputs\n \nGeneral\nRange\n\nof Significant\n\nUnobservable\n\nInput Values\n\n \n \n \n \n \n \n \n \n \n \n \n\nCollateral\ndependent loans with ACL:\n\n \n\n \n \n \n \n \n \n \n \n \n \n\nAgriculture\n$\n—\n$\n251\n \nAppraised\nValue\n \nDiscounts\nto reflect current market conditions, ultimate collectability, and estimated costs to sell\n \n0\n– 18%\n\n \n \n \n \n \n \n \n \n \n \n \n\nCommercial Real Estate\n \n—\n \n300\n \nAppraised\nValue\n \nDiscounts\nto reflect current market conditions, ultimate collectability, and estimated costs to sell\n \n0\n– 18%\n\n \n \n \n \n \n \n \n \n \n \n \n\nConsumer and all other\n \n—\n \n—\n \nAppraised\nValue/Other estimates from Independent Sources\n \nDiscounts\nto reflect current market conditions, ultimate collectability, and estimated costs to sell\n \n0\n– 18%\n\n \n \n \n \n \n \n \n \n \n \n \n\nOther Real Estate Owned\n$\n184\n$\n89\n \nAppraised\nValue/Comparable Sales/Other Estimates from Independent Sources\n \nDiscounts\nto reflect current market conditions and estimated costs to sell\n \n0\n– 18%\n\n \n\n**Fair\nValue of Financial Instruments**\n\n \n\nFair\nvalue information about financial instruments, whether or not recognized in the balance sheet, for which it is practical to estimate\nthe value is based upon the characteristics of the instruments and relevant market information. Financial instruments include cash, evidence\nof ownership in an entity, or contracts that convey or impose on an entity that contractual right or obligation to either receive or\ndeliver cash for another financial instrument.\n\n \n\nThe\nfollowing summary presents the methodologies and assumptions used to estimate the fair value of the Company’s financial instruments\npresented below. The information used to determine fair value is highly subjective and judgmental in nature and, therefore, the results\nmay not be precise. Subjective factors include, among other things, estimates of cash flows, risk characteristics, credit quality, and\ninterest rates, all of which are subject to change. Since the fair value is estimated as of the balance sheet date, the amounts that\nwill actually be realized or paid upon settlement or maturity on these various instruments could be significantly different.\n\n \n\n 20\n\n \n\n \n\nThe\ncarrying amount and fair value of the Company’s financial instruments that are not required to be measured or reported at fair\nvalue on a recurring basis as of March 31, 2026, and December 31, 2025, are as follows:\n\n \n\nSchedule\nof estimated fair value of financial instruments \n    \n    \n    \n    \n   \n\n  \n   \n   \nFair\nValue Measurements \n\n(Dollars\nin thousands) \nCarrying\nAmount  \nFair\n\nValue  \nQuoted\n\nmarket\n\nprice in\n\nactive\n\nmarkets\n\n(Level 1)  \nSignificant\n\nother\n\nobservable\n\ninputs\n(Level 2)  \nSignificant\n\nunobservable\n\ninputs\n\n(Level 3) \n\n  \n   \n   \n   \n   \n  \n\nMarch\n31, 2026 \n    \n    \n    \n    \n   \n\nFinancial instruments –\nassets \n    \n    \n    \n    \n   \n\nNet\nloans \n$715,189  \n$713,767  \n$—  \n$—  \n$713,767 \n\n  \n    \n    \n    \n    \n   \n\nFinancial instruments –\nliabilities \n    \n    \n    \n    \n   \n\nTime\ndeposits \n 289,926  \n 289,782  \n —  \n 289,782  \n — \n\nBorrowed\nfunds \n 18,986  \n 17,170  \n —  \n 17,170  \n — \n\n  \n    \n    \n    \n    \n   \n\nDecember\n31, 2025 \n    \n    \n    \n    \n   \n\nFinancial instruments –\nassets \n    \n    \n    \n    \n   \n\nNet\nloans \n$701,480  \n$697,105  \n$—  \n$—  \n$697,105 \n\n  \n    \n    \n    \n    \n   \n\nFinancial instruments –\nliabilities \n    \n    \n    \n    \n   \n\nTime\ndeposits \n 294,216  \n 294,244  \n —  \n 294,244  \n — \n\nBorrowed\nfunds \n 18,986  \n 17,132  \n —  \n 17,132  \n — \n\n \n\nFair\nvalue estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.\nThese estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire\nholdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments,\nfair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics\nof various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of\nsignificant judgment and therefore cannot be determined with precision. Changes in assumptions can significantly affect the estimates.\n\n \n\nEstimated\nfair values have been determined by the Company using historical data, as generally provided in the Company’s regulatory reports,\nand an estimation methodology suitable for each category of financial instruments. The Company’s fair value estimates, methods\nand assumptions are set forth below for the Company’s other financial instruments.\n\n \n\nThe\ncarrying values of cash and due from banks, federal funds sold, deposits with no stated maturities, and accrued interest approximates\nfair value and are excluded from the table above.\n\n \n\nThe\nmethods utilized to measure the fair value of financial instruments represent an approximation of exit price; however, an actual exit\nprice may differ.\n\n \n\n**NOTE\n12 LEASING ACTIVITIES**\n\n \n\nAs\nof March 31, 2026, the Bank leases four branch offices, one administrative office, one loan production office and sublets a lot adjacent\nto another branch office. The lease agreements have maturity dates ranging from 2028 to December 2041. It is assumed that there are currently\nno circumstances in which the leases would be terminated prior to expiration. The weighted average remaining life of the lease terms\nas of March 31, 2026 was 6.07\nyears.\n\n \n\nThe\ndiscount rate used in determining the lease liability for each individual lease was the FHLB fixed advance rate which corresponded to\nthe lease term for each transaction. This methodology is expected to be used for any other subsequent lease agreements. The weighted\naverage discount rate for the leases as of March 31, 2026 was 3.35%.\n\n \n\nFor\nthe three months ended March 31, 2026 and 2025, operating lease expenses were $147,000\nand $142,000,\nrespectively.\n\n \n\n 21\n\n \n\n \n\nThe\nCompany’s other operating leases were evaluated and determined to be immaterial to the financial statements. As of March 31, 2026,\nfuture minimum rental commitments under the non-cancellable operating leases discussed above are as follows (dollars are in thousands):\n\n \n\nSchedule\nof future minimum rental commitments under the non-cancellable operating leases  \n   \n\n2026  \n$432 \n\n2027  \n 598 \n\n2028  \n 603 \n\n2029  \n 492 \n\n2030  \n 492 \n\nThereafter  \n 712 \n\nTotal lease payments  \n 3,329 \n\nLess:\nimputed interest  \n (450)\n\nTotal  \n$2,879 \n\n   \n   \n\n**NOTE\n13 BORROWED FUNDS**\n\n \n\nBorrowed\nfunds totaled $18,986,000 as\nof March 31, 2026 and December 31, 2025. For additional information on borrowed funds, refer to Note 19 in Item 8 of Form 10-K for the\nyear ended December 31, 2025.\n\n \n\n**NOTE\n14 REVENUE FROM CONTRACTS WITH CUSTOMERS**\n\n \n\nAll\nour revenue from contracts with customers as defined in ASC 606 is recognized within noninterest income. Refer to Note 25 in our Annual\nReport on Form 10-K for the year ended December 31, 2025 for a description of how each revenue stream is accounted for under ASC 606.\nThe following table presents noninterest income by revenue stream for the three months ended March 31, 2026 and 2025:\n\n \n\nSchedule\nof revenue from contracts with customers \n    \n   \n\n  \nFor\nthe three months ended \n\n  \nMarch\n31, \n\n(Dollars\nin thousands) \n2026  \n2025 \n\nService charges\nand fees \n$837  \n$877 \n\nCard processing and interchange\nincome \n 986  \n 865 \n\nFinancial services fees \n 419  \n 318 \n\nOther\nnoninterest income \n 388  \n 353 \n\nTotal\nnoninterest income \n$2,630  \n$2,413 \n\n \n\n**NOTE\n15 NONINTEREST EXPENSES**\n\n \n\nOther\noperating expenses, included as part of noninterest expenses, consisted of the following for the periods presented:\n\n \n\nSchedule\nof noninterest expenses \n    \n   \n\n  \nFor\nthe three months ended\nMarch 31, \n\n(Dollars\nin thousands) \n2026  \n2025 \n\nOther operating\nexpenses \n$913  \n$879 \n\nATM network expense \n 377  \n 428 \n\nLegal, accounting, and\nprofessional fees \n 213  \n 237 \n\nFDIC insurance premiums\n \n 103  \n 98 \n\nLoan related expenses \n 76  \n 79 \n\nAdvertising \n 63  \n 67 \n\nConsulting fees \n 39  \n 42 \n\nPrinting and supplies \n 31  \n 25 \n\nOther\nreal estate owned expenses, net \n 4  \n 1 \n\nTotal\nother operating expenses \n$1,819  \n$1,856 \n\n \n\n 22\n\n \n\n \n\n**NOTE\n16 RECENT ACCOUNTING DEVELOPMENTS**\n\n \n\nThe\nfollowing is a summary of recent authoritative announcements:\n\n \n\nIn\nNovember 2024, the Financial Accounting Standards Board (FASB) issued ASU 2024-03, “Income Statement—Reporting Comprehensive\nIncome—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” ASU 2024-03 requires\npublic companies to disclose, in the notes to the financial statements, specific information about certain costs and expenses at each\ninterim and annual reporting period. This includes disclosing amounts related to employee compensation, depreciation, and intangible\nasset amortization. In addition, public companies will need to provide qualitative description of the amounts remaining in relevant expense\ncaptions that are not separately disaggregated quantitatively. The FASB subsequently issued ASU 2025-01, “Income Statement—Reporting\nComprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date”, which amends the\neffective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in ASU 2024-03 in annual\nreporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15,\n2027. Early adoption of ASU 2024-03 is permitted. Implementation of ASU 2024-03 may be applied prospectively or retrospectively. The\nCompany does not expect the adoption of ASU 2024-03 to have a material impact on its consolidated financial statements.\n\n \n\nOther\naccounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material\nimpact on the Company’s financial position, results of operations or cash flows.\n\n \n\n 23"}