Form 10-Q NEW PEOPLES BANKSHARES For: Jun 30

 

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

☑

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

 

For the quarterly period ended June 30, 2026

 

or

 

☐

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

 

For the transition period from ____________ to _____________

 

Commission file number: 000-33411

 

NEW PEOPLES BANKSHARES, INC. 

(Exact name of registrant as specified in its charter)

Virginia  (State or other jurisdiction of  incorporation or organization)			31-1804543  (I.R.S. Employer  Identification No.)
67 Commerce Drive, Honaker, Virginia  (Address of principal executive offices)			24260  (Zip Code)

(276) 873-7000

(Registrant’s telephone number, including area code)

 

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

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
	None

 

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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filer  ☐		Accelerated filer  ☐
Non-accelerated filer  ☑		Smaller reporting company  ☑
		Emerging growth company  ☐

 

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

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

Yes

☐

No

☑

 

The number of shares outstanding of the registrant’s common stock was 23,539,302 as of August 12, 2026.

 

 

NEW PEOPLES BANKSHARES, INC.

 

INDEX

 

			Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets – June 30, 2026 (Unaudited) and December 31, 2025		3
	Consolidated Statements of Income – Three and six months ended June 30, 2026 and 2025 (Unaudited)		4
	Consolidated Statements of Comprehensive Income – Three and six months ended June 30, 2026 and 2025 (Unaudited)		5
	Consolidated Statements of Changes in Shareholders’ Equity – Three and six months ended June 30, 2026 and 2025 (Unaudited)		6
	Consolidated Statements of Cash Flows – Six months ended June 30, 2026 and 2025 (Unaudited)		7
	Notes to Consolidated Financial Statements		8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		34
Item 4.	Controls and Procedures		34
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings		35
Item 1A.	Risk Factors		35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		35
Item 3.	Defaults upon Senior Securities		35
Item 4.	Mine Safety Disclosures		35
Item 5.	Other Information		36
Item 6.	Exhibits		36
SIGNATURES			37

 

 

Part I

Financial Information

Item 1

Financial Statements

 

NEW PEOPLES BANKSHARES, INC. 

CONSOLIDATED BALANCE SHEETS 

JUNE 30, 2026 AND DECEMBER 31, 2025 

(IN THOUSANDS EXCEPT PER SHARE AND SHARE DATA) 

(UNAUDITED)

 

		June 30,				December 31,
		2026				2025
ASSETS
Cash and due from banks		$	17,403			$	13,849
Interest-bearing deposits with banks			66,060				63,109
Federal funds sold			850				252
Total cash and cash equivalents			84,313				77,210
Investment securities available-for-sale, at fair value			98,610				96,433
Restricted stock, at cost			2,636				2,598
Loans held for sale			1,334				—
Loans receivable			732,260				709,587
Allowance for credit losses			(8,215	)			(8,107	)
Net loans			724,045				701,480
Bank premises and equipment, net			15,961				16,400
Other real estate owned			225				89
Accrued interest receivable			3,751				3,451
Deferred taxes, net			4,110				3,895
Right-of-use assets – operating leases			2,759				2,998
Other assets			4,406				5,146
Total assets		$	942,150			$	909,700
LIABILITIES
Deposits:
Noninterest bearing		$	242,549			$	220,829
Interest-bearing			584,930				577,437
Total deposits			827,479				798,266
Borrowed funds			18,986				18,986
Lease liabilities – operating leases			2,759				2,998
Accrued interest payable			1,336				1,507
Accrued expenses and other liabilities			5,245				5,088
Total liabilities			855,805				826,845
SHAREHOLDERS’ EQUITY
Common stock - $2.00 par value; 50,000,000 shares authorized; 23,539,312 and 23,567,013 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively			47,079				47,134
Additional paid-in-capital			14,335				14,378
Retained earnings			33,603				29,210
Accumulated other comprehensive loss			(8,672	)			(7,867	)
Total shareholders’ equity			86,345				82,855
Total liabilities and shareholders’ equity		$	942,150			$	909,700

 

The accompanying notes are an integral part of these consolidated financial statements.

  

NEW PEOPLES BANKSHARES, INC. 

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025 

(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) 

(UNAUDITED)

 

		For the Three Months Ended June 30,								For the Six Months Ended June 30,
INTEREST AND DIVIDEND INCOME		2026				2025				2026				2025
Loans including fees		$	11,710			$	10,540			$	22,925			$	20,452
Federal funds sold			4				3				8				5
Interest-earning deposits with banks			687				663				1,325				1,355
Investments			751				711				1,449				1,413
Dividends on equity securities (restricted)			36				41				78				84
Total interest and dividend income			13,188				11,958				25,785				23,309
INTEREST EXPENSE
Deposits			3,544				3,450				7,078				6,899
Borrowed funds			249				294				495				586
Total interest expense			3,793				3,744				7,573				7,485
NET INTEREST INCOME			9,395				8,214				18,212				15,824
PROVISION FOR CREDIT LOSSES			63				154				303				413
NET INTEREST INCOME AFTER  PROVISION FOR CREDIT LOSSES			9,332				8,060				17,909				15,411
NONINTEREST INCOME
Service charges and fees			889				899				1,726				1,776
Card processing and interchange			1,088				988				2,074				1,853
Financial services fees			329				356				748				674
Other noninterest income			214				193				602				546
Total noninterest income			2,520				2,436				5,150				4,849
NONINTEREST EXPENSES
Salaries and employee benefits			3,885				3,652				7,769				7,450
Occupancy and equipment expense			873				874				1,764				1,858
Data processing and telecommunications			607				665				1,246				1,299
Other operating expenses			2,016				2,022				3,835				3,878
Total noninterest expenses			7,381				7,213				14,614				14,485
INCOME BEFORE INCOME TAXES			4,471				3,283				8,445				5,775
INCOME TAX EXPENSE			1,020				751				1,932				1,335
NET INCOME		$	3,451			$	2,532			$	6,513			$	4,440
Earnings per share
Basic and diluted		$	0.15			$	0.11			$	0.28			$	0.19
Average Weighted Shares of Common Stock
Basic and diluted			23,549,269				23,607,372				23,556,113				23,616,941

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

NEW PEOPLES BANKSHARES, INC. 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025 

(IN THOUSANDS) 

(UNAUDITED)

 

		For the Three Months Ended  June 30,								For the Six Months Ended  June 30,
		2026				2025				2026				2025
NET INCOME		$	3,451			$	2,532			$	6,513			$	4,440
Other comprehensive income (loss):
Investment securities activity
Unrealized gains (losses) arising during the period			(212	)			(280	)			(1,020	)			2,099
Related tax (expense) benefit			46				58				215				(441	)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)			(166	)			(222	)			(805	)			1,658
TOTAL COMPREHENSIVE INCOME		$	3,285			$	2,310			$	5,708			$	6,098

 

The accompanying notes are an integral part of these consolidated financial statements.

 

NEW PEOPLES BANKSHARES, INC. 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY 

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025 

(IN THOUSANDS INCLUDING SHARE DATA) 

(UNAUDITED)

 

		Shares of Common Stock				Common Stock				Additional Paid-in- Capital				Retained Earnings				Accumulated Other Comprehensive Loss				Total Shareholders’ Equity
Three Months Ended June 30,
Balance, March 31, 2026			23,556			$	47,111			$	14,360			$	30,152			$	(8,506	)		$	83,117
Net income			—				—				—				3,451				—				3,451
Other comprehensive loss, net of tax			—				—				—				—				(166	)			(166	)
Repurchase of common stock			(17	)			(32	)			(25	)			—				—				(57	)
Balance, June 30, 2026			23,539			$	47,079			$	14,335			$	33,603			$	(8,672	)		$	86,345
Balance, March 31, 2025			23,614			$	47,228			$	14,428			$	21,020			$	(10,104	)		$	72,572
Net income			—				—				—				2,532				—				2,532
Other comprehensive loss, net of tax			—				—				—				—				(222	)			(222	)
Repurchase of common stock			(13	)			(26	)			(12	)			—				—				(38	)
Balance, June 30, 2025			23,601			$	47,202			$	14,416			$	23,552			$	(10,326	)		$	74,844
Six Months Ended June 30,
Balance, December 31, 2025			23,567			$	47,134			$	14,378			$	29,210			$	(7,867	)		$	82,855
Net income			—				—				—				6,513				—				6,513
Other comprehensive loss, net of tax			—				—				—				—				(805	)			(805	)
Cash dividend declared ($0.09 per share)			—				—				—				(2,120	)			—				(2,120	)
Repurchase of common stock			(28	)			(55	)			(43	)			—				—				(98	)
Balance, June 30, 2026			23,539			$	47,079			$	14,335			$	33,603			$	(8,672	)		$	86,345
Balance, December 31, 2024			23,637			$	47,273			$	14,451			$	21,001			$	(11,984	)		$	70,741
Net income			—				—				—				4,440				—				4,440
Other comprehensive income, net of tax			—				—				—				—				1,658				1,658
Cash dividend declared ($0.08 per share)			—				—				—				(1,889	)			—				(1,889	)
Repurchase of common stock			(36	)			(71	)			(35	)			—				—				(106	)
Balance, June 30, 2025			23,601			$	47,202			$	14,416			$	23,552			$	(10,326	)		$	74,844

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

NEW PEOPLES BANKSHARES, INC. 

CONSOLIDATED STATEMENTS OF CASH FLOWS 

FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 

(IN THOUSANDS) 

(UNAUDITED)

 

		2026				2025
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	6,513			$	4,440
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			621				745
Provision for credit losses			303				413
Gain on sale of mortgage loans			—				(9	)
Gain on sale or disposal of premises and equipment			(9	)			(2	)
Gain on sale of other real estate owned			(37	)			(6	)
Loans originated for sale			(112	)			(380	)
Proceeds from sales of loans originated for sale			112				389
Net amortization/accretion of bond premiums/discounts			34				37
Deferred tax benefit			(2	)			—
Net change in:
Accrued interest receivable			(300	)			(123	)
Other assets			683				(542	)
Accrued interest payable			(171	)			(15	)
Accrued expenses and other liabilities			173				(102	)
Net cash provided by operating activities			7,808				4,845
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in loans			(24,386	)			(38,350	)
Purchase of securities available-for-sale			(9,908	)			(4,770	)
Proceeds from repayments and maturities of securities available-for-sale			6,677				6,067
Net purchase of equity securities (restricted)			(38	)			(258	)
Payments for the purchase of premises and equipment and software			(123	)			(444	)
Proceeds from sale of premises and equipment			9				2
Proceeds from sale of other real estate owned			69				50
Proceeds from bank owned life insurance benefit			—				5,417
Net cash used in investing activities			(27,700	)			(32,286	)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings			—				5,000
Repayment of long-term debt			—				(3,000	)
Net change in noninterest bearing deposits			21,720				8,629
Net change in interest-bearing deposits			7,493				23,298
Dividends paid			(2,120	)			(1,889	)
Repurchase of common stock			(98	)			(106	)
Net cash provided by financing activities			26,995				31,932
Net increase in cash and cash equivalents			7,103				4,491
Cash and cash equivalents, beginning of the period			77,210				67,668
Cash and cash equivalents, end of the period		$	84,313			$	72,159
Supplemental disclosure of cash paid during the period for:
Interest		$	7,744			$	7,500
Taxes			1,931				880
Supplemental disclosure of non-cash transactions:
Transfer of loans to other real estate owned			168				14
Change in unrealized losses on securities available-for-sale			(1,020	)			2,099
Transfer of loans receivable to loans held for sale			1,334				—

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

NEW PEOPLES BANKSHARES, INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 NATURE OF OPERATIONS

 

Nature of Operations – New Peoples Bankshares, Inc. (New Peoples or the Company) is a financial holding company whose principal activity is the ownership and management of a community bank, New Peoples Bank, Inc. (the Bank). New Peoples and the Bank are organized and incorporated under the laws of the Commonwealth of Virginia. As a state-chartered member bank, the Bank is subject to regulation by the Virginia Bureau of Financial Institutions, the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System (the Federal Reserve). The Bank provides general banking services to individuals, small and medium-size businesses and the professional community of southwest Virginia, southern West Virginia, western North Carolina and northeastern Tennessee. These services include commercial and consumer loans along with traditional deposit products such as checking and savings accounts.

 

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

These consolidated financial statements conform to U. S. generally accepted accounting principles (GAAP) and to general industry practices. In the opinion of management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Company’s financial position as of June 30, 2026 and December 31, 2025, and the results of operations for the three- and six-month periods ended June 30, 2026 and 2025. The Notes included herein should be read in conjunction with the notes to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The results of operations for interim periods are not necessarily indicative of the results of operations that may be expected for a full year or any future period.

 

The consolidated financial statements include New Peoples, the Bank, NPB Insurance Services, Inc., and NPB Web Services, Inc. (hereinafter, collectively referred to as the Company, we, us or our). All significant intercompany balances and transactions have been eliminated. In accordance with Accounting Standards Codification (ASC) 942, Financial Services – Depository and Lending, NPB Capital Trust I and 2 are not included in the consolidated financial statements.

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The determination of the adequacy of the allowance for credit losses is based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions.

 

Certain reclassifications have been made to prior period amounts to conform to current period presentation. None of these reclassifications are considered material and have no impact on net income or shareholders’ equity.

 

The Company’s significant accounting policies followed in the preparation of the unaudited consolidated financial statements are disclosed in the Company’s Annual report on Form 10-K. There have been no significant changes to the application of significant accounting policies since December 31, 2025, except for the following:

 

Loans held for sale – Loans that management has decided to sell are transferred from loans held for investment to loans held for sale. Loans held for sale are carried at the lower of amortized cost or fair value, determined on an individual or aggregate basis, as applicable. Any amount by which amortized cost exceeds fair value at the date of transfer, and subsequent changes in the valuation allowance, are recognized in earnings. Loans classified as held for sale are not subject to the Company’s allowance for credit losses methodology applicable to loans held for investment.

 

NOTE 3 EARNINGS PER SHARE

 

Basic earnings per share computations are based on the weighted average number of shares outstanding during each period. Diluted earnings per share reflect the additional common shares that would have been outstanding if dilutive potential common shares had been issued. For the three- and six-month periods ended June 30, 2026 and 2025, there were no potential common shares. Basic and diluted net income per common share calculations follow:

 

8 

 

 

Schedule of basic and diluted net loss per common share calculations
(Dollars in thousands, except per share data)		For the three months  ended June 30,								For the six months ended June 30,
		2026				2025				2026				2025
Net income		$	3,451			$	2,532			$	6,513			$	4,440
Weighted average shares outstanding			23,549,269				23,607,372				23,556,113				23,616,941
Weighted average dilutive shares outstanding			23,549,269				23,607,372				23,556,113				23,616,941
Basic and diluted earnings per share		$	0.15			$	0.11			$	0.28			$	0.19

 

NOTE 4 CAPITAL

 

Capital Requirements and Ratios

 

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action.

 

To qualify as a “Small Bank Holding Company” under federal regulations, a bank must have consolidated assets of $3.0 billion or less. The primary benefit of being deemed a “Small Bank Holding Company” is the exemption from the requirement to maintain consolidated regulatory capital ratios; instead, regulatory capital ratios only apply at the subsidiary bank level.

 

The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (BASEL III rules) became fully phased in on January 1, 2019. 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 required is 2.50%. At June 30, 2026, the Bank had a capital conservation buffer of 8.73%. Amounts recorded to accumulated other comprehensive income (loss) are not included in computing regulatory capital. Management believes as of June 30, 2026, the Bank met all capital adequacy requirements to which it was subject.

 

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At June 30, 2026, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.

 

9 

 

 

The Bank’s actual capital amounts and ratios are presented in the following table as of June 30, 2026 and December 31, 2025, respectively.

 

Schedule of bank’s actual capital amounts and ratios presented
		Actual								Minimum Capital Requirement								Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands)		Amount				Ratio				Amount				Ratio				Amount				Ratio
June 30, 2026:
Total capital to risk weighted assets		$	115,070				16.73	%		$	55,017				8.00	%		$	68,772				10.00	%
Tier 1 capital to risk weighted assets			106,473				15.48	%			41,263				6.00	%			55,017				8.00	%
Tier 1 capital to average assets			106,473				11.17	%			38,144				4.00	%			47,681				5.00	%
Common equity Tier 1 capital to risk weighted assets			106,473				15.48	%			30,947				4.50	%			44,701				6.50	%
December 31, 2025:
Total capital to risk weighted assets		$	110,354				16.51	%		$	53,467				8.00	%		$	66,834				10.00	%
Tier 1 capital to risk weighted assets			101,997				15.26	%			40,100				6.00	%			53,467				8.00	%
Tier 1 capital to average assets			101,997				10.93	%			37,344				4.00	%			46,680				5.00	%
Common equity Tier 1 capital to risk weighted assets			101,997				15.26	%			30,075				4.50	%			43,442				6.50	%

 

NOTE 5 INVESTMENT SECURITIES

 

The amortized cost and estimated fair value of available-for-sale (“AFS”) securities as of June 30, 2026 and December 31, 2025 are as follows:

 

Schedule of securities amortized cost and estimated fair value
						Gross				Gross				Estimated
		Amortized				Unrealized				Unrealized				Fair
(Dollars in thousands)		Cost				Gains				Losses				Value
June 30, 2026
U.S. Treasuries		$	6,077			$	—			$	150			$	5,927
U.S. Government agencies			9,322				30				408				8,944
Municipal securities			24,193				2				4,505				19,690
Corporate bonds			2,500				2				123				2,379
Mortgage-backed securities			51,043				21				5,093				45,971
Collateralized mortgage obligations guaranteed			16,454				9				764				15,699
Total securities available-for-sale		$	109,589			$	64			$	11,043			$	98,610
December 31, 2025
U.S. Treasuries		$	5,597			$	16			$	153			$	5,460
U.S. Government agencies			9,482				49				372				9,159
Municipal securities			24,217				4				4,224				19,997
Corporate bonds			2,500				6				127				2,379
Mortgage-backed securities			50,742				134				4,797				46,079
Collateralized mortgage obligations guaranteed			13,854				70				565				13,359
Total securities available-for-sale		$	106,392			$	279			$	10,238			$	96,433

 

10 

 

 

The following table details unrealized losses and related fair values in the AFS portfolio. This information is aggregated by the length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2026 and December 31, 2025. 

Schedule of fair value and gross unrealized losses on investment securities
		Less than 12 Months								12 Months or More								Total
(Dollars in thousands)		Fair Value				Unrealized   Losses				Fair   Value				Unrealized   Losses				Fair Value				Unrealized Losses
June 30, 2026
U.S. Treasuries		$	2,979			$	20			$	1,611			$	130			$	4,590			$	150
U.S. Government agencies			2,100				18				5,358				390				7,458				408
Municipal securities			556				21				18,122				4,484				18,678				4,505
Corporate bonds			—				—				1,877				123				1,877				123
Mortgage-backed securities			8,082				124				32,270				4,969				40,352				5,093
Collateralized mortgage obligations guaranteed			9,774				119				3,299				645				13,073				764
Total		$	23,491			$	302			$	62,537			$	10,741			$	86,028			$	11,043
December 31, 2025
U.S. Treasuries		$	—			$	—			$	4,444			$	153			$	4,444			$	153
U.S. Government agencies			814				1				4,469				371				5,283				372
Municipal securities			946				110				18,036				4,114				18,982				4,224
Corporate bonds			—				—				1,873				127				1,873				127
Mortgage-backed securities			744				5				37,156				4,792				37,900				4,797
Collateralized mortgage obligations guaranteed			3,076				5				3,699				560				6,775				565
Total		$	5,580			$	121			$	69,677			$	10,117			$	75,257			$	10,238

 

As of June 30, 2026, the available-for-sale portfolio included 211 investments for which the fair market value was less than amortized cost. As of December 31, 2025, the available-for-sale portfolio included 165 investments for which the fair market value was less than amortized cost. Management believes that all unrealized losses have resulted from temporary changes in the interest rates and current market conditions and are not a result of credit deterioration. Management does not plan to sell, and it is not likely that the Bank will be required to sell any of the securities referenced in the table above before recovery of their amortized cost. None of the individual securities are past due as to principal or interest payments and a number of these securities have explicit or implicit payment guarantees. The remaining securities have credit ratings at or above that necessary to be considered “bank qualified.”

 

Investment securities with a carrying value of $29.8 million and $32.5 million as of June 30, 2026 and December 31, 2025, respectively, were pledged as collateral to secure public deposits and for other purposes required or permitted by law.

 

There were no sales of available-for-sale investment securities during the three or six months ended June 30, 2026 and 2025.

 

The amortized cost and fair value of investment securities as of June 30, 2026, by contractual maturity, are shown in the following schedule. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

Schedule of amortized cost and fair value of investment securities contractual maturity
										Weighted
(Dollars in thousands)		Amortized				Fair				Average
Securities Available-for-Sale		Cost				Value				Yield
Due in one year or less		$	3,435			$	3,397				1.75	%
Due after one year through five years			12,630				12,220				3.21	%
Due after five years through ten years			32,935				30,697				2.90	%
Due after ten years			60,589				52,296				2.73	%
Total		$	109,589			$	98,610				2.88	%

 

The Bank, as a member bank of the Federal Reserve Bank of Richmond (“Federal Reserve Bank”) and the Federal Home Loan Bank of Atlanta (FHLB), is required to hold stock in each. The Bank also owns stock in CBB Financial Corp., which is a correspondent of the Bank. These equity securities are restricted from trading and are recorded at a cost of $2.6 million as of June 30, 2026 and December 31, 2025. The stock has no quoted market value and no ready market exists. When evaluating these securities for impairment, their value is determined based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. Equity securities are viewed as long-term investments and management believes the Company has the ability and the intent to hold these securities until their value is recovered.

 

 

NOTE 6 LOANS

 

Loans receivable outstanding as of June 30, 2026, and December 31, 2025, are summarized as follows:

 

Schedule of loans receivable outstanding
(Dollars in thousands)		June 30,   2026				December 31, 2025
Real estate secured:
Commercial		$	253,872			$	255,707
Construction and land development			53,645				42,826
Residential 1-4 family			254,109				252,624
Multifamily			51,044				45,964
Farmland			25,478				23,385
Total real estate loans			638,148				620,506
Commercial			58,699				53,175
Agriculture			4,566				4,384
Consumer installment and all other loans			30,847				31,522
Total loans		$	732,260			$	709,587

 

Also included in total loans above are deferred loan fees of $2.3 million and $2.2 million as of June 30, 2026 and December 31, 2025, respectively. Deferred loan costs were $2.1 million as of June 30, 2026 and December 31, 2025. Income from net deferred fees and costs is recognized over the lives of the respective loans as a yield adjustment. If loans repay prior to scheduled maturities, any unamortized fees or costs are recognized at that time.

 

During the second quarter of 2026, the Company transferred its $1.3 million credit card portfolio from loans held for investment to loans held for sale based on management’s decision to sell the portfolio. The loans were transferred at the lower of amortized cost or fair value, determined on an aggregate basis which resulted in no fair value writedown at the date of transfer. The sale of the portfolio is not expected to be finalized until 2027.

 

Loans receivable on nonaccrual status as of June 30, 2026, and December 31, 2025, are summarized as follows:

 

Schedule of loans receivable nonaccrual status
		June 30, 2026												December 31, 2025
		With No Allowance				With an Allowance				Total				With No Allowance				With an Allowance				Total
(Dollars in thousands)
Real estate secured:
Commercial		$	—			$	—			$	—			$	—			$	415			$	415
Construction and land development			—				19				19				—				23				23
Residential 1-4 family			703				1,752				2,455				960				1,323				2,283
Farmland			—				14				14				—				16				16
Total real estate loans			703				1,785				2,488				960				1,777				2,737
Commercial			—				23				23				—				25				25
Agriculture			105				512				617				446				305				751
Consumer installment loans and other loans			—				185				185				—				85				85
Total loans receivable on nonaccrual status		$	808			$	2,505			$	3,313			$	1,406			$	2,192			$	3,598

 

12 

 

 

The Company evaluates loans that do not share risk characteristics on an individual basis utilizing the collateral or discounted cash flow methods. The following table presents the unpaid principal balance of individually evaluated loans, by measurement method, and the related ACL allocated to those loans as of June 30, 2026 and December 31, 2025:

 

Schedule of summary of impaired loans
		June 30, 2026								December 31, 2025
		Unpaid Principal Balance				Related Allowance				Unpaid Principal Balance				Related Allowance
(Dollars in thousands)
Collateral Dependent Loans
Real estate secured:
Commercial		$	—			$	—			$	408			$	108
Residential 1-4 family			1,147				13				998				39
Total real estate loans			1,147				13				1,406				147
Agriculture			181				37				752				54
Total collateral dependent		$	1,328			$	50			$	2,158			$	201
Discounted Cash Flow Method
Agriculture		$	437			$	91			$	—			$	—
Total DCF method		$	437			$	91			$	—			$	—
Total individually evaluated		$	1,765			$	141			$	2,158			$	201

 

During the second quarter of 2026, the Company began individually evaluating one agriculture loan relationship using the discounted cash flow method rather than the fair value of collateral. The borrower has ceased making payments and has filed for bankruptcy protection, and repayment is expected to occur through payments under the borrower’s bankruptcy plan over an extended period rather than through the operation or sale of collateral. Expected credit losses on this loan were measured as the difference between the loan’s amortized cost basis and the present value of estimated future cash flows, discounted at the loan’s effective interest rate. As of June 30, 2026, the loan had an unpaid principal balance of approximately $437,000, net of a $50,000 charge-off recorded during the prior year, and a related specific allowance for credit losses of approximately $91,000.

 

The following table is an age analysis of past due loans receivable as of June 30, 2026, segregated by class:

 

Schedule of analysis of past due loans receivable
June 30, 2026  (Dollars in thousands)		Loans 30-59 Days   Past   Due				Loans  60-89  Days  Past  Due				Loans  90 or More Days Past Due				Total Past  Due  Loans				Current  Loans				Total  Loans
Real estate secured:
Commercial		$	55			$	—			$	—			$	55			$	253,817			$	253,872
Construction and land development			169				—				—				169				53,476				53,645
Residential 1-4 family			1,323				1,231				831				3,385				250,724				254,109
Multifamily			—				—				—				—				51,044				51,044
Farmland			—				—				—				—				25,478				25,478
Total real estate loans			1,547				1,231				831				3,609				634,539				638,148
Commercial			130				124				3				257				58,442				58,699
Agriculture			—				—				618				618				3,948				4,566
Consumer installment and all other loans			235				58				26				319				30,528				30,847
Total loans		$	1,912			$	1,413			$	1,478			$	4,803			$	727,457			$	732,260

 

13 

 

 

The following table is an age analysis of past due loans receivable as of December 31, 2025, segregated by class:

 

December 31, 2025  (Dollars in thousands)		Loans  30-59  Days  Past  Due				Loans  60-89  Days  Past Due				Loans  90 or More  Days  Past  Due				Total Past Due Loans				Current Loans				Total Loans
Real estate secured:
Commercial		$	468			$	—			$	423			$	891			$	254,816			$	255,707
Construction and land development			—				—				—				—				42,826				42,826
Residential 1-4 family			2,140				1,631				828				4,599				248,025				252,624
Multifamily			—				—				—				—				45,964				45,964
Farmland			—				—				—				—				23,385				23,385
Total real estate loans			2,608				1,631				1,251				5,490				615,016				620,506
Commercial			203				26				—				229				52,946				53,175
Agriculture			110				—				802				912				3,472				4,384
Consumer installment and all other loans			272				26				307				605				30,917				31,522
Total loans		$	3,193			$	1,683			$	2,360			$	7,236			$	702,351			$	709,587

 

The Company categorizes loans receivable 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. The Company analyzes loans individually by classifying the loans receivable as to credit risk. The Company uses the following definitions for risk ratings:

 

Pass - Loans in this category are considered to have a low likelihood of loss based on relevant information analyzed about the ability of the borrowers to service their debt and other factors.

 

Special Mention - Loans in this category are currently protected but are potentially weak, including adverse trends in borrower’s operations, credit quality or financial strength. Those loans constitute an undue and unwarranted credit risk but not to the point of justifying a substandard classification. The credit risk may be relatively minor yet constitute an unwarranted risk in light of the circumstances.  Special mention loans have potential weaknesses which may, if not checked or corrected, weaken the loan or inadequately protect the Company’s credit position at some future date.

 

Substandard - A substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt; they are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

 

Doubtful - Loans classified doubtful have all the weaknesses inherent in loans classified as substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable.

 

14 

 

 

The following table presents the credit risk grade of loans by origination year as of June 30, 2026:

 

Schedule of credit risk grade of loans
As of June 30, 2026 (Dollars in thousands)		2026				2025				2024				2023				2022				Prior				Revolving				Total
Commercial real estate
Pass		$	13,266			$	28,783			$	21,670			$	39,345			$	41,729			$	97,900			$	11,179			$	253,872
Total commercial real estate		$	13,266			$	28,783			$	21,670			$	39,345			$	41,729			$	97,900			$	11,179			$	253,872
Current period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	(103	)		$	—			$	(103	)
Construction and land development
Pass		$	9,244			$	16,507			$	22,808			$	478			$	2,042			$	2,091			$	456			$	53,626
Substandard			—				—				19				—				—				—				—				19
Total construction and land development		$	9,244			$	16,507			$	22,827			$	478			$	2,042			$	2,091			$	456			$	53,645
Current period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
Residential 1-4 family
Pass		$	14,432			$	33,904			$	17,556			$	20,466			$	21,749			$	102,692			$	40,566			$	251,365
Special Mention			—				—				—				—				—				458				—				458
Substandard			442				—				—				71				241				1,368				164				2,286
Total residential 1-4 family		$	14,874			$	33,904			$	17,556			$	20,537			$	21,990			$	104,518			$	40,730			$	254,109
Current period gross charge-offs		$	—			$	—			$	(29	)		$	—			$	—			$	—			$	—			$	(29	)
Multifamily
Pass		$	7,266			$	18,078			$	383			$	2,121			$	8,856			$	13,348			$	992			$	51,044
Total multifamily		$	7,266			$	18,078			$	383			$	2,121			$	8,856			$	13,348			$	992			$	51,044
Current period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
Farmland
Pass		$	1,165			$	6,949			$	2,404			$	1,102			$	1,751			$	7,541			$	4,443			$	25,355
Special Mention			—				—				—				—				—				109				—				109
Substandard			—				—				—				—				—				14				—				14
Total farmland		$	1,165			$	6,949			$	2,404			$	1,102			$	1,751			$	7,664			$	4,443			$	25,478
Current period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
Commercial
Pass		$	15,037			$	11,264			$	8,161			$	5,445			$	1,483			$	3,357			$	13,880			$	58,627
Special Mention			—				—				—				—				—				2				—				2
Substandard			—				12				—				19				—				20				19				70
Total commercial		$	15,037			$	11,276			$	8,161			$	5,464			$	1,483			$	3,379			$	13,899			$	58,699
Current period gross charge-offs		$	—			$	(51	)		$	(3	)		$	—			$	—			$	(19	)		$	(16	)		$	(89	)
Agriculture
Pass		$	336			$	501			$	526			$	90			$	155			$	47			$	2,189			$	3,844
Special Mention			—				—				—				27				—				—				—				27
Substandard			—				436				181				—				—				78				—				695
Doubtful			—				—				—				—				—				—				—				—
Total agriculture		$	336			$	937			$	707			$	117			$	155			$	125			$	2,189			$	4,566
Current period gross charge-offs		$	—			$	—			$	(117	)		$	—			$	—			$	—			$	—			$	(117	)
Consumer and all other
Pass		$	7,294			$	12,181			$	6,014			$	2,446			$	817			$	1,601			$	332			$	30,685
Substandard			—				98				27				37				—				—				—				162
Total consumer and all other		$	7,294			$	12,279			$	6,041			$	2,483			$	817			$	1,601			$	332			$	30,847
Current period gross charge-offs		$	—			$	(20	)		$	(34	)		$	(10	)		$	—			$	(97	)		$	(11	)		$	(172	)
Total		$	68,482			$	128,713			$	79,749			$	71,647			$	78,823			$	230,626			$	74,220			$	732,260
Total current period gross charge-offs		$	—			$	(71	)		$	(183	)		$	(10	)		$	—			$	(219	)		$	(27	)		$	(510	)

 

15 

 

 

The following table presents the credit risk grade of loans by origination year as of December 31, 2025:

 

As of December 31, 2025
(Dollars in thousands)		2025				2024				2023				2022				2021				Prior				Revolving				Total
Commercial real estate
Pass		$	33,892			$	22,565			$	43,005			$	44,828			$	42,021			$	69,031			$	358			$	255,700
Substandard			—				—				—				—				—				7				—				7
Total commercial real estate		$	33,892			$	22,565			$	43,005			$	44,828			$	42,021			$	69,038			$	358			$	255,707
Current period gross charge-offs		$	—			$	—			$	—			$	(1	)		$	—			$	—			$	—			$	(1	)
Construction and land development
Pass		$	12,676			$	21,666			$	2,448			$	2,113			$	2,122			$	1,778			$	0			$	42,803
Substandard			—				23				—				—				—				—				—				23
Total construction and land development		$	12,676			$	21,689			$	2,448			$	2,113			$	2,122			$	1,778			$	0			$	42,826
Current period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
Residential 1-4 family
Pass		$	35,441			$	18,703			$	24,178			$	24,318			$	35,543			$	76,674			$	34,842			$	249,699
Special Mention			—				—				—				—				—				476				—				476
Substandard			—				104				197				50				—				2,020				78				2,449
Total residential 1-4 family		$	35,441			$	18,807			$	24,375			$	24,368			$	35,543			$	79,170			$	34,920			$	252,624
Current period gross charge-offs		$	—			$	—			$	(138	)		$	—			$	—			$	(1	)		$	—			$	(139	)
Multifamily
Pass		$	17,668			$	1,464			$	3,197			$	9,874			$	6,444			$	7,317			$	—			$	45,964
Total multifamily		$	17,668			$	1,464			$	3,197			$	9,874			$	6,444			$	7,317			$	—			$	45,964
Current period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
Farmland
Pass		$	9,005			$	2,610			$	1,142			$	1,830			$	2,641			$	6,020			$	—			$	23,248
Special Mention			—				—				—				—				—				121				—				121
Substandard			—				—				—				—				—				16				—				16
Total farmland		$	9,005			$	2,610			$	1,142			$	1,830			$	2,641			$	6,157			$	—			$	23,385
Current period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
Commercial
Pass		$	14,653			$	10,852			$	8,745			$	2,628			$	1,284			$	3,106			$	11,880			$	53,148
Special Mention			—				—				—				—				—				2				—				2
Substandard			—				—				—				—				—				—				25				25
Total commercial		$	14,653			$	10,852			$	8,745			$	2,628			$	1,284			$	3,108			$	11,905			$	53,175
Current period gross charge-offs		$	—			$	(59	)		$	—			$	—			$	(23	)		$	(15	)		$	—			$	(97	)
Agriculture
Pass		$	1,437			$	683			$	162			$	176			$	104			$	98			$	942			$	3,602
Special Mention			—				—				—				—				—				—				31				31
Substandard			—				—				—				—				—				—				—				—
Doubtful			—				305				—				—				—				—				446				751
Total agriculture		$	1,437			$	988			$	162			$	176			$	104			$	98			$	1,419			$	4,384
Current period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	(50	)		$	(50	)
Consumer and all other
Pass		$	16,111			$	7,607			$	3,599			$	1,311			$	845			$	1,617			$	372			$	31,462
Substandard			18				30				10				2				—				0				—				60
Total consumer and all other		$	16,129			$	7,637			$	3,609			$	1,313			$	845			$	1,617			$	372			$	31,522
Current period gross charge-offs		$	(14	)		$	(47	)		$	(25	)		$	(5	)		$	(5	)		$	(280	)		$	—			$	(376	)
Total		$	140,901			$	86,612			$	86,683			$	87,130			$	91,004			$	168,283			$	48,974			$	709,587
Total current period gross charge-offs		$	(14	)		$	(106	)		$	(163	)		$	(6	)		$	(28	)		$	(296	)		$	(50	)		$	(663	)

 

 

NOTE 7 ALLOWANCE FOR CREDIT LOSSES FOR LOANS (“ACLL”)

 

In determining the amount of our allowance for credit losses, we rely on an analysis of our loan portfolio, our experience and our evaluation of general economic conditions. If our assumptions prove to be incorrect, our current allowance may not be sufficient to cover future loan losses and we may experience significant increases to our provision.

 

The following table presents a disaggregated analysis of activity in the allowance for credit losses for loans as of June 30, 2026 and June 30, 2025: 

Schedule of allowance for credit losses for loans
		Real estate secured
(Dollars are in thousands)		Commercial RE				Construction and Land Development				Residential 1-4 family				Multifamily				Farmland				Commercial				Agriculture				Consumer and All Other				Total
Three months ended June 30, 2026
Beginning balance		$	2,772			$	488			$	2,834			$	588			$	179			$	646			$	37			$	572			$	8,116
Charge-offs			—				—				(29	)			—				—				(51	)			—				(92	)			(172	)
Recoveries			92				—				60				3				—				6				—				42				203
Provision for credit losses			(182	)			19				48				(16	)			8				51				125				15				68
Ending balance		$	2,682			$	507			$	2,913			$	575			$	187			$	652			$	162			$	537			$	8,215

 

		Real estate secured
(Dollars are in thousands)		Commercial RE				Construction and Land Development				Residential 1-4 family				Multifamily				Farmland				Commercial				Agriculture				Consumer and All Other				Total
Three months ended June 30, 2025
Beginning balance		$	2,592			$	316			$	2,909			$	372			$	155			$	771			$	114			$	603			$	7,832
Charge-offs			—				—				—				—				—				—				(50	)			(55	)			(105	)
Recoveries			—				11				12				3				—				1				—				39				66
Provision for credit losses			(31	)			33				77				57				27				(35	)			(2	)			29				155
Ending balance		$	2,561			$	360			$	2,998			$	432			$	182			$	737			$	62			$	616			$	7,948

 

		Real estate secured
(Dollars are in thousands)		Commercial RE				Construction and Land Development				Residential 1-4 family				Multifamily				Farmland				Commercial				Agriculture				Consumer and All Other				Total
Six months ended June 30, 2026
Beginning balance		$	2,856			$	411			$	2,799			$	559			$	166			$	602			$	82			$	632			$	8,107
Charge-offs			(103	)			—				(29	)			—				—				(89	)			(117	)			(172	)			(510	)
Recoveries			92				—				96				6				9				6				—				90				299
Provision for credit losses			(163	)			96				47				10				12				133				197				(13	)			319
Ending balance		$	2,682			$	507			$	2,913			$	575			$	187			$	652			$	162			$	537			$	8,215

 

		Real estate secured
(Dollars are in thousands)		Commercial RE				Construction and Land Development				Residential 1-4 family				Multifamily				Farmland				Commercial				Agriculture				Consumer and All Other				Total
Six months ended June 30, 2025
Beginning balance		$	2,565			$	322			$	2,923			$	382			$	149			$	751			$	36			$	556			$	7,684
Charge-offs			—				—				—				—				—				(18	)			(50	)			(115	)			(183	)
Recoveries			—				26				22				6				3				2				—				66				125
Provision for credit losses			(4	)			12				53				44				30				2				76				109				322
Ending balance		$	2,561			$	360			$	2,998			$	432			$	182			$	737			$	62			$	616			$	7,948

 

Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

 

NOTE 8 MODIFICATIONS MADE TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY

 

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 of its real estate 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 against the allowance for credit losses, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.

 

 17

 

 

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.

 

On February 15, 2025, severe flash flooding occurred in Tazewell and Buchanan, Counties in Virginia. On September 27, 2024, Hurricane Helene passed through western North Carolina, southwest Virginia and northeast Tennessee, causing flood and wind damage in its path. To assist borrowers impacted by these natural disasters, we offered short-term payment deferrals of 3 to 6 months. As of June 30, 2026, the deferral periods have ended, and 42 loans totaling $6.3 million that participated in the deferral program have commenced regular payments. As of December 31, 2025, 48 loans totaling $6.6 million were participating in the deferral program. One of these loans, a residential mortgage loan totaling $178,000, received an additional 3-month deferral, due to the extent of damage to the property. The loan was settled in 2026. There were no loans modified to borrowers experiencing financial difficulties in the three and six-months ended June 30, 2026.

 

NOTE 9 CREDIT ALLOWANCE FOR UNFUNDED COMMITMENTS

 

The Company maintains a separate allowance for credit losses on off-balance-sheet credit exposures, including unfunded loan commitments, which is included in other liabilities on the consolidated balance sheet. The allowance for credit losses for off-balance-sheet credit exposures is adjusted through a provision for credit losses in the income statement. 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 their estimated lives, utilizing the same models and approaches for the Company’s other loan portfolio segments described above, as these unfunded commitments share similar risk characteristics as its loan portfolio segments. The Company has identified the unfunded portion of certain lines of credit as unconditionally cancellable credit exposures, meaning the Company can cancel the unfunded commitment at any time, and those commitments are excluded from the credit loss estimate.

 

As of June 30, 2026 and December 31, 2025, the liability for credit losses on off-balance-sheet credit exposures included in other liabilities was $455,000 and $471,000, respectively. During the three and six months ended June 30, 2026, a recovery of losses on unfunded commitments of $5,000 and $16,000, respectively, was included in the Provision for Credit Losses. During the three and six months ended June 30, 2025, a provision for losses on unfunded commitments of $0 and $92,000, respectively, was included in the Provision for Credit Losses.

 

NOTE 10 OTHER REAL ESTATE OWNED

 

The following table summarizes the activity in other real estate owned for the six months ended June 30, 2026, and the year ended December 31, 2025:

 

Schedule of activity in other real estate owned
(Dollars in thousands)		June 30, 2026				December 31, 2025
Balance, beginning of period		$	89			$	87
Additions			168				46
Proceeds from sales			(69	)			(50	)
Net gains from sales			37				6
Balance, end of period		$	225			$	89

 

As of June 30, 2026 three loans secured by residential real estate, totaling $286,000 were in the process of foreclosure.

 

NOTE 11 FAIR VALUES

 

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with the Fair Value Measurements and Disclosures topic of Financial Accounting Standards Board (the FASB) ASC, 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 and 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 Company’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.

 

 18

 

 

The fair value guidance provides a consistent definition of fair value, which focuses on exit price in the principal or most advantageous market and 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 most representative of fair value under current market conditions.

 

In accordance with this guidance, the Company groups its financial assets and financial liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

 

Level 1: Quoted prices are available in active markets for identical assets or liabilities as of the reported date.

 

Level 2: Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities include items for which quoted prices are available but traded less frequently, and items that are valued using other financial instruments, the parameters of which can be directly observed.

 

Level 3: Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

 

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy are as follows:

 

Investment Securities Available-for-sale - Investment securities AFS are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices. The Company’s AFS securities, totaling $98.6 million and $96.4 million as of June 30, 2026 and December 31, 2025, respectively, are the only assets whose fair values are measured on a recurring basis using Level 2 inputs from an independent pricing service.

 

Collateral Dependent Loans with an ACL - In accordance with ASC 326, we may determine that an individual loan exhibits unique risk characteristics which differentiate it from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things. A loan is considered to be collateral dependent when, based upon management’s assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. We reevaluate the fair value of collateral supporting collateral dependent loans on a quarterly basis. The fair value of real estate collateral supporting collateral dependent loans is evaluated by appraisal services using a methodology that is consistent with the Uniform Standards of Professional Appraisal Practice.

 

Other Real Estate Owned –Other real estate owned is adjusted to fair value upon transfer of the loans, or former bank premises, to other real estate owned. These assets are carried at the lower of their carrying value or fair value. Fair value is based upon observable market prices, when available, reduced by estimated disposition costs, which the Company considers to be nonrecurring Level 2 inputs. When observable market prices are not available, management determines the fair value of the foreclosed asset using independent third-party appraisals, evaluated to determine whether or not the property is further impaired below the appraised value, and adjusts for estimated costs of disposition. The Company records foreclosed assets as nonrecurring Level 3.

 

 19

 

 

Assets and liabilities measured at fair value are as follows as of June 30, 2026 and December 31, 2025:

 

Schedule of summary of assets and liabilities measured at fair value
June 30, 2026 (Dollars in thousands)		Quoted market price in active markets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)
(On a recurring basis) Available-for-sale investments
U.S. Treasuries		$	—			$	5,927			$	—
U.S. Government agencies			—				8,944				—
Corporate bonds			—				2,379				—
Municipal securities			—				19,690				—
Mortgage-backed securities			—				45,971				—
Collateralized mortgage obligations – guaranteed			—				15,699				—
(On a non-recurring basis) Other real estate owned			—				—				225
Collateral dependent loans with ACL:
Agriculture			—				—				40
Residential 1-4 Family			—				—				429
Total		$	—			$	98,610			$	694

 

December 31, 2025 (Dollars in thousands)		Quoted market price in active markets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)
(On a recurring basis) Available-for-sale investments
U.S. Treasuries		$	—			$	5,460			$	—
U.S. Government agencies			—				9,159				—
Corporate bonds			—				2,379				—
Municipal securities			—				19,997				—
Mortgage-backed securities			—				46,079				—
Collateralized mortgage obligations – guaranteed			—				13,359				—
(On a non-recurring basis) Other real estate owned			—				—				89
Collateral dependent loans with ACL:
Agriculture			—				—				251
Commercial real estate			—				—				300
Total		$	—			$	96,433			$	640

 

Not included in the tables above as December 31, 2025 is a residential 1-4 family mortgage loan totaling $39,000 that had a specific allowance for credit loss allocation of 100% and was settled during the first six months of 2026.

 

 20

 

 

For Level 3 assets measured at fair value on a recurring or non-recurring basis as of June 30, 2026 and December 31, 2025, the significant unobservable inputs used in the fair value measurements were as follows:

 

Schedule of significant unobservable inputs In level 3 assets
(Dollars in thousands)		Fair Value at June 30, 2026		Fair Value at December 31, 2025		Valuation Technique		Significant Unobservable Inputs		General Range of Significant Unobservable Input Values
Collateral dependent loans with ACL:
Commercial real estate	$	—	$	300		Appraised Value		Discounts to reflect current market conditions, ultimate collectability, and estimated costs to sell		0 – 18%
Residential 1-4 Family	$	429	$	—		Appraised Value		Discounts to reflect current market conditions, ultimate collectability, and estimated costs to sell		0 – 18%
Agriculture	$	40	$	251		Appraised Value/Other estimates from Independent Sources		Discounts to reflect current market conditions, ultimate collectability, and estimated costs to sell		0 – 18%
Other Real Estate Owned	$	225	$	89		Appraised Value/Comparable Sales/Other Estimates from Independent Sources		Discounts to reflect current market conditions and estimated costs to sell		0 – 18%

 

Fair Value of Financial Instruments

 

Fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practical to estimate the value is based upon the characteristics of the instruments and relevant market information. Financial instruments include cash, evidence of ownership in an entity, or contracts that convey or impose on an entity that contractual right or obligation to either receive or deliver cash for another financial instrument.

 

The following summary presents the methodologies and assumptions used to estimate the fair value of the Company’s financial instruments presented below. The information used to determine fair value is highly subjective and judgmental in nature and, therefore, the results may not be precise. Subjective factors include, among other things, estimates of cash flows, risk characteristics, credit quality, and interest rates, all of which are subject to change. Since the fair value is estimated as of the balance sheet date, the amounts that will actually be realized or paid upon settlement or maturity on these various instruments could be significantly different.

 

 21

 

 

The carrying amount and fair value of the Company’s financial instruments that are not required to be measured or reported at fair value on a recurring basis as of June 30, 2026, and December 31, 2025, are as follows:

 

Schedule of estimated fair value of financial instruments
										Fair Value Measurements
(Dollars in thousands)		Carrying Amount				Fair Value				Quoted market price in active markets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)
June 30, 2026
Financial instruments – assets
Net loans		$	724,045			$	721,922			$	—			$	—			$	721,922
Loans held for sale			1,334				1,367				—				—				1,367
Financial instruments – liabilities
Time deposits			287,978				287,544				—				287,544				—
Borrowed funds			18,986				17,927				—				17,927				—
December 31, 2025
Financial instruments – assets
Net loans		$	701,480			$	697,105			$	—			$	—			$	697,105
Financial instruments – liabilities
Time deposits			294,216				294,244				—				294,244				—
Borrowed funds			18,986				17,132				—				17,132				—

 

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 Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’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 can significantly affect the estimates.

 

Estimated fair values have been determined by the Company using historical data, as generally provided in the Company’s regulatory reports, and an estimation methodology suitable for each category of financial instruments. The Company’s fair value estimates, methods and assumptions are set forth below for the Company’s other financial instruments.

 

The carrying values of cash and due from banks, federal funds sold, deposits with no stated maturities, and accrued interest approximates fair value and are excluded from the table above.

 

NOTE 12 LEASING ACTIVITIES

 

As of June 30, 2026, the Bank leases four branch offices, one administrative office, one loan production office and sublets a lot adjacent to another branch office. The lease agreements have maturity dates ranging from 2028 to December 2041. It is assumed that there are currently no circumstances in which the leases would be terminated prior to expiration. The weighted average remaining life of the lease terms as of June 30, 2026 was 5.85 years.

 

The discount rate used in determining the lease liability for each individual lease was the FHLB fixed advance rate which corresponded to the lease term for each transaction. This methodology is expected to be used for any other subsequent lease agreements. The weighted average discount rate for the leases as of June 30, 2026 was 3.34%.

 

For the three and six months ended June 30, 2026 and 2025, operating lease expenses were $148,000 and $295,000; and $145,000 and $288,000, respectively.

 

 22

 

 

The Company’s other operating leases were evaluated and determined to be immaterial to the financial statements. As of June 30, 2026, future minimum rental commitments under the non-cancellable operating leases discussed above are as follows (dollars are in thousands):

 

Schedule of future minimum rental commitments under the non-cancellable operating leases
2026			$	288
2027				599
2028				603
2029				492
2030				492
Thereafter				712
Total lease payments				3,186
Less: imputed interest				(427	)
Total			$	2,759

 

NOTE 13 BORROWED FUNDS

 

Borrowed funds totaled $18,986 and $18,986 as of June 30, 2026 and December 31, 2025, respectively. For additional information on borrowed funds, refer to Note 19 in Item 8 of Form 10-K for the year ended December 31, 2025.

 

NOTE 14 REVENUE FROM CONTRACTS WITH CUSTOMERS

 

All our revenue from contracts with customers as defined in ASC 606 is recognized within noninterest income. Refer to Note 25 in our Annual Report 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. The following table presents noninterest income by revenue stream for the three and six months ended June 30, 2026 and 2025:

 

Schedule of revenue from contracts with customers
		For the three months ended								For the six months ended
		June 30,								June 30,
(Dollars in thousands)		2026				2025				2026				2025
Service charges and fees		$	889			$	899			$	1,726			$	1,776
Card processing and interchange income			1,088				988				2,074				1,853
Financial services fees			329				356				748				674
Other noninterest income			214				193				602				546
Total noninterest income		$	2,520			$	2,436			$	5,150			$	4,849

  

NOTE 15 NONINTEREST EXPENSES

 

Other operating expenses, included as part of noninterest expenses, consisted of the following for the periods presented:

 

Schedule of noninterest expenses
		For the three months ended June 30,								For the six months ended June 30,
(Dollars in thousands)		2026				2025				2026				2025
Other operating expenses		$	990			$	934			$	1,903			$	1,813
ATM network expense			403				417				780				845
Legal, accounting, and professional fees			254				234				468				471
Loan related expenses			51				175				127				254
FDIC insurance premiums			105				99				208				197
Advertising			113				89				176				156
Consulting fees			102				41				141				83
Printing and supplies			30				36				61				61
Other real estate owned expenses, net			(32	)			(3	)			(29	)			(2	)
Total other operating expenses		$	2,016			$	2,022			$	3,835			$	3,878

 

 

NOTE 16 RECENT ACCOUNTING DEVELOPMENTS

 

The following is a summary of recent authoritative announcements:

 

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.

 

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Caution About Forward-Looking Statements

 

We make forward-looking statements in this quarterly report on Form 10-Q that are subject to risks and uncertainties. These forward-looking statements include statements regarding expectations, intentions, projections and beliefs concerning our profitability, liquidity, and allowance for credit losses, interest rate sensitivity, market risk, growth strategy, and financial and other goals. The words “believes,” “expects,” “may,” “will,” “should,” “projects,” “contemplates,” “anticipates,” “forecasts,” “intends,” or other similar words or terms are intended to identify forward looking statements. The forward-looking information is based on various factors and was derived using numerous assumptions. Important factors that may cause actual results to differ from projections include:

 

●

the success or failure of our efforts to implement our business plan;

●

any required increase in our regulatory capital ratios;

●

satisfying other regulatory requirements that may arise from examinations, changes in the law and other similar factors;

●

deterioration of asset quality;

●

changes in the level of our nonperforming assets and charge-offs;

●

fluctuations of real estate values in our markets;

●

our ability to attract and retain talent;

●

demographical changes in our markets which negatively impact the local economy;

●

the uncertain outcome of current or future legislation or regulations or policies of state and federal regulators;

●

the successful management of interest rate risk;

●

the successful management of liquidity;

●

changes in general economic and business conditions in our market area and the United States in general;

●

credit risks inherent in making loans such as changes in a borrower’s ability to repay and our management of such risks;

●

competition with other banks and financial institutions, and companies outside of the banking industry, including online lenders and those companies that have substantially greater access to capital and other resources;

●

customer acceptance of new products and services we have offered or may offer;

●

deposit flows and competition for deposits;

●

the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve, inflation, interest rate, market and monetary fluctuations;

●

the occurrence of significant natural disasters, including severe weather conditions, floods, health related issues and other catastrophic events;

●

geopolitical conditions, including trade restrictions and tariffs, and acts or threats of terrorism, international hostilities, military conflicts or actions taken by the U.S. or other governments in response thereto, which could impact business and economic conditions in the U.S. and abroad;

●

the continued effective operation of our information technology systems and third-party service providers, including the stabilization and ongoing performance of our core processing platform following the system conversion completed during the fourth quarter of 2025;

●

the effects of cyber incidents or other failures, disruptions, or breaches of our operational or security systems, or those of our third-party vendors or other service providers, including as a result of cyber threats or attacks;

●

our ability to successfully manage cybersecurity, including generative artificial intelligence risks;

●

our ability to assist in managing third party fraud against customer accounts including but not limited to check, credit and debit card, and electronic funds transfer fraud;

●

our reliance on third-party vendors and correspondent banks;

●

changes in generally accepted accounting principles;

●

changes in governmental regulations, tax rates and similar matters; and

●

other risks, which may be described, from time to time, in our filings with the SEC.

 

 

Because of these uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. In addition, our past results of operations do not necessarily indicate our future results. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

Critical Accounting Policies

 

For discussion of our significant accounting policies, see our Annual Report on Form 10-K for the year ended December 31, 2025, and Note 2 Summary of Significant Accounting Policies, in Item 1 of this Form 10-Q. Certain critical accounting policies affect the more significant judgments and estimates used in the preparation of our financial statements. Our most critical accounting policies relate to our allowance for credit losses.

 

The allowance for credit losses reflects the estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our borrowers were to deteriorate, resulting in an impairment of their ability to make payments, our estimates would be updated, and additional provisions could be required. For further discussion of the estimates used in determining the allowance for credit losses, we refer you to the section on “Asset Quality” in this discussion.

 

Overview and Highlights

 

Quarter-to-date highlights include:

 

●

Net income for the second quarter of 2026 was $3.5 million, or $0.15 per share.

●

Net interest margin was 4.12% for the second quarter of 2026 compared to 3.86% for the second quarter of 2025.

●

Total loans held for investment were $732.3 million as of June 30, 2026, an increase of $22.7 million, or 3.20%, from $709.6 million as of December 31, 2025.

●

Total deposits increased $29.2 million, or 3.66%, during the six months ended June 30, 2026 to $827.5 million.

●

The annualized return on average assets for the quarter was 1.47%.

●

The annualized return on average equity for the quarter was 16.28%.

●

New Peoples Bank remains well-capitalized with a leverage ratio of 11.17%.

 

Comparison of the Three Months ended June 30, 2026 and 2025

 

Net interest income for the quarter ended June 30, 2026 was $9.4 million, an increase of $1.2 million, or 14.38%, compared to the second quarter of 2025. Interest and dividend income increased $1.2 million to $13.2 million due to the combination of an increase of 17 basis points (“bps”) in the yield on earning assets to 5.78% and a $60.6 million increase in the average balance of earning assets when compared to the second quarter of 2025. The loan portfolio was the primary driver of both increases as the yield rose 25 bps to 6.45% while the average balance increased $46.4 million compared to the second quarter of 2025. Also contributing to the improvement in net interest income was lower funding costs. While the average balance of interest-bearing liabilities increased $40.2 million, the cost decreased 14 bps to 2.52%, and total interest expense increased only $49,000 to $3.8 million during the second quarter of 2026 compared to the second quarter of 2025. The reduction in the cost of interest-bearing liabilities is primarily due to maturing time deposits repricing in a lower interest-rate environment and declines in both the cost and balance of borrowed funds. The decrease in the average balance of borrowed funds was due to a $3 million principal payment on a borrowing from the Federal Home Loan Bank of Atlanta during the fourth quarter of 2025. In addition, the variable rate paid on the trust preferred securities decreased as overnight and short-term borrowing rates declined during the last half of 2025. The net interest margin improved 26 bps to 4.12% for the quarter ended June 30, 2026, compared to 3.86% for the same period in 2025, due to the increase in the yield on earning assets and the decline in the cost of funds. The net interest spread widened by 31 bps to 3.26% for the second quarter of 2026 from 2.95% for the comparable period of 2025.

 

 

The following table shows the rates paid on earning assets and interest-bearing liabilities for the periods indicated:

 

Net Interest Margin Analysis 

Average Balances, Income and Expense, and Yields and Rates 

Three Months Ended June 30, 

		2026												2025
		Average				Income/				Yields/				Average				Income/				Yields/
(Dollars are in thousands)		Balance				Expense				Rates				Balance				Expense				Rates
ASSETS
Loans (1) (2)		$	728,192			$	11,710				6.45	%		$	681,828			$	10,540				6.20	%
Federal funds sold			382				4				3.68	%			276				3				4.43	%
Interest-bearing deposits in other banks			75,315				687				3.66	%			60,976				663				4.36	%
Investment securities (2)			111,020				787				2.84	%			111,272				752				2.71	%
Total earning assets			914,909				13,188				5.78	%			854,352				11,958				5.61	%
Less: Allowance for credit losses			(8,327	)											(7,956	)
Non-earning assets			36,616												36,905
Total assets		$	943,198											$	883,301
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing demand deposits		$	71,461			$	107				0.60	%		$	72,194			$	128				0.71	%
Savings and money market deposits			225,103				1,027				1.83	%			194,919				832				1.71	%
Time deposits			288,899				2,410				3.35	%			275,114				2,490				3.63	%
Total interest-bearing deposits			585,463				3,544				2.43	%			542,227				3,450				2.55	%
Other borrowings			7,000				62				3.51	%			10,055				89				3.51	%
Trust preferred securities			11,986				187				6.18	%			11,986				205				6.76	%
Total borrowed funds			18,986				249				5.19	%			22,041				294				5.28	%
Total interest-bearing liabilities			604,449				3,793				2.52	%			564,268				3,744				2.66	%
Non-interest-bearing deposits			244,072												236,284
Other liabilities			9,628												9,680
Total liabilities			858,149												810,232
Shareholders’ equity			85,049												73,069
Total liabilities and shareholders’ equity		$	943,198											$	883,301
Net interest income						$	9,395											$	8,214
Net interest margin											4.12	%											3.86	%
Net interest spread											3.26	%											2.95	%

 

(1)

Nonaccrual loans and loans held for sale have been included in average loan balances.

(2)

Tax exempt income is not significant and has been treated as fully taxable.

 

 

Net interest income is affected by changes in both average interest rates and average volumes (balances) of interest-earning assets and interest-bearing liabilities. The following table sets forth the amounts of the total changes in interest income and interest expense which can be attributed to rates and volume for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025.

 

		Volume and Rate Analysis
		Increase (decrease)
		Three Months Ended June 30, 2026
(Dollars in thousands)		Volume Effect				Rate Effect				Change in Interest Income/ Expense
Interest income:
Loans		$	735			$	435			$	1,170
Federal funds sold			1				—				1
Interest-bearing deposits in other banks			141				(117	)			24
Taxable investment securities			(2	)			37				35
Total earning assets			875				355				1,230
Interest expense:
Interest-bearing demand deposits			(2	)			(19	)			(21	)
Savings and money market deposits			139				56				195
Time deposits			120				(200	)			(80	)
Other borrowings			(27	)			—				(27	)
Trust preferred securities			—				(18	)			(18	)
Total interest-bearing liabilities			230				(181	)			49
Change in net interest income		$	645			$	536			$	1,181

 

The provision for credit losses charged to the income statement for the quarter ended June 30, 2026 was $63,000 compared to $154,000 for the three months ended June 30, 2025. The provision expense for the second quarter of 2026 is primarily attributable to growth in the loan portfolio and a modest adjustment to the qualitative factors in the calculation of the allowance for credit losses on one-to-four-family residential mortgage loans and for geopolitical uncertainty related to the conflict in the Middle East and was partially offset by a slight decrease in the overall historical loss rates. The provision expense also benefited from the net recoveries on loans previously charged off and a reduction in the allowance for credit losses on unfunded commitments resulting from a decline in construction loan commitments. A recovery of credit losses on unfunded commitments of $5,000 was recognized for the second quarter of 2026 due to a $4.6 million reduction in commitments on construction loans. The provision for credit losses on unfunded commitments for the second quarter of 2025 was $0.

 

Noninterest income, totaling $2.5 million for the second quarter of 2026, increased $84,000 compared to the quarter ended June 30, 2025. The improvement was driven primarily by a $100,000 increase in income from card processing and interchange income.

 

Noninterest expense was $7.4 million for the quarter ended June 30, 2026, an increase of $168,000, or 2.33%, compared to the second quarter of 2025. The increase was primarily attributable to contractual and inflationary price increases, an increase in incentive accruals and less costs deferred on loan originations, partially offset by reductions in other operating expense categories, including expenses for the debit card rewards program which was discontinued in the fourth quarter of 2025.

 

The efficiency ratio, which is defined as noninterest expense divided by the sum of net interest income, on a tax-equivalent basis, plus noninterest income, decreased to 61.93% during the second quarter of 2026 from 67.70% for the second quarter of 2025. We continue to assess our operational procedures and structure to improve efficiencies and contain costs.

 

 

Income tax expense for the second quarter of 2026 totaled $1,020,000, an increase of $269,000, or 35.82%, from $751,000 recorded during the same period in 2025. This increase was in line with the increase in pre-tax income which increased $1.2 million or 36.19% for the comparative three months ended June 30, 2026 and 2025. The effective tax rate for the three months ended June 30, 2026, was 22.81%, compared to 22.88% for the same period in 2025.

 

Comparison of the Six Months ended June 30, 2026 and 2025

 

Year-to-date highlights include:

 

●

Net income for the six months ended June 30, 2026 was $6.5 million, or $0.28 per share, an increase of $2.1 million, or 46.69%, from the $4.4 million or $0.19 per share reported for the same period in 2025.

●

Returns on average assets and equity of 1.41% and 15.49% for the first half of 2026, compared to 1.02% and 12.37% for the first six months of 2025, respectively;

 

For the six months ended June 30, 2026, net interest income totaled $18.2 million, an increase of $2.4 million, or 15.09%, as compared to the six months ended June 30, 2025. The net interest margin increased 27 bps to 4.05% as compared to 3.78% for the same period in 2025. Net interest income improved due to growth in average earning assets, which increased $61.0 million, or 7.2%, to $905.7 million. In addition, the yield on earning assets improved 18 bps to 5.74% during the six months ended June 30, 2026 compared to the same period in 2025. Interest expense for the six months ended June 30, 2026 totaled $7.6 million, an increase of $88,000, or 1.18%, from the same period in 2025, as a 16 basis-point decline in the cost of interest-bearing liabilities to 2.53% was more than offset by a $42.2 million increase in the average balance of interest-bearing liabilities.

 

The following table shows the rates paid on earning assets and interest-bearing liabilities for the periods indicated:

 

Net Interest Margin Analysis 

Average Balances, Income and Expense, and Yields and Rates 

Six Months Ended June 30,

		2026												2025
		Average				Income/				Yields/				Average				Income/				Yields/
(Dollars are in thousands)		Balance				Expense				Rates				Balance				Expense				Rates
ASSETS
Loans (1) (2)		$	722,531			$	22,925				6.40	%		$	670,488			$	20,452				6,15	%
Federal funds sold			436				8				3.63	%			208				5				4.42	%
Interest-bearing deposits in other banks			73,201				1,325				3.65	%			62,681				1,355				4.36	%
Investment securities (2)			109,527				1,527				2.79	%			111,290				1,497				2.71	%
Total earning assets			905,695				25,785				5.74	%			844,667				23,309				5.56	%
Less: Allowance for credit losses			(8,251	)											(7,873	)
Non-earning assets			36,950												37,157
Total assets		$	934,394											$	873,951
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing demand deposits		$	72,852			$	219				0.61	%		$	72,293			$	265				0.74	%
Savings and money market deposits			220,633				1,968				1.80	%			190,952				1,610				1.70	%
Time deposits			289,902				4,891				3.40	%			274,841				5,024				3.69	%
Total interest-bearing deposits			583,387				7,078				2.45	%			538,086				6,899				2.59	%
Other borrowings			7,000				123				3.51	%			10,028				177				3.51	%
Trust preferred securities			11,986				372				6.18	%			12,085				409				6.73	%
Total borrowed funds			18,986				495				5.19	%			22,113				586				5.27	%
Total interest-bearing liabilities			602,373				7,573				2.53	%			560,199				7,485				2.69	%
Non-interest-bearing deposits			237,510												231,690
Other liabilities			9,714												9,631
Total liabilities			849,597												801,520
Shareholders’ equity			84,797												72,431
Total liabilities and shareholders’ equity		$	934,394											$	873,951
Net interest income						$	18,212											$	15,824
Net interest margin											4.05	%											3.78	%
Net interest spread											3.21	%											2.87	%

⁽¹⁾ Nonaccrual loans and loans held for sale have been included in average loan balances.

⁽²⁾ Tax exempt income is not significant and has been treated as fully taxable.

 

 

Net interest income is affected by changes in both average interest rates and average volumes (balances) of interest-earning assets and interest-bearing liabilities. The following table sets forth the amounts of the total changes in interest income and interest expense which can be attributed to rates and volume for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025.

 

		Volume and Rate Analysis
		Increase (decrease)
		Six Months Ended June 30, 2026
(Dollars in thousands)		Volume Effect				Rate Effect				Change in Interest Income/ Expense
Interest income:
Loans		$	1,623			$	850			$	2,473
Federal funds sold			4				(1	)			3
Interest-bearing deposits in other banks			209				(239	)			(30	)
Taxable investment securities			(25	)			55				30
Total earning assets			1,811				665				2,476
Interest expense:
Interest-bearing demand deposits			2				(48	)			(46	)
Savings and money market deposits			259				99				358
Time deposits			270				(403	)			(133	)
Other borrowings			(54	)			—				(54	)
Trust preferred securities			(3	)			(34	)			(37	)
Total interest-bearing liabilities			474				(386	)			88
Change in net interest income		$	1,337			$	1,051			$	2,388

 

For the six months ended June 30, 2026, the provision for credit losses totaled $303,000 as compared to $413,000 recorded for the same period in 2025.

 

For the six months ended June 30, 2026, noninterest income totaled $5.2 million, an increase of $301,000 compared to the same period in 2025, driven primarily by a $221,000 increase in card processing and interchange income and a $74,000 increase in financial and investment services income.

 

For the six months ended June 30, 2026, noninterest expense totaled $14.6 million, an increase of $129,000, or 0.89%, over the same period in 2025. The increase primarily resulted from higher salaries and employee benefits, partially offset by lower occupancy costs and discontinuance of the debit card rewards program.

 

Balance Sheet

 

Total assets as of June 30, 2026 were $942.2 million, an increase of $32.5 million, or 3.57%, from $909.7 million as of December 31, 2025. Loans held for investment of $732.3 million as of June 30, 2026 reflected an increase of $22.7 million, or 3.20%, from $709.6 million as of December 31, 2025. During the second quarter of 2026, the Company transferred its $1.3 million credit card portfolio from loans held for investment to loans held for sale based on management’s decision to sell the portfolio. The sale of the portfolio is not expected to be finalized until 2027. Liquid assets in the form of cash and cash equivalents increased $7.1 million, or 9.20%, during the first six months of 2026. Investment securities available for sale increased $2.2 million during the first six months of 2026 due to purchases of $9.9 million offset by maturities, calls, payments and amortization of $6.7 million and a $1.0 million increase in the unrealized loss on securities available for sale.

 

 

Gross loans receivable increased $22.7 million, or 3.19%, to $732.3 million at June 30, 2026, compared with $709.6 million at December 31, 2025. Construction and land development loans increased $10.8 million, or 25.26%, to $53.6 million during the first six months of 2026. The increase was partly attributable to draws on construction lines originated in prior periods, which also contributed to the decrease in unfunded commitments during the first half of 2026. Lending collateralized by multifamily properties increased $5.1 million, or 11.05%, to $51.0 million at June 30, 2026. Non-real estate commercial loans increased $5.5 million, or 10.39%, from December 31, 2025 to June 30, 2026.

 

Deposits totaled $827.5 million as of June 30, 2026, compared to $798.3 million as of December 31, 2025. The increase of $29.2 million, or 3.66%, was due to continued efforts to attract and retain money market account relationships combined with growth in noninterest-bearing demand deposits. Uninsured deposits as of June 30, 2026 were estimated at $136 million, or 16.4% of total deposits.

 

As of June 30, 2026 and December 2025, borrowed funds totaled $19.0 million.

 

During the six months ended June 30, 2026, total shareholders’ equity increased $3.5 million to $86.3 million, due to net income of $6.5 million, which was partially offset by an increase in the net unrealized loss on available-for-sale securities of $805,000, dividends paid to shareholders of $2.1 million, and the repurchase of common stock totaling $98,000. Consequently, book value per share increased to $3.67 as of June 30, 2026, compared to $3.52 as of December 31, 2025. The Bank remains well capitalized per regulatory guidance.

 

During the first six months of 2026, the Company repurchased 27,701 shares of its common stock at an average price of $3.54 per share. Since the commencement of the repurchase plan in 2022, 382,774 shares have been repurchased at an average price of $2.61 per share. On July 20, 2026, the Board of Directors approved the termination of the Company's stock repurchase program. As a result, the Company will no longer repurchase shares of its common stock under the program.

 

Asset Quality

 

The allowance for credit losses on loans was $8.2 million, or 1.12% as a percentage of total loans, as of June 30, 2026, and $8.1 million, or 1.14%, as of December 31, 2025. The decrease in the allowance as a percentage of loans was primarily attributable to charge-offs recorded on two individually evaluated borrower relationships for which specific allowance allocations had been established at year-end. One of these relationships had two pieces of collateral – the residential property was foreclosed and reclassified into other real estate owned and the commercial property was sold at auction during the first six months of 2026. The charge-off on the other relationship was largely driven by the amount of time that it had been in its classified status. The $108,000 increase in the allowance for credit losses on loans was attributable to provision expense associated with a larger loan portfolio and modest adjustments to qualitative factors for geopolitical uncertainty related to the conflict in the Middle East and one-to-four-family residential mortgage loans.

 

The allowance for credit losses on unfunded commitments was $455,000 as of June 30, 2026, as compared to $471,000 as of December 31, 2025. The decrease in the allowance for credit losses on unfunded commitments was due to a decrease in loan commitments, specifically residential and commercial real estate construction loan commitments.

 

Annualized net charge-offs (recoveries) as a percentage of average loans were (0.02%) during the second quarter of 2026 compared to 0.14% during the first quarter of 2026 and 0.02% during the second quarter of 2025. Annualized net charge-offs for the first six months of 2026 and 2025 were 0.06% and 0.02%, respectively.

 

Nonperforming assets, which include nonaccrual loans, accruing loans past due 90 days or more, and other real estate owned, totaled $3.5 million as of June 30, 2026, a decrease of $320,000, or 8.29%, since year-end 2025. Nonaccrual loans decreased $285,000 during the first six months of 2026 primarily due to the charge-off of the specific allowance allocations on the individually evaluated loans and a loan that was removed from nonaccrual status based on performance. Nonperforming assets as a percentage of total assets were 0.38% as of June 30, 2026 and 0.42% as of December 31, 2025.

 

Other real estate owned increased to $225,000 as of June 30, 2026 from $89,000 at December 31, 2025 due to the foreclosure on the residential property discussed above. During the second quarter of 2026, a residential property in other real estate owned was sold for a $37,000 gain.

 

For detailed information on nonaccrual loans and other real estate owned as of June 30, 2026 and December 31, 2025, refer to Note 6 Loans and Note 10 Other Real Estate Owned in Item 1 of this Form 10-Q.

 

 

Loans rated substandard or below totaled $3.2 million as of June 30, 2026, an increase of $600,000 from $2.6 million as of December 31, 2025. Total past due loans decreased to $4.8 million as of June 30, 2026 from $7.2 million as of December 31, 2025.

 

The allowance for credit losses is maintained at a level that management deems appropriate to absorb any expected future losses and known impairments within the loan portfolio, whether or not the losses are actually ever realized. Through our quarterly assessment, we continue to adjust the CECL model to best reflect the risks in the portfolio. However, future provisions may be deemed necessary. During the first six months of 2026, we maintained the adjustments to our qualitative factors initiated in 2024 and carried forward into 2025, to consider risk factors associated with commercial real estate and residential mortgage loans, including a modest increase in 2026 in the risk factor for residential mortgage loans based on the past dues and increases in loans in the process of foreclosure in that portfolio. Those changes, along with recoveries of loans previously charged off and the assessment of the historical and specific risks associated with the loan portfolio, resulted in a provision for credit losses of $303,000, which included a $319,000 provision for the loan portfolio; and a $16,000 recovery of credit losses on unfunded commitments.

 

The following table summarizes components of the allowance for credit losses and related loans as of June 30, 2026 and December 31, 2025:

 

Selected Credit Ratios
		June 30,				December 31,
(Dollars in thousands)		2026				2025
Allowance for credit losses - loans		$	8,215			$	8,107
Total loans			732,260				709,587
Allowance for credit losses to total loans			1.12	%			1.14	%
Nonaccrual loans		$	3,313			$	3,598
Nonaccrual loans to total loans			0.45	%			0.51	%
Ratio of allowance for credit losses loans to nonaccrual loans			2.48	X			2.25	X
Charge-offs net of recoveries		$	211			$	316
Average loans		$	722,531			$	689,104
Net charge-offs to average loans1			0.06	%			0.05	%

¹ - Annualized

 

Deferred Tax Asset and Income Taxes

 

Due to timing differences between the book and tax treatments of several income and expense items, a net deferred tax asset, excluding the deferred tax asset on the unrealized loss on securities available-for-sale of $2.3 million and $2.1 million existed as of June 30, 2026 and December 31, 2025, respectively. Our income tax expense was computed at the federal corporate income tax rate of 21% of taxable income and a blended state tax rate of 1.87%. We have no significant nontaxable income or nondeductible expenses.

 

Capital Resources

 

The Company meets the eligibility criteria to be classified as a small bank holding company in accordance with the Federal Reserve’s Small Bank Holding Company Policy Statement issued in February 2015 and is therefore not obligated to report consolidated regulatory capital. The Bank continues to be subject to various capital requirements administered by banking agencies.

 

The Bank’s capital ratios along with the minimum regulatory thresholds to be considered well-capitalized are presented in Note 4 in Item 1 of this Form 10-Q.

 

As of June 30, 2026, the Bank remains well capitalized under the regulatory framework for prompt corrective action. The ratios mentioned above for the Bank comply with the Federal Reserve rules to align with the Basel III Capital requirements.

 

Book value per common share was $3.67 and $3.52 as of June 30, 2026 and December 31, 2025, respectively. The increase in the book value was due largely to the $6.5 million, or $0.28 per share, of net income for the first six months of 2026, partially offset by the net increase in the unrealized loss on available for sale investment securities of $805,000, the cash dividend payment of $0.09 per share and the repurchase of common shares for $98,000 during the first half of 2026.

 

 

Other key performance indicators are as follows:

 

		Three months ended June 30,								Six months ended June 30,
		2026				2025				2026				2025
Return on average assets1			1.47	%			1.15	%			1.41	%			1.02	%
Return on average shareholders’ equity1			16.28	%			13.91	%			15.49	%			12.37	%
Average equity to average assets			9.02	%			8.27	%			9.08	%			8.29	%

 

¹ - Annualized

 

Under current economic conditions, we believe it is prudent to continue to retain capital sufficient to support planned asset growth while being able to absorb potential losses that may occur if asset quality deteriorates, and based upon projections, we believe our current capital levels will be sufficient.

 

During the first quarter of 2026, the Company paid a cash dividend of $0.09 per common share to our shareholders. Future payments of cash dividends will depend on a number of factors including but not limited to maintaining positive retained earnings, compliance with regulatory rules governing the payment of dividends, strategic plans, and sufficient capital at the Bank to allow payment of dividends to the Company.

 

As previously reported, the Company had approved a one-year stock repurchase program that authorized the repurchase of up to 500,000 of the Company’s common shares through March 31, 2027. On July 20, 2026, the Board of Directors approved the termination of the Company's stock repurchase program. As a result, the Company will no longer repurchase shares of its common stock under the program. As of June 30, 2026, the Company had repurchased 382,774 shares at an average price of $2.61 per share since inception of the plan. During the quarter ended June 30, 2026, the Company repurchased 16,205 shares at an average price of $3.53 per share.

 

Liquidity

 

We closely monitor our liquidity and our liquid assets in the form of cash, due from banks, federal funds sold and unpledged available-for-sale investments. Collectively, those balances were $153.1 million as of June 30, 2026, up from $141.0 million as of December 31, 2025. The increase is primarily due to deposit growth exceeding funding needs for loan growth and cash provided by operations. A surplus of short-term assets is maintained at levels management deems adequate to meet potential liquidity needs.

 

As of June 30, 2026, all of our investments are classified as available-for-sale, providing an additional source of liquidity in the amount of $68.8 million, which is net of the $29.8 million of securities pledged as collateral. Generally, the investment portfolio serves as a source of liquidity while yielding a higher return at the purchase date when compared to other short-term investment options, such as federal funds sold and overnight deposits with the Federal Reserve Bank of Richmond (the FRB). Due to the unrealized loss on securities available-for-sale, the sale of investments, other than shorter-term investments with minimal unrealized losses or more recently purchased investments, would not be a main source of liquidity at this time due to the immediate impact on regulatory capital; however, the majority of the portfolio is considered high credit quality investments and would be available to pledge against borrowed funds. Total investment securities increased $2.2 million, or 4.55%, annualized during the first half of 2026 from $96.4 million as of December 31, 2025 to $98.6 million as of June 30, 2026. The Bank also has additional borrowing capacity on lines for which investments and certain loans are currently pledged.

 

Our loan to deposit ratio was 88.48% and 88.89% as of June 30, 2026 and December 31, 2025, respectively.

 

Available third-party sources of liquidity as of June 30, 2026 include the following: a line of credit with the FHLB, access to brokered certificates of deposit markets and the discount window at the Federal Reserve Bank. We also have the ability to borrow $30.0 million in unsecured federal funds through credit facilities extended by correspondent banks.

 

 

We have used our line of credit with the FHLB to issue letters of credit totaling $14.0 million to the Treasury Board of Virginia for collateral on public funds. No draws on these letters of credit have been issued. The letters of credit are considered to be draws on our FHLB line of credit. In May 2023, we borrowed $10.0 million from the FHLB, through a fixed rate 5-year advance, to support loan fundings and other general liquidity needs and prepaid $3 million of the outstanding balance in the fourth quarter of 2025; and, in June 2025, we borrowed an additional $5.0 million which was repaid in July 2025. An additional $261.0 million was available as of June 30, 2026 on the $282.0 million line of credit. Full use of the FHLB borrowing capacity would require the Company to pledge additional assets.

 

As of June 30, 2026 we held brokered time deposits of $8.0 million, unchanged from December 31, 2025. Internet accounts are limited to customers located in our primary market area and the surrounding geographical area. The average balance of and the rate paid on deposits is shown in the net interest margin analysis tables. Total reciprocal Certificate of Deposit Registry Services (“CDARS”) time deposits were $7.3 million and $7.0 million as of June 30, 2026 and December 31, 2025, respectively. Aside from the availability of CDARS time deposits, we also offer a similar deposit product for transaction account customers through Intrafi Cash Service (“ICS”). As of June 30, 2026 approximately $11.4 million were placed in this product as compared to $16.1 million at December 31, 2025. Both the CDARS and ICS offerings assist us in maintaining deposit relationships, while assuring the depositors’ funds retain federal deposit insurance coverage.

 

Additional liquidity is available through the Federal Reserve Bank discount window for overnight funding needs. We may collateralize this line with investment securities and loans at our discretion; however, while we do not anticipate using this as a primary funding source, securities with an estimated market value of $24.6 million were pledged as of June 30, 2026.

 

Time deposits of $250,000 or more were approximately 6.21% of total deposits at June 30, 2026 and 7.15% of total deposits at December 31, 2025.

 

In January 2025, we made a voluntary principal payment of $3.0 million on an outstanding trust preferred security. We may consider making future principal payments based on our available liquidity and considering other funding opportunities that may be available.

 

With the on-balance sheet liquidity and other external sources of funding, we believe the Bank has adequate liquidity and capital resources to meet our requirements and needs for the foreseeable future. However, liquidity can be further affected by a number of factors such as counterparty willingness or ability to extend credit, regulatory actions and customer preferences, some of which are beyond our control. Given continued economic uncertainty, the level of market interest rates, and potential impacts from proposed or enacted tariffs and other trade restrictions, along with ongoing geopolitical conflicts than can contribute to energy price volatility and broader financial market volatility, we continue monitoring our liquidity position, specifically cash on hand, and readily-available contingent funding sources, in order to meet customer demands. Additionally, our contingency funding plan is reviewed quarterly with our Asset Liability Committee.

 

Off Balance Sheet Items and Contractual Obligations

 

There have been no material changes during the six months ended June 30, 2026, to the off-balance sheet items and the contractual obligations disclosed in our 2025 Form 10-K.

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

Not Applicable.

 

Item 4.

Controls and Procedures

 

We have carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Executive Officer (our CEO) and our Executive Vice President and Chief Financial Officer (our CFO), of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were operating effectively in providing reasonable assurance that (a) the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (b) such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

 

 

Changes in Internal Control Over Financial Reporting  

 

There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended June 30, 2026, that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

 

Part II Other Information

 

Item 1.

Legal Proceedings

 

In the course of operations, we may become a party to legal proceedings in the normal course of business. At June 30, 2026, we do not anticipate that the aggregate ultimate liability arising out of litigation pending or threatened against the Company or any of its subsidiaries or to which the property of the Company or any of its subsidiaries is subject, in the opinion of management, will materially impact the financial condition or liquidity of the Company.

 

Item 1A.

Risk Factors

 

Not Applicable.

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

(a)

Sales of Unregistered Securities – None

 

(b)

Use of Proceeds – Not Applicable

 

(c)

Issuer Purchases of Securities

 

Stock Repurchase Program

 

The Company had previously approved a one-year stock repurchase program that authorized the repurchase of up to 500,000 of the Company’s common shares through March 31, 2027. On July 20, 2026, the Board of Directors approved the termination of the Company's stock repurchase program. As a result, the Company will no longer repurchase shares of its common stock under the program.

 

Shares of the Company’s common stock were repurchased during the three months ended June 30, 2026, as detailed below.

 

Period Beginning on First Day of Month Ended			Total Number of Shares Purchased				Average Price Paid Per Share				Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs				Maximum Number of Shares That May Yet Be Purchased Under Plans or Programs
April 30, 2026				—			$	0.00				—				133,431
May 31, 2026				8,580			$	3.53				8,580				124,851
June 30, 2026				7,625			$	3.53				7,625				117,226
		Total		16,205			$	3.53				16,205

 

Item 3.

Defaults Upon Senior Securities

 

None.

 

Item 4.

Mine Safety Disclosures

 

Not Applicable.

 

 

Item 5.

Other Information

 

Trading Arrangements – During the three months ended June 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).

 

Item 6.

Exhibits

 

The following exhibits are filed as part of this report or are incorporated by reference:

 

No.	Description
3.1	Amended Articles of Incorporation of New Peoples Bankshares, Inc. (incorporated by reference to Exhibit 3.1 to Form 10-Q for the quarterly period ended June 30, 2008 filed on August 11, 2008).
3.2	Bylaws of New Peoples Bankshares, Inc. (incorporated by reference to Exhibit 3.2 to Form 8-K filed on August 26, 2020).
4.1	Specimen Common Stock Certificate of New Peoples Bankshares, Inc. (incorporated by reference to Exhibit 4.1 to Form 10-Q for the quarterly period ended June 30, 2012 filed on August 14, 2012).
4.2	Description of New Peoples Bankshares, Inc.’s Securities (incorporated by reference to Exhibit 4.2 to Form 10-K for the year ended December 31, 2024, filed on March 31, 2025).
31.1	Certification by Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
31.2	Certification by Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
32	Certification by Chief Executive Officer and Chief Financial Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials for the Company’s Form 10-Q for the quarterly period ended June 30, 2026, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to the Consolidated Financial Statements, tagged as blocks of text.

 

* Denotes management contract

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

			NEW PEOPLES BANKSHARES, INC.
			(Registrant)
		By:	/s/ JAMES W. KISER
			James W. Kiser
			President and Chief Executive Officer
	Date: August 12, 2026
		By:	/s/ CHRISTOPHER G. SPEAKS
			Christopher G. Speaks
			Executive Vice President and Chief Financial Officer
	Date:  August 12, 2026

ATTACHMENTS / EXHIBITS

CERTIFICATIONS

CERTIFICATIONS

CERTIFICATION OF

XBRL SCHEMA FILE

XBRL CALCULATION FILE

XBRL DEFINITION FILE

XBRL LABEL FILE

XBRL PRESENTATION FILE

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