BV Financial Inc.

11/13/2025 | Press release | Distributed by Public on 11/13/2025 10:09

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

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

General

Management's discussion and analysis is intended to enhance your understanding of our financial condition and results of operations. The financial information in this section is derived from the accompanying financial statements. You should read the financial information in this section in conjunction with the business and financial information contained in this Quarterly Report on Form 10-Q and in the Company's 2024 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 27, 2025.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements, which can be identified by the use of words such as "estimate," "project," "believe," "intend," "anticipate," "assume," "plan," "seek," "expect," "will," "may," "should," "indicate," "would," "contemplate," "continue," "intend," "target" and words of similar meaning. These forward-looking statements include, but are not limited to:

•
statements of our goals, financial performance, intentions and expectations;
•
statements regarding our business plans, prospects, growth and operating strategies;
•
statements regarding the quality of our loan and investment portfolios; and
•
estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not undertake any obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

•
general economic conditions, either nationally or in our market areas, that are worse than expected, including as a result of unemployment levels and labor shortages, and any potential recession or slowed economic growth;
•
changes in the level and direction of loan delinquencies and charge-offs and changes in estimates of the adequacy of the allowance for credit losses;
•
changes in the economic assumptions and methodology used to calculate the allowance for credit losses;
•
our ability to access cost-effective funding;
•
changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio;
•
fluctuations in real estate values and both residential and commercial real estate market conditions;
•
our continued ability to originate loans outside of our market area;
•
our ability to implement and update our business strategies;
•
competition among depository and other financial institutions;
•
inflation and changes in the interest rate environment that reduce our margins and yields, the fair value of financial instruments or our level of loan originations or prepayments on loans we have made and make;
•
adverse changes in the securities markets;

BV FINANCIAL, INC. AND SUBSIDIARIES

•
changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements and insurance premiums;
•
the imposition of tariffs or other domestic or international governmental policies and retaliatory responses;
•
changes in the quality or composition of our loan or investment portfolios;
•
technological changes that may be more difficult or expensive than expected;
•
system failure or cyber-security breaches of our information technology infrastructure;
•
the failure to maintain current technologies and/or successfully implement future information technology enhancements;
•
the inability of third-party providers to perform as expected;
•
our ability to manage market risk, credit risk and operational risk in the current economic environment;
•
our ability to enter new markets successfully and capitalize on growth opportunities;
•
our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire, and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto;
•
changes in investor sentiment and consumer spending, borrowing and savings habits;
•
changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;
•
our ability to retain key employees;
•
our compensation expense associated with equity allocated or awarded to our employees; and
•
changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Except as required by law or regulation, we do not undertake, and we specifically disclaim any obligation to release publicly the results of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Critical Accounting Policies and Use of Critical Accounting Estimates

Our accounting policies are integral to understanding the results reported. We consider accounting policies that require management to exercise significant judgment or discretion or to make significant assumptions that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies.

Allowance for Credit Losses

The ACL is an estimate of the expected credit losses for loans held for investment and for off-balance sheet exposures. ASC 326, "Financial Instruments-Credit Losses," requires an immediate recognition of the credit losses expected to occur over the lifetime of a financial asset whether originated or purchased. Charge-offs are recorded to the ACL when management believes a loan is uncollectible. Subsequent recoveries, if any, are credited to the ACL. Management believes the ACL is maintained in accordance with GAAP and in compliance with appropriate regulatory guidelines. The ACL includes quantitative estimates of losses for collectively and individually evaluated loans. The quantitative estimate for collectively evaluated loans (other than investor commercial real estate loans) is determined using the average charge-off method that utilizes historical losses for all Maryland banks with assets less than $1 billion beginning in March 2000. The investor commercial real estate portfolio utilizes the national loss history for banks with assets less than $1 billion over the same time period. Investor CRE loans are made nationwide, therefore, management deems it appropriate to utilize national loss rates when evaluating this portfolio. Adjustments are made to the historical loss factors under each scenario for economic

BV FINANCIAL, INC. AND SUBSIDIARIES

conditions, portfolio concentrations, collateral values, the level and trend of delinquent and non-accrual loans and internal changes in staffing, loan policies and monitoring of the portfolio. Loans are selected for individual evaluation primarily based on their payment status and whether the loan has been placed on non-accrual status. Loans on non-accrual status include all loans greater than 90 days delinquent and other loans with weaknesses sufficient for management to place these loans on non-accrual status. The ACL is measured on a collective basis when similar risk factors exist as determined by internal loan coding and assignment to a portfolio segment. The Company utilizes reasonable and supportable forecasts of future economic conditions when estimating the ACL on loans. The model's calculation also uses an adjustment for a 12-month forecast period utilizing the most recent 12-month economic forecast from the Federal Reserve Board for national gross domestic product ("GDP"). The model compares the average history of loss rates described above to the forecasted GDP to determine the neccessity and amount of any forward-looking adjustment. The establishment of the ACL is significantly affected by management's judgment and by economic and other uncertainties, and different amounts may be reported under different conditions or assumptions. The Federal Deposit Insurance Corporation and the Maryland Office of the Commissioner of Financial Regulation, as an integral part of their examination process, periodically review the ACL for reasonableness and, as a result of such reviews, we may be required to increase our ACL or recognize loan charge-offs. The calculation of ACL excludes accrued interest receivable balances because these balances are reversed in a timely manner against previously recognized interest income when a loan is placed on non-accrual.

Goodwill

The excess purchase price over the fair value of net assets from acquisitions, or goodwill, is evaluated for impairment at least annually and on an interim basis if an event or circumstance indicates it is likely impairment has occurred. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount. In any given year, the Company may elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is in excess of its carrying value. If it is not more likely than not that the fair value of the reporting unit is in excess of the carrying value, or if the Company elects to bypass the qualitative assessment, a quantitative impairment test is performed. In performing a quantitative test for impairment, the fair value of net assets is estimated based on analyses of the Company's market value, discounted cash flows, and peer values. The determination of goodwill impairment is sensitive to market conditions and other key assumptions used in determining or allocating fair value. Variability in the market and changes in assumptions or subjective measurements used to estimate fair value are reasonably possible and may have a material impact on our consolidated financial statements or results of operations. Our annual goodwill impairment test is performed each year as of September 30. The Company performed its 2025 goodwill impairment qualitative assessment and determined its goodwill was not considered impaired.

Deferred Income Taxes

At September 30, 2025, we had a net deferred tax asset totaling $9.3 million. In accordance with ASC Topic 740 "Income Taxes," we use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. If currently available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting deferred tax assets and liabilities. These judgments require us to make projections of future taxable income. The judgments and estimates we make in determining our deferred tax assets are subjective and are reviewed on a regular basis as regulatory, economic or business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets. A valuation allowance that results in additional income tax expense in the period in which it is recognized would negatively affect income. Management believes, based upon current facts, that it is more likely than not that there will be sufficient taxable income in future years to realize its federal and state deferred tax asset.

BV FINANCIAL, INC. AND SUBSIDIARIES

Comparison of Financial Condition at September 30, 2025 (unaudited) and December 31, 2024

Assets. Total assets were $909.4 million at September 30, 2025, a decrease of $2.4 million, or 0.27%, from $911.8 million at December 31, 2024. The decrease was due primarily to the Company utilizing cash to repay $15.0 million in borrowings from the FHLB, offset by an increase in loans.

Cash and Cash Equivalents. Cash and cash equivalents decreased $7.0 million, or 9.9%, to $63.5 million at September 30, 2025 from $70.5 million at December 31, 2024. The decrease in cash was primarily a result of the pay-off of FHLB borrowings offset by deposit growth and securities repayments.

Loans. Loans receivable increased $8.3 million, or 1.1%, to $746.1 million at September 30, 2025 from $737.8 million at December 31, 2024. Increases in in owner occupied 1-4 loans, commercial loans and construction loans offset decreases in investor commercial real estate loans, non-owner occupied 1-4 loans, owner occupied 1-4 junior liens, owner occupied commercial real estate, marine and farm loans.

Allowance for Credit Losses. The allowance for credit losses - loans decreased $325,000 to $8.2 million at September 30, 2025 compared to $8.5 million at December 31, 2024. The ratio of our allowance for credit losses to total loans was 1.10% at September 30, 2025 compared to 1.15% at December 31, 2024, while the allowance for credit losses to non-performing loans was 233.5% at September 30, 2025 compared to 212.5% at December 31, 2024.

Securities. Securities available for sale decreased by $2.8 million, or 7.5%, from December 31, 2024 as paydowns and maturities were not fully replaced with new purchases. The held-to-maturity portfolio experienced a slight decrease due to paydowns.

Liabilities. Total liabilities increased $2.8 million, or 0.4%, to $719.2 million at September 30, 2025 from $716.3 million at December 31, 2024. The increase was due primarily to the increase in deposits and other liabilities offset by a decrease in borrowings.

Deposits. Total deposits increased $12.3 million, or 1.9% to $663.8 million at September 30, 2025 from $651.5 million at December 31, 2024. Interest-bearing deposits increased $7.3 million, or 1.4%, to $529.0 million at September 30, 2025 from $521.8 million at December 31, 2024. Noninterest bearing deposits increased $5.0 million, or 3.9%, to $134.7 million at September 30, 2025 from $129.7 million at December 31, 2024.

Stockholders' Equity. Stockholders' equity decreased $5.3 million, or 2.7%, to $190.2 million at September 30, 2025 from $195.5 million at December 31, 2024 a due to $17.7 million in stock repurchases offset by net income, a decrease in the accumulative other comprehensive loss and the impact of equity compensation plans.

BV FINANCIAL, INC. AND SUBSIDIARIES

Comparison of Operating Results for the Three and Nine Months Ended September 30, 2025 and 2024

Average Balances and Yields. The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances. Non-accrual loans are included in the computation of average balances only. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Average balances exclude loans held for sale, if applicable. Net deferred loan origination fees totaled $2.3 million and $2.1 million at September 30, 2025 and 2024, respectively.

For the Three Months Ended September 30,

2025

2024

(dollars in thousands)

Average Outstanding Balance

Interest

Average Yield/Rate(1)

Average Outstanding Balance

Interest

Average Yield/Rate(1)

(Unaudited)

Interest-earning assets:

Loans

$

743,119

$

11,519

6.15%

$

690,170

$

10,522

6.05

%

Securities available-for-sale

35,107

329

3.72%

36,201

353

3.87

%

Securities held-to-maturity

6,465

46

2.82%

9,937

83

3.31

%

Cash, cash equivalents and other interest-earning assets

57,784

633

4.38%

86,322

1,192

5.48

%

Total interest-earning assets

842,475

12,527

5.90%

822,630

12,150

5.86

%

Noninterest-earning assets

63,948

68,767

Total assets

$

906,423

$

891,397

Interest-bearing liabilities:

Interest-bearing demand deposits

$

75,302

151

0.80%

$

79,652

207

1.03

%

Savings deposits

117,422

136

0.46%

128,918

89

0.27

%

Money market deposits

128,265

787

2.43%

108,518

669

2.45

%

Certificates of deposit

205,022

1,638

3.17%

173,751

1,416

3.23

%

Total interest-bearing deposits

526,011

2,712

2.05%

490,839

2,381

1.92

%

Federal Home Loan Bank advances

-

-

-

-

-

-

Subordinated debentures

34,983

465

5.27%

34,827

466

5.30

%

Total borrowings

34,983

465

5.27%

34,827

466

5.30

%

Total interest-bearing
liabilities

560,994

3,177

2.25%

525,666

2,847

2.15

%

Noninterest-bearing demand deposits

137,179

140,039

Other noninterest-bearing liabilities

16,191

18,101

Total liabilities

714,364

683,806

Equity

192,059

207,591

Total liabilities and equity

$

906,423

$

891,397

Net interest income

$

9,350

$

9,303

Net interest rate spread(2)

3.65%

3.71

%

Net interest-earning assets(3)

$

281,481

$

296,964

Net interest margin(4)

4.40%

4.49

%

Average interest-earning assets to interest-bearing liabilities

150.18

%

156.49

%

(1)
Annualized.
(2)
Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(3)
Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(4)
Net interest margin represents net interest income divided by average total interest-earning assets.

BV FINANCIAL, INC. AND SUBSIDIARIES

The following table sets forth the effects of changing rates and volumes on our net interest income for the three months ended September 30, 2025 and 2024. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by current rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume which cannot be segregated have been allocated proportionately based on the changes due to rate and volume.

For the three months ended September 30, 2025

Interest Income Increase (Decrease) Due to

(In thousands)

Volume

Rate

Total

Interest income:

Loans receivable

$

821

$

176

$

997

Investment securities AFS

(10

)

(14

)

(24

)

Investment securities HTM

(25

)

(12

)

(37

)

Total Investment securities

(35

)

(26

)

(61

)

Equity Investments

-

(3

)

(3

)

Short-term investments and other

interest-earning assets

(317

)

(239

)

(556

)

Total interest-earning assets

$

469

$

(92

)

$

377

Interest expense:

Deposits

$

181

$

150

$

331

FHLB Borrowings

-

-

-

Subordinated Debentures

(1

)

-

-

Total Borrowings

(1

)

-

(1

)

Total interest-bearing liabilities

180

150

330

Change in net interest income

$

289

$

(242

)

$

47

BV FINANCIAL, INC. AND SUBSIDIARIES

For the nine months ended September 30,

2025

2024

(dollars in thousands)

Average Outstanding Balance

Interest

Average Yield/Rate(1)

Average Outstanding Balance

Interest

Average Yield/Rate(1)

(Unaudited)

Interest-earning assets:

Loans

$

745,001

$

33,594

6.03%

$

701,310

$

30,481

5.79

%

Securities available-for-sale

35,580

1,003

3.77%

34,569

966

3.72

%

Securities held-to-maturity

6,801

139

2.73%

10,507

266

3.37

%

Cash, cash equivalents and other interest-earning assets

57,988

1,938

4.49%

74,720

3,058

5.46

%

Total interest-earning assets

845,370

36,674

5.80%

821,106

34,771

5.64

%

Noninterest-earning assets

64,424

68,985

Total assets

$

909,794

$

890,091

Interest-bearing liabilities:

Interest-bearing demand deposits

$

77,365

482

0.83%

$

83,683

681

1.08

%

Savings deposits

120,136

342

0.38%

138,474

250

0.24

%

Money market deposits

126,316

2,318

2.45%

96,724

1,496

2.06

%

Certificates of deposit

199,332

4,793

32.10%

174,896

4,183

3.19

%

Total interest-bearing deposits

523,149

7,935

2.03%

493,777

6,610

1.78

%

Federal Home Loan Bank advances

5,604

194

4.63%

-

-

-

Subordinated debentures

34,944

1,396

5.34%

35,139

1,985

7.53

%

Total borrowings

40,548

1,590

5.24%

35,139

1,985

7.53

%

Total interest-bearing
liabilities

563,697

9,525

2.26%

528,916

8,595

2.16

%

Noninterest-bearing demand deposits

134,686

139,642

Other noninterest-bearing liabilities

16,027

17,676

Total liabilities

714,410

686,234

Equity

195,384

203,857

Total liabilities and equity

$

909,794

$

890,091

Net interest income

$

27,149

$

26,176

Net interest rate spread(2)

3.54%

3.48

%

Net interest-earning assets(3)

$

281,673

$

292,190

Net interest margin(4)

4.29%

4.25

%

Average interest-earning assets to interest-bearing liabilities

149.97

%

155.24

%

(1)
Annualized.
(2)
Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(3)
Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(4)
Net interest margin represents net interest income divided by average total interest-earning assets.

BV FINANCIAL, INC. AND SUBSIDIARIES

The following table sets forth the effects of changing rates and volumes on our net interest income for the nine months ended September 30, 2025 and 2024. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by current rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume which cannot be segregated have been allocated proportionately based on the changes due to rate and volume.

For the nine months ended September 30, 2025

Interest Income Increase (Decrease) Due to

(In thousands)

Volume

Rate

Total

Interest income:

Loans receivable

$

1,902

$

1,211

$

3,113

Investment securities AFS

26

11

37

Investment securities HTM

(76

)

(51

)

(127

)

Total Investment securities

(50

)

(40

)

(90

)

Equity Investments

1

(4

)

(3

)

Short-term investments and other

interest-earning assets

(573

)

(544

)

(1,117

)

Total interest-earning assets

$

1,280

$

623

$

1,903

Interest expense:

Deposits

$

438

$

887

$

1,325

FHLB Borrowings

194

-

194

Subordinated Debentures

(8

)

(581

)

(589

)

Total Borrowings

186

(581

)

(395

)

Total interest-bearing liabilities

624

306

930

Change in net interest income

$

656

$

317

$

973

BV FINANCIAL, INC. AND SUBSIDIARIES

Net Income. Net income was $3.7 million or $0.41 per diluted share for the three months ended September 30, 2025 compared to $3.8 million or $0.35 per diluted share for the three months ended September 30, 2024. Net income was $8.7 million or $0.88 per diluted share for the nine months ended September 30, 2025 compared to $9.8 million or $0.91 per diluted share for the nine months ended September 30, 2024. The decreases were due to higher compensation expenses and smaller credits to the provision for credit losses offsetting higher net interest and other income.

Interest Income. Interest income increased $377,000, or 3.10%, to $12.5 million for the three months ended September 30, 2025 from $12.2 million for the three months ended September 30, 2024. The increase was due primarily to an increase in interest income on loans, partially offset by a decrease in other interest income on cash and cash equivalents. Interest income on loans increased $1.0 million, or 9.5%, to $11.5 million for the three months ended September 30, 2025 from $10.5 million for the three months ended September 30, 2024 due to increases in the average balance and average yield on loans. The average balance of loans increased $52.9 million, or 7.7%, to $743.1 million for the three months ended September 30, 2025 from $690.2 million for the three months ended September 30, 2024. The weighted average yield on loans increased 10 basis points to 6.15% for the three months ended September 30, 2025 compared to 6.05% for the three months ended September 30, 2024, as variable rate loans reset to higher interest rates and the rates on new loans exceeded the rates on paid off loans due to the higher interest rate environment. Interest income on cash and cash equivalents decreased $559,000 to $633,000 for the three months ended September 30, 2025 from $1.2 million for the three months ended September 30, 2024 primarily due to a decrease in average balance of $28.5 million.

Interest income increased $1.9 million, or 5.5%, to $36.7 million for the nine months ended September 30, 2025 from $34.8 million for the nine months ended September 30, 2024. The increase was due primarily to an increase in interest income on loans, partially offset by a decrease in other interest income on cash and cash equivalents. Interest income on loans increased $3.1 million, or 10.2%, to $33.6 million for the nine months ended September 30, 2025 from $30.5 million for the nine months ended September 30, 2024 due to increases in the average balance and average yield on loans. The average balance of loans increased $43.7 million, or 6.2%, to $745.0 million for the nine months ended September 30, 2025 from $701.3 million for the nine months ended September 30, 2024. The weighted average yield on loans increased 24 basis points to 6.03% for the nine months ended September 30, 2025 compared to 5.79% for the nine months ended September 30, 2024, as variable rate loans reset to higher interest rates and the rates on new loans exceeded the rates on paid off loans due to the higher interest rate environment. Interest income on cash and cash equivalents decreased $1.1 million to $1.9 million for the nine months ended September 30, 2025 from $3.1 million for the nine months ended September 30, 2024 primarily due to a decrease in average balance of $16.7 million and a 97 basis point decrease in the yield.

Interest Expense. Interest expense increased $330,000 or 11.6% to $3.2 million for the three months ended September 30, 2025 from $2.8 million at September 30, 2024. Interest expense on deposits increased $331,000 for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

The increase in interest expense on deposits was due to a 13 basis point increase in the average rate, as well as a $35.2 million increase in the average balance of interest-bearing deposits to $56.0 million for the three months ended September 30, 2025 from $490.8 million for the three months ended September 30, 2024. The average rate on interest-bearing deposits was 2.05% for the three months ended September 30, 2025 compared to 1.92% for the three months ended September 30, 2024 as rates paid increased and depositors moved money into higher-cost certificates of deposit and money market accounts.

There were no interest expenses on FHLB advances for the three months ended September 30, 2025 or for the three months ended September 30,2024.

Interest expense on subordinated debentures was relatively unchanged at $465,000 in the quarter ended September 30, 2025 compared to $466,000 in the quarter ended September 30, 2024.

Interest expense increased $930,000, or 10.8%, to $9.5 million for the nine months ended September 30, 2025 from $8.6 million at September 30, 2024. Interest expense on deposits increased $1.3 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, due to both higher volumes of interest bearing deposits and higher rates paid on these deposits.

BV FINANCIAL, INC. AND SUBSIDIARIES

The increase in interest expense on deposits was due to a 25 basis point increase in the average rate, as well as a $29.4 million increase in the average balance of interest-bearing deposits to $523.1 million for the nine months ended September 30, 2025 from $493.8 million for the nine months ended September 30, 2024. The average rate on interest-bearing deposits was 2.03% for the nine months ended September 30, 2025 compared to 1.78% for the nine months ended September 30, 2024 as rates paid increased and depositors moved money into higher-cost certificates of deposit and money market accounts.

Interest expense on subordinated debentures decreased $590,000, or 29.7%, to $1.4 million for the nine months ended September 30, 2025 compared to $2.0 million for the nine months ended September 30, 2024. The decrease was due to the pay-off in the first quarter of 2024 of $3.0 million in junior subordinated debt assumed in a prior acquisition and the concurrent write-off of the purchase accounting adjustment on that debt.

Net Interest Income. Net interest income was $9.4 million for the three months ended September 30, 2025 compared to $9.3 million for the three months ended September 30, 2024. The net interest margin for the three months ended September 30, 2025 was 4.40% compared to 4.49% for the three months ended September 30, 2024. The increase in net interest income was due to higher average balances of interest earning assets and higher yields on these assets offset by a higher average balance of deposits and higher rates paid on deposits.

Net interest income was $27.1 million for the nine months ended September 30, 2025, compared to $26.2 million in the nine months ended September 30, 2024. The net interest margin for the nine months ended September 30, 2025 was 4.29% compared to 4.25% for the nine months ended September 30, 2024. The increase in net interest income was due to higher average balances of interest earning assets and higher yields on these assets offsetting the increase in interest expense due to a higher volume of deposits and higher rates paid on deposits.

Provision for Credit Losses. We recorded a reversal of the provision for credit losses of $1.0 million for the three months ended September 30, 2025 compared to a reversal of the provision for credit losses of $714,000 for the three months ended September 30, 2024. We recorded a reversal of the provision for credit losses of 539,000 for the nine months ended September 30, 2025 compared to a reversal of the provision for credit losses of $806,000 for the nine months ended September 30, 2024. Our allowance for credit losses was $8.2 million at September 30, 2025 compared to $8.5 million at December 31, 2024. The ratio of our allowance for credit losses to total loans was 1.10% at September 30, 2025 compared to 1.15% at December 31, 2024, while the allowance for credit losses to non-performing loans was 233.5% at September 30, 2025 compared to 212.5% at December 31, 2024.

Non-interest Income. For the three months ended September 30, 2025, noninterest income totaled approximately $684,000 compared to $696,000 for the quarter ended September 30, 2024.

For the nine months ended September 30, 2025 and September 30, 2024, noninterest income totaled $1.9 million.

Non-interest Expense. For the three months ended September 30, 2025, noninterest expense totaled $5.9 million compared to $5.5 million in the three months ended September 30, 2024. Compensation and benefits increased $570,000, primarily due to the costs of the 2024 equity incentive plan. For the quarter ended September 30, 2024, the expenses of the 2024 equity incentive plan were only applicable for one month based on the grant dates of the awards. All other expense categories combined decreased by $165,000 in the quarter ended September 30, 2025 when compared to the quarter ended September 30, 2024.

For the nine months ended September 30, 2025, noninterest expense totaled $17.8 million as compared to $15.3 million in the nine months ended September 30, 2024. Compensation and benefits expense increased $2.9 million. For the nine months ended September 30, 2025, the expenses of the 2024 equity incentive plan were applicable for all nine months compared to one month for the nine month period ended September 30, 2024. The increase in plan expenses totaled $2.9 million in the 2025 year-to-date period when compared to the same period in 2024. All other expense categories combined decreased by $374,000 in the quarter ended September 30, 2025 when compared to the quarter ended September 30, 2024.

Income Tax Expense. For the three months and nine months ended September 30, 2025, income tax expense was $1.4 million for an effective tax rate of 27.9% and $3.1 million for an effective tax rate of 26.4%, respectively. For the three months and nine months ended September 30, 2024, income tax expense was $1.4 million for an effective tax rate of 27.5% and $3.8 million for an effective tax rate of 27.9%, respectively. The lower effective tax rate in the nine-month period ended September 30, 2025 was due to an accrual adjustment made in the first quarter.

BV FINANCIAL, INC. AND SUBSIDIARIES

Asset Quality. Non-performing assets at September 30, 2025 totaled $3.5 million consisting of $3.5 million in nonperforming loans and $0 in foreclosed real estate, compared to $4.2 million at December 31, 2024, consisting of $4.0 million in non-performing loans and $159,000 in foreclosed real estate. Commercial non-performing loans increased by $630,000 in the nine-month period due to a $660,000 loan relationship being placed on non-accrual status. These loans are secured with real estate and business assets. At September 30, 2025, the allowance for credit losses on loans was $8.2 million, which represented 1.10% of total loans and 233.5% of non-performing loans compared to $8.5 million at December 31, 2024, which represented 1.15% of total loans and 212.5% of non-performing loans.

Liquidity and Capital Resources

Liquidity. Liquidity describes our ability to meet financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities and proceeds from maturities of securities. We also have the ability to borrow from the FHLB. At September 30, 2025, we had a $162.5 million line of credit with the FHLB, and $23.0 million of FHLB in unfunded letters of credit used to secure municipal deposits. The Company also has a $20.0 million short-term unsecured facility from a correspondent bank.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments, including interest-bearing demand deposits. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period. We are committed to maintaining a strong liquidity position.

We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained. However, if a substantial portion of these deposits is not retained, we may utilize FHLB advances, brokered deposits or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense. At September 30, 2025, the Company had $50.3 million in brokered deposits compared to $10.0 million in brokered deposits at September 30, 2024. In addition, we had $55.3 million of municipal deposits at September 30, 2025, which represented 8.3% of total deposits. The Bank's uninsured deposits totaled $167.6 million, or 24.5% of total deposits, of which $48.2 million were secured using the market value of pledged collateral or letters of credit issued by FHLB, and an additional $19.2 million were deposits of the Company at the Bank.

Capital Resources. At September 30, 2025, the Bank exceeded all of its regulatory capital requirements and was categorized as well capitalized. Management is not aware of any conditions or events since the most recent notification that would change our category.

BV FINANCIAL, INC. AND SUBSIDIARIES

BV Financial Inc. published this content on November 13, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 13, 2025 at 16:09 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]