Texas Community Bancshares, Inc. TCBS US Equity☆

ITEM 1A.Risk Factors

Not applicable, as Texas Community Bancshares is a “smaller reporting company.”

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ITEM 1B.Unresolved Staff Comments

None.

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ITEM 1C.Cybersecurity

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Risk Management and Strategy

The Company’s Information Security Program (“Program”) uses a variety of safeguards to protect the confidentiality, integrity, and availability of information. The Program is designed to identify, prevent, or mitigate the risks from cybersecurity threats. The Program leverages recognized security frameworks, such as the National Institute of Standards and Technology (NIST), Financial Services Information Sharing and Analysis Center (FS-ISAC), and Federal Financial Institutions Examination Council (FFIEC) to organize, improve, and assess the program and to better manage and reduce cybersecurity risk. The Program is assessed and updated annually and as needed.

The Company regularly assesses the threats and vulnerabilities to its environment so it can update and maintain its systems and controls to effectively mitigate these risks. Layered security controls are designed to complement each other to protect customer information and transactions. The Company periodically engages third-party experts and consultants to conduct evaluations of our security controls, whether through penetration testing, audits, assessments, or consulting on best practices to address new challenges. Results are used to help drive priorities and initiatives to improve the Program. Additionally, as a regulated entity, bank regulators assess the quality of our information security program during their regular examinations of the Company and its compliance with federal regulations and requirements.

The Company’s third-party risk management program is designed to oversee and identify the cybersecurity threats associated with the use of third-party service providers. While the optics into a third-party’s operation are limited, the Company performs risk-based evaluations of third-party service providers. These evaluations include reviewing information including, but not limited to, security assessment questionnaires, security testing summaries, audit reports performed under the SSAE 18 Audit Standard, and information security policies.

We view security awareness as a continuous program. All Company employees receive cybersecurity and fraud training at the required new employee orientation and subsequently receive information security tips via email. Employees also receive annual security awareness training.

During the fiscal year of this Report, the Company has not identified risks from cybersecurity threats that individually or in the aggregate have materially affected or are reasonably anticipated to materially affect the organization. Nevertheless, the Company recognizes cybersecurity threats are ongoing and evolving, and we continue to remain vigilant.

Governance

The Company’s system of internal controls also incorporates a protocol for the appropriate reporting and escalation of information and cybersecurity matters to management and the Board of Directors for resolution and, if necessary, disclosure of any material incidents. The Board of Directors is actively engaged in the oversight of the Company’s continuous efforts to reinforce and enhance its operational resilience and receives education to enhance their oversight efforts to accommodate for the ever-evolving information and cybersecurity threat landscape. The Information Security Officer (“ISO”) reports regularly to the Board, management and any appropriate committees on the information and cybersecurity risks, threats, exposures, and mitigation measures. The Company’s incident response process is periodically tested and includes cybersecurity scenarios.

The Chief Operating Officer (COO) along with the ISO are responsible for developing and implementing our Program and reporting on cybersecurity matters to the Board.Our COO and ISO have over 25 years of combined related

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experience. We view cybersecurity as a shared responsibility, and we periodically perform simulations and tabletop exercises and incorporate external resources and advisors as needed.

The Program is overseen by the Information Security Committee, Board of Directors, and Compliance Committee.

The Company’s Board of Directors monitors the Program including policies and practices. The Company’s Compliance Committee and Information Security Committee along with the company’s Board of Directors oversee areas of operational risk such as information technology activities; risks associated with development, infrastructure, and cybersecurity; oversight of information security risk assessments, strategies, policies, and programs; and disaster recovery, business continuity, and incident response process. The COO also provides periodic cybersecurity updates to the Board of Directors.

We face a number of cybersecurity risks in connection with our business. Although such risks have not materially affected us, including our business strategy, results of operations, or financial condition, to date. Disruptions in our information technology systems or a compromise of security with respect to our systems could adversely affect our operating results by limiting our ability to effectively monitor and control our operations, adjust to changing market conditions, implement strategic initiatives or support our customer transactions and our business may be adversely affected by security breaches at third-parties.

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ITEM 2.Properties

As of December 31, 2025, the net book value of our land, building and equipment was $11.5 million. The following table sets forth information regarding our offices as of December 31, 2025:

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​ ​ ​ ​ ​ ​ ​ ​

​ ​ Leased or ​ Year Acquired ​ Net Book Value of

Location ​ ​ ​ Owned ​ ​ ​ or Leased ​ ​ ​ Land, Building & Equipment

​ ​ ​ ​ ​ ​ (In thousands)

Main Office: ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​

Corporate Office: ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​

Branch Offices: ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​

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In 2025, the Company leased corporate office space in Tyler, Texas for employee and customer accessibility and began due diligence for purchase of land in Terrell, Texas for a new branch. At December 31, 2025, the book value of the land being purchased was $117,000 and the Company closed on the property on January 5, 2026 for a purchase price of $1.5 million. We believe that all other current facilities are adequate to meet our present and foreseeable needs with future expansion in Terrell, Texas.

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ITEM 3.Legal Proceedings

Periodically, we are involved in claims and lawsuits, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business. The Company has been named a defendant in a legal action arising from the conduct of its normal business and employment activities. Management believes that the legal action against the Company is without merit and intends to defend against it. Any liability that could arise with respect to this action is not reasonably estimable at December 31, 2025 and in the opinion of the Company, any such liability will not have a material adverse effect on the Company’s consolidated financial statements.

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ITEM 4.Mine Safety Disclosures

Not applicable.

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PART II

ITEM 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The common stock of Texas Community Bancshares is listed on The Nasdaq Capital Market under the symbol “TCBS”. As of March 19, 2026, we had 535 stockholders of record, and 2,885,392 shares of common stock outstanding.

The payment and amount of any dividend payments is subject to statutory and regulatory limitations, and depends upon a number of factors, including the following: regulatory capital requirements; our financial condition and results of operations; tax considerations; and general economic conditions.

On May 16, 2023, the Company announced a program to repurchase up to 164,842 shares of the Company’s outstanding common stock or approximately 5% of the shares then outstanding. On November 9, 2023, after completing the purchase of 164,842 shares, the Company announced a second repurchase program of 161,316 shares, or approximately 5% of the shares then outstanding, which was completed on April 14, 2025. On February 27, 2025, the Company announced a third repurchase program of 153,083 shares, or approximately 5% of the shares then outstanding. On December 16, 2025, after completing the purchase of 153,083 shares, the Company announced a fourth repurchase program of 144,364 shares, or approximately 5% of the shares then outstanding. The program has no stated expiration date.

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The following table summarizes the Company’s repurchases of its outstanding shares of common stock during the quarter ended December 31, 2025.

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There were no sales of unregistered securities during the year ended December 31, 2025.

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ITEM 6.Reserved

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ITEM 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion and analysis reflects our consolidated financial statements and other relevant statistical data, and is intended to enhance your understanding of our financial condition and results of operations. The information in this section has been derived from the consolidated financial statements, which appear elsewhere in this annual report. You should read the information in this section in conjunction with the other business and financial information provided in this annual report.

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Overview

Our business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations and borrowings from the Federal Home Loan Bank of Dallas, in residential real estate loans, commercial real estate loans, construction and land loans and, to a lesser extent, commercial loans and consumer and other loans. Although the majority of our loans were fixed-rate loans, with the growth in the commercial lending portfolio in 2025, many of our originations were loans with adjustable rates. We also invest in securities, which have historically consisted primarily of mortgage-backed securities and obligations issued by U.S. government sponsored enterprises and others, state and municipal securities, collateralized mortgage obligations, corporate bonds, and Federal Home Loan Bank stock. We offer a variety of deposit accounts, including checking accounts, savings accounts and certificate of deposit accounts. Broadstreet Bank is subject to comprehensive regulation and examination by the Texas Department of Savings and Mortgage Lending and the Federal Deposit Insurance Corporation and is a member of the Federal Home Loan Bank system.

Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities. Our results of operations also are affected by our provision for credit losses, non-interest income and non-interest expense. Non-interest income currently consists primarily of service charges on deposit accounts, other service charges and fees, income from bank owned life insurance, gains and losses on the sale or disposal of assets and other income. Non-interest expense currently consists primarily of expenses related to salaries and employee benefits, occupancy and equipment, data processing, technology expenses, contract services, director fees, and other expenses.

We invest in bank owned life insurance to provide us with a funding source to offset some costs of our benefit plan obligations. Bank owned life insurance provides us with non-interest income that is nontaxable. Federal regulations generally limit our investment in bank owned life insurance to 25% of our Tier 1 capital plus our allowance for credit losses. At December 31, 2025, our investment in bank owned life insurance was $6.5 million, which was within this investment limit.

Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.

Business Strategy

Our current business strategy consists of the following:

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Our commercial real estate loans and construction and land loans have higher credit risk than our residential mortgage loans.

Summary of Critical Accounting Policies and Critical Accounting Estimates

The discussion and analysis of the financial condition and results of operations are based on our consolidated financial statements, which are prepared in conformity with U.S. GAAP. The preparation of these consolidated financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We consider the accounting policies discussed below to be critical accounting policies. The estimates and assumptions that we use are

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based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.

The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company” we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We determined not to take advantage of the benefits of this extended transition period.

The following represent our critical accounting policies:

Allowance for Credit Losses. Effective January 1, 2023, the Company adopted Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”), referred to as CECL. The allowance for credit losses applies to any financial asset carried at amortized cost, including unfunded commitments. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect collectability. The Company uses the weighted average remaining maturity (WARM) method to estimate future expected losses for all of the Company’s loan pools. The allowance for credit losses on loans is a reserve for estimated current expected credit losses on individually evaluated loans determined to be impaired as well as estimated current expected credit losses inherent in the loan portfolio. Actual credit losses, net of recoveries, are deducted from the allowance for credit losses. Loans are charged off when management believes that the uncollectability of the principal is confirmed. Subsequent recoveries, if any, are credited to the allowance for credit losses. A provision for credit losses, which is a charge against earnings, is recorded to bring the allowance for credit losses to a level that, in management’s judgment, is adequate to absorb current expected losses in the loan portfolio. Management’s evaluation process used to determine the appropriateness of the allowance for credit losses is subject to the use of estimates, assumptions, and judgment. The evaluation process involves gathering and interpreting many qualitative and quantitative factors which could affect current expected credit losses. Because interpretation and analysis involves judgment, current economic or business conditions can change, and future events are inherently difficult to predict, the anticipated amount of estimated credit losses and therefore the appropriateness of the allowance for credit losses could change significantly.

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For additional information regarding the allowance for credit losses, see notes 1 and 4 of the notes to consolidated financial statements.

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Income Taxes. The assessment of income tax assets and liabilities involves the use of estimates, assumptions, interpretation, and judgment concerning certain accounting pronouncements and federal and state tax codes. There can be no assurance that future events, such as court decisions or positions of federal and state taxing authorities, will not differ from management’s current assessment, the impact of which could be significant to the results of operations and reported earnings.

Texas Community Bancshares files consolidated federal income tax returns with Broadstreet Bank. Amounts provided for income tax expense are based on income reported for financial statement purposes and do not necessarily represent amounts currently payable under tax laws. Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax law rates applicable to the periods in which the differences are expected to affect taxable income. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income tax expense. Valuation allowances are established when it is more likely than not that a portion of the full amount of the deferred tax asset will not be realized. In assessing the ability to realize deferred tax assets, management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies. We may also recognize a liability for unrecognized tax benefits from uncertain tax positions. Unrecognized tax benefits represent the differences between a tax position taken or expected to be taken in a tax return and the benefit recognized and measured in the consolidated financial statements. Penalties related to unrecognized tax benefits are classified as income tax expense.

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Selected Financial Data

The following selected consolidated financial data sets forth certain financial highlights of the Company and should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

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​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ At December 31, ​ At December 31,

Selected Financial Condition Data (Amounts in thousands): ​ ​ ​ ​ ​ ​

Cash and cash equivalents ​ ​ 6,450 ​ ​ 13,290

Interest bearing deposits in banks ​ 5,509 ​ 9,720

Bank owned life insurance ​ 6,544 ​ 6,370

Other real estate owned ​ 9,271 ​ 480

Restricted investments carried at cost ​ 2,773 ​ 3,715

Core deposit intangible ​ — ​ 132

Advances from the Federal Home Loan Bank ​ 45,669 ​ 49,878

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​ ​ For the Twelve Months Ended December 31,

Selected Operating Data (Amounts in thousands): ​ ​ ​ ​ ​ ​

Provision for credit losses ​ ​ 831 ​ 158

Net interest income after provision for credit losses ​ ​ 12,483 ​ 12,392

Noninterest income (loss) ​ ​ 3,079 ​ (1,903)

Income (Loss) before income taxes ​ ​ 3,364 ​ (1,781)

Income tax expense (benefit) ​ ​ 522 ​ (476)

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​ ​ ​ ​ ​ ​

​ ​ ​ ​ At or For the Years Ended

​ ​ December 31, ​

​ ​ ​ ​ ​

Performance Ratios: ​ ​ ​ ​

Return on average assets ​ 0.65 % (0.29) %

Return on average equity ​ 6.18 % (3.08) %

Interest rate spread (1) ​ 2.80 % 2.51 %

Net interest margin (2) ​ 3.26 % 2.98 %

Noninterest expense to average assets 2.77 % 2.73 %

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Capital Ratios: ​ ​ ​

Average equity to average assets 10.45 % 9.44 %

Total capital to risk-weighted assets 16.67 % 15.60 %

Tier 1 capital to risk-weighted assets 15.57 % 14.59 %

Common equity tier 1 capital to risk-weighted assets 15.57 % 14.59 %

Tier 1 capital to average assets 11.74 % 10.84 %

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Asset Quality Ratios: ​ ​ ​

Allowance for credit losses as a percentage of total loans 1.12 % 1.09 %

Nonaccrual loans as a percentage of total loans 0.66 % 0.72 %

Nonperforming loans as a percentage of total loans 0.70 % 0.76 %

Nonperforming loans as a percentage of total assets 0.50 % 0.51 %

Total nonperforming assets as a percentage of total assets 2.65 % 0.62 %

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Other Data: ​ ​ ​

Number of offices ​ 7 7 ​

Number of full-time employees ​ 61 60 ​

Number of part-time employees ​ 10 8 ​

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Comparison of Financial Condition at December 31, 2025 and December 31, 2024

Total Assets. Total assets were $429.8 million as of December 31, 2025, a decrease of $13.7 million, or 3.1%, when compared to total assets of $443.5 million as of December 31, 2024. The decrease was due primarily to a decrease in securities of $19.1 million, or 19.6%, to $78.2 million at December 31, 2025 from $97.3 million at December 31, 2024, a decrease in cash and equivalents of $6.8 million, or 51.1%, to $6.5 million at December 31, 2025 from $13.3 million at December 31, 2024, and a decrease in interest bearing deposits in banks of $4.2 million, or 43.3%, to $5.5 million at December 31, 2025 from $9.7 million at December 31, 2024 partially offset by an increase in net loans and leases of $9.5 million, or 3.2%, to $303.2 million at December 31, 2025 from $293.7 million at December 31, 2024, and an increase in other real estate owned of $8.8 million, or 1837.5% to $9.3 million at December 31, 2025 which consisted of a foreclosed multifamily property, two parcels of land received in lieu of foreclosure, and a building the Bank had purchased for expansion and had listed for sale. The decrease in securities included sales of securities for general liquidity purposes.

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Cash and Cash Equivalents. Total cash and cash equivalents (which includes fed funds sold) decreased $6.8 million, or 51.1%, to $6.5 million (including $2.6 million in Fed Funds sold) at December 31, 2025 from $13.3 million (including $9.3 million in Fed Funds sold) at December 31, 2024. These balances provided a favorable yield while maintaining adequate liquidity for strategic funding needs.

Interest Bearing Deposits in Banks. Interest bearing deposits in banks decreased $4.2 million, or 43.3%, to $5.5 million at December 31, 2025, from $9.7 million at December 31, 2024. The decrease was the result of general funding needs for loan growth, and the paydown of maturing FHLB Advances and brokered deposits, and a decrease in core deposits.

Securities Available for Sale. Securities available for sale decreased by $15.3 million, or 20.3%, to $59.9 million at December 31, 2025 from $75.2 million at December 31, 2024. The decrease in securities resulted primarily from sales of securities in 2025 for general liquidity purposes. During the year ended December 31, 2025, we had sales of securities of $23.8 million partially offset by strategic purchases of $23.7 million in securities with more attractive yields or overall terms and received paydowns and payoffs of $17.7 million. Additionally, we purchased $30.0 million in short-term US treasury securities as part of a tax management strategy. Unrealized losses on the available for sale portfolio decreased by $2.6 million, or 40.0%, to $3.9 million, from $6.5 million, due primarily to decreases in market interest rates. Gross unrealized losses on the available for sale portfolio consisting of 66 securities decreased from $6.5 million, or 8.0% of the portfolio’s amortized cost of $81.6 million at December 31, 2024, to $3.9 million, or 6.1% of the amortized cost of $63.8 million at December 31, 2025. These unrealized losses are due to increases in market interest rates since the time of purchase.

At December 31, 2025, the AFS portfolio was comprised of 59.7% collateralized mortgage obligations, 16.0% corporate bonds, 14.6% state and municipal securities, and 9.7% residential mortgage backed securities.

Securities Held to Maturity. Securities held to maturity decreased by $3.8 million, or 17.2%, to $18.3 million at December 31, 2025 from $22.1 million at December 31, 2024. This decrease is primarily due to principal repayments of $3.4 million and maturities of $365,000. At December 31, 2025, the portfolio was comprised of 88.1% residential mortgage backed securities, 6.6% state and municipal securities and 5.3% U.S. government and agency bonds.

Loans and Leases Receivable, Net. Net loans and leases receivable increased $9.5 million, or 3.2%, to $303.2 million at December 31, 2025 from $293.7 million at December 31, 2024. The increase in loans was primarily due to an increase in loans secured by farmland and commercial real estate, as well as municipal loans and commercial loans. Farmland loans increased $7.6 million, or 80.0%, from $9.5 million for the year ended December 31, 2024 to $17.1 million for the year ended December 31, 2025. Commercial real estate loans increased $5.4 million, or 9.6%, from $56.1 million for the year ended December 31, 2024 to $61.5 million for the year ended December 31, 2025. Municipal loans increased $5.6 million, or 60.2%, from $9.3 million for the year ended December 31, 2024 to $14.9 million for the year ended December 31, 2025. Commercial loans increased $2.5 million, or 39.7%, from $6.3 million for the year ended December 31, 2024 to $8.8 million for the year ended December 31, 2025. These increases were partially offset by a decrease in construction and land loans of $5.7 million, or 10.5% from $54.1 million for the year ended December 31, 2024 to $48.4 million for the year ended December 31, 2025 due to the foreclosure of a multifamily property in our primary market. 1-4 family residential and multifamily real estate loans decreased $4.8 million, or 3.1%, from $156.1 million for the year ended December 31, 2024 to $151.3 million for the year ended December 31, 2025. There was $86.8 million in loan originations partially offset by $44.3 million in payoffs and other principal reductions and $11.9 million in contractual repayments.

Loan portfolio diversification efforts continue in line with the Bank’s strategic plan to increase loans in the commercial real estate portfolio. Loans secured by residential and multifamily real estate decreased $4.8 million, or 3.1%, to $151.3 million, or 49.4% of the loan portfolio, at December 31, 2025, from $156.1 million, or 52.5% of total loans at December 31, 2024. Construction and land loans decreased $5.7 million, or 10.5%, to $48.4 million, or 15.8% of total loans at December 31, 2025, from $54.1 million, or 18.2% of total loans at December 31, 2024. Farmland loans increased $7.6 million, or 80.0%, to $17.1 million, or 5.6% of total loans at December 31, 2025, from $9.5 million, or 3.2% of total loans at December 31, 2024. Municipal loans increased $5.6 million, or 60.2%, to $14.9 million, or 4.8% of the loan portfolio at December 31, 2025, from $9.3 million, or 3.1% of total loans at December 31. 2024. Commercial

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loans increased $2.5 million, or 39.7%, to $8.8 million, or 2.8% of total loans at December 31, 2025, from $6.3 million, or 2.1% of total loans at December 31, 2024. Commercial real estate loans increased $5.4 million, or 9.6%, to $61.5 million, or 20.1% of total loans at December 31, 2025, from $56.1 million, or 18.9% of total loans at December 31, 2024.

At December 31, 2025, commercial real estate loans consisted of $26.9 million owner occupied and $34.6 million non-owner occupied real estate. At December 31, 2025, commercial real estate loans primarily include loans collateralized by gas stations with convenience stores ($16.7 million), self-storage facilities ($15.6 million), and commercial rental properties ($11.4 million). At December 31, 2025, $18.5 million in commercial real estate loans are outside of our primary market area.

During the year ended December 31, 2025, loan originations totaled $86.7 million of which $10.3 million were renewals or refinancings of existing loans with Broadstreet Bank (including interim construction loans converting to a permanent loan), resulting in net originations of $76.4 million. Originations consisted primarily of $11.4 million in one-to-four family residential mortgage loans, $2.1 million in multifamily loans, interim construction loans of $27.0 million (when fully funded upon completion), $18.9 million in commercial real estate loans, $2.2 million in consumer and other loans, $2.6 million in commercial and industrial loans, $6.9 million in land and development loans, $9.7 million in farmland loans and $5.9 million in municipal loans. Originated interim construction loans included $2.7 million in commercial construction, $19.1 million in residential construction loans, including 22 speculative residential loans of $10.4 million, and four infrastructure development loans totaling $5.2 million. During the year ended December 31, 2025, interim construction loans (when fully funded upon completion) decreased by $6.5 million, or 15.2%, to $36.0 million at December 31, 2025 from $42.5 million at December 31, 2024. The total interim construction loan portfolio consisted of 54 loans with funded balances of $23.9 million at December 31, 2025 compared to 55 loans at December 31, 2024 with funded balances of $33.1 million. Construction loans continue to be a large segment of our loan portfolio with the majority of the loans being originated in our primary market.

Other real estate owned. Other real estate owned increased $8.8 million, or 1,837.5%, to $9.3 million at December 31, 2025 from $480,000 at December 31, 2024. At December 31, 2024, there were two properties in other real estate owned that were properties the Bank had purchased for expansion and in 2024 decided to sell. One of these properties was sold in 2025 and one remains at a value of $167,000 at December 31, 2025. Four additional properties were added to other real estate owned. One of these was sold at a gain and three remain at December 31, 2025 including a residential development property in Dallas, Texas, with a carrying value of $1.3 million, a commercial development property in North Richland Hills, Texas, with a carrying value of $2.1 million, and a multi-family property in our primary service area with a carrying value of $5.7 million. We are actively marketing all four other real estate owned properties.

Deposits. Deposits decreased $7.9 million, or 2.4%, to $327.9 million at December 31, 2025 from $335.8 million at December 31, 2024. Core deposits (defined as all deposits other than certificates of deposit) decreased $11.8 million, or 5.7%, to $194.1 million at December 31, 2025 from $205.9 million at December 31, 2024. Retail certificates of deposit increased $5.1 million, or 4.8%, to $113.1 million at December 31, 2025 from $107.9 million at December 31, 2024. Brokered deposits decreased $4.0 million, or 18.2%, to $18.0 million at December 31, 2025, from $22.0 million at December 31, 2024. We have lowered rates on most interest-bearing deposit accounts but continue to match short-term CD rates as part of a retention effort due to a competitive deposit market. With the decline in deposit rates, we have seen a migration of deposits from non-maturity deposits into higher yielding CDs. The average cost of interest-bearing deposits has declined 13 basis points, or 4.9%, to 2.46% at December 31, 2025, compared to 2.59% at December 31, 2024. At December 31, 2025, there were 195 accounts with balances in excess of the $250,000 FDIC insurance limit with a total balance of $94.6 million, or 28.9% of deposits. The amount that was over $250,000 was $45.8 million, or 14.0%, that was potentially uninsured, including certificates of deposit of $13.6 million and $32.2 million in checking, MMDA and savings accounts.

Advances from the Federal Home Loan Bank. Advances from the Federal Home Loan Bank decreased by $4.2 million, or 8.4%, to $45.7 million at December 31, 2025 from $49.9 million at December 31, 2024 due to maturities and principal payments on amortizing advances.

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Shareholders’ Equity. Total shareholders’ equity increased $1.7 million, or 3.3%, to $53.8 million at December 31, 2025 from $52.1 million at December 31, 2024.This increase was primarily due to $2.8 million net income for the year ended December 31, 2025, a decrease in the other comprehensive loss of $1.7 million, $607,000 in expense related to the equity incentive plan for the year ended December 31, 2025, and an increase in equity of $253,000 for the 2025 funding of the Broadstreet Bank leveraged ESOP with the release of 15,472 ESOP shares to participants. At December 31, 2025, the unallocated ESOP contra equity account was $1.9 million. The Company also repurchased 196,968 shares of its common stock for a decrease of $3.2 million and paid quarterly dividends totaling $593,000.

At December 31, 2025, Broadstreet Bank opted to use the community bank leverage ratio framework (Tier 1 capital to average assets) for regulatory capital purposes. At December 31, 2025, a community bank leverage ratio of at least 9.0% is required to be considered “well capitalized” under regulatory requirements. At December 31, 2025, Broadstreet Bank’s community bank leverage ratio was 11.74%.

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Average Balance Sheets

The following tables set forth average balance sheets, average yields and costs, and certain other information at and 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. Nonaccrual loans are included in the computation of average balances. Average yields for loans include loan fees of $557,000 and $511,000 for the years ended December 31, 2025 and 2024, respectively. We have not recorded deferred loan fees, as we have determined them to be immaterial.

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ For the Year Ended December 31,

​ ​ Average ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​

​ ​ Outstanding ​ ​ ​ ​ Average ​ Outstanding ​ ​ ​ ​ Average ​

​ ​ (Dollars in thousands)

Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Allowance for credit losses ​ ​ (3,260) ​ ​ ​ ​ (3,044) ​ ​ ​ ​

Financial derivative ​ ​ 18 ​ ​ (10) ​ ​ ​ ​ 380 ​ ​ 450 ​ ​ ​

Noninterest-earning assets ​ ​ 31,765 ​ ​ ​ ​ 28,720 ​ ​ ​ ​

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Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Noninterest-bearing demand deposits ​ 50,640 ​ ​ ​ ​ 51,760 ​ ​ ​ ​

Other noninterest-bearing liabilities ​ 4,430 ​ ​ ​ ​ 4,641 ​ ​ ​ ​

Total shareholders' equity ​ 45,963 ​ ​ ​ ​ 42,413 ​ ​ ​ ​

Total liabilities and shareholders' equity ​ $ 439,826 ​ ​ ​ ​ $ 449,163 ​ ​ ​ ​

Net interest income ​ ​ ​ $ 13,314 ​ ​ ​ ​ $ 12,550 ​ ​

Net interest rate spread (1) ​ ​ ​ ​ ​ 2.80 % ​ ​ ​ 2.51 %

Net interest-earning assets (2) ​ $ 69,268 ​ ​ ​ ​ ​ $ 70,094 ​ ​ ​ ​

Net interest margin (3) ​ ​ ​ ​ ​ 3.26 % ​ ​ ​ 2.98 %

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Rate/Volume Analysis

The following tables present the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by current year volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior 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 the changes due to volume. There were no out-of-period items or adjustments required to be excluded from the table below.

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Increase (Decrease) Due to ​ Total Increase

​ ​ Volume ​ Rate ​ (Decrease)

​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) ​ ​ ​ ​ ​

Interest-earning assets: ​ ​ ​ ​ ​ ​

Restricted stock ​ (40) ​ (14) ​ (54)

Interest-bearing deposits in banks ​ (318) ​ (82) ​ (400)

Federal funds sold and other ​ (414) ​ (50) ​ (464)

Total change in interest-earning assets ​ (890) ​ 929 ​ 39

​ ​ ​ ​ ​ ​ ​ ​ ​

Interest-bearing liabilities: ​ ​ ​ ​ ​ ​

Interest-bearing demand deposits ​ (33) ​ (58) ​ (91)

Regular savings and other deposits ​ (9) ​ 37 ​ 28

Money market deposits ​ 23 ​ (275) ​ (252)

Advances from the Federal Home Loan Bank ​ (687) ​ 151 ​ (536)

Other interest-bearing liabilities ​ (7) ​ 6 ​ (1)

Total change in interest-bearing liabilities ​ (101) ​ (624) ​ (725)

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Change in net interest income ​ $ (789) ​ $ 1,553 ​ $ 764

​

Comparison of Operating Results for the Years Ended December 31, 2025 and December 31, 2024

Net Income. Net income was $2.8 million for the year ended December 31, 2025, compared to a net loss of $1.3 million for the year ended December 31, 2024, an increase of $4.1 million. This increase was primarily due to a $3.8 million loss on the sale of loans recorded in the year ended December 31, 2024 as part of a strategic repositioning of the balance sheet. Additionally, interest expense decreased $725,000, or 7.1%, to $9.2 million for the year ended December 31, 2025 from $9.9 million for the year ended December 31, 2024. This was partially offset by an increase in the provision for credit losses of $673,000, or 425.9%, to $831,000 for the year ended December 2025 from $158,000 for the year ended December 31, 2024, which was primarily related to a foreclosed multi-family property within our primary service area.

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Interest Income. Interest income was unchanged at $22.5 million for the years ended December 31, 2024 and 2025. This was primarily the result of increased interest income on loans resulting from an increase in the average balance and average yield for the year ended December 31, 2025. This was offset by decreased interest on securities resulting from a decrease in the average balance for the year ended December 31, 2025, as well as decreases in interest on deposits in banks and federal funds sold resulting from a decrease in average balances and average yield for the year ended December 31, 2025. Interest income on financial derivatives decreased following the termination of the remaining swap contracts in the first quarter of 2025. There was a decrease in average interest earning assets of $12.3 million, or 2.9%, to $408.1 million at December 31, 2025 from $420.4 million at December 31, 2024 which was offset by an increase of 17 basis points, or 3.2%, in average yield on interest–earning assets from 5.34% at December 31, 2024 to 5.51% at December 31, 2025.

Interest income on the securities portfolio decreased $341,000, or 7.6% to $4.1 million for the year ended December 31, 2025, from $4.5 million for the year ended December 31, 2024. This decrease is primarily due to a decrease in the average balance of securities of $13.1 million, or 11.8%, from $110.9 million, for the year ended December 31, 2024 to $97.8 million for the year ended December 31, 2025. The average yield on securities increased by 18 basis points, or 4.5%, from 4.03% for the year ended December 31, 2024 to 4.21% for the year ended December 31, 2025. The yield increase is reflective of changes in the securities portfolio due to maturities, principal payments, and strategic purchases and sales. In 2025, the Company sold 20 securities totaling $23.8 million at a gain of $117,000 and purchased 16 securities totaling $23.7 million as part of a balance sheet restructuring strategy to increase interest income and diversify the portfolio. The Company also purchased $30.0 million in short-term securities as part of a tax management strategy.

Interest income on net loans and leases increased $1.8 million, or 11.0%, to $17.7 million for the year ended December 31, 2025 from $15.9 million for the year ended December 31, 2024 primarily due to an increase of $15.4 million, or 5.4%, in the average balance of the loan portfolio from $282.9 million for the year ended December 31, 2024 to $298.3 million for the year ended December 31, 2025, and an increase of 30 basis points, or 5.3%, in the average yield on loans from 5.63% for the year ended December 31, 2024 to 5.93% for the year ended December 31, 2025. The increased yield on loans is primarily due to changes in market interest rates, higher loan rates and fees primarily from an increase in commercial real estate, and a decrease in residential real estate as part of the execution of a strategic restructuring of the loan portfolio in which $24.3 million in residential loans were sold and replaced with other higher-yielding loans in 2024.

Dividends on restricted investments including stock in the Federal Home Loan Bank and Texas Independent Bank (TIB) decreased $54,000, or 24.4%, from $221,000 for the year ended December 31, 2024 to $167,000 for the year ended December 31, 2025. This decrease resulted primarily from an decrease in average balance of $650,000, or 18.1%, from $3.6 million for the year ended December 31, 2024 to $2.9 million for the year ended December 31, 2025, and a decrease in yield of 48 basis points, or 7.8%, from 6.17% for the year ended December 31, 2024 to 5.69% for the year ended December 31, 2025.

Interest income from interest bearing deposits in banks decreased $400,000, or 55.3%, from $723,000 for the year ended December 31, 2024 to $323,000 for the year ended December 31, 2025, resulting primarily from a decrease in average yield of 111 basis points, or 20.3%, from 5.45% for the year ended December 31, 2024 to 4.34% for the year ended December 31, 2025 and a decrease in average interest bearing deposits of $5.9 million, or 44.4% from $13.3 million for the year ended December 31, 2024 to $7.4 million for the year ended December 31, 2025. There was also a decrease of $464,000 in fed funds interest income for the year ended December 31, 2025 primarily from a decrease of 105 basis points, or 19.6%, in average yield on fed funds sold from 5.38% for the year ended December 31, 2024 to 4.33% for the year ended December 31, 2025 and a $7.7 million, or 61.6%, decrease in average fed funds sold from $12.5 million for the year ended December 31, 2024 to $4.8 million for the year ended December 31, 2025. The decreases in interest bearing deposits in banks and fed funds are primarily the result of loan growth, paydown of FHLB advances and brokered deposits, and a decrease in core deposits. The decrease in yields on deposits in banks and fed funds is reflective of a decrease in market interest rates.

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The Company recorded a net interest expense from the fair value hedge of $10,000 for the year ended December 31, 2025 following termination of the remaining swap contracts in the first quarter. This is a decrease of $460,000, or 102.2% from interest income of $450,000 for the year ended December 31, 2024. The Company had entered into the interest rate swap agreement in 2023 to convert a portion of its interest rate exposure from fixed rates to floating rates to help manage the interest rate risk position. Refer to additional detail regarding the fair value hedge in Note 20 – Derivatives of the accompanying consolidated financial statements.

Interest Expense. Interest expense decreased $725,000, or 7.3%, to $9.2 million for the year ended December 31, 2025 from $9.9 million for the year ended December 31, 2024 due primarily to a decrease in the average balance of interest-bearing liabilities of $11.5 million, or 3.3%, from $350.3 million for the year ended December 31, 2024 to $338.8 million for the year ended December 31, 2025 and a decrease in the average cost of interest bearing liabilities of 12 basis points, or 4.2%, from 2.83% for the year ended December 31, 2024 to 2.71% for the year ended December 31, 2025 primarily due to an decrease in deposit costs. Interest expense on deposit accounts decreased $188,000, or 2.6%, to $7.1 million for the year ended December 31, 2025 from $7.3 million for the year ended December 31, 2024, due to a decrease in the average deposit cost of 13 basis points, or 4.9%, from 2.59% for the year ended December 31, 2024 to 2.46% for the year ended December 31, 2025 and partially offset by an increase in average interest-bearing deposits of $7.0 million, or 2.5%, from $281.4 million for the year ended December 31, 2024 to $288.4 million for the year ended December 31, 2025. The increase in average interest-bearing deposit balances were primarily in higher cost certificates of deposit accounts and partially offset by a decrease in lower cost interest-bearing demand and savings accounts. This shift to higher yielding accounts is due primarily to an increase in the average balance of brokered deposits. At December 31, 2025, market rates had leveled off some and the Bank’s deposit rates had decreased.

Interest expense on Federal Home Loan Bank advances decreased $536,000, or 20.6%, to $2.1 million for the year ended December 31, 2025 from $2.6 million for the year ended December 31, 2024. The average balance of Federal Home Loan Bank advances decreased by $18.0 million, or 26.4%, to $50.2 million for the year ended December 31, 2025 from $68.2 million for the year ended December 31, 2024. This was offset by an increase in average cost of 30 basis points, or 7.9%, from 3.81% for the year ended December 31, 2024 to 4.11% for the year ended December 31, 2025. The Company has paid down FHLB advances to $45.7 million at December 31, 2025.

Net Interest Income. Net interest income increased $764,000, or 6.1%, to $13.3 million for the year ended December 31, 2025 from $12.6 million for the year ended December 31, 2024, primarily due to an increase in net interest rate spread of 29 basis points, or 11.5%, from 2.51% for the year ended December 31, 2024 to 2.80% for the year ended December 31, 2025. Net interest margin increased 28 basis points to 3.26% for the year ended December 31, 2025 from 2.98% for the year ended December 31, 2024.

Provision for Credit Losses. Based on management’s analysis of the adequacy of the allowance for credit losses, the provision for credit losses was $831,000 for the year ended December 31, 2025, compared to $158,000 for the year ended December 31, 2024, an increase of $673,000, or 425.9%, primarily due to loan growth as well as provision expense recorded following the charge-off of a loan and subsequent foreclosure of a multi-family property.

​

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Noninterest Income. Noninterest income increased $5.0 million, or 263.2%, to $3.1 million for the year ended December 31, 2025 from a net loss of $1.9 million for the year ended December 31, 2024. This decrease is primarily due to a $3.8 million loss on the sale of residential loans as part of a strategic balance sheet repositioning executed during the year ended December 31, 2024, a $287,000 expense on the disposal of a fixed asset recorded in the year ended December 31, 2024, a $495,000 fair value adjustment on a commercial development property received in lieu of foreclosure, a $198,000 gain on other investment, and $230,000 in rental income on foreclosed properties recorded in the year ended December 31, 2025.

Noninterest Expense. Noninterest expense decreased $72,000, or 0.6%, to $12.2 million for the year ended December 31, 2025 from $12.3 million for the year ended December 31, 2024 primarily due to compensation and benefits paid to terminated employees in the year ended December 31, 2024, and partially offset by an increase in expense related to foreclosed properties in the year ended December 31, 2025.

Salary and employee benefit expenses decreased by $308,000, or 4.5%, to $6.5 million for the year ended December 31, 2025 from $6.8 million for the year ended December 31, 2024. This is due primarily to an extraordinary $129,000 initial vesting expense and nonrecurring expenses of $230,000 related to executive changes in 2024, and is partially offset by normal increases in wages, insurance costs and payroll taxes. Technology expense decreased $137,000, or 31.5%, to $298,000 for the year ended December 31, 2025 from $435,000 for the year ended December 31, 2024 due primarily to card processing fees incurred in the first half of 2024 associated with a “tap” debit card implementation project. Other expenses combined increased $361,000, or 15.1%, from $2.4 million for the year ended December 31, 2024 to $2.7 million for the year ended December 31, 2025 which included a $256,000 increase in expense related to foreclosed properties held in other real estate owned and a $119,000 increase in marketing expense due to contracting with an outside marketing firm and expanding our reach through additional advertising channels.

Income Tax Expense. Income tax expense increased by $998,000 to $522,000 for the year ended December 31, 2025 from a tax benefit of $476,000 for the year ended December 31, 2024 due primarily to the increase in the taxable income. The effective tax rate was 15.5% and 26.7% for the years ended December 31, 2025 and 2024, respectively. The decrease in the effective tax rate was due to the non-recurring loan sale and related loss for the year ended December 31, 2024, which was taxed at the marginal rate.

Management of Market Risk

General. Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. Our Asset/Liability Committee is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the policy and guidelines approved by our board of directors. We currently utilize a third-party modeling program, prepared on a quarterly basis, to evaluate our sensitivity to changing interest rates, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors.

We have sought to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates. We have implemented the following strategies to manage our interest rate risk:

● maintaining a high level of liquidity;

● growing our volume of core deposit accounts;

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● managing our borrowings from the Federal Home Loan Bank of Dallas;

● Derivatives.

By following these strategies, we believe that we are better positioned to react to increases and decreases in market interest rates.

Net Interest Income. We analyze our sensitivity to changes in interest rates through a net interest income model. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings. We estimate what our net interest income would be for a 12-month period. We then calculate what the net interest income would be for the same period under the assumptions that the United States Treasury yield curve increases or decreases instantaneously by various rate change scenarios ranging from 100 to 400 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the “Change in Interest Rates” column below.

The tables below set forth the calculation of the estimated changes in our net interest income that would result from the designated immediate changes in the United States Treasury yield curve. The changes indicated in the following table are within policy guidelines approved by our Board of Directors.

​

​ ​ ​ ​ ​ ​ ​

Change in Interest Rates ​ ​ ​ Net Interest Income Year ​ ​ ​ Year 1 Change from

(basis points) (1) ​ 1 Forecast ​ Level

(Dollars in thousands)

(1) Assumes an immediate uniform change in interest rates at all maturities.

The table above indicates that at December 31, 2025, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 3.49% increase in net interest income, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 0.93% decrease in net interest income.

Net Economic Value. We also compute amounts by which the net present value of our assets and liabilities (net economic value of equity or “EVE”) would change in the event of a range of assumed changes in market interest rates. This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value. The model estimates the economic value of each type of asset, liability and off-balance

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sheet contract under the assumptions that the United States Treasury yield curve increases or decreases instantaneously by rate change scenarios ranging from 100 to 400 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.

The tables below set forth the calculation of the estimated changes in our EVE that would result from the designated immediate changes in the United States Treasury yield curve.

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ EVE as a Percentage of

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Present Value of Assets (3)

​ ​ ​ ​ ​ Estimated Increase ​ ​ ​ Increase

Change in Interest ​ Estimated ​ (Decrease) in EVE ​ ​ ​ (Decrease)

(Dollars in thousands)

(1) Assumes an immediate uniform change in interest rates at all maturities.

(4) EVE Ratio represents EVE divided by the present value of assets.

The table above indicates that at December 31, 2025, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 0.98% decrease in EVE, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 7.03% decrease in EVE.

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. The net interest income and net economic value tables presented assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the tables provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates, and actual results may differ.

Liquidity and Capital Resources

Liquidity describes our ability to meet the 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 and loans. We are also able to borrow from the Federal Home Loan Bank of Dallas. At December 31, 2025, we had outstanding advances of $45.7 million from the Federal Home Loan Bank of Dallas. At December 31, 2025, we had unused borrowing capacity of $100.3 million with the Federal Home Loan Bank of Dallas. In addition, at December 31, 2025, we had two unused lines of credit for a total of $8.0 million, which included an unsecured $3.0 million line of credit with Texas Independent Bankers Bank and an unsecured $5.0 million line of credit with First Horizon Bank. At December 31, 2025, there was no outstanding balance with any of these facilities.

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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 cash equivalents and short-term investments including interest-bearing demand deposits. The levels of these assets depend on our operating, financing, lending, and investing activities during any given period.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. For additional information, see the consolidated statements of cash flows for the years ended December 31, 2025 and 2024 included as part of the consolidated financial statements appearing elsewhere in this annual report.

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.

Texas Community Bancshares, Inc. is a separate legal entity from Broadstreet Bank and it must provide for its own liquidity to pay any dividends to stockholders and for other financial purposes. Its primary source of income is dividends received from Broadstreet Bank. The amount of dividends that Broadstreet Bank may declare and pay to Texas Community Bancshares, Inc. is governed by applicable banking laws and regulations. At December 31, 2025, Texas Community Bancshares, Inc. (on a stand-alone unconsolidated basis) had liquid assets totaling $3.7 million.

Liquidity management and asset quality continue to be high priorities. With continued volatility in the market and market interest rate uncertainty, liquidity management and analysis is a key factor in daily asset and liability management and strategic planning. We are monitoring deposit balances daily. We run stress tests quarterly in multiple scenarios, which include deposit runoff combined with the inability to access our available lines of credit and a reduction in the availability of FHLB advances. The scenarios indicate that we are able to maintain our operational liquidity with a designated buffer with our liquidity resources available. We are closely monitoring our assets, liabilities, capital and investment portfolio unrealized losses for possible issues and opportunities related to the current economic and market conditions.

The Bank educates and assists large depositors on having FDIC coverage to the fullest legal extent, which is over $250,000 for many depositors depending on the type of account ownership. At December 31, 2025, there were 195 accounts with balances in excess of $250,000 with a total of $94.6 million, or 28.8% of deposits. The amount that was over $250,000 was $45.8 million, or 14.0%, that was potentially uninsured, including certificates of deposit of $13.6 million and $32.2 million in checking, MMDA and savings accounts.

At December 31, 2025, the weighted average life (WAL) of our securities portfolio is 4.9 years. The gross unrealized losses on the AFS securities is $3.9 million, or 6.1% of the $63.8 million AFS portfolio and 6.9% of capital. Unrealized losses on the HTM securities were $1.5 million, or 8.2% of the $18.3 million HTM portfolio and 2.6% of capital. The total gross unrealized losses are $5.4 million, or 6.6% of the $82.1 million securities portfolio and 9.5% of capital. The securities portfolio includes $31.8 million, or 38.8%, that are agency issued and guaranteed by the U.S. government. These losses are the result of market interest rate increases and we continue to monitor the portfolio for credit and other risks. The net unrealized loss on AFS securities, and the corresponding other comprehensive loss, net of tax, was $3.1 million, or 5.8% of capital. Over the next 24 months from December 31, 2025, we anticipate $38.9 million in incoming cash flow from the securities portfolio with $20.7 million in 2026 and 18.2 million in 2027. See the Securities section of the management discussion and analysis for more information.

During 2023, the Bank entered into interest rate swap agreements with a total notional amount of $25 million to hedge the risk of changes in the fair value of fixed rate AFS securities for changes in the SOFR benchmark rate. In the first quarter of 2025, the Bank terminated these swap agreements at a gain of $463,000, which will be recognized in income over the remaining life of the underlying securities.

Our asset quality remains strong. We are being cautiously optimistic with our lending and strategic decisions, staying focused on long-term goals and taking advantage of opportunities while being diligent about recognizing and mitigating risk. At December 31, 2025, our allowance for credit losses to total loans and leases was 1.12%. The Company continues to monitor rates and loan demand weekly and align pricing accordingly. Housing supply and

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demand are monitored for indicators of a significant change in the local housing markets. The Bank adjusts in-house mortgage rates based on market pricing while continuing to offer secondary market options to moderate loan funding and we have seen a moderate increase in mortgage demand due to relatively lower market interest rates. We are monitoring housing supply and demand, primarily in our Mineola, Lindale and Tyler markets where home sales and new home construction have been active, for indicators of a significant changes in the local housing markets. Construction and residential real estate loan balances have declined, but the overall loan growth has been driven by increases in commercial real estate, farmland, commercial and municipal loans.

At December 31, 2025 we have $2.7 million in internet deposit listing service CDs, and $18.0 million in callable brokered CDs, and have paid down $4.2 million in FHLB borrowings.

The following are the various liquidity sources we had available at December 31, 2025 that we could use as needed:

● FHLB borrowing capacity of $100.3 million

● $8 million in credit lines with 2 correspondent banks

● Federal Reserve discount window

● Qwickrate (listed) CD Program

● Brokered deposits

● The ability to sell securities.

● The ability to sell a portion of our BOLI assets

At December 31, 2025, Broadstreet Bank exceeded all of its regulatory capital requirements, and was categorized as well-capitalized at that date. Management is not aware of any conditions or events since the most recent notification of well-capitalized status that would change our category. See Note 18 of the notes to consolidated financial statements.

Off-Balance Sheet Arrangements

Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit, unused lines of credit and swap transactions. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans we make. At December 31, 2025, we had outstanding commitments to originate loans of $35.7 million. We anticipate that we will have sufficient funds available to meet our current lending commitments. Time deposits that are scheduled to mature in less than one year from December 31, 2025 totaled $102.6 million. Management expects that a substantial portion of these time deposits will be retained. However, if a substantial portion of these time deposits is not retained, we may utilize advances from the Federal Home Loan Bank of Dallas or other wholesale funding sources, or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.

Contractual Obligations. In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities.

Recent Accounting Pronouncements

For a discussion of the impact of recent accounting pronouncements, see Note 1 of the notes to our consolidated financial statements beginning on page F-1 of this annual report.

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Impact of Inflation and Changing Prices

The consolidated financial statements and related data have been prepared in accordance with U.S. GAAP, which requires the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates, generally, have a more significant impact on a financial institution’s performance than does inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

​

ITEM 7A.Quantitative and Qualitative Disclosures About Market Risk

The information regarding this Item is contained in Item 7 under the heading “Management of Market Risk.”

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ITEM 8.Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm (PCAOB ID 686)

Shareholders, Board of Directors and Audit Committee

Texas Community Bancshares, Inc. and Subsidiaries

Mineola, Texas

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial condition of Texas Community Bancshares, Inc. (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2020.

/s/ Forvis Mazars, LLP

Houston, Texas

March 25, 2026

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Texas Community Bancshares, Inc. and Subsidiaries

Consolidated Statements of Financial Condition

December 31, 2025 and 2024

(Amounts in thousands, except for share and per share data)

​

​

​

​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ December 31, ​ ​ ​ December 31,

Assets ​ ​ ​ ​ ​ ​

Cash and cash equivalents ​ ​ 6,450 ​ ​ 13,290

Interest bearing deposits in banks ​ ​ 5,509 ​ ​ 9,720

Securities available for sale ​ ​ 59,893 ​ ​ 75,189

Net investment in direct financing leases ​ ​ 1,219 ​ ​ 1,292

Accrued interest receivable ​ ​ 1,888 ​ ​ 1,919

Bank-owned life insurance ​ ​ 6,544 ​ ​ 6,370

Other real estate owned ​ ​ 9,271 ​ ​ 480

Restricted investments carried at cost ​ ​ 2,773 ​ ​ 3,715

Core deposit intangible ​ ​ — ​ ​ 132

Deferred income taxes ​ ​ 1,814 ​ ​ 2,688

Financial derivative ​ ​ — ​ ​ 419

Liabilities and Shareholders' Equity ​ ​ ​ ​ ​ ​

Liabilities ​ ​ ​ ​ ​ ​

Advances from Federal Home Loan Bank (FHLB) ​ ​ 45,669 ​ ​ 49,878

Accrued expenses and other liabilities ​ ​ 2,512 ​ ​ 5,643

Shareholders' Equity ​ ​ ​ ​ ​ ​

Accumulated other comprehensive loss ​ ​ (3,063) ​ ​ (4,766)

​

See Notes to Consolidated Financial Statements

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Texas Community Bancshares, Inc. and Subsidiaries

Consolidated Statements of Operations

Years Ended December 31, 2025 and 2024

(Amounts in thousands, except for share and per share data)

​

​

​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended

​ ​ December 31,

Interest Income ​

Debt securities ​ ​ ​ ​

Dividends on restricted investments ​ 167 ​ 221

Deposits with banks ​ 323 ​ 723

Financial derivative ​ (10) ​ 450

Interest Expense ​ ​ ​ ​ ​

Provision for Credit Losses - loans ​ ​ 736 ​ ​ 269

Provision for Credit Losses ​ 831 ​ 158

Net Interest Income After Provision for Credit Losses ​ 12,483 ​ 12,392

Noninterest Income ​ ​ ​ ​ ​

Service charges on deposit accounts ​ 729 ​ 687

Other service charges and fees ​ 1,154 ​ 1,244

Net gain on securities transactions ​ 117 ​ 190

Net loss on sale of loans ​ — ​ (3,850)

Net (loss) gain on sale of other real estate owned ​ (19) ​ 37

Fair value adjustments to other real estate owned ​ 495 ​ (78)

Net loss on premises and equipment ​ — ​ (287)

Net appreciation on bank-owned life insurance ​ 173 ​ 133

Gain on other investment ​ ​ 198 ​ ​ —

Total noninterest income (loss) ​ 3,079 ​ (1,903)

Noninterest Expenses ​ ​ ​ ​ ​

Salaries and employee benefits ​ 6,532 ​ 6,840

Occupancy and equipment expense ​ 1,098 ​ 1,103

Income (Loss) Before Income Taxes ​ 3,364 ​ (1,781)

Income Tax Expense (Benefit) ​ 522 ​ (476)

Earnings (Loss) per share - basic ​ ​ 1.04 ​ ​ (0.45)

Earnings (Loss) per share - diluted ​ ​ 1.00 ​ ​ (0.44)

Weighted-average shares outstanding - basic ​ ​ 2,727,212 ​ ​ 2,915,402

Weighted-average shares outstanding - diluted ​ ​ 2,855,459 ​ ​ 2,986,015

​

See Notes to Consolidated Financial Statements

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Consolidated Statements of Comprehensive Income (Loss)

Years Ended December 31, 2025 and 2024

(Amounts in thousands, except for share and per share data)

​

​

​

​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended

​ ​ December 31,

​ ​ ​ ​ ​ ​ ​

Other items of comprehensive income ​ ​ ​ ​ ​ ​

Debt Securities ​ ​ ​ ​ ​ ​

Total other items of comprehensive income, before tax ​ 2,155 ​ 1,045

​ ​ ​ ​ ​ ​ ​

Total other items of comprehensive income (loss), after tax ​ 1,703 ​ 826

​ ​ ​ ​ ​ ​ ​

Comprehensive Income (Loss) ​ $ 4,545 ​ $ (479)

​

See Notes to Consolidated Financial Statements

​

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Consolidated Statements of Shareholders’ Equity

Years Ended December 31, 2025 and 2024

(Amounts in thousands, except for share and per share data)

​

​

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ Unearned ​ ​ ​ Total

​ ​ Stock ​ Stock ​ Capital ​ Earnings ​ Loss ​ Shares ​ Stock ​ Equity

Net income ​ — ​ — ​ — ​ 2,842 ​ — ​ — ​ — ​ 2,842

Other comprehensive income, net of tax ​ — ​ — ​ — ​ — ​ 1,703 ​ — ​ — ​ 1,703

Cash dividend declared ($0.20 per share) ​ — ​ — ​ — ​ (593) ​ — ​ — ​ — ​ (593)

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net loss ​ — ​ — ​ — ​ (1,305) ​ — ​ — ​ — ​ (1,305)

Other comprehensive income, net of tax ​ — ​ — ​ — ​ — ​ 826 ​ — ​ — ​ 826

​

See Notes to Consolidated Financial Statements

​

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Consolidated Statements of Cash Flows

Years Ended December 31, 2025 and 2024

(Amounts in thousands, except for share and per share data)

​

​

​

​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended

​ ​ December 31,

Operating Activities ​ ​ ​ ​

Provision for credit losses - loans ​ ​ 736 ​ ​ 269

Net (accretion) amortization of securities ​ (149) ​ 74

Depreciation and amortization ​ 593 ​ 572

Net realized gain on sales of securities available for sale ​ (117) ​ (190)

Net unrealized gain on discontinued financial derivative ​ ​ 463 ​ ​ —

Stock dividends on restricted investments ​ ​ (155) ​ ​ (211)

Net increase on other investment ​ ​ (157) ​ ​ —

Loss on sale of loans ​ ​ — ​ ​ 3,850

Loss on disposal of fixed assets ​ — ​ 287

Appreciation on bank-owned life insurance ​ (173) ​ (133)

ESOP compensation expense for allocated shares ​ ​ 253 ​ ​ 223

Loss (gain) on sale other real estate owned ​ ​ 19 ​ ​ (37)

Fair value adjustment on other real estate owned ​ ​ (495) ​ ​ 78

Stock-based compensation ​ 607 ​ 757

Deferred income tax expense (benefit) ​ 405 ​ (476)

Loss on fair value adjustment of fair value hedges ​ 10 ​ (6)

Net change in ​ ​ ​ ​

Accrued interest receivable ​ 31 ​ (191)

Accrued expenses and other liabilities ​ (3,212) ​ (785)

Net Cash from Operating Activities ​ 1,367 ​ 1,941

Investing Activities ​ ​ ​ ​

Net change in interest bearing deposits in banks ​ 4,211 ​ 2,578

Activity in available for sale securities ​ ​ ​ ​ ​ ​

Maturities, prepayments and calls ​ ​ 47,683 ​ ​ 18,384

Activity in held to maturity securities ​ ​ ​ ​

Maturities, prepayments and calls ​ 3,724 ​ 3,801

Redemptions of restricted investments ​ 1,096 ​ —

Purchases of other investment ​ (169) ​ (132)

Loan originations and principal collections, net ​ (19,189) ​ ​ (37,139)

Proceeds from sales of other real estate owned ​ 568 ​ 56

Additions of premises and equipment ​ (394) ​ (1,201)

Net Cash from Investing Activities ​ 7,682 ​ 8,802

Financing Activities ​ ​ ​ ​

Net (decrease) increase in deposits ​ (7,924) ​ 18,587

Advances from FHLB and other borrowings ​ 16,052 ​ 5,052

Payments on FHLB and other borrowings ​ (20,261) ​ (32,070)

Cash dividends declared and paid ​ (593) ​ (504)

Purchases of treasury stock ​ (3,163) ​ (1,578)

Net Cash used for Financing Activities ​ (15,889) ​ (10,513)

Net Change in Cash and Cash Equivalents ​ (6,840) ​ 230

Cash and Cash Equivalents at Beginning of Period ​ 13,290 ​ 13,060

Cash and Cash Equivalents at End of Period ​ $ 6,450 ​ $ 13,290

​

See Notes to Consolidated Financial Statements

​

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Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

(Amounts in thousands, except for share and per share data)

​

Note 1 - Summary of Significant Accounting Policies

General

Texas Community Bancshares, Inc. (the “Company”), a Maryland corporation and registered bank holding company, was incorporated on March 5, 2021, and became the holding company for Broadstreet Bank, SSB (the “Bank”), formerly known as Mineola Community Bank, SSB prior to December 4, 2023, as part of the mutual to stock conversion of the former Mineola Community Mutual Holding Company (“MHC”), which was completed on July 14, 2021. The Company’s shares trade on the NASDAQ under the symbol TCBS. Voting rights in the Company are held and exercised exclusively by the shareholders of the Company.

​

The Company’s primary source of revenue is providing loans and banking services to consumers and commercial customers in Mineola, Texas, and the surrounding area and the Dallas Fort Worth Metroplex. The accounting and reporting policies of the Company conform with accounting principles generally accepted in the United States of America (GAAP) and to general practices of the banking industry.

​

Policies and practices which materially affect the determination of financial position, results of operations and cash flows are summarized as follows:

​

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which include Broadstreet Bank, SSB and its wholly-owned subsidiary Mineola Financial Service Corporation, which is not actively being utilized. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

In preparing consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses.

Significant Group Concentration of Credit Risk

Most of the Company’s activities are with customers located within the Wood, Smith, and Van Zandt County areas and the Dallas Fort Worth Metroplex. Note 3 discusses the types of securities in which the Company invests. Note 4 discusses the types of lending in which the Company engages. Approximately 91% and 93% of the loan balance at December 31, 2025 and 2024, respectively, is secured by real estate. The Company does not have any other significant concentrations to any one industry or customer.

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740). This update requires public business entities to annually disclose specific categories within the income tax rate reconciliation and provide additional information for reconciling items that meet a certain quantitative threshold. Additionally, the amendments in this update require entities to disclose certain information about income taxes paid, income tax disaggregation, disclosures around unrecognized tax benefits, and the removal of disclosures related to temporary differences surrounding deferred tax liabilities to enhance the transparency and decision usefulness of income tax disclosures. This update is effective for

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Notes to Consolidated Financial Statements

December 31, 2025 and 2024

(Amounts in thousands, except for share and per share data)

​

fiscal years beginning after December 15, 2024, and early adoption is permitted. The Company adopted this update prospectively as of January 1, 2025 (see Note 10).

​

Previously Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which expands reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. The amendments in this update introduce a new requirement to disclose significant segment expenses regularly provided to the chief operating decision maker, extend certain annual disclosures to interim periods, clarify that single reportable segment entities must apply Topic 280 in its entirety, permit more than one measure of segment profit or loss to be reported under certain conditions and require disclosure of the title and position of the chief operating decision maker. ASU 2023-07 is effective for public business entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company has evaluated the impact of adopting ASU 2023-07 and concluded the impact to be immaterial on its consolidated financial position, results of operations, or disclosures. See Note 1 for the corresponding segments disclosure.

​

Accounting Pronouncements Not Yet Adopted

​

In December 2025, the FASB issued Accounting Standards Update ("ASU") 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which amends ASC Topic 270 to improve the organization and navigability of interim reporting guidance and to clarify when the guidance applies. The ASU compiles existing interim disclosure requirements from across the Codification into Topic 270 and introduces a disclosure principle requiring entities to disclose events that occur after the end of the most recent annual reporting period that have a material effect on the entity. The amendments are not intended to change the fundamental nature of interim reporting or significantly expand or reduce existing interim disclosure requirements.

​

For public business entities, the amendments are effective for interim reporting periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied prospectively or retrospectively. The Company is currently evaluating the impact of this ASU on its interim financial statement disclosures and does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

​

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income— Expense Disaggregation Disclosures (Subtopic 220-40), which requires public business entities to provideenhanced disclosures in the notes to the financial statements regarding the disaggregation of certain incomestatement expense captions into specified natural expense categories, including, but not limited to, employeecompensation, depreciation, and amortization. The ASU does not change the expense captions presented on theface of the income statement.

​

For public business entities, the amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently assessing the impact of this ASU on its financial statement disclosures and related reporting processes. Adoption of this guidance is expected to primarily affect the Company’s disclosure requirements and is not expected to have a material impact on its consolidated financial statements.

​

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash, balances due from banks and federal funds sold, all of which mature within ninety days.

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Notes to Consolidated Financial Statements

December 31, 2025 and 2024

(Amounts in thousands, except for share and per share data)

​

Balances in transaction accounts at other financial institutions may exceed amounts covered by federal deposit insurance. Management regularly evaluates the credit risk associated with other financial institutions and believes that the Company is not exposed to any significant credit risks on cash and cash equivalents. At December 31, 2025 and 2024, the Company had $5,209 and $9,421, respectively, that exceeded amounts covered by federal deposit insurance.

Interest Bearing Deposits in Banks

Interest bearing deposits in banks mature within three to six months and are carried at cost.

Debt Securities

Debt securities that management has the positive intent and ability to hold to maturity are classified as “held to maturity” and recorded at amortized cost. Debt securities not classified as held to maturity are classified as “available for sale” and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss).

Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities.

Held to Maturity Securities

​

The Company evaluates all securities quarterly to determine if any securities in a loss position require a provision for credit losses in accordance with ASC 326. The Company first assesses whether it intends to sell or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through net income. For securities that do not meet this criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors.

​

In making this assessment, the Company considers the extent to which fair value is less than amortized cost, changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income (loss). Changes in the allowance for credit losses are recorded as provision for or (reduction of) provision for credit losses.

​

Losses are charged against the allowance when management believes the uncollectability of a security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

​

For the year ended December 31, 2025 and 2024, the Company determined no provision for credit losses on securities was necessary.

​

Restricted Investments Carried at Cost

The Company’s primary restricted investment is Federal Home Loan Bank stock carried at cost ($100 per share par value), which approximates its fair value. As a member of the FHLB system, the Company is required to maintain a minimum level of investment in FHLB stock based on specific percentages of its outstanding FHLB advances. The Company may request redemption at par value of any stock in excess of the amount it is required to hold. Stock

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Notes to Consolidated Financial Statements

December 31, 2025 and 2024

(Amounts in thousands, except for share and per share data)