Executive Summary

Q2 2025 net income rose 50.4% year over year to $2.5M ($0.11 EPS), driven by loan growth and a 45 bps expansion in net interest margin to 3.86% .
Efficiency improved to 67.70% vs. 71.96% in Q2 2024; ROA and ROE increased to 1.15% and 13.91%, respectively .
Loans grew to $695.8M and deposits to $781.9M as of June 30, 2025; the Bank remains well-capitalized with a 10.74% leverage ratio .
Management highlighted early success at the new Wytheville loan production office and the upcoming Jack Henry core conversion—potential short-term cost headwinds but expected operational efficiencies longer term .

What Went Well and What Went Wrong

Net interest income increased 17.9% YoY to $8.214M as asset yields outpaced funding costs, lifting NIM to 3.86% .
Deposit mix optimization (time and money market additions, lower-cost brokered time deposits) reduced the cost of interest-bearing deposits vs. prior year and supported loan funding needs .
CEO commentary: “Our team has done an outstanding job growing both loans and deposits while continuing to focus on expanding our net interest margin…. early success of our new loan production office in Wytheville…” .

Noninterest income declined modestly (-3.8% YoY) on lower service charges and the absence of prior-year gains on premises/equipment sales .
Classified loans increased to $5.7M (substandard or below), reflecting two relationships downgraded in H1 2025; management is working to remediate covenant issues on a $2.2M exposure .
Management expects additional expenses tied to the 2025 core conversion (overtime, installation, testing, training) in the remainder of the year, a near-term cost headwind .

Metric	Q2 2024	Q2 2025
EPS ($)	$0.07	$0.11
Net Income ($USD Millions)	$1.684	$2.532
Total Interest & Dividend Income ($USD Millions)	$11.011	$11.958
Net Interest Income ($USD Millions)	$6.970	$8.214
Net Interest Margin (%)	3.41%	3.86%
Efficiency Ratio (%)	71.96%	67.70%

Metric	Q1 2025	Q2 2025
EPS ($)	$0.08	$0.11
Net Income ($USD Millions)	$1.908	$2.532
Total Interest & Dividend Income ($USD Millions)	$11.351	$11.958
Net Interest Margin (%)	3.69%	3.86%

KPI	Dec 31, 2024	Jun 30, 2025
Loans ($USD Millions)	$657.536	$695.815
Deposits ($USD Millions)	$749.982	$781.909
Nonaccrual Loans ($USD Millions)	$3.273	$3.488
Allowance for Credit Losses ($USD Millions)	$7.684	$7.948
Leverage Ratio (%)	10.70%	10.74%

Metric	Period	Previous Guidance	Current Guidance	Change
Core conversion (Jack Henry) costs	H2 2025	Not provided	Management expects additional expenses for overtime, installation, testing, training in 2025	Maintained qualitative; near-term cost headwind
Effective Tax Rate	Q2 2025	Not provided	22.88% actual in Q2 2025 (context for modeling)	New actual; no formal guidance
Dividend per share	FY 2025 (Q1 action)	$0.07 in 2024	$0.08 declared, paid Mar 31, 2025	Raised

Note: No formal revenue/EPS guidance was provided in the press release or 10-Q -.

(No Q2 2025 earnings call transcript was located) [ListDocuments returned none; 0 documents].

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Core system conversion / Digital banking	Q4 2024: Terminated legacy core; conversion planned in Q4 2025	Team focused on Jack Henry conversion; expects added costs in 2025, aiming for customer experience and efficiency gains	Ongoing execution (near-term cost; long-term efficiency)
Deposit strategy & funding costs	Q1 2025: NIM improved to 3.69% on asset/deposit growth	Mix shift (brokered time deposits, money market) supported liquidity and lowered cost of interest-bearing deposits vs. prior year	Improving funding mix; cost easing vs. FY24
Loan growth / LPO expansion	Q1 2025: Loans up to $670.7M	Loans $695.8M; Wytheville LPO originated >$10M	Accelerating
Credit quality	Q4 2024: Nonaccruals and past dues elevated; hurricane/flood deferrals	Nonaccruals ~0.50% of loans; classified loans rose to $5.7M; past dues fell to $4.4M; ACL 1.14%	Mixed (some downgrades; overall manageable)
Capital & dividends	Q4 2024: Well-capitalized; leverage 10.70%	Leverage 10.74%; $0.08 dividend paid; buybacks continued	Solid capital; shareholder returns steady
Regulatory/tax context	—	“One Big Beautiful Bill Act” enacted; assessment of impacts pending final regs	Monitoring policy changes

“We are very pleased with our second quarter results… Our team has done an outstanding job growing both loans and deposits while continuing to focus on expanding our net interest margin… early success of our new loan production office in Wytheville, which has already originated over $10 million… We are focused on our conversion to Jack Henry… so our customers can have a friendlier digital experience and the bank can gain operational efficiencies.” — J.W. Kiser, President & CEO .
Returns improved: ROA 1.15%, ROE 13.91% for Q2 2025; efficiency ratio decreased to 67.70% .

No Q2 2025 earnings call transcript was available; key themes derived from the press release and 10-Q MD&A [ListDocuments: 0 transcripts] -.

Wall Street consensus (S&P Global) for EPS and revenue was not available for Q2 2025 (no consensus entries retrieved).
S&P Global actual revenue for Q2 2025 recorded at $10.496M*; company-reported total interest & dividend income was $11.958M (different definitions) .
EPS actual: $0.11 (company-reported); consensus EPS unavailable .

Metric	Q2 2025 Consensus	Q2 2025 Actual
EPS ($)	N/A	$0.11
Revenue ($USD Millions)	N/A	$10.496*

Values with asterisk retrieved from S&P Global. Definitions may differ from company “Total interest & dividend income” [GetEstimates].

Core banking fundamentals strengthened: NIM expansion, higher net interest income, and improved efficiency ratio—supporting earnings quality despite modest noninterest income softness .
Balance sheet growth is broad-based (commercial/residential real estate, consumer), with deposits aligned to fund growth and ease funding costs; model slightly lower deposit beta into H2 .
Credit remains manageable: nonaccruals ~0.50% of loans and ACL at 1.14%; watch two downgraded relationships and the agriculture/consumer charge-off cadence for any spillover .
Near-term margin tailwinds from trust preferred principal reductions and lower borrowings could persist; factor in temporary OpEx related to the Jack Henry conversion in H2 .
Shareholder returns continued (dividend raised to $0.08, buybacks ongoing); capital levels remain solid, enabling growth and return flexibility .
With limited formal guidance and sparse sell-side coverage, price action likely keys off quarterly NIM/loan growth cadence and credit updates; Wytheville LPO traction is a tangible growth catalyst .
Policy/tax changes are on watch; management will assess impacts after final regulations—low immediate risk, but monitor effective tax rate variability into 2026 .

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