UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the Fiscal Year Ended December 31, ~~2024~~2025

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

For the transition period from _____________ to _______________

Commission File Number: 001-40610

Texas Community Bancshares, Inc.

(Exact Name of Registrant as Specified in its Charter)

Maryland		86-2760335
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

215 West Broad Street, Mineola, Texas		75773
(Address of principal executive offices)		(Zip code)

(903) 569-2602

(Registrant’s telephone number, including area code)

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

Common stock, par value $0.01 per share		TCBS		The Nasdaq Stock Market LLC
Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ◻ No ⌧

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ◻ No ⌧

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐Accelerated filer ☐Non-accelerated filer ☒Smaller reporting company ☒

Emerging growth company ☒

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by a check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 30, ~~2024~~2025, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $3336,~~071~~371,~~891~~226.

As of March 25, ~~2025~~2026, 32,~~061~~885,~~652~~392 shares of the registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Definitive Proxy Statement for the ~~2025~~2026 Annual Meeting of Stockholders are incorporated by reference into Part III of this annual report.

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TABLE OF CONTENTS

		PAGE NO.
PART I		4
ITEM 1.	Business	4
ITEM 1A.	Risk Factors	2930
ITEM 1B.	Unresolved Staff Comments	2930
ITEM 1C.	Cybersecurity	30
ITEM 2.	Properties	3132
ITEM 3.	Legal Proceedings	3132
ITEM 4.	Mine Safety Disclosures	3132
PART II		3233
ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	3233
ITEM 6.	[Reserved]	3233
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3233
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	4951
ITEM 8.	Financial Statements and Supplementary Data	5052
ITEM 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	~~100~~102
ITEM 9A.	Controls and Procedures	~~100~~102
ITEM 9B.	Other Information	~~101~~103
ITEM 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	~~101~~103
PART III		~~101~~103
ITEM 10.	Directors, Executive Officers and Corporate Governance	~~101~~103
ITEM 11.	Executive Compensation	~~101~~103
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~101~~103
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence	~~102~~104
ITEM 14.	Principal Accountant Fees and Services	~~102~~104
PART IV		~~103~~105
ITEM 15.	Exhibits and Financial Statement Schedules	~~103~~105
ITEM 16.	Form 10-K Summary	~~103~~105
SIGNATURES		~~104~~106

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PART I

ITEM 1.Business

Forward Looking Statements

This annual report contains forward-looking statements, which can be identified by the use of words such as such “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect,” “will,” “would,” “should,” “could” or “may,” and words of similar meaning. These forward-looking statements include, but are not limited to:

●

statements of our goals, intentions and expectations;

●

statements regarding our business plans, prospects, growth and operating strategies;

●

statements regarding the quality of our loan and investment portfolios; and

●

estimates of our risks and future costs and benefits.

These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Accordingly, you should not place undue reliance on such statements. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this annual report.

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

●

general economic conditions, either nationally or in our market areas, that are worse than expected;

●

changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses;

●

our ability to access cost-effective funding;

●

fluctuations in real estate values and both residential and commercial real estate market conditions;

●

demand for loans and deposits in our market area;

●

our ability to implement and change our business strategies;

●

competition among depository and other financial institutions;

●

inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of financial instruments, including our mortgage servicing rights asset, or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make;

●

adverse changes in the securities or secondary mortgage markets;

●

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, capital requirements and insurance premiums;

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●

changes in the quality or composition of our loan or investment portfolios;

●

technological changes that may be more difficult or expensive than expected;

●

the inability of third-party providers to perform as expected;

●

a failure or breach of our operational or security systems or infrastructure, including cyberattacks;

●

our ability to manage market risk, credit risk and operational risk;

●

our ability to enter new markets successfully and capitalize on growth opportunities;

●

changes in consumer spending, borrowing and savings habits;

●

changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;

●

our ability to retain key employees; and

●

changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

Texas Community Bancshares, Inc.

Texas Community Bancshares, Inc. (“Texas Community Bancshares,” the “Company” or “we”) was incorporated in March 2021 to become the holding company for Broadstreet Bank, SSB (“Broadstreet Bank” or the “Bank”) upon the conversion of Mineola Community Mutual Holding Company from a mutual holding company to a stock holding company (the “Conversion”). The Conversion was completed on July 14, 2021. In connection with the Conversion, the Company issued 3,257,759 shares of common stock at a price of $10.00 per share.

The Company conducts its operations primarily through its wholly owned subsidiary, Broadstreet Bank, a Texas-chartered savings bank. At December 31, ~~2024~~2025, the Company had total consolidated assets of $~~443~~429,~~457~~842,000, net loans and leases of $~~293~~303,~~708~~205,000, deposits of $~~335~~327,~~828~~904,000 and stockholders’ equity of $5253,~~108~~757,000.

Our executive offices are located at 215 West Broad Street, Mineola, Texas 75773 and our telephone number is (903) 569-2602. Our website address is www.broadstreet.bank. Information on our website is not and should not be considered a part of this annual report. The Company is a registered bank holding company subject to comprehensive regulation and examination by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) and by the Texas Department of Savings and Mortgage Lending.

Broadstreet Bank, SSB

~~Formerly named Mineola Community Bank, S.S.B.,~~ Broadstreet Bank, SSB is a Texas-chartered savings bank headquartered in Mineola, Texas. ~~On December 4, 2023, the name of the Bank changed from Mineola Community Bank to Broadstreet Bank to be more inclusive of all of the communities we serve.~~ 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, municipality loans, and, to a lesser extent, commercial loans, and consumer and other loans. The majority of Broadstreet Bank’s loans are currently fixed-rate loans, however the Bank’s ispricing ~~originating~~and ~~more~~terms for commercial loans have changed to adjustable rates or maximum fixed-rate of 5-years to diversify our loan portfolio and decrease risk associated with fluctuations in market rates. We also invest in securities,

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~~commercial loans with adjustable rates to diversify our loan portfolio and decrease risk associated with fluctuations in market 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, money market 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.

Market Area

We consider ~~Franklin County, Hopkins County, Smith County, Van Zandt County and Wood County, and contiguous areas, as~~ our primary market area, for originating loans and gathering deposits., ~~Our~~the counties in which our main office and six branch offices are located, inwhich ~~these~~include, ~~counties~~Franklin ~~including~~County, ~~the~~Hopkins ~~Tyler~~County, ~~Texas branch in~~ Smith County, ~~which~~Van ~~opened~~Zandt inCounty ~~the~~and ~~first~~Wood ~~quarter~~County, ofand ~~2024~~contiguous areas. Our branch office in Winnsboro, Texas, is in Wood County, but the Winnsboro city limits also lie within Franklin County and Hopkins County.

Mineola, Texas, located in Wood County, is approximately 80 miles east of Dallas, Texas, and approximately 35 miles north of Tyler, Texas, two notable population centers. Our Edgewood branch office, located in Van Zandt County, is approximately 50 miles east of Dallas and our Lindale branch office, located in Smith County, is approximately 20 miles north of Tyler. The Tyler metropolitan area is a growing regional economic center with a large, diversified employment base spread across varied economic sectors. Tyler Junior College and The University of Texas at Tyler are located in Tyler.

Mineola has become an attractive, lower-cost of living, retirement area for residents of the Dallas area. There are major hospitals and other healthcare facilities located in Tyler and numerous recreational facilities located in the vicinity of Mineola including well-known bass fishing lakes, golf courses, and other recreational facilities, all of which have contributed to the influx of population. The remote work and hybrid work trend has also contributed to the area’s population growth by allowing workers to live further from their place of employment. Lindale has become a fast growing community due to the success of the school district, economic development and its proximity to Tyler and Interstate 20.

Major employers in our primary market area include Morton Salt Company (which operates a salt mine in Grand Saline, TX), Sanderson Farms, Inc. (which operates a poultry feed mill in Mineola and an additional facility in Lindale), Target (which has a distribution center in Lindale), local school districts, local governments, Walmart, Inc., Exxon Mobil Corporation, hospitals and other facilities, and numerous small manufacturing firms. Although there is some oil exploration business in Wood County, the economy of the primary market area is not heavily dependent on it.

Competition

We face intense competition within our local market area both in making loans and attracting deposits. Our market area has a high concentration of financial institutions that include money center banks, regional banks, community banks, and credit unions. We compete for loans with banks, savings institutions, mortgage brokers, consumer finance companies and credit unions. We compete for deposits with banks, savings institutions, credit unions, money market funds, brokerage firms, mutual funds and insurance companies. As of June 30, ~~2024~~2025 (the most recent date for which data is available), our deposit market share in Smith County was 0.2733% (19th among 2627 Federal Deposit Insurance Corporation-insured institutions with offices in the county), 8.9052% in Van Zandt County (6th among 8 Federal Deposit Insurance Corporation-insured institutions with offices in the county) and 19.9478% in Wood County (3rd among 7 Federal Deposit Insurance Corporation-insured institutions with offices in the county). These are the counties in which our offices are located.

Lending Activities

General. Our historical lending activity consists primarily of originating one-to four-family residential mortgage loans, commercial real estate loans, and construction and land loans. To a substantially lesser extent,

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~~Lending~~we originate ~~Activities~~agricultural loans, commercial loans, loans to municipalities, and consumer and other loans. While the majority of the Company’s loan portfolio is comprised of fixed rate loans, we have updated our commercial lending pricing and terms to adjustable rates or maximum fixed-rates of 5-years.

~~General~~Loan Portfolio Composition. ~~Our~~The ~~historical~~following ~~lending~~table ~~activity~~sets ~~consists~~forth ~~primarily~~the composition of ~~originating~~our ~~one-to~~loan ~~four-family~~portfolio ~~residential~~by ~~mortgage~~type ~~loans,~~of ~~commercial~~loan ~~real~~at ~~estate~~the ~~loans,~~dates ~~and~~indicated. ~~construction~~In ~~and~~addition ~~land~~to the loans. Todisclosed ain ~~substantially~~the ~~lesser~~table ~~extent~~below, we ~~originate~~ ~~agricultural~~had loans, ~~commercial~~in ~~loans~~process, ~~loans~~with toscheduled ~~municipalities~~closings, ~~and~~of ~~consumer~~$15.6 million and ~~other loans~~$6.2 ~~While~~million ~~the~~at ~~majority~~December of31, ~~the~~2025 ~~Company’s~~and ~~loan~~December ~~portfolio~~31, is2024, ~~comprised~~respectively. ofWe ~~fixed~~had ~~rate~~no loans, weheld ~~have~~for ~~updated~~sale ~~our~~at ~~commercial~~December ~~lending~~31, ~~terms~~2025 and ~~are~~December ~~originating~~31, ~~more~~2024, ~~commercial loans with adjustable rates~~respectively.

Loan Portfolio Composition. The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated. In addition to the loans disclosed in the table below, we had loans in process, with scheduled closings, of $6.2 million and $22.9 million at December 31, 2024 and December 31, 2023, respectively. We had no loans held for sale at December 31, 2024 and December 31, 2023, respectively.


	At December 31,
	~~2024~~2025				~~2023~~2024
	Amount		Percent		Amount		Percent
	(Dollars in thousands)
Real estate loans:
1-4 family residential	$	~~145~~140,~~587~~383	4945.08	%	$	~~172~~145,~~205~~587	6049.80	%
Multi-family		10,~~481~~943	3.56			910,~~259~~481	3.35
Construction & land		5448,~~136~~372	1815.28			3754,~~526~~136	1318.32
Commercial		5661,~~068~~526	1820.91			4156,~~788~~068	1418.89
Farmland		917,~~540~~085	35.26			89,~~317~~540	23.92
Agriculture loans		5533	0.0			~~150~~55	0.10
Commercial loans		68,~~315~~813	2.18			6,~~900~~315	2.41
Municipalities		914,~~253~~890	34.18			29,~~173~~253	03.81
Consumer and other		54,~~495~~600	1.95			45,~~710~~495	1.79
Total loans		~~296~~306,~~930~~645	100.0	%		~~283~~296,~~028~~930	100.000	%
Less:
Allowance for losses		3,~~222~~440				3,~~096~~222
Total loans and leases, net	$	~~293~~303,~~708~~205			$	~~279~~293,~~932~~708

Contractual Maturities. The following tables set forth the contractual maturities of our total loan portfolio at December 31, ~~2024~~2025. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. Because the tables present contractual maturities and do not reflect repricing or the effect of prepayments, actual maturities may differ.

One- to

Four-Family

Residential

Multi-Family

Construction

Commercial

Real Estate

and Land

Real Estate

Farmland

(In thousands)

Amounts due in:

One year or less

1,~~090~~963

~~7,757~~—

3017,~~465~~132

123,~~447~~968

~~1,975~~184

After one year through five years

75,~~361~~248

—

117,~~686~~735

1513,~~591~~755

3,~~482~~295

After five years through 15 years

21,~~717~~362

—

13,~~422~~201

105,~~841~~735

1,~~121~~717

After 15 years

~~115~~111,~~419~~810

210,~~724~~943

1020,~~563~~304

1738,~~189~~068

211,~~962~~889

Total

~~145~~140,~~587~~383

10,~~481~~943

5448,~~136~~372

5661,~~068~~526

917,~~540~~085


											Consumer
		Agriculture			Commercial			Municipalities			and Other			Total

		(in thousands)
Amounts due in:
One year or less		$	7		$	5,781		$	—		$	1,322		$	30,357
After one year through five years			26			1,830			872			2,307			35,068
After five years through 15 years			—			1,202			7,256			971			41,444
After 15 years			—			—			6,762			—			199,776
Total		$	33		$	8,813		$	14,890		$	4,600		$	306,645

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							Consumer
	Agriculture		Commercial		Municipalities		and Other		Total
	(in thousands)
Amounts due in:
One year or less	$	1	$	2,268	$	—	$	1,443	$	57,446
After one year through five years		54		2,565		845		3,098		44,682
After five years through 15 years		—		1,482		2,985		954		40,522
After 15 years		—		—		5,423		—		154,280
Total	$	55	$	6,315	$	9,253	$	5,495	$	296,930

The following table sets forth our fixed and adjustable-rate loans at December 31, 2025 that are contractually due after December 31, 2026.

The following table sets forth our fixed and adjustable-rate loans at December 31, 2024 that are contractually due after December 31, 2025.


		Due After December 31, 2026
		Fixed			Adjustable			Total

		(In thousands)
Real estate loans:
1-4 family residential		$	132,380		$	6,040		$	138,420
Multi-family			7,672			3,271			10,943
Construction and land			5,484			25,756			31,240
Commercial			19,276			38,282			57,558
Farmland			13,049			3,852			16,901
Agriculture loans			26			—			26
Commercial loans			2,280			752			3,032
Municipalities			13,714			1,176			14,890
Consumer and other loans			3,278			—			3,278
Total loans		$	197,159		$	79,129		$	276,288


	Due After December 31, 2025
	Fixed		Adjustable		Total
	(In thousands)
Real estate loans:
1-4 family residential	$	141,057	$	3,440	$	144,497
Multi-family		2,724		—		2,724
Construction and land		10,719		12,952		23,671
Commercial		23,681		19,940		43,621
Farmland		4,984		2,580		7,564
Agriculture loans		54		—		54
Commercial loans		4,047		—		4,047
Municipalities		9,253		—		9,253
Consumer and other loans		4,053		—		4,053
Total loans	$	200,572	$	38,912	$	239,484

One- to-Four Family Residential Real Estate Lending. At December 31, 2025, we had $140.4 million of loans secured by one- to four-family real estate, or 45.8% of total loans. The majority of our one-to-four family residential real estate loans are secured by properties located in our primary market area.

We have also originated residential mortgage loans secured by owner-occupied properties located in the the Dallas Fort Worth Metroplex. These loans are originated primarily through existing relationships and word-of-mouth referrals. These are generally jumbo loans with low loan-to-value ratios, generally in the range of 60% to 75%. At December 31, 2025, these loans amounted to $42.4 million, of which $14.8 million were jumbo loans with current balances exceeding the 2025 conforming loan limits and $27.6 million were conventional loans.

~~One-~~Our one-to-~~Four~~four ~~Family~~family ~~Residential~~residential ~~Real~~real ~~Estate~~estate ~~Lending.~~loans Atare ~~December~~generally ~~31,~~underwritten ~~2024,~~to weFreddie ~~had~~Mac ~~$145~~guidelines.6 ~~million~~Substantially all of ~~loans~~our ~~secured~~residential bymortgage ~~one-~~loans toare ~~four~~fixed-~~family~~rate ~~real~~loans. ~~estate~~Residential mortgage loans are generally originated at a fixed rate of 15, 20, or 4930 years.0% ofWe ~~total~~generally ~~loans.~~limit ~~The~~the ~~majority~~loan-to-value ratios of our one-to-four family residential ~~real~~mortgage ~~estate~~ loans ~~are~~to ~~secured~~89% byof ~~properties~~the ~~located~~purchase inprice ~~our~~or ~~primary~~appraised ~~market~~value, ~~area~~whichever is lower.

We have also originated residential mortgage loans secured by owner-occupied properties located in the northern and eastern sections of the Dallas Metroplex. These loans are originated primarily through existing relationships and word-of-mouth referrals. These are generally jumbo loans with low loan-to-value ratios, generally in the range of 60% to 75%. At December 31, 2024, these loans amounted to $44.6 million, of which $27.8 million were jumbo loans and $16.8 million were conventional loans.

Our one-to-four family residential real estate loans are generally underwritten to Freddie Mac guidelines. Substantially all of our residential mortgage loans are fixed-rate loans. Residential mortgage loans are generally originated at a fixed rate of 15, 20, or 30 years or with the optional 6-year or 10-year balloon terms based on a 20- or 30-year amortization schedule. We generally limit the loan-to-value ratios of our one-to-four family residential mortgage loans to 80% (or 95% with private mortgage insurance) of the purchase price or appraised value, whichever is lower.

We do not offer “interest only” mortgage loans on permanent one-to-four family residential real estate loans (where the borrower pays interest for an initial period, after which the loan converts to a fully amortizing loan). We also do not offer loans that provide for negative amortization of principal, such as “Option ARM” loans, where the borrower can pay less than the interest owed on the loan, resulting in an increased principal balance during the life of the loan. In general, we do not currently offer “subprime loans” on one-to-four family residential real estate loans (i.e., generally loans to borrowers with credit scores less than 620).

In 2023, the Company entered into an agreement with The Independent Bankers Bank (“TIB”) to facilitate the loan application process for conventional, FHA, VA, and USDA residential mortgage loans. During the year ended December 31, 2025, we derived $144,000 in noninterest income from the facilitation of 22 loan applications for a total of $7.7 million.

Commercial Real Estate Loans. At December 31, 2025, we had $61.5 million in commercial real estate loans, or 20.1% of total loans. Our commercial real estate loans are adjustable rate loans with a maximum five year initial term and with a 10- to 20-year amortization period or adjustable rate loans tied to WSJ Prime rate. The maximum loan-to-value ratio of our commercial real estate loans is generally 80%.

At December 31, 2025, we had eleven loans secured by self-storage facilities totaling $15.6 million, nine loans secured by gas stations with convenience stores totaling $16.7 million, and nineteen loans secured by commercial rental properties totaling $11.4 million. At December 31, 2025, all of these loans were performing according to their terms.

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December 31, 2024, we derived $194,000 in noninterest income from the facilitation of 35 loan applications for a total of $10.0 million.

Commercial Real Estate Loans. At December 31, 2024, we had $56.1 million in commercial real estate loans, or 18.9% of total loans. Our commercial real estate loans are fixed-rate balloon loans with a six to ten year initial term and with a 10- to 20-year amortization period or adjustable rate loans tied to WSJ Prime rate. The majority of the commercial real estate loans originated in 2024 have adjustable rates. The maximum loan-to-value ratio of our commercial real estate loans is generally 80%.

At December 31, 2024, we had twelve loans secured by self-storage facilities totaling $16.3 million, seven loans secured by gas stations with convenience stores totaling $10.5 million, sixteen loans secured by commercial rental properties totaling $7.6 million, eight loans secured by churches totaling $4.5 million, two loans secured by a rural water district totaling $3.8 million, six loans secured by restaurant/fast food restaurant properties totaling $3.6 million, and one loan secured by a hotel totaling $923,000. At December 31, 2024, all of these loans were performing according to their terms.

We consider a number of factors in originating commercial real estate loans. We evaluate the qualifications and financial condition of the borrower, including credit history, profitability and expertise, as well as the value and condition of the property securing the loan. When evaluating the qualifications of the borrower, we consider the financial resources of the borrower, the borrower’s experience in owning or managing similar property, debt service capabilities, global cash flows of the borrower and other guarantors, and the borrower’s payment history with us and other financial institutions. In evaluating the property securing the loan, the factors we consider include the net operating income of the mortgaged property before debt service and depreciation, the ratio of the loan amount to the appraised value of the mortgaged property, and the debt service coverage ratio (the ratio of net operating income to debt service). Generally, we require that the debt service coverage ratio be at least 1.20x. The significant majority of our commercial real estate loans are appraised by outside independent appraisers approved by the board of directors. Personal guarantees are generally obtained from the principals of commercial real estate borrowers.

At December 31, ~~2024~~2025, our largest commercial real estate loan relationship consisted of a $7.52 million loan secured by self-storage facilities. At December 31, ~~2024~~2025, this loan was performing according to its original terms.

Multi-Family Loans. At December 31, ~~2024~~2025, we had $10.59 million in multi-family loans, or 3.56% of total loans. Multi-family loan underwriting and terms are based on commercial real estate loan guidelines. At December 31, ~~2024~~2025, our largest multi-family loan relationship consisted of one loan totaling $7.7 million, which is secured by a townhome apartment complex. This loan was paid off in full in January 2026. At December 31, ~~2024~~2025, all multi-family loans were performing according to their original terms.

Construction and Land Loans. At December 31, ~~2024~~2025, we had $5448.14 million in construction and land loans, or 1815.28% of total loans. We make construction loans primarily to individuals for the construction of their primary residences and to contractors and builders of single-family homes. We also originate land loans to complement our construction lending activities, as such loans are generally secured by lots that will be used for residential development, and land loans for future commercial real estate development. Land loans also include loans secured by land purchased for investment purposes. At December 31, ~~2024~~2025, our construction and development loans totaled $3323.19 million, or 117.28% of our total loan portfolio, in addition to $2124.05 million in land loans. At December 31, ~~2024~~2025, $75.7 million of our single-family construction loans were to individuals and $34.96 million were to builders. At December 31, ~~2024~~2025, our construction portfolio also included $4.5.1 million in commercial real estate construction and development loans, $156.43 million in apartment or duplex construction, and $12.52 million in subdivision developments.

At December 31, ~~2024~~2025, our largest single family residence construction loan was ~~for~~a speculative construction loan of $~~752~~1.2 million,~~000,~~ upon completion. At December 31, ~~2024~~2025, our largest construction and land development loan relationship consisted of ~~three~~four loans totaling $89.0 million, which is fully funded. At December 31, ~~2024~~2025, all of these loans were performing according to their original terms.

Our construction loans are primarily secured by properties in our primary market area. We have also developed long-term relationships with borrowers who now reside in the Dallas Fort Worth Metroplex and continue to provide them with financing, including residential construction. At December 31, 2025, ten construction loans totaling $7.5 million, upon completion, were in process to borrowers in the Dallas Fort Worth Metroplex.

While we may originate loans to builders whether or not the collateral property underlying the loan is under contract for sale, we consider each project carefully and evaluate current residential real estate market conditions. Construction loans originated to builders where there is no contract for sale for the underlying completed home at the time of origination are referred to as speculative construction loans. We actively monitor the number of unsold homes in our construction loan portfolio and local housing markets to attempt to maintain an appropriate balance between home sales and new loan originations. We generally will limit the maximum number of speculative units (units that are not pre-sold) approved for each builder, typically starting with one speculative loan per builder until we develop a relationship with the builder. At December 31, 2025, speculative construction loans consisted of eighteen loans totaling $9.7 million, upon completion. Due to the continued growth in our market area, the need for multi-family housing has increased and at December 31, 2025, multi-family construction totaled $6.9 million, upon completion, which primarily consists of a quad-plex construction project in our market area.

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Our owner-occupied single-family construction loans are ~~primarily~~fixed ~~secured~~rate byinterest-only ~~properties~~loans inthat ~~our~~provide ~~primary~~for ~~market~~the ~~area.~~payment Weof ~~have~~interest ~~also~~during ~~developed~~the ~~long-term~~construction ~~relationships~~phase, ~~with~~which ~~borrowers~~is ~~who~~usually ~~now~~up ~~reside~~to in12 months. ~~the~~Our ~~northern~~commercial construction and ~~eastern~~land ~~sections~~development ofloans ~~the~~are ~~Dallas~~adjustable ~~Metroplex~~rate ~~and~~interest-only ~~continue~~loans ~~to provide them~~ with ~~financing,~~terms ~~including~~up ~~residential~~to ~~construction~~24 months. At ~~December~~the ~~31,~~end ~~2024,~~of ~~five~~the construction ~~loans~~phase, ~~totaling~~the ~~$3.2~~loan ~~million,~~may ~~upon~~convert ~~completion,~~to ~~were~~a inpermanent ~~process~~mortgage toloan ~~individual~~or ~~borrowers~~may inbe ~~the~~paid ~~Metroplex~~in full.

~~While~~Single-family weconstruction ~~may originate~~ loans togenerally ~~builders~~can ~~whether~~be ormade ~~not~~with ~~the~~a ~~collateral~~maximum ~~property underlying the~~ loan-to-value isratio ~~under~~of ~~contract~~89% ~~for~~of ~~sale,~~the weestimated ~~consider~~appraised ~~each~~market ~~project~~value ~~carefully~~upon incompletion ~~light~~ of ~~current~~the ~~residential~~project. ~~real~~Commercial ~~estate~~construction ~~market~~and ~~conditions.~~land ~~Construction~~development loans ~~originated~~generally tocan ~~builders~~be ~~where~~made ~~there~~with ismaximum noloan-to-value ~~contract~~of ~~for~~80% ~~sale~~of ~~for~~ the ~~underlying~~estimated ~~completed~~market ~~home~~value atof the ~~time~~completed ofproject ~~origination~~or ~~are referred~~ loan-to-cost asof ~~speculative~~80% ~~construction~~of ~~loans. We actively monitor~~ the ~~number~~estimated ~~of unsold homes in our~~ construction ~~loan~~costs ~~portfolio~~of ~~and local housing markets to attempt to maintain an appropriate balance between home sales and new loan originations. We generally will limit~~ the ~~maximum~~completed ~~number of speculative units (units that are not pre-sold) approved for each builder~~project, ~~typically~~whichever ~~starting~~is ~~with~~less. ~~one~~Before ~~speculative~~making ~~loan~~a ~~per~~commitment ~~builder~~to ~~until~~fund ~~we develop~~ a ~~relationship~~construction ~~with the builder. At December 31~~loan, ~~2024,~~we ~~speculative~~require ~~construction~~an ~~loans~~appraisal ~~consisted~~ of ~~thirteen~~the ~~loans~~property ~~totaling~~by ~~$5.1~~an ~~million,~~independent ~~upon~~licensed ~~completion~~appraiser. ~~Due~~We toalso ~~the~~generally ~~continued~~require ~~growth~~inspections inof ~~our market area,~~ the ~~need~~property ~~for~~before ~~multi-family~~disbursements ~~housing~~of ~~has~~funds ~~increased~~during ~~and~~the atterm ~~December 31, 2024, multi-family construction totaled $15.5 million, upon completion, which primarily consists~~ of ~~apartment~~the ~~and quad-plex~~ construction ~~in our market area~~loan.

~~Our~~Commercial ~~single-family~~Loans. ~~construction~~At ~~loans~~December ~~are~~31, ~~fixed rate interest-only loans that provide for the payment of interest during the construction phase~~2025, ~~which is usually up to 12 months. Our~~ commercial ~~construction and land development~~ loans ~~are~~were ~~adjustable rate interest-only loans with terms up to 24 months~~$8.8 ~~At the end of the construction phase~~million, ~~the loan may convert to a permanent mortgage loan~~ or ~~may~~2.8% beof ~~paid~~total ~~in full~~loans.

~~Construction~~We ~~loans~~make ~~generally~~commercial ~~can~~loans beprimarily ~~made with a maximum loan-~~to~~-value~~ ~~ratio~~small ofbusinesses ~~95%~~in ofour ~~the estimated appraised~~ market ~~value~~area. ~~upon~~These ~~completion~~loans ofare ~~the~~generally ~~project. Mortgage~~secured ~~insurance~~by ~~pre-approval~~business isassets, ~~required~~such ~~for~~as ~~loans~~equipment ~~exceeding~~and ~~80%~~accounts ~~loan-to-value~~receivable. Commercial ~~construction~~loans ~~and~~secured ~~land~~by ~~development~~accounts ~~loans~~receivable ~~generally~~are ~~can be~~ made with ~~maximum~~adjustable ~~loan-to-value~~rates ofand ~~80%~~for ofterms ~~the~~not ~~estimated~~to ~~market~~exceed ~~value~~12 ofmonths. ~~the~~Commercial ~~completed~~equipment ~~project~~loans orare ~~loan-to-cost~~made ofwith ~~80%~~fixed-interest ofrates ~~the~~and ~~estimated~~for ~~construction~~terms ~~costs~~generally ofup ~~the~~to ~~completed~~60 months ~~project.~~based ~~Before~~on ~~making~~useful alife ~~commitment~~of tothe ~~fund~~equipment. aDepending ~~construction~~on ~~loan,~~the wecollateral ~~require~~used anto ~~appraisal~~secure of the ~~property~~loans, bycommercial anloans ~~independent~~are ~~licensed~~generally ~~appraiser.~~made Wein ~~also~~amounts ~~generally~~of ~~require~~up ~~inspections~~to 80% of the ~~property~~value ~~before disbursements~~ of ~~funds during~~ the ~~term~~collateral ofsecuring the ~~construction~~ loan.

Commercial Loans. At December 31, 2024, commercial loans were $6.3 million, or 2.1% of total loans.

We make commercial loans primarily to small businesses in our market area. These loans are generally secured by business assets, such as equipment and accounts receivable. Commercial loans secured by accounts receivable are made with adjustable rates and for terms not to exceed 12 months. Commercial equipment loans are made with fixed-interest rates and for terms generally up to 60 months. Depending on the collateral used to secure the loans, commercial loans are generally made in amounts of up to 80% of the value of the collateral securing the loan.

When making commercial loans, we consider the financial statements of the borrower, our lending history with the borrower, the debt service capabilities and global cash flows of the borrower and other guarantors, the projected cash flows of the business and the value of the collateral, accounts receivable, inventory and equipment.

At December 31, ~~2024~~2025, our largest commercial loan ~~totaled~~relationship ~~$843,000~~consisted ~~and~~of isone ~~secured by manufacturing equipment. At December 31, 2024, this~~ loan ~~was~~totaling ~~classified as collateral dependent with an associated allowance for credit losses of~~ $~~54,000~~3.6 ~~Our~~million ~~largest~~to ~~commercial~~a ~~relationship~~water ~~consists~~supply ofcorporation ~~five loans totaling $925,000~~ and is secured by ~~machinery~~accounts ~~and equipment~~receivable. At December 31, ~~2024~~2025, ~~these~~this ~~loans~~loan was performing according to the original terms.

~~Consumer~~Municipal ~~and Other~~ Loans. At December 31, ~~2024~~2025, ~~consumer~~municipal ~~and other~~ loans were $514.59 million, or 14.98% of total loans. ~~Our~~We ~~consumer~~make ~~loan~~loans ~~portfolio~~to ~~generally~~municipalities, ~~consists~~political ofsubdivisions, ~~loans~~and ~~secured~~school ~~predominately~~districts in Texas, which are primarily secured by ~~used~~tax ~~automobiles,~~or ~~recreational~~revenue ~~vehicles,~~pledges. ~~all-terrain~~At ~~vehicles~~December ~~and~~31, ~~boats~~2025, asour ~~well~~largest asmunicipal ~~share~~loan ~~loans~~relationship ~~secured~~consisted byof aone ~~deposit~~loan ~~account~~totaling at$3.2 ~~Broadstreet~~million ~~Bank~~and is secured by tax revenue.

Consumer and Other Loans. At December 31, 2025, consumer and other loans were $4.6 million, or 1.5% of total loans. Our consumer loan portfolio generally consists of loans secured predominately by used automobiles, recreational vehicles, all-terrain vehicles and boats, as well as share loans secured by a deposit account at Broadstreet Bank.

Loan Underwriting Risks

Commercial Real Estate Loans. Loans secured by commercial real estate generally have larger balances and involve a greater degree of risk than one-to-four family residential real estate loans. The primary concern in commercial real estate lending is the borrower’s creditworthiness and the feasibility and cash flow potential of the project. Payments on loans secured by income properties often depend on successful operation and management of the properties. As a result, repayment of such loans may be subject, to a greater extent than residential real estate loans, to adverse conditions in the real estate market or the economy. To monitor cash flows on income properties, we generally require borrowers and loan guarantors to provide quarterly, semi-annual or annual financial statements, depending on the size of the loan, on commercial real estate loans. In reaching a decision on whether to make a commercial real estate loan, we consider and review a global cash flow analysis of the borrower and consider the net operating income of the property, the borrower’s expertise, credit history and profitability and the value of the underlying property. We have generally required that the properties securing these real estate loans have an aggregate debt service ratio, including the guarantor’s cash flows and the borrower’s other projects, of at least 1.20x. An environmental phase one report is

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~~Loan~~obtained ~~Underwriting~~when ~~Risks~~required by policy or when the possibility exists that hazardous materials may have existed on the site or the site may have been impacted by adjoining properties that handled hazardous materials.

If we foreclose on a commercial real estate loan, the marketing and liquidation period to convert the real estate asset to cash can be lengthy with substantial holding costs. In addition, vacancies, deferred maintenance, repairs and market stigma can result in prospective buyers expecting sale price concessions to offset their real or perceived economic losses for the time it takes them to return the property to profitability. Depending on the individual circumstances, initial charge-offs and subsequent losses on commercial real estate loans can be unpredictable and substantial.

Commercial Loans. Unlike residential real estate loans, which generally are made on the basis of the borrower’s ability to make repayment from his or her employment or other income, and which are secured by real property whose value tends to be more easily ascertainable, commercial loans and agricultural loans are of higher risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flows of the borrower’s business, and the collateral securing these loans may fluctuate in value. Our commercial loans are originated primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. Collateral for commercial loans typically consists of accounts receivable, inventory or equipment. Credit support provided by the borrower for most of these loans is based on the liquidation of the pledged collateral and enforcement of a personal guarantee, if any. Further, any collateral securing such loans may depreciate over time, may be difficult to appraise and may fluctuate in value. As a result, the availability of funds for the repayment of commercial loans and agricultural loans may depend substantially on the success of the business or farm itself, respectively.

Construction and Land Loans. Our construction loans are based upon estimates of costs and values associated with the completed project. Underwriting is focused on the borrowers’ financial strength, credit history and demonstrated ability to produce a quality product and effectively market and manage their operations.

Construction lending involves additional risks when compared with permanent lending because funds are advanced upon the security of the project, which is of uncertain value before its completion. Because of the uncertainties inherent in estimating construction costs, as well as the market value of the completed project and the effects of governmental regulation of real property, it is relatively difficult to evaluate accurately the total funds required to complete a project and the related loan-to-value ratio. ~~In addition, generally during the term of a construction loan, interest may be funded by the borrower or disbursed from an interest reserve set aside from the construction loan budget.~~ These loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability of the borrower or guarantor to repay principal and interest. If the appraised value of a completed project proves to be overstated, we may have inadequate security for the repayment of the loan upon completion of construction of the project and may incur a loss. In addition, speculative construction loans, which are loans made to home builders who, at the time of loan origination, have not yet secured an end buyer for the home under construction, typically carry higher risks than those associated with traditional construction loans. These increased risks arise because of the risk that there will be inadequate demand to ensure the sale of the property within an acceptable time. As a result, in addition to the risks associated with traditional construction loans, speculative construction loans carry the added risk that the builder will have to pay the property taxes and other carrying costs of the property until an end buyer is found. Land loans have substantially similar risks to speculative construction loans.

Balloon Loans. Although balloon mortgage loans may reduce to an extent our vulnerability to changes in market interest rates because they reprice at the end of the term, the ability of the borrower to renew or repay the loan and the marketability of the underlying collateral may be adversely affected if real estate values decline before the expiration of the term of the loan or in a rising interest rate environment.

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in addition to the risks associated with traditional construction loans, speculative construction loans carry the added risk that the builder will have to pay the property taxes and other carrying costs of the property until an end buyer is found. Land loans have substantially similar risks to speculative construction loans.

Consumer and Other Loans. Consumer loans may entail greater risk than residential real estate loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate rapidly. Repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and a small remaining deficiency often does not warrant further substantial collection efforts against the borrower. Consumer loan collections depend on the borrower’s continuing financial stability, and therefore are likely to be adversely affected by various factors, including job loss, divorce, illness or personal bankruptcy. Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.

Originations, Purchases and Sales of Loans

Lending activities are conducted by our salaried loan personnel operating at our main and branch office locations. All loans originated by us are underwritten pursuant to our policies and procedures. We originate fixed-rate consumer purpose loans and commercial loans generally have adjustable rates. We originate real estate and other loans through our loan officers, marketing efforts, our customer base, walk-in customers and referrals from real estate brokers, builders and attorneys.

In addition, from time to time, we may purchase or sell participation interests in loans. We underwrite our participation interest in the loan that we are purchasing according to our own underwriting criteria and procedures. At December 31, ~~2024~~2025, we had one purchased construction loan participation interest in commercial real estate of $403,000, upon completion, and one purchased ~~construction~~ participation of $~~1.0 million~~884,000 ~~upon completion,~~ secured by a hotel. ~~At December 31, 2024, we had one loan for the construction of a convenience store, secured by the completed project of $4.2 million, for which we sold one participation interest totaling $1.2 million.~~

We generally do not originate loans for sale. At December 31, ~~2024~~2025, we had no loans held for sale.

Loan Approval Procedures and Authority

Pursuant to Texas law, Broadstreet Bank is permitted to make loans to any one borrower or a group of related borrowers not to exceed an amount equal to 25% of the bank’s unimpaired capital and surplus (Tier 1 Capital). The 25% limit applies to the majority of the loans made. At December 31, ~~2024~~2025, based on this limitation, Broadstreet Bank’s loans-to-one-borrower limit was approximately $12.09 million. Notwithstanding this legal limit, Broadstreet Bank had an in-house limit of $3.0 million for a consumer borrower and $8.0 million for a commercial borrower at December 31, ~~2024~~2025. At December 31, ~~2024~~2025, our largest loan relationship with one borrower had extensions of credit totaling $9.0 million, when fully funded, secured primarily by ~~single-family~~duplex ~~residential~~ construction projects and ~~multi-family construction projects~~land. At December 31, ~~2024~~2025, the loans were ~~fully funded and were~~ performing according to the original terms.

Our lending is subject to written underwriting standards and origination procedures. Decisions on loan applications are made on the basis of detailed applications submitted by the prospective borrower, credit histories that we obtain, and property valuations (consistent with our appraisal policy) prepared by our internal licensed appraiser or outside independent licensed appraisers approved by our board of directors as well as internal evaluations, where permitted by regulations. The loan applications are designed primarily to determine the borrower’s ability to repay the requested loan, and the more significant items on the application are verified through use of credit reports, bank statements and tax returns.

12All loan approval amounts are based on the aggregate loans (total credit exposure), including total balances of outstanding loans and the proposed loan to the individual borrower and any related entity. Individual loan officer approval authorities range up to $500,000. Our Loan Committee has approval authority up to $1 million on commercial and residential properties. Our Executive Committee has approval authority up to $2.5 million. Our Board of Directors must approve all loans greater than or equal to $2.5 million. These loan approval authorities are established by our loan policy.

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All loan approval amounts are based on the aggregate loans (total credit exposure), including total balances of outstanding loans and the proposed loan to the individual borrower and any related entity. Individual loan officer approval authorities range up to $200,000. Our Loan Committee has approval authority up to $500,000 on commercial and $750,000 on residential properties. Our Executive Committee has approval authority up to $2.0 million. Our Board of Directors must approve all loans greater than or equal to $2.0 million. These loan approval authorities are established by our loan policy.

Generally, we require title insurance or abstracts on our mortgage loans as well as fire and extended coverage casualty insurance in amounts at least equal to the principal amount of the loan or the value of improvements on the property, depending on the type of loan.

Delinquencies and Asset Quality

Delinquency Procedures. When a loan payment becomes 15 days past due, we contact the customer by mailing a late notice, and loan officers may contact their customers. If a loan payment becomes 30 days past due, we mail an additional late notice and a loan-specific letter written by a collection representative, and we also place telephone calls to the borrower. These loan collection efforts continue until a loan becomes 90 days past due, at which point we would refer the loan for foreclosure proceedings unless management determines that it is in the best interest of Broadstreet Bank to work further with the borrower to arrange a workout plan. The foreclosure process would begin when a loan becomes 120 days delinquent. Loan collections depend on the borrower’s continuing financial stability, and therefore are

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likely to be adversely affected by various factors, including job loss, divorce, illness or personal bankruptcy. Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans

Loans Past Due and Nonperforming Assets. Loans are reviewed on a regular basis. Management determines that a loan is impaired or nonperforming when it is probable at least a portion of the loan will not be collected in accordance with the original terms due to a deterioration in the financial condition of the borrower or the value of the underlying collateral if the loan is collateral dependent. When a loan is determined to be collateral dependent, the measurement of the loan in the allowance for credit losses is measured for impairment based on the fair value of the collateral. Nonaccrual loans are loans for which collectability is questionable and, therefore, interest on such loans will no longer be recognized on an accrual basis. All loans that become 90 days or more delinquent are placed on nonaccrual status unless the loan is well secured and in the process of collection. When loans are placed on nonaccrual status, unpaid accrued interest is fully reversed, and further income is recognized only to the extent received on a cash basis or cost recovery method.

When we acquire real estate as a result of foreclosure, the real estate is classified as real estate owned. The real estate owned is recorded at the lower of carrying amount or fair value, less estimated costs to sell. Soon after acquisition, we order a new appraisal to determine the current market value of the property. Any excess of the recorded value of the loan satisfied over the market value of the property is charged against the allowance for credit losses, or, if the existing allowance is inadequate, charged to earnings in the current period. After acquisition, all costs incurred in maintaining the property are expensed. Costs relating to the development and improvement of the property, however, are capitalized to the extent of estimated fair value less estimated costs to sell.

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Delinquent Loans. The following table sets forth our loan delinquencies, including nonaccrual loans, by type and amount at the dates indicated.


	At December 31,
	~~2024~~2025						~~2023~~2024
	30-59		60-89		90 Days		30-59		60-89		90 Days
	Days		Days		or More		Days		Days		or More
	Past Due		Past Due		Past Due		Past Due		Past Due		Past Due
	(In thousands)
Real estate loans:
1-4 family residential	$	~~260~~113	$	849	$	25—	$	~~344~~260	$	~~271~~8	$	~~137~~25
Multi-family		—		—		—		—		—		—
Commercial		~~301~~—		—		—		—301		~~410~~—		22—
Construction and land		—		—		~~301~~—		~~808~~—		~~1,153~~—		—301
Farmland		—		—		—		—		—		—
Agriculture loans		—		—		—		—		—		—
Commercial loans		2181		—		—1		—2		—		8—
Consumer and other loans		2		—		—		—		—		—
Municipalities		—		—		—		—		—		—
Total	$	565	$	8	$	326	$	1,152	$	1,834	$	167
Consumer and other loans		22		3		—		2		—		—
Total	$	316	$	52	$	1	$	565	$	8	$	326

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Nonperforming Assets. The following table sets forth information regarding our nonperforming assets.


	At December 31,
	~~2024~~2025			~~2023~~2024
	(Dollars in thousands)

Nonaccrual loans:
Real estate loans:
1-4 family residential	$	~~610~~968		$	~~497~~610
Multi-family		—			—
Commercial		5142			6151
Construction and land		~~301~~—			—301
Farmland		—			—
Agriculture loans		—			—
Commercial loans		1,~~163~~000			~~351~~1,163
Consumer loans		—			—
Municipalities		—			—
Total nonaccrual loans	$	2,125		$	909
Consumer loans		4			—
Total nonaccrual loans	$	2,014		$	2,125

Accruing loans past due 90 days or more		—1			30—
Other nonperforming loans under 90 days past due		~~135~~121			~~241~~135

Real estate owned:
1-4 family residential		—			—
Multi-family		—5,749			—
Commercial		—			~~162~~—
Construction and land		—3,355			—
Bank owned property held for sale		~~480~~167			—480
Total real estate owned		~~480~~9,271			~~162~~480

Total nonperforming assets	$	211,~~740~~407		$	12,~~342~~740

Total nonperforming loans to total loans		0.7670	%		0.3376	%
Total nonaccruing loans to total loans		0.7266	%		0.3272	%
Total nonperforming assets to total assets		02.6265	%		0.3062	%

Classified Assets. Federal regulations provide for the classification of loans and other assets as “substandard,” “doubtful” or “loss.” An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard,” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss allowance is not warranted. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are designated as “special mention” by our management.

When an insured institution classifies problem assets as either substandard or doubtful, it may establish general allowances in an amount deemed prudent by management to cover probable accrued losses. General allowances represent loss allowances which have been established to cover probable accrued losses associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. When an insured institution classifies problem assets as “loss,” it is required either to establish a specific allowance for losses equal to 100% of that portion of the asset so classified or to charge-off such amount. An institution’s determination as to the

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~~Classified Assets. Federal regulations provide for the~~ classification of ~~loans~~its ~~and other~~ assets ~~as “substandard,” “doubtful” or “loss.” An asset is considered “substandard” if it is inadequately protected by the current net worth~~ and ~~paying capacity of~~ the ~~obligor~~amount or of ~~the~~its ~~collateral~~valuation ~~pledged,~~allowances ifis ~~any.~~subject ~~“Substandard”~~to ~~assets~~review ~~include those characterized~~ by the ~~“distinct~~regulatory possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandardauthorities,” ~~with~~such ~~the added characteristic~~ that ~~the~~additional ~~weaknesses~~general ~~present make “collection~~ or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss ~~allowance~~allowances ismay ~~not~~be ~~warranted~~required. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are designated as “special mention” by our management.

In connection with the filing of our periodic reports with the Federal Deposit Insurance Corporation and in accordance with our classification of assets policy, we regularly review the problem loans in our portfolio to determine whether any loans require classification in accordance with applicable regulations.

On the basis of this review of our assets, our classified and special mention assets at the dates indicated were as follows:


	At December 31,
	~~2024~~2025		~~2023~~2024
	(In thousands)

Substandard assets	$	3,~~904~~067	$	3,~~667~~904
Doubtful assets		—		—
Loss assets		—		—
Total classified assets	$	3,~~904~~067	$	3,~~667~~904
Special mention assets	$	61,~~931~~776	$	~~788~~6,931
Foreclosed assets	$	—9,104	$	~~162~~—

Allowance for Credit Losses

The allowance for credit losses is maintained at a level which, in management’s judgment, is adequate to absorb current expected credit losses inherent in the loan portfolio. The amount of the allowance is based on management’s evaluation of the collectability of the loan portfolio, including the nature of the portfolio, credit concentrations, trends in historical loss experience, specific collateral dependent loans, and economic conditions. Allowances for collateral dependent loans are generally determined based on collateral values or the present value of estimated cash flows. Because of uncertainties associated with regional economic conditions, collateral values, and future cash flows on collateral dependent loans, it is reasonably possible that management’s estimate of current expected credit losses inherent in the loan portfolio and the related allowance may change materially in the near-term. The allowance is increased by a provision for credit losses, which is charged to expense and reduced by full and partial charge-offs, net of recoveries. Changes in the allowance relating to collateral dependent loans are charged or credited to the provision for credit losses. Management’s periodic evaluation of the adequacy of the allowance is based on various factors, including, but not limited to, management’s ongoing review and grading of loans, facts and issues related to specific loans, historical loan loss and delinquency experience, trends in past due and nonaccrual loans, existing risk characteristics of specific loans or loan pools, the fair value of underlying collateral, current economic conditions and other qualitative and quantitative factors which could affect potential credit losses.

As an integral part of their examination process, the Texas Department of Savings and Mortgage Lending and the Federal Deposit Insurance Corporation will periodically review our allowance for credit losses, and as a result of such reviews, we may have to adjust our allowance for credit losses. However, regulatory agencies are not directly involved in the process for establishing the allowance for credit losses as the process is our responsibility and any increase or decrease in the allowance is the responsibility of management.

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specific loans or loan pools, the fair value of underlying collateral, current economic conditions and other qualitative and quantitative factors which could affect potential credit losses.

The following table sets forth activity in our allowance for credit losses on loans for the periods indicated.


	At or For the Years Ended
	December 31,
	~~2024~~2025			~~2023~~2024
	(Dollars in thousands)

Allowance for credit losses at beginning of year	$	3,~~096~~222		$	13,~~755~~096
Provision for credit losses		~~269~~736			~~329~~269
Charge-offs:
Real estate loans:
1-4 family residential		163			—16
Multi-family		—			—
Commercial		—			—
Construction and land		—453			—
Agriculture loans		—			—
Commercial loans		848			—84
Consumer loans		28			44
Municipalities		—			—
Consumer Other – Overdrafts		58			31
Consumer loans		15			28
Total charge-offs		186			75
Consumer Other – Overdrafts		45			58
Total charge-offs		524			186

Recoveries:
Real estate loans:
1-4 family residential		—			—
Multi-family		—			—
Commercial		—			—
Construction and loan		—			—
Agriculture loans		—			—
Commercial loans		—			—
Consumer loans		43			9
Municipalities		—			—
Total recoveries		43			9
Consumer loans		6			43
Net (charge-offs) recoveries		(143)			(66)
Total recoveries		6			43
Overage from off-balance sheet credit exposures		—			53
Net (charge-offs) recoveries		(518)			(143)
Adjustment for adoption of CECL methodology		—			1,025
Allowance for credit losses at end of year	$	3,440		$	3,222
Allowance for credit losses at end of year	$	3,222		$	3,096

Allowance for credit losses to nonperforming loans		~~142~~161.60	%		~~267~~142.6	%
Allowance for credit losses to total loans outstanding at the end of the year		1.0912	%		1.09	%
Net (charge-offs) recoveries to average loans outstanding during the year		(0.0517)	%		(0.0205)	%

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Allocation of Allowance for Credit Losses. The following tables set forth the allowance for credit losses allocated by loan category and the percent of the allowance in each category to the total allocated allowance at the dates indicated. The allowance for credit losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.


	At December 31,
	~~2024~~2025						~~2023~~2024
			Percent of						Percent of
			Allowance		Percent of				Allowance		Percent of
			in Each		Loans in				in Each		Loans in
			Category		Each				Category		Each
	Allowance		to Total		Category		Allowance		to Total		Category
	for Credit		Allocated		to Total		for Credit		Allocated		to Total
	Losses		Allowance		Loans		Losses		Allowance		Loans
	(Dollars in thousands)
Real estate loans:
1-4 Residential & multi-family	$	1,~~355~~399	4240.17	%	5249.54	%	$	1,~~621~~355	5242.41	%	6452.15	%
Commercial		~~605~~718	1820.89		1820.91			~~482~~605	1518.68		1418.89
Construction and land		~~632~~591	1917.62		1815.28			~~378~~632	1219.26		1318.32
Farmland		74152	24.34		35.26			6674	2.13		23.92
Agriculture loans		1	—		—			21	~~0.1~~—		~~0.1~~—
Commercial loans		~~375~~407	11.68		2.18			~~441~~375	1411.26		2.41
Municipalities		83102	23.60		34.18			1883	02.6		03.81
Consumer and other loans		9770	32.0		1.95			8897	23.80		1.79
Total allocated allowance	$	3,~~222~~440	100	%	100	%	$	3,~~096~~222	100	%	100	%

Investment Activities

General. The goals of our investment policy is to maximize portfolio yield over the long term in a manner that is consistent with minimizing risk, meeting liquidity needs, meeting pledging requirements, and meeting asset/liability management and interest rate risk strategies. Subject to loan demand and our interest rate risk analysis, we may increase the balance of our investment securities portfolio when we have excess liquidity.

Our investment policy was adopted by the board of directors and is reviewed annually by the board of directors. All investment decisions are made by our Asset/Liability Committee according to board-approved policies. An investment schedule detailing the investment portfolio is reviewed at least monthly by the board of directors.

Our current investment policy permits, with certain limitations, investments in: U.S. Treasury securities; securities issued by the U.S. government and its agencies or government sponsored enterprises including mortgage-backed securities, mortgage backed securities and collateralized mortgage obligations issued by other entities; corporate and municipal bonds; certificates of deposit in other financial institutions; federal funds and money market funds.

At December 31, ~~2024~~2025, our investment portfolio consisted of securities and obligations issued by U.S. Government-sponsored enterprises and others including mortgage-backed securities and collateralized mortgage obligations, corporate bonds including bank subordinated debt as well as state and municipal securities. At December 31, ~~2024~~2025, we also owned $32.56 million of Federal Home Loan Bank of Dallas stock. As a member of Federal Home Loan Bank of Dallas, we are required to purchase stock in the Federal Home Loan Bank of Dallas, which is carried at cost and classified as a restricted investment.

As of December 31, ~~2024~~2025 and ~~2023~~2024, all of our available for sale investment securities are carried at fair value through accumulated other comprehensive loss and our held to maturity securities are carried at cost.

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The following table summarizes securities available for sale:


	December 31,
	~~2024~~2025				~~2023~~2024
	Fair		Percentage of		Fair		Percentage of
	Value		Total		Value		Total
Securities available for sale:
Residential mortgage-backed	$	95,~~151~~796	129.27	%	$	249,~~925~~151	2612.72	%
Collateralized mortgage obligations		4635,~~568~~742	6159.97	%		4946,~~879~~568	5361.49	%
State and municipal		138,~~277~~743	1714.76	%		13,~~350~~277	1417.37	%
Corporate bonds		69,~~193~~612	816.20	%		56,~~173~~193	58.62	%
U.S. Government and agency		—	—	%		—	—	%
Total securities available for sale	$	7559,~~189~~893	100.0	%	$	9375,~~327~~189	100.0	%

The following table sets forth information regarding fair values, weighted average yields and maturities of available for sale investments. The yields have been computed on a tax equivalent basis. Maturities are based on the final contractual payment dates and do not reflect the impact of prepayments or early redemptions that may occur.


	December 31, ~~2024~~2025
	Due in One Year				One to Five Years				Five to Ten Years				After Ten Years				No Fixed Maturity				Total Investment Securities
			Weighted				Weighted				Weighted				Weighted				Weighted				Weighted
	Fair		Average		Fair		Average		Fair		Average		Fair		Average		Fair		Average		Fair		Average
	Value		Yield		Value		Yield		Value		Yield		Value		Yield		Value		Yield		Value		Yield
Securities available for sale:
Residential mortgage-backed	$	—	—	%	$	—	—	%	$	—	—	%	$	—	—	%	$	95,~~151~~796	2.6331	%	$	95,~~151~~796	2.6331	%
Collateralized mortgage obligations		—	—	%		—	—	%		—	—	%		—	—	%		4635,~~568~~742	54.3682	%		4635,~~568~~742	54.3682	%
State and municipal		—	—	%		31,~~313~~054	2.2735	%		53,~~709~~478	2.3035	%		4,~~255~~212	1.5796	%		—	—	%		138,~~277~~744	2.0616	%
Corporate bonds		—	—	%		—	—	%		58,~~217~~596	45.9070	%		~~976~~1,015	3.96	%		—	—	%		69,~~193~~611	45.7552	%
Total securities available for sale	$	—			$	31,~~313~~054			$	1012,~~926~~074			$	5,~~231~~227			$	5541,~~719~~538			$	7559,~~189~~893

The following table summarizes securities held to maturity:


	December 31,
	~~2024~~2025				~~2023~~2024
	Amortized		Percentage of		Amortized		Percentage of
	Cost		Total		Cost		Total
Securities held to maturity:
Residential mortgage-backed	$	1916,~~090~~112	8688.41	%	$	2219,~~301~~090	8586.74	%
State and municipal		1,~~567~~200	76.16	%		1,~~985~~567	7.61	%
U.S. Government and agency		~~1,439~~971	6.5.3	%		1,~~734~~439	6.75	%
Total securities held to maturity	$	2218,~~096~~283	100.0	%	$	2622,~~020~~096	100.0	%

The following table sets forth information regarding amortized costs, weighted average yields and maturities of all held to maturity investments. The yields have been computed on a tax equivalent basis. Maturities are based on the final contractual payment dates and do not reflect the impact of prepayments or early redemptions that may occur.


	December 31, ~~2024~~2025
	Due in One Year				One to Five Years				Five to Ten Years				After Ten Years				No Fixed Maturity				Total Investment Securities
			Weighted				Weighted				Weighted				Weighted				Weighted				Weighted
	Amortized		Average		Amortized		Average		Amortized		Average		Amortized		Average		Amortized		Average		Amortized		Average
	Cost		Yield		Cost		Yield		Cost		Yield		Cost		Yield		Cost		Yield		Cost		Yield
Securities held to maturity:
Residential mortgage-backed	$	—	—	%	$	—	—	%	$	—	—	%	$	—	—	%	$	1916,~~090~~112	1.7674	%	$	1916,~~090~~112	1.7674	%
State and municipal		~~365~~—	~~4.29~~—	%		~~134~~135	2.6566	%		—	—	%		1,~~068~~065	24.2094	%		—	—	%		1,~~567~~200	24.7368	%
U.S. Government and Agency		—	—	%		—	—	%		~~1,439~~971	6.6802	%		—	—	%		—	—	%		~~1,439~~971	6.6802	%
Total securities held to maturity	$	~~365~~—			$	~~134~~135			$	~~1,439~~971			$	1,~~068~~065			$	1916,~~090~~112			$	2218,~~096~~283

For additional information regarding our investment securities portfolio, see Note 3 to the notes to consolidated financial statements.

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During the year ended December 31, 2023, the Company 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 available for sale securities for changes in the Secured Overnight Financing Rate (SOFR). ~~For~~The ~~additional~~Company ~~information~~terminated ~~regarding~~ the ~~fair~~interest ~~value~~rate ~~hedge~~swap agreements on January 15, ~~see~~2025, ~~Note~~and 19the $463,000 unrealized gain will be amortized to interest income over the ~~notes~~remaining tolife ~~consolidated~~of ~~financial~~the ~~statements~~hedged securities.

Sources of Funds

General. Customer deposits have traditionally been our primary source of funds for use in lending and investment activities. We also use borrowings, ~~and occasionally~~ brokered deposits, and listed deposits to supplement cash flow needs, manage the maturities of liabilities for interest rate risk purposes and to manage the cost of funds. In addition, we receive funds from scheduled loan payments and prepayments, investment maturities, ~~loan~~and ~~prepayments~~paydowns, retained earnings and income on earning assets. While scheduled loan payments and income on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by prevailing interest rates, market conditions and levels of competition.

Deposits. Our deposits are generated primarily from our primary market area. Weand ~~occasionally~~we attain brokered deposits and listed deposits to supplement our more traditional deposit sources. We offer a selection of deposit accounts, including savings accounts, checking accounts, money market accounts, certificates of deposit and individual retirement accounts. Deposit account terms vary, with the principal differences being the minimum balance required, the amount of time the funds must remain on deposit and the interest rate.

Interest rates paid, maturity terms, service fees and withdrawal penalties are established on a periodic basis. Deposit rates and terms are based primarily on current operating strategies and market rates, liquidity requirements, rates paid by competitors and growth goals. We rely upon personalized customer service, long-standing relationships with customers, and the favorable image of Broadstreet Bank in the community to attract and retain local deposits. We also seek to obtain deposits from our commercial loan customers.

The flow of deposits is influenced significantly by general economic conditions, changes in money market and other prevailing interest rates and competition. The variety of deposit accounts offered allows us to be competitive in obtaining funds and responding to changes in consumer demand. Based on experience, we believe that our deposits are relatively stable. However, the ability to attract and maintain deposits and the rates paid on these deposits, has been and will continue to be significantly affected by market conditions.

The following table sets forth the distribution of total deposits by account type at the dates indicated.


	At December 31,
	~~2024~~2025							~~2023~~2024
					Average							Average
	Amount		Percent		Rate			Amount		Percent		Rate
	(Dollars in thousands)

Noninterest-bearing demand deposits	$	4145,~~465~~871	1214.30	%		—	%	$	4541,~~538~~465	1412.43	%	—	%
Interest-bearing demand deposits		7160,~~959~~603	2118.45	%		0.6657	%		6371,~~581~~959	2021.04	%	0.4166	%
Regular savings deposits and other deposits		4341,~~266~~605	12.97	%		0.2938	%		4943,~~755~~266	1512.79	%	0.3129	%
Money market deposits		4946,~~203~~040	14.70	%		32.2665	%		3949,~~672~~203	1214.57	%	3.2326	%
Certificates of deposit		~~129~~133,~~935~~785	3840.78	%		43.3195	%		~~118~~129,~~695~~935	3738.47	%	34.5831	%
Total	$	~~335~~327,~~828~~904	100.0	%				$	~~317~~335,~~241~~828	100.0	%

At December 31, ~~2024~~2025 and ~~2023~~2024, the aggregate amount of uninsured deposits, which includes deposit account balances in excess of $250,000, which is the maximum amount for federal deposit insurance, was $5045.38 million and ~~$37.2 million, respectively. At December 31, 2024 and 2023, the aggregate amount of our uninsured certificates of~~

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$50.3 million, respectively. At December 31, 2025 and 2024, the aggregate amount of our uninsured certificates of deposit balances in excess of $250,000 was $1013.76 million and $810.67 million, respectively. At December 31, ~~2024~~2025 and December 31, ~~2023~~2024, we had no deposits that were uninsured for any reason other than being in excess of the maximum amount for federal deposit insurance. At December 31, ~~2024~~2025 and ~~2023~~2024, the amount of deposits that were brokered was $2218.0 million and $1222.0 million, respectively. All brokered deposits were fully insured.

The following table sets forth the maturity of our uninsured portion of certificates of deposit at December 31, ~~2024~~2025.


	At December 31,
	~~2024~~2025
	(In thousands)
Maturity Period:
Three months or less	$	35,~~361~~325
Over three through six months		32,~~189~~089
Over six through twelve months		35,~~148~~526
Over twelve months		~~999~~634
Total	$	1013,~~697~~574

Borrowings. At December 31, ~~2024~~2025, we had outstanding advances of $4945.97 million from the Federal Home Loan Bank of Dallas. At December 31, ~~2024~~2025, we had unused borrowing capacity of $~~102~~100.43 million with the Federal Home Loan Bank of Dallas. For further information regarding our borrowings from the Federal Home Loan Bank of Dallas, see note 89 of the notes to consolidated financial statements.

Personnel and Human Capital Resources

As of December 31, ~~2024~~2025, we had 6061 full-time employees and ~~eight~~10 part-time employees. Our employees are not represented by any collective bargaining group. Management believes that we have good working relations with our employees.

The success of our business depends highly on our employees, who provide value to our customers and communities through their dedication to our business. We encourage and support the growth and development of our employees and, wherever possible, seek to fill open positions by promotion and transfer from within the organization. Continual learning and career development are advanced through internally developed training programs. We believe our ability to attract and retain employees is a key to our success and strive to offer competitive salaries and employee benefits to all employees and monitor salaries in our market areas.

Subsidiary Activities

Broadstreet Bank is the sole and wholly owned subsidiary of Texas Community Bancshares. Broadstreet Bank has one subsidiary, Mineola Financial Service Corporation, which is currently inactive.

Supervision and Regulation

General

As a Texas-chartered savings bank, Broadstreet Bank is subject to examination and regulation by the Texas Department of Savings and Mortgage Lending, and is also subject to examination by the Federal Deposit Insurance Corporation as deposit insurer. The state and federal system of regulation and supervision establishes a comprehensive framework of activities in which Broadstreet Bank may engage and is intended primarily for the protection of depositors and the Federal Deposit Insurance Corporation’s Deposit Insurance Fund, and not for the protection of security holders. Broadstreet Bank also is a member of and owns stock in the Federal Home Loan Bank of Dallas, which is one of the 11 regional banks in the Federal Home Loan Bank System.

Under this system of regulation, the regulatory authorities have extensive discretion in connection with their supervisory, enforcement, rulemaking and examination activities and policies, including rules or policies that: establish minimum capital levels; restrict the timing and amount of dividend payments; govern the classification of assets; provide oversight for the adequacy of the allowance for credit losses for regulatory purposes; and establish the timing and amounts of assessments and fees. Moreover, as part of their examination authority, the banking regulators assign numerical ratings to banks and savings institutions relating to capital, asset quality, management, liquidity, earnings and other factors. These ratings are inherently subjective and the receipt of a less than satisfactory rating in one or more categories may result in enforcement action by the banking regulators against a financial institution. A less than satisfactory rating may also prevent a financial institution, such as Broadstreet Bank or its holding company, from

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In addition, we must comply with significant anti-money laundering and anti-terrorism laws and regulations, Community Reinvestment Act laws and regulations, and fair lending laws and regulations. Broadstreet Bank must comply with consumer protection regulations issued by the Consumer Financial Protection Bureau, as enforced by the Federal Deposit Insurance Corporation. Government agencies have the authority to impose monetary penalties and other sanctions on institutions that fail to comply with these laws and regulations, which could significantly affect our business activities, including our ability to acquire other financial institutions or expand our branch network.

Texas Community Bancshares is a bank holding company and is required to comply with the Bank Holding Company Act of 1956, as amended, and the rules and regulations of the Federal Reserve Board. It is required to file certain reports with the Federal Reserve Board and is subject to examination by and the enforcement authority of the Federal Reserve Board. Additionally, the Federal Reserve Board may directly examine the subsidiaries of a bank holding company, including Broadstreet Bank. Texas Community Bancshares is also subject to the rules and regulations of the Securities and Exchange Commission under the federal securities laws.

Any change in applicable laws or regulations, whether by the Texas Department of Savings and Mortgage Lending, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Federal Reserve Board, the Securities and Exchange Commission or Congress, could have a material adverse impact on the operations and financial performance of Texas Community Bancshares and Broadstreet Bank.

Set forth below is a brief description of material regulatory requirements that are or will be applicable to Broadstreet Bank and Texas Community Bancshares. The description is limited to certain material aspects of the statutes and regulations addressed, and is not intended to be a complete description of such statutes and regulations and their effects on Broadstreet Bank and Texas Community Bancshares.

Savings Bank Regulation

Business Activities. As a Texas-chartered savings bank, Broadstreet Bank is subject to supervision and regulation by the Texas Department of Savings and Mortgage Lending and the Federal Deposit Insurance Corporation. The Texas Department of Savings and Mortgage Lending supervises and regulates all areas of Broadstreet Bank’s operations including, without limitation, the making of loans, the ~~issuance~~purchase of securities, the conduct of corporate affairs, the satisfaction of capital adequacy requirements, the payment of dividends, and the establishment or closing of banking offices. The Texas Department of Savings and Mortgage Lending also conducts examinations of state savings banks and generally conducts joint examinations with the Federal Deposit Insurance Corporation. The Texas Department of Savings and Mortgage Lending charges assessments and fees which recover the costs of examining state savings banks, processing applications and other filings and covering direct and indirect expenses in regulating state savings banks. The Texas Department of Savings and Mortgage Lending also has certain enforcement powers over Broadstreet Bank.

The Federal Deposit Insurance Corporation is Broadstreet Bank’s primary federal regulator, which periodically examines Broadstreet Bank’s operations and financial condition and compliance with federal consumer protection laws. In addition, Broadstreet Bank’s deposit accounts are insured by the Federal Deposit Insurance Corporation to the maximum extent permitted by law, and it has certain enforcement powers over the Bank.

Broadstreet Bank is empowered by statute, subject to the limitations contained in those statutes, to take and pay interest on savings and time deposits, to accept demand deposits, to make loans on residential and other real estate, to make consumer and commercial loans, to invest, with certain limitations, in equity securities and in debt obligations of banks and corporations and to provide various other banking services for the benefit of Broadstreet Bank’s customers. Various state consumer laws and regulations also affect the operations of Broadstreet Bank, including state usury laws and consumer credit laws.

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Broadstreet Bank is empowered by statute, subject to the limitations contained in those statutes, to take and pay interest on savings and ~~loan~~time ~~association~~deposits, orto ~~under~~accept ~~federal~~demand ~~law~~deposits, ~~for~~to amake ~~federal~~loans ~~savings~~on residential and ~~loan~~other ~~association~~real estate, ~~savings~~to ~~bank~~make orconsumer ~~national~~and ~~bank~~commercial ifloans, ~~such~~to ~~institution’s~~invest, ~~principal~~with ~~office~~certain islimitations, ~~located~~in equity securities and in ~~Texas.~~debt ~~This~~obligations ~~provision~~of isbanks ~~commonly~~and ~~referred~~corporations and to asprovide various other banking services for the ~~“Expansion~~benefit of ~~Powers”~~Broadstreet ~~provision~~Bank’s ofcustomers. Various state consumer laws and regulations also affect the ~~Texas~~operations ~~Finance~~of ~~Code~~Broadstreet ~~applicable~~Bank, toincluding state ~~savings~~usury ~~banks~~laws and consumer credit laws.

Texas law further provides that, subject to the limitations established by rule of the Texas Finance Commission, a Texas savings bank may make any loan or investment or engage in any activity permitted under state law for a bank or savings and loan association or under federal law for a federal savings and loan association, savings bank or national bank if such institution’s principal office is located in Texas. This provision is commonly referred to as the “Expansion of Powers” provision of the Texas Finance Code applicable to state savings banks.

Under federal law, a Texas state savings bank is a state bank. The Federal Deposit Insurance Corporation Improvement Act of 1991 provides that no state bank or any subsidiary of a state bank may engage as a principal in any activity not permitted for national banks, unless the institution complies with applicable capital requirements and the Federal Deposit Insurance Corporation determines that the activity poses no significant risk to the Deposit Insurance Fund.

Texas state-chartered savings banks are required to maintain at least 50% of their portfolio assets in qualified thrift investments as defined by in federal law and other assets determined by the Commissioner of the Texas Department of Savings and Mortgage Lending under rules adopted by the Texas Finance Commission, to be substantially equivalent to qualified thrift investments or which further residential lending or community development.

Capital Requirements. Federal regulations require federally insured depository institutions to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets ratio of 8.0%, and a 4.0% Tier 1 capital (tier 1 leverage ratio) to total assets.

In determining the amount of risk-weighted assets for calculating risk-based capital ratios, all assets, including certain off-balance sheet assets (e.g., recourse obligations, direct credit substitutes, residual interests) are multiplied by a risk-weight factor assigned by the regulations based on the risks believed inherent in the type of asset. Higher levels of capital are required for asset categories believed to present greater risk. Common equity Tier 1 capital is generally defined as common stockholders’ equity and related surplus and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital. Additional Tier 1 capital includes certain non-cumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt. Also included in Tier 2 capital is the allowance for credit losses, including the allowance for credit losses on off-balance sheet credit exposures, limited to a maximum of 1.25% of risk-weighted assets. Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations. In assessing an institution’s capital adequacy, the Federal Deposit Insurance Corporation takes into consideration not only these numeric factors, but qualitative factors as well, and has the authority to establish higher capital requirements for individual institutions where deemed necessary.

In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.

Federal law required the federal banking agencies, including the Federal Deposit Insurance Corporation, to establish a “community bank leverage ratio” of between 8% and 10% for institutions with assets of less than $10 billion. Institutions with capital complying with the ratio and otherwise meeting the specified requirements and electing the alternative framework are considered to comply with the applicable regulatory capital requirements, including the risk-based requirements. The community bank leverage ratio was established at 9% Tier 1 capital to total average assets, effective January 1, 2020. A qualifying institution may opt in and out of the community bank leverage ratio framework on its quarterly call report. An institution that temporarily ceases to meet any qualifying criteria is provided with a two-quarter grace period to regain compliance. Failure to meet the qualifying criteria within the grace period or maintain a leverage ratio of 8% or greater requires the institution to comply with the generally applicable regulatory capital requirements.

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Atalternative ~~December~~framework 31are considered to comply with the applicable regulatory capital requirements, ~~2024~~including the risk-based requirements. The community bank leverage ratio was established at 9% Tier 1 capital to total average assets, ~~Broadstreet~~effective ~~Bank~~January 1, ~~had~~2020. ~~opted~~A ~~into~~qualifying institution may opt in and out of the community bank leverage ratio framework ~~and~~on its ~~capital~~quarterly ~~exceeded~~call ~~all~~report. An institution that temporarily ceases to meet any qualifying criteria is provided with a two-quarter grace period to regain compliance. Failure to meet the qualifying criteria within the grace period or maintain a leverage ratio of 8% or greater requires the institution to comply with the generally applicable regulatory capital requirements.

~~Loans-to-One~~At ~~Borrower.~~December ~~Because~~31, ~~of the availability of the savings bank expansion of powers language in the Texas Finance Code~~2025, ~~savings~~Broadstreet ~~banks~~Bank ~~have~~had ~~flexibility~~opted ininto the ~~calculation~~community of their applicable lending limit. The lending limit applicable to state banks in Texas is broader than the limit applicable to national banks. The Texas Finance Code adopts the lending limit applicable to federal savings associations under federal law for state savings banks, however, Texas savings bank ~~are~~leverage ~~permitted~~ratio ~~under~~framework ~~the~~and ~~expansion~~its of power authority to adopt the legal lending limit applicable to national banks or state banks. Generally (subject to certain exceptions) the lending limit for loans to one borrower may not exceed an amount equal to 25% of the bank’s unimpaired capital ~~and~~exceeded ~~surplus~~all ~~(Tier 1 Capital). Broadstreet Bank has adopted the lending limit~~ applicable ~~to state banks or 25% of the bank’s unimpaired capital and surplus (Tier 1 Capital)~~requirements. ~~At December 31, 2024, Broadstreet Bank was in compliance with the loans-to-one borrower limitations.~~

Loans-to-One Borrower. Because of the availability of the savings bank expansion of powers language in the Texas Finance Code, savings banks have flexibility in the calculation of their applicable lending limit. The lending limit applicable to state banks in Texas is broader than the limit applicable to national banks. The Texas Finance Code adopts the lending limit applicable to federal savings associations under federal law for state savings banks, however, Texas savings bank are permitted under the expansion of power authority to adopt the legal lending limit applicable to national banks or state banks. Generally (subject to certain exceptions) the lending limit for loans to one borrower may not exceed an amount equal to 25% of the bank’s unimpaired capital and surplus (Tier 1 Capital). Broadstreet Bank has adopted the lending limit applicable to state banks or 25% of the bank’s unimpaired capital and surplus (Tier 1 Capital). At December 31, 2025, Broadstreet Bank was in compliance with the loans-to-one borrower limitations.

Capital Distributions. The Federal Deposit Insurance Act generally provides that an insured depository institution may not make any capital distribution if, after making such distribution, the institution would fail to meet any applicable regulatory capital requirement. Unless the approval of the Federal Deposit Insurance Corporation is obtained, Broadstreet Bank may not declare or pay a dividend if the total of all dividends declared during the calendar year, including the proposed dividend, exceeds the sum of its net income during the current calendar year and the retained net income of the prior two calendar years. Under Texas law, Broadstreet Bank is permitted to declare and pay a dividend on capital stock only out of current or retained income.

Community Reinvestment Act and Fair Lending Laws. All insured depository institutions have a responsibility under the Community Reinvestment Act and related regulations to help meet the credit needs of their communities, including low- and moderate-income borrowers. The Federal Deposit Insurance Corporation is required to assess Broadstreet Bank’s record of compliance with the Community Reinvestment Act. An institution’s failure to comply with the provisions of the Community Reinvestment Act could, at a minimum, result in denial of certain corporate applications such as branches or mergers, or in restrictions on its activities. In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices. The failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions by the Federal Deposit Insurance Corporation, as well as other federal regulatory agencies and the Department of Justice.

The Community Reinvestment Act requires all institutions insured by the Federal Deposit Insurance Corporation to publicly disclose their rating. Broadstreet Bank received a “satisfactory” Community Reinvestment Act rating in its most recent federal examination.

Transactions with Related Parties. An insured depository institution’s authority to engage in transactions with its affiliates is generally limited by Sections 23A and 23B of the Federal Reserve Act and federal regulation. An affiliate is generally a company that controls, or is under common control with, an insured depository institution such as Broadstreet Bank. Texas Community Bancshares will be an affiliate of Broadstreet Bank because of its control of Broadstreet Bank. In general, transactions between an insured depository institution and its affiliates are subject to certain quantitative limits and collateral requirements. In addition, federal regulations prohibit a savings bank from lending to any of its affiliates that are engaged in activities that are not permissible for bank holding companies and from purchasing the securities of any affiliate, other than a subsidiary. Finally, transactions with affiliates must be consistent with safe and sound banking practices, not involve the purchase of low-quality assets and be on terms that are as favorable to the institution as comparable transactions with non-affiliates.

Broadstreet Bank’s authority to extend credit to its directors, executive officers and 10% stockholders, as well as to entities controlled by such persons, is currently governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the Federal Reserve Board. Among other things, these provisions generally require that extensions of credit to insiders:

● be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features; and

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●

be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features; and

●

not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of Broadstreet Bank’s capital.

In addition, extensions of credit in excess of certain limits must be approved by Broadstreet Bank’s board of directors. Extensions of credit to executive officers are subject to additional limits based on the type of extension involved.

Enforcement. The Federal Deposit Insurance Corporation has primary enforcement responsibility over state savings banks and has authority to bring enforcement action against all “institution-affiliated parties,” including directors, officers, stockholders, attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful action likely to have an adverse effect on a state savings bank. Formal enforcement action by the Federal Deposit Insurance Corporation may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors of the institution and the appointment of a receiver or conservator. Civil penalties cover a wide range of violations and actions, and range up to $25,000 per day, unless a finding of reckless disregard is made, in which case penalties may be as high as $1 million per day. The Federal Deposit Insurance Corporation also has the authority to terminate deposit insurance.

Standards for Safety and Soundness. Federal law requires each federal banking agency to prescribe certain standards for the insured depository institutions they supervise. These standards relate to, among other things, internal controls, information systems and audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, asset quality, earnings, compensation and benefits, and other operational and managerial standards as the agency deems appropriate. Interagency guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard. If an institution fails to meet these standards, the appropriate federal banking agency may require the institution to implement an acceptable compliance plan. Failure to implement such a plan can result in further enforcement action, including the issuance of a cease and desist order or the imposition of civil money penalties.

Branching. Federal law permits insured state banks to engage in interstate branching if the laws of the state where the new banking office is to be established would permit the establishment of the banking office if it were chartered by a bank in such state. Under current Texas law, Broadstreet Bank can establish a branch in Texas or in any other state. All branch applications require prior approval of the Texas Department of Savings and Mortgage Lending and the Federal Deposit Insurance Corporation. Finally, Broadstreet Bank may also establish banking offices in other states by merging with banks or by purchasing banking offices of other banks in other states, subject to certain restrictions.

Prompt Corrective Action. Federal law requires, among other things, that federal banking agencies take “prompt corrective action” with respect to institutions that do not meet minimum capital requirements. For this purpose, the Federal Deposit Insurance Corporation’s regulations stablish five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. Under applicable regulations, an institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a leverage ratio of 5.0% or greater and a common equity Tier 1 ratio of 6.5% or greater. An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater and a common equity Tier 1 ratio of 4.5% or greater. An institution is “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0% or a common equity Tier 1 ratio of less than 4.5%. An institution is deemed to be “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a leverage ratio of less than 3.0% or a common equity Tier 1 ratio of less than 3.0%. An institution is considered to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%.

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~~on the payment of dividends, and restrictions on the acceptance of brokered deposits~~greater. ~~Furthermore,~~An ~~if an insured depository~~ institution is ~~classified in one of the~~ “undercapitalized” ~~categories,~~if it ishas ~~required~~a tototal ~~submit~~risk-based a capital ~~restoration~~ratio ~~plan to the appropriate federal banking agency, and the holding company must guarantee the performance~~ of ~~that~~less ~~plan.~~than ~~Based upon its capital levels~~8.0%, a ~~bank~~Tier ~~that~~1 ~~is classified as well~~risk-~~capitalized,~~based ~~adequately capitalized, or undercapitalized may be treated as though it were in the next lower~~ capital ~~category~~ratio ifof ~~the~~less ~~appropriate~~than ~~federal banking agency~~6.0%, ~~after~~a ~~notice~~leverage ~~and~~ratio ~~opportunity~~of ~~for~~less ~~hearing,~~than ~~determines~~4.0% ~~that an unsafe~~ or ~~unsound condition, or an unsafe or unsound practice, warrants such treatment. An undercapitalized bank’s compliance with~~ a ~~capital~~common ~~restoration~~equity ~~plan~~Tier is1 ~~required~~ratio toof beless ~~guaranteed~~than ~~by any company that controls the undercapitalized institution in an amount equal to the lesser of 5~~4.05%. ofAn ~~the~~ institution’s ~~total~~is ~~assets when~~ deemed ~~undercapitalized or the amount necessary~~ to ~~achieve~~be ~~the status of adequately capitalized. If an~~ “significantly undercapitalized” ~~bank fails to submit an acceptable plan, it is treated as~~ if it ishas ~~“significantly~~a ~~undercapitalized.”~~total ~~“Significantly~~risk-based ~~undercapitalized”~~capital ~~banks~~ratio ~~must comply with one or more~~ of aless ~~number~~than ~~of additional restrictions~~6.0%, ~~including~~ a ~~regulatory~~Tier ~~order~~1 torisk-based ~~sell~~capital ~~sufficient~~ratio ~~voting~~of ~~stock~~less tothan ~~become adequately capitalized~~4.0%, ~~requirements~~a toleverage ~~reduce~~ratio ~~total assets, ceasing receipt~~ of ~~deposits~~less ~~from~~than ~~correspondent~~3.0% ~~banks, dismissal of directors~~ or ~~officers,~~a ~~and~~common ~~restrictions~~equity onTier ~~interest~~1 ~~rates~~ratio ~~paid on deposits, compensation~~ of ~~executive~~less ~~officers~~than ~~and~~3.0%. ~~capital~~An ~~distributions~~institution byis ~~the~~considered ~~parent~~to ~~holding~~be ~~company.~~ “~~Critically~~critically undercapitalized” ~~institutions~~if ~~are~~it ~~subject~~has toa ~~additional~~ratio ~~measures~~of ~~including,~~tangible ~~subject~~equity to(as adefined ~~narrow~~in ~~exception,~~ the ~~appointment~~regulations) ofto atotal ~~receiver~~assets orthat ~~conservator~~is ~~within~~equal ~~270 days~~to ~~after~~or itless ~~obtains~~than ~~such status~~2.0%.

At each successive lower capital category, an insured depository institution is subject to more restrictions and prohibitions, including restrictions on growth, restrictions on interest rates paid on deposits, restrictions or prohibitions on the payment of dividends, and restrictions on the acceptance of brokered deposits. Furthermore, if an insured depository institution is classified in one of the undercapitalized categories, it is required to submit a capital restoration plan to the appropriate federal banking agency, and the holding company must guarantee the performance of that plan. Based upon its capital levels, a bank that is classified as well-capitalized, adequately capitalized, or undercapitalized may be treated as though it were in the next lower capital category if the appropriate federal banking agency, after notice and opportunity for hearing, determines that an unsafe or unsound condition, or an unsafe or unsound practice, warrants such treatment. An undercapitalized bank’s compliance with a capital restoration plan is required to be guaranteed by any company that controls the undercapitalized institution in an amount equal to the lesser of 5.0% of the institution’s total assets when deemed undercapitalized or the amount necessary to achieve the status of adequately capitalized. If an “undercapitalized” bank fails to submit an acceptable plan, it is treated as if it is “significantly undercapitalized.” “Significantly undercapitalized” banks must comply with one or more of a number of additional restrictions, including a regulatory order to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets, ceasing receipt of deposits from correspondent banks, dismissal of directors or officers, and restrictions on interest rates paid on deposits, compensation of executive officers and capital distributions by the parent holding company. “Critically undercapitalized” institutions are subject to additional measures including, subject to a narrow exception, the appointment of a receiver or conservator within 270 days after it obtains such status.

The previously referenced final rule establishing an elective “community bank leverage ratio” regulatory capital framework provides that a qualifying institution whose capital exceeds the community bank leverage ratio and opts to use that framework will be considered “well-capitalized” for purposes of prompt corrective action.

At December 31, ~~2024~~2025, Broadstreet Bank met the criteria for being considered “well capitalized.”

Insurance of Deposit Accounts. The Deposit Insurance Fund of the Federal Deposit Insurance Corporation insures deposits at Federal Deposit Insurance Corporation-insured financial institutions such as Broadstreet Bank, generally up to a maximum of $250,000 per separately insured depositor. The Federal Deposit Insurance Corporation charges insured depository institutions premiums to maintain the Deposit Insurance Fund.

Under the Federal Deposit Insurance Corporation’s risk-based assessment system, institutions deemed less risky of failure pay lower assessments. Assessments for institutions of less than $10 billion of assets are based on financial measures and supervisory ratings derived from statistical modeling estimating the probability of an institution’s failure within three years.

The Federal Deposit Insurance Corporation has authority to increase insurance assessments. Any significant increases would have an adverse effect on the operating expenses and results of operations of Broadstreet Bank. We cannot predict what assessment rates will be in the future.

Insurance of deposits may be terminated by the Federal Deposit Insurance Corporation upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the Federal Deposit Insurance Corporation. Broadstreet Bank does not know of any practice, condition or violation that may lead to termination of its deposit insurance.

Privacy Regulations. Federal regulations generally require that Broadstreet Bank disclose its privacy policy, including identifying with whom it shares a customer’s “non-public personal information,” to customers at the time of establishing the customer relationship and annually thereafter. In addition, Broadstreet Bank would be required to provide its customers with the ability to “opt-out” of having their personal information shared with unaffiliated third parties and not to disclose account numbers or access codes to non-affiliated third parties for marketing purposes, however, the Bank does not share personal information requiring the opt-out notice. Broadstreet Bank currently has a privacy protection policy in place and believes that such policy is in compliance with the regulations.

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~~contains~~establishing ~~provisions~~the ~~intended~~customer relationship and annually thereafter. In addition, Broadstreet Bank would be required to ~~encourage~~provide its customers with the ability to “opt-out” of having their personal information ~~sharing~~shared ~~among~~with ~~bank~~unaffiliated ~~regulatory~~third ~~agencies~~parties and ~~law~~not ~~enforcement~~to ~~bodies~~disclose ~~and~~account ~~imposes~~numbers ~~affirmative~~or ~~obligations~~access oncodes ~~financial~~to ~~institutions~~non-affiliated third parties for marketing purposes, ~~such~~however, asthe ~~enhanced~~Bank ~~recordkeeping~~does not share personal information requiring the opt-out notice. Broadstreet Bank currently has a privacy protection policy in place and ~~customer~~believes ~~identification~~that ~~requirements~~such policy is in compliance with the regulations.

USA PATRIOT Act. Broadstreet Bank is subject to the USA PATRIOT Act, which gives federal agencies additional powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing, and broadened anti-money laundering requirements. The USA PATRIOT Act contains provisions intended to encourage information sharing among bank regulatory agencies and law enforcement bodies and imposes affirmative obligations on financial institutions, such as enhanced recordkeeping and customer identification requirements.

Prohibitions Against Tying Arrangements. State savings banks are prohibited, subject to some exceptions, from extending credit to or offering any other service, or fixing or varying the consideration for such extension of credit or service, on the condition that the customer obtain some additional service from the institution or its affiliates or not obtain services of a competitor of the institution.

Other Regulations

Interest and other charges collected or contracted for by Broadstreet Bank are subject to state usury laws and federal laws concerning interest rates. Loan operations are also subject to state and federal laws applicable to credit transactions, such as the:

●

Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;

●

Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;

●

Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; and

●

Rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.

The deposit operations of Broadstreet Bank also are subject to, among others, the:

●

Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records;

●

Check Clearing for the 21^st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; and

●

Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services.

Federal Home Loan Bank System

Broadstreet Bank is a member of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks. The Federal Home Loan Bank provides a central credit facility primarily for member institutions. Members of the Federal Home Loan Bank are required to acquire and hold shares of capital stock in their Federal Home Loan Bank. Broadstreet Bank complied with this requirement at December 31, 2024. Based on redemption provisions of the Federal Home Loan Bank of Dallas, the stock has no quoted market value and is carried at cost. Broadstreet Bank reviews for impairment, based on the ultimate recoverability, the cost basis of the Federal Home Loan Bank of Dallas stock. At December 31, 2024, no impairment had been recognized.

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Federal Home Loan Bank System

Broadstreet Bank is a member of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks. The Federal Home Loan Bank provides a central credit facility primarily for member institutions. Members of the Federal Home Loan Bank are required to acquire and hold shares of capital stock in their Federal Home Loan Bank. Broadstreet Bank complied with this requirement at December 31, 2025. Based on redemption provisions of the Federal Home Loan Bank of Dallas, the stock has no quoted market value and is carried at cost. Broadstreet Bank reviews for impairment, based on the ultimate recoverability, the cost basis of the Federal Home Loan Bank of Dallas stock. At December 31, 2025, no impairment had been recognized.

Holding Company Regulation

Texas Community Bancshares is a bank holding company within the meaning of Bank Holding Company of 1956, as amended. As such, Texas Community Bancshares is registered with the Federal Reserve Board and subject to regulations, examinations, supervision and reporting requirements applicable to bank holding companies. In addition, the Federal Reserve Board has enforcement authority over Texas Community Bancshares and its non-savings bank subsidiaries. Among other things, this authority permits the Federal Reserve Board to restrict or prohibit activities that are determined to be a serious risk to Broadstreet Bank.

A bank holding company is generally prohibited from engaging in non-banking activities, or acquiring direct or indirect control of more than 5% of the voting securities of any company engaged in non-banking activities. One of the principal exceptions to this prohibition is for activities found by the Federal Reserve Board to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Some of the principal activities that the Federal Reserve Board has determined by regulation to be so closely related to banking are: (i) making or servicing loans; (ii) performing certain data processing services; (iii) providing discount brokerage services; (iv) acting as fiduciary, investment or financial advisor; (v) leasing personal or real property; (vi) making investments in corporations or projects designed primarily to promote community welfare; and (vii) acquiring a savings association whose direct and indirect activities are limited to those permitted for bank holding companies.

The Gramm-Leach-Bliley Act of 1999 authorized a bank holding company that meets specified conditions, including being “well capitalized” and “well managed,” to opt to become a “financial holding company” and thereby engage in a broader array of financial activities than previously permitted. Such activities can include insurance underwriting and investment banking.

Bank holding companies with less than $3 billion in consolidated assets are exempt from consolidated regulatory capital requirements unless the Federal Reserve Board determines otherwise in particular cases.

By law, holding companies, including bank holding companies, must act as a source of strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial stress.

The Federal Reserve Board has issued supervisory policies regarding the payment of dividends and the repurchase of shares of common stock by bank holding companies and savings and loan holding companies. In general, the policy provides that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the holding company appears consistent with the organization’s capital needs, asset quality and overall financial condition. Regulatory guidance provides for prior regulatory consultation with respect to capital distributions in certain circumstances such as where the company’s net income for the past four quarters, net of capital distributions previously paid over that period, is insufficient to fully fund the dividend or the company’s overall rate of earnings retention is inconsistent with the company’s capital needs and overall financial condition. The ability of a holding company to pay dividends may be restricted if a subsidiary bank becomes undercapitalized. The policy statement also states that a holding company should inform the Federal Reserve Board supervisory staff before redeeming or repurchasing common stock or perpetual preferred stock if the holding company is experiencing financial weaknesses or if the repurchase or redemption would result in a net reduction, at the end of a quarter, in the amount of such equity instruments outstanding compared with the beginning of the quarter in which the redemption or repurchase occurred. ~~These regulatory policies may affect the ability of Texas Community Bancshares to pay dividends, repurchase shares of common stock or otherwise engage in capital distributions.~~

Change in Control Regulations

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aThese ~~determination~~regulatory ~~by the regulator that the acquirer has the power, directly or indirectly, to exercise a controlling influence over the management or~~ policies ofmay ~~the~~affect ~~institution. There is a presumption of control upon~~ the ~~acquisition~~ability of ~~10%~~Texas orCommunity ~~more~~Bancshares ofto apay ~~class of voting stock if the holding company involved has its shares registered under the Securities Exchange Act of 1934~~dividends, ~~or,~~repurchase ~~of the holding company involved does now have its~~ shares ~~registered under the Securities Exchange Act~~ of ~~1934,~~common ifstock ~~no other persons will own, control~~ or ~~hold~~otherwise ~~the~~engage ~~power~~in tocapital ~~vote a greater percentage of that class of voting security after the acquisition~~distributions.

Change in Control Regulations

Under the Change in Bank Control Act, no person or group of persons may acquire “control” of a bank holding company, such as Texas Community Bancshares, unless the Federal Reserve Board has been given 60 days’ prior written notice and has not issued a notice disapproving the proposed acquisition, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the competitive effects of the acquisition. Control, as defined under federal law, means ownership, control of or holding irrevocable proxies representing more than 25% of any class of voting stock, control in any manner of the election of a majority of the institution’s directors, or a determination by the regulator that the acquirer has the power, directly or indirectly, to exercise a controlling influence over the management or policies of the institution. There is a presumption of control upon the acquisition of 10% or more of a class of voting stock if the holding company involved has its shares registered under the Securities Exchange Act of 1934, or, of the holding company involved does now have its shares registered under the Securities Exchange Act of 1934, if no other persons will own, control or hold the power to vote a greater percentage of that class of voting security after the acquisition.

Federal Securities Laws

The common stock of Texas Community Bancshares is registered with the Securities and Exchange Commission. Texas Community Bancshares is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 is intended to improve corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws. We have policies, procedures and systems designed to comply with these regulations, and we review and document such policies, procedures and systems to ensure continued compliance with these regulations.

Emerging Growth Company Status

Texas Community Bancshares is an emerging growth company. For as long as it continues to be an emerging growth company, it may choose to take advantage of exemptions from various reporting requirements applicable to public companies. These exemptions include, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As an emerging growth company, Texas Community Bancshares also will not be subject to Section 404(b) of the Sarbanes-Oxley Act of 2002, which would require that our independent auditors audit our internal control over financial reporting. We have also elected not to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Such an election is irrevocable during the period a company is an emerging growth company.

Texas Community Bancshares will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of the completion of the Conversion; (ii) the first fiscal year after our total annual gross revenues are $1.235 billion (adjusted for inflation) or more; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million at the end of the second quarter of that fiscal year. We expect to lose our status as an emerging growth company effective December 31, 2026, which is the end of the fiscal year following the fifth anniversary of the completion date of the Conversion.

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Taxation

Broadstreet Bank and Texas Community Bancshares are subject to federal and state income taxation in the same general manner as other corporations, with some exceptions discussed below. The following discussion of federal and state taxation is intended only to summarize certain pertinent tax matters and is not a comprehensive description of the tax rules applicable to Texas Community Bancshares or Broadstreet Bank.

Our federal and state tax returns have not been audited for the past five years.

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Federal Taxation

Method of Accounting. Broadstreet Bank currently reports income and expenses on the accrual method of accounting and use a tax year ending December 31 for filing their federal income tax returns. The Small Business Protection Act of 1996 eliminated the use of the reserve method of accounting for income taxes on bad debt reserves by savings institutions. For taxable years beginning after 1995, Broadstreet Bank has been subject to the same bad debt reserve rules as commercial banks. It currently utilizes the specific charge-off method under Section 582(a) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). Texas Community Bancshares and Broadstreet Bank will file a consolidated federal income tax return.

Alternative Minimum Tax. The Internal Revenue Code imposes an alternative minimum tax at a rate of 20% on a base of regular taxable income plus certain tax preferences, less an exemption amount, referred to as “alternative minimum taxable income.” The alternative minimum tax is payable to the extent tax computed this way exceeds tax computed by applying the regular tax rates to regular taxable income. Net operating losses can, in general, offset no more than 90% of alternative minimum taxable income. Certain payments of alternative minimum tax may be used as credits against regular tax liabilities in future years. The Tax Cuts and Jobs Act repealed the alternative minimum tax for income generated after January 1, 2018. At December 31, ~~2024~~2025, Broadstreet Bank had no minimum tax credit carryovers.

Net Operating Loss Carryovers. As a result of the Tax Cuts and Jobs Act generally, a financial institution may carry net operating losses forward indefinitely. At December 31, ~~2023~~2024, Broadstreet Bank had a $2.38 million federal net operating loss carryforward.

Capital Loss Carryovers. A corporation cannot recognize capital losses in excess of capital gains generated. Generally, a financial institution may carry back capital losses to the preceding three taxable years and forward to the succeeding five taxable years. Any capital loss carryback or carryover is treated as a short-term capital loss for the year to which it is carried. As such, it is grouped with any other capital losses for the year to which it is carried and is used to offset any capital gains. Any undeducted loss remaining after the five-year carryover period is no longer deductible. At December 31, ~~2024~~2025, Broadstreet Bank had no capital loss carryovers.

Corporate Dividends. Texas Community Bancshares, Inc. may generally exclude from its income 100% of dividends received from Broadstreet Bank, as a member of the same affiliated group of corporations.

Excise Tax. The Internal Revenue Code imposes a stock repurchase excise tax equal to 1% of the fair market value of any stock of the Company that is repurchased by the Company during the taxable year beginning January 1, 2023. The tax is not included in income tax expense, but is recognized as a cost of the stock repurchased and reflected in the end of year treasury stock balance.

State Taxation

Texas State Taxation. Texas Community Bancshares and Broadstreet Bank file a combined annual report and pay franchise tax to the State of Texas.

Maryland State Taxation. As a Maryland business corporation, Texas Community Bancshares is required to file a personal property and income tax return and pay taxes to the State of Maryland.

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ITEM 1A.Risk Factors

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

ITEM 1B.Unresolved Staff Comments

None.

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ITEM 1C.Cybersecurity

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), ~~and Ransomware Self-Assessment Tool (R-SAT),~~ 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 ~~updates~~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 ~~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.

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ofexperience. ~~operational~~We ~~risk~~view ~~such~~cybersecurity as ~~information~~a ~~technology~~shared ~~activities; risks associated with development~~responsibility, ~~infrastructure,~~ and ~~cybersecurity;~~we ~~oversight~~periodically ofperform ~~information~~simulations ~~security~~and ~~risk~~tabletop ~~assessments,~~exercises ~~strategies, policies,~~ and ~~programs;~~incorporate ~~and~~external ~~disaster~~resources ~~recovery, business continuity,~~ and ~~incident~~advisors ~~response~~as ~~process~~needed. ~~The ISO also provides periodic cybersecurity updates to the Board of Directors.~~

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, ~~2024~~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, ~~2024~~2025:


	Leased or	Year Acquired	Net Book Value of
Location	Owned	or Leased	~~Real~~Land, ~~Property~~Building & Equipment
			(In thousands)
Main Office:
215 West Broad Street Mineola, TX 75773	Own	1964	$	1,~~724~~668

Branch Offices:
Corporate Office:
5755 Eagles Nest Blvd Tyler, TX 75703	Lease	2025	$	34

1224 North Pacific Street Mineola, TX 75773	Lease	1999	$	81
Branch Offices:

415 West Frank Street Grand Saline, TX 75140	Own	2006	$	971
1224 North Pacific Street Mineola, TX 75773	Lease	1999	$	75

500 South Main Street Winnsboro, TX 75494	Own	2005	$	1,231
415 West Frank Street Grand Saline, TX 75140	Own	2006	$	935

304 South Main Street Lindale, TX 75771	Own	2017	$	4,174
500 South Main Street Winnsboro, TX 75494	Own	2005	$	1,191

500 West Pine Street Edgewood, TX 75117	Own	2018	$	825
304 South Main Street Lindale, TX 75771	Own	2017	$	4,062

917 East Southeast Loop 323 Tyler, TX 75701	Own	2023	$	2,466
500 West Pine Street Edgewood, TX 75117	Own	2018	$	773

917 East Southeast Loop 323 Tyler, TX 75701	Own	2023	$	2,412

In ~~2024~~2025, the Company ~~listed~~leased ~~two~~corporate ~~buildings~~office space in Tyler, Texas for ~~sale~~employee ~~that~~and ~~were~~customer ~~purchased~~accessibility ~~for~~and ~~future~~began ~~expansion.~~due ~~These~~diligence ~~properties~~for ~~are~~purchase ~~now~~of ~~classified~~land asin ~~other~~Terrell, ~~real~~Texas ~~estate~~for ~~owned.~~a Innew ~~the~~branch. ~~first~~At ~~quarter~~December of31, ~~2024~~2025, wethe ~~opened~~book avalue ~~new~~of ~~branch~~the inland ~~Tyler,~~being ~~Texas~~purchased was $117,000 and ~~moved~~the ~~into~~Company closed on the ~~new~~property ~~branch~~on ~~building~~January ~~located~~5, at2026 ~~the~~for ~~same~~a ~~location~~purchase inprice ~~Lindale~~of $1. 5 million. We believe that all other current facilities are adequate to meet our present and foreseeable needs, ~~subject~~with ~~to possible~~ future expansion in Terrell, Texas.

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. AtThe ~~December~~Company ~~31,~~has ~~2024,~~been wenamed ~~were~~a ~~not~~defendant in a ~~party~~legal toaction ~~any~~arising ~~pending~~from the conduct of its normal business and employment activities. Management believes that the legal ~~proceedings~~action against the Company is without merit and intends to defend against it. Any liability that wecould ~~believe~~arise ~~would~~with ~~have~~respect ato ~~material~~this ~~adverse~~action ~~effect~~is onnot ~~our~~reasonably ~~financial~~estimable ~~condition~~at December 31, ~~results~~2025 and in the opinion of ~~operations~~the orCompany, ~~cash~~any ~~flows~~such liability will not have a material adverse effect on the Company’s consolidated financial statements.

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 1119, ~~2025~~2026, we had ~~553~~535 stockholders of record, and 32,~~061~~885,~~652~~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.

The following table summarizes the Company’s repurchases of its outstanding shares of common stock during the quarter ended December 31, ~~2024~~2025.


	Total Number of Shares Purchased		Average Price Paid Per Share	Total Number of Shares Purchased as Part of PubliclyAnnounced Plans	Maximum Number of Shares That May Yet be Purchased Under the Plans
October 1, 2024 - October 31, 2024	5,000	$	15.05	5,000	76,385
October 1, 2025 - October 31, 2025	23,000		16.22	23,000	27,468
November 1, 2024 - November 30, 2024	10,000		15.02	10,000	66,385
November 1, 2025 - November 30, 2025	18,000		16.01	18,000	9,468
December 1, 2024 - December 31, 2024	22,500		15.09	22,500	43,885
December 1, 2025 - December 31, 2025	9,468		16.35	9,468	-
Total	3750,~~500~~468	$	1516.0717	3750,~~500~~468

There were no sales of unregistered securities during the year ended December 31, ~~2024~~2025.

ITEM 6.Reserved

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.

~~Overview~~33

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 2024, many of our originations were loans with adjustable rates. We also invest in securities, which

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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.Overview

Our ~~results~~business consists primarily of ~~operations~~taking ~~depend~~deposits ~~primarily~~from onthe ~~our~~general ~~net~~public ~~interest~~and ~~income.~~investing ~~Net~~those ~~interest~~deposits, ~~income~~together iswith ~~the~~funds ~~difference~~generated ~~between~~from operations and borrowings from the ~~interest~~Federal ~~income~~Home weLoan ~~earn~~Bank onof ~~our~~Dallas, ~~interest-earning~~in ~~assets~~residential real estate loans, commercial real estate loans, construction and ~~the~~land ~~interest~~loans weand, ~~pay~~to ona ~~our~~lesser ~~interest-bearing~~extent, ~~liabilities~~commercial loans and consumer and other loans. ~~Our~~Although ~~results~~the majority of ~~operations~~our ~~also~~loans ~~are~~were ~~affected~~fixed-rate byloans, ~~our~~with ~~provisions~~the ~~for~~growth ~~credit~~in ~~losses~~the commercial lending portfolio in 2025, ~~non-interest~~many ~~income~~of ~~and~~our ~~non-interest~~originations ~~expense~~were loans with adjustable rates. ~~Non-interest~~We ~~income~~also ~~currently~~invest ~~consists~~in securities, which have historically consisted primarily of ~~service~~mortgage-backed ~~charges~~securities onand ~~deposit~~obligations ~~accounts,~~issued ~~other~~by ~~service~~U.S. ~~charges~~government sponsored enterprises and ~~fees~~others, ~~income~~state ~~from~~and ~~bank~~municipal ~~owned~~securities, ~~life~~collateralized ~~insurance~~mortgage obligations, ~~gains~~corporate bonds, and ~~losses~~Federal onHome ~~the~~Loan ~~sale~~Bank orstock. ~~disposal~~We offer a variety of ~~assets~~deposit ~~and~~accounts, ~~other~~including ~~income.~~checking ~~Non-interest~~accounts, ~~expense~~savings ~~currently~~accounts ~~consists~~and ~~primarily~~certificate of ~~expenses~~deposit ~~related~~accounts. Broadstreet Bank is subject to ~~salaries~~comprehensive regulation and ~~employee~~examination ~~benefits,~~by ~~occupancy~~the ~~and~~Texas ~~equipment,~~Department ~~data~~of ~~processing,~~Savings ~~technology~~and ~~expenses,~~Mortgage ~~contract~~Lending ~~services,~~and ~~director~~the ~~fees,~~Federal Deposit Insurance Corporation and ~~other~~is ~~expenses~~a member of the Federal Home Loan Bank system.

WeOur ~~invest~~results inof ~~bank~~operations ~~owned~~depend ~~life~~primarily ~~insurance~~on toour ~~provide~~net usinterest ~~with~~income. aNet ~~funding~~interest ~~source~~income tois ~~offset~~the ~~some~~difference ~~costs~~between ofthe interest income we earn on our ~~benefit~~interest-earning ~~plan~~assets ~~obligations~~and the interest we pay on our interest-bearing liabilities. ~~Bank~~Our ~~owned~~results ~~life~~of ~~insurance~~operations ~~provides~~also usare ~~with~~affected by our provision for credit losses, non-interest income ~~that~~and isnon-interest ~~nontaxable~~expense. ~~Federal~~Non-interest ~~regulations~~income ~~generally~~currently ~~limit~~consists ~~our~~primarily ~~investment~~of inservice charges on deposit accounts, other service charges and fees, income from bank owned life insurance, togains ~~25%~~and oflosses ~~our~~on ~~Tier~~the 1sale ~~capital~~or ~~plus~~disposal ~~our~~of ~~allowance~~assets ~~for~~and ~~credit~~other ~~losses~~income. AtNon-interest ~~December~~expense ~~31,~~currently ~~2024,~~consists ~~our~~primarily ~~investment~~of inexpenses ~~bank~~related ~~owned~~to ~~life~~salaries ~~insurance~~and ~~was~~employee ~~$6.4~~benefits, ~~million~~occupancy and equipment, ~~which~~data ~~was~~processing, ~~within~~technology ~~this~~expenses, ~~investment~~contract ~~limit~~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:

● Continue to serve our community as a community bank. Since our founding in 1934, we have operated as a community bank. Historically, our primary lending activity has been the origination of fixed-rate residential mortgage loans to individuals in our market area funded primarily by deposits gathered from individuals and businesses in our market area. We expect that real estate lending will continue to be a primary focus of our business for the foreseeable future, however, this focus has expanded to include more commercial real estate as an integral part of the Company’s strategic plan. As part of our customer focus, we generally do not sell the loans we originate but retain them in our portfolio. In 2024, we sold a block of residential loans in order to restructure the loan portfolio more quickly, but it is not part of our normal procedures to sell the loans we originate. When customers have questions regarding their loans, they are able to deal directly with us rather than another institution. At December 31, ~~2024~~2025, one-to-four family residential mortgage loans totaled $~~145~~140.64 million, or 4945.08% of total loans. This amount includes one- to four-family residential mortgage loans originated in the Dallas Fort Worth Metroplex. We have originated one-to-four family residential mortgage loans secured primarily by owner-occupied properties ~~primarily~~ located in the ~~northern~~Dallas ~~and~~Fort ~~eastern~~Worth ~~sections of the Dallas~~ Metroplex for over ten years and continue to do so primarily through existing relationships and word-of-mouth referrals. At December 31, ~~2024~~2025, these loans amounted to $4442.64 million and included $2714.8 million of jumbo loans with current balances exceeding the 2025 conforming loan limits.

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● Grow and diversify our loan portfolio prudently. There has been an influx of retirees and others from the Dallas metropolitan area and an influx of new residents in general into the state of Texas and our market area. Our more rural market area offers a lower-cost of living and many recreational amenities, while being within easy reach of the cities of Dallas and Tyler and the urban amenities they offer. We believe this movement away from major cities like Dallas was accelerated by the work-from-home trend. In 2024, we opened a branch office in Tyler, Texas and a new branch office in Lindale, Texas in order to better serve that rapidly growing Smith county market. In 2018 we acquired our branch office in Edgewood, Texas. Edgewood is located in a growth area of our market because of its closer proximity to Dallas. The increase in population in our market area as well as the expansion in Smith county has provided opportunities for residential mortgage lending, construction and land lending, and commercial real estate lending. We closed a loan production office in Canton, Texas in 2024 after determining that we can adequately meet the loan demand of that area through the use of technology and other resources. As we continue our historical focus on the origination of residential mortgage loans, we have increased our focus on commercial real estate lending and construction and land lending to continue to diversify our loan portfolio and income sources. At December 31, ~~2024~~2025, commercial real estate loans amounted to $5661.15 million, or 1920.01% of total loans compared to $4156.81 million, or 1418.89% at December 31, ~~2023~~2024, and construction and land loans amounted to $5448.14 million, or 1815.48% of total loans compared to $3754.51 million, or 1318.32% at December 31, ~~2023~~2024. In 2024, we sold a block of 111 residential loans totaling $24.3 million to reallocate into commercial real estate and other categories to accelerate ~~diversifying~~diversification of the portfolio with a goal of increasing our interest income and mitigating interest rate risk.

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

● Continue to grow core deposits. We consider our core deposits to include statement savings accounts, money market accounts, negotiable orders of withdrawal (NOW) accounts, other savings deposits and checking accounts. We will continue our efforts to increase our core deposits to provide a stable source of funds to support loan growth at costs consistent with improving our interest rate spread and net interest margin. Core deposits totaled $~~205~~194.91 million, or 6159.32% of total deposits, as of December 31, ~~2024~~2025, compared to $~~198~~205.59 million, or 6261.63% of total deposits, as of December 31, ~~2023~~2024.

● Continue to manage credit risk to maintain a low level of nonperforming assets. Historically, we have been able to maintain a high level of asset quality. We believe strong asset quality remains a key factor to our long-term financial success. Our total nonperforming assets to total assets ratio was 02.6265% and 0.3062% at December 31, ~~2024~~2025 and ~~2023~~2024, respectively. This increase is due primarily to the foreclosure of one multi-family property, now held in other real estate owned and currently for sale. Our strategy for credit risk management continues to focus on having an experienced team of credit professionals, well-defined policies and procedures, appropriate loan underwriting criteria and active credit monitoring.

●

Grow organically and through opportunistic acquisitions or branching. We intend to grow our assets organically on a managed basis, and the capital raised in the offering has enabled us to increase our lending and investment capacity. In addition to organic growth, we may also consider expansion opportunities in our market area or in contiguous markets that we believe would enhance both our franchise value and stockholder returns. These opportunities may include acquiring other financial institutions and/or establishing loan production offices, establishing new, or de novo, branch offices and/or acquiring branch offices, and the capital we raised in the offering will help us fund any such opportunities that may arise.

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 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.35

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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 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.

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

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.


	At December 31,		At December 31,
	~~2024~~2025		~~2023~~2024
	(In thousands)
Selected Financial Condition Data (Amounts in thousands):
Selected Financial Condition Data:
Total assets	$	429,842	$	443,457
Total assets	$	443,457	$	452,044
Cash and cash equivalents		6,450		13,290
Cash and cash equivalents		13,290		13,060
Interest bearing deposits in banks		5,509		9,720
Interest bearing deposits in banks		9,720		12,298
Securities available for sale		59,893		75,189
Securities available for sale		75,189		93,327
Securities held to maturity		18,283		22,096
Securities held to maturity		22,096		26,020
Loans and leases receivable, net		303,205		293,708
Loans and leases receivable, net		293,708		279,932
Premises and equipment, net		11,459		11,526
Premises and equipment, net		11,526		11,609
Bank owned life insurance		6,544		6,370
Bank owned life insurance		6,370		6,238
Other real estate owned		9,271		480
Other real estate owned		480		162
Restricted investments carried at cost		2,773		3,715
Restricted investments carried at cost		4,252		3,909
Core deposit intangible		—		132
Core deposit intangible		132		265
Total deposits		327,904		335,828
Total deposits		335,828		317,241
Advances from the Federal Home Loan Bank		45,669		49,878
Advances from the Federal Home Loan Bank		49,878		76,896
Total shareholders' equity		53,757		52,108
Total shareholders' equity		52,108		53,689


	For the ~~Years~~Twelve Months Ended December 31,
	~~2024~~2025		~~2023~~2024
	(In thousands)
Selected Operating Data (Amounts in thousands):
Selected Operating Data:
Interest income	$	22,491		22,452
Interest income	$	22,452		18,978
Interest expense		9,177		9,902
Interest expense		9,902		7,914
Net interest income		13,314		12,550
Net interest income		12,550		11,064
Provision for credit losses		831		158
Provision for credit losses		158		356
Net interest income after provision for credit losses		12,483		12,392
Net interest income after provision for credit losses		12,392		10,708
Noninterest income (loss)		3,079		(1,903)
Noninterest (loss) income		(1,903)		352
Noninterest expense		12,198		12,270
Noninterest expense		12,270		11,997
Income (Loss) before income taxes		3,364		(1,781)
Loss before income taxes		(1,781)		(937)
Income tax expense (benefit)		522		(476)
Income tax benefit		(476)		(204)
Net income (loss)	$	2,842	$	(1,305)
Net loss	$	(1,305)	$	(733)

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	At or For the Years Ended
	December 31,
	~~2024~~2025		~~2023~~2024

Performance Ratios:
Return on average assets	(0.~~29)~~65	%	(0.1729)	%
Return on average equity	(36.~~08)~~18	%	(13.7508)	%
Interest rate spread (1)	2.5180	%	2.2751	%
Net interest margin (2)	23.9826	%	2.7398	%
Noninterest expense to average assets	2.7377	%	2.7973	%
Efficiency ratio (3)	~~115~~74.2441	%	~~105~~115.0924	%
Average interest-earning assets to average interest-bearing liabilities	120.0145	%	~~123~~120.4301	%

Capital Ratios:
Average equity to average assets	910.4445	%	9.7744	%
Total capital to risk-weighted assets (4)	15.60	%	16.73	%
Total capital to risk-weighted assets	16.67	%	15.60	%
Tier 1 capital to risk-weighted assets (4)	14.59	%	15.65	%
Tier 1 capital to risk-weighted assets	15.57	%	14.59	%
Common equity tier 1 capital to risk-weighted assets (4)	14.59	%	15.65	%
Common equity tier 1 capital to risk-weighted assets	15.57	%	14.59	%
Tier 1 capital to average assets	1011.8474	%	10.7684	%

Asset Quality Ratios:
Allowance for credit losses as a percentage of total loans	1.0912	%	1.09	%
Allowance for credit losses as a percentage of nonperforming loans	~~142~~161.5705	%	~~267~~142.5957	%
Allowance for credit losses as a percentage of nonaccrual loans	~~151~~170.6280	%	~~340~~151.5962	%
Nonaccrual loans as a percentage of total loans	0.7266	%	0.3272	%
Net (charge-offs) recoveries to average outstanding loans during the year	(0.0517)	%	(0.0205)	%
Nonperforming loans as a percentage of total loans	0.7670	%	0.4176	%
Nonperforming loans as a percentage of total assets	0.5150	%	0.2651	%
Total nonperforming assets as a percentage of total assets	02.6265	%	0.3062	%

Other Data:
Number of offices	7		67
Number of full-time employees	6061		6260
Number of part-time employees	810		58

(1)

Represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(2)

Represents net interest income as a percentage of average interest-earning assets.

(3)

Represents noninterest expenses divided by the sum of net interest income and noninterest income.

Comparison of Financial Condition at December 31, ~~2024~~2025 and December 31, ~~2023~~2024

Total Assets. Total assets were $~~443~~429.58 million as of December 31, ~~2024~~2025, a decrease of $813.57 million, or 13.91%, when compared to total assets of $~~452~~443.05 million as of December 31, ~~2023~~2024. The decrease was due primarily to a decrease in securities of $2219.01 million, or 1819.46%, to $9778.32 million at December 31, ~~2024~~2025 from $~~119~~97.3 million at December 31, ~~2023~~2024, ~~and~~ a decrease in ~~interest~~cash ~~bearing~~and ~~deposits~~equivalents ~~in banks~~ of $2.6.8 million, or 2151.1%, to $96.75 million at December 31, ~~2024~~2025 from $1213.3 million at December 31, ~~2023~~2024, ~~partially~~and ~~offset~~a bydecrease ~~an increase~~ in ~~net~~interest ~~loans~~bearing ~~and~~deposits ~~leases~~in banks of $134.82 million, or 443.93%, to $~~293~~5.75 million at December 31, ~~2024~~2025 from $~~279.~~9.7 million at December 31, ~~2023,~~2024 partially offset by an increase in ~~other~~net ~~real~~loans ~~estate~~and ~~owned~~leases of $~~318~~9.5 million,~~000,~~ or ~~196.~~3.2%, to $~~480,000~~303.2 million at December 31, ~~2024~~2025 ~~which~~from ~~consisted of two buildings the Company had purchased for expansion and had listed for sale, an increase of~~ $~~343,000, or 8~~293.~~8%,~~7 ~~to $4.3~~ million at December 31, 2024 ~~in restricted investments carried at cost~~, ~~which~~and ~~includes~~an ~~$3.5 million in FHLB stock. The~~ increase in ~~loans~~other ~~was~~real ~~net~~estate ofowned ~~the sale~~ of ~~111 performing residential mortgage loans totaling~~ $248.38 million, ator a1837.5% ~~loss~~to of $39.83 million, ~~net~~at ofDecember ~~mortgage servicing rights retained~~31, as2025 ~~part~~which consisted of a ~~portfolio~~foreclosed ~~repositioning~~multifamily ~~strategy~~property, totwo ~~take~~parcels ~~advantage~~ of ~~repricing~~land ~~opportunities~~received ~~with~~in ~~the~~lieu ~~goal~~ of ~~increasing yield~~foreclosure, ~~shortening weighted average life~~ and ~~diversifying~~a building the ~~loan~~Bank had ~~portfolio~~purchased byfor ~~reducing~~expansion ~~the~~and ~~concentration~~had inlisted ~~residential~~for ~~mortgage loans~~sale. The decrease in securities included sales of securities tofor ~~partially~~general ~~fund~~liquidity ~~loan~~ purposes.

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growth and a paydown in FHLB advances of $27.0 million, or 35.1%, to $49.9 million at December 31, 2024 from $76.9 million at December 31, 2023 partially offset by an increase in deposits of $18.6 million, or 5.9%, to $335.8 million at December 31, 2024 from $317.2 million at December 31, 2023.

Cash and Cash Equivalents. Total cash and cash equivalents (which includes fed funds sold) increased $230,000, or 1.5%, to $13.3 million (including $9.3 million in Fed Funds sold) at December 31, 2024 from $13.1 million (including $7.6 million in Fed Funds sold) at December 31, 2023. These accounts provided a favorable yield while maintaining a high level of liquidity. The Bank continued to strategically hold more liquid assets while restructuring the loan portfolio throughout 2024.

Interest Bearing Deposits in Banks. Interest bearing deposits in banks decreased $2.6 million, or 21.1%, to $9.7 million at December 31, 2024, from $12.3 million at December 31, 2023. The decrease was primarily the result of a reduction of $3.2 million in Qwickrate Certificates of Deposit (CDs). The Bank utilizes the Qwickrate listing service, which is a resource where banks can purchase and sell Certificates of Deposit (CDs) with other banks to invest excess funds in CDs at a competitive rate. At December 31, 2024, there were no Qwickrate CDs with other banks. Those funds were used primarily to fund loan growth and reduce FHLB debt.

Securities Available for Sale. Securities available for sale decreased by $18.1 million, or 19.4%, to $75.2 million at December 31, 2024 from $93.3 million at December 31, 2023. The decrease in securities resulted primarily from sales of securities in 2024 to take advantage of the current market interest rate spreads. During the twelve months ended December 31, 2024, we had sales of securities of $20.1 million partially offset by strategic purchases of $19.4 million in securities with more attractive yields or overall terms and received paydowns and payoffs of $18.4 million. Net unrealized losses on the available for sale portfolio, including derivatives, decreased by $826,000, or 14.8%, to $4.8 million, net of tax, from $5.7 million, net of tax, due primarily to decreases in market interest rates. Gross unrealized losses on the available for sale portfolio consisting of 77 securities decreased from $7.2 million, or 7.2% of the portfolio’s amortized cost of $100.5 million at December 31, 2023, to $6.5 million, or 8.0% of the amortized cost of $81.6 million at December 31, 2024. These unrealized losses are due to increases in market interest rates since the time of purchase.

At December 31, 2024, the AFS portfolio was comprised of 12.2% residential mortgage backed securities, 61.9% collateralized mortgage obligations, 17.7% state and municipal securities and 8.2% corporate bonds.

Securities Held to Maturity. Securities held to maturity decreased by $3.9 million, or 15.0%, to $22.1 million at December 31, 2024 from $26.0 million at December 31, 2023. This decrease is primarily due to principal repayments of $3.4 million and one call of $395,000. At December 31, 2024, the portfolio was comprised of 86.4% residential mortgage backed securities, 7.1% state and municipal securities and 6.5% U.S. government and agency bonds.

Loans and Leases Receivable, Net. Net loans and leases receivable increased $13.8 million, or 4.9%, to $293.7 million at December 31, 2024 from $279.9 million at December 31, 2023. The increase in loans was primarily due to an increase in commercial real estate loans and construction and land loans from investing the funds from the sale of 111 performing residential mortgage loans totaling $24.3 million being sold at a loss of $3.8 million, net of mortgage servicing rights retained of $239,000. The sales were part of a portfolio repositioning strategy to take advantage of repricing opportunities with the goal of increasing yield, shortening weighted average life and diversifying the loan portfolio by reducing concentration risk in residential mortgage loans. In addition to the loan sale, there was $98.1 million in loan originations partially offset by $53.7 million in payoffs and other principal reductions and $13.5 million in contractual repayments.

The loan portfolio has become more diverse in line with the Bank’s strategic plan to increase loans in the commercial real estate sector. Loans secured by residential real estate, multifamily and farmland decreased $24.2 million, or 12.8%, to $165.6 million, or 55.8% of the loan portfolio, at December 31, 2024 from $189.8 million, or 67.1% of total loans at December 31, 2023 and commercial real estate loans increased $14.3 million, or 34.2%, to $56.1 million, or 18.9% of total loans at December 31, 2024 from $41.8 million, or 14.8% of total loans at December 31, 2023. Construction and land loans increased $16.6 million, or 44.3%, to $54.1 million at December 31, 2024 from $37.5 million at December 31, 2023.

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At ~~December~~Cash ~~31,~~and ~~2024,~~Cash ~~commercial~~Equivalents. ~~real~~Total ~~estate~~cash ~~loans~~and ~~consisted~~cash ofequivalents ~~$23.4~~(which ~~million~~includes ~~owner~~fed ~~occupied~~funds ~~and~~sold) decreased $326.78 million, ~~non-owner~~or ~~occupied real estate~~51. ~~At December 31~~1%, ~~2024,~~to ~~commercial real estate loans primarily include loans collateralized by self-storage facilities (~~$166.35 million), ~~commercial rental properties~~ (including $72.6 million), ~~gas~~in ~~stations~~Fed ~~with~~Funds ~~convenience stores ($10.5 million~~sold), ~~churches~~at ~~($4.5~~December ~~million)~~31, ~~rural~~2025 ~~water~~from ~~district assets (~~$313.83 million), ~~restaurants~~ (including $39.63 million), ~~and~~in ~~hotels~~Fed ~~($923,000~~Funds sold). Atat December 31, 2024~~, $13~~.3 ~~million~~These inbalances ~~commercial~~provided ~~real~~a ~~estate~~favorable ~~loans~~yield ~~are~~while ~~outside~~maintaining ofadequate ~~our~~liquidity ~~primary~~for ~~market~~strategic ~~area.~~funding needs.

~~During~~Interest ~~the~~Bearing ~~year~~Deposits ended December 31, 2024, loan originations totaled $98.1 million of which $9.1 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 $88~~Banks.3 ~~million. Originations~~Interest ~~consisted~~bearing ~~primarily~~deposits ~~of $11.1 million~~ in ~~one-to-four~~banks ~~family~~decreased ~~residential mortgage loans,~~ $24.~~7 million in multifamily loans, interim construction loans of $25.~~2 million ~~(when fully funded upon completion)~~, $19.5 million in commercial real estate loans, $5.1 million in consumer loans, $5.0 million in commercial and industrial loans, $17.7 million in land and development loans, $3.2 million in farmland loans and $8.5 million in municipal loans. Originated interim construction loans included $7.9 million in commercial construction, $15.1 million in residential construction loans, including 16 speculative residential loans of $6.5 million, two subdivision loans totaling $1.6 million and one multi-family construction loan totaling $598,000. During the year ended December 31, 2024, interim construction loans (when fully funded upon completion) decreased by $11.8 million, or 2143.73%, to $425.5 million at December 31, ~~2024~~2025, from $549.37 million at December 31, ~~2023~~2024. The ~~total~~decrease ~~interim~~was ~~construction~~the ~~loan~~result ~~portfolio consisted~~ of 55general ~~loans~~funding ~~with~~needs ~~funded~~for ~~balances~~loan ~~of $33.1 million at December 31~~growth, ~~2024~~and ~~compared~~the topaydown ~~82 loans at December 31, 2023 with funded balances~~ of ~~$31.5~~maturing ~~million.~~FHLB ~~Construction~~Advances ~~loans~~and ~~continue~~brokered todeposits, beand a ~~large~~decrease ~~segment of our loan portfolio with the majority of the loans being originated~~ in ~~our~~core ~~primary market~~deposits.

~~Deposits~~Securities Available for Sale. ~~Deposits~~Securities ~~increased~~available for sale decreased by $1815.63 million, or 520.93%, to $~~335~~59.89 million at December 31, ~~2024~~2025 from $~~317~~75.2 million at December 31, ~~2023~~2024. ~~Core~~ ~~deposits~~The ~~(defined~~decrease asin ~~all~~securities ~~deposits~~resulted ~~other~~primarily ~~than~~from ~~certificates~~sales of ~~deposit)~~securities ~~increased~~in ~~$7.4~~2025 ~~million,~~for orgeneral ~~3.7%,~~liquidity ~~to $205~~purposes.9 ~~million~~During atthe year ended December 31, ~~2024 from $198.5 million at December 31~~2025, ~~2023.~~we ~~Retail~~had ~~certificates~~sales of ~~deposit~~securities ~~increased~~of $123.28 million, orpartially ~~1.1%,~~offset toby ~~$107.9~~strategic ~~million~~purchases atof ~~December 31, 2024 from~~ $~~106~~23.7 million atin ~~December~~securities ~~31,~~with ~~2023.~~more ~~Brokered~~attractive ~~deposits~~yields ~~increased $10.0 million,~~ or ~~83.4%,~~overall toterms ~~$22.0~~and ~~million~~received atpaydowns ~~December~~and ~~31,~~payoffs ~~2024,~~of ~~from~~ $1217.07 million. ~~at December 31~~Additionally, ~~2023.~~we ~~The~~purchased ~~increase in brokered CDs primarily funded the~~ $1030.0 million ~~prepayment~~in ofshort-term ~~FHLB~~US ~~advances.~~treasury Insecurities ~~2023, we increased the rate on money market accounts and matched CD rates~~ as part of a ~~retention~~tax ~~effort~~management ~~during~~strategy. Unrealized alosses ~~time~~on ofthe ~~rising~~available ~~market~~for ~~interest~~sale ~~rates~~portfolio ~~and~~decreased aby ~~competitive deposit market~~$2.6 ~~Although~~million, ~~rates~~or ~~decreased~~40.0%, into ~~2024~~$3.9 million, ~~the~~from ~~movement~~$6.5 ~~within~~million, ~~the~~due ~~portfolio~~primarily to ~~higher~~decreases ~~yielding~~in ~~accounts~~market ~~and~~interest ~~the~~rates. ~~additional~~Gross ~~brokered~~unrealized ~~CDs~~losses ~~are~~on the ~~primary~~available ~~reasons~~ for ansale ~~increase~~portfolio inconsisting ~~our average cost~~ of ~~deposits~~66 ofsecurities 42decreased ~~basis~~from ~~points~~$6.5 million, or 178.40%, toof ~~2.83%~~the atportfolio’s ~~December~~amortized ~~31,~~cost ~~2024,~~of ~~compared to 2~~$81.~~41%~~6 million at December 31, ~~2023. At December 31,~~ 2024, ~~there~~to ~~were 191 accounts with balances in excess of the~~ $~~250,000 FDIC insurance limit with a total balance of $98~~3.09 million, or 296.21% of ~~deposits.~~the ~~The~~amortized ~~amount~~cost ~~that~~of ~~was over~~ $~~250,000 was $50~~63.38 million, orat ~~15.0%,~~December ~~that was potentially uninsured~~31, ~~including~~2025. These ~~certificates~~unrealized oflosses ~~deposit~~are ofdue ~~$10.7~~to ~~million~~increases ~~and~~in ~~$39.6~~market ~~million~~interest inrates ~~checking,~~since ~~MMDA~~the ~~and~~time ~~savings~~of ~~accounts~~purchase.

~~Advances~~At ~~from the Federal Home Loan Bank. Advances from the Federal Home Loan Bank decreased by $27.0 million, or 35.1%, to $49.9 million at~~ December 31, ~~2024 from $76.9 million at December 31~~2025, ~~2023~~the ~~due~~AFS ~~primarily~~portfolio towas ~~the~~comprised ~~payoff~~ of ~~nine advances totaling $30~~59.7% ~~million~~collateralized ~~and~~mortgage ~~normal~~obligations, ~~principal payments on amortizing advances of $1~~16.~~3 million partially offset by a short-term purchase of $5.~~0% ~~million. Seven~~corporate ~~advances~~bonds, ~~totaling $25~~14.76% ~~million~~state ~~had matured~~ and ~~two~~municipal ~~advances~~securities, ~~totaling~~and ~~$10~~9.07% ~~million~~residential ~~were~~mortgage ~~prepaid~~backed ~~to take advantage of favorable market conditions~~securities.

~~Shareholders’~~Securities ~~Equity~~Held to Maturity. ~~Total~~Securities ~~shareholders’~~held ~~equity~~to maturity decreased by $13.68 million, or 317.02%, to $5218.13 million at December 31, ~~2024~~2025 from $5322.71 million at December 31, ~~2023~~2024. This decrease ~~was~~is primarily due to aprincipal ~~$1.3~~repayments ~~million net loss for the year ended December 31, 2024 resulting primarily from the pre-tax loss~~ of $3.84 million, ~~net~~and ofmaturities ~~mortgage servicing rights retained, on the sale~~ of ~~residential mortgage loans. The Company also repurchased 107,431 shares of its common stock for a decrease of~~ $~~1.6 million and paid quarterly dividends totaling $504~~365,000,. At ~~partially~~December ~~offset by a decrease in the accumulated other comprehensive loss of $826~~31,~~000,~~ ~~an increase in equity of $223~~2025,~~000~~ ~~for~~ the ~~2024~~portfolio ~~funding~~was comprised of ~~the~~88.1% ~~Broadstreet~~residential ~~Bank~~mortgage ~~leveraged~~backed ~~ESOP with the release of 15~~securities,~~862~~ ~~ESOP~~6.6% ~~shares~~state ~~to participants~~ and ~~$757,000~~municipal ~~related~~securities toand ~~accruals~~5.3% ~~for the equity incentive plan for the year ended December 31, 2024~~U. AtS. ~~December~~government ~~31,~~and ~~2024,~~agency ~~the unallocated ESOP contra equity account was $2~~bonds.~~0 million.~~

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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Atloans ~~December~~increased ~~31,~~$2.5 ~~2024~~million, ~~Broadstreet~~or ~~Bank~~39.7%, ~~opted~~ to ~~use~~$8.8 ~~the~~million, ~~community~~or ~~bank~~2.8% ~~leverage~~of ~~ratio~~total ~~framework~~loans ~~(Tier~~at 1December ~~capital~~31, to2025, ~~average~~from ~~assets)~~$6.3 ~~for~~million, ~~regulatory~~or ~~capital purposes~~2.1% Atof total loans at December 31, 2024. aCommercial ~~community~~real ~~bank~~estate ~~leverage~~loans ~~ratio~~increased of$5.4 atmillion, ~~least~~or 9.06%, ~~is required~~ to be$61.5 ~~considered~~million, ~~“well~~or ~~capitalized”~~20.1% ~~under~~of ~~regulatory~~total ~~requirements. At~~loans at December 31, ~~2024~~2025, ~~Broadstreet~~from ~~Bank’s~~$56.1 ~~community~~million, ~~bank~~or ~~leverage~~18.9% ~~ratio~~of ~~was~~total 10loans at December 31, 2024.~~84%.~~

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 $~~511~~557,000 and $~~631~~511,000 for the years ended December 31, ~~2024~~2025 and ~~2023~~2024, respectively. We have not recorded deferred loan fees, as we have determined them to be immaterial.

For the Year Ended December 31,

~~2024~~2025

~~2023~~2024

Average

Outstanding

Average

Outstanding

Average

Balance

Interest

Yield/Rate

Balance

Interest

Yield/Rate

(Dollars in thousands)

Interest-earning assets:

Loans

~~282~~298,~~894~~300

1517,~~923~~681

5.6393

~~268~~282,~~179~~894

1215,~~842~~923

45.7963

Allowance for credit losses

(3,~~044~~260)

(23,~~642~~044)

Securities

~~110~~97,~~893~~846

4,~~464~~123

4.0321

~~123~~110,~~494~~893

54,~~061~~464

4.1003

Restricted stock

32,~~584~~934

~~221~~167

65.1769

3,~~096~~584

~~159~~221

56.1417

Interest-bearing deposits in banks

137,~~271~~442

~~723~~323

54.4534

813,~~787~~271

~~452~~723

5.1445

Federal funds sold

124,~~465~~781

~~671~~207

54.3833

312,~~661~~465

~~187~~671

5.1138

Financial derivative

~~380~~18

~~450~~(10)

~~559~~380

~~277~~450

Total interest-earning assets

~~420~~408,~~443~~061

22,~~452~~491

5.3451

~~405~~420,~~134~~443

1822,~~978~~452

45.6834

Noninterest-earning assets

2831,~~720~~765

2428,~~667~~720

Total assets

~~449~~439,~~163~~826

~~429~~449,~~801~~163

Interest-bearing liabilities:

Interest-bearing demand deposits

6964,~~237~~213

~~454~~363

0.6657

6069,~~271~~237

~~247~~454

0.4166

Regular savings and other deposits

4542,~~652~~731

~~134~~162

0.2938

5545,~~509~~652

~~171~~134

0.3129

Money market deposits

4445,~~526~~236

1,~~453~~201

32.2665

3244,~~626~~526

1,~~055~~453

3.2326

Certificates of deposit

~~121~~136,~~986~~209

5,~~252~~379

43.3195

~~108~~121,~~011~~986

35,~~871~~252

34.5831

Total interest-bearing deposits

~~281~~288,~~401~~389

7,~~293~~105

2.5946

~~256~~281,~~417~~401

57,~~344~~293

2.0859

Advances from the Federal Home Loan Bank

6850,~~224~~186

2,~~599~~063

34.8111

7168,~~198~~224

2,~~561~~599

3.6081

Other liabilities

~~724~~218

109

14.3813

~~608~~724

910

1.4838

Total interest-bearing liabilities

~~350~~338,~~349~~793

9,~~902~~177

2.8371

~~328~~350,~~223~~349

79,~~914~~902

2.4183

Noninterest-bearing demand deposits

5150,~~760~~640

5451,~~943~~760

Other noninterest-bearing liabilities

4,~~641~~430

4,~~652~~641

Total liabilities

~~406~~393,~~750~~863

~~387~~406,~~818~~750

Total shareholders' equity

4245,~~413~~963

4142,~~983~~413

Total liabilities and shareholders' equity

~~449~~439,~~163~~826

~~429~~449,~~801~~163

Net interest income

1213,~~550~~314

1112,~~064~~550

Net interest rate spread (1)

2.5180

2.2751

Net interest-earning assets (2)

7069,~~094~~268

7670,~~911~~094

Net interest margin (3)

23.9826

2.7398

Average interest-earning assets to interest-bearing liabilities

120.0145

~~123~~120.4301

(1)	Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(2)	Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3)	Net interest margin represents net interest income divided by average total interest-earning assets.

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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.


	Years Ended December 31, ~~2024~~2025 vs. ~~2023~~2024
	Increase (Decrease) Due to				Total Increase
	Volume		Rate		(Decrease)
			(In thousands)
Interest-earning assets:
Loans	$	~~705~~867	$	~~2,376~~891	$	31,~~081~~758
Securities		(~~516~~525)		~~(81)~~184		(~~597~~341)
Restricted stock		25(40)		37(14)		62(54)
Interest-bearing deposits in banks		~~231~~(318)		40(82)		~~271~~(400)
Federal funds sold and other		~~450~~(414)		34(50)		~~484~~(464)
Derivative		—(460)		~~173~~—		~~173~~(460)
Total interest-earning assets		895		2,579		3,474
Total change in interest-earning assets		(890)		929		39

Interest-bearing liabilities:
Interest-bearing demand deposits		37(33)		~~170~~(58)		~~207~~(91)
Regular savings and other deposits		(309)		~~(7)~~37		~~(37)~~28
Money market deposits		~~385~~23		13(275)		~~398~~(252)
Certificates of deposit		~~501~~612		~~880~~(485)		~~1,381~~127
Total deposits		~~893~~593		~~1,056~~(781)		~~1,949~~(188)
Advances from the Federal Home Loan Bank		(~~107~~687)		~~145~~151		38(536)
Other interest-bearing liabilities		2(7)		~~(1)~~6		(1)
Total interest-bearing liabilities		788		1,200		1,988
Total change in interest-bearing liabilities		(101)		(624)		(725)

Change in net interest income	$	~~107~~(789)	$	1,~~379~~553	$	~~1,486~~764

Comparison of Operating Results for the Years Ended December 31, ~~2024~~2025 and December 31, ~~2023~~2024

Net ~~Loss~~Income. ~~The~~Net ~~net~~income ~~loss~~ was $12.38 million for the year ended December 31, ~~2024~~2025, compared to a net loss of $~~733,000~~1.3 million for the year ended December 31, ~~2023~~2024, an ~~increased~~increase ~~loss~~ of $~~572,000,~~4.1 ~~or 78~~million.~~0%.~~ ~~The~~This increase ~~in the loss~~ 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. ~~This~~Additionally, ~~was~~interest ~~partially~~expense ~~offset~~decreased by$725,000, anor ~~increase~~7.1%, ofto $19.52 million, orfor ~~13.4%,~~the inyear ~~net~~ended ~~interest~~December ~~income~~31, a2025 from $~~190,000~~9.9 ~~gain~~million onfor the ~~sale~~year ofended ~~securities~~December ~~and~~31, a2024. ~~decrease~~This was partially offset by an increase in the provision for credit losses of $~~198~~673,000~~. A~~, ~~loss~~or on425.9%, ~~the~~to ~~sale~~$831,000 offor ~~securities~~the ofyear ~~$1.7~~ended ~~million~~December ~~was~~2025 ~~recognized~~from in$158,000 for the ~~prior~~ year ~~ending~~ended December 31, ~~2023~~2024, which was primarily related to a foreclosed multi-family property within our primary service area.

Interest Income. Interest income increased $3.5 million, or 18.4%, to $22.5 million for the year ended December 31, 2024 from $19.0 million at December 31, 2023. 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, 2024. There was an increase in average interest earning assets of $15.3 million, or 3.8%, to $420.4 million at December 31, 2024 from $405.1 million at December 31, 2023 and an increase of 66 basis points, or 14.0%, in average yield on interest–earning assets from 4.68% at December 31, 2023 to 5.34% at December 31, 2024.43

Table of Contents

Interest ~~income~~Income. onInterest ~~the~~income ~~securities~~was ~~portfolio~~unchanged ~~decreased~~at $~~597,000, or 11~~22.~~8% to $4.~~5 million for the ~~year~~years ended December 31, 2024, ~~from~~and $52025.1 This ~~million~~was ~~for~~primarily the ~~year~~result ~~ended~~of ~~December~~increased ~~31,~~interest ~~2023. This~~income ~~decrease~~on isloans ~~primarily~~resulting ~~due~~from toan aincrease ~~decrease~~ in the average balance ofand ~~securities~~average ofyield ~~$12.6~~for ~~million,~~the oryear ~~10.2%,~~ended ~~from~~December ~~$123~~31, 2025.5 This ~~million,~~was ~~for~~offset ~~the~~by ~~year~~decreased ~~ended~~interest ~~December~~on ~~31,~~securities ~~2023~~resulting tofrom ~~$110.9~~a ~~million~~decrease in the average balance for the year ended December 31, ~~2024. The~~2025, ~~average~~as ~~yield~~well onas ~~securities~~decreases ~~declined~~in byinterest ~~seven~~on ~~basis~~deposits ~~points,~~in orbanks ~~1.8%,~~and ~~from~~federal ~~4.10%~~funds ~~for~~sold ~~the~~resulting ~~year~~from ~~ended~~a ~~December~~decrease ~~31,~~in ~~2023~~average tobalances ~~4.03%~~and average yield for the year ended December 31, ~~2024~~2025. ~~The~~Interest ~~yield~~income ~~decrease~~on isfinancial ~~reflective~~derivatives ofdecreased ~~changes~~following in the ~~securities~~termination ~~portfolio~~of ~~due~~the toremaining ~~maturities,~~swap ~~principal~~contracts ~~payments,~~in ~~and~~the ~~strategic~~first ~~purchases~~quarter ~~and~~of ~~sales~~2025. There Inwas ~~2024,~~a ~~the~~decrease ~~Company~~in ~~sold~~average ~~eight~~interest ~~securities~~earning ~~totaling~~assets of $2012.13 million, ator a2.9%, ~~gain~~to of $~~190,000~~408.1 ~~and~~million ~~purchased~~at ~~nine~~December ~~securities~~31, ~~totaling~~2025 from $19420.4 million asat ~~part~~December of31, a2024 ~~balance~~which ~~sheet~~was ~~restructuring~~offset ~~strategy~~by toan increase of 17 basis points, or 3.2%, in average yield on interest–earning ~~income~~assets ~~and~~from ~~diversify~~5.34% ~~the~~at ~~portfolio~~December 31, 2024 to 5. 51% at December 31, 2025.

Interest income on ~~net~~the ~~loans~~securities ~~and~~portfolio ~~leases~~decreased ~~increased~~ $~~3.1 million~~341,000, or 247.06%, to $154.91 million for the year ended December 31, ~~2024~~2025, from $124.85 million for the year ended December 31, ~~2023~~2024. This decrease is primarily due to ana ~~increase~~decrease in the average balance of securities of $1413.71 million, or 511.58%, ~~in the average balance of the loan portfolio~~ from $~~268~~110.29 million, for the year ended December 31, ~~2023~~2024 to $~~282~~97.98 million for the year ended December 31, ~~2024,~~2025. The ~~and~~average anyield ~~increase~~on ofsecurities 84increased by 18 basis points, or 174.5%, ~~in the average yield on loans~~ from 4.7903% for the year ended December 31, ~~2023~~2024 to 54.6321% for the year ended December 31, ~~2024~~2025. The ~~increased~~ yield onincrease ~~loans~~ is ~~primarily~~reflective of changes in the securities portfolio due to ~~increased~~maturities, ~~market~~principal ~~interest rates~~payments, ~~higher~~and ~~loan~~strategic ~~rates~~purchases and ~~fees~~sales. ~~primarily~~In ~~from~~2025, anthe ~~increase~~Company insold ~~commercial~~20 ~~real~~securities ~~estate~~totaling as$23.8 ~~part~~million at a gain of ~~the~~$117,000 ~~execution~~and purchased 16 securities totaling $23.7 million as part of a ~~strategic~~balance sheet restructuring ofstrategy ~~the~~to ~~loan~~increase interest income and diversify the portfolio. inThe ~~which~~Company also purchased $2430.30 million in ~~residential~~short-term ~~loans~~securities ~~were~~as ~~sold~~part ~~and~~of ~~replaced~~a ~~with~~tax ~~other~~management ~~higher-yielding loans~~strategy.

~~Dividends~~Interest income on ~~restricted~~net ~~investments~~loans ~~including stock in the Federal Home Loan Bank~~ and ~~Texas~~leases ~~Independent Bank (TIB)~~ increased $621.8 million,~~000,~~ or 3911.0%, ~~from~~to $~~159,000~~17.7 million for the year ended December 31, ~~2023~~2025 tofrom $~~221,000~~15.9 million for the year ended December 31, 2024. ~~This increase resulted~~ primarily ~~from~~due to an increase ~~in yield~~ of ~~103~~$15.4 ~~basis points~~million, or 205.14%, in the average balance of the loan portfolio from 5$282.~~14%~~9 million for the year ended December 31, ~~2023~~2024 to 6$298.~~17%~~3 million for the year ended December 31, ~~2024~~2025, and an increase inof ~~average~~30 ~~balance~~basis ~~of $488~~points,~~000,~~ or 155.83%, in the average yield on loans from $35.163% ~~million~~ for the year ended December 31, ~~2023~~2024 to $35.693% ~~million~~ for the year ended December 31, ~~2024~~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.

~~Interest~~Dividends ~~income~~on ~~from~~restricted ~~interest~~investments ~~bearing~~including ~~deposits~~stock in ~~banks~~the ~~increased~~Federal Home Loan Bank and Texas Independent Bank (TIB) decreased $~~271~~54,000, or 6024.04%, from $~~452~~221,000 for the year ended December 31, ~~2023~~2024 to $~~723~~167,000 for the year ended December 31, ~~2024,~~2025. ~~resulting~~This ~~primarily~~decrease ~~from~~resulted ~~the~~primarily ~~increase in average yield of 31 basis points, or 6.1%,~~ from ~~5.14% for the year ended December 31, 2023 to 5.45% for the year ended December 31, 2024 and~~ an ~~increase~~decrease in average ~~interest~~balance ~~bearing deposits~~ of $~~4.5 million~~650,000, or 5118.01%, from $83.86 million for the year ended December 31, ~~2023~~2024 to $132.39 million for the year ended December 31, ~~2024.~~2025, ~~There~~and ~~was~~a ~~also~~decrease ~~an increase of $484,000~~ in ~~fed~~yield ~~funds interest income for the year ended December 31, 2024 primarily from an increase~~ of 2748 basis points, or 57.38%, ~~in average yield on fed funds sold~~ from 56.1117% for the year ended December 31, ~~2023~~2024 to 5.3869% for the year ended December 31, ~~2024 and a $8~~2025.8 million, or 237.8%, increase in average fed funds sold from $3.7 million for the year ended December 31, 2023 to $12.5 million for the year ended December 31, 2024. The increases in interest bearing deposits in banks and fed funds are primarily the result of holding the funds from the loan sale in these accounts while waiting to originate new loans, core deposit growth, maturities and principal reductions from the securities portfolio, an increase in brokered deposits, and is partially offset by a reduction in FHLB advances. The increase in yields on deposits in banks and fed funds is reflective of the increase in market interest rates.

Interest income from interest bearing deposits in banks decreased $400,000, or 55.3%, from $723,000 for the ~~fair~~year ~~value~~ended ~~hedge~~December ~~was~~31, 2024 to $~~450~~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% ~~The~~for ~~Company~~the ~~entered~~year ~~into~~ended anDecember ~~interest~~31, ~~rate~~2025 ~~swap~~and ~~agreement~~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 ~~convert~~$7.4 million for the year ended December 31, 2025. There was also a ~~portion~~decrease of ~~its~~$464,000 in fed funds interest ~~rate~~income ~~exposure~~for the year ended December 31, 2025 primarily from ~~fixed~~a ~~rates~~decrease toof ~~floating~~105 ~~rates~~basis points, or 19.6%, in average yield on fed funds sold from 5.38% for the year ended December 31, 2024 to ~~help~~4.33% ~~manage~~for the ~~interest~~year ~~rate~~ended ~~risk~~December ~~position~~31, 2025 and a $7.7 ~~Refer~~million, or 61.6%, decrease in average fed funds sold from $12.5 million for the year ended December 31, 2024 to ~~additional~~$4.8 ~~detail~~million ~~regarding~~for the ~~fair~~year ~~value~~ended ~~hedge~~December 31, 2025. The decreases in ~~Note~~interest 19bearing –deposits ~~Derivatives~~in ofbanks and fed funds are primarily the ~~accompanying~~result ~~consolidated~~of ~~financial~~loan ~~statements~~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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Table of Contents

~~Interest~~The ~~Expense.~~Company ~~Interest~~recorded ~~expense~~a ~~increased~~net ~~$2.0~~interest ~~million,~~expense ~~or 25.3%, to $9.9 million for the year ended December 31, 2024~~ from ~~$7.9 million for~~ the ~~year~~fair ~~ended~~value ~~December~~hedge ~~31, 2023 due primarily to an increase in the average yield on interest bearing liabilities~~ of ~~42 basis points~~$10,000 ~~or 17.2%, from 2.41%~~ for the year ended December 31, ~~2023~~2025 tofollowing ~~2.83%~~termination ~~for~~of the ~~year~~remaining ~~ended~~swap ~~December~~contracts ~~31, 2024 and an increase~~ in the ~~average~~first ~~balance~~quarter. This ofis ~~interest-bearing~~a ~~liabilities~~decrease of $~~22.1 million~~460,000, or 6102.72%, from ~~$328.2~~interest ~~million~~income ~~for~~of ~~the year ended December 31~~$450,000 ~~2023 to $350.3 million~~ for the year ended December 31, 2024 ~~primarily due to an increase in deposit and funding costs~~. ~~Interest~~ ~~expense~~The onCompany ~~deposit~~had ~~accounts~~entered ~~increased~~into ~~$2.0 million, or 37.8%, to $7.3 million for~~ the ~~year~~interest ~~ended~~rate ~~December~~swap ~~31,~~agreement ~~2024~~in ~~from $5.3 million for the year ended December 31,~~ 2023, ~~due~~ to anconvert ~~increase~~a inportion ~~the average deposit cost~~ of 51its ~~basis~~interest ~~points,~~rate orexposure ~~24.4%,~~ from ~~2.08%~~fixed ~~for~~rates ~~the~~to ~~year~~floating ~~ended~~rates ~~December 31, 2023~~ to ~~2.59%~~help ~~for~~manage the ~~year ended December 31, 2024 and an increase in average~~ interest~~-bearing~~ ~~deposits~~rate ofrisk ~~$25~~position.0 ~~million,~~Refer ~~or 9.8%, from $256.4 million for the year ended December 31, 2023~~ to ~~$281.4~~additional ~~million~~detail ~~for~~regarding the ~~year~~fair ~~ended~~value ~~December~~hedge ~~31, 2024, with the increase being primarily~~ in ~~higher~~Note ~~cost~~20 ~~certificates~~– Derivatives of ~~deposit and money market deposits, offset by a decrease in lower cost savings accounts. This migration to higher yielding accounts is due to~~ the ~~interest~~accompanying ~~rate~~consolidated ~~environment,~~financial ~~competition and additional brokered deposits~~statements. ~~At December 31, 2024, market rates had levelled off some and the Bank’s deposit rates had decreased.~~

Interest ~~expense~~Expense. onInterest ~~Federal~~expense ~~Home~~decreased ~~Loan Bank advances increased~~ $38725,000, or 17.53%, to $9.2 million for the year ended December 31, 2025 from $9.69 million for the year ended December 31, 2024. ~~The~~due primarily to a decrease in the average balance of ~~Federal~~interest-bearing ~~Home~~liabilities ~~Loan~~of ~~Bank~~$11.5 ~~advances~~million, ~~decreased~~or by3.3%, from $350.3 million for the year ended December 31, 2024 to $338.08 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 ~~$68~~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, ~~2024~~2025 from $717.23 million for the year ended December 31, ~~2023. This~~2024, ~~was~~due ~~offset~~to bya andecrease ~~increase~~ in the average deposit cost of 2113 basis points, or 54.9%, from 32.6059% for the year ended December 31, ~~2023~~2024 to 32.8146% for the year ended December 31, ~~2024. As~~2025 ~~overall~~and ~~liquidity~~partially ~~has~~offset ~~improved~~by an increase in average interest-bearing deposits of $7.0 million, ~~this~~or ~~has~~2.5%, ~~enabled~~from ~~the~~$281.4 ~~Company~~million tofor ~~pay~~the ~~down~~year ~~FHLB~~ended ~~advances~~December 31, 2024 to $49288.94 million atfor the year ended December 31, ~~2024~~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.

~~Net~~ Interest ~~Income.~~expense ~~Net~~on ~~interest~~Federal ~~income~~Home ~~increased~~Loan ~~$1.5~~Bank ~~million~~advances decreased $536,000, or 1320.56%, to $122.61 million for the year ended December 31, ~~2024~~2025 from $112.16 million for the year ended December 31, ~~2023,~~2024. ~~primarily~~The ~~due~~average tobalance anof ~~increase~~Federal inHome ~~interest-earning~~Loan ~~assets~~Bank ofadvances decreased by $1518.30 million, or 326.84%, to $~~420~~50.42 million atfor the year ended December 31, ~~2024~~2025 from $~~405~~68.12 million atfor the year ended December 31, ~~2023,~~2024. This ~~and~~was offset by an increase in ~~net~~average ~~interest~~cost ~~rate spread~~ of 2430 basis points, or 107.69%, from 23.2781% for the year ended December 31, ~~2023~~2024 to 24.5111% for the year ended December 31, ~~2024~~2025. The ~~Net~~Company ~~interest~~has ~~margin~~paid ~~increased~~down 25FHLB ~~basis~~advances ~~points~~ to 2$45.~~98%~~7 ~~for~~million ~~the~~at ~~year ended~~ December 31, ~~2024 from 2~~2025.~~73% for the year ended December 31, 2023.~~

~~Provision~~Net ~~for~~Interest ~~Credit Losses~~Income. ~~Based~~Net oninterest ~~management’s~~income ~~analysis~~increased of$764,000, ~~the~~or ~~adequacy~~6.1%, ofto ~~the~~$13.3 ~~allowance~~million for ~~credit losses,~~ the ~~provision~~year ~~for~~ended ~~credit~~December ~~losses~~31, ~~was~~2025 from $~~158,000~~12.6 million for the year ended December 31, 2024, ~~compared~~primarily due to ~~$356,000~~an ~~for~~increase ~~the~~in ~~year~~net ~~ended~~interest ~~December~~rate ~~31,~~spread ~~2023,~~of a29 ~~decrease~~basis ~~of $198~~points,~~000,~~ or 5511.65%, ~~primarily~~from ~~due~~2.51% tofor ~~significant~~the ~~loan~~year ~~growth~~ended inDecember ~~2023~~31, ~~and~~2024 ~~the~~to ~~adoption~~2.80% offor ~~ASC~~the ~~326~~year onended ~~January~~December 131, ~~2023~~2025. ~~See~~Net ~~the~~interest ~~CECL~~margin ~~discussion~~increased in28 ~~the~~basis ~~accompanying~~points ~~consolidated~~to ~~financial~~3.26% ~~statements~~ for ~~further~~the ~~explanation~~year ofended ~~the~~December ~~Bank’s~~31, ~~transition~~2025 tofrom 2.98% for the ~~new~~year ~~methodology.~~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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Table of Contents

Noninterest Income. Noninterest income ~~decreased~~increased $25.30 million, or ~~641~~263.02%, to ~~a loss of~~ $13.91 million for the year ended December 31, ~~2024~~2025 from a net loss of $~~352,000~~1.9 million for the year ended December 31, ~~2023~~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 ~~related~~recorded toin the ~~new~~year ~~branch~~ended ~~partially~~December ~~offset~~31, by2024, a $~~190~~495,000 ~~gain~~fair value adjustment on ~~the~~a ~~sale~~commercial ofdevelopment ~~securities.~~property Areceived ~~loss~~in lieu of foreclosure, a $~~1.7~~198,000 ~~million~~gain on ~~the~~other ~~sale~~investment, ofand ~~securities~~$230,000 ~~was~~in ~~recognized~~rental income on foreclosed properties recorded in the year ended December 31, ~~2023~~2025.

Noninterest Expense. Noninterest expense ~~increased~~decreased $~~273~~72,000, or 20.36%, to $12.32 million for the year ended December 31, ~~2024~~2025 from $12.03 million for the year ended December 31, ~~2023~~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 ~~occupancy~~expense ~~and~~related ~~equipment~~to ~~costs~~foreclosed ~~and~~properties ~~other~~in ~~expenses~~the year ended December 31, 2025.

Salary and employee benefit expenses decreased by $~~229~~308,000, or 34.25%, to $6.85 million for the year ended December 31, ~~2024~~2025 from $76.18 million for the year ended December 31, ~~2023~~2024. This is due primarily to an ~~increase in equity award expenses of $229,000 including an~~ extraordinary $129,000 initial vesting expense and nonrecurring expenses of $230,000 related to executive changes in 2024, ~~being~~and ~~offset~~is ~~primarily~~partially offset by ~~reduced~~normal ~~executive~~increases ~~salary~~in ~~expense~~wages, ~~related~~insurance tocosts ~~the CEO transition~~ and ~~the~~payroll ~~termination~~taxes. ofTechnology ~~the~~expense ~~deferred~~decreased ~~compensation~~$137,000, ~~executive~~or ~~incentive plan on December~~ 31.5%, ~~2023.~~to ~~The~~$298,000 ~~remaining~~for ~~increase~~the ~~was~~year ~~due~~ended toDecember ~~normal~~31, ~~increases~~2025 infrom ~~wages~~$435,000 ~~insurance~~for ~~costs~~the ~~and~~year ~~payroll~~ended ~~taxes. Occupancy~~December ~~and~~31, ~~equipment~~2024 ~~expenses~~due ~~increased~~primarily byto ~~$268,000,~~card orprocessing ~~32.1%,~~fees ~~primarily~~incurred ~~due~~in tothe ~~depreciation,~~first ~~building~~half ~~expense~~of ~~and~~2024 ~~property taxes~~ associated with ~~two~~a ~~new~~“tap” ~~bank~~debit ~~branch~~card ~~locations~~implementation ~~opened in 2024~~project. Other expenses combined increased $~~381~~361,000, or 1915.01%, from $2.04 million for the year ended December 31, ~~2023~~2024 to $2.47 million for the year ended December 31, ~~2024~~2025 ~~including~~which included a $~~172~~256,000 increase in ~~audit~~expense ~~and accounting expenses~~ related ~~primarily~~ to ~~additional~~foreclosed ~~loan~~properties ~~review,~~held ~~a $69,000 increase~~ in ~~FDIC~~other ~~assessments~~real ~~due~~estate toowned ~~an overall increase in the assessment rate,~~ and a $67119,000 increase in ~~employee~~marketing ~~training~~ expense~~. Increases~~ ~~for~~due ~~the year ended December 31, 2024 were primarily related~~ to ~~growth,~~contracting ~~including~~with ~~branch~~an ~~completion,~~outside ~~employee~~marketing ~~recruitment~~firm and ~~price~~expanding ~~increases~~our inreach ~~all~~through ~~types~~additional ofadvertising ~~services the Company incurred due to inflationary pressures~~channels.

Income Tax ~~Benefit~~Expense. ~~The~~Income ~~income~~ tax ~~benefit~~expense increased by $~~272~~998,000, orto ~~133.3%, from~~ $~~204~~522,000 for the year ended December 31, ~~2023~~2025 tofrom a tax benefit of $476,000 for the year ended December 31, 2024 due primarily to the increase in the taxable ~~loss~~income. The effective tax rate was 2615.695% and 2126.777% for the years ended December 31, ~~2024~~2025 and ~~2023~~2024, respectively. The ~~increase~~decrease in the effective tax rate was ~~primarily~~ due to ~~taxable~~the ~~income~~non-recurring ~~increasing~~loan atsale aand ~~faster~~related ~~rate~~loss ~~than~~for ~~nontaxable~~the ~~income~~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 ~~Risk~~Asset/Liability ~~Management~~Committee ~~and Interest Rate Risk Management Officer~~ 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 capital levels that exceed the thresholds for well-capitalized status under federal regulations;

●

maintaining a high level of liquidity;

●

growing our volume of core deposit accounts;

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●

managing our investment securities portfolio so as to reduce the average maturity and effective life of the portfolio;

~~● continuing to diversify our investment securities portfolio by continuing to add collateralized mortgage obligations (CMOs) and subordinated debt;~~46

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●

diversifying our securities portfolio by continuing to add collateralized mortgage obligations (CMOs) and subordinated debt;

●

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

●

managing our loan services by adding wholesale lending products to continue to offer these services while reducing interest rate risk in the loan portfolio;

● continuing to diversify our loan portfolio by adding more commercial~~-related~~ loans, which typically have shorter maturities, adjustable rates, and fee income; and

●

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 ~~200~~various ~~and~~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.


At December 31, 2024
At December 31, 2025
Change in Interest Rates	Net Interest Income Year		Year 1 Change from
(basis points) (1)	1 Forecast		Level
(Dollars in thousands)
400	$	14,~~146~~368	135.5478	%
300		1314,~~787~~234	104.6679	%
200		1314,~~394~~056	73.5049	%
100		1213,~~973~~711	40.1395	%
Level		1213,~~459~~583	—
(100)		1113,~~990~~429	(31.7613)	%
(200)		1113,~~624~~456	(60.7093)	%
(300)		1113,~~182~~286	(102.2519)	%
(400)		1013,~~686~~230	(142.2360)	%

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

The table above indicates that at December 31, ~~2024~~2025, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 73.5049% increase in net interest income, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 60.7093% decrease in net interest income.

45Net 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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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 sheet contract under the assumptions that the United States Treasury yield curve increases or decreases instantaneously by ~~200~~rate ~~and~~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.


At December 31, 2024
At December 31, 2025
							EVE as a Percentage of
							Present Value of Assets (3)
			Estimated Increase						Increase
Change in Interest	Estimated		(Decrease) in EVE						(Decrease)
Rates (basis points) (1)	EVE (2)		Amount		Percent		EVE Ratio (4)		(basis points)
(Dollars in thousands)
400	$	5161,~~464~~642	$	(13,~~635~~591)	(35.0851)	%	1315.0278	%	9275
300		5263,~~659~~291		(~~440~~1,942)	(02.8398)	%	1215.9980	%	8977
200		5364,~~511~~591		~~412~~(642)	(0.7898)	%	1215.8671	%	7668
100		5365,~~805~~304		~~706~~71	10.3311	%	1215.5946	%	4943
Level		5365,~~099~~233		—	—	%	1215.1003	%	—
(100)		5163,~~791~~909		(1,~~308~~324)	(2.4603)	%	1114.4733	%	(6370)
(200)		4860,~~504~~644		(4,~~595~~589)	(87.6503)	%	1013.4423	%	(~~166~~180)
(300)		4254,~~756~~695		(10,~~343~~538)	(1916.4815)	%	811.9461	%	(~~316~~342)
(400)		3245,~~770~~221		(20,~~329~~012)	(3830.2968)	%	69.6639	%	(~~544~~564)

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

(2)	EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.

(3)	Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.

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

The table above indicates that at December 31, ~~2024~~2025, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 0.7898% ~~increase~~decrease in EVE, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 87.6503% 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.

Interest rate risk calculations also may not reflect the fair values of financial instruments. For example, increases in market interest rates can decrease the fair values of our loans, mortgage servicing rights, deposits and borrowings.

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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Loan Bank of Dallas. At December 31, 2024, we had outstanding advances of $49.9 million from the Federal Home Loan Bank of Dallas. At December 31, 2024, we had unused borrowing capacity of $102.4 million with the Federal Home Loan Bank of Dallas. In addition, at December 31, 2024, we had three unused lines of credit which included an unsecured $10.0 million and a secured $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, 2024, there was no outstanding balance with any of these facilities.

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, ~~2024~~2025 and ~~2023~~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, ~~2024~~2025, Texas Community Bancshares, Inc. (on a stand-alone unconsolidated basis) had liquid assets totaling $73.87 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, ~~2024~~2025, there were ~~191~~195 accounts with balances in excess of $250,000 with a total of $9894.06 million, or 2928.28% of deposits. The amount that was over $250,000 was $5045.38 million, or 1514.0%, that was potentially uninsured, including certificates of deposit of $1013.76 million and $3932.62 million in checking, MMDA and savings accounts.

At December 31, ~~2024~~2025, the weighted average life (WAL) of our securities portfolio is 4.59 years. The gross unrealized losses on the AFS securities is $63.59 million, or 86.01% of the $8163.68 million AFS portfolio and 136.59% of capital. Unrealized losses on the HTM securities were $21.65 million, or ~~11.~~8.2% of the $2218.13 million HTM portfolio and 52.46% of capital. The total gross unrealized losses are $95.04 million, or 86.76% of the $~~103~~82.71 million securities portfolio and ~~are 18~~9.85% of capital. The securities portfolio includes $4231.48 million, or 4138.08%, 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 derivative combined~~, and the corresponding other comprehensive loss, net of tax, was $43.81 million, or 95.98% of capital. Over the next 24 months from December 31, ~~2024~~2025, we anticipate $4238.79 million in incoming cash flow from the securities portfolio with $2220.47 million in ~~2025~~2026 and 2018.32 million in ~~2026~~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. AtIn 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.

47Our 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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~~December~~demand 31are 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, ~~2024~~primarily in our Mineola, ~~the~~Lindale ~~derivatives~~and ~~were~~Tyler ~~highly~~markets ~~effective~~where home sales and ~~offset~~new home construction have been active, for indicators of a significant changes in the ~~unrealized~~local ~~loss~~housing onmarkets. Construction ~~AFS~~and ~~securities~~residential byreal ~~$329~~estate loan balances have declined,~~000~~ ~~bringing~~but the ~~accumulated~~overall ~~other~~loan ~~comprehensive~~growth ~~loss~~has ~~from~~been ~~$5.1~~driven ~~million~~by toincreases ~~$4.8~~in ~~million~~commercial real estate, farmland, commercial and municipal loans.

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, ~~2024,~~2025 ~~our~~we ~~allowance~~have ~~for credit losses to total loans and leases was 1~~$2.~~09%.~~7 ~~The~~million ~~Company~~in ~~continues~~internet todeposit ~~monitor~~listing ~~rates~~service ~~and~~CDs, ~~loan demand weekly~~ and ~~align pricing accordingly~~$18. ~~Housing~~0 ~~supply~~million ~~and demand are monitored for indicators of a significant change~~ in ~~the~~callable ~~local~~brokered housing markets. The Bank has raised in-house mortgage rates while continuing to offer secondary market options to moderate loan funding and we have seen a decrease in mortgage demand due to higher market interest rates. We are monitoring housing supply and demandCDs, ~~primarily in our Mineola~~ and ~~Lindale markets where home sales and new home construction~~ have ~~been~~paid ~~active,~~down ~~for indicators of a significant changes in the local housing markets~~$4. ~~The~~2 ~~decrease~~million in ~~mortgage~~FHLB ~~demand has been offset by increases in commercial real estate and construction and land loan demand~~borrowings.

WeThe following are ~~not~~the ~~currently~~various ~~utilizing~~liquidity ~~internet~~sources ~~deposit listing service CDs, but~~ we ~~did~~had ~~attain~~available anat ~~additional~~December ~~$10~~31, ~~million~~2025 inthat ~~brokered~~we ~~CDs~~could inuse ~~2024~~as ~~to help maintain liquidity while prepaying $10 million in FHLB borrowings.~~ needed:

~~The~~● ~~following~~FHLB ~~are~~borrowing ~~the~~capacity ~~various~~of ~~liquidity~~$100.3 ~~sources we had available at December 31, 2024 that we could use as needed:~~million

● ~~FHLB~~$8 ~~borrowing~~million ~~capacity~~in ofcredit ~~$102.4~~lines ~~million~~with 2 correspondent banks

● $18 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 group of loans in the secondary market on an as needed basis

●

The ability to sell a portion of our BOLI assets

At December 31, ~~2024~~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 1718 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, ~~2024~~2025, we had outstanding commitments to originate loans of $1835.07 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, ~~2024~~2025 totaled $96102.26 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.

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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. ~~and Subsidiaries~~ (the “Company”) as of December 31, ~~2024~~2025 and ~~2023~~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, ~~2024~~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, ~~2024~~2025 and ~~2023~~2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, ~~2024~~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

WeHouston, ~~have~~TexasMarch ~~served~~25, ~~as the Company's auditor since 2020.~~2026

Houston, TexasMarch 27, 2025

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Texas Community Bancshares, Inc. and Subsidiaries

Consolidated Statements of Financial Condition

December 31, ~~2024~~2025 and ~~2023~~2024

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


	December 31,		December 31,
	~~2024~~2025		~~2023~~2024
Assets
Cash and due from banks	$	43,~~015~~876	$	54,~~412~~015
Federal funds sold		92,~~275~~574		79,~~648~~275
Cash and cash equivalents		136,~~290~~450		13,~~060~~290
Interest bearing deposits in banks		95,~~720~~509		129,~~298~~720
Securities available for sale		7559,~~189~~893		9375,~~327~~189
Securities held to maturity (fair values of $19,531 at December 31, 2024 and $23,400 at December 31, 2023)		22,096		26,020
Securities held to maturity, net of allowance for credit losses of $0 (fair values of $16,744 at December 31, 2025 and $19,531 at December 31, 2024)		18,283		22,096
Loans receivable, net of allowance for credit losses of $3,222 at December 31, 2024 and $3,096 at December 31, 2023		292,416		279,896
Loans receivable, net of allowance for credit losses of $3,440 at December 31, 2025 and $3,222 at December 31, 2024		301,986		292,416
Net investment in direct financing leases		1,~~292~~219		361,292
Accrued interest receivable		1,~~919~~888		1,~~728~~919
Premises and equipment, net		11,~~526~~459		11,~~609~~526
Bank-owned life insurance		6,~~370~~544		6,~~238~~370
Other real estate owned		~~480~~9,271		~~162~~480
Restricted investments carried at cost		42,~~252~~773		3,~~909~~715
Core deposit intangible		~~132~~—		~~265~~132
Deferred income taxes		21,~~688~~814		2,~~432~~688
Financial derivative		~~419~~—		~~115~~419
Other assets		12,~~668~~753		~~949~~2,205
	$	~~443~~429,~~457~~842	$	~~452~~443,~~044~~457
Liabilities and Shareholders' Equity
Liabilities
Noninterest bearing	$	4145,~~466~~871	$	4541,~~538~~466
Interest bearing		~~294~~282,~~362~~033		~~271~~294,~~703~~362
Total deposits		~~335~~327,~~828~~904		~~317~~335,~~241~~828
Advances from Federal Home Loan Bank (FHLB)		4945,~~878~~669		7649,~~896~~878
Accrued expenses and other liabilities		52,~~643~~512		45,~~218~~643
Total liabilities		~~391~~376,~~349~~085		~~398~~391,~~355~~349
Shareholders' Equity
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued and outstanding		—		—
Common stock, $0.01 par value, 19,000,000 shares authorized, 3,370,425 issued and 3,088,152 outstanding at December 31, 2024 and 3,350,268 issued and 3,175,426 outstanding at December 31, 2023		34		34
Common stock, $0.01 par value, 19,000,000 shares authorized, 3,366,516 issued and 2,887,275 outstanding at December 31, 2025 and 3,370,425 issued and 3,088,152 outstanding at December 31, 2024		34		34
Additional paid in capital		3233,~~493~~198		3132,~~671~~493
Retained earnings		3032,~~163~~412		3130,~~972~~163
Accumulated other comprehensive loss		(43,~~766~~063)		(54,~~592~~766)
Unearned Employee Stock Ownership Program (ESOP) shares, at cost		(21,~~039~~884)		(2,~~197~~039)
Treasury stock, at cost (282,273 shares at December 31, 2024 and 174,842 shares at December 31, 2023)		(3,777)		(2,199)
Treasury stock, at cost (479,241 shares at December 31, 2025 and 282,273 shares at December 31, 2024)		(6,940)		(3,777)
Total shareholders' equity		5253,~~108~~757		5352,~~689~~108
	$	~~443~~429,~~457~~842	$	~~452~~443,~~044~~457

See Notes to Consolidated Financial Statements

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Consolidated Statements of Operations

Years Ended December 31, ~~2024~~2025 and ~~2023~~2024

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


	Year Ended
	December 31,
	~~2024~~2025		~~2023~~2024
Interest Income
Loans, including fees	$	1517,~~923~~681	$	1215,~~842~~923
Debt securities
Taxable		43,~~306~~947		4,~~871~~306
Non taxable		~~158~~176		~~190~~158
Dividends on restricted investments		~~221~~167		~~159~~221
Federal funds sold		~~671~~207		~~187~~671
Deposits with banks		~~723~~323		~~452~~723
Financial derivative		~~450~~(10)		~~277~~450
Total interest income		22,~~452~~491		1822,~~978~~452
Interest Expense
Deposits		7,~~293~~105		57,~~344~~293
Advances from FHLB		2,~~599~~063		2,~~561~~599
Other		109		910
Total interest expense		9,~~902~~177		79,~~914~~902
Net Interest Income		1213,~~550~~314		1112,~~064~~550
Provision for Credit Losses - loans		~~269~~736		~~329~~269
Provision (Credit) for Credit Losses - off-balance sheet credit exposures		~~(111)~~95		27(111)
Provision for Credit Losses		~~158~~831		~~356~~158
Net Interest Income After Provision for Credit Losses		12,~~392~~483		1012,~~708~~392
Noninterest Income
Service charges on deposit accounts		~~687~~729		~~686~~687
Other service charges and fees		1,~~244~~154		1,~~206~~244
Net gain (loss) on securities transactions		190		(1,734)
Net gain on securities transactions		117		190
Net loss on sale of loans		~~(3,850)~~—		—(3,850)
Net (loss) gain on sale of other real estate owned		(4119)		3237
Net loss on sale of premises and equipment		(287)		(1)
Fair value adjustments to other real estate owned		495		(78)
Net appreciation on bank-owned life insurance		133		113
Net loss on premises and equipment		—		(287)
Other income		21		50
Net appreciation on bank-owned life insurance		173		133
Total noninterest income (loss)		(1,903)		352
Gain on other investment		198		—
Noninterest Expenses
Other income		232		21
Salaries and employee benefits		6,840		7,069
Total noninterest income (loss)		3,079		(1,903)
Occupancy and equipment expense		1,103		835
Noninterest Expenses
Data processing		937		927
Salaries and employee benefits		6,532		6,840
Technology expense		435		473
Occupancy and equipment expense		1,098		1,103
Contract services		265		289
Data processing		1,013		937
Director fees		304		399
Technology expense		298		435
Other expense		2,386		2,005
Contract services		262		265
Total noninterest expense		12,270		11,997
Director fees		248		304
Loss Before Income Taxes		(1,781)		(937)
Other expense		2,747		2,386
Income Tax Benefit		(476)		(204)
Total noninterest expense		12,198		12,270
Net Loss	$	(1,305)	$	(733)
Income (Loss) Before Income Taxes		3,364		(1,781)
Loss per share - basic	$	(0.45)	$	(0.24)
Income Tax Expense (Benefit)		522		(476)
Loss per share - diluted	$	(0.44)	$	(0.24)
Net Income (Loss)	$	2,842	$	(1,305)
Weighted-average shares outstanding - basic		2,915,402		3,062,517
Earnings (Loss) per share - basic		1.04		(0.45)
Weighted-average shares outstanding - diluted		2,986,015		3,062,517
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, ~~2024~~2025 and ~~2023~~2024

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


	Year Ended
	December 31,
	~~2024~~2025		~~2023~~2024
Net Loss	$	(1,305)	$	(733)
Net Income (Loss)	$	2,842	$	(1,305)

Other items of comprehensive income (loss)
Other items of comprehensive income
Debt Securities
Net changes in fair value of available for sale securities, before tax		~~937~~2,689		~~(72)~~937
Reclassification adjustment for realized (gain) loss on sale of investment securities included in net loss, before tax		(190)		1,734
Reclassification adjustment for realized gain on sale of investment securities included in net income (loss), before tax		(117)		(190)
Net changes in fair value of available for sale securities hedged, before tax		~~298~~(417)		~~119~~298
Total other items of comprehensive income (loss), before tax		1,045		1,781
Total other items of comprehensive income, before tax		2,155		1,045

Income tax benefit related to other items of comprehensive income (loss)		(219)		(374)
Income tax expense related to other items of comprehensive income		(452)		(219)
Total other items of comprehensive income (loss), after tax		~~826~~1,703		~~1,407~~826

Comprehensive (Loss) Income	$	(479)	$	674
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, ~~2024~~2025 and ~~2023~~2024

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


									Accumulated
					Additional				Other		Unearned				Total
	Preferred		Common		Paid In		Retained		Comprehensive		ESOP		Treasury		Shareholders'
Year Ended December 31, 2024 and 2023	Stock		Stock		Capital		Earnings		Loss		Shares		Stock		Equity
	Stock		Stock		Capital		Earnings		Loss		Shares		Stock		Equity
Balance at January 1, 2025	$	—	$	34	$	32,493	$	30,163	$	(4,766)	$	(2,039)	$	(3,777)	$	52,108
Net income		—		—		—		2,842		—		—		—		2,842
Stock based compensation expense		—		—		607		—		—		—		—		607
Other comprehensive income, net of tax		—		—		—		—		1,703		—		—		1,703
Cash dividend declared ($0.20 per share)		—		—		—		(593)		—		—		—		(593)
ESOP shares committed to be released, 15,472 shares		—		—		98		—		—		155		—		253
Treasury stock purchased, 196,968 shares		—		—		—		—		—		—		(3,163)		(3,163)
Balance at December 31, 2025	$	—	$	34	$	33,198	$	32,412	$	(3,063)	$	(1,884)	$	(6,940)	$	53,757

Balance at January 1, 2024	$	—	$	34	$	31,671	$	31,972	$	(5,592)	$	(2,197)	$	(2,199)	$	53,689
Net loss		—		—		—		(1,305)		—		—		—		(1,305)
Stock based compensation expense		—		—		757		—		—		—		—		757
Other comprehensive income, net of tax		—		—		—		—		826		—		—		826
Cash dividend declared ($0.04 per share)		—		—		—		(504)		—		—		—		(504)
Cash dividend declared ($0.16 per share)		—		—		—		(504)		—		—		—		(504)
ESOP shares committed to be released, 15,862 shares		—		—		65		—		—		158		—		223
Treasury stock purchased, 107,431 shares		—		—		—		—		—		—		(1,578)		(1,578)
Balance at December 31, 2024	$	—	$	34	$	32,493	$	30,163	$	(4,766)	$	(2,039)	$	(3,777)	$	52,108

Balance at January 1, 2023	$	—	$	33	$	31,099	$	34,083	$	(6,999)	$	(2,346)	$	—	$	55,870
Cumulative change in accounting principle (adoption of ASC 326)		—		—		—		(1,010)		—		—		—		(1,010)
Balance at January 1, 2023 (as adjusted for change in accounting principle)		—		33		31,099		33,073		(6,999)		(2,346)		—		54,860
Net loss		—		—		—		(733)		—		—		—		(733)
Stock based compensation expense		—		—		528		—		—		—		—		528
Issuance of restricted stock awards		—		1		—		—		—		—		—		1
Other comprehensive income, net of tax		—		—		—		—		1,407		—		—		1,407
Cash dividend declared (at an average of $0.03 per share)		—		—		—		(368)		—		—		—		(368)
ESOP shares committed to be released, 14,844 shares		—		—		44		—		—		149		—		193
Treasury stock purchased, 174,842 shares		—		—		—		—		—		—		(2,199)		(2,199)
Balance at December 31, 2023	$	—	$	34	$	31,671	$	31,972	$	(5,592)	$	(2,197)	$	(2,199)	$	53,689

See Notes to Consolidated Financial Statements

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Consolidated Statements of Cash Flows

Years Ended December 31, ~~2024~~2025 and ~~2023~~2024

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


	Year Ended
	December 31,
	~~2024~~2025		~~2023~~2024
Operating Activities
Net loss	$	(1,305)	$	(733)
Net income (loss)	$	2,842	$	(1,305)
Adjustments to reconcile net loss to net cash from operating activities
Adjustments to reconcile net income (loss) to net cash from operating activities
Provision (credit) for credit losses - loans		269		329
Provision for credit losses - loans		736		269
Provision (credit) for credit losses - off-balance sheet credit exposures		~~(111)~~95		27(111)
Net amortization (accretion) of securities		74		(47)
Net (accretion) amortization of securities		(149)		74
Depreciation and amortization		~~572~~593		~~422~~572
Net realized (gain) loss on sales of securities available for sale		(190)		1,734
Net realized gain on sales of securities available for sale		(117)		(190)
Stock dividends on restricted investments		(211)		(49)
Net unrealized gain on discontinued financial derivative		463		—
Loss on sale of loans		3,850		—
Stock dividends on restricted investments		(155)		(211)
Loss on disposal of fixed assets		287		1
Net increase on other investment		(157)		—
Appreciation on bank-owned life insurance		(133)		(113)
Loss on sale of loans		—		3,850
ESOP compensation expense for allocated shares		223		193
Loss on disposal of fixed assets		—		287
Loss (gain) on other real estate owned		41		(32)
Appreciation on bank-owned life insurance		(173)		(133)
Stock-based compensation		757		528
ESOP compensation expense for allocated shares		253		223
Deferred income tax benefit		(476)		(232)
Loss (gain) on sale other real estate owned		19		(37)
(Gain) loss on fair value adjustment of fair value hedges		(6)		4
Fair value adjustment on other real estate owned		(495)		78
Net change in
Stock-based compensation		607		757
Accrued interest receivable		(191)		(401)
Deferred income tax expense (benefit)		405		(476)
Other assets		(724)		(160)
Loss on fair value adjustment of fair value hedges		10		(6)
Accrued expenses and other liabilities		(785)		817
Net change in
Net Cash from Operating Activities		1,941		2,288
Accrued interest receivable		31		(191)
Investing Activities
Other assets		(229)		(724)
Net change in interest bearing deposits in banks		2,578		(10,243)
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
Purchases		(1953,~~394~~718)		(1019,~~261~~394)
Sales		2023,~~134~~797		1820,~~033~~134
Maturities, prepayments and calls		1847,~~384~~683		618,~~173~~384
Activity in held to maturity securities
Purchases		—		(2,139)
Maturities, prepayments and calls		3,724		3,801
Maturities, prepayments and calls		3,801		3,802
Redemptions of restricted investments		1,096		—
Purchases of restricted investments		(132)		(1,055)
Purchases of other investment		(169)		(132)
Loan originations and principal collections, net		(3719,~~139~~189)		(2937,~~891~~139)
Net (increase) decrease in net investment in direct financing leases		(1,256)		28
Net decrease (increase) in net investment in direct financing leases		73		(1,256)
Proceeds from sale of loans, originally classified as loans held for investment		~~22,971~~—		—22,971
Proceeds from sales of other real estate owned		56568		—56
Additions of premises and equipment		(~~1,201~~394)		(51,~~601~~201)
Net Cash from (used for) Investing Activities		8,802		(31,154)
Net Cash from Investing Activities		7,682		8,802
Financing Activities
Net increase in deposits		18,587		21,164
Net (decrease) increase in deposits		(7,924)		18,587
Advances from FHLB and other borrowings		516,052		335,~~201~~052
Payments on FHLB and other borrowings		(3220,~~070~~261)		(1832,~~799~~070)
Cash dividends declared and paid		(~~504~~593)		(~~368~~504)
Purchases of treasury stock		(13,~~578~~163)		(21,~~199~~578)
Net Cash from Financing Activities		(10,513)		32,999
Net Cash used for Financing Activities		(15,889)		(10,513)
Net Change in Cash and Cash Equivalents		~~230~~(6,840)		~~4,133~~230
Cash and Cash Equivalents at Beginning of Period		13,~~060~~290		813,~~927~~060
Cash and Cash Equivalents at End of Period	$	136,~~290~~450	$	13,~~060~~290

See Notes to Consolidated Financial Statements

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Notes to Consolidated Financial Statements

December 31, ~~2024~~2025 and ~~2023~~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 9391% and 9593% of the loan balance at December 31, ~~2024~~2025 and ~~2023~~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 ~~November~~December 2023, the FASB issued ASU ~~No.~~ 2023-0709, ~~Segment~~Income ~~Reporting~~Taxes (Topic ~~280~~740):. ~~Improvements~~This toupdate ~~Reportable~~requires ~~Segment~~public ~~Disclosures~~business ~~(“ASU~~entities ~~2023-07”),~~to ~~which~~annually ~~expands~~disclose ~~reportable~~specific ~~segment~~categories ~~disclosure~~within ~~requirements~~the ~~through~~income ~~enhanced~~tax ~~disclosures~~rate ~~about~~reconciliation ~~significant~~and ~~segment~~provide ~~expenses.~~additional ~~The~~information ~~amendments~~for inreconciling ~~this~~items ~~update~~that ~~introduce~~meet a ~~new~~certain ~~requirement~~quantitative tothreshold. ~~disclose~~Additionally, ~~significant~~the ~~segment~~amendments ~~expenses~~in ~~regulatory~~this ~~provided~~update torequire ~~the~~entities ~~chief~~to ~~operating~~disclose ~~decision~~certain ~~maker,~~information ~~extend~~about ~~certain~~income ~~annual~~taxes ~~disclosures~~paid, toincome ~~interim~~tax ~~periods~~disaggregation, ~~clarify~~disclosures ~~that~~around ~~single~~unrecognized ~~reportable~~tax ~~segment~~benefits, ~~entities~~and ~~must~~the ~~apply~~removal ~~Topic~~of ~~280~~disclosures inrelated ~~its~~to ~~entirety,~~temporary ~~permit~~differences ~~more~~surrounding ~~than~~deferred ~~one~~tax ~~measure~~liabilities ofto ~~segment~~enhance ~~profit~~the ortransparency ~~loss~~and todecision beusefulness ~~reported~~of ~~under~~income ~~certain~~tax ~~conditions~~disclosures. ~~and~~This ~~require~~update ~~disclosure~~is ofeffective ~~the~~for ~~title~~

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Notes to Consolidated Financial Statements

December 31, ~~2024~~2025 and ~~2023~~2024

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

~~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~~2024, and ~~interim periods within fiscal years beginning after December 15, 2024, with~~ early adoption is permitted. The Company ~~has~~adopted ~~evaluated~~this ~~the~~update ~~impact~~prospectively ofas ~~adopting ASU 2023-07 and concluded the impact to be immaterial on its Consolidated Statement~~ of ~~Financial~~January ~~Condition~~1, ~~Consolidated~~2025 ~~Statement~~(see ~~of Operations, or disclosures. See~~ Note ~~1 for the corresponding segments disclosure~~10).

Previously Adopted Accounting Pronouncements

~~The~~In ~~Company~~November ~~adopted~~2023, ~~Accounting~~the ~~Standards~~FASB ~~Update~~issued (“ASU”) ~~2016~~No. 2023-1307, ~~Financial~~Segment ~~Instruments~~Reporting ~~– Credit Losses~~ (Topic ~~326~~280): ~~Measurement~~Improvements ofto ~~Credit~~Reportable ~~Losses~~Segment onDisclosures ~~Financial Instruments~~ (“~~ASC~~ASU ~~326~~2023-07”), ~~effective~~which ~~January~~expands 1,reportable ~~2023~~segment disclosure requirements through enhanced disclosures about significant segment expenses. The ~~guidance~~amendments ~~replaces~~in this update introduce a new requirement to disclose significant segment expenses regularly provided to the ~~incurred~~chief ~~loss~~operating ~~methodology~~decision ~~with~~maker, anextend ~~expected~~certain ~~loss~~annual ~~methodology~~disclosures to interim periods, clarify that issingle ~~referred~~reportable tosegment asentities ~~the~~must ~~current~~apply ~~expected~~Topic ~~credit~~280 ~~loss~~in ~~(“CECL”)~~its ~~methodology. The~~entirety, ~~measurement~~permit more than one measure of ~~expected~~segment ~~credit~~profit ~~losses~~or loss to be reported under certain conditions and require disclosure of the ~~CECL~~title ~~methodology~~and position of the chief operating decision maker. ASU 2023-07 is ~~applicable~~effective tofor ~~financial~~public ~~assets~~business ~~measured~~entities atfor ~~amortized~~fiscal ~~cost,~~years ~~including~~beginning ~~loan~~after ~~receivables~~December 15, 2023, and ~~held~~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~~-maturity~~ ~~debt~~be ~~securities~~immaterial on its consolidated financial position, results of operations, or disclosures. See Note 1 for the corresponding segments disclosure.

ItAccounting ~~also~~Pronouncements ~~applies~~Not toYet ~~off-balance~~Adopted sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credits, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842 on leases. ASC 326 requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses as well as the credit quality and underwriting standards of a company’s portfolio. In addition, ASC 326 made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities management does not intend to sell or believes that it is more likely than not they will not be required to sell.

~~The~~In ~~Company~~December ~~adopted~~2025, ~~ASC 326 using~~ the ~~modified~~FASB ~~retrospective~~issued ~~method~~Accounting ~~for~~Standards ~~loans~~Update ~~and off-balance-sheet~~ (~~“OBS”~~"ASU") ~~credit~~2025-11, ~~exposures. Results~~Interim ~~for~~Reporting ~~reporting~~(Topic ~~periods~~270): ~~beginning~~Narrow-Scope ~~after~~Improvements, ~~January~~which 1,amends ~~2023~~ASC ~~are~~Topic ~~presented~~270 ~~under~~to ~~ASC~~improve ~~326~~the ~~while~~organization ~~prior~~and ~~period~~navigability ~~amounts~~of ~~continue~~interim toreporting beguidance ~~reported~~and into ~~accordance~~clarify ~~with~~when ~~previously~~the ~~applicable~~guidance ~~GAAP~~applies. The ~~Company~~ASU ~~recorded~~compiles aexisting ~~one-time~~interim ~~cumulative-effect~~disclosure ~~adjustment~~requirements tofrom across the ~~allowance~~Codification ~~for~~into ~~credit~~Topic ~~losses~~270 ofand ~~$1,025~~introduces ~~which~~a ~~was~~disclosure ~~recognized~~principle ~~through~~requiring anentities ~~$810 adjustment~~ to ~~retained~~disclose ~~earnings,~~events ~~net~~that ofoccur ~~tax.~~after ~~This adjustment brought~~ the ~~beginning~~end ~~balance~~ of the ~~allowance~~most ~~for~~recent ~~credit~~annual ~~losses~~reporting toperiod ~~$2,780~~that ashave ofa ~~January~~material 1,effect ~~2023. In~~on ~~addition,~~ the ~~Company~~entity. ~~recorded~~The aamendments ~~$254~~are ~~allowance~~not onintended ~~unfunded~~to ~~commitments~~change ~~which~~the ~~was~~fundamental ~~recognized~~nature ~~through~~of ainterim ~~$200~~reporting ~~adjustment~~or tosignificantly ~~retained~~expand ~~earnings,~~or ~~net~~reduce ofexisting ~~tax~~interim disclosure requirements.

~~The~~For ~~Company~~public ~~adopted~~business ~~ASC~~entities, ~~326 using~~ the ~~prospective~~amendments ~~transition~~are ~~approach~~effective for ~~financial~~interim ~~assets~~reporting ~~purchased~~periods ~~with~~within ~~credit~~fiscal ~~deterioration~~years ~~(“PCD”)~~beginning ~~that~~after ~~were~~December ~~previously~~15, ~~classified~~2027. asEarly ~~purchased~~adoption ~~credit~~is ~~impaired~~permitted. ~~(“PCI”)~~The ~~and~~amendments ~~accounted~~may ~~for~~be ~~under~~applied ~~ASC~~prospectively ~~310-30~~or retrospectively. As ofThe ~~December~~Company ~~31,~~is ~~2022,~~currently evaluating the ~~Company~~impact ~~did~~of ~~not~~this ~~hold~~ASU ~~any~~on ~~purchased~~its ~~loans~~interim ~~with~~financial ~~deteriorated~~statement ~~credit~~disclosures ~~quality.~~and ~~Therefore,~~does ~~the~~not ~~Company~~expect ~~did~~the ~~not~~adoption ~~have~~of ~~any~~this ~~PCI~~guidance ~~loans~~to ~~upon~~have ~~adoption~~a ofmaterial ~~ASC~~impact ~~326~~on asits ofconsolidated ~~January~~financial ~~1, 2023~~statements.

~~The~~In ~~Company~~November ~~adopted~~2024, ~~ASC~~the ~~326~~FASB ~~using~~issued ~~the~~ASU ~~prospective~~2024-03, ~~transition~~Income ~~approach~~Statement—Reporting ~~for~~Comprehensive ~~debt~~Income— ~~securities~~Expense ~~for~~Disaggregation ~~which~~Disclosures ~~other~~(Subtopic 220-~~than-temporary~~40), ~~impairment~~which ~~had~~requires ~~been~~public ~~recognized~~business ~~prior~~entities to ~~January~~provide 1,enhanced ~~2023.~~disclosures Asin ofthe ~~December~~notes ~~31,~~to ~~2022,~~the financial statements regarding the ~~Company~~disaggregation ~~did~~of ~~not~~certain ~~have~~income ~~any~~statement ~~other-than-temporarily~~expense ~~impaired~~captions ~~investment~~into ~~securities.~~specified ~~Therefore~~natural expense categories, ~~upon~~including, ~~adoption~~but ofnot ~~ASC~~limited ~~326~~to, ~~the~~employee ~~Company~~compensation, ~~determined~~depreciation, ~~that~~and anamortization. ~~allowance~~The ~~for~~ASU ~~credit~~does ~~losses~~not change the expense captions presented on ~~available-for-sale~~the ~~securities~~face ~~was~~of ~~not~~the ~~deemed~~income ~~necessary~~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 ~~following~~Company ~~table~~is ~~illustrates~~currently assessing the impact of ~~the~~this ~~adoption~~ASU on its financial statement disclosures and related reporting processes. Adoption of ~~ASC~~this ~~326:~~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.

57Cash 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.

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2024~~2025 and ~~2023~~2024

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


	As Reported under ASC 326		Pre ASC 326 Adoption		Impact of ASC 326 Adoption
Assets:
Allowance for credit losses on loans	$	2,780	$	1,755	$	1,025

Liabilities:
Allowance for credit losses on OBS credit exposures (included in other liabilities)		254		—		254

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.

The Company adopted ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, effective January 1, 2023. The additional disclosures are included in Note 4 – Loans and Leases on a prospective basis and include loan modifications where the contractual payment terms of the borrower’s loan agreement were modified through a refinancing or restructuring. Modifications that do not impact the contractual payment terms, such as covenant waivers, insignificant payment deferrals, and any modifications made to loans carried at fair value are not included in the disclosures.

The Company uses various indicators to identify borrowers in financial difficulty. Consumer loan borrowers that are delinquent and commercial loan borrowers that are rated substandard or worse are the primary criteria used to identify borrowers who are experiencing financial difficulty.

If a borrower is current at the time of modification, the loan generally remains a performing loan as long as there is demonstrated performance prior to the modification, and payment in full under the modified terms is expected. Otherwise, the loan is placed on nonaccrual status and reported as nonperforming until there is sustained repayment performance for a reasonable period, which is generally at least six consecutive months.

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.

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, 2024 and 2023, the Company had $9,421 and $9,006, 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).

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Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

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

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, ~~2024~~2025 and ~~2023~~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 redemptions are made at the discretion of FHLB. Due to requirements for additional advances, there were no purchases and dividend reinvestments of $211 for the year ended December 31, 2024, and there were purchases of $706 and dividend reinvestments of $150 for the year ended December 31, 2023. Both cash and stock dividends are reported as income. There were no sales during 2024 or 2023. Additionally, the Company periodically evaluates FHLB stock for impairment. As of December 31, 2024 or 2023, no impairment charges were recorded.

~~Other restricted investments are carried at cost. Any changes to the cost basis of these investments are recorded in the consolidated statements of operations.~~60

Loans and Leases

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2024~~2025 and ~~2023~~2024

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

~~Worth~~redemptions ~~Metroplex~~are ~~area~~made at the discretion of FHLB. ~~The~~Due ~~ability~~to advance requirements, there were no purchases and dividend reinvestments of $155 for the ~~Company’s~~year ~~debtors~~ended toDecember ~~honor~~31, ~~their~~2025, ~~contracts~~and isthere ~~dependent~~were ~~upon~~no purchases and dividend reinvestments of $211 for the ~~general~~year ~~economic~~ended ~~conditions~~December in31, ~~this~~2024. ~~area~~Both cash and stock dividends are reported as income. There were stock redemptions of $1,096 during 2025 and no sales or redemptions during 2024. Additionally, the Company periodically evaluates FHLB stock for impairment. As of December 31, 2025 or 2024, no impairment charges were recorded.

~~Loans~~Other ~~that~~restricted ~~management~~investments ~~has the intent and ability to hold for the foreseeable future or until maturity or pay-off which~~ are ~~measured~~carried at ~~historical~~ cost ~~are generally reported at their outstanding unpaid principal balances net of any unearned income, charge-offs, and unamortized deferred fees and costs on originated loans~~. ~~Interest~~Any ~~income~~changes isto ~~accrued on~~ the ~~unpaid~~cost ~~principal~~basis ~~balance. The deferral~~ of ~~all loan origination fees and origination costs is quantified annually. In 2024 and 2023, management determined the deferral of~~ these ~~fees~~investments ~~and~~are ~~costs~~recorded toin ~~be immaterial to~~ the consolidated ~~financial~~ statements. ~~Unearned income is amortized to interest income using a level yield methodology. Accrued interest receivable on loans totaled $1,416 and $1,127 as~~ of ~~December 31, 2024 and 2023, respectively, and was reported in accrued interest receivable on the consolidated statement of financial condition and is excluded from the estimate of credit losses~~operations.

Loans and Leases

The Company grants mortgage, commercial and consumer loans to customers. A substantial portion of the loan portfolio is represented by loans secured by real estate throughout Wood, Smith, and Van Zandt Counties and the Dallas Fort Worth Metroplex area. The ability of the Company’s debtors to honor their contracts is dependent upon the general economic conditions in this area.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off which are measured at historical cost are generally reported at their outstanding unpaid principal balances net of any unearned income, charge-offs, and unamortized deferred fees and costs on originated loans. Interest income is accrued on the unpaid principal balance. The deferral of all loan origination fees and origination costs is quantified annually. In 2025 and 2024, management determined the deferral of these fees and costs to be immaterial to the consolidated financial statements. Unearned income is amortized to interest income using a straight-line methodology. Accrued interest receivable on loans totaled $1,493 and $1,416 as of December 31, 2025 and 2024, respectively, and was reported in accrued interest receivable on the consolidated statement of financial condition and is excluded from the estimate of credit losses.

The Company makes disclosures of loans and other financing receivables and the related allowance in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 310, Receivables. The accounting guidance defines a portfolio segment as the level at which an entity develops and documents a systematic methodology to determine the allowance for credit losses, and a class of financing receivables as the level of disaggregation of portfolio segments based on the initial measurement attributes, risk characteristics and methods for assessing risk. The Company’s portfolio segments are real estate, agriculture, commercial, municipalities, and consumer and other. The classes of financing receivables within the real estate segment are Construction and Land, Farmland, 1-4 Residential and Multifamily, and Commercial Real Estate. The remaining portfolio segments contain a single class of financing receivables. Under this accounting guidance, the allowance is presented by portfolio segment.

Allowance for Credit Losses

The Company uses the weighted average remaining maturity (“WARM”) method to estimate expected losses for all of Company’s loan pools. These pools are as follows: construction & land; farmland; 1-4 residential & multi-family real estate; commercial real estate; agriculture; commercial; municipalities; and consumer and other. The loan portfolio pools were selected in order to generally align with the loan categories specified in the quarterly call reports required to be filed with the Federal Financial Institutions Examination Council. For each of these loan pools, the Company calculates an average annual loss rate and estimates future outstanding balances based on contractual maturities and estimated prepayments. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on historical internal data and peer group data. Relevant data to support the Company’s estimates of lifetime expected credit losses is maintained through internal and external information. The CECL model leverages the use of publicly available call report data, which allows the use of external information from peers to supplement the Company’s own historical data. The loss rate is based on historical loss rates for the peer group and the Company. Due to internal loss rates being low, a blended historical loss rate of 75% peer group and 25% Company was used. The weighted average remaining life is determined based on contracted loan payments, expected prepayments and maturity dates. The allowance model uses data from the St. Louis Federal Reserve Economic Database for reasonable and supportable forecasts.

Management has determined that between years one and two represents a reasonable and supportable forecast period and reverts to a historical loss rate in years three or four depending on the loan type. Management leverages economic projections from the St. Louis Federal Reserve Economic Database (FRED) to inform its loss driver forecasts. Other internal and external indicators of economic forecasts are also considered by management when developing the forecast metrics.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2024~~2025 and ~~2023~~2024

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

~~risk~~low, ~~via~~ a ~~contractual~~blended ~~obligation~~historical toloss ~~extend~~rate ~~credit,~~of ~~unless~~75% ~~the~~peer ~~obligation~~group isand ~~unconditionally~~25% ~~cancellable~~Company bywas ~~the Company~~used. The ~~allowance~~weighted ~~for~~average ~~credit~~remaining ~~losses~~life ~~on off-balance sheet credit exposures~~ is ~~adjusted~~determined ~~through~~based ~~credit~~on ~~loss~~contracted ~~expense.~~loan ~~The~~payments, ~~estimate~~expected ~~includes~~prepayments ~~consideration of the likelihood that funding will occur~~ and anmaturity ~~estimate~~dates. ofThe ~~expected~~allowance ~~credit~~model ~~losses~~uses ondata ~~commitments~~from ~~expected~~the ~~to be funded over its expected life~~St. ~~Estimates~~Louis ~~are~~Federal ~~influenced~~Reserve byEconomic ~~historical~~Database ~~losses,~~for ~~economic conditions and~~ reasonable and supportable forecasts ~~described in the preceding section for the allowance for credit losses on loans receivable~~.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless the obligation is unconditionally cancellable by the Company. The allowance for credit losses on off-balance sheet credit exposures is adjusted through credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its expected life. Estimates are influenced by historical losses, economic conditions and reasonable and supportable forecasts described in the preceding section for the allowance for credit losses on loans receivable.

Nonperforming Loans, Charge-Offs and Delinquencies

Nonperforming loans generally include loans that have been placed on nonaccrual status including nonaccrual loans whose contractual terms have been restructured in a manner that grants a concession to a borrower experiencing financial difficulties.

The entire balance of a loan is contractually delinquent if the minimum payment is not received by the specified due date on the customer’s billing statement. Interest and fees continue to accrue on past due loans until the date the loan goes into nonaccrual status, if applicable.

The outstanding balance of real estate secured loans, including all classes of financing receivables within the real estate portfolio segment, that is in excess of the estimated property value, less estimated costs to sell, is generally charged off no later than the end of the month in which the account becomes 180 days past due. The estimated property value, less estimated costs to sell, is determined utilizing appraisals or broker price opinions of the fair value of the collateral.

The outstanding balance of loans within the remaining loan segments (agriculture, commercial, and consumer and other) are generally charged off no later than the end of the month in which the account becomes 120 days past due. For secured loans, accounts are written down to the collateral value.

The fair value of the collateral is estimated by management based on current financial information, inspections, and appraisals. For unsecured loans, the outstanding balance is written off.

Loans within all portfolio segments are generally placed on nonaccrual status and classified as nonperforming at 90 days past due.

Accrued interest receivable is reversed when a loan is placed on nonaccrual status. Interest collections on non-accruing loans for which the ultimate collectability of principal is uncertain are applied as principal reductions; otherwise, such collections are credited to interest income when received. These loans may be restored to accrual status when all principal and interest is current and full repayment of the remaining contractual principal and interest is expected, or ~~when the loan otherwise becomes well-secured and is in the process of collection.~~

Wholesale Lending

The Company has entered into a wholesale lending agreement with a wholesale lender and correspondent bank, TIB. The Company facilitates the loan application process and interacts with the customer while the wholesale lender underwrites, funds, closes and services the loan. The Company receives a fee from the wholesale lender at closing for the services provided which is included in noninterest income.

Financial Instruments

In the ordinary course of business, the Company has entered into commitments to extend credit, including commercial letters of credit and standby letters of credit. Such financial instruments are recorded when they are funded.

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2024~~2025 and ~~2023~~2024

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

when the loan otherwise becomes well-secured and is in the process of collection.

Wholesale Lending

Financial Instruments

Derivative Loan Commitments

Mortgage loan commitments that relate to the origination of a mortgage that will be held for sale upon funding are considered derivative instruments under the derivatives and hedging accounting guidance (FASB ASC 815, Derivatives and Hedging). Loan commitments that are derivatives are recognized at fair value on the consolidated statements of financial condition in other assets and other liabilities with changes in their fair values recorded in noninterest income.

Forward Loan Sale Commitments

The Company evaluates all loan sales agreements to determine whether they meet the definition of a derivative under FASB ASC 815 as facts and circumstances may differ significantly. If agreements qualify, to protect against the price risk inherent in derivative loan commitments, the Company uses "best efforts" forward loan sale commitments to mitigate the risk of potential decreases in the values of loans that would result from the exercise of the derivative loan commitments. Accordingly, forward loan sale commitments are recognized at fair value on the consolidated statements of financial condition in other assets and liabilities with changes in their fair values recorded in other noninterest income.

The Company estimates the fair value of its forward loan sales commitments using a methodology similar to that used for derivative loan commitments.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company – put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

Cash Surrender Value of Bank-owned Life Insurance

Life insurance policies are initially recorded at cost at the date of purchase. Subsequent to purchase, the policies are periodically adjusted for changes in cash surrender value. The adjustment to cash surrender value increases or decreases the carrying value of the policies and is recorded as income or expense on the consolidated statements of operations.

~~Other Real Estate Owned~~ 63

Assets acquired through, or in lieu of, loan foreclosure are initially recorded at fair value less estimated costs to sell at the date of foreclosure. All write-downs based on the asset’s fair value at the date of acquisition are charged to the allowance for credit losses. After foreclosure, property held for sale is carried at the lower of the new cost basis or estimated fair value less costs to sell.

Impairment losses on property to be held and used are measured at the amount by which the carrying amount of a property exceeds its fair value. Costs of significant property improvements are capitalized, whereas costs related to holding property are expensed. Valuations are periodically performed by management, and any subsequent write-downs are recorded as a charge to earnings, if necessary, to reduce the carrying value of the property to the lower of its cost or fair value less costs to sell.

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2024~~2025 and ~~2023~~2024

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

Other Real Estate Owned

Premises and Equipment

Land is carried at cost. Buildings and equipment are carried at cost, less accumulated depreciation computed on the straight-line method over the estimated useful lives of the assets or the expected terms of the leases, if shorter. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 7 to 40 years. Furniture, fixtures and equipment are depreciated using the straight-line or accelerated method with useful lives ranging from 3 to 20 years.

Leases

Leases are classified as operating or finance leases at the lease commencement date. The Company leases certain locations and equipment. The Company records leases on the consolidated statements of financial condition in the form of a lease liability for the present value of future minimum payments under the lease terms and a right-of-use asset equal to the lease liability adjusted for items such as deferred or prepaid rent, lease incentives, and any impairment of the right-of-use asset. The discount rate used in determining the lease liability is based upon incremental borrowing rates the Company could obtain for similar loans as of the date of commencement or renewal. The Company does not record leases on the consolidated statements of financial condition that are classified as short term (less than one year).

At lease inception, the Company determines the lease term by considering the minimum lease term and all optional renewal periods that the Company is reasonably certain to renew. The lease term is also used to calculate straight-line rent expense. The depreciable life of leasehold improvements is limited by the estimated lease term, including renewals if they are reasonably certain to be renewed. The Company’s leases do not contain residual value guarantees or material variable lease payments that will impact the Company's ability to pay dividends or cause the Company to incur additional expenses.

Operating lease expense consists of a single lease cost allocated over the remaining lease term on a straight-line basis, variable lease payments not included in the lease liability, and any impairment of the right-of-use asset. Rent expense and variable lease expense are included in occupancy and equipment expense on the Company's consolidated statements of operations.

The Company has elected to treat property leases that include both lease and non-lease components as a single component and account for it as a lease.

~~Mortgage Servicing Rights~~64

Mortgage servicing rights are recognized as separate assets when rights are acquired through purchase or through sale of financial assets. Mortgage servicing rights are capitalized and amortized into income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. Mortgage servicing rights are evaluated for impairment based upon the fair value of the rights as compared to amortized cost. Impairment is determined by stratifying rights by predominant characteristics, such as interest rates and terms. Fair value is determined by using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance for an individual stratum, to the extent that fair value is less than the capitalized amount for the stratum.

Intangible Assets

Intangible assets with a finite life consist of a core deposit intangible and is carried at cost less accumulated amortization. The Company amortizes the cost of the identifiable intangible asset on a straight-line basis over the expected period of benefit, which is seven years.

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2024~~2025 and ~~2023~~2024

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

Mortgage Servicing Rights

Intangible Assets

Intangible assets with a finite life consisted of a core deposit intangible that was carried at cost less accumulated amortization. The Company amortized the cost of the identifiable intangible asset on a straight-line basis over the expected period of benefit, which was seven years. At December 31, 2025, the Company had fully amortized the core deposit intangible.

Income Taxes

The Company’s income tax expense consists of the following components: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rate and laws are recognized in the period in which they occur.

Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not some portion or all of a deferred tax asset will not be realized. The Company recognizes interest accrued on and penalties related to unrecognized tax benefits in tax expense.

During the years ended December 31, ~~2024~~2025 and ~~2023~~2024, the Company recognized no interest and penalties. Based on management’s analysis, the Company did not have any uncertain tax positions at December 31, ~~2024~~2025 and ~~2023~~2024.

The Company files income tax returns in the U.S. federal jurisdiction and the State of Texas.

Treasury Stock

Treasury stock is accounted for using the cost method and consists of ~~282~~479,~~273~~241 and ~~174~~282,~~842~~273 shares at December 31, ~~2024~~2025 and ~~2023~~2024, respectively.

~~Advertising~~65

Advertising costs are expensed as incurred. Advertising expenses for the years ended December 31, 2024 and 2023 amounted to $113 and $75, respectively.

Operating Segments

While the chief decision-makers monitor the revenue streams of the various products and services, operations are managed, and financial performance is evaluated on a Company-wide basis. Discrete operating results are not reviewed by senior management to make resource allocation or performance decisions. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

Segment Information

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2024~~2025 and ~~2023~~2024

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

streams of the various products and services offered by the Bank, the Company’s operations are managed and financial performance is evaluated on a Company-wide basis as a single reportable operating segment, which is the Bank.Advertising

Advertising costs are expensed as incurred. Advertising expenses for the years ended December 31, 2025 and 2024 amounted to $240 and $113, respectively.

Operating Segments

Segment Information

The Company’s chief operating decision-maker (“CODM”) is the Chief Executive Officer. Operating segments are defined as components of a business about which separate financial information is available and evaluated regularly by the CODM in deciding how to allocate resources and assess performance. While the CODM monitors the revenue streams of the various products and services offered by the Bank, the Company’s operations are managed and financial performance is evaluated on a Company-wide basis as a single reportable operating segment, which is the Bank.

Discrete financial information, with a full allocation of revenue, costs, and capital from key corporate functions, is not available at a level other than on a Company-wide basis. Although the CODM has some limited financial information about the Company’s various financial products and services, this information is not complete and is insufficient for making resource allocation decisions or performance assessments at a more granular level. Therefore, management considers all financial service operations to be aggregated within one reportable operating segment, the Bank, and evaluates financial performance on a company-wide basis using net income as reported on the Consolidated Statement of Operations. The measure of segment assets is total assets, as reported on the Consolidated Statements of Financial Condition. The CODM uses net income to monitor budget versus actual results and in the determination of allocating resources across the Company.

The Company’s single reportable segment, the Bank, generates revenues primarily from interest income from financial instruments and non-interest income and service charges on deposit accounts. There are no intra-entity sales or transfers within the Company. Management continues to evaluate the Company’s business units for potential separate reporting in the future as facts and circumstances evolve.

Revenue Policies

FASB ASC Topic 606, Revenue from Contracts with Customers (Topic 606), (i) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (ii) revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets, such as foreclosed assets. The majority of the Company’s revenues come from interest income and other sources, including loans, leases, and securities, that are outside the scope of Topic 606. The Company’s services that fall within the scope of Topic 606 are presented within Non-Interest Income and are recognized as revenue as the Company satisfies its obligation to the customer. Services within the scope of Topic 606 include service charges on deposits, interchange income, and the gain (loss) on the sale of foreclosed assets.

~~A description of the Company’s revenue streams accounted for under Topic 606 follows:~~66

Service Charges on Deposit Accounts: The Company earns fees from its deposit customers for transaction-based, account-maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance.

Interchange Income: The Company earns interchange fees from debit/credit cardholder transactions conducted through the Visa/MasterCard/Other payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder.

Gains (Losses) on Sales of Foreclosed Assets: The Company records a gain or loss from the sale of foreclosed assets when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of a foreclosed asset to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the foreclosed asset is derecognized and the gain or loss on sale is recorded upon the transfer of control

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2024~~2025 and ~~2023~~2024

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

ofA ~~the~~description ~~property~~of to the ~~buyer. In determining the gain or loss on the sale, the~~ Company’s ~~adjusts~~revenue ~~the~~streams ~~transaction~~accounted ~~price~~for ~~and~~under ~~related~~Topic ~~gain~~606 ~~(loss) on sale if a significant financing component is present.~~follows:

Gains (Losses) on Sales of Other Real Estate Owned: The Company records a gain or loss from the sale of other real estate owned when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of a other real estate owned to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the other real estate owned is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present.

Derivatives

The Company adopted ASU 2022-01, Derivatives and Hedging (Topic 815) – Fair Value Hedging – Portfolio Layer Method, as of January 1, 2023.

At the inception of a derivative contract, the Company designates the derivatives as one of the three types based on the Company’s intentions and belief as to likely effectiveness as a hedge. These three types are (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”), (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”), or (3) an instrument with no hedging designation (“stand-alone derivative”). For a fair value hedge, the gain or loss on the derivate, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in current earnings as fair values change. For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income (loss) and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. Changes in the fair value of derivatives not designated or that do not qualify for hedge accounting are reported currently in earnings, as non-interest income.

Accrued settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Accrued settlements on derivatives not designated or that do not qualify for hedge accounting are reported in non-interest income. Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the items being hedged.

The Company formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions at the inception of the hedging relationship. This documentation includes linking fair value or cash flow hedges to specific assets and liabilities on the statement of financial condition or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in fair values or cash flows of the hedged items. The Company discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment of the derivative as a hedge is no longer appropriate or intended.

When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as non-interest income. When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive income (loss) are amortized into earnings over the same periods which the hedged transactions will affect earnings.

The Company is exposed to losses if a counterparty fails to make its payments under a contract in which the Company is in the net receiving position. The Company anticipates that the counterparties will be able to fully satisfy their obligations under the agreements. All the contracts to which the Company is a party settle monthly or semi-annually.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net (loss) income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains (losses) on securities available-for-sale.

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2024~~2025 and ~~2023~~2024

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

flows of the hedged item, the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment of the derivative as a hedge is no longer appropriate or intended.

The Company would be exposed to losses if a counterparty fails to make its payments under a contract in which the Company is in the net receiving position. The Company anticipates that the counterparties would be able to fully satisfy their obligations under the agreements.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains (losses) on securities available-for-sale.

Stock Incentive Plan

Compensation cost is recognized for stock options and restricted stock awards issued to directors, executive management, and other officers based on the fair value of these awards at the date of the grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of the grant is used for restricted stock awards.

Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.

Reclassifications

Certain reclassifications of amounts previously reported have been made to the accompanying financial statements to maintain consistency between periods presented. The reclassifications had no impact on net income or shareholders' equity.

Subsequent Events

Management has evaluated subsequent events through March 27, 2025, which was the date the accompanying consolidated financial statements were issued.

OnRevision ~~January~~of ~~15,~~Prior-Period ~~2025,~~Comparative ~~the~~Financial ~~Company~~Statements ~~terminated the two interest rate swap agreements with a notional amount of $25 million.~~

OnCertain ~~February~~disclosures ~~27,~~in ~~2025,~~ the ~~Company~~2024 ~~announced~~comparative ~~that~~consolidated ~~the~~financial ~~Company’s~~statements ~~Board~~have ofbeen ~~Directors~~revised ~~had~~to ~~approved~~correct afor ~~new~~misstatements ~~stock~~that ~~repurchase~~were ~~program~~not ~~that~~material ~~authorized~~to the ~~Company~~previously toissued ~~repurchase~~2024 upfinancial statements. The revisions relate to ~~153,083~~the ~~shares~~presentation of ~~common~~certain ~~stock~~disclosures and do not impact previously reported total assets, total liabilities, total shareholder’s equity, or net income for the year ended December 31, 2024. The specific revisions are as follows:

As● ofRelated ~~December~~Party ~~31,~~Loans: ~~2024,~~The ~~the~~balance ~~Company~~of ~~had~~loans ~~agreed~~ to ~~repurchase~~related ~~residential~~parties ~~mortgage~~as ~~loans~~of ~~totaling~~December ~~$2.3~~31, ~~million~~2024, atwas ~~the~~revised ~~original~~from ~~sales~~$2,987 ~~price. These loans were previously sold during 2024 due~~ to ~~specific~~$3,978 ~~documentation~~in ~~issues~~Note ~~that~~15 ~~did~~Related ~~not~~Party ~~impact the credit quality of the loans~~Transactions.

●

Related Party Deposits: The balance of deposits to related parties as of December 31, 2024, was revised from $4,052 to $6,212 in Note 15 Related Party Transactions.

At December 31, 2024, the Company accrued for the repurchase consideration in Accrued expenses and Other liabilities and included the assets in Loans receivable net of allowance for credit losses on the Company’s Consolidated Statement of Financial Condition. Cash proceeds were transferred on January 9, 2025. 68

Subsequent to December 31, 2024 and through March 27, 2025, we purchased 31,500 shares of common stock at an average price of $15.70 pursuant to the Stock Repurchase Plan.

Note 2 - Earnings Per Share

Basic earnings per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period, including allocated and committed-to-be-released ESOP shares and restricted stock awards granted on August 31, 2022, February 28, 2023, February 28, 2024, and August 30, 2024, during the applicable period. Diluted earnings per share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method.

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Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2024~~2025 and ~~2023~~2024

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

Note 2 - Earnings Per Share

Basic earnings per share is computed by dividing the net income or loss by the weighted-average number of common shares outstanding during the period, including allocated and committed-to-be-released ESOP shares and vested restricted stock awards. Diluted earnings per share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method.

The following table presents a reconciliation of the number of shares used in the calculation of basic and diluted earnings per common share:


	Year Ended
	December 31,
	~~2024~~2025		~~2023~~2024
Net Loss	$	(1,305)	$	(733)
Net Income (Loss)	$	2,842	$	(1,305)

Weighted average shares outstanding for basic earnings per share:
Average shares outstanding		32,~~132~~925,~~101~~812		3,~~293~~132,~~752~~101
Less: average unearned ESOP shares		(~~216~~198,~~699~~600)		(~~231~~216,~~235~~699)
Weighted average shares outstanding for basic earnings per share		2,~~915~~727,~~402~~212		32,~~062~~915,~~517~~402

Additional dilutive shares		70128,~~613~~247		—70,613

Weighted average shares outstanding for dilutive earnings per share		2,~~986~~855,~~015~~459		32,~~062~~986,~~517~~015

Basic earnings (loss) per share	$	(01.~~45)~~04	$	(0.2445)

Dilutive earnings (loss) per share	$	(01.~~44)~~00	$	(0.2444)

Nonvested restricted stock awards for 64,886 ~~and 84,697~~ shares of common stock were not considered in computing diluted earnings per share for 2024 ~~and 2023~~, ~~respectively,~~ because they were antidilutive. ~~Nonvested~~All nonvested restricted stock awards were considered in computing diluted earnings per share for 2025, because they were dilutive. Stock options for ~~160~~128,~~596~~269 and ~~211~~160,~~747~~596 shares of common stock were not considered in computing diluted earnings per share for 2025 and ~~vested~~2024, ~~stock~~because they were nonvested. Stock options for 44,630 ~~and 19,546~~ shares of common stock have vested, however, were not considered in computing diluted earnings per share for 2024 ~~and 2023~~, ~~respectively,~~ because they were antidilutive.

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2024~~2025 and ~~2023~~2024

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

Note 3 - Debt Securities

The amortized cost and fair value of securities, with gross unrealized gains and losses, follows:

December 31, ~~2024~~2025

Gross

Estimated

Amortized

Unrealized

Fair

Available for Sale

Cost

Gains

Losses

Value

Debt Securities:

Residential mortgage-backed

106,~~356~~475

—

(~~1,205~~679)

95,~~151~~796

Collateralized mortgage obligations

4837,~~808~~023

2112

(21,~~261~~293)

4635,~~568~~742

State and municipal

159,~~124~~753

—

(1,~~847~~010)

138,~~277~~743

Corporate bonds

710,~~352~~519

—49

(~~1,159~~956)

69,~~193~~612

Total securities available for sale

8163,~~640~~770

2161

(63,~~472~~938)

7559,~~189~~893

Held to Maturity

Debt Securities:

Residential mortgage-backed

1916,~~090~~112

—

(21,~~521~~534)

1614,~~569~~578

State and municipal

1,~~567~~200

—

(456)

1,~~522~~194

U.S. Government and agency

~~1,439~~971

—

~~1,440~~972

Total securities held to maturity

2218,~~096~~283

(21,~~566~~540)

1916,~~531~~744

December 31, ~~2023~~2024

Gross

Estimated

Amortized

Unrealized

Fair

Available for Sale

Cost

Gains

Losses

Value

Debt Securities:

Residential mortgage-backed

2610,~~379~~356

—

(1,~~454~~205)

249,~~925~~151

Collateralized mortgage obligations

5248,~~426~~808

3121

(2,~~578~~261)

4946,~~879~~568

State and municipal

15,~~220~~124

—

(1,~~870~~847)

13,~~350~~277

Corporate bonds

67,~~500~~352

—

(1,~~327~~159)

56,~~173~~193

Total securities available for sale

~~100~~81,~~525~~640

3121

(76,~~229~~472)

9375,~~327~~189

Held to Maturity

Debt Securities:

Residential mortgage-backed

2219,~~301~~090

—

(2,~~584~~521)

1916,~~717~~569

State and municipal

1,~~985~~567

—

(3545)

1,~~950~~522

U.S. Government and agency

1,~~734~~439

—1

~~(1)~~—

1,~~733~~440

Total securities held to maturity

2622,~~020~~096

—1

(2,~~620~~566)

2319,~~400~~531

During the years ended December 31, 2025 and 2024, the Company had sales of available for sale securities with an amortized cost basis of $23,672 with a gain of $117 and $19,944 with a gain of $190, ~~and~~respectively. There were no sales of held to maturity securities. ~~During~~during the ~~year~~years ended December 31, ~~2023,~~2025 ~~the Company had sales of available for sale securities with an amortized cost of $19,767 with a loss of $1,734~~ and ~~no sales of held to maturity securities~~2024.

At December 31, ~~2024~~2025 and ~~2023~~2024, securities with a fair value of $1714,~~862~~815 and $1417,~~152~~862, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

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Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2024~~2025 and ~~2023~~2024

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

The amortized cost and fair value of debt securities by contractual maturity at December 31, ~~2024~~2025, follows:

Available for Sale

Held to Maturity

Estimated

Amortized

Fair

Amortized

Fair

Cost

Value

Cost

Value

Due in one year

—

~~365~~—

Due from one to five years

31,~~549~~144

31,~~313~~054

~~134~~135

~~124~~128

Due in five to ten years

12,~~528~~879

1012,~~926~~074

~~1,439~~971

~~1,439~~972

After ten years

6,~~399~~249

5,~~231~~227

1,~~068~~065

1,~~034~~066

Residential mortgage-backed

106,~~356~~475

95,~~151~~796

1916,~~090~~112

1614,~~569~~578

Collateralized mortgage obligations

4837,~~808~~023

4635,~~568~~742

—

Total

8163,~~640~~770

7559,~~189~~893

2218,~~096~~283

1916,~~531~~744

The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:


	December 31, ~~2024~~2025
	Less than 12 months				12 months or longer
			Gross				Gross
	Fair		Unrealized		Fair		Unrealized
Category (number of securities)	Value		Losses		Value		Losses
Residential mortgage-backed (1,83)	$	434	$	(20)	$	25,287	$	(3,706)
Residential mortgage-backed (0, 77)	$	—	$	—	$	20,374	$	(2,213)
Collateralized mortgage obligations (8,15)		15,185		(224)		22,316		(2,037)
Collateralized mortgage obligations (2, 15)		2,538		(18)		24,891		(1,275)
State and municipal (1,17)		309		(1)		14,126		(1,891)
State and municipal (1, 9)		1,065		—		8,872		(1,016)
Corporate bonds (2,12)		1,581		(20)		4,611		(1,139)
Corporate bonds (4, 13)		2,871		(29)		5,572		(927)
U.S. Government and agency (0,0)		—		—		—		—
Total	$	6,474	$	(47)	$	59,709	$	(5,431)
Total	$	17,509	$	(265)	$	66,340	$	(8,773)


	December 31, ~~2023~~2024
	Less than 12 months				12 months or longer
			Gross				Gross
	Fair		Unrealized		Fair		Unrealized
Category (number of securities)	Value		Losses		Value		Losses
Residential mortgage-backed (4,85)	$	9,486	$	(46)	$	35,156	$	(3,992)
Residential mortgage-backed (1, 83)	$	434	$	(20)	$	25,287	$	(3,706)
Collateralized mortgage obligations (5,20)		12,909		(207)		31,793		(2,371)
Collateralized mortgage obligations (8, 15)		15,185		(224)		22,316		(2,037)
State and municipal (4,16)		1,718		(2)		13,582		(1,903)
State and municipal (1, 17)		309		(1)		14,126		(1,891)
Corporate bonds (0,12)		—		—		4,423		(1,327)
Corporate bonds (2, 12)		1,581		(20)		4,611		(1,139)
U.S. Government and agency (1,0)		1,733		(1)		—		—
Total	$	17,509	$	(265)	$	66,340	$	(8,773)
Total	$	25,846	$	(256)	$	84,954	$	(9,593)

At December 31, ~~2024~~2025 and ~~2023~~2024, the Company had investment securities with approximately $85,~~773~~431 and $98,~~593~~773, respectively, in unrealized losses, which have been in continuous loss positions for more than twelve months. The Company’s assessments indicated that the cause of the market depreciation was primarily the change in market interest rates and not the issuer’s financial condition or downgrades by rating agencies. The Company has the ability and intent to hold such securities until maturity.

The Company monitors credit quality of debt securities held to maturity through the use of credit rating. The Company monitors the credit rating on a continual basis. The following table summarizes bond ratings for the Company’s held to maturity portfolio, based upon amortized cost, issued by state and political subdivisions and other securities as of

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Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2024~~2025 and ~~2023~~2024

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

~~monitors~~December ~~the credit rating on a continual basis. The following table summarizes bond ratings for the Company’s held to maturity portfolio~~31, ~~based~~2025 ~~upon amortized cost, issued by state~~ and ~~political subdivisions and other securities as of December 31,~~ 2024:


	December 31, ~~2024~~2025
	Residential mortgage-backed		State and municipal		U.S Government and agency
AAA	$	1916,~~090~~112	$	1,~~433~~066	$	~~1,439~~971
Baa1		—		134		—
	$	1916,~~090~~112	$	1,~~567~~200	$	~~1,439~~971


	December 31, ~~2023~~2024
	Residentialmortgage-backed		State and municipal		U.S Government and agency
AAA	$	2219,~~301~~090	$	1,~~851~~433	$	1,~~734~~439
Baa2		—		134		—
Baa1		—		134		—
	$	2219,~~301~~090	$	1,~~985~~567	$	1,~~734~~439

As of December 31, ~~2024~~2025 and ~~2023~~2024, there were no securities held to maturity on nonaccrual or past due status.

Mortgage-backed Securities and Collateralized Mortgage Obligations

The unrealized losses on the Company'’s ~~investment~~investments in mortgage-backed securities and collateralized mortgage obligations were caused by market interest rate increases and changes in prepayment speeds. ~~The Company purchased these investments at a discount relative to its face amount,~~ and ~~the~~not ~~contractual~~credit ~~cash flows of these investments are guaranteed by an agency of the U~~quality.S. ~~government.~~It ~~Accordingly, it~~ is expected that the securities would not be settled at a price less than the amortized cost basis of the Company'’s investments. ~~Because the decline in market value is attributable to changes in interest rates and prepayment speeds and not credit quality, and~~ because the Company does not intend to sell the investments before recovery of their amortized cost basis, which may be maturity,. ~~the~~The unrealized losses on the Company’s investment in mortgage-backed securities have not been recognized into income and no allowance for credit losses was established at December 31, ~~2024~~2025 orand ~~2023~~2024.

U.S. Government and Agency

The unrealized losses on the Company'’s ~~investment~~investments in U.S. ~~Government~~government and agency securities have not been recognized into income and no allowance for credit losses was established because the bonds are of high credit quality, management does not intend to sell, and it is likely that management will not be required to sell the securities prior to their anticipated recovery, which may be at maturity. The decline in fair value is largely due to increases in market interest rates and not credit quality deterioration and the fair value is expected to recover as the bonds approach maturity. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost ~~bases~~basis of the Company’s investments. Therefore, an allowance for credit losses is deemed unnecessary at December 31, ~~2024~~2025 and ~~2023~~2024.

Municipal Securities and Corporate Bonds

The unrealized losses on the Company'’s ~~investment~~investments in state and municipal securities and corporate bonds have not been recognized into income and no allowance for credit losses was established because the bonds are of high credit quality, management does not intend to sell, and it is likely that management will not be required to sell the securities prior to their anticipated recovery, which may be at maturity. The decline in fair value is largely due to increases in market interest rates and not credit quality deterioration and the fair value is expected to recover as the bonds approach maturity. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost basis of the

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Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2024~~2025 and ~~2023~~2024

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

management does not intend to sell, and it is likely that management will not be required to sell the securities prior to their anticipated recovery. The decline in fair value is largely due to increases in interest rates and not credit quality and the fair value is expected to recover as the bonds approach maturity. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost bases of the Company’s investments. Therefore, an allowance for credit losses is deemed unnecessary at December 31, ~~2024~~2025 and ~~2023~~2024.

Note 4 - Loans and Leases

A summary of the balances of loans and leases follows:


	December 31,		December 31,
	~~2024~~2025		~~2023~~2024
Real estate
Construction and land	$	5448,~~136~~372	$	3754,~~526~~136
Farmland		917,~~540~~085		89,~~317~~540
1-4 Residential and multi-family		~~156~~151,~~068~~326		~~181~~156,~~464~~068
Commercial Real Estate		5661,~~068~~526		4156,~~788~~068
Total real estate		~~275~~278,~~812~~309		~~269~~275,~~095~~812
Agriculture		5533		~~150~~55
Commercial		68,~~315~~813		6,~~900~~315
Municipalities		914,~~253~~890		29,~~173~~253
Consumer and other		54,~~495~~600		45,~~710~~495
Subtotal		~~296~~306,~~930~~645		~~283~~296,~~028~~930
Less allowance for credit losses		(3,222)		(3,096)
Less: allowance for credit losses		(3,440)		(3,222)
Loans and leases, net	$	~~293~~303,~~708~~205	$	~~279~~293,~~932~~708

Direct financing leases of $1,~~292~~219 and $361,292 are included in consumer and other loans at December 31, ~~2024~~2025 and ~~2023~~2024, respectively.

The following table set forth information regarding the activity in the allowance for credit losses for the year ended December 31, ~~2024~~2025 and ~~2023~~2024:


		December 31, ~~2024~~2025
	Real Estate
Allowance for credit losses:	Construction and Land		Farmland		1-4 Residential & multi-family		Commercial real estate		Agriculture		Commercial		Municipalities		Consumer and other		Total
Balance, January 1, 2024	$	378	$	66	$	1,621	$	482	$	2	$	441	$	18	$	88	$	3,096
Balance, January 1, 2025	$	632	$	74	$	1,355	$	605	$	1	$	375	$	83	$	97	$	3,222
Provision (credit) for credit losses		~~254~~412		878		~~(250)~~47		~~123~~113		~~(1)~~—		1840		6519		5227		~~269~~736
Loans charged-off		—(453)		—		(163)		—		—		(848)		—		(8660)		(~~186~~524)
Recoveries		—		—		—		—		—		—		—		436		436
Balance, December 31, 2024	$	632	$	74	$	1,355	$	605	$	1	$	375	$	83	$	97	$	3,222
Balance, December 31, 2025	$	591	$	152	$	1,399	$	718	$	1	$	407	$	102	$	70	$	3,440

Balance, December 31, 2024 allocated to loans and leases individually evaluated	$	131	$	—	$	20	$	16	$	—	$	279	$	—	$	5	$	451

Balance, December 31, 2024 allocated to loans and leases collectively evaluated	$	501	$	74	$	1,335	$	589	$	1	$	96	$	83	$	92	$	2,771

Loans and leases receivable:
Balance, December 31, 2024 loans and leases individually evaluated	$	7,285	$	—	$	1,630	$	743	$	—	$	1,172	$	—	$	6	$	10,836
Balance, December 31, 2024 loans and leases collectively evaluated		46,851		9,540		154,438		55,325		55		5,143		9,253		5,489		286,094
Balance, December 31, 2024	$	54,136	$	9,540	$	156,068	$	56,068	$	55	$	6,315	$	9,253	$	5,495	$	296,930

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

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


		December 31, 2024
	Real Estate
Allowance for credit losses:	Construction and Land		Farmland		1-4 Residential & multi-family		Commercial real estate		Agriculture		Commercial		Municipalities		Consumer and other		Total
Balance, January 1, 2024	$	378	$	66	$	1,621	$	482	$	2	$	441	$	18	$	88	$	3,096
Provision for credit losses		254		8		(250)		123		(1)		18		65		52		269
Loans charged-off		—		—		(16)		—		—		(84)		—		(86)		(186)
Recoveries		—		—		—		—		—		—		—		43		43
Balance, December 31, 2024	$	632	$	74	$	1,355	$	605	$	1	$	375	$	83	$	97	$	3,222


		December 31, 2023
	Real Estate
Allowance for credit losses:	Construction and Land		Farmland		1-4 Residential & multi-family		Commercial real estate		Agriculture		Commercial		Municipalities		Consumer and other		Total
Beginning balance prior to adoption of ASC 326	$	262	$	31	$	812	$	227	$	1	$	359	$	4	$	59	$	1,755
Impact of adopting ASC 326 on January 1, 2023		92		28		677		133		2		61	$	4	$	28		1,025
Provision for credit losses		24		7		132		122		(1)		21		10		14		329
Loans charged-off		—		—		—		—		—		—		—		(75)		(75)
Recoveries		—		—		—		—		—		—		—		62		62
Balance, December 31, 2023	$	378	$	66	$	1,621	$	482	$	2	$	441	$	18	$	88	$	3,096

Balance, December 31, 2023 allocated to loans and leases individually evaluated	$	17	$	4	$	23	$	12	$	—	$	348	$	—	$	4	$	408

Balance, December 31, 2023 allocated to loans and leases collectively evaluated	$	361	$	62	$	1,598	$	470	$	2	$	93	$	18	$	84	$	2,688

Loans and leases receivable:
Balance, December 31, 2023 loans and leases individually evaluated	$	962	$	155	$	1,432	$	492	$	—	$	1,401	$	—	$	14	$	4,456
Balance, December 31, 2023 loans and leases collectively evaluated		36,564		8,162		180,032		41,296		150		5,499		2,173		4,696		278,572
Balance, December 31, 2023	$	37,526	$	8,317	$	181,464	$	41,788	$	150	$	6,900	$	2,173	$	4,710	$	283,028

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing as of December 31, 2024 and 2023:


	December 31, 2024
	NonaccrualwithoutAllowance		Nonaccrual with Allowance		Loans Past Due Over 90 Days Still Accruing
Real estate
Construction and land	$	301	$	—	$	—
Farmland		—		—		—
1‑4 Residential & multi-family		610		—		—
Commercial real estate		51		—		—
Agriculture		—		—		—
Commercial		23		1,140		—
Municipalities		—		—		—
Consumer and other		—		—		—
Total	$	985	$	1,140	$	—

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2024~~2025 and ~~2023~~2024

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


	December 31, 2023
	NonaccrualwithoutAllowance		Nonaccrual with Allowance		Loans Past Due Over 90 Days Still Accruing
Real estate
Construction and land	$	—	$	—	$	—
Farmland		—		—		—
1‑4 Residential & multi-family		497		—		—
Commercial real estate		61		—		22
Agriculture		—		—		—
Commercial		6		345		8
Municipalities		—		—		—
Consumer and other		—		—		—
Total	$	564	$	345	$	30

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days and still accruing interest as of December 31, 2025 and 2024:

The Company did not recognize any interest income on nonaccrual loans during the years ended December 31, 2024 or 2023.


	December 31, 2025
	Nonaccrual without Allowance		Nonaccrual with Allowance		Loans Past Due Over 90 Days Still Accruing
Real estate
Construction and land	$	—	$	—	$	—
Farmland		—		—		—
1‑4 Residential & multi-family		968		—		—
Commercial real estate		42		—		—
Agriculture		—		—		—
Commercial		67		933		1
Municipalities		—		—		—
Consumer and other		4		—		—
Total	$	1,081	$	933	$	1

The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of December 31, 2024:


	December 31, 2024
	Nonaccrual without Allowance		Nonaccrual with Allowance		Loans Past Due Over 90 Days Still Accruing
Real estate
Construction and land	$	301	$	—	$	—
Farmland		—		—		—
1‑4 Residential & multi-family		610		—		—
Commercial real estate		51		—		—
Agriculture		—		—		—
Commercial		23		1,140		—
Municipalities		—		—		—
Consumer and other		—		—		—
Total	$	985	$	1,140	$	—


	December 31, 2024
	Real Estate		AccountsReceivableandInventory		Other
Real estate
Construction and land	$	301	$	—	$
1-4 Residential & multi-family		745		—		—
Commercial real estate		51		—		—
Commercial		—		297		866
Total	$	1,097	$	297	$	866

The Company did not recognize any interest income on nonaccrual loans during the years ended December 31, 2025 or 2024.


	December 31, 2023
	Real Estate		AccountsReceivableandInventory		Other
Real estate
1-4 Residential & multi-family	$	645	$	—	$	—
Commercial real estate		61		—		—
Commercial		—		445		6
Total	$	706	$	445	$	6

The Company had $2,260 and $1,157 in collateral-dependent loans as of December 31, 2024 and 2023, respectively.

Table of Contents

Texas Community Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2024~~2025 and ~~2023~~2024

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

The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of December 31, 2025 and 2024:


	December 31, 2025
	Real Estate		Accounts Receivable and Inventory		Other
Real estate
1-4 Residential & multi-family	$	1,090	$	—	$	—
Commercial real estate		42

Filing Compare · Texas Community Bancshares, Inc.