Strategic Plan

Our key strategic initiatives are designed to generate continued growth in earning assets, core transaction deposits, treasury management fee income, while operating with an efficient cost structure. Continued emphasis on expansion of our South Florida footprint and exploring additional niche lines of business are also part of our strategic plan.

We believe providing our clients with reasonable solutions that meet their business and personal needs fosters stability in our client base, builds full-service banking relationships, and allows for profitable growth that enhances shareholder returns. We intend to deliver the solutions to clients in a very personalized manner while investing in talent and leveraging modern technology to facilitate efficiency and decrease client pain points while enhancing our competitiveness.

We are focused on full-service banking relationships, continuing to identify deposit growth opportunities among our existing customer base and prospects throughout South Florida, Florida, and the United States. Improving our core funding capabilities is foundational to the ability to support our opportunity to capitalize on the strong business and real estate market in South Florida and with our niche skilled nursing facility and merchant cash advance markets. We will accomplish this through the addition of experienced and skilled bankers to our business development and retail banking teams, and we are modernizing and improving our products and digital services to better support our personalized business model. This includes upgrading our core banking system in 2025. We believe adding this talent and upgrading our core banking system will allow us to better service local area small businesses that will add granularity and diversification to our customer base and balance sheet, while improving the utilization of our local area branches.

Modernizing our technology and improving our products and services also allows us to better support our personalized business model to our niche business owner-operator client base with less friction, a human touch, and we believe better convenience than the large banks. In coordination with our Treasury Cash Management capabilities this has allowed us to enter niche businesses including banking services to Skilled Nursing Facilities in the areas of CRE, Asset-Based Lending (ABL) while capturing the business operating accounts. In addition, we have built capabilities in Small Business Administration (SBA) lending, entering the space in late 2023 and being designated as a Preferred Lender under the SBA’s Preferred Lenders Program (PLP) in the first quarter of 2025. Under the program the Bank offers SBA-guaranteed 7A loans generally secured by accounts receivable, inventory, equipment, or real estate. At March 31, 2025 the SBA loan portfolio totaled $9.9 million, or 1.2% of total loans, up from $9 million, or 1.1% of loans at December 31, 2024. Management has implemented initiatives that have enabled us to grow our loan portfolio primarily with South Florida and Florida generated relationships in the commercial real estate, owner-occupied commercial real estate, multifamily, and commercial and industrial sectors, out-of-area loans.

In treasury management services, our primary focus will remain on merchant cash advance providers and the related electronic funds transfer line of business. For this revenue source to increase further in a meaningful way, automation will be necessary in order to further improve efficiency. We are currently investing in the necessary technology and expect efficiencies to occur during 2025.

Financial Condition at March 31, 2025 and December 31, 2024

Capital Levels

As of March 31, 2025, the Bank is well capitalized under regulatory guidelines.

Refer to Note 9 for the Bank’s actual and required minimum capital ratios.

Overview

The Company’s total assets increased by approximately $44.6 million to $977.5 million at March 31, 2025, from $932.9 million at December 31, 2024, primarily due to increases in cash and cash equivalents. Net loans decreased by $3.7 million to $791.2 million at March 31, 2025, from $794.9 million at December 31, 2024. Deposits grew by approximately $80.7 million to $852.9 million at March 31, 2025, from $772.2 million at December 31, 2024. Total stockholders’ equity increased by approximately $4.8 million to $108 million at March 31, 2025, from $103.2 million at December 31, 2024, primarily due to net earnings, proceeds from common stock sales, and unrealized gains on debt securities available for sale.

The following table shows selected information for the periods ended or at the dates indicated:

Metric	Three Months Ended March 31	Year Ended December 31
	2025	2024
Average equity as a percentage of average assets	11.1%	9.3%
Equity to total assets at end of period	11.0%	11.1%
Return on average assets (1)	1.6%	1.4%
Return on average equity (1)	14.7%	7.3%
Noninterest expenses to average assets (1)	2.4%	2.1%

(1) Annualized for the three months ended March 31, 2025.

Liquidity and Sources of Funds

The Company’s sources of funds include customer deposits, advances from the Federal Home Loan Bank of Atlanta (“FHLB”), principal repayments and sales of debt securities, loan repayments, the use of Federal Funds markets, net earnings, and loans taken out at the Federal Reserve Bank discount window.

Our liquidity is derived primarily from our deposit base, scheduled amortization and prepayments of loans and investment securities, funds provided by operations, and capital. Additionally, as a commercial bank, we are expected to maintain an adequate liquidity position. The liquidity position may consist of cash on hand, cash on demand deposit with correspondent banks, federal funds sold, and unpledged marketable securities such as United States government treasury and agency securities, municipal securities, U.S. agency mortgage-backed securities, and asset-backed securities. Some of our securities are pledged to the Federal Reserve Bank. The market value of securities pledged to the Federal Reserve Bank was $1.7 million at March 31, 2025.

The Company increased deposits by approximately $80.7 million during the three-month period ended March 31, 2025. The increase in deposits provided funding for new loan originations and the repayment of outstanding borrowings from FHLB.

In addition to obtaining funds from depositors, the Company may borrow funds from other financial institutions. At March 31, 2025, the Company had outstanding borrowings of $10 million, against its $233.2 million in established borrowing capacity with the FHLB. The Company’s borrowing facility is subject to collateral and stock ownership requirements, as well as prior FHLB consent to each advance. The Bank has a line of credit with the Federal Reserve Bank which is secured by investment securities with fair value of $1.7 million as of March 31, 2025. At March 31, 2025, the Company also had available lines of credit amounting to $30.5 million with five correspondent banks to purchase federal funds. Disbursements on the lines of credit are subject to the approval of the correspondent banks. We measure and monitor our liquidity daily and believe our liquidity sources are adequate to meet our operating needs.

Results of Operations

The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest and dividend income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average cost; (iii) net interest income; (iv) interest-rate spread; (v) net interest margin; and (vi) the ratio of average interest-earning assets to average interest-bearing liabilities.

| Metric | Three Months Ended March 31 |

	2025	2024
Average Balance	Interest and Dividends	Average Yield/Rate (5)
Interest-earning assets:
Loans	$796,846	$13,601
Securities	22,977	160
Other (1)	109,863	1,246
Total interest-earning assets/interest income	929,686	15,007
Interest-bearing liabilities:
Savings, NOW and money-market deposits	$277,012	$1,751
Time deposits	312,116	3,527
Borrowings (2)	32,222	303
Total interest-bearing liabilities/interest expense	621,350	5,581
Net interest income		$9,426
Interest rate spread (3)
Net interest margin (4)
Ratio of average interest-earning assets to average interest-bearing liabilities		1.50

(1) Includes interest-earning deposits with banks and Federal Home Loan Bank stock dividends. (2) Includes Federal Home Loan Bank advances. (3) Interest-rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. (4) Net interest margin is net interest income divided by average interest-earning assets. (5) Annualized.

Comparison of the Three-Month Periods Ended March 31, 2025, and 2024

| Metric | Three Months Ended March 31 | Increase / (Decrease) |

	2025	2024	Amount	Percentage
Total interest income	$15,007	$13,465	$1,542	11%
Total interest expense	5,581	5,714	(133)	-2%
Net interest income	9,426	7,751	1,675	22%
Credit loss (reversal) expense	(165)	1,057	(1,222)	-116%
Net interest income after credit loss (reversal) expense	9,591	6,694	2,897	43%
Total noninterest income	1,231	1,239	(8)	-1%
Total noninterest expenses	5,626	4,709	917	19%
Net earnings before income taxes	5,196	3,224	1,972	61%
Income taxes	1,326	847	479	57%
Net earnings	$3,870	$2,377	1,493	63%
Net earnings per share - Basic	$0.33	$0.31
Net earnings per share - Diluted	$0.32	$0.31

Net earnings. Net earnings for the three months ended March 31, 2025, were $3.9 million or $0.33 per basic share and $0.32 per diluted share compared to net earnings of $2.4 million or $0.31 per basic share and $0.31 per diluted share for the three months ended March 31, 2024. The increase in net earnings during the three months ended March 31, 2025 compared to three months ended March 31, 2024 is primarily attributed to an increase in net interest income and increase in credit loss reversal.

Interest income. Interest income increased $1.5 million to $15 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 due primarily to increases in average balances of interest earning assets.

Interest expense. Interest expense decreased $0.1 million to $5.6 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to reduction in deposit rates and repayment of borrowings, which lowered overall funding cost.

Credit loss (reversal) expense. The Company recorded a credit loss reversal of $0.2 million for the three months ended March 31, 2025, compared to a credit loss expense of $1.1 million for the three months ended March 31, 2024. The expected credit loss (reversal) expense is a credit to earnings as losses are expected to have occurred in order to bring the total allowance for credit losses to a level deemed appropriate by management to absorb losses expected. The allowance for credit losses totaled $8.3 million or 1.03% of loans outstanding at March 31, 2025, compared to $8.7 million or 1.08% of loans outstanding at December 31, 2024. During the three-months ended March 31, 2025, the net charge off amounting to $246,000 resulted from consumer lending.

Noninterest income. Total noninterest income was $1.2 million for the three months ended March 31, 2025, compared to $1.2 for the three months ended March 31, 2024, The amount remained relatively unchanged, reflecting consistent performance in wire transfer and ACH fees during first quarter of 2025.

Noninterest expenses. Total noninterest expenses increased to $5.6 million for the three months ended March 31, 2025, compared to $4.7 million for the three months ended March 31, 2024, primarily due to employee compensation and benefits, professional fees, and other expenses.

Item 3. Quantitative and Qualitative Disclosures about Market Risks

Not applicable.