| Business Segments |
Note 7 – Business Segments Segment Overview The Company reports three business segments: 1.Community Banking – Provides loans, deposits, and related banking services to retail and commercial customers primarily in Central Virginia. Revenue is primarily from net interest income. 2.Mortgage Banking – Originates residential mortgage loans for sale into the secondary market, typically with servicing released. Revenue consists mainly of gains on loan sales. 3.Investment Advisory – Offers investment advisory and financial planning services through Pettyjohn, Wood & White, Inc. Revenue is primarily fee-based, tied to assets under management (AUM). Segments refer business to one another when appropriate. Robert R. Chapman III, President of the Company, is the Chief Operating Decision Maker (CODM). The CODM evaluates performance and allocates resources based on segment profit (pre-tax income). Supplemental data regularly reviewed by the CODM includes total loans held for investment, total deposits, and AUM, as these metrics provide additional insights into segment performance. Segment accounting policies are consistent with those in the consolidated financial statements.
Note 7 – Business Segments (continued) Significant Expense Categories. Significant segment expenses that are reviewed regularly by the CODM and included in segment profit measures are separately presented. For the three and nine months ended September 30, 2026 and 2025, these significant approximate expenses included: Community Banking: Salaries and employee benefits ($4.29 million and $4.16 million for the three months ended September 30, 2026 and 2025, respectively, and $12.59 million and $11.92 million for the nine-month periods, respectively); data processing ($543 thousand and $381 thousand for the three-month periods, and $1.54 million and $1.98 million for the nine-month periods); professional and other outside expenses ($715 thousand and $689 thousand for the three-month periods, and $2.16 million and $3.06 million for the nine-month periods); equipment ($707 thousand and $664 thousand for the three-month periods, and $2.08 million and $1.94 million for the nine-month periods); and occupancy ($516 thousand and $447 thousand for the three-month periods, and $1.58 million and $1.48 million for the nine-month periods). Mortgage Banking: Salaries and employee benefits ($854 thousand and $919 thousand for the three-month periods, and $2.60 million and $2.44 million for the nine-month periods); credit-related expenses ($171 thousand and $158 thousand for the three-month periods, and $522 thousand and $509 thousand for the nine-month periods); and occupancy costs ($32 thousand and $39 thousand for the three month periods, and $93 thousand and $98 thousand for the nine-month periods). Investment Advisory: Salaries and employee benefits ($493 thousand and $432 thousand for the three-month periods end September 30, 2026 and 2025, respectively, and $1.46 million and $1.29 million for the nine-month periods and September 30, 2026 and 2025, respectively); and amortization of intangible assets ($140 thousand and $420 thousand for each of the three- and nine-month periods ended September 30, 2026 and 2025, respectively). Supplemental Segment Data Supplemental data regularly reviewed by the CODM includes total loans held for investment, total deposits, and AUM, as these metrics provide additional insights into segment performance: Community Banking: Total loans held for investment, net of allowance, were $694.0 million at September 30, 2026, compared to $661.4 million at December 31, 2025 and $653.3 million at September 30, 2025. Deposits totaled $968.9 million at September 30, 2026, compared to $944.1 million at December 31, 2025 and $922.1 million at September 30, 2025. Investment Advisory: AUM were $1.10 billion at September 30, 2026, compared to $1.03 billion at December 31, 2025 and $984.7 million at September 30, 2025. Segment financial information, including significant expense categories and supplemental metrics, is presented in the tables below, along with reconciliations to consolidated financial statements for the three and nine months ended September 30, 2026 and 2025 (dollars in thousands).
Note 7 – Business Segments (continued) | | | | | | | | Business Segments for the Three Months Ended | | September 30, 2026 | Dollars in Thousands | Community Banking | Mortgage Banking | Investment Advisory | Holding Company | Eliminations (1) | Consolidated | Interest income | $ 12,883 | $ - | $ - | $ - | $ - | $ 12,883 | Interest expense | 3,041 | - | - | 121 | - | 3,162 | Net interest income | 9,842 | - | - | (121) | - | 9,721 | Gains on sales of loans | - | 1,306 | - | - | - | 1,306 | Wealth Management Fees | - | - | 1,504 | - | - | 1,504 | Other noninterest income | 1,400 | - | | 3,470 | (3,501) | 1,369 | Net revenue | 11,242 | 1,306 | 1,504 | 3,349 | (3,501) | 13,900 | Less: | | | | | | | Provision for credit losses | 35 | - | - | - | - | 35 | | | | | | | | Noninterest expense: | | | | | | | Salaries and employee benefits | 4,285 | 854 | 493 | - | - | 5,632 | Occupancy | 516 | 32 | 34 | - | (31) | 551 | Equipment | 707 | 15 | 33 | - | - | 755 | Supplies | 192 | 5 | 8 | - | - | 205 | Professional and other outside expenses | 715 | - | 11 | 20 | - | 746 | Data processing | 543 | - | - | - | - | 543 | Marketing | 162 | 1 | 2 | 62 | - | 227 | Loan-related expense | 56 | 171 | - | - | - | 227 | Other real estate expenses, net | 84 | - | - | - | - | 84 | FDIC insurance expense | 126 | - | - | - | - | 126 | Amortization of intangibles | - | - | 140 | - | - | 140 | Other | 346 | 84 | 29 | 1 | - | 460 | Total noninterest expense | 7,732 | 1,162 | 750 | 83 | (31) | 9,696 | | | | | | | | Segment income before income taxes | 3,476 | 144 | 754 | 3,265 | (3,470) | 4,169 | Allocated income tax expense | 670 | 30 | 204 | (56) | - | 848 | Segment net income | $ 2,806 | $ 114 | $ 550 | $ 3,321 | $ (3,470) | $ 3,321 | Segment assets at September 30, 2026 | $ 1,053,543 | $ 3,165 | $ 9,779 | $ 112,018 | $ (113,922) | $ 1,064,583 | | | | | | | | Supplemental Data at September 30, 2026: | | | | | | | Total loans held for investment, net | $ 694,033 | $ - | $ - | $ - | $ - | $ 694,033 | Total deposits | $ 968,899 | $ - | $ - | $ - | $ (5,304) | $ 963,595 | Assets under management | $ - | $ - | $ 1,098,883 | $ - | $ - | $ 1,098,883 |
(1)Primarily service/occupancy fees and equity in earnings of subsidiaries eliminated in consolidation. Note 7 – Business Segments (continued) | | | | | | | | Business Segments for the Three Months Ended | | September 30, 2025 | Dollars in Thousands | Community Banking | Mortgage Banking | Investment Advisory | Holding Company | Eliminations (1) | Consolidated | Interest income | $ 11,771 | $ - | $ - | $ - | $ - | $ 11,771 | Interest expense | 3,437 | - | - | 68 | (34) | 3,471 | Net interest income | 8,334 | - | - | (68) | 34 | 8,300 | Gains on sales of loans | - | 1,242 | - | - | - | 1,242 | Wealth management fees | - | - | 1,362 | - | - | 1,362 | Other noninterest income | 1,594 | - | - | 2,835 | (2,864) | 1,565 | Net revenue | 9,928 | 1,242 | 1,362 | 2,767 | (2,830) | 12,469 | | | | | | | | Less: | | | | | | | Provision for credit losses | 91 | - | - | - | - | 91 | | | | | | | | Noninterest expense: | | | | | | | Salaries and employee benefits | 4,164 | 919 | 432 | - | 1 | 5,516 | Occupancy | 447 | 39 | 33 | - | 4 | 523 | Equipment | 664 | 19 | 14 | - | - | 697 | Supplies | 139 | 6 | 8 | - | - | 153 | Professional and other outside expenses | 689 | - | 13 | 23 | - | 725 | Data processing | 381 | - | - | - | - | 381 | Marketing | 228 | 3 | 1 | 17 | - | 249 | Loan-related expense | 58 | 158 | - | - | - | 216 | Other real estate expenses, net | - | - | - | - | - | - | FDIC insurance expense | 132 | - | - | - | - | 132 | Amortization of intangibles | - | - | 140 | - | - | 140 | Other | 448 | (51) | 31 | - | - | 428 | Total noninterest expense | 7,350 | 1,093 | 672 | 40 | 5 | 9,160 | | | | | | | | Segment income before income taxes | 2,487 | 149 | 690 | 2,727 | (2,835) | 3,218 | Allocated income tax expense (benefit) | 349 | 32 | 110 | (25) | - | 466 | Segment net income | $ 2,138 | $ 117 | $ 580 | $ 2,752 | $ (2,835) | $ 2,752 | Segment assets at September 30, 2025 | $ 1,007,040 | $ 3,992 | $ 10,331 | $ 102,021 | $ (103,259) | $ 1,020,125 | | | | | | | | Supplemental Data at September 30, 2025: | | | | | | | Total loans held for investment, net | $ 653,288 | $ - | $ - | $ - | $ - | $ 653,288 | Total deposits | 922,113 | - | - | - | (2,317) | 919,796 | Assets under management | - | - | 984,747 | - | - | 984,747 |
(1)Primarily service/occupancy fees and equity in earnings of subsidiaries eliminated in consolidation.
Note 7 – Business Segments (continued) | | | | | | | | Business Segments for the Nine Months Ended | | September 30, 2026 | Dollars in Thousands | Community Banking | Mortgage Banking | Investment Advisory | Holding Company | Eliminations (1) | Consolidated | Interest income | $ 37,019 | $ - | $ - | $ - | $ - | $ 37,019 | Interest expense | 8,943 | - | - | 367 | - | 9,310 | Net interest income | 28,076 | - | - | (367) | - | 27,709 | Gains on sales of loans | - | 4,031 | - | - | - | 4,031 | Wealth management fees | - | - | 4,383 | - | - | 4,383 | Other noninterest income | 4,299 | - | | 9,715 | (9,809) | 4,205 | Net revenue | 32,375 | 4,031 | 4,383 | 9,348 | (9,809) | 40,328 | Less: | | | | | | | Provision for credit losses | 239 | - | - | - | - | 239 | | | | | | | | Noninterest expense: | | | | | | | Salaries and employee benefits | 12,585 | 2,601 | 1,456 | - | - | 16,642 | Occupancy | 1,581 | 93 | 102 | - | (94) | 1,682 | Equipment | 2,077 | 46 | 85 | - | - | 2,208 | Supplies | 456 | 16 | 25 | - | - | 497 | Professional and other outside expenses | 2,157 | - | 52 | 63 | - | 2,272 | Data processing | 1,537 | - | - | - | - | 1,537 | Marketing | 572 | 4 | 10 | 88 | - | 674 | Other real estate expenses, net | 84 | - | - | - | - | 84 | Loan-related expense | 154 | 522 | - | - | - | 676 | FDIC insurance expense | 380 | - | - | - | - | 380 | Amortization of intangibles | - | - | 420 | - | - | 420 | Other | 1,056 | 157 | 85 | 2 | - | 1,300 | Total noninterest expense | 22,639 | 3,439 | 2,235 | 153 | (94) | 28,372 | | | | | | | | Segment income before income taxes | 9,497 | 592 | 2,148 | 9,195 | (9,715) | 11,717 | Allocated income tax expense | 1,819 | 124 | 580 | (141) | - | 2,382 | Segment net income | $ 7,679 | $ 468 | $ 1,568 | $ 9,335 | $ (9,715) | $ 9,335 | Segment assets at September 30, 2026 | $ 1,053,543 | $ 3,165 | $ 9,779 | $ 112,018 | $ (113,922) | $ 1,064,583 | | | | | | | | Supplemental Data at September 30, 2026: | | | | | | | Total loans held for investment, net | $ 694,033 | $ - | $ - | $ - | $ - | $ 694,033 | Total deposits | $ 968,899 | $ - | $ - | $ - | $ (5,304) | $ 963,595 | Assets under management | $ - | $ - | $ 1,098,883 | $ - | $ - | $ 1,098,883 |
(1)Primarily service/occupancy fees and equity in earnings of subsidiaries eliminated in consolidation. | Business Segments for the Nine Months Ended | | September 30, 2025 | Dollars in Thousands | Community Banking | Mortgage Banking | Investment Advisory | Holding Company | Eliminations (1) | Consolidated | Interest income | $ 34,643 | $ - | $ - | $ - | $ - | $ 34,643 | Interest expense | 9,917 | - | - | 407 | 50 | 10,374 | Net interest income | 24,726 | - | - | (407) | (50) | 24,269 | Gains on sales of loans | - | 3,668 | - | - | - | 3,668 | Wealth management fees | - | - | 3,917 | - | - | 3,917 | Other noninterest income | 4,032 | - | - | 6,672 | (6,762) | 3,942 | Net revenue | 28,758 | 3,668 | 3,917 | 6,265 | (6,812) | 35,796 | | | | | | | | Less: | | | | | | | Recovery of credit losses | (301) | - | - | - | - | (301) | | | | | | | | Noninterest expense: | | | | | | | Salaries and employee benefits | 11,915 | 2,444 | 1,291 | - | - | 15,650 | Occupancy | 1,484 | 98 | 98 | - | (90) | 1,590 | Equipment | 1,941 | 47 | 33 | - | - | 2,021 | Supplies | 422 | 15 | 26 | - | - | 463 | Professional and other outside expenses | 3,059 | - | 74 | 61 | - | 3,194 | Data processing | 1,984 | - | - | - | - | 1,984 | Marketing | 630 | 5 | 11 | 38 | - | 684 | Credit expense | 156 | 509 | - | - | - | 665 | Other real estate expenses, net | - | - | - | - | | - | FDIC insurance expense | 394 | - | - | - | - | 394 | Amortization of intangibles | - | - | 420 | - | - | 420 | Other | 1,257 | 31 | 87 | 1 | - | 1,376 | Total noninterest expense | 23,242 | 3,149 | 2,040 | 100 | (90) | 28,441 | | | | | | | | Segment income before income taxes | 5,817 | 519 | 1,877 | 6,165 | (6,722) | 7,656 | Allocated income tax expense | 950 | 110 | 431 | (134) | - | 1,357 | Segment net income | $ 4,867 | $ 409 | $ 1,446 | $ 6,299 | $ (6,722) | $ 6,299 | Segment assets at September 30, 2025 | $ 1,007,040 | $ 3,992 | $ 10,331 | $ 102,021 | $ (103,259) | $ 1,020,125 | | | | | | | | Supplemental Data at September 30, 2025: | | | | | | | Total loans held for investment, net | $ 653,288 | $ - | $ - | $ - | $ - | $ 653,288 | Total deposits | $ 922,113 | $ - | $ - | $ - | $ (2,317) | $ 919,796 | Assets under management | $ - | $ - | $ 984,747 | $ - | $ - | $ 984,747 |
(1)Primarily service/occupancy fees and equity in earnings of subsidiaries eliminated in consolidation.
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