Commercial Bancgroup, Inc. Announces Results for the First Quarter 2026

Commercial Bancgroup, Inc. Announces Results for the First Quarter 2026 Commercial Bancgroup, Inc. ("Commercial" or the "Company") (Nasdaq:CBK), the parent company of Commercial Bank (the "Bank"), today announced net income of $9.5 million, or $0.70 per common share, for the first quarter of 2026, compared to net income of $8.7 million, or $0.72 per common share, for the first quarter of 2025. Core (net of any one-time adjustments) net income was 10.0 million, or $0.73 per common share, for the first quarter of 2026, compared to core net income of $8.7 million, or $0.72 per common share, for the first quarter of 2025. Prior to Commercial's initial public offering ("IPO") of it's common stock in October 2025, Commercial had three classes of common stock outstanding: common stock, Class B common stock, and Class C common stock. On September 18, 2025, Commercial's charter was amended and restated. The Company's amended and restated charter provided for, among other things: effective upon the filing of the amended and restated charter, the reclassification and conversion of (i) each outstanding share of Class B common stock into 1.15 shares of common stock and (ii) each outstanding share of Class C common stock into 1.05 shares of common stock (collectively, the "Stock Reclassification"); and effective immediately following the Stock Reclassification, a 250-for-1 forward stock split in respect of the outstanding shares of our common stock (the "Stock Split"). Our financial statements, including earnings per share and book value per share, reflect the stock Reclassification and Stock Split retroactively. Because the IPO occurred after September 30, 2025, the financial impacts of the IPO are reflected for the fourth quarter of 2025 in the financial statements presented in this press release. First Quarter 2026 Performance Highlights: Net income of $9.5 million or $0.70 per common share; Core net income of $10.0 million or $0.73 per common share (see non-GAAP reconciliation) Return on average assets ("ROAA") of 1.66%; Core return on average assets of 1.74% share (see non-GAAP reconciliation) Return on average equity ("ROAE") of 13.22%; Core return on average equity of 13.87% share (see non-GAAP reconciliation) Return on average tangible common equity ("ROATCE") of 13.76%; Core return on average tangible common equity of 14.44% (see non-GAAP reconciliation) Net interest margin of 3.88%, a decrease of 13 basis points from the fourth quarter of 2025 Core efficiency ratio of 45.45% share (see non-GAAP reconciliation) Total loans increased $18.1 million during the quarter, or 4.0% annualized, from the fourth quarter of 2025 Book value per share increased $0.60, or 11.5% annualized, to $21.43 and tangible book value per share increased $0.62, or 12.4% annualized, to $20.60 at March 31, 2026 from the $20.83 and $19.98, respectively, at December 31, 2025 (see non-GAAP reconciliation) Net charge-offs to average loans of 0.01% and nonperforming assets to total assets of 0.28% Redeemed $6.2 million in principal amount of trust preferred securities Year-Over-Year Highlights: Net income of $9.5 million or $0.70 per share for the three months ended March 31, 2026, compared to $8.7 million or $0.72per share for the three months ended March 31, 2025. Return on average assets of 1.66% for the three months ended March 31, 2026, compared to 1.52% for the three months ended March 31, 2025. Return on average shareholders' equity of 13.22% for the three months ended March 31, 2026, compared to 15.81% for the three months ended March 31, 2025. Total operating revenue of $23.1 million for the three months ended March 31, 2026, compared to $21.8 million for the three months ended March 31, 2025. Non-interest expense of $11.1 million for the three months ended March 31, 2026, compared to $10.6 million for the three months ended March 31, 2025. Tangible book value per share of $20.60 per share as of March 31, 2026, compared to $17.45 per share as of March 31, 2025 (see non-GAAP reconciliation). Core Efficiency ratio of 45.5% for the three months ended March 31, 2026, compared to 48.6% for the three months ended March 31, 2025. The Federal Reserve Bank of Atlanta raised the Bank's Community Reinvestment Act rating from Needs to Improve to Satisfactory. Balance Sheet Trends Total assets were $2.3 billion as of March 31, 2026, compared to $2.3 billion as of March 31, 2025. Total net loans were $1.9 billion as of March 31, 2026, an increase of $96.8 million, or 5.4%, from March 31, 2025. While the Bank experienced various large loan payoffs from long-term borrowers selling businesses during 2025, the Bank had strong loan growth during the fourth quarter of 2025. Total net loans increased by $18.4 million or 1.0% from $1.9 billion as of December 31, 2025. As of March 31, 2026, the Bank exceeded the minimum requirements to be well-capitalized for bank regulatory purposes, with a total risk-based capital ratio of 14.0%, a Tier 1 risk-based capital ratio of 13.0%, a common equity Tier 1 capital ratio of 13.0%, and a Tier 1 leverage ratio of 11.1%. Total deposits were $1.9 billion as of March 31, 2026, a decrease of $10.0 million, or 0.5%, from March 31, 2025. This decrease was primarily driven by a $103.8 million reduction in brokered deposits to $41.5 million at March 31, 2026, from $145.3 million at March 31, 2025. Noninterest bearing demand deposits decreased $16.7 million, or 4.0%, to $403.0 million as of March 31, 2026, from $419.8 million as of March 31, 2025. Non-brokered deposits were $1.9 billion as of March 31, 2026, an increase of $93.9 million, or 5.3%, from March 31, 2025. This increase was primarily driven by normal customer business cycles. Asset quality decreased slightly with nonperforming assets to total assets of 0.28% as of March 31, 2026 as compared to 0.24% as of March 31, 2025. The allowance for credit losses to total loans decreased slightly to 0.97% as of March 31, 2026 from 1.01% as of March 31, 2025. Net Income Before Income Taxes Net income before income taxes was $11.9 million for the three months ended March 31, 2026, an increase of $0.7 million, or 5.9%, from the three months ended March 31, 2025. The increase was primarily the result of an increase in net interest income after provision for credit losses of $1.0 million or 5.3% an increase in non-interest income of $0.2 million or 6.1% net of an increase of noninterest expense of $0.5 million or 4.8%. Non-Interest Income Non-interest income was $2.6 million for the three months ended March 31, 2026, an increase of $0.2 million, or 6.1%, as compared to the three months ended March 31, 2025. This increase was primarily due to an increase in customer service and ATM fees. About Commercial Bancgroup, Inc. Commercial Bancgroup, Inc. is a bank holding company headquartered in Harrogate, Tennessee. Through our wholly owned subsidiary, Commercial Bank, a Tennessee state-chartered bank, we offer a suite of traditional consumer and commercial banking products and services to businesses and individuals in select markets in Kentucky, North Carolina, and Tennessee. More information about Commercial can be found on its website at www.cbtn.com. Commercial Bancgroup, Inc. Financial Tables Financial Highlights (unaudited) Table 1A For the Three Months Ended As of and for the Twelve Months Ended (dollars in thousands except per share amounts) March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2025 December 31, 2024 Selected Operating Data: Interest and Dividend Income $ 29,463 $ 29,958 $ 30,021 $ 30,859 $ 30,766 $ 121,604 $ 123,213 Interest Expense 8,985 9,148 9,799 10,800 11,426 41,173 45,629 Net Interest Income 20,478 20,810 20,222 20,059 19,340 80,431 77,584 Provision for Credit Losses 122 463 - - - 463 1,829 Net Interest Income After Provision for Credit Losses 20,356 20,347 20,222 20,059 19,340 79,968 75,755 Noninterest Income 2,591 2,667 2,626 2,194 2,443 9,930 10,878 Noninterest Expense 11,087 10,623 10,552 10,725 10,581 42,480 46,061 Income Before Income Taxes 11,860 12,391 12,296 11,528 11,202 47,418 40,572 Provision for Income Taxes 2,326 2,224 2,829 2,658 2,510 10,221 8,886 Net Income 9,534 10,167 9,467 8,870 8,692 37,197 31,686 Less: Net Income Attributable to Noncontrolling Interest - - - - - - 276 Net Income attributable to Commercial Bancgroup, Inc. 9,534 10,167 9,467 8,870 8,692 37,197 31,410 Add: Non-recurring Expense Net of Taxes 470 - - - - 231 - Core Net Income (1) 10,004 10,167 9,467 8,870 8,692 37,428 31,410 (1) Considered non-GAAP financial measure - See "Non-GAAP Financial Measures" and reconciliation of non-GAAP financial measures at table 10 Financial Highlights (unaudited) For the Three Months Ended As of and for the Twelve Months Ended March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2025 December 31, 2024 Share and Per Share Data: Basic earnings per share $ 0.70 $ 0.74 $ 0.77 $ 0.72 $ 0.72 $ 2.95 $ 2.58 Diluted earnings per share $ 0.69 $ 0.74 $ 0.77 $ 0.72 $ 0.72 $ 2.95 $ 2.54 Book value per share $ 21.43 $ 20.83 $ 20.03 $ 19.22 $ 18.48 $ 20.83 $ 18.18 Tangible book value per share (1) $ 20.60 $ 19.98 $ 19.05 $ 18.22 $ 17.45 $ 19.98 $ 17.11 Shares of common stock outstanding 13,697,987 13,697,987 12,239,644 12,239,644 12,239,644 13,697,987 12,113,114 Weighted average diluted shares outstanding 13,746,198 13,704,030 12,240,568 12,239,644 12,137,013 12,611,170 12,367,248 (1) Considered non-GAAP financial measure - See "Non-GAAP Financial Measures" and reconciliation of non-GAAP financial measures at table 10 Financial Highlights (unaudited) As of and for the Three Months Ended As of and for the Twelve Months Ended (dollars in thousands) March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2025 December 31, 2024 Selected Balance Sheet Data: Total assets $ 2,328,789 $ 2,291,455 $ 2,214,408 $ 2,262,511 $ 2,266,878 $ 2,291,455 $ 2,301,211 Securities available-for-sale at fair value 42,175 43,137 29,556 30,113 48,830 43,137 47,938 Securities held-to-maturity, at carrying value, net of allowance for credit losses 96,387 97,728 131,915 157,452 140,019 97,728 128,217 Gross loans less deferred fees and discounts 1,892,174 1,873,533 1,767,193 1,791,516 1,795,178 1,873,533 1,806,997 Allowance for credit losses 18,329 18,096 17,942 17,989 18,109 18,096 18,205 Goodwill and other intangible assets 12,392 12,767 13,149 13,546 13,938 12,767 14,339 Total deposits 1,892,217 1,815,734 1,780,634 1,851,248 1,902,206 1,815,734 1,938,597 Core deposits (1) 1,733,718 1,665,470 1,631,921 1,628,816 1,659,301 1,665,470 1,669,380 Other borrowings 118,248 166,838 162,760 148,509 109,090 166,838 109,165 Total Shareholders' equity 293,518 285,344 245,153 235,268 226,179 285,344 220,256 (1) Considered non-GAAP financial measure - See "Non-GAAP Financial Measures" and reconciliation of non-GAAP financial measures at table 10 Financial Highlights (unaudited) Table 1B As of and for the Three Months Ended As of and for the Twelve Months Ended (dollars in thousands) March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2025 December 31, 2024 Performance Ratios: Pre-tax pre-provision net revenue (PPNR) (1) $ 11,982 $ 12,854 $ 12,296 $ 11,528 $ 11,202 $ 47,880 $ 42,401 Return on average assets (ROAA) 1.66 1.76 1.69 1.57 1.52 1.61 1.40 Return on average equity (ROAE) 13.22 15.46 15.81 15.57 15.81 15.60 15.30 Return on average tangible common equity (ROATCE) (1) 13.76 16.40 16.65 16.43 16.75 16.55 16.49 Net interest rate spread 3.27 3.34 3.32 3.11 2.98 3.20 3.05 Net interest margin 3.88 4.01 4.02 3.84 3.63 3.87 3.75 Cost of Funds 1.82 1.88 2.07 2.18 2.25 2.10 2.31 Efficiency ratio 45.45 45.24 46.19 48.20 48.57 47.01 48.92 Noninterest income to average assets 0.45 0.47 0.48 0.39 0.43 0.44 0.49 Noninterest expense to average assets 1.93 1.87 1.94 1.91 1.85 1.90 2.08 Average interest-earning assets to average interest-bearing liabilities 1.36 1.39 1.36 1.31 1.30 1.34 1.32 Average equity to average total assets 0.13 0.12 0.11 0.10 0.10 0.11 0.09 (1) Considered non-GAAP financial measure - See "Non-GAAP Financial Measures" and reconciliation of non-GAAP financial measures at table 10 Financial Highlights (unaudited) As of and for the Three Months Ended As of and for the Twelve Months Ended March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2025 December 31, 2024 Asset Quality Data: Net charge-offs to average loans 0.01 % 0.01 % 0.00 % 0.01 % 0.01 % 0.03 % 0.01 % Total allowance for credit losses to total loans 0.97 % 0.97 % 1.02 % 1.00 % 1.01 % 0.97 % 1.01 % Total allowance for credit losses to nonperforming loans 313 % 290 % 333 % 307 % 375 % 313 % 375 % Nonperforming loans to gross loans 0.31 % 0.33 % 0.31 % 0.33 % 0.27 % 0.31 % 0.27 % Nonperforming assets to total assets 0.28 % 0.28 % 0.27 % 0.30 % 0.24 % 0.28 % 0.24 % x As of and for the Three Months Ended As of and for the Twelve Months Ended March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2025 December 31, 2024 Balance Sheet and Capital Ratios (Commercial Bancgroup, Inc.): Loan-to-deposit ratio 99.03 % 102.19 % 99.25 % 96.77 % 94.37 % 102.19 % 93.21 % Noninterest bearing deposits to total deposits 21.22 % 21.91 % 22.39 % 22.53 % 22.05 % 21.91 % 20.46 % Total shareholders'equity to total assets 12.60 % 12.45 % 11.07 % 10.40 % 9.98 % 12.45 % 9.57 % Tangible common equity to tangible assets (1) 12.18 % 12.01 % 10.59 % 9.92 % 9.48 % 12.01 % 9.07 % Tier 1 leverage ratio 12.32 % 12.19 % 11.03 % 10.22 % 9.63 % 12.19 % 9.51 % Common equity tier 1 ratio 14.73 % 14.99 % 12.83 % 12.26 % 11.62 % 14.99 % 11.11 % Total risk-based capital ratio 15.68 % 15.96 % 14.12 % 13.55 % 12.90 % 15.96 % 12.37 % Other Number of branches 34 34 34 34 34 34 34 Number of full-time equivalent employees 287 287 287 289 284 287 279 (1) Considered non-GAAP financial measure - See "Non-GAAP Financial Measures" and reconciliation of non-GAAP financial measures at table 10 Quarter End Balance Sheets (unaudited) Table 2 (dollars in thousands) March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 Assets Cash and due from banks $ 151,610 $ 118,989 $ 122,945 $ 108,501 $ 113,190 Federal funds sold 16,784 25,329 31,841 42,782 37,303 Investment securities 138,562 140,865 161,471 187,565 188,849 Gross loans less deferred fees and discounts 1,892,174 1,873,533 1,767,193 1,791,516 1,795,178 Allowance for credit losses (18,329 ) (18,096 ) (17,942 ) (17,989 ) (18,109 ) Loans, net of alloawance for credit losses 1,873,845 1,855,437 1,749,251 1,773,527 1,777,069 Premises and equipment, net 49,445 49,765 50,268 50,337 50,038 Foreclosed assets held for sale, net 575 253 533 861 565 Bank owned life insurance 46,469 46,648 46,482 46,480 46,191 Goodwill and other intangible assets 12,392 12,767 13,149 13,546 13,938 Deferred tax asset 1,056 1,003 1,427 1,029 1,029 Other 38,049 40,399 37,041 37,883 38,706 Total Assets $ 2,328,789 $ 2,291,455 $ 2,214,408 $ 2,262,511 $ 2,266,878 Liabilities and Shareholders' Equity Liabilities Deposits Demand 973,678 913,986 928,958 926,886 960,915 Savings, NOW and money market 415,132 414,716 382,002 382,788 390,491 Time 503,408 487,032 469,674 541,574 550,800 Total deposits 1,892,217 1,815,734 1,780,634 1,851,248 1,902,206 Short-term borrowings 45,068 88,251 62,663 46,300 5,900 Long-term debt 73,181 78,587 100,097 102,209 103,190 Interest Payable 2,644 2,962 3,410 4,545 5,157 Other Liabilities 22,161 20,576 22,451 22,941 24,246 Total Liabilities 2,035,271 2,006,110 1,969,255 2,027,243 2,040,699 Shareholders' Equity Common stock 137 137 122 122 122 Additional paid-in capital 38,536 38,377 8,406 8,406 8,406 Retained earnings 255,670 247,505 237,366 227,900 219,000 Accumulated other comprehensive loss (825 ) (675 ) (741 ) (1,160 ) (1,349 ) Total Shareholders'equity 293,518 285,344 245,153 235,268 226,179 Total liabilities and shareholders' equity $ 2,328,789 $ 2,291,454 $ 2,214,408 $ 2,262,511 $ 2,266,878 x Statement of Operations (unaudited) Table 3 For the Three Months Ended As of and for the Twelve Months Ended (dollars in thousands) March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2025 December 31, 2024 Interest and Dividend Income Loans, including fees $ 27,675 $ 27,866 $ 28,074 $ 28,432 $ 27,930 $ 112,301 $ 113,391 Debt securities-taxable 838 739 929 1,070 975 3,714 2,679 Debt securities-tax-exempt 114 114 102 116 110 442 368 Dividends on restricted stock 147 157 156 148 160 621 700 Interest-bearing deposits 689 1,082 760 1,093 1,591 4,526 6,075 Total interest and dividend income 29,463 29,958 30,021 30,859 30,766 121,604 123,213 Interest expense Deposits 8,315 8,441 8,654 9,717 10,294 37,107 40,352 Short-term borrowings 47 18 55 44 31 148 205 Long-term debt 623 689 1,090 1,039 1,101 3,919 5,072 Total interest expense 8,985 9,148 9,799 10,800 11,426 41,174 45,629 Net interest income 20,478 20,810 20,222 20,059 19,340 80,430 77,584 Provision for credit losses 122 463 - - - 463 1,829 Net interest income after provision for credit losses 20,356 20,347 20,222 20,059 19,340 79,967 75,755 Noninterest Income Customer service fees 781 779 735 674 655 2,844 3,041 Net gains on sales of premises and equipment - 44 20 2 (28 ) 38 759 Net gains on sales of foreclosed assets 107 48 110 1 3 161 153 ATM fees 854 877 846 891 799 3,413 3,281 Increase in BOLI 312 342 306 336 308 1,292 1,199 Other 537 577 609 290 706 2,182 2,445 = Total noninterest income 2,591 2,667 2,626 2,194 2,443 9,930 10,878 x Noninterest Expense Salaries and employee benefits $ 5,716 $ 5,753 $ 5,729 $ 5,657 $ 5,626 $ 22,764 $ 24,873 Occupancy 843 877 738 774 875 3,264 3,786 Data processing 1,101 1,068 1,103 1,151 1,207 4,530 4,235 Deposit insurance premiums 242 234 267 245 226 972 1,129 Professional fees 209 229 136 286 195 846 1,017 Depreciation and amortization 933 1,001 955 803 948 3,706 4,109 Other 1,440 1,461 1,624 1,809 1,504 6,398 6,912 Loss on retirement of debt 603 - - - - - - Total noninterest expense 11,087 10,623 10,552 10,725 10,581 42,480 46,061 Income before income taxes 11,860 12,391 12,296 11,528 11,202 47,417 40,572 Provision for income taxes 2,326 2,224 2,829 2,658 2,510 10,221 8,886 Net Income 9,534 10,167 9,467 8,870 8,692 37,196 31,686 Less: Net Income Attributable to Noncontrolling Interest - - - - - - 276 Net Income attributable to Commercial Bancgroup, Inc. $ 9,534 $ 10,167 $ 9,467 $ 8,870 $ 8,692 $ 37,196 $ 31,410 x QTD Average Balances and Yields/Rates (unaudited) Table 4 Three Months Ended (dollars in thousands) March 31, 2026 December 31, 2025 Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Interest Earning Assets Gross loans, net of unearned income $ 1,883,103 $ 27,675 5.9 % $ 1,807,127 $ 27,866 6.2 % Investment securities 140,223 1,099 3.1 % 152,782 1,011 2.6 % Other interest-earning assets 85,953 689 3.2 % 116,517 1,081 3.7 % Total interest-earning assets 2,109,279 29,463 5.6 % 2,076,426 29,958 5.8 % Noninterest-earning assets: Allowance for credit losses (18,283 ) (17,954 ) Noninterest-earning assets 205,119 190,810 Total Assets 2,296,115 2,249,282 Interest-bearing liabilities: Interest-bearing DDAs 575,981 2,809 1.95 % 518,495 2,647 2.0 % NOW, savings and MMDA deposits 412,533 1,425 1.38 % 427,419 1,585 1.5 % Time Deposits 479,804 4,081 3.40 % 475,972 4,209 3.5 % Federal Home Loan bank advances 60,522 467 3.09 % 60,781 444 2.9 % Other borrowings 20,355 203 3.99 % 24,953 263 4.2 % Total interest-bearing liabilities 1,549,195 8,985 2.32 % 1,507,620 9,148 2.4 % Noninterest bearing liabilites: Noninterest bearing deposits 430,842 434,578 Other liabilities 27,593 47,299 Total noninterest bearing liabilities 458,435 481,877 Shareholders' equity 288,485 259,785 Total liabilities and shareholders's equity 2,296,115 2,249,282 Net interest income 20,478 20,810 Net interest spread 3.27 % 3.32 % Net interest margin 3.88 % 4.02 % Cost interest bearing deposits 2.32 % 2.37 % Cost of funds 1.82 % 2.43 % x YTD Average Balances and Yields/Rates (unaudited) Table 5 Three Months Ended March 31, 2026 March 31, 2025 (dollars in thousands) Average Balance Interest Yield/ Rate Average Balance Interest Yield/ Rate Interest Earning Assets Gross loans, net of unearned income 1,883,103 27,675 5.9 % 1,794,477 27,930 6.2 % Investment securities 140,223 1,099 3.1 % 186,604 1,245 2.7 % Other interest-earning assets 85,953 689 3.2 % 150,891 1,591 4.2 % Total interest-earning assets 2,109,279 29,463 5.6 % 2,131,972 30,766 5.8 % Noninterest-earning assets: Allowance for credit losses (18,283 ) (18,109 ) Noninterest-earning assets 205,119 176,014 Total Assets 2,296,115 2,289,877 Interest-bearing liabilities: Interest-bearing DDAs 575,981 2,809 2.0 % 581,411 3,326 2.3 % NOW, savings and MMDA deposits 412,533 1,425 1.4 % 383,685 1,435 1.5 % Time Deposits 479,804 4,081 3.4 % 564,710 5,533 3.9 % Federal Home Loan bank advances 60,522 467 3.1 % 64,361 442 2.7 % Other borrowings 20,355 203 4.0 % 43,951 690 6.3 % Total interest-bearing liabilities 1,549,195 8,985 2.3 % 1,638,118 11,426 2.8 % Noninterest bearing liabilites: Noninterest bearing deposits 430,842 395,414 Other liabilities 27,593 36,110 Total noninterest bearing liabilities 458,435 431,524 Shareholders' equity 288,485 219,940 Total liabilities and shareholders's equity 2,296,115 2,289,582 Net interest income 20,478 19,340 Net interest spread 3.27 % 2.98 % Net interest margin 3.88 % 3.63 % Cost of total deposits 2.32 % 2.79 % Cost of total funding 1.82 % 2.25 % Loan Data (unaudited) Table 6 As of Quarter Ended March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 (dollars in thousands) Amount % of Total Amount % of Total Amount % of Total Amount % of Total Amount % of Total Real Estate Loans Commercial $ 1,114,516 58.7 % $ 1,113,440 59.2 % $ 1,002,192 56.5 % $ 1,016,229 57 % $ 1,029,444 57 % Construction and land development 195,189 10.3 % 176,688 9.4 % 201,399 11 % 189,187 11 % 180,066 10 % Residential 383,346 20 % 377,943 20 % 376,769 21 % 376,442 21 % 372,338 21 % Other 14,511 1 % 14,824 1 % 14,831 1 % 15,290 1 % 16,406 1 % Commercial 171,029 9 % 174,248 9 % 154,732 9 % 178,832 10 % 182,186 10 % Consumer 12,260 1 % 15,417 1 % 16,009 1 % 14,636 1 % 14,908 1 % Other 7,237 0 % 7,450 0 % 7,642 0 % 7,772 0 % 7,505 0 % Total loans 1,898,088 100 % 1,880,010 100 % 1,773,574 100 % 1,798,388 100 % 1,802,853 100 % Deferred loan fees and discounts 5,914 6,477 6,381 6,872 7,675 Allowance for credit Losses 18,329 18,096 17,942 17,989 18,109 Loans, net 1,873,845 1,855,437 1,749,251 1,773,527 1,777,069 x Nonperforming Assets (unaudited) Table 7 As of the Quarter Ended (dollars in thousands) March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 Nonaccrual loans $ 5,861 $ 6,245 $ 5,390 $ 5,846 $ 4,808 Past due loans 90 days and still accruing - - - 6 20 Total nonperforming loans 5,861 6,245 5,390 5,852 4,828 Other real estate owned 575 253 533 861 565 Total nonperforming assets $ 6,436 $ 6,498 $ 5,923 $ 6,713 $ 5,393 Allowance for credit losses $ 18,329 $ 18,096 $ 17,942 $ 17,989 $ 18,109 Total loans outstanding at end of period net of deferred loan fees and discounts $ 1,892,174 $ 1,873,533 $ 1,767,193 $ 1,791,516 $ 1,795,178 Nonperforming loans to total loans 0.31 % 0.33 % 0.31 % 0.33 % 0.27 % Nonperforming assets to total loans and OREO 0.34 % 0.35 % 0.34 % 0.37 % 0.30 % Allowance for credit losses to nonperforming loans 313 % 290 % 333 % 307 % 375 % Allowance for credit losses to total loans 0.97 % 0.97 % 1.02 % 1.00 % 1.01 % Nonaccrual loans to total assets 0.25 % 0.27 % 0.24 % 0.26 % 0.21 % x Allowance for credit losses (unaudited) Table 8 As of and for the Three Months Ended As of and for the Twelve Months Ended (dollars in thousands) March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2025 December 31, 2024 Average loans outstanding $ 1,883,103 $ 1,807,127 $ 1,767,379 $ 1,795,846 $ 1,794,477 $ 1,791,550 $ 1,738,433 Total loans outstanding at end of period net of deferred loan fees and discounts 1,892,174 1,873,533 1,767,193 1,791,516 1,795,178 1,873,533 1,806,997 ACL balance, beginning of period 18,096 17,942 17,989 18,109 18,205 18,205 16,635 Charge-offs: Commercial real estate - (284 ) - (18 ) - (301 ) (49 ) Construction and land development - - - - Residential real estate - - - (121 ) - (121 ) (52 ) Commercial - (48 ) - - (314 ) (362 ) (177 ) Consumer and other (15 ) (13 ) (186 ) (34 ) (17 ) (251 ) (151 ) Total charge-offs (15 ) (345 ) (186 ) (173 ) (331 ) (1,035 ) (429 ) Recoveries: Commercial real estate 114 - 108 33 10 151 75 Construction and land development - - - - 202 201 Residential real estate - 20 26 2 16 64 9 Commercial 1 7 1 3 - 11 54 Consumer and other 11 56 4 15 7 83 32 Total recoveries 126 83 139 53 235 510 170 Net (charge-offs) recoveries 111 (262 ) (47 ) (120 ) (96 ) (525 ) (259 ) Provision for credit losses 122 416 - - - 416 1,829 ACL balance at end of period $ 18,329 $ 18,096 $ 17,942 $ 17,989 $ 18,109 $ 18,096 $ 18,205 Ratio of allowance to end of period loans 0.97 % 0.97 % 1.02 % 1.00 % 1.01 % 0.97 % 1.01 % Ratio of net (charge-offs) recoveries to average loans 0.01 % -0.01 % 0.00 % -0.01 % -0.01 % -0.03 % -0.01 % Loan Risk Ratings (unaudited) Table 9 As of the Quarter Ended (dollars in thousands) March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 Real Estate Loans Commercial Pass $ 1,105,529 $ 1,104,532 $ 999,788 $ 1,012,190 $ 1,023,884 Special mention 8,897 8,814 1,776 2,515 4,182 Substandard 90 94 628 1,524 1,378 Total Commercial $ 1,114,516 $ 1,113,440 $ 1,002,192 $ 1,016,229 $ 1,029,444 Construction and land development Pass $ 194,983 $ 176,014 $ 201,363 $ 189,149 $ 180,066 Special mention 171 78 - - - Substandard 35 596 36 38 - Total Construction and land development $ 195,189 $ 176,688 $ 201,399 $ 189,187 $ 180,066 Residential Pass $ 377,179 $ 371,583 $ 371,226 $ 371,353 $ 367,216 Special mention 545 833 838 849 854 Substandard 5,622 5,527 4,705 4,240 4,268 Total Residential $ 383,346 $ 377,943 $ 376,769 $ 376,442 $ 372,338 Other Pass $ 14,511 $ 14,824 $ 14,831 $ 15,290 $ 16,406 Special mention - - - - Substandard - - - - - Total Other $ 14,511 $ 14,824 $ 14,831 $ 15,290 $ 16,406 Commercial Pass $ 170,093 $ 173,324 $ 153,819 $ 177,969 $ 181,255 Special mention 701 793 733 747 808 Substandard 235 131 180 116 123 Total Commercial $ 171,029 $ 174,248 $ 154,732 $ 178,832 $ 182,186 Consumer Pass $ 12,162 $ 15,317 $ 15,974 $ 14,594 $ 14,866 Special mention 44 21 5 6 7 Substandard 54 79 30 36 35 Total Consumer $ 12,260 $ 15,417 $ 16,009 $ 14,636 $ 14,908 Other Pass $ 7,237 $ 7,451 $ 7,642 $ 7,773 $ 7,506 Special mention - - - - Substandard - - - - - Total Other $ 7,237 $ 7,451 $ 7,642 $ 7,773 $ 7,506 Total loans Pass $ 1,881,694 $ 1,863,045 $ 1,764,643 $ 1,788,318 $ 1,791,199 Special mention 10,358 10,539 3,352 4,117 5,851 Substandard 6,036 6,427 5,579 5,954 5,804 Total Gross loans $ 1,898,088 $ 1,880,011 $ 1,773,574 $ 1,798,389 $ 1,802,854 Non-GAAP Financial Measures This press release contains certain financial measure(s) that are not financial measure(s) recognized under generally accepted accounting principles in the U.S. ("GAAP") and, therefore, are considered non-GAAP financial measure(s) and should be read along with the accompanying reconciliation of non-GAAP financial measure(s) to GAAP financial measure(s). We use non-GAAP financial measures, certain of which are included in this press release, both to explain our operating results to shareholders and the investment community and to evaluate, analyze, and manage our business. We believe that these non-GAAP financial measures provide a better understanding of ongoing operations, enhance the comparability of results across periods, and enable investors to better understand our performance. Our management believes that the "core" metrics described below and used in this press release assist users of the Company's financial statements with their financial analysis period-over-period as they exclude certain non-recurring items. However, non-GAAP financial measures should not be considered in isolation and should be considered supplemental in nature and not as a substitute for or superior to the most directly comparable or other financial measures calculated in accordance with GAAP. Additionally, the manner in which the non-GAAP financial measure(s) contained in this press release are calculated may differ from the manner in which measures with similar names are calculated by other companies. You should understand how other companies calculate their financial measures similar to, or with names similar to, the non-GAAP financial measure(s) contained in this press release when comparing such financial measures. The non-GAAP financial measures in this press release include the following: Core deposits. We calculate core deposits by excluding jumbo time deposits (deposits greater than or equal to $250,000) from total deposits. Core net income. We define core net income as net income plus non-recurring expenses, net of the related tax effect of non-recurring expenses. Core diluted earnings per share. We define core diluted earnings per share as core net income divided by diluted weighted average shares outstanding. Core ROAA. We define core ROAA as core net income divided by average assets, with average assets based upon the average daily balance of total assets in each period. Core return on average tangible common equity. We define core return on average tangible common equity as core net income divided by total average shareholders' equity less average intangible assets (goodwill and core deposit intangibles). Core efficiency ratio. We define core efficiency ratio as operating revenue (net interest income, plus total noninterest income, divided by noninterest expenses (less non-recurring expenses). This ratio is an indicator used by our management to assess operating efficiencies and is intended to demonstrate how efficiently our management is controlling expenses relative to generating revenues on our core activities. Efficiency Ratio. We define efficiency ratio as operating expenses divided by fee income plus tax equivalent net interest income. This metric indicates how effectively the Company manages its expenses relative to its income, providing insights into cost management and profitability. Pre-tax, pre-provision ROAA. We define pre-tax, pre-provision ROAA as pre-tax, pre-provision net income divided by average assets calculated based upon the average daily balance of total assets in each year. Tangible assets. We define tangible assets as total assets less goodwill and other intangible assets. Tangible book value per share. We define tangible book value per share as our tangible common equity, which is shareholders' equity reduced by goodwill and other intangible assets, divided by diluted weighted average shares outstanding. The following table provides a reconciliation of the above non-GAAP financial measures to their most directly comparable financial measure presented in accordance with GAAP. Non-GAAP Reconciliations (unaudited) As of and for the Three Months Ended As of and for the Twelve Months Ended (dollars in thousands, except per share data) March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2025 December 31, 2024 Pre-Tax Pre-Provision Net Net Income: Pre-tax income $ 11,860 $ 12,391 $ 12,296 $ 11,528 $ 11,202 $ 47,417 $ 40,572 Add: provision for loan and lease losses 122 463 - - - 463 1,829 Pre-tax pre-provision net income $ 11,982 $ 12,854 $ 12,296 $ 11,528 $ 11,202 $ 47,880 $ 42,401 Tangible Common Equity: Shareholders' equity $ 293,518 $ 285,344 $ 245,153 $ 235,268 $ 226,179 285,344 220,256 Less: non controlling interest - - Less: goodwill 8,511 8,511 8,511 8,511 8,511 8,511 8,514 Less: core deposit intangible (net of tax benefit) 2,875 3,164 3,448 3,744 4,035 3,164 4,331 Tangible common equity $ 282,132 $ 273,669 $ 233,194 $ 223,013 $ 213,633 $ 273,669 $ 207,411 Pre-Tax Pre-Provision Return on Average Assets: Total average assets $ 2,296,115 $ 2,249,282 $ 2,170,869 $ 2,248,134 $ 2,289,582 $ 2,239,468 $ 2,217,423 Pre-tax pre-provision net income 11,982 12,854 12,296 11,528 11,202 47,880 42,401 Pre-tax pre-provision return on average assets 2.09 % 2.29 % 2.27 % 2.05 % 1.96 % 2.14 % 1.91 % Return on Average Tangible Common Equity: Total average shareholders' equity 288,485 $ 259,784 $ 239,473 $ 227,883 $ 219,940 $ 236,770 $ 206,622 Less: average intangible assets (net of tax benefit) 11,386 11,767 11,980 11,997 12,310 $ 12,014 13,497 Less: average non controlling interest - - - - - - 2,701 Average tangible equity 277,099 248,017 227,493 215,886 207,630 224,757 190,424 Net income to shareholders 9,534 10,167 9,467 8,870 8,692 37,196 31,410 Return on average tangible equity 13.76 % 16.40 % 16.65 % 16.43 % 16.75 % 16.55 % 16.49 % Tangible Book Value per Common Share: Tangible common equity $ 282,132 $ 273,669 $ 233,194 $ 223,013 $ 213,633 $ 273,669 $ 207,411 Shares of common stock outstanding 13,697,987 13,697,987 12,239,644 12,239,644 12,239,644 13,697,987 12,113,114 Tangible book value per share, reported $ 20.60 $ 19.98 $ 19.05 $ 18.22 $ 17.45 $ 19.98 $ 17.12 As of and for the Three Months Ended As of and for the Twelve Months Ended (dollars in thousands, except per share data) March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2025 December 31, 2024 Tangible Common Equity to Tangible Assets: Tangible common equity $ 282,132 $ 273,669 $ 233,194 $ 223,013 $ 213,633 $ 273,669 $ 207,411 Total assets 2,328,789 2,291,455 2,214,408 2,262,511 2,266,878 2,291,455 2,301,211 Less: intangible assets 12,392 12,767 13,149 13,546 13,938 12,767 14,339 Tangible assets 2,316,397 2,278,688 2,201,258 2,248,965 2,252,940 2,278,688 2,286,872 Tangible common equity to tangible assets 12.18 % 12.01 % 10.59 % 9.92 % 9.48 % 12.01 % 9.07 % Core Deposits: Total Deposits $ 1,892,217 $ 1,815,734 $ 1,780,634 $ 1,851,248 $ 1,902,206 $ 1,815,734 1,938,597 Less: Time deposits equal to or greater than $250,000 116,966 102,294 100,743 97,209 97,537 102,294 94,567 Less: Brokered deposits 41,533 47,970 47,970 125,223 145,375 47,970 174,918 Core deposits $ 1,733,718 $ 1,665,470 $ 1,631,921 $ 1,628,816 $ 1,659,294 $ 1,665,470 $ 1,669,112 Core Net Income: Net income $ 9,534 $ 10,167 $ 9,467 $ 8,870 $ 8,692 $ 37,196 31,410 Add: Non-recurring Expense 603 - - 302 7 309 2,788 Less: tax effect (133 ) - - (76 ) (2 ) (78 ) (697 ) Core net income $ 10,004 $ 10,167 $ 9,467 $ 9,096 $ 8,697 $ 37,427 33,501 Core Earnings per Share: Core net income $ 10,004 $ 10,167 $ 9,467 $ 9,096 $ 8,697 $ 37,427 $ 33,501 Average shares outstanding 13,746,198 13,704,030 12,240,568 12,239,644 12,137,013 12,580,314 12,187,788 Core earnings per share $ 0.73 $ 0.74 $ 0.77 $ 0.74 $ 0.72 $ 2.98 $ 2.75 Core Return on Average Assets: Core net income $ 10,004 $ 10,167 $ 9,467 $ 9,096 $ 8,697 $ 37,427 $ 33,501 Average assets 2,296,115 2,249,282 2,170,869 2,248,134 2,289,582 2,239,468 2,217,423 Core return on average assets 1.74 % 1.81 % 1.74 % 1.62 % 1.52 % 1.67 % 1.51 % Core Return on Average Tangible Common Equity: Average tangible common equity $ 277,099 $ 248,017 $ 227,493 $ 215,886 $ 207,630 $ 224,757 $ 190,424 Core net income 10,004 10,167 9,467 9,096 8,697 37,427 33,501 Core return on average tangible common equity 14.44 % 16.40 % 16.65 % 16.85 % 16.75 % 16.65 % 17.59 % Core Efficiency Ratio: Add: net interest income $ 20,478 $ 20,810 $ 20,222 $ 20,059 $ 19,340 $ 80,431 $ 77,584 Add: non interest income 2,591 2,667 2,626 2,194 2,443 9,930 10,878 Operating revenue $ 23,069 $ 23,477 $ 22,848 $ 22,253 $ 21,783 $ 90,361 88,462 Total noninterest expenses 11,087 10,623 10,552 10,725 10,581 42,481 46,061 Less: non-recurring expenses 603 - - 302 7 309 2,788 Core noninterest expenses 10,484 10,623 10,552 10,423 10,574 42,172 43,273 Core efficiency ratio 45.45 % 45.25 % 46.18 % 46.84 % 48.54 % 46.67 % 48.92 % Contacts Philip J. Metheny Sr. Executive Vice President, Chief Financial Officer Commercial Bancgroup, Inc. [email protected] 423-869-5151 Roger Mobley Executive Vice President, Chief Financial Officer Commercial Bank [email protected] 704-648-0185 Commercial Bancgroup, Inc. Forward-Looking Statements This press release contains statements that constitute "forward-looking statements" within the meaning of the U.S. federal securities laws. The statements in this press release that are not purely historical facts are forward-looking statements. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "target," "will," "would" and, in each case, their negative or other variations or comparable terminology and expressions. You should not place undue reliance on these forward-looking statements as actual future results may differ materially from those expressed or implied by any forward-looking statement. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed in any forward-looking statements, including but not limited to: (1) business and economic conditions nationally, regionally and in our target markets, particularly in Kentucky, North Carolina and Tennessee and the particular geographic areas in which we operate; (2) the level of, or changes in the level of, interest rates and inflation, including the effects thereof on our earnings and financial condition and the market value of our investment securities and loan portfolios; (3) the concentration of our loan portfolio in real estate loans and changes in the prices, values and sales volumes of commercial and residential real estate; (4) the concentration of our business within our geographic areas of operation in Kentucky, North Carolina and Tennessee and neighboring markets; (5) credit and lending risks associated with our commercial real estate, commercial, and construction and land development loan portfolios; (6) risks associated with our focus on lending to small and medium-sized businesses; (7) our ability to maintain important deposit customer relationships, maintain our reputation or otherwise avoid liquidity risks; (8) changes in demand for our products and services; (9) the failure of assumptions and estimates underlying the establishment of allowances for possible credit losses and other asset impairments, losses, valuations of assets and liabilities and other estimates; (10) the sufficiency of our capital, including sources of such capital and the extent to which capital may be used or required; (11) our inability to maintain a "satisfactory" rating under the Community Reinvestment Act; (12) the risk that our cost of funding could increase in the event we are unable to continue to attract stable, low-cost deposits and reduce our cost of deposits; (13) our inability to raise necessary capital to fund our growth strategy and operations or to meet increased required minimum regulatory capital levels; (14) our ability to execute and prudently manage our growth and execute our business strategy, including expansionary activities; (15) the composition of and changes in our management team and our ability to attract, incentivize and retain key personnel; (16) the effects of competition from a wide variety of local, regional, national and other providers of financial, investment, trust and other wealth management services and insurance services, including the disruptive effects of financial technology and other competitors who are not subject to the same regulations as the Company and the Bank; (17) the deterioration of our asset quality or the value of collateral securing loans; (18) changes in accounting standards; (19) the effectiveness of our risk management framework, including internal controls; (20) severe weather, natural disasters, pandemics, epidemics, acts of war, terrorism, or other external events, such as the transition risk associated with climate change, and other matters beyond our control; (21) changes in technology or products that may be more difficult, more costly, or less effective than anticipated; (22) the risks of acquisitions and other expansionary activities, including without limitation our ability to identify and consummate transactions with potential future acquisition candidates, the time and costs associated with pursuing such transactions, our ability to successfully integrate operations as part of such transactions and our ability, and possible failures, to achieve expected gains, revenue growth, expense savings and/or other synergies from such transactions; (23) our ability to maintain our historical rate of growth; (24) failure to keep pace with technological change or difficulties when implementing new technologies; (25) systems failures or interruptions involving our risk management framework, our information technology and telecommunications systems or third-party service providers; (26) our ability to identify and address unauthorized data access, cyber-crime and other threats to data security and customer privacy; (27) our compliance with governmental and regulatory requirements, including the Bank Holding Company Act of 1956, as amended, and other laws relating to banking, consumer protection, securities and tax matters, and our ability to maintain licenses required in connection with mortgage origination, sale and servicing operations; (28) compliance with the Bank Secrecy Act of 1970, Office of Foreign Assets Control rules and anti-money laundering laws and regulations; (29) governmental monetary and fiscal policies; (30) changes in laws, rules, or regulations, or interpretations thereof, or policies relating to financial institutions or accounting, tax, trade, monetary or fiscal matters; (31) our ability to receive dividends from the Bank and satisfy our obligations as they become due; (32) the institution and outcome of litigation and other legal proceedings against us or to which we become subject; (33) the limited experience of our management team in managing and operating a public company; (34) the incremental costs of operating as a public company; (35) our ability to meet our obligations as a public company, including our obligations under Section 404 of the Sarbanes-Oxley Act of 2002; and (36) other risks and factors described under the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual report on Form 10-K for the fiscal year ended December 31, 2025, or in any of the Company's subsequent filings with the U.S. Securities and Exchange Commission. Commercial undertakes no obligation to update these forward-looking statements, as a result of changes in assumptions, new information, or otherwise, after the date of this press release, except as required by law. SOURCE: Commercial Bancgroup, Inc. View the original press release on ACCESS Newswire