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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☑

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 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: 333‑ 209052

SKYLINE BANKSHARES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Virginia		47-5486027
(State or Other Jurisdiction of Incorporation)		(I.R.S. Employer Identification Number)

212 East Main Street
Floyd, Virginia		24091
(Address of Principal Executive Offices)		(Zip Code)

(540) 745-4191

(Registrant’s Telephone Number, Including Area Code)

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

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

None

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 such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by checkmark whether the Registrant has submitted electronically any Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405) of this chapter during the preceding 12 months or for 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, 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The registrant had 5,651,704 shares of Common Stock, no par value per share, outstanding as of November 12, 2025.

PART I FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets—September 30, 2025 (Unaudited) and December 31, 2024 (Audited)	3

	Unaudited Consolidated Statements of Income—Three and Nine Months Ended September 30, 2025 and September 30, 2024	4

	Unaudited Consolidated Statements of Comprehensive Income—Nine and Three Months Ended September 30, 2025 and September 30, 2024	5

	Unaudited Consolidated Statements of Changes in Stockholders’ Equity—Nine and Three Months Ended September 30, 2025 and September 30, 2024	6

	Unaudited Consolidated Statements of Cash Flows—Nine Months Ended September 30, 2025 and September 30, 2024	7

	Notes to Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	49

Item 4.	Controls and Procedures	50

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	51

Item 1A.	Risk Factors	51

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51

Item 3.	Defaults Upon Senior Securities	51

Item 4.	Mine Safety Disclosures	51

Item 5.	Other Information	51

Item 6.	Exhibits	52

Signatures		53

Part I. Financial Information

Item 1. Financial Statements

Skyline Bankshares, Inc. and Subsidiary

Consolidated Balance Sheets

September 30, 2025 and December 31, 2024

	September 30,			December 31,
(dollars in thousands)	2025			2024
	(Unaudited)			(Audited)
Assets

Cash and due from banks	$	24,260		$	17,889
Interest-bearing deposits with banks		32,042			1,562
Federal funds sold		240			-
Total cash and cash equivalents		56,542			19,451
Investment securities available for sale		114,493			118,287
Restricted equity securities		4,662			4,034
Loans		1,036,439			984,459
Allowance for credit losses		(8,547	)		(8,027	)
Net loans		1,027,892			976,432
Cash value of life insurance		27,013			26,743
Other real estate owned		-			140
Properties and equipment, net		40,906			34,663
Accrued interest receivable		4,135			4,013
Core deposit intangible		3,217			3,815
Goodwill		7,900			7,900
Deferred tax assets, net		4,146			5,593
Other assets		15,621			16,528
	$	1,306,527		$	1,217,599

Liabilities and Stockholders’ Equity

*Liabilities*
Deposits
Noninterest-bearing	$	363,910		$	337,918
Interest-bearing		806,263			754,285
Total deposits		1,170,173			1,092,203

Borrowings		26,500			25,000
Federal funds purchased		-			4,254
Accrued interest payable		644			950
Other liabilities		7,330			6,524
		1,204,647			1,128,931

Commitments and contingencies (Note 11)

*Stockholders’ Equity*
Preferred stock, no par value; 5,000,000 shares authorized, none issued		-			-
Common stock, no par value; 25,000,000 shares authorized, 5,651,704 and 5,651,704 issued and outstanding at September 30, 2025 and December 31, 2024, respectively		-			-
Surplus		33,658			33,507
Retained earnings		82,225			73,714
Accumulated other comprehensive loss		(14,003	)		(18,553	)
		101,880			88,668
	$	1,306,527		$	1,217,599

See Notes to Consolidated Financial Statements

Skyline Bankshares, Inc. and Subsidiary

Consolidated Statements of Income

For the Three and Nine Months ended September 30, 2025 and 2024

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in thousands except share amounts)	2025		2024		2025		2024
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
*Interest income*
Loans and fees on loans	$	15,925	$	12,759	$	46,013	$	35,433
Interest-bearing deposits in banks		262		150		435		298
Federal funds sold		7		25		14		33
Interest on taxable securities		590		678		1,827		2,023
Interest on nontaxable securities		48		59		146		156
Dividends		42		41		187		155
		16,874		13,712		48,622		38,098
Interest expense
Deposits		3,695		3,407		10,471		9,049
Interest on borrowings		288		374		1,077		1,148
		3,983		3,781		11,548		10,197
Net interest income		12,891		9,931		37,074		27,901

*Provision for credit losses*		189		738		651		902
Net interest income after
Provision for credit losses		12,702		9,193		36,423		26,999

*Noninterest income*
Service charges on deposit accounts		651		598		1,841		1,693
Other service charges and fees		1,050		940		2,982		2,698
Net realized losses on securities		-		-		-		(141	)
Mortgage origination fees		52		108		169		209
Increase in cash value of life insurance		184		161		538		458
Life insurance income		-		-		60		221
Other income		24		44		58		82
		1,961		1,851		5,648		5,220
*Noninterest expenses*
Salaries and employee benefits		4,987		4,525		14,337		13,194
Occupancy and equipment		1,465		1,387		4,349		4,191
Data processing expense		864		744		2,585		2,079
FDIC Assessments		241		153		725		441
Advertising		304		256		798		713
Bank franchise tax		132		132		396		330
Director fees		103		52		298		178
Professional fees		304		188		854		580
Telephone expense		115		117		357		353
Core deposit intangible amortization		178		107		598		266
Merger related expenses		-		1,143		-		1,500
Other expense		872		821		2,351		2,158
		9,565		9,625		27,648		25,983
Net income before income taxes		5,098		1,419		14,423		6,236

*Income tax expense*		1,022		362		2,973		1,314
Net income	$	4,076	$	1,057	$	11,450	$	4,922

*Net income per share*	$	0.73	$	0.19	$	2.05	$	0.89
*Weighted average shares outstanding*		5,584,704		5,553,579		5,584,704		5,557,229
*Dividends declared per share*	$	0.27	$	0.23	$	0.52	$	0.46

See Notes to Consolidated Financial Statements

Skyline Bankshares, Inc. and Subsidiary

Consolidated Statements of Comprehensive Income

For the Nine and Three Months ended September 30, 2025 and 2024

	Nine Months Ended
	September 30,
(dollars in thousands)	2025			2024
	(Unaudited)			(Unaudited)

Net income	$	11,450		$	4,922

Other comprehensive income (loss)

Net change in fair value of cash flow hedge:
Change in fair value of cash flow hedge		(18	)		-
Tax effect		4			-

Unrealized gains on investment securities available for sale:
Unrealized gains arising during the period		5,778			4,249
Tax effect		(1,214	)		(892	)
Reclassification of net realized losses during the period		-			141
Tax effect		-			(30	)

Total other comprehensive income		4,550			3,468
Total comprehensive income	$	16,000		$	8,390

	Three Months Ended
	September 30,
(dollars in thousands)	2025			2024
	(Unaudited)			(Unaudited)

Net Income	$	4,076		$	1,057

Other comprehensive income (loss)

Net change in fair value of cash flow hedge:
Change in fair value of cash flow hedge		(29	)		-
Tax effect		6			-

Unrealized gains on investment securities available for sale:
Unrealized gains arising during the period		1,837			5,423
Tax effect		(387	)		(1,139	)

Total other comprehensive income		1,427			4,284
Total comprehensive income	$	5,503		$	5,341

See Notes to Consolidated Financial Statements

Skyline Bankshares, Inc. and Subsidiary

Consolidated Statements of Changes in Stockholders’ Equity

For the Nine and Three Months ended September 30, 2025 and 2024 (unaudited)

(dollars in thousands except share amounts)
												Accumulated
												Other
	Common Stock								Retained			Comprehensive
	Shares			Amount		Surplus			Earnings			Loss			Total

*Balance, December 31, 2023*		5,584,204		$	-	$	33,356		$	68,866		$	(19,340	)	$	82,882

Net income		-			-		-			2,051			-			2,051
Other comprehensive loss		-			-		-			-			(568	)		(568	)
Dividends paid ($0.23 per share)		-			-		-			(1,279	)		-			(1,279	)
Stock awards issued		65,000			-		-			-			-			-
Share-based compensation		-			-		19			-			-			19
Common stock repurchased		(20,000	)		-		(230	)		-			-			(230	)

*Balance, March 31, 2024*		5,629,204		$	-	$	33,145		$	69,638		$	(19,908	)	$	82,875

Net income		-			-		-			1,814			-			1,814
Other comprehensive loss		-			-		-			-			(248	)		(248	)
Share-based compensation		-			-		68			-			-			68

*Balance, June 30, 2024*		5,629,204		$	-	$	33,213		$	71,452		$	(20,156	)	$	84,509

Net income		-			-		-			1,057			-			1,057
Other comprehensive income		-			-		-			-			4,284			4,284
Dividends paid ($0.23 per share)		-			-		-			(1,297	)		-			(1,297	)
Stock awards issued		10,000			-		-			-			-			-
Share-based compensation		-			-		70			-			-			70

*Balance, September 30, 2024*		5,639,204		$	-	$	33,283		$	71,212		$	(15,872	)	$	88,623

*Balance, December 31, 2024*		5,651,704		$	-	$	33,507		$	73,714		$	(18,553	)	$	88,668

Net income		-			-		-			3,573			-			3,573
Other comprehensive income		-			-		-			-			2,044			2,044
Dividends paid ($0.25 per share)		-			-		-			(1,413	)		-			(1,413	)
Share-based compensation		-			-		49			-			-			49

*Balance, March 31, 2025*		5,651,704		$	-	$	33,556		$	75,874		$	(16,509	)	$	92,921

Net income		-			-		-			3,801			-			3,801
Other comprehensive income		-			-		-			-			1,079			1,079
Share-based compensation		-			-		51			-			-			51

*Balance, June 30, 2025*		5,651,704		$	-	$	33,607		$	79,675		$	(15,430	)	$	97,852

Net income		-			-		-			4,076			-			4,076
Other comprehensive income		-			-		-			-			1,427			1,427
Dividends paid ($0.27 per share)		-			-		-			(1,526	)		-			(1,526	)
Share-based compensation		-			-		51			-			-			51

*Balance, September 30, 2025*		5,651,704		$	-	$	33,658		$	82,225		$	(14,003	)	$	101,880

See Notes to Consolidated Financial Statements

Skyline Bankshares, Inc. and Subsidiary

Consolidated Statements of Cash Flows, continued

For the Nine Months ended September 30, 2025 and 2024

	Nine Months Ended
	September 30,
(dollars in thousands)	2025			2024
	(Unaudited)			(Unaudited)
Cash flows from operating activities
Net income	$	11,450		$	4,922
Adjustments to reconcile net income to net cash provided by operations:
Depreciation		1,499			1,527
Amortization of core deposit intangible		598			266
Accretion of loan discount and deposit premium, net		(784	)		(128	)
Provision for credit losses		651			902
Deferred income taxes		238			1,164
Net realized losses on securities		-			141
Accretion of discount on securities, net of amortization of premiums		22			59
Deferred compensation		88			133
Share-based compensation		151			157
Loss on sale of other real estate owned		27			-
Life insurance income		(60	)		(221	)
Changes in assets and liabilities:
Cash value of life insurance		(538	)		(458	)
Accrued interest receivable		(122	)		66
Other assets		889			8
Accrued interest payable		(306	)		173
Other liabilities		622			(462	)
Net cash provided by operating activities		14,425			8,249

Cash flows from investing activities
Activity in available for sale securities:
Sales		-			46,210
Maturities/calls/paydowns		9,549			7,966
Purchases of restricted equity securities		(628	)		(415	)
Net increase in loans		(51,177	)		(48,101	)
Proceeds from life insurance contracts		328			730
Proceeds from sale of other real estate owned		113			-
Purchases of property and equipment		(7,742	)		(2,267	)
Cash received in business combination, net of cash paid		-			(17,733	)
Net cash used in investing activities		(49,557	)		(13,610	)

Cash flows from financing activities
Net increase in deposits		77,916			31,826
Proceeds from FHLB advances		279,500			165,000
Repayments on FHLB advances		(274,500	)		(170,000	)
Prepayment of FHLB advances		-			(8,088	)
Net change in fed funds purchased		(4,254	)		-
Advances on short-term line of credit		4,000			5,000
Payment on short-term line of credit		(7,500	)		-
Repayment of bank term funding program advances		-			(2,500	)
Common stock repurchased		-			(230	)
Dividends paid		(2,939	)		(2,576	)
Net cash provided by financing activities		72,223			18,432
Net increase in cash and cash equivalents		37,091			13,071

*Cash and cash equivalents, beginning*		19,451			22,093
*Cash and cash equivalents, ending*	$	56,542		$	35,164

See Notes to Consolidated Financial Statements

Skyline Bankshares, Inc. and Subsidiary

Consolidated Statements of Cash Flows, continued

For the Nine Months ended September 30, 2025 and 2024

	Nine Months Ended
	September 30,
(dollars in thousands)	2025			2024
	(Unaudited)			(Unaudited)
*Supplemental disclosure of cash flow information*
Interest paid	$	11,854		$	9,749
Taxes paid	$	1,811		$	1,235

*Supplemental disclosure of noncash transactions*
Effect on equity of change in net unrealized gain on available for sale securities	$	4,564		$	3,468
Unrealized holding loss on cash flow hedge, net of tax	$	(14	)	$	-
Right-of-use assets obtained in exchange for new operating lease liabilities	$	-		$	35

*Business combinations*
Assets acquired (excluding goodwill)	$	-		$	154,128
Liabilities assumed	$	-		$	133,771
Net assets	$	-		$	20,357
Goodwill recorded	$	-		$	4,643
Cash paid to acquire Johnson County Bank	$	-		$	25,000

See Notes to Consolidated Financial Statements

Skyline Bankshares, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

Note 1. Organization and Summary of Significant Accounting Policies

Organization

Skyline Bankshares, Inc. (the “Company”) is a bank holding company headquartered in Floyd, Virginia. The Company offers a wide range of retail and commercial banking services through its wholly-owned bank subsidiary, Skyline National Bank (the “Bank”). On January 1, 2023, the Company changed its name from Parkway Acquisition Corp. to Skyline Bankshares, Inc. to align its brand across the entire organization.

The Company was incorporated as a Virginia corporation on November 2, 2015. The Company was formed as a business combination shell company for the purpose of completing a business combination transaction between Grayson Bankshares, Inc. (“Grayson”) and Cardinal Bankshares Corporation (“Cardinal”) in which Grayson and Cardinal merged with and into the Company, with the Company as the surviving corporation (the “Cardinal merger”), on July 1, 2016. Upon completion of the Cardinal merger, the Bank of Floyd (“Floyd”), a wholly-owned subsidiary of Cardinal, was merged with and into the Bank (formerly Grayson National Bank), a wholly-owned subsidiary of Grayson. Effective March 13, 2017, the Bank changed its name to Skyline National Bank.

On July 1, 2018, the Company acquired Great State Bank (“Great State”), based in Wilkesboro, North Carolina, through the merger of Great State with and into the Bank, with the Bank as the surviving bank.

On April 16, 2024, the Company entered into a definitive agreement to acquire Johnson County Bank (“JCB”), based in Mountain City, Tennessee, in an all-cash transaction valued at $25.0 million, with the Bank as the surviving bank. The purpose of this acquisition was to facilitate the Bank’s entry into Eastern Tennessee. The transaction closed and the merger of JCB with and into the Bank became effective on September 1, 2024. The Company was considered the acquiror and JCB was considered the acquiree in the transaction for accounting purposes. Pursuant to the JCB merger, the Company acquired $154.1 million of assets, including $87.2 million in loans and assumed $133.8 million in liabilities, including $125.3 million of deposits, on September 1, 2024. Such amounts include preliminary estimated fair value adjustments, which are subject to change.

For purposes of this quarterly report on Form 10-Q, all information contained herein as of and for periods prior to September 1, 2024 reflects the operations of the Company prior to the JCB merger. Unless this report otherwise indicates or the context otherwise requires, all references to the “Company” as of and for periods subsequent to September 1, 2024 refer to the combined company and its subsidiary as a combined entity after the merger, and all references to the “Company” as of and for periods prior to September 1, 2024 are references to the Company and its subsidiary as a combined entity prior to the merger.

The Bank was organized under the laws of the United States in 1900 and now serves the Virginia counties of Grayson, Floyd, Carroll, Wythe, Pulaski, Montgomery, Roanoke, Patrick and Washington, the North Carolina counties of Alleghany, Ashe, Burke, Caldwell, Catawba, Cleveland, Davie, Iredell, Watauga, Wilkes, and Yadkin, and the Tennessee county of Johnson, and the surrounding areas, through twenty-eight full-service banking offices and two loan production offices. As a Federal Deposit Insurance Corporation (“FDIC”) insured national banking association, the Bank is subject to regulation by the Comptroller of the Currency and the FDIC. The Company is regulated by the Board of Governors of the Federal Reserve System (the “Federal Reserve”).

The consolidated financial statements as of September 30, 2025 and for the three and nine month periods ended September 30, 2025 and 2024 included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the information furnished in the interim consolidated financial statements reflects all adjustments necessary to present fairly the Company’s consolidated financial position, results of operations, changes in stockholders’ equity and cash flows for such interim periods. Management believes that all interim period adjustments are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto as of December 31, 2024, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the full year.

Skyline Bankshares, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

Note 1. Organization and Summary of Significant Accounting Policies, continued

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the 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 relate to the determination of the allowance for credit losses and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans. In connection with the determination of the allowances for credit and foreclosed real estate losses, management obtains independent appraisals for significant properties.

Substantially all of the Bank’s loan portfolio consists of loans in its market area. Accordingly, the ultimate collectability of a substantial portion of the Bank’s loan portfolio and the recovery of a substantial portion of the carrying amount of foreclosed real estate are susceptible to changes in local market conditions. The regional economy is diverse, but influenced to an extent by the manufacturing and agricultural segments.

While management uses available information to recognize loan and foreclosed real estate losses, future additions to the allowances may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as a part of their routine examination process, periodically review the Bank’s allowances for credit and foreclosed real estate losses. Such agencies may require the Bank to recognize additions to the allowances based on their judgments about information available to them at the time of their examinations. Because of these factors, it is reasonably possible that the allowances for credit and foreclosed real estate losses may change materially in the near term.

The Company seeks strategies that minimize the tax effect of implementing their business strategies. As such, judgments are made regarding the ultimate consequence of long-term tax planning strategies, including the likelihood of future recognition of deferred tax benefits. The Company’s tax returns are subject to examination by both Federal and State authorities. Such examinations may result in the assessment of additional taxes, interest and penalties. As a result, the ultimate outcome, and the corresponding financial statement impact, can be difficult to predict with accuracy.

Accounting for pension benefits, costs and related liabilities are developed using actuarial valuations. These valuations include key assumptions determined by management, including the discount rate and expected long-term rate of return on plan assets. Material changes in pension costs may occur in the future due to changes in these assumptions.

Segment Reporting

The Company adopted Accounting Standards Update (“ASU”) 2023-07 “Segment Reporting (Topic 280) - Improvement to Reportable Segment Disclosures” on January 1, 2024. The Company has determined that its banking subsidiary meets the aggregation criteria of Accounting Standards Codification (“ASC”) 280, Segment Reporting, as its current operating model is structured whereby its banking subsidiary serves a similar base of retail and commercial clients utilizing a company-wide offering of similar products and services managed through similar processes and platforms that are collectively reviewed by the Company’s Chief Executive Officer, who has been identified as the chief operating decision maker (“CODM”).

The CODM regularly assesses performance of the aggregated single operating and reporting segment and decides how to allocate resources based on net income calculated on the same basis as is net income reported in the Company’s consolidated statements of income and other comprehensive income. The measure of segment assets is reported on the balance sheet as total consolidated assets. The CODM is also regularly provided with expense information at a level consistent with that disclosed in the Company’s consolidated statements of income and other comprehensive income.

Skyline Bankshares, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

Note 1. Organization and Summary of Significant Accounting Policies, continued

Critical Accounting Policies

Management believes the policies with respect to the methodology for the determination of the allowance for credit losses, and asset impairment judgments, such as the recoverability of intangible assets and credit losses on investment securities, involve a higher degree of complexity and require management to make difficult and subjective judgments that often require assumptions or estimates about highly uncertain matters. Changes in these judgments, assumptions or estimates could cause reported results to differ materially. These critical policies and their application are periodically reviewed with the Audit Committee and the Board of Directors.

Derivative Instruments and Hedging Activities

The Company follows ASC Topic 815, Derivatives and Hedging, with regard to disclosure requirements for derivatives and hedging activities, with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Qualitative disclosures explain the Company’s objectives and strategies for using derivatives, and quantitative disclosures are made regarding the fair value of, and gains and losses on, derivative instruments, and about credit-risk-related contingent features in derivative instruments.

As required by ASC 815, the Company reports all derivatives on its balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.

Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with 1) the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge, or 2) the earnings effect of the hedged forecasted transactions in a cash flow hedge. See additional discussion of interest rate swap contracts in Note 10 to the consolidated financial statements.

Reclassification

No reclassifications have been made to the prior years’ financial statements to place them on a comparable basis with the current presentation.

Skyline Bankshares, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

Note 1. Organization and Summary of Significant Accounting Policies, continued

Recent Accounting Pronouncements

The following accounting standards may affect the future financial reporting by the Company:

In December 2023, the FASB amended the Income Taxes topic in the Accounting Standards Codification to improve the transparency of income tax disclosures. The amendments are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company does not expect these amendments to have a material effect on its financial statements.

In March 2024, the FASB issued amendments to the Codification that remove references to various FASB Concepts Statements. The amendments are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company will apply the amendments prospectively to all new transactions recognized on or after the date that the Company first applies the amendments. The Company does not expect these amendments to have a material effect on its financial statements.

In November 2024, the FASB issued Accounting Standards Update 2024-03 (“ASU 2024-03”) which amended the Income Statement—Reporting Comprehensive Income topic in the Accounting Standards Codification to require public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to financial statements. The amendments are effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company will apply the amendments prospectively to financial statements issued for reporting periods after the effective date. The Company does not expect these amendments to have a material effect on its financial statements.

In January 2025, the FASB amended the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The Company does not expect these amendments to have a material effect on its financial statements.

In March 2025, the FASB amended an SEC paragraph in the Accounting Standards Codification pursuant to the issuance of SEC Staff Accounting Bulletin No. 122. The amendment was effective upon issuance. The Company does not expect this amendment to have a material effect on its financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

Skyline Bankshares, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

Note 2. Business Combinations

On September 1, 2024, the Company completed its merger with JCB as discussed above in Note 1. The merger was accounted for under the acquisition method of accounting. The Company is considered the acquiring entity in this business combination for accounting purposes. Under the terms of the merger agreement, JCB was acquired by the Company in an all-cash transaction valued at $25.0 million. The Company calculated fair values of all assets and liabilities acquired in the transaction. The assets and liabilities of JCB have been recorded at their estimated fair values and added to those of the Company for periods following the merger date. Valuations of acquired JCB assets and liabilities may be refined for up to one year following the merger date. The Company does not expect that any portion of goodwill will be deductible for tax purposes.

The following table presents the JCB assets acquired and liabilities assumed as of September 1, 2024 as well as the related fair value adjustments and determination of goodwill.

(dollars in thousands)	As Reported by			Fair Value			As Reported by
	JCB			Adjustments			the Company
Assets

Cash and cash equivalents	$	7,267		$	-		$	7,267
Investment securities available for sale		48,293			(1,790	)		46,503
Restricted equity securities		482			-			482
Loans		91,411			(4,235	)		87,176
Allowance for credit losses		(823	)		627			(196	)
Cash value of life insurance		3,700			-			3,700
Other real estate owned		140			-			140
Property and equipment		511			1,307			1,818
Accrued interest receivable		413			-			413
Core deposit intangible		-			3,380			3,380
Deferred tax assets, net		1,934			231			2,165
Other assets		1,346			(66	)		1,280
Total assets acquired	$	154,674		$	(546	)	$	154,128

Liabilities

Deposits	$	125,437		$	(146	)	$	125,291
Borrowings		8,000			88			8,088
Accrued interest payable		275			-			275
Other liabilities		112			5			117
Total liabilities acquired	$	133,824		$	(53	)	$	133,771

Net assets acquired								20,357
Cash consideration								25,000
Goodwill							$	4,643

Management made significant estimates and exercised significant judgement in accounting for the acquisition of JCB. The following is a brief description of the valuation methodologies used to estimate the fair values of major categories of assets acquired and liabilities assumed.

Investment Securities Available for Sale

The estimated fair value of the acquired portfolio of debt securities was based on quoted market prices. All of the acquired portfolio was sold upon completion of the acquisition.

Skyline Bankshares, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

Note 2. Business Combinations, continued

Loans and Allowance for Credit Losses

The fair valuation process identified loans with credit risk indicators that qualified for “purchase credit deteriorated” (“PCD”) status. PCD and non-PCD loans were then evaluated for credit risk and other fair value indicators. Consistent with GAAP, JCB’s related allowance for credit losses on loans was not recorded. Upon the acquisition of JCB, the PCD loans received an initial allowance for credit losses of $196 thousand that represents an adjustment to the amortized cost basis of the loans, with no impact to earnings.

Credit risk was quantified using a probability of default (“PD”)/loss given default (“LGD”) methodology from a market participant perspective and applied to each loan’s outstanding principal balance. PD rates were applied based on FDIC call report code and risk rating category. LGD rates were applied based on FDIC call report code. Other fair value indicators were quantified using a discounted cash flow methodology, utilizing a built-up discount rate that contemplates current index rates adjusted for market assumed premiums. Cash flows were generated based upon the loans’ underlying characteristics and estimated prepayment speeds.

The following table provides information on PCD and non-PCD loans as of the acquisition date:

(dollars in thousands)	PCD Loans			Non-PCD Loans			Total Loans
September 1, 2024

Number of Loans		128			1,136			1,264
JCB recorded value	$	6,127		$	85,284		$	91,411
Discount for credit risk		(256	)		(370	)		(626	)
Discount for non-credit factors		(396	)		(3,409	)		(3,805	)
Reclass of PCD discount to ACL		196			-			196
Fair value	$	5,671		$	81,505		$	87,176

Property and Equipment

The fair value of premises acquired was based on recent third-party appraisals. Acquired equipment was based on the remaining net book value of JCB, which approximated fair value.

Intangible Assets

Core deposit relationships provide a stable source of funds for lending and contribute to profitability. The core deposit intangible was valued using an income approach focused on cost savings, which recognizes the cost savings represented by the expense of maintaining the core deposit base versus the cost of an alternative funding source. The valuation incorporates assumptions related to account retention, discount rates, deposit interest rates, deposit maintenance costs and alternative funding rates.

Deferred Tax Asset

Application of the fair value measurements resulted in an increase to the deferred tax asset. The deferred tax assets were calculated using a blended tax rate of 22.20%.

Other Assets

The fair value adjustment of other assets was based on the Company’s evaluation of acquired other assets.

Skyline Bankshares, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

Note 2. Business Combinations, continued

Deposits

Deposits were valued using methods appropriate to their characteristics. The fair value of noninterest bearing demand deposits, interest bearing demand deposits, money market and savings deposit accounts were assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand. Time deposits were valued at the present value of the expected contractual payments discounted at market rates for instruments with similar terms.

Borrowings

The estimated fair value of borrowings was determined by obtaining payoff quotes from the Federal Home Loan Bank. The borrowings were paid off upon completion of the acquisition.

Other Liabilities

The fair value adjustment of other liabilities was based on the Company’s evaluation of acquired other liabilities.

Supplemental Pro Forma Information (dollars in thousands except per share data)

The table below presents supplemental pro forma information as if the JCB acquisition had occurred at the beginning of the earliest period presented, which was January 1, 2024. Pro forma results include adjustments for amortization and accretion of fair value adjustments and do not include any projected cost savings or other anticipated benefits of the merger. Therefore, the pro forma financial information is not indicative of the results of operations that would have occurred had the transactions been effected on the assumed date. Pre-tax merger-related costs of $1.5 million and $1.1 million included in the Company’s consolidated statements of operations for the nine months and three months ended September 30, 2024 and are not included in the pro forma statements below.

	Three Months		Nine Months
	Ended		Ended
	September 30,		September 30,
	2024		2024
	(Unaudited)		(Unaudited)

Net interest income	$	10,842	$	31,532
Net income (a)	$	551	$	4,968

Weighted average shares outstanding (b)		5,553,579		5,557,229
Earnings per common share	$	0.10	$	0.89

(a)

Supplemental pro forma net income includes the impact of certain fair value adjustments. Supplemental pro forma net income does not include assumptions on cost savings or the impact of merger-related expenses.

(b)

Weighted average shares outstanding are not affected by the merger because no common stock was issued in connection with the JCB acquisition. The acquisition was an all-cash transaction valued at $25.0 million.

Skyline Bankshares, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

Note 3. Investment Securities

Investment securities have been classified in the consolidated balance sheets according to management’s intent. The amortized cost of securities and their approximate fair values at September 30, 2025 and December 31, 2024 is summarized in the following table. There was no allowance for credit losses on available for sale securities as of September 30, 2025 and December 31, 2024.

(dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
September 30, 2025
*Available for sale:*
U.S. Government agencies	$	25,419	$	-	$	(2,686	)	$	22,733
Mortgage-backed securities		59,468		-		(6,953	)		52,515
State and municipal securities		46,263		6		(7,024	)		39,245
	$	131,150	$	6	$	(16,663	)	$	114,493
December 31, 2024
*Available for sale:*
U.S. Treasury securities	$	2,502	$	-	$	(14	)	$	2,488
U.S. Government agencies		25,309		-		(3,804	)		21,505
Mortgage-backed securities		65,080		-		(9,542	)		55,538
Corporate securities		1,500		-		(9	)		1,491
State and municipal securities		46,331		5		(9,071	)		37,265
	$	140,722	$	5	$	(22,440	)	$	118,287

Restricted equity securities totaled $4.7 million at September 30, 2025 and $4.0 million at December 31, 2024. Restricted equity securities consist of investments in stock of the Federal Home Loan Bank of Atlanta (“FHLB”), CBB Financial Corp., Pacific Coast Bankers Bank, and the Federal Reserve Bank of Richmond, all of which are carried at cost. All of these entities are upstream correspondents of the Bank. The FHLB requires financial institutions to make equity investments in the FHLB in order to borrow money. The Federal Reserve requires banks to purchase stock as a condition for membership in the Federal Reserve System. The Bank’s stock in CBB Financial Corp. and Pacific Coast Bankers Bank is restricted only in the fact that the stock may only be repurchased by the respective banks.

The following tables detail unrealized losses and related fair values in the Company’s available for sale investment securities portfolios for which an allowance for credit losses has not been recorded as of September 30, 2025 and December 31, 2024. This information is aggregated by the length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2025 and December 31, 2024.

	Less Than 12 Months					12 Months or More					Total
(dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
September 30, 2025
*Available for sale:*
U.S. Government agencies	$	-	$	-		$	22,733	$	(2,686	)	$	22,733	$	(2,686	)
Mortgage-backed securities		-		-			52,515		(6,953	)		52,515		(6,953	)
State and municipal securities		-		-			37,929		(7,024	)		37,929		(7,024	)
Total securities available for sale	$	-	$	-		$	113,177	$	(16,663	)	$	113,177	$	(16,663	)

December 31, 2024
*Available for sale:*
U.S. Treasury securities	$	-	$	-		$	2,488	$	(14	)		2,488	$	(14	)
U.S. Government agencies		-		-			21,505		(3,804	)		21,505		(3,804	)
Mortgage-backed securities		-		-			55,538		(9,542	)		55,538		(9,542	)
Corporate securities		-		-			1,491		(9	)		1,491		(9	)
State and municipal securities		584		(16	)		35,967		(9,055	)		36,551		(9,071	)
Total securities available for sale	$	584	$	(16	)	$	116,989	$	(22,424	)	$	117,573	$	(22,440	)

Skyline Bankshares, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

Note 3. Investment Securities, continued

At September 30, 2025, 76 investment securities with unrealized losses had depreciated 12.83 percent from their total amortized cost basis. Management evaluates all available for sale investments in an unrealized loss position on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. If the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security, the security is written down to fair value and the entire loss is recorded in earnings.

If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors. In making the assessment, the Company may consider various factors including the extent to which fair value is less than amortized cost, performance on any underlying collateral, downgrades in the ratings of the security by a rating agency, the failure of the issuer to make scheduled interest or principal payments and adverse conditions specifically related to the security. If the assessment indicates that a credit loss exists, the present value of cash flows expected to be collected are compared to the amortized cost basis of the security and any excess is recorded as an allowance for credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any amount of unrealized loss that has not been recorded through an allowance for credit loss is recognized in other comprehensive income.

Changes in the allowance for credit loss are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance for credit loss when management believes an available for sale security is confirmed to be uncollectible or when either of the criteria regarding intent or requirement to sell is met. At September 30, 2025 and December 31, 2024, there was no allowance for credit losses related to the available for sale portfolio.

There were no sales of investment securities available for sale for the nine month period ended September 30, 2025. Proceeds from the sales of investment securities available for sale were $46.2 million for the nine month period ended September 30, 2024. Gross proceeds from called securities totaled $36 thousand and $2.7 million for the nine month periods ended September 30, 2025 and 2024. Gains and losses on the sale of investment securities are recorded on the trade date and are determined using the specific identification method. The realized loss shown below for the nine month period ended September 30, 2024 resulted from the recognition of unamortized premiums on a called bond that had no pre-set call date. Gross realized gains and losses for the nine and three month periods ended September 30, 2025 and 2024 are as follows:

	Nine Months Ended September 30,					Three Months Ended September 30,
(dollars in thousands)	2025		2024			2025		2024

Realized gains	$	-	$	-		$	-	$	-
Realized losses		-		(141	)		-		-
	$	-	$	(141	)	$	-	$	-

There were no securities transferred between the available for sale and held to maturity portfolios or other sales of held to maturity securities during the periods presented. In the future management may elect to classify securities as held to maturity based upon such considerations as the nature of the security, the Bank’s ability to hold the security until maturity, and general economic conditions. The scheduled maturities of securities available for sale at September 30, 2025, were as follows:

(dollars in thousands)	Amortized Cost		Fair Value

Due in one year or less	$	5,456	$	5,437
Due after one year through five years		10,237		9,582
Due after five years through ten years		69,462		61,678
Due after ten years		45,995		37,796
	$	131,150	$	114,493

Maturities of mortgage-backed securities are based on contractual amounts. Actual maturity will vary as loans underlying the securities are prepaid.

Investment securities with amortized cost of approximately $55.9 million and $56.9 million at September 30, 2025 and December 31, 2024, respectively, were pledged as collateral on public deposits and for other purposes as required or permitted by law.

Skyline Bankshares, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

Note 4. Loans Receivable

The major components of loans in the consolidated balance sheets at September 30, 2025 and December 31, 2024 are as follows:

(dollars in thousands)	2025			2024

Real Estate Secured:
Construction & development	$	69,858		$	68,650
Farmland		23,731			24,412
Residential		578,690			518,122
Commercial mortgage		290,434			293,151
Non-Real Estate Secured:
Commercial & agricultural		58,050			61,187
Consumer & other		15,676			18,937
Total loans		1,036,439			984,459
Allowance for credit losses		(8,547	)		(8,027	)
Loans, net of allowance for credit losses	$	1,027,892		$	976,432

Included in total loans above are deferred loan fees of $1.7 million and $1.5 million at September 30, 2025 and December 31, 2024, respectively. Included in total loans above are deferred loan costs of $5.8 million and $5.2 million, at September 30, 2025 and December 31, 2024, respectively. Income from net deferred fees and costs is recognized over the lives of the respective loans as a yield adjustment. If loans repay prior to scheduled maturities any unamortized fee or cost is recognized at that time.

The Company elected to exclude accrued interest receivable from the amortized cost basis of loans. Accrued interest receivable related to loans totaled $3.7 million at September 30, 2025 and $3.4 million at December 31, 2024 and was reported in accrued interest receivable on the consolidated balance sheets.

As of September 30, 2025 and December 31, 2024, substantially all of the Bank’s residential 1-4 family loans were pledged as collateral for borrowing lines at the FHLB.

As of September 30, 2025 and December 31, 2024, the Bank had no residential real estate loans in the process of foreclosure.

Skyline Bankshares, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

Note 5. Allowance for Credit Losses

Allowance for Credit Losses - Loans

The change in the allowance for credit losses for the three and nine months ended September 30, 2025, was due to the increase in loan volume and changes in the Company’s forecast variables during the period ended September 30, 2025. The change in the allowance for credit losses for the three and nine months ended September 30, 2024, was due to the increase in loan volume, the loans acquired as a result of the JCB merger and changes in the Company’s forecast variables during the period ended September 30, 2024. The following table summarizes the activity related to the allowance for credit losses for the three month and nine month periods ended September 30, 2025 and 2024 under the CECL methodology.

(dollars in thousands)	Construction & Development			Farmland		Residential		Commercial Mortgage		Commercial & Agricultural			Consumer & Other			Total

For the Three Months Ended September 30, 2025
Balance, June 30, 2025	$	1,036		$	173	$	4,247	$	2,041	$	558		$	319		$	8,374
Charge-offs		-			-		-		-		-			(30	)		(30	)
Recoveries		-			-		-		1		2			6			9
Provision for credit losses		(15	)		7		193		3		(32	)		38			194
Balance, September 30, 2025	$	1,021		$	180	$	4,440	$	2,045	$	528		$	333		$	8,547

(dollars in thousands)	Construction & Development		Farmland			Residential		Commercial Mortgage			Commercial & Agricultural			Consumer & Other			Total

For the Three Months Ended September 30, 2024
Balance, June 30, 2024	$	791	$	181		$	3,349	$	1,937		$	455		$	157		$	6,870
Merger adjustment for PCD acquired loans		45		-			148		1			-			2			196
Charge-offs		-		-			-		-			-			(22	)		(22	)
Recoveries		-		-			-		1			25			7			33
Provision for credit losses		115		(8	)		444		(87	)		(2	)		248			710
Balance, September 30, 2024	$	951	$	173		$	3,941	$	1,852		$	478		$	392		$	7,787

(dollars in thousands)	Construction & Development		Farmland		Residential			Commercial Mortgage		Commercial & Agricultural			Consumer & Other			Total

For the Nine Months Ended September 30, 2025
Balance, December 31, 2024	$	1,012	$	174	$	4,070		$	1,941	$	504		$	326		$	8,027
Charge-offs		-		-		(1	)		-		-			(100	)		(101	)
Recoveries		-		-		2			3		30			31			66
Provision for credit losses		9		6		369			101		(6	)		76			555
Balance, September 30, 2025	$	1,021	$	180	$	4,440		$	2,045	$	528		$	333		$	8,547

(dollars in thousands)	Construction & Development			Farmland		Residential		Commercial Mortgage			Commercial & Agricultural			Consumer & Other			Total

For the Nine Months Ended September 30, 2024
Balance, December 31, 2023	$	910		$	154	$	3,167	$	1,902		$	424		$	182		$	6,739
Merger adjustment for PCD acquired loans		45			-		148		1			-			2			196
Charge-offs		-			-		-		-			(16	)		(77	)		(93	)
Recoveries		-			-		9		3			27			19			58
Provision for credit losses		(4	)		19		617		(54	)		43			266			887
Balance, September 30, 2024	$	951		$	173	$	3,941	$	1,852		$	478		$	392		$	7,787

Skyline Bankshares, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

Note 5. Allowance for Credit Losses, continued

Credit Quality Indicators

Management closely monitors the quality of the loan portfolio and has established a loan review process designed to help grade the quality of the Bank’s loan portfolio. The Bank’s loan ratings coincide with the “Substandard,” “Doubtful” and “Loss” classifications used by federal regulators in their examination of financial institutions. Generally, an asset is considered “Substandard” if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. “Substandard” assets include those characterized by the distinct possibility that the insured financial institution will sustain some loss if the deficiencies are not corrected. Assets classified as “Doubtful” have all the weaknesses inherent in assets classified “Substandard” with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable. Assets classified as "Loss” are those considered uncollectible, and of such little value that its continuance on the books is not warranted. As of September 30, 2025 and December 31, 2024, respectively, the Bank had no loans graded “Doubtful” or “Loss” included in the balance of total loans outstanding.

Assets that do not currently expose the insured financial institutions to sufficient risk to warrant classification in one of the aforementioned categories but otherwise possess weaknesses are designated “Special Mention.” Management also maintains a listing of loans designated “Watch”. These loans represent borrowers with declining earnings, strained cash flow, increasing leverage and/or weakening market fundamentals that indicate above average risk. Loans that are currently performing and are of high quality are given a loan rating of “Pass”.

Loans are graded at origination and will be considered for potential downgrades as the borrower experiences financial difficulties. Loan officers meet periodically to discuss their past due credits and loan downgrades could occur at that time. Commercial relationships of over $1.0 million are reviewed on an annual basis, and that review could result in downgrades or in some cases, upgrades. In addition, the Company engages a third-party loan review each quarter. The results of these loan reviews could result in upgrades or downgrades.

The following table presents the Company’s recorded investment in loans by credit quality indicators as of September 30, 2025 and December 31, 2024:

	Loan Grades
(dollars in thousands)	Pass		Watch		Special Mention		Substandard		Total
September 30, 2025
Real Estate Secured:
Construction & development	$	69,858	$	-	$	-	$	-	$	69,858
Farmland		22,829		-		270		632		23,731
Residential		569,412		362		3,410		5,506		578,690
Commercial mortgage		284,604		4,283		1,172		375		290,434
Non-Real Estate Secured:
Commercial & agricultural		57,204		581		18		247		58,050
Consumer & other		15,332		-		-		344		15,676
Total	$	1,019,239	$	5,226	$	4,870	$	7,104	$	1,036,439

December 31, 2024
Real Estate Secured:
Construction & development	$	68,459	$	-	$	175	$	16	$	68,650
Farmland		23,234		111		272		795		24,412
Residential		511,943		205		2,270		3,704		518,122
Commercial mortgage		286,140		3,548		3,017		446		293,151
Non-Real Estate Secured:
Commercial & agricultural		61,133		-		54		-		61,187
Consumer & other		18,550		-		22		365		18,937
Total	$	969,459	$	3,864	$	5,810	$	5,326	$	984,459

Skyline Bankshares, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

Note 5. Allowance for Credit Losses, continued

Credit Quality Indicators, continued

The following table presents the Company’s recorded investment in loans by credit quality indicators by year of origination as of September 30, 2025:

	Term Loans by Year of Origination														Revolving Loans Converted
(dollars in thousands)	2025		2024		2023		2022		2021		Prior		Revolving		To Term		Total

Construction & development
Pass	$	20,852	$	20,691	$	5,617	$	4,763	$	5,320	$	8,371	$	4,075	$	169	$	69,858
Watch		-		-		-		-		-		-		-		-		-
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Total construction & development	$	20,852	$	20,691	$	5,617	$	4,763	$	5,320	$	8,371	$	4,075	$	169	$	69,858

Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Farmland
Pass	$	2,921	$	2,287	$	3,313	$	1,728	$	1,248	$	9,361	$	1,971	$	-	$	22,829
Watch		-		-		-		-		-		-		-		-		-
Special Mention		-		-		-		-		-		172		98		-		270
Substandard		-		-		-		-		-		632		-		-		632
Total farmland	$	2,921	$	2,287	$	3,313	$	1,728	$	1,248	$	10,165	$	2,069	$	-	$	23,731

Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Residential
Pass	$	71,538	$	64,879	$	62,259	$	100,091	$	53,680	$	121,187	$	95,241	$	537	$	569,412
Watch		99		-		64		-		-		199		-		-		362
Special Mention		-		218		-		854		225		2,113		-		-		3,410
Substandard		-		-		867		2,430		57		352		1,800		-		5,506
Total residential	$	71,637	$	65,097	$	63,190	$	103,375	$	53,962	$	123,851	$	97,041	$	537	$	578,690

Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	1	$	-	$	-	$	1

Commercial mortgage
Pass	$	25,277	$	28,983	$	39,050	$	49,549	$	41,432	$	89,221	$	10,878	$	214	$	284,604
Watch		-		-		-		1,977		-		2,306		-		-		4,283
Special Mention		-		-		-		-		422		750		-		-		1,172
Substandard		-		23		-		-		71		281		-		-		375
Total residential	$	25,277	$	29,006	$	39,050	$	51,526	$	41,925	$	92,558	$	10,878	$	214	$	290,434

Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Commercial & agricultural
Pass	$	14,903	$	11,084	$	7,148	$	4,386	$	2,228	$	1,968	$	15,206	$	281	$	57,204
Watch		-		-		-		-		-		-		581		-		581
Special Mention		-		-		-		-		5		13		-		-		18
Substandard		-		57		39		-		21		130		-		-		247
Total commercial & agricultural	$	14,903	$	11,141	$	7,187	$	4,386	$	2,254	$	2,111	$	15,787	$	281	$	58,050

Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Consumer & other
Pass	$	4,880	$	2,787	$	1,469	$	1,588	$	1,259	$	2,596	$	753	$	-	$	15,332
Watch		-		-		-		-		-		-		-		-		-
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		8		8		-		-		291		37		-		-		344
Total consumer & other	$	4,888	$	2,795	$	1,469	$	1,588	$	1,550	$	2,633	$	753	$	-	$	15,676

Current period gross write-offs	$	13	$	34	$	24	$	8	$	3	$	18	$	-	$	-	$	100

Total loans
Pass	$	140,371	$	130,711	$	118,856	$	162,105	$	105,167	$	232,704	$	128,124	$	1,201	$	1,019,239
Watch		99		-		64		1,977		-		2,505		581		-		5,226
Special Mention		-		218		-		854		652		3,048		98		-		4,870
Substandard		8

Skyline Bankshares, Inc. 10-Q