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Commercial Bancgroup, Inc.

CBK
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Business Summary

Commercial Bancgroup, Inc. (CBK) is a Tennessee-incorporated bank holding company that operates primarily through its wholly-owned subsidiary, Commercial Bank, a Tennessee banking corporation. The Bank is a full-service community banking institution offering traditional consumer and commercial products and services to businesses and individuals in select markets across Kentucky, North Carolina, and Tennessee . As of December 31, 2025, CBK reported total consolidated assets of $2.3 billion , loans, net of allowance for credit losses, of $1.9 billion , deposits of $1.8 billion , and total shareholders’ equity of $285.3 million . The company operated 34 banking offices and one loan production office (LPO) in Lincolnton, North Carolina, as of the same date . CBK completed an initial public offering (IPO) on October 3, 2025, selling 1,458,343 shares of common stock and receiving net proceeds of approximately $29.9 million . These proceeds were used to fully repay its outstanding holding company loan agreement with Community Trust Bank, Inc. (CTB Loan) for $20.5 million on October 7, 2025 .

The company's core business model revolves around generating revenue primarily through net interest income, which is the difference between interest earned on interest-earning assets (loans, investment securities, and interest-bearing cash) and interest expense incurred on interest-bearing liabilities (deposits and borrowings) . Noninterest income, derived from sources such as service charges on deposit accounts, ATM and debit card fees, and benefits from Bank Owned Life Insurance (BOLI), also contributes to revenue . Primary customer segments include small businesses, corporate customers, Commercial Real Estate (CRE) owners, and consumers . The company targets business customers with annual revenues up to $300 million . CBK emphasizes relationship banking, funding loan growth primarily through low-cost core customer deposits, which constituted 91.6% of total deposits as of December 31, 2025 .

CBK's loan portfolio is segmented into real estate, commercial, consumer, and other categories . As of December 31, 2025, real estate loans comprised 89.5% of total loans , with Commercial Real Estate (CRE) loans representing 59% of total loans , Construction and Land Development (C&D) loans 9% , residential loans 20% , and other real estate loans 1% . Commercial loans, excluding real estate, accounted for 9% of total loans , while consumer loans made up 1% , and other loans 0% . The company's securities portfolio, which provides liquidity and serves as an interest rate risk management tool, consists of available-for-sale and held-to-maturity securities, primarily U.S. government, municipal, and corporate bonds . As of December 31, 2025, available-for-sale securities had a fair value of $43,136,672 and held-to-maturity securities had a fair value of $94,455,878 .

For the fiscal year ended December 31, 2025, CBK reported net income less non-controlling interest of $37.2 million , an increase of $5.8 million or 18.4% from the fiscal year ended December 31, 2024 . Net interest income was $80.4 million , up $2.8 million or 3.7% from the prior year . Noninterest income decreased by $0.9 million or 8.7% to $9.9 million , while noninterest expense decreased by $3.6 million or 7.8% to $42.5 million . Basic earnings per share were $2.95 and diluted earnings per share were $2.95 for the fiscal year ended December 31, 2025, compared to $2.58 and $2.54 respectively, for the fiscal year ended December 31, 2024. The Bank's regulatory capital ratios as of December 31, 2025, were well-capitalized, with a total risk-based capital ratio of 13.5% , a Tier 1 risk-based capital ratio of 12.5% , a common equity Tier 1 capital ratio of 12.5% , and a Tier 1 leverage ratio of 10.8% .

Year-over-year, total assets slightly decreased by $9.6 million or 0.4% to $2.3 billion as of December 31, 2025 . Net loans increased by $66.6 million or 3.7% to $1.9 billion , primarily due to organic loan growth in the Nashville MSA, Knoxville MSA, and Charlotte MSA . Total deposits decreased by $122.9 million or 6.3% to $1.8 billion , mainly driven by a $126.9 million reduction in brokered deposits to $48.0 million . Noninterest-bearing demand deposits, however, increased by $1.2 million or 0.3% to $397.8 million . The net interest margin increased to 3.87% in 2025 from 3.75% in 2024, and the net interest spread increased to 3.20% from 3.05% . The provision for credit losses significantly decreased to $0.46 million in 2025 from $1.83 million in 2024.

During the reported period, Commercial Bancgroup completed its IPO on October 3, 2025 . In connection with the IPO, a reclassification and 250-for-1 forward stock split occurred on September 18, 2025 . The company also fully repaid its $20.5 million CTB Loan on October 7, 2025 . The acquisition of Alliance Bank & Trust Company (Alliance) was completed on July 1, 2024, expanding services to North Carolina, including parts of the Charlotte MSA, and adding four branches and one LPO . The company also made significant investments in technology, completing an upgrade to customer online banking and mobile platforms in 2023, and implementing real-time payment options for FedNow and RTP in 2024 .

Business Outlook

Commercial Bancgroup intends to continue its growth strategy through both acquisitions and organic expansion in its current and new markets . The company aims to increase its market share of deposits and loans by providing superior customer service . Management will seek strategic acquisitions that can fill market voids and support balance sheet needs as the Bank grows . The company has successfully grown its balance sheet with loan growth of 9% and deposit growth of 6% between December 31, 2020, and December 31, 2025 .

A key growth area for CBK is the continued emphasis on commercial banking in local communities, focusing on the specific needs of small and medium-sized businesses and individuals . The company plans to provide a high degree of responsiveness and a wide variety of banking products and services . It aims to be a dominant bank in smaller markets and a competitive player in larger metropolitan areas such as the Charlotte MSA, Knoxville MSA, Nashville MSA, and Tri-Cities MSA . The company also plans to pursue growth opportunities through strategic acquisitions and de novo expansion, particularly in attractive and adjacent markets with experienced banking teams that are a cultural fit and knowledgeable of the target customer base . Acquisitions will focus on providing meaningful financial benefits, long-term organic growth opportunities, and economies of scale without compromising asset quality .

Operationally, CBK plans to fund asset growth through core deposits and relationship banking, with core deposits representing 91.6% of total deposits as of December 31, 2025 . The company also intends to leverage technology to enhance the customer experience and improve productivity . Significant investments have been made in technology, including online and mobile banking platforms, and the company utilizes Jack Henry & Associates, Inc. as a core processing service provider to support its growth plan . In 2026, the company anticipates installing a dedicated commercial cash management platform that is configurable and supports a broad range of customer needs, including a commercial mobile and tablet app with access to commercial products such as risk management tools, wire transfers, and Automated Clearing House (ACH) origination .

The company's planned capital allocation includes continued investment in technology and risk management systems, believing it has developed an infrastructure that can support significant additional growth with minimal capital investment . While the filing does not explicitly state R&D spending levels, capital expenditure plans, or share repurchase authorization amounts for the upcoming period, it does note that the company did not repurchase any equity securities during the quarter ended December 31, 2025 . The company intends to pay quarterly cash dividends to holders of its common stock, subject to the discretion of its Board and dependent on financial condition, liquidity, results of operations, capital levels, and needs .

Management has explicitly flagged several structural headwinds and execution risks. The company's business is concentrated in, and largely dependent upon, the continued growth of and economic conditions in its primary markets of Tennessee, Kentucky, and North Carolina . Adverse economic conditions in these areas could reduce growth, affect loan repayment ability, impact collateral values, and hinder deposit attraction . The company is also exposed to credit and lending risks, particularly due to its concentration in commercial and real estate loans, including CRE and C&D loans . As of December 31, 2025, approximately 59% of the loan portfolio consisted of CRE loans , and the ratio of total CRE loans excluding owner-occupied CRE loans to total risk-based capital was 322% , exceeding the 300% supervisory criterion . The three-year growth rate for the CRE portfolio was 60.5% , also above the 50% growth rate threshold . The hotels/motels category has occasionally exceeded the internal limit of 50% of total risk-based capital . These concentrations may lead to enhanced regulatory scrutiny and potentially require a reduction in CRE lending or an increase in capital . Geopolitical tensions, including hostilities in the Middle East, the ongoing conflict in Ukraine, and the evolving crisis in Venezuela, are also cited as factors that could weaken the economic environment .

Risk Factors

Commercial Bancgroup faces material risks across several categories. Macroeconomic risks include changes in interest rates, which can adversely affect net interest margin and the market value of investment and loan portfolios, as evidenced by net unrealized losses on securities available for sale of $1.0 million and held-to-maturity of $3.3 million as of December 31, 2025, collectively equaling 1.4% of Tier 1 capital . Persistent inflationary pressures and actions by the Federal Reserve in response thereto, as well as potential prolonged government shutdowns, could negatively impact economic conditions in its concentrated markets of Tennessee, Kentucky, and North Carolina . Competitive risks stem from a highly competitive banking and financial services industry, with larger institutions possessing greater financial resources and more developed technology platforms . Operational risks include dependence on information technology and third-party servicers, with systems failures, interruptions, or cybersecurity breaches potentially having a material adverse effect . The adoption of AI tools by the company and its vendors may also increase the risk of errors, omissions, unfair treatment, or fraudulent behavior . Regulatory and compliance risks are significant, given extensive federal and state regulation, including potential enforcement actions for non-compliance with laws like the Bank Secrecy Act and anti-money laundering regulations . The company's concentration in CRE loans, with a ratio of total CRE loans excluding owner-occupied CRE loans to total risk-based capital of 322% and a three-year growth rate of 60.5% as of December 31, 2025, may lead to enhanced regulatory scrutiny and potential restrictions on growth or capital requirements . Furthermore, FDIC deposit insurance assessments may increase, as seen with the special assessment beginning in 2024 at an annual rate of approximately 13.4 basis points for an anticipated total of eight quarterly assessment periods .

Management Priorities

Management's message to shareholders emphasizes a strategy of disciplined organic and acquisition-fueled growth, aiming to continue providing superior customer service and grow market share in deposits and loans . They highlight successful integration of past acquisitions and organic growth in existing and new markets . Management intends to pursue strategic acquisitions that can fill market voids and support balance sheet needs, while also developing professional staff and executives through internal development, acquisitions, and strategic external hires . A key strategic priority is emphasizing commercial banking in local communities, focusing on small and medium-sized businesses and individuals, and striving to be a dominant bank in smaller markets and a competitive player in larger metropolitan areas . Another priority is funding asset growth through low-cost core customer deposits and leveraging technology to enhance customer experience and improve productivity . Management also notes significant investments in technology and risk management systems, believing the current infrastructure can support substantial additional growth with minimal capital investment . They anticipate installing a dedicated commercial cash management platform in 2026 . The overall tone suggests confidence in their growth strategy and operational efficiency, while acknowledging the competitive and rapidly changing environment.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Company Overview
  2. [2] Item 1, Business — Company Overview
  3. [3] Item 1, Business — Company Overview
  4. [4] Item 1, Business — Company Overview
  5. [5] Item 1, Business — Company Overview
  6. [6] Item 1, Business — Company Overview
  7. [7] Item 1, Business — Initial Public Offering
  8. [8] Item 1, Business — Initial Public Offering
  9. [9] Item 7, MD&A — Primary Factors Used to Evaluate Our Business — Net Interest Income
  10. [10] Item 7, MD&A — Primary Factors Used to Evaluate Our Business — Noninterest Income
  11. [11] Item 1, Business — Our Customers
  12. [12] Item 1, Business — Our Customers
  13. [13] Item 1, Business — Business Strategy
  14. [14] Item 7, MD&A — Loan Portfolio
  15. [15] Item 7, MD&A — Loan Portfolio
  16. [16] Item 7, MD&A — Loan Portfolio Segments
  17. [17] Item 7, MD&A — Loan Portfolio Segments
  18. [18] Item 7, MD&A — Loan Portfolio Segments
  19. [19] Item 7, MD&A — Loan Portfolio Segments
  20. [20] Item 7, MD&A — Loan Portfolio Segments
  21. [21] Item 7, MD&A — Loan Portfolio Segments
  22. [22] Item 7, MD&A — Loan Portfolio Segments
  23. [23] Item 7, MD&A — Securities Portfolio
  24. [24] Item 7, MD&A — Securities Portfolio
  25. [25] Item 7, MD&A — Securities Portfolio
  26. [26] Item 7, MD&A — Fiscal Year ended December 31, 2025 Highlights — Results of Operations
  27. [27] Item 7, MD&A — Fiscal Year ended December 31, 2025 Highlights — Results of Operations
  28. [28] Item 7, MD&A — Fiscal Year ended December 31, 2025 Highlights — Results of Operations
  29. [29] Item 7, MD&A — Fiscal Year ended December 31, 2025 Highlights — Results of Operations
  30. [30] Item 7, MD&A — Fiscal Year ended December 31, 2025 Highlights — Results of Operations
  31. [31] Item 7, MD&A — Fiscal Year ended December 31, 2025 Highlights — Results of Operations
  32. [32] Item 8, Financial Statements — Consolidated Statements of Income
  33. [33] Item 8, Financial Statements — Consolidated Statements of Income
  34. [34] Item 8, Financial Statements — Consolidated Statements of Income
  35. [35] Item 8, Financial Statements — Consolidated Statements of Income
  36. [36] Item 7, MD&A — Fiscal Year ended December 31, 2025 Highlights — Financial Condition
  37. [37] Item 7, MD&A — Fiscal Year ended December 31, 2025 Highlights — Financial Condition
  38. [38] Item 7, MD&A — Fiscal Year ended December 31, 2025 Highlights — Financial Condition
  39. [39] Item 7, MD&A — Fiscal Year ended December 31, 2025 Highlights — Financial Condition
  40. [40] Item 7, MD&A — Fiscal Year ended December 31, 2025 Highlights — Financial Condition
  41. [41] Item 7, MD&A — Fiscal Year ended December 31, 2025 Highlights — Financial Condition
  42. [42] Item 7, MD&A — Financial Condition
  43. [43] Item 7, MD&A — Fiscal Year ended December 31, 2025 Highlights — Financial Condition
  44. [44] Item 7, MD&A — Fiscal Year ended December 31, 2025 Highlights — Financial Condition
  45. [45] Item 7, MD&A — Fiscal Year ended December 31, 2025 Highlights — Financial Condition
  46. [46] Item 7, MD&A — Results of Operations for the Fiscal Years Ended December 31, 2025 and 2024
  47. [47] Item 7, MD&A — Results of Operations for the Fiscal Years Ended December 31, 2025 and 2024
  48. [48] Item 7, MD&A — Results of Operations for the Fiscal Years Ended December 31, 2025 and 2024
  49. [49] Item 7, MD&A — Results of Operations for the Fiscal Years Ended December 31, 2025 and 2024
  50. [50] Item 7, MD&A — Provision for Credit Losses
  51. [51] Item 7, MD&A — Provision for Credit Losses
  52. [52] Item 1, Business — Initial Public Offering
  53. [53] Item 1, Business — Reclassification
  54. [54] Item 1, Business — Initial Public Offering
  55. [55] Item 7, MD&A — Overview
  56. [56] Item 1, Business — Information Technology Systems
  57. [57] Item 1, Business — Business Strategy
  58. [58] Item 1, Business — Business Strategy
  59. [59] Item 1, Business — Business Strategy
  60. [60] Item 1, Business — Business Strategy
  61. [61] Item 1, Business — Business Strategy
  62. [62] Item 1, Business — Business Strategy
  63. [63] Item 1, Business — Business Strategy
  64. [64] Item 1, Business — Business Strategy
  65. [65] Item 1, Business — Business Strategy
  66. [66] Item 1, Business — Business Strategy
  67. [67] Item 1, Business — Business Strategy
  68. [68] Item 1, Business — Business Strategy
  69. [69] Item 1, Business — Information Technology Systems
  70. [70] Item 1, Business — Business Strategy
  71. [71] Item 5, Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
  72. [72] Item 5, Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
  73. [73] Item 1A, Risk Factors — Risks Related to Our Business — Our business is concentrated in, and largely dependent upon, the continued growth of, and economic conditions in, the markets where we operate.
  74. [74] Item 1A, Risk Factors — Risks Related to Our Business — Our business is concentrated in, and largely dependent upon, the continued growth of, and economic conditions in, the markets where we operate.
  75. [75] Item 1A, Risk Factors — Risks Related to Our Business — We have a concentration of credit exposure to borrowers in certain industries, and we also target small to medium-sized businesses and make other loans that may carry increased levels of credit risk.
  76. [76] Item 7, MD&A — Loan Portfolio
  77. [77] Item 7, MD&A — Loan Portfolio
  78. [78] Item 1, Business — Commercial Real Estate Concentrations
  79. [79] Item 1, Business — Commercial Real Estate Concentrations
  80. [80] Item 1, Business — Commercial Real Estate Concentrations
  81. [81] Item 7, MD&A — Loan Portfolio
  82. [82] Item 1, Business — Commercial Real Estate Concentrations
  83. [83] Item 1A, Risk Factors — Risks Related to Our Business — Negative developments in the U.S. economy and local economies in our primary markets may adversely impact our results in the future.
  84. [84] Item 1A, Risk Factors — Risks Related to Our Business — Increases in interest rates have in the past resulted in, and could in the future result in, unrealized losses in our investment securities portfolio.
  85. [85] Item 1A, Risk Factors — Risks Related to Our Business — Increases in interest rates have in the past resulted in, and could in the future result in, unrealized losses in our investment securities portfolio.
  86. [86] Item 1A, Risk Factors — Risks Related to Our Business — Increases in interest rates have in the past resulted in, and could in the future result in, unrealized losses in our investment securities portfolio.
  87. [87] Item 1A, Risk Factors — Risks Related to Our Business — Negative developments in the U.S. economy and local economies in our primary markets may adversely impact our results in the future.
  88. [88] Item 1A, Risk Factors — Risks Related to Our Business — We operate in a highly competitive industry and face significant competition from other financial institutions and financial services providers, which may impair our growth or profits.
  89. [89] Item 1A, Risk Factors — Risks Related to Technology and Cybersecurity — We are dependent on our information technology and telecommunications systems and third-party servicers, and systems failures or interruptions or breaches of security could have a material adverse effect on our financial condition and results of operations, as well as cause legal or reputational harm.
  90. [90] Item 1A, Risk Factors — Risks Related to Technology and Cybersecurity — The adoption of AI tools by us and our third-party vendors and service providers may increase the risk of errors, omissions, unfair treatment or fraudulent behavior by our employees, customers or counterparties, or other third parties.
  91. [91] Item 1A, Risk Factors — Legal, Regulatory and Compliance Risks — We face the risk of noncompliance with, and enforcement actions related to, the Bank Secrecy Act and other anti-money laundering laws and regulations.
  92. [92] Item 1A, Risk Factors — Legal, Regulatory and Compliance Risks — We have a concentration in CRE lending that could cause our regulators to restrict our ability to grow.
  93. [93] Item 1A, Risk Factors — Legal, Regulatory and Compliance Risks — We have a concentration in CRE lending that could cause our regulators to restrict our ability to grow.
  94. [94] Item 1A, Risk Factors — Legal, Regulatory and Compliance Risks — We have a concentration in CRE lending that could cause our regulators to restrict our ability to grow.
  95. [95] Item 1A, Risk Factors — Legal, Regulatory and Compliance Risks — FDIC deposit insurance assessments may materially increase in the future, which would have an adverse effect on our earnings and results of operations.
  96. [96] Item 1, Business — Business Strategy
  97. [97] Item 1, Business — Business Strategy
  98. [98] Item 1, Business — Business Strategy
  99. [99] Item 1, Business — Business Strategy
  100. [100] Item 1, Business — Business Strategy
  101. [101] Item 1, Business — Business Strategy
  102. [102] Item 1, Business — Information Technology Systems

Analysis on 5/20/2026