What changed in this filing

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Item 1. Financial Statements

2025-05-09 compared with 2024-11-13 · 300 added, 425 removed, 1086 unchanged (40% of the section changed)

2 unchanged sentences

Consolidated Financial Statements:

Consolidated Balance Sheets as of September 30, 2024 (Unaudited), and December 31, 2023

Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2024, and September 30, 2023 (Unaudited)

Consolidated Statements of Comprehensive Income (Loss) for the Three and Nin e Months Ended September 30, 2024, and September 30, 2023 (Unaudited)

Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2024, and September 30, 2023 (Unaudited)

Consolidated Statements of Cash Flows for the Nine Months Ended Septem ber 30, 2024, and September 30, 2023 (Unaudited)

Consolidated Balance Sheets as of March 31, 2025 (Unaudited), and December 31, 202 4

Consolidated Statements of Income for the Three Months Ended March 31, 2025 , and March 31, 202 4 (Unaudited)

Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2 025 , and March 31, 2024 (Unaudited)

Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2 025 , and March 31, 202 4 (Unaudited)

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 202 5 , and March 31, 202 4 (Unaudited)

Notes to the Consolidated Financial Statements (Unaudited)

2 unchanged sentences

(In thousands, except share and per share data)

September 30, 2024

March 31, 2025

December 31, 2024

30 unchanged sentences

2,000,000 shares authorized;

1,500 shares issued and outstanding at September 30, 2024;

no shares issued and outstanding at December 31, 2023

1,500 shares issued and outstanding at March 31, 2025;

1,500 shares issued and outstanding at December 31, 2024

10,413 10,413

Common Stock 7,777 7,770

$ 0.50 par value;

40,000,000 shares authorized, 15,534,293 shares issued and 14,963,003 shares outstanding at September 30, 2024;

40,000,000 shares authorized, 15,554,097 shares issued and 14,982,807 shares outstanding at March 31, 2025;

40,000,000 shares authorized, 15,540,394 shares issued and 14,969,104 shares outstanding at December 31, 2024

3 unchanged sentences

Treasury stock ( 27,584 ) ( 27,584 )

571,290 shares, at cost, at September 30, 2024, and 571,290 shares, at cost, at December 31, 2023

571,290 shares, at cost, at March 31, 2025, and 571,290 shares, at cost, at December 31, 2024

Total Shareholders’ Equity

6 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Interest income

13 unchanged sentences

72,987 22,131

Credit loss expense - loans 85 200 19,515 1,034

Credit loss expense (recapture) - off-balance sheet credit exposures 62 35 3,872 ( 70 )

Total provision for credit losses 147 235 23,387 964

Credit loss expense (recapture) - loans and available-for-sale securities 900 ( 670 )

Credit loss (recapture) - off-balance sheet credit exposures ( 399 ) —

Total provision (recapture) for credit losses 501 ( 670 )

Net interest income after credit loss expense 72,486 22,801

2 unchanged sentences

Service charges and fees 2,089 655

Net gains (losses) on securities — ( 1 ) 613 ( 112 )

Net gains on securities 1 —

Income from company-owned life insurance 1,193 547

Bank debit and other card revenue 2,884 1,132

Other non-interest income 1,413 501

9 unchanged sentences

Income tax expense

5,200 464 3,725 1,869

Net income 27,201 5,212

8 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Net income $ 27,201 $ 5,212

1 unchanged sentence

Unrealized gains (losses) on securities:

Unrealized gain (loss) arising during period, net of tax of ($ 7,610 ) and $ 5,392 for the three months ended September 30, 2024, and September 30, 2023, respectively, net of tax of ($ 7,714 ) and $ 2,212 for the nine months ended September 30, 2024, and September 30, 2023, respectively

28,628 ( 20,285 ) 29,019 ( 8,322 )

Reclassification adjustment for loss (gain) on securities, net of tax of $ 0 and $ 0 for the three months ended September 30, 2024, and September 30, 2023, respectively, net of tax of $ 129 and ($ 23 ) for the nine months ended September 30, 2024, and September 30, 2023, respectively

Unrealized gain (loss) arising during period, net of tax of ($ 2,296 ) and $ 117 for the three months ended March 31, 2025, and March 31, 2024, respectively

7,688 ( 441 )

Reclassification adjustment for loss (gain) on fair value hedge, net of tax of $ 9 and $ 9 for the three months ended September 30, 2024, and September 30, 2023, respectively, net of tax of $ 25 and ($ 224 ) for the nine months ended September 30, 2024, and September 30, 2023, respectively

Reclassification adjustment for loss (gain) on securities, net of tax of $ 0 and $ 0 for the three months ended March 31, 2025, and March 31, 2024, respectively

Reclassification adjustment for loss (gain) on fair value hedge, net of tax of $ 9 and $ 9 for the three months ended March 31, 2025, and March 31, 2024, respectively

( 31 ) ( 32 )

Unrealized gain (loss) on cash flow hedge:

Unrealized holding gain (loss) on cash flow hedge, net of tax of $ 816 and $ 10 for the three months ended September 30, 2024, and September 30, 2023, respectively, net of tax of ($ 128 ) and $ 71 for the nine months ended September 30, 2024, and September 30, 2023, respectively

( 3,071 ) ( 38 ) 483 ( 267 )

Reclassification adjustment for losses (gains) included in net income, net of tax $ 227 and ($ 99 ) for the three months ended September 30, 2024, and September 30, 2023, respectively, net of tax of $ 315 and ($ 264 ) for the nine months ended September 30, 2024, and September 30, 2023, respectively

( 853 ) 373 ( 1,187 ) 995

Unrealized holding gain (loss) on cash flow hedge, net of tax of ($ 111 ) and ($ 707 ) for the three months ended March 31, 2025, and March 31, 2024, respectively

Reclassification adjustment for losses (gains) included in net income, net of tax $ 99 and ($ 94 ) for the three months ended March 31, 2025, and March 31, 2024, respectively

Total other comprehensive income (loss) 7,696 2,540

4 unchanged sentences

Consolidated Statements of Changes in Shareholders’ Equity

For the Three Months Ended September 30, 2024, and 2023

(In thousands, except share and per share data)

Preferred Stock and Surplus Common Stock Retained

Earnings Comprehensive

Income (Loss) Treasury

Stock Shareholders’

Shares Outstanding Amount Additional Paid-in

Balance June 30, 2024 $ 10,413 14,932,169 $ 7,752 $ 399,553 $ 403,422 $ ( 100,430 ) $ ( 27,584 ) $ 693,126

Net income — — — — 27,622 — — 27,622

Other comprehensive income (loss) — — — — — 24,672 — 24,672

(Purchase) sale of treasury stock, net — — — — — — — —

Common stock cash dividends, declared — — — — ( 7,921 ) — — ( 7,921 )

Preferred stock cash dividends, declared — — — — ( 225 ) — — ( 225 )

Share-based compensation expense, net — 30,834 15 824 ( 54 ) — — 785

Balance September 30, 2024 $ 10,413 14,963,003 $ 7,767 $ 400,377 $ 422,844 $ ( 75,758 ) $ ( 27,584 ) $ 738,059

Balance June 30, 2023 $ — 7,428,710 $ 4,000 $ 13,208 $ 426,625 $ ( 126,177 ) $ ( 27,584 ) $ 290,072

Net income — — — — 4,056 — — 4,056

Other comprehensive income (loss) — — — — — ( 19,982 ) — ( 19,982 )

(Purchase) sale of treasury stock, net — — — — — — — —

Common stock cash dividends, declared — — — — ( 3,937 ) — — ( 3,937 )

Share-based compensation expense, net — — — 610 — — — 610

Balance September 30, 2023 $ — 7,428,710 $ 4,000 $ 13,818 $ 426,744 $ ( 146,159 ) $ ( 27,584 ) $ 270,819

See Notes to Consolidated Financial Statements.

Burke & Herbert Financial Services Corp.

Consolidated Statements of Changes in Shareholders’ Equity

For the Nine Months Ended September 30, 2024, and 2023

For the Three Months Ended March 31, 2025, and 2024

(In thousands, except share and per share data)

5 unchanged sentences

Balance December 31, 2024 $ 10,413 14,969,104 $ 7,770 $ 401,172 $ 434,106 $ ( 95,720 ) $ ( 27,584 ) $ 730,157

Acquisition of Summit Financial Group, Inc.

10,413 7,405,772 3,703 383,329 — — — 397,445

Net income — — — — 27,201 — — 27,201

4 unchanged sentences

Share-based compensation expense, net — 13,703 7 1,510 ( 109 ) — — 1,408

Balance September 30, 2024 $ 10,413 14,963,003 $ 7,767 $ 400,377 $ 422,844 $ ( 75,758 ) $ ( 27,584 ) $ 738,059

Balance March 31, 2025 $ 10,413 14,982,807 $ 7,777 $ 402,682 $ 452,736 $ ( 88,024 ) $ ( 27,584 ) $ 758,000

Balance December 31, 2023 $ — 7,428,710 $ 4,000 $ 14,495 $ 427,333 $ ( 103,494 ) $ ( 27,584 ) $ 314,750

Cumulative effect adjustment due to the adoption of CECL, net of tax — — — — ( 3,439 ) — — ( 3,439 )

Net income — — — — 5,212 — — 5,212

3 unchanged sentences

Share-based compensation expense, net — 11,315 6 813 ( 74 ) — — 745

Balance September 30, 2023 $ — 7,428,710 $ 4,000 $ 13,818 $ 426,744 $ ( 146,159 ) $ ( 27,584 ) $ 270,819

Balance March 31, 2024 $ — 7,440,025 $ 4,006 $ 15,308 $ 428,532 $ ( 100,954 ) $ ( 27,584 ) $ 319,308

See Notes to Consolidated Financial Statements.

2 unchanged sentences

(In thousands, except share and per share data)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash Flows from Operating Activities

6 unchanged sentences

Amortization of housing tax credits 1,859 1,372

Realized (gain) loss on sales of available-for-sale securities ( 613 ) 112

Realized (gain) on sales of OREO property ( 172 ) —

Provision for credit losses 23,387 964

Realized (gain) on sales of available-for-sale securities ( 1 ) —

Realized loss on sales of OREO property 2 —

Provision for (recapture of) credit losses 501 ( 670 )

Income from company-owned life insurance ( 1,193 ) ( 547 )

Deferred tax (benefit) ( 41,052 ) ( 2,101 )

Deferred tax expense (benefit) ( 1,495 ) 741

Loss on disposal of fixed assets 88 235

9 unchanged sentences

(Increase) decrease in other assets ( 24,845 ) 1,006

Increase in accrued interest payable and other liabilities 61,882 6,329

Increase (decrease) in accrued interest payable and other liabilities 35,679 ( 1,543 )

Net cash flows provided by operating activities $ 37,647 $ 7,089

7 unchanged sentences

Purchases of property and equipment, net of disposals ( 1,778 ) ( 1,503 )

(Purchase of) proceeds from company-owned life insurance 2,213 ( 6 )

Proceeds from company-owned life insurance — 1,130

Proceeds from sale of OREO property 161 —

(Increase) decrease in loans made to customers, net 23,944 ( 30,425 )

1 unchanged sentence

Cash Flows from Financing Activities

Net (decrease) in non-interest-bearing accounts ( 19,833 ) ( 107,307 )

Net increase (decrease) in non-interest-bearing accounts 2,487 ( 7,553 )

Net increase (decrease) in interest-bearing accounts 24,145 ( 4,215 )

3 unchanged sentences

Proceeds from employee stock purchase program 63 48

Issuance of common stock 2,617 —

Burke & Herbert Financial Services Corp.

1 unchanged sentence

(In thousands, except share and per share data)

Issuance of common stock 103 819

Sale of treasury stock — —

Net cash flows provided by financing activities $ 35,696 $ 9,320

Increase (decrease) in cash and cash equivalents 247,267 ( 8,431 )

Net cash flows provided by (used in) financing activities $ ( 46,720 ) $ 73,107

Increase in cash and cash equivalents 13,532 9,579

Cash and cash equivalents

13 unchanged sentences

See Notes to Consolidated Financial Statements.

Notes to Consolidated Financial Statements

Note 1— Nature of Business Activities and Significant Accounting Policies

Nature of operations

The consolidated financial statements include Burke & Herbert Financial Services Corp.

(“Burke & Herbert”) and its wholly-owned subsidiary Burke & Herbert Bank & Trust Company (“the Bank”), together referred to as “the Company” for purposes of the Notes to the Financial Statements.

Burke & Herbert Financial Services Corp.

(“Burke & Herbert”) was organized as a Virginia corporation on September 14, 2022, to serve as the holding company for Burke & Herbert Bank & Trust Company (“the Bank” and, together with Burke & Herbert, the “Company”).

Burke & Herbert commenced operations as a bank holding company on October 1, 2022, following a reorganization transaction in which it became the Bank’s holding company.

This transaction was treated as an internal reorganization as all shareholders of the Bank became shareholders of Burke & Herbert.

In September 2023, Burke & Herbert elected to be a financial holding company.

As a financial holding company, Burke & Herbert is subject to regulation and supervision by the Federal Reserve.

Burke & Herbert has no material operations and owns 100 % of the Bank.

was organized as a Virginia corporation in 2022 to serve as the holding company for the Bank.

Burke & Herbert became a bank holding company when it commenced operations on October 1, 2022, following a reorganization transaction in which it acquired control of the Bank under the Bank Holding Company Act of 1956 (“BHCA”).

This transaction was treated as an internal reorganization as all shareholders of the Bank became shareholders of the Company.

The Company has no material operations other than owning the Bank.

In September 2023, the Company elected to become a financial holding company under the BHCA.

As a financial holding company of a Virginia state bank, the Company is subject to regulation, supervision, and examination by the Board of Governors of the Federal Reserve System (the “Federal Reserve”) and the Bureau of Financial Institutions of the Virginia State Corporation Commission (the “Virginia BFI”).

The Bank is a Virginia chartered commercial bank that commenced operations in 1852.

The Bank is supervised and regulated by the Federal Deposit Insurance Corporation (the “FDIC”) and the Bureau of Financial Institutions of the Virginia State Corporation Commission (the “Virginia BFI”).

Merger with Summit Financial Group, Inc.

Effective on May 3, 2024 (the “Closing Date”), Burke & Herbert completed its previously announced merger with Summit Financial Group, Inc., a West Virginia corporation (“Summit”), pursuant to the Agreement and Plan of Reorganization and accompanying Plan of Merger dated August 24, 2023, between Burke & Herbert and Summit (the “Merger Agreement”).

Below is a description of the nature of the event as of the merger Closing Date.

Pursuant to the Merger Agreement, on the Closing Date, (i) Summit merged with and into Burke & Herbert, with Burke & Herbert continuing as the surviving corporation (the “Merger”), and (ii) immediately following the Merger, Summit Community Bank, Inc., a West Virginia chartered bank and a wholly-owned subsidiary of Summit (“SCB”), merged with and into the Bank, with the Bank as the surviving bank.

In the Merger, holders of Summit common stock outstanding at the effective time of the Merger received 0.5043 shares of Burke & Herbert common stock for each share of Summit common stock they owned, subject to the payment of cash in lieu of fractional shares.

The total aggregate consideration payable in the Merger was approximately 7,405,772 shares of Burke & Herbert Common Stock.

Additionally, each share of Summit’s 6.0 % Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series 2021 (the “Summit Series 2021 Preferred Stock”) issued and outstanding was converted into the right to receive a share of a newly created series of preferred stock, the Burke & Herbert Series 2021 Preferred Stock (the “Burke & Herbert Series 2021 Preferred Stock”).

Summit’s results of operations are included from the Closing Date.

The Bank became a member of the Federal Reserve System on December 31, 2024.

The Bank is subject to regulation, supervision, and examination by the Federal Reserve (through the Federal Reserve Bank of Richmond) and the Virginia BFI.

The Bank’s primary market area includes northern Virginia and West Virginia, and it has over 77 branches and commercial loan offices across Delaware, Kentucky, Maryland, Virginia, and West Virginia.

2 unchanged sentences

The Company’s loan portfolio includes commercial and consumer loans, a substantial portion of which are secured by real estate.

Merger with Summit Financial Group, Inc.

Effective on May 3, 2024 (the “Closing Date”), the Company completed its merger (the “M erger”) with Summit Financial Group, Inc., a West Virginia corporation (“Summit”), pursuant to the Agreement and Plan of Reorganization and accompanying Plan of Merger dated August 24, 2023 between the Company and Summit (the “Merger Agreement”).

Pursuant to the Merger Agreement, on the Closing Date, (i) Summit merged with and into the Company with the Company as the surviving entity, and (ii) immediately following the Merger, Summit Community Bank, Inc., a West Virginia chartered bank and wholly-owned subsidiary of Summit (“SCB”) merged with and into the Bank, with the Bank as the surviving bank.

In the Merger, holders of Summit common stock outstanding at the effective time of the Merger received 0.5043 shares of the Company’s Common Stock for each share of Summit common stock they owned, subject to the payment of cash in lieu of fractional shares.

The total aggregate consideration payable in the Merger was approximately 7,405,772 shares of the Company’s Common Stock.

Additionally, each share of the 6.0 % Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series 2021 of Summit (the “Summit Series 2021 Preferred Stock”) issued and outstanding was converted into the right to receive a share of a newly created series of preferred stock of the Company, the Burke & Herbert Series 2021 Preferred Stock (the “Burke & Herbert Series 2021 Preferred Stock”).

Summit’s results of operations are included from the Closing Date forward.

Basis of Presentation

4 unchanged sentences

They do not include all of the information and notes required by GAAP for complete financial statements.

As such, these unaudited financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ending December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 22, 2024, and as amended on April 12, 2024.

As such, these unaudited financial statements

Note 1— Nature of Business Activities and Significant Accounting Policies (continued)

should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ending December 31, 2024, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 17, 2025.

The consolidated financial statements include the accounts of the Company and the Bank (as its wholly-owned subsidiary).

All significant intercompany accounts and transactions between the Company and the Bank have been eliminated.

In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that

Note 1— Nature of Business Activities and Significant Accounting Policies (continued)

affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period.

In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of operations in these financial statements, have been made.

The results of operations for the three and nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for any other interim period or for the full year.

The results of operations for the three months ended March 31, 2025, are not necessarily indicative of the results to be expected for any other interim period or for the full year.

All December 31, 2024, amounts and disclosures included in this quarterly report were derived from the Company’s audited consolidated financial statements.

1 unchanged sentence

These reclassifications had no effect on prior year net income or on shareholders’ equity.

Purchased Credit Deteriorated (PCD) Loans

The Company has purchased loans, some of which have experienced more than insignificant credit deterioration since origination.

PCD loans are loans on nonaccrual status, are greater than 60 days past due at any time since loan origination or have a risk rating of special mention, substandard, doubtful, or loss.

PCD loans are recorded at the amount paid.

An allowance for credit losses is determined using the same methodology as other loans held for investment.

The initial allowance for credit losses determined on a collective basis is allocated to individual loans.

The sum of the loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis.

The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan.

Subsequent changes to the allowance for credit losses are recorded through credit loss expense.

Goodwill and Other Intangible Assets

Goodwill arises from business combinations and is determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date.

Goodwill and intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that an impairment test should be performed.

The Company has selected September 30 as the date to perform the annual impairment test.

Intangible assets with finite useful lives are amortized over their estimated useful lives to their estimated residual values.

Amortized intangibles must be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the long-lived asset (group) might not be recoverable.

An impairment loss related to intangible assets with finite useful lives is recognized if the carrying amount of the intangible asset is not recoverable and its carrying amount exceeds its fair value.

After the impairment loss is recognized, the adjusted carrying amount of the intangible asset shall be its new accounting basis.

Goodwill is the only intangible asset with an indefinite life on our balance sheet.

Other intangible assets consists of core deposit intangible assets arising from whole bank and branch acquisitions and is amortized using an accelerated method over their estimated useful lives of seven years .

Recently adopted accounting standards

In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updated (“ASU”) 2023-02, Investments—Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method .

These amendments allow reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits.

The ASU was effective for us January 1, 2024, and did not have a material impact on our consolidated financial statements.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions .

ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

The ASU was effective for us January 1, 2024, and did not have a material impact on our consolidated financial statements.

Pending adoption of new accounting standards

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) :

Improvements to Income Tax Disclosures .

The amendments in this ASU require an entity to disclose specific categories in the rate reconciliation and provide

Note 1— Nature of Business Activities and Significant Accounting Policies (continued)

additional information for reconciling items that meet a quantitative threshold, which is greater than five percent of the amount computed by multiplying pretax income by the entity’s applicable statutory rate, on an annual basis.

Additionally, the amendments in this ASU require an entity to disclose the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions that are equal to or greater than five percent of total income taxes paid (net of refunds received).

Lastly, the amendments in this ASU require an entity to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign.

This ASU is effective for annual periods beginning after December 15, 2024.

Newly issued not yet adopted accounting standards

In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40):

Reporting Comprehensive Income—Expense Disaggregation Disclosures.

This ASU seeks to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions.

The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The amendments should be applied on a prospective basis;

however, retrospective application is permitted.

We do not expect the adoption of ASU 2023-09 to have a material impact on our consolidated financial statements.

This ASU is not expected to have a material impact our consolidated financial statements.

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative .

This ASU incorporates certain SEC disclosure requirements into the FASB Accounting Standards Codification.

This ASU incorporates certain amendments to SEC disclosure requirements into the FASB Accounting Standards Codification.

The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations.

For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules.

For all other entities, the amendments will be effective two years later.

For all other entities, the effective date will be two years after the date of such removal.

However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective for any entity.

1 unchanged sentence

Note 2— Securities

The carrying amount of available-for-sale (“AFS”) securities and their approximate fair values at September 30, 2024, and December 31, 2023, are summarized as follows (in thousands):

September 30, 2024

The carrying amount of available-for-sale (“AFS”) securities and their approximate fair values at March 31, 2025, and December 31, 2024, are summarized as follows (in thousands):

March 31, 2025

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

9 unchanged sentences

Total $ 1,546,361 $ 1,492 $ 110,984 $ 1,436,869

Note 2— Securities (continued)

December 31, 2024

10 unchanged sentences

Total $ 1,549,589 $ 1,658 $ 118,876 $ 1,432,371

At September 30, 2024, and December 31, 2023, AFS securities with amortized costs of $ 1.2 billion and $ 826.5 million, respectively, and with estimated fair values of $ 1.1 billion and $ 742.5 million, respectively, were pledged to serve as collateral for secured borrowings, derivative exposures, or to secure public deposits as required or permitted by law.

The proceeds from sales, calls, and maturities of debt securities available-for-sale, including principal payments received, and the related gross gains and losses realized, for the nine months ended September 30, 2024, and September 30, 2023, were as follows (in thousands):

At March 31, 2025, and December 31, 2024, AFS securities with amortized costs of $ 1.2 billion and $ 1.2 billion, respectively, and with estimated fair values of $ 1.1 billion and $ 1.1 billion, respectively, were pledged to serve as collateral for secured borrowings, derivative exposures, or to secure public deposits as required or permitted by law.

The proceeds from sales, calls, and maturities of debt securities available-for-sale, including principal payments received, and the related gross gains and losses realized, for the three months ended March 31, 2025, and March 31, 2024, were as follows (in thousands):

Proceeds from Gross realized

Nine months ended September 30, Sales Calls and maturities Principal Payments Gains Losses

Three Months Ended March 31, Sales Calls and maturities Principal Payments Gains Losses

2025 $ — $ 10,867 $ 39,506 $ 1 $ —

2024 1,281 — 35,010 — —

The tax benefit (provision) related to these net realized gains and losses for September 30, 2024, and September 30, 2023, was ($ 128.7 ) thousand, and $ 23.5 thousand, respectively.

The maturities of AFS securities at September 30, 2024, were as follows (in thousands):

The tax benefit (provision) related to these net realized gains and losses for March 31, 2025, and March 31, 2024, was ($ 0.2 ) thousand, and zero , respectively.

The maturities of AFS securities at March 31, 2025, were as follows (in thousands):

(Expected maturities of securities not due at a single maturity date are based on average life at estimated prepayment speed.

Expected maturities may differ from contractual maturities because borrowers have the right to call or prepay some obligations with or without call or prepayment penalties).

September 30, 2024

Note 2— Securities (continued)

March 31, 2025

Amortized Cost

10 unchanged sentences

Total $ 94,717 $ 515,452 $ 558,838 $ 377,354 $ 1,546,361

Note 2— Securities (continued)

September 30, 2024

March 31, 2025

One Year or Less One to Five Years Five to Ten Years After Ten Years Total

9 unchanged sentences

Total $ 93,576 $ 488,946 $ 515,073 $ 339,274 $ 1,436,869

At September 30, 2024, and December 31, 2023, there were no holdings of securities of any one issuer, other than the U.S.

At March 31, 2025, and December 31, 2024, there were no holdings of securities of any one issuer, other than the U.S.

Government and its agencies, in any amount greater than 10% of shareholders’ equity.

The following table shows the gross unrealized losses and fair value of the Company’s securities with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2024, and December 31, 2023.

Note 2— Securities (continued)

AFS securities in a continuous unrealized loss position for less than twelve months and more than twelve months are as follows (in thousands):

September 30, 2024

March 31, 2025

Less Than Twelve Months More Than Twelve Months

10 unchanged sentences

Total $ 370,246 $ 8,477 $ 923,235 $ 102,507 $ 110,984

Note 2— Securities (continued)

December 31, 2024

18 unchanged sentences

If this assessment indicates that a credit loss exists, the present value of the expected cash flows of the security is compared to the amortized cost basis of the security.

If the present value of the cash flows expected to be collected is less than the amortized cost, an allowance for credit losses (“ACL”) is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis under the current expected credit loss (“CECL”) standard, and declines due to non-credit factors are recorded in accumulated other comprehensive income (“AOCI”), net of taxes.

Note 2— Securities (continued)

other comprehensive income (“AOCI”), net of taxes.

If a credit loss is recognized in earnings, subsequent improvements to the expectation of collectability will be recognized through the ACL.

If the fair value of the security increases above its amortized cost, the unrealized gain will be recorded in accumulated other comprehensive income, net of taxes, in the consolidated statements of financial condition.

Prior to implementation of the CECL standard, unrealized losses caused by a credit event would require the direct write-down of the AFS security through the other-than-temporary impairment approach.

The Company did no t record an ACL on the AFS securities as of September 30, 2024, or December 31, 2023.

If the fair value of the security increases above its amortized cost, the unrealized gain will be recorded in accumulated other comprehensive income, net of taxes, in the Consolidated Balance Sheets.

The Company did no t record an ACL on the AFS securities as of March 31, 2025, or December 31, 2024.

The Company considers the unrealized losses on the AFS securities to be related to fluctuations in market conditions, primarily interest rates, and not reflective of deterioration in credit.

The Company had 383 securities in an unrealized loss position as of September 30, 2024.

The Company has evaluated AFS securities in an unrealized loss position for credit-related impairment at September 30, 2024, and concluded no impairment existed based on a combination of factors, which included:

The Company had 505 securities in an unrealized loss position as of March 31, 2025.

The Company has evaluated AFS securities in an unrealized loss position for credit-related impairment at March 31, 2025, and concluded no impairment existed based on a combination of factors, which included:

(1) the securities are of high credit quality, (2) unrealized losses are primarily the result of market volatility and increases in market interest rates, (3) the contractual terms of the investments do not permit the issuer(s) to settle the securities at a price less than the par value of each investment, (4) issuers continue to make timely principal and interest payments, and (5) the Company does not intend to sell any of the investments and the accounting standard of “more likely than not” has not been met for the Company to be required to sell any of the investments before recovery of its amortized cost basis.

As such, there was no ACL on AFS securities at September 30, 2024.

As such, there was no ACL on AFS securities at March 31, 2025.

Securities of U.S.

Treasury and Federal Agencies and Federal Agency Mortgage (Residential and Commercial) Backed Securities

At September 30, 2024, the unrealized losses associated with 11 U.S.

Treasuries and Government Agency securities, 14 Residential Mortgage Backed – Agency securities, and 14 Commercial Mortgage Backed – Agency securities were generally driven by changes in interest rates and not due to credit losses given the explicit or implicit guarantees provided

Note 2— Securities (continued)

Therefore, the Company has concluded that the unrealized losses for these securities do not require an ACL at September 30, 2024.

At March 31, 2025, the unrealized losses associated with 11 U.S.

Treasuries and Government Agency securities, 14 Residential Mortgage Backed – Agency securities, and 15 Commercial Mortgage Backed – Agency securities were generally driven by changes in interest rates and not due to credit losses given the explicit or implicit guarantees provided by the U.S.

Therefore, the Company has concluded that the unrealized losses for these securities do not require an ACL at March 31, 2025.

Securities of U.S.

States and Municipalities

At September 30, 2024, the unrealized losses associated with 212 State and Municipal securities were primarily caused by changes in interest rates and not the credit quality of the securities.

At March 31, 2025, the unrealized losses associated with 346 State and Municipal securities were primarily caused by changes in interest rates and not the credit quality of the securities.

These securities are investment grade and were generally underwritten in accordance with our own investment standards prior to the decision to purchase, without relying on a bond insurer’s guarantee in making the investment decision.

1 unchanged sentence

As a result, we expect to recover the entire amortized cost basis of these securities.

Therefore, the Company has concluded that the unrealized losses for these securities do not require an ACL at September 30, 2024.

Therefore, the Company has concluded that the unrealized losses for these securities do not require an ACL at March 31, 2025.

Residential & Commercial Mortgage Backed – Non-Agency Securities

At September 30, 2024, the unrealized losses associated with 69 Residential Mortgage Backed – Non-Agency securities and 30 Commercial Mortgage Backed – Non-Agency securities were generally driven by changes in interest rates, credit spreads, and projected collateral losses.

At March 31, 2025, the unrealized losses associated with 70 Residential Mortgage Backed – Non-Agency securities and 23 Commercial Mortgage Backed – Non-Agency securities were generally driven by changes in interest rates, credit spreads, and projected collateral losses.

We assess for credit impairment by estimating the present value of expected cash flows.

1 unchanged sentence

Based on our assessment of the expected credit losses and the credit enhancement level of the securities, we expect to recover the entire amortized cost of these securities.

Therefore, the Company has concluded that the unrealized losses for these securities do not require an ACL at September 30, 2024.

Therefore, the Company has concluded that the unrealized losses for these securities do not require an ACL at March 31, 2025.

Asset-Backed Securities

At September 30, 2024, the unrealized losses associated with 21 Asset-Backed securities were generally driven by changes in interest rates, credit spreads, and projected collateral losses.

At March 31, 2025, the unrealized losses associated with 18 Asset-Backed securities were generally driven by changes in interest rates, credit spreads, and projected collateral losses.

We assess for credit impairment by estimating the present value of expected cash flows.

1 unchanged sentence

Based on our assessment of the expected credit losses and the credit enhancement level of the securities, we expect to recover the entire amortized cost of these securities.

Therefore, the Company has concluded that the unrealized losses for these securities do not require an ACL at September 30, 2024.

Therefore, the Company has concluded that the unrealized losses for these securities do not require an ACL at March 31, 2025.

Other Securities

At September 30, 2024, the unrealized losses associated with 12 securities were primarily driven by interest rates and not the credit quality of the securities.

These investments were underwritten in accordance with our own investment standards prior to the decision to purchase, without relying on a bond insurer’s guarantee in making the investment decision.

At March 31, 2025, the unrealized losses associated with 8 securities were primarily driven by interest rates and not the credit quality of the securities.

These investments were underwritten in accordance with our own investment standards

Note 2— Securities (continued)

prior to the decision to purchase, without relying on a bond insurer’s guarantee in making the investment decision.

Based on our assessment of the expected credit losses, we expect to recover the entire amortized cost basis of the securities.

Therefore, the Company has concluded that the unrealized losses for these securities do not require an ACL at September 30, 2024.

Therefore, the Company has concluded that the unrealized losses for these securities do not require an ACL at March 31, 2025.

Restricted stock, at cost

The Company’s investment in Federal Home Loan Bank (“FHLB”) stock totaled $ 16.8 million and $ 5.9 million at September 30, 2024, and December 31, 2023, respectively.

FHLB stock is generally viewed as a long-term investment and as a restricted investment security, which is carried at cost, because there is no market for the stock other than the FHLB or member institutions.

Therefore, when evaluating FHLB stock for impairment, its value is based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value.

The Company does not consider this investment to be impaired at September 30, 2024, and no impairment has been recognized.

FHLB stock is included in a separate line item, Restricted stock, at cost on the Consolidated Balance Sheets and is not part of the Company’s AFS securities portfolio.

The Company’s Restricted stock line item on the Consolidated Balance Sheets also includes an investment in Community Bankers’ Bank, totaling $ 111 thousand at September 30, 2024, and $ 50 thousand at December 31, 2023, which is carried at cost and is not impaired at September 30, 2024.

The Company’s investment in Federal Home Loan Bank (“FHLB”) stock totaled $ 19.8 million and $ 18.2 million at March 31, 2025, and December 31, 2024, respectively.

The Company’s investment in Federal Reserve Bank stock totaled $ 14.8 million and $ 14.8 million at March 31, 2025, and December 31, 2024, respectively.

FHLB and Federal Reserve stock are generally viewed as long-term investments and as restricted investment securities, which are carried at cost, because there is no market for the stocks other than member institutions.

Therefore, when evaluating FHLB and Federal Reserve stock for impairment, their values are based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value.

The Company does not consider these investments to be impaired at March 31, 2025, and no impairment has been recognized.

FHLB stock and Federal Reserve stock are included in a separate line item, restricted stock, at cost on the Consolidated Balance Sheets and are not part of the Company’s AFS securities portfolio.

The Company’s restricted stock line item on the Consolidated Balance Sheets also includes an investment in Community Bankers’ Bank, totaling $ 111 thousand at March 31, 2025, and $ 111 thousand at December 31, 2024, which is carried at cost and is not impaired at March 31, 2025.

The Company also has other restricted investments including Independent Community Bancorp, Inc.

and WV Bankers Title which are included in restricted stock on the Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024.

Note 3— Loans

The Company’s loan portfolio segments, as reported in the tables below, include (i) commercial real estate, (ii) owner-occupied commercial real estate, (iii) acquisition, construction & development, (iv) commercial & industrial, (v) single family residential (1-4 units), and (vi) consumer non-real estate and other.

The risks associated with lending activities differ

Note 3— Loans (continued)

among the various loan segments and are subject to the impact of changes in interest rates, market conditions of collateral securing the loans, and general economic conditions.

The risks associated with lending activities differ among the various loan segments and are subject to the impact of changes in interest rates, market conditions of collateral securing the loans, and general economic conditions.

• Commercial real estate loans carry risk associated with either the net operating income generated from the lease of the real estate collateral or income generated from the sale of the collateral.

6 unchanged sentences

• Consumer non-real estate and other loans, which includes overdrafts, carry risk associated with the credit-worthiness of the borrower and the value of the collateral, if any.

Loan balances as of September 30, 2024, and December 31, 2023, by portfolio segment were as follows (in thousands):

September 30, 2024 December 31, 2023

Note 3— Loans (continued)

Loan balances as of March 31, 2025, and December 31, 2024, by portfolio segment were as follows (in thousands):

March 31, 2025 December 31, 2024

Commercial real estate $ 2,809,573 $ 2,637,802

7 unchanged sentences

Loans, net $ 5,579,754 $ 5,604,196

Net deferred loan fees included in the above loan categories totaled $ 3.4 million and $ 3.5 million at September 30, 2024, and December 31, 2023, respectively.

Net deferred loan fees included in the above loan categories totaled $ 4.2 million and $ 4.4 million at March 31, 2025, and December 31, 2024, respectively.

Note 4— Allowance for Credit Losses

1 unchanged sentence

The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables.

All information presented as of September 30, 2024, is in accordance with ASC 326.

All information presented as of March 31, 2025, is in accordance with ASC 326.

The Company’s ACL is calculated quarterly, with any adjustment recorded to the provision for credit losses in the Consolidated Statement of Income.

2 unchanged sentences

Loans that do not share similar risk characteristics are evaluated on an individual loan basis and are excluded from the collective evaluation for the ACL.

Loans identified to be individually evaluated under CECL include loans on non-accrual status and may include accruing loans that do not share similar risk characteristics to other accruing loans that are

Note 4— Allowance for Credit Losses (continued)

collectively evaluated on a loan pool basis.

A specific reserve analysis may be applied to the individually evaluated loans, which considers collateral value, an observable market price, or the present value of the expected future cash flows.

1 unchanged sentence

Based on management’s analysis, adjustments may be applied for additional factors impacting the risk of loss in the loan portfolio beyond the information that is used to calculate a reasonable and supportable forecast and a reversion period forecast on collectively evaluated loans.

Management may consider an additional or reduced reserve as warranted through qualitative risk factors based on the current and expected conditions as measured in supplemental information relative to the macroeconomic variable loss drivers used to calculate a reasonable and supportable forecast and a reversion period forecast.

Note 4— Allowance for Credit Losses (continued)

These qualitative risk factors considered by management are largely comparable to legacy factors prior to the adoption of CECL.

The following tables present the activity in the ACL for the three months and nine months ended September 30, 2024, and for the three months and nine months ended September 30, 2023, including the impact of the adoption of CECL for the nine months ended September 30, 2023, and the impact of the allowance established for PCD loans for the three months and nine months ended September 30, 2024, (in thousands).

Commercial real estate Owner-occupied commercial real estate Acquisition, construction & development Commercial & industrial Single family residential (1-4 units) Consumer non-real estate and other Unallocated Total

The following tables present the activity in the ACL three months ended March 31, 2025, and the three months ended March 31, 2024, (in thousands).

Three months ended

September 30, 2024

Balance, beginning of period $ 27,304 $ 5,040 $ 18,639 $ 4,768 $ 11,648 $ 618 $ — $ 68,017

Provision for (recapture of) credit losses ( 1,516 ) ( 1,073 ) 3,084 425 ( 1,006 ) 171 — 85

Charge-offs — — — ( 32 ) ( 67 ) ( 206 ) — ( 305 )

Recoveries 3 — — 9 1 7 — 20

Balance, end of period $ 25,791 $ 3,967 $ 21,723 $ 5,170 $ 10,576 $ 590 $ — $ 67,817

September 30, 2023

Balance, beginning of period $ 18,639 $ 719 $ 1,319 $ 612 $ 4,520 $ 110 $ — $ 25,919

Provision for (recapture of) credit losses 969 66 446 ( 95 ) ( 1,135 ) ( 51 ) — 200

Charge-offs — — — — — ( 13 ) — ( 13 )

Recoveries 4 — — — 1 — — 5

Balance, end of period $ 19,612 $ 785 $ 1,765 $ 517 $ 3,386 $ 46 $ — $ 26,111

Nine months ended

September 30, 2024

March 31, 2025

Balance, beginning of period $ 30,444 $ 3,261 $ 17,386 $ 6,633 $ 9,763 $ 553 $ 68,040

Allowance established for acquired PCD loans 7,503 1,931 5,968 5,684 2,608 216 — 23,910

Provision for (recapture of) credit losses 4,296 699 ( 5,912 ) 1,728 ( 308 ) 397 900

2 unchanged sentences

Balance, end of period $ 34,746 $ 3,273 $ 11,474 $ 8,272 $ 9,554 $ 434 $ 67,753

September 30, 2023

March 31, 2024

Balance, beginning of period $ 20,633 $ 783 $ 368 $ 645 $ 2,797 $ 75 $ 25,301

Impact of adoption CECL 2,686 ( 6 ) ( 640 ) 237 1,661 187 — 4,125

Provision for (recapture of) credit losses ( 1,659 ) ( 1 ) 306 179 474 31 ( 670 )

2 unchanged sentences

Balance, end of period $ 18,977 $ 782 $ 674 $ 824 $ 3,272 $ 77 $ 24,606

Note 4— Allowance for Credit Losses (continued)

The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality.

The following table presents the aging of the recorded investment in past due loans as of September 30, 2024, and December 31, 2023, by portfolio segment (in thousands):

September 30, 2024

The recorded investment in loans excludes accrued interest receivable due to immateriality.

The following table presents the aging of the recorded investment in past due loans as of March 31, 2025, and December 31, 2024, by portfolio segment (in thousands):

March 31, 2025

30 - 59 Days Past Due 60 - 89 Days Past Due 90 Days or More Past Due Total Past Due Current Loans Total Loans 90 Days Past Due & Still Accruing Non-accrual loans

18 unchanged sentences

current financial information, historical payment experience, credit documentation, public information, current economic information, and other factors.

The Company analyzes loans individually by classifying the loans by credit risk.

The Company analyzes loans individually by classifying the loans by

Note 4— Allowance for Credit Losses (continued)

The Company internally grades all commercial loans at the time of origination.

In addition, the Company performs an annual review on the top twenty-five non-homogenous commercial loan relationships as measured by total Company exposure to each borrower.

In addition, the Company performs an annual review on at least 50% of the Bank’s commercial credit exposure to each borrower.

The Company uses the following definitions for credit risk classifications:

10 unchanged sentences

While there may be the possibility of some recovery in the future, it is not practical or desirable to defer writing off these loans at the present time.

Note 4— Allowance for Credit Losses (continued)

The Company has a portfolio of smaller homogenous loans that are not individually risk rated that are included within the single family residential and consumer non-real estate and other loan classes.

Generally, these loan classes are rated as “Pass” unless these loans are on non-accrual and are then classified as substandard.

The following table presents the amortized cost basis of the loan portfolio, by year of origination, loan class, and credit quality, as of September 30, 2024, and December 31, 2023 (in thousands):

September 30, 2024

The following table presents the amortized cost basis of the loan portfolio, by year of origination, loan class, and credit quality, as of March 31, 2025, and December 31, 2024 (in thousands):

March 31, 2025

2025 2024 2023 2022 2021 Prior Revolving Loans Total

20 unchanged sentences

Doubtful — — — — — — 209 209

Note 4— Allowance for Credit Losses (continued)

Loss — — — — — — — —

16 unchanged sentences

Total $ 10,525 $ 88,310 $ 152,399 $ 198,022 $ 141,473 $ 401,303 $ 169,374 $ 1,161,406

Note 4— Allowance for Credit Losses (continued)

Year to date gross charge-offs $ — $ — $ — $ — $ — $ 19 $ 14 $ 33

25 unchanged sentences

Total $ 61,433 $ 72,571 $ 99,133 $ 128,439 $ 44,425 $ 175,827 $ 32,534 $ 614,362

Note 4— Allowance for Credit Losses (continued)

Year to date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

16 unchanged sentences

Single family residential (1-4 units)

Note 4— Allowance for Credit Losses (continued)

Pass $ 88,857 $ 152,438 $ 201,410 $ 142,719 $ 77,783 $ 332,025 $ 170,077 $ 1,165,309

15 unchanged sentences

Note 4— Allowance for Credit Losses (continued)

The following tables present information about collateral-dependent loans that were individually evaluated for purposes of determining the ACL as of September 30, 2024, and December 31, 2023 (in thousands):

September 30, 2024

The following tables present information about collateral-dependent loans that were individually evaluated for purposes of determining the ACL as of March 31, 2025, and December 31, 2024 (in thousands):

March 31, 2025

With Allowance With No Related Allowance Total

Amortized Cost Related Allowance Amortized Cost Amortized Cost Related Allowance

September 30, 2024

March 31, 2025

Commercial real estate $ 6,220 $ 5,034 $ 18,873 $ 25,093 $ 5,034

32 unchanged sentences

an individual loan.

For the three and nine months ended September 30, 2024, and for the year ended, December 31, 2023, the Company did not extend any modifications to borrowers experiencing financial difficulty that had a more-than-insignificant direct change in the contractual cash flows of the loan.

For the three months ended March 31, 2025, and for the year ended, December 31, 2024, the Company did not extend any modifications to borrowers experiencing financial difficulty that had a more-than-insignificant direct change in the contractual cash flows of the loan.

Other Real Estate Owned

Real estate owned activity was as follows for the nine months ended September 30, 2024, and for the year ended, December 31, 2023 (in thousands):

September 30, 2024 December 31, 2023

Real estate owned activity was as follows for the three months ended March 31, 2025, and for the year ended, December 31, 2024 (in thousands):

March 31, 2025 December 31, 2024

Beginning balance $ 2,783 $ —

5 unchanged sentences

Note 5— Deposits

The aggregate amount of time deposits that meet or exceed the FDIC Insurance Limit of $250,000, was approximately $ 265.1 million and $ 92.3 million on September 30, 2024, and December 31, 2023, respectively.

Brokered time deposits, which are fully insured, totaled $ 345.3 million and $ 389.0 million as of September 30, 2024, and December 31, 2023, respectively.

Time deposits through the Certificate of Deposit Account Registry Service (“CDARS”) program totaled $ 36.5 million at September 30, 2024, compared to $ 24.2 million at December 31, 2023.

At September 30, 2024, the scheduled maturities of time deposits for the remaining three months ending December 31, 2024, the following five years, and for the years thereafter, were as follows (in thousands):

As of September 30, 2024

Remaining three months ending, December 31, 2024 $ 450,696

The aggregate amount of time deposits that meet or exceed the FDIC Insurance Limit of $250,000, was approximately $ 292.3 million and $ 284.4 million on March 31, 2025, and December 31, 2024, respectively.

Brokered time deposits, which are fully insured, totaled $ 246.9 million and $ 244.8 million as of March 31, 2025, and December 31, 2024, respectively.

Time deposits through the Certificate of Deposit Account Registry Service (“CDARS”) program totaled $ 32.2 million at March 31, 2025, compared to $ 35.7 million at December 31, 2024.

The remaining maturities of time deposits as of March 31, 2025 are as follows (in thousands):

As of March 31, 2025

Remaining nine months ending, December 31, 2025 $ 987,610

Thereafter 6,922

Total $ 1,267,153

At September 30, 2024, and December 31, 2023, amounts included in time deposits for individual retirement accounts totaled $ 121.0 million and $ 28.5 million, respectively.

Overdrafts of $ 1.3 million and $ 110 thousand were reclassified to loans as of September 30, 2024, and the year ended December 31, 2023, respectively.

At March 31, 2025, and December 31, 2024, amounts included in time deposits for individual retirement accounts totaled $ 118.5 million and $ 118.9 million, respectively.

Overdrafts of $ 899.0 thousand and $ 1.6 million were reclassified to loans as of March 31, 2025, and the year ended December 31, 2024, respectively.

Note 6— Borrowed Funds

Short-term borrowings

The Company had borrowings of $ 320.2 million and $ 272.0 million at September 30, 2024, and December 31, 2023, respectively.

At September 30, 2024, the interest rate on this debt ranged from 4.87 % to 4.90 %.

The Company had borrowings of $ 300.0 million and $ 365.0 million at March 31, 2025, and December 31, 2024, respectively.

At March 31, 2025, the interest rate on this debt was 4.42 %.

At December 31, 2024, the interest rate on this debt ranged from 4.43 % to 4.57 %.

The average balance outstanding during the nine months ending September 30, 2024, and the year ending December 31, 2023, was $ 323.5 million and $ 293.9 million, respectively.

The average balance outstanding during the three months ending March 31, 2025, and the year ending December 31, 2024, was $ 332.6 million and $ 422.5 million, respectively.

The Company has a finance lease liability that is not included in these balances - see Note 7 - Leased Property for a discussion of this liability that is included in the accrued interest and other liabilities line in the Consolidated Balance Sheets.

Note 6— Borrowed Funds (continued)

The Company has available secured lines of credit with the Federal Reserve Bank of Richmond, such as the Borrower-In-Custody program, the FHLB of Atlanta, and unsecured federal funds lines of credit from correspondent banking relationships.

Through these sources, the Company has unused capacity of $ 2.4 billion in remaining borrowing capacity as of September 30, 2024.

Through these sources, the Company has unused capacity of $ 4.1 billion in remaining borrowing capacity as

Note 6— Borrowed Funds (continued)

of March 31, 2025.

The advances on credit lines are secured by both securities and loans.

The lendable collateral value of securities and loans pledged against available lines of credit as of September 30, 2024, and December 31, 2023, was $ 1.1 billion and $ 797.8 million, respectively.

As of September 30, 2024, all of the Company’s borrowings will mature within one calendar year.

The contractual maturities of these borrowings, which all occur within one year of the reporting date, are as follows as of September 30, 2024, (in thousands):

Due in 2024 $ 300,163

The lendable collateral value of securities and loans pledged against available lines of credit as of March 31, 2025, and December 31, 2024, was $ 3.1 billion and $ 3.1 billion, respectively.

As of March 31, 2025, all of the Company’s borrowings will mature within one calendar year.

The contractual maturities of these borrowings, which all occur within one year of the reporting date, are as follows as of March 31, 2025, (in thousands):

Due in 2025 $ 300,000

3 unchanged sentences

As part of the Merger, Burke & Herbert assumed $ 75.0 million of subordinated debentures, that were fair valued at $ 61.5 million with a $ 13.5 million discount being amortized into interest expense over the stated maturity.

As of September 30, 2024, the net balance was $ 63.7 million.

As of March 31, 2025, the net balance was $ 66.3 million.

The subordinated debt qualifies as Tier 2 capital under Federal Reserve Board guidelines, until the debt is within 5 years of its maturity;

5 unchanged sentences

Through the Merger, Burke & Herbert also assumed $ 30 million of subordinated debentures that were fair valued at $ 29.8 million with a $ 0.2 million discount being amortized into interest expense over the stated maturity.

As of September 30, 2024, the net balance was $ 29.8 million.

As of March 31, 2025, the net balance was $ 29.9 million.

The subordinated debt qualifies as Tier 2 capital under Federal Reserve Board guidelines, until the debt is within 5 years of its maturity;

12 unchanged sentences

The capital securities are subject to mandatory redemption in whole, or in part, upon repayment of the debentures.

We have entered into agreements which, taken

Note 6— Borrowed Funds (continued)

collectively, fully and unconditionally guarantee the capital securities subject to the terms of the guarantee.

We have entered into agreements which, taken collectively, fully and unconditionally guarantee the capital securities subject to the terms of the guarantee.

The debentures of each Capital Trust are redeemable by us quarterly.

The capital securities issued by SFG Capital Trust I, SFG Capital Trust II, and SFG Capital Trust III qualify as Tier 1 capital under the Federal Reserve guidelines.

In accordance with these Guidelines, trust preferred securities are limited to 25% of Tier 1 capital elements, net of goodwill.

In accordance with these Guidelines, trust preferred securities are limited to

Note 6— Borrowed Funds (continued)

25% of Tier 1 capital elements, net of goodwill.

The amount of trust preferred securities and certain other elements in excess of the limit can be included in Tier 2 capital.

The remaining maturities of subordinated debentures as of September 30, 2024, are as follows (in thousands):

The remaining maturities of subordinated debentures as of March 31, 2025, are as follows (in thousands):

Subordinated debentures

Subordinated debentures owed to unconsolidated subsidiary trusts

Remaining three months ending, December 31, 2024 $ — $ —

Remaining nine months ending, December 31, 2025 $ — $ —

Thereafter 105,000 19,589

3 unchanged sentences

The Company enters into operating leases with customers to lease vacant space in certain owned premises that is not being used by the Company.

These operating leases are typically payable in monthly installments with terms ranging from around two years to around sixteen years and may contain renewal options.

The components of lease income, which was included in non-interest expense on the Consolidated Statements of Income, were as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

These operating leases are typically payable in monthly installments with terms ranging from around one year to around ten years and may contain renewal options.

The components of lease income, which were included in non-interest expense on the Consolidated Statements of Income, were as follows (in thousands):

Three Months Ended March 31,

Operating lease income $ 693 $ 575

Total lease income $ 693 $ 575

The remaining maturities of operating lease receivables as of September 30, 2024, are as follows (in thousands):

The remaining maturities of operating lease receivables as of March 31, 2025, are as follows (in thousands):

Operating Leases

Remaining three months ending, December 31, 2024 $ 543

Remaining nine months ending, December 31, 2025 $ 2,009

Thereafter 2,833

6 unchanged sentences

The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.

Note 7— Leased Property (continued)

Lease liabilities represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows.

1 unchanged sentence

The right-of-use asset and lease liability are included in other assets and other liabilities, respectively, in the Consolidated Balance Sheets.

Note 7— Leased Property (continued)

Right-of-use assets and liabilities by lease type, and the associated balance sheet classifications are as follows (in thousands):

Balance Sheet Classification September 30, 2024 December 31, 2023

Balance Sheet Classification March 31, 2025 December 31, 2024

Right-of-use assets:

7 unchanged sentences

The components of total lease cost were as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Finance lease cost

3 unchanged sentences

Total lease cost $ 932 $ 733

The Company’s future undiscounted lease payments for finance and operating leases with initial terms of one year or more as of September 30, 2024, are as follows (in thousands):

The Company’s future undiscounted lease payments for finance and operating leases with initial terms of one year or more as of March 31, 2025, are as follows (in thousands):

Operating Leases Finance Leases

Remaining three months ending, December 31, 2024 $ 855 $ 83

Remaining nine months ending, December 31, 2025 $ 2,352 $ 251

2026 2,659 340

7 unchanged sentences

Note 7— Leased Property (continued)

The following table presents additional information about the Company’s leases as of September 30, 2024, and December 31, 2023.

Supplemental lease information (dollars in thousands) September 30, 2024 December 31, 2023

The following table presents additional information about the Company’s leases as of March 31, 2025, and December 31, 2024.

Supplemental lease information (dollars in thousands) March 31, 2025 December 31, 2024

Finance lease weighted average remaining lease term (years) 11.50 11.75

2 unchanged sentences

Operating lease weighted average discount rate 4.66 % 4.65 %

Nine Months Ended September 30,

Three Months Ended March 31,

Cash paid for amounts included in the measurement of lease liabilities 2025 2024

9 unchanged sentences

Failure to meet capital requirements can initiate regulatory action.

Under the Basel III Framework, an entity must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios.

The net unrealized gain or loss on AFS securities is not included in computing regulatory capital.

Management believes as of September 30, 2024, the Company and the Bank meet all capital adequacy requirements to which they are subject.

Management believes as of March 31, 2025, the Company and the Bank meet all capital adequacy requirements to which they are subject.

“Prompt corrective action” regulations provide five classifications:

2 unchanged sentences

If “undercapitalized”, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.

As of September 30, 2024, and December 31, 2023, the most recent notification from the FDIC categorized the Bank as “well capitalized” under the regulatory framework for “prompt corrective action”.

As of March 31, 2025, and December 31, 2024, the most recent notification from the FDIC categorized the Bank as “well capitalized” under the regulatory framework for “prompt corrective action.”

Note 8— Regulatory Capital Matters (continued)

The following table presents the actual and required capital amounts and ratios for the Company and the Bank at September 30, 2024, and December 31, 2023 (in thousands except for ratios):

The following table presents the actual and required capital amounts and ratios for the Company and the Bank at March 31, 2025, and December 31, 2024 (in thousands except for ratios):

Actual Minimum Required Capital - Basel III Minimum Required to be Well Capitalized

Amount Ratio Amount Ratio Amount Ratio

As of September 30, 2024

As of March 31, 2025

Total Capital to risk weighted assets

35 unchanged sentences

Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies.

As of September 30, 2024, approximately $ 234.7 million of retained earnings was available for dividend declaration consistent with the Company’s capital plan.

As of March 31, 2025, approximately $ 265.7 million of retained earnings was available for dividend declaration consistent with the Company’s capital plan.

Note 9— Derivatives

3 unchanged sentences

Cash flow hedges of interest rate risk

The Company’s objective in using interest rate derivatives is to add stability to interest income and to manage its exposure to interest rate movements.

The Company’s objective in using interest rate derivatives is to add stability to net interest income and to manage its exposure to interest rate movements.

To accomplish this objective, the Company primarily uses interest rate swaps, caps, and floors as part of its interest rate risk management strategy.

Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

Other interest rate swaps designated as cash flow hedges involve the receipt of fixed-rate amounts from a counterparty in exchange for the Company making variable-rate payments

As of March 31, 2025, such derivatives were

Note 9— Derivatives (continued)

over the life of the agreements without exchange of the underlying notional amount.

During 2024, such derivatives were used to hedge the variable cash flows associated with variable-rate assets.

used to hedge the variable cash flows associated with variable-rate liabilities.

As of March 31, 2024, such derivatives were used to hedge the variable cash flows associated with variable-rate debt and variable-rate securities.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in AOCI and subsequently reclassified into interest expense or interest income in the same period(s) during which the hedged transaction affects earnings.

During the next twelve months, the Company estimates that an additional $ 76.4 thousand will be reclassified as an increase to interest expense.

During the next twelve months, the Company estimates that an additional $ 360.0 thousand will be reclassified as a reduction to interest expense.

Derivatives not designated as hedges

2 unchanged sentences

These derivatives represent economic hedges and do not qualify as hedges for accounting.

These back-to-back interest rate swaps are reported at fair value in “other assets” and “other liabilities” in the Company’s Consolidated Balance Sheets.

These back-to-back interest rate swaps are reported at fair value in other assets and accrued interest and other liabilities in the Company’s Consolidated Balance Sheets.

Changes in the fair value of interest rate swaps are recorded in other non-interest expense and sum to zero because of offsetting terms of swaps with borrowers and swaps with dealer counterparties.

The table below presents the fair value of the Company’s derivative financial instruments, which includes accrued interest, as well as their classification on the Consolidated Balance Sheets as of September 30, 2024, and December 31, 2023 (in thousands):

September 30, 2024

The table below presents the fair value of the Company’s derivative financial instruments, which includes accrued interest, as well as their classification on the Consolidated Balance Sheets as of March 31, 2025, and December 31, 2024 (in thousands):

March 31, 2025

Balance Sheet Location Notional Amount Fair Value

Derivatives designated as hedges:

Interest rate swaps related to fair value hedges Other liabilities $ 300,000 $ 1,502

Interest rate swaps related to cash flow hedges Other assets $ 250,000 $ 514

Interest rate swaps related to cash flow hedges Other liabilities $ 50,000 $ 219

Derivatives not designated as hedges:

9 unchanged sentences

Interest rate swaps related to customer loans Other liabilities 99,899 1,823

The table below presents the effect of cash flow hedge accounting on AOCI for the three months ended September 30, 2024, and September 30, 2023 (in thousands):

Derivatives in Cash Flow

Hedging Relationships September 30, 2024 Location of Gain or (Loss) Reclassified from AOCI into Income September 30, 2024

Amount of Gain or (Loss) Recognized in OCI on Derivative

Amount of Gain or (Loss) Recognized in OCI Included Component Amount of Gain or (Loss) Recognized in OCI Excluded Component Amount of Gain or (Loss) Reclassified from AOCI into Income Amount of Gain or (Loss) Reclassified from AOCI into Income Included Component Amount of Gain or (Loss) Reclassified from AOCI into Income Excluded Component

Interest Rate Products $ — $ — $ — Interest Income $ — $ — $ —

Interest Rate Products ( 3,887 ) ( 3,887 ) — Interest Expense 1,080 1,080 —

Total $ ( 3,887 ) $ ( 3,887 ) $ — $ 1,080 $ 1,080 $ —

Note 9— Derivatives (continued)

Derivatives in Cash Flow

Hedging Relationships September 30, 2023 Location of Gain or (Loss) Reclassified from AOCI into Income September 30, 2023

Amount of Gain or (Loss) Recognized in OCI on Derivative

Interest Rate Products $ ( 48 ) $ ( 48 ) $ — Interest Income $ ( 473 ) $ ( 473 ) $ —

Total $ ( 48 ) $ ( 48 ) $ — $ ( 473 ) $ ( 473 ) $ —

The table below presents the effect of cash flow hedge accounting on AOCI for the nine months ended September 30, 2024, and September 30, 2023 (in thousands):

The table below presents the effect of cash flow hedge accounting on AOCI for the three months ended March 31, 2025, and March 31, 2024 (in thousands):

Derivatives in Cash Flow

Hedging Relationships September 30, 2024 Location of Gain or (Loss) Reclassified from AOCI into Income September 30, 2024

Hedging Relationships March 31, 2025 Location of Gain or (Loss) Reclassified from AOCI into Income March 31, 2025

Amount of Gain or (Loss) Recognized in OCI on Derivative

4 unchanged sentences

Derivatives in Cash Flow

Hedging Relationships September 30, 2023 Location of Gain or (Loss) Reclassified from AOCI into Income September 30, 2023

Hedging Relationships March 31, 2024 Location of Gain or (Loss) Reclassified from AOCI into Income March 31, 2024

Amount of Gain or (Loss) Recognized in OCI on Derivative

1 unchanged sentence

Interest Rate Products $ ( 17 ) $ ( 17 ) $ — Interest Income $ ( 483 ) $ ( 483 ) $ —

Interest Rate Products 3,385 3,385 — Interest Expense 36 36 —

Total $ 3,368 $ 3,368 $ — $ ( 447 ) $ ( 447 ) $ —

The table below presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income for the three and nine months ended September 30, 2024, and September 30, 2023 (in thousands).

Note 9— Derivatives (continued)

The table below presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income for the three months ended March 31, 2025, and March 31, 2024 (in thousands).

Location and Amount of Gain or (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships

Three months ended

September 30, 2024 September 30, 2023

March 31, 2025 March 31, 2024

Interest Income Interest Expense Interest Income Interest Expense

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Amount of gain or (loss) reclassified from AOCI into income - excluded component

Location and Amount of Gain or (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships

Nine months ended

September 30, 2024 September 30, 2023

Interest Income Interest Expense Interest Income Interest Expense

Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value or cash flow hedges are recorded.

$ ( 491 ) $ 2,113 $ ( 1,549 ) $ —

The effects of fair value and cash flow hedging:

Gain or (loss) on fair value hedging relationships in Subtopic 815-20

Interest contracts

Hedged items (1)

120 — ( 1,066 ) —

Derivatives designated as hedging instruments — — 776 —

Gain or (loss) on cash flow hedging relationships in Subtopic 815-20

Interest contracts

Amount of gain or (loss) reclassified from AOCI into income ( 611 ) 2,113 ( 1,259 ) —

Amount of gain or (loss) reclassified from AOCI into income as a result that a forecasted transaction is no longer probable of occurring — — — —

Amount of gain or (loss) reclassified from AOCI into income - included component

( 611 ) 2,113 ( 1,259 ) —

Amount of gain or (loss) reclassified from AOCI into income - excluded component

(1) The Company voluntarily discontinued a fair value hedging relationship and these amounts include the gain or (loss) and the hedging adjustment on a voluntary discontinued hedging relationship.

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Credit-risk-related Contingent Features

As of September 30, 2024, the Company has no derivatives in a net liability position that would require the posting of collateral.

As of March 31, 2025, the fair value of derivatives in a liability position, which includes accrued interest but excludes any adjustment for non-performance risk related to these agreements, was $ 0.2 million.

As of March 31, 2024, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for non-performance risk related to these agreements, was $ 0.5 million.

As of March 31, 2025 and as of March 31, 2024 , the Company has posted the full amount of collateral related to these agreements.

Note 10— Commitments and Contingencies

6 unchanged sentences

Since many of our commitments to extend credit may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash flow requirements.

A summary of the contractual amounts of the Company’s financial instruments outstanding at September 30, 2024, and December 31, 2023, is as follows (in thousands):

September 30, 2024 December 31, 2023

A summary of the contractual amounts of the Company’s financial instruments outstanding at March 31, 2025, and December 31, 2024, is as follows (in thousands):

March 31, 2025 December 31, 2024

Commitments to extend credit $ 1,021,447 $ 969,317

5 unchanged sentences

Allowance for credit losses - off-balance-sheet credit exposures

The Company recorded a provision for credit losses on unfunded commitments of $ 62.0 thousand and $ 3.9 million for the three and nine months ended September 30, 2024.

The Company recorded a provision for credit losses on unfunded commitments of $ 35.0 thousand and a recapture of $ 69.8 thousand for the three and nine months ended September 30, 2023.

The ACL on off-balance-sheet credit totaled $ 4.1 million and $ 254.2 thousand as of September 30, 2024 and December 31, 2023, and is included in accrued interest and other liabilities on the accompanying Consolidated Balance Sheets.

The Company recorded a recapture of credit losses on unfunded commitments of $ 398.8 thousand and zero provision for credit losses on unfunded commitments for the three months ended March 31, 2025 and March 31, 2024, respectively.

The ACL on off-balance-sheet credit totaled $ 3.6 million and $ 4.0 million as of March 31, 2025, and December 31, 2024, and is included in accrued interest and other liabilities on the accompanying Consolidated Balance Sheets.

The Company is a party to litigation, claims, and proceedings arising in the normal course of business that are ordinary and routine to the nature of the Company’s business and operations.

Management, after consultation with legal counsel, believes that the liabilities, if any, arising from any currently pending or threatened litigation, claims, or proceedings will not be material to the Company’s financial position.

Note 11— Fair Value Measurements

18 unchanged sentences

Equity investments are recorded at fair value on a recurring basis, with changes in fair value reported in net income.

Through the Merger, at September 30, 2024, we acquired an investment in an S&P 500 index mutual fund that is actively traded on an exchange, and we classify it as Level 1.

Through the Merger, at March 31, 2025, we acquired an investment in an S&P 500 index mutual fund that is traded on an exchange, and we classify it as Level 2.

Through the Merger, we acquired perpetual preferred stock of a bank holding company issued in October 2022 in a private offering.

3 unchanged sentences

Equity securities without readily determinable fair values are carried at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment.

Such equity securities are included in Equity Investments on the accompanying consolidated balance sheets.

Such equity securities are included in other assets on the accompanying Consolidated Balance Sheets.

The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2).

8 unchanged sentences

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

Fair Value Measurements at September 30, 2024, Using:

Fair Value Measurements at March 31, 2025, Using:

Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs

31 unchanged sentences

Loans held-for-sale, at fair value $ — $ 2,331 $ — $ 2,331

Equity investments $ — $ 12,407 $ — $ 12,407

Derivatives $ — $ 3,191 $ — $ 3,191

1 unchanged sentence

Derivatives $ — $ 1,988 $ — $ 1,988

Note 11— Fair Value Measurements (continued)

The following describes the valuation techniques used by the Company to measure certain assets recorded at fair value on a non-recurring basis in the financial statements:

1 unchanged sentence

Loans for which the borrower is experiencing financial difficulty and repayment is dependent upon the operation or sale of collateral, are considered collateral-dependent.

For collateral-dependent loans, the fair value is measured based on the value

Note 11— Fair Value Measurements (continued)

of the collateral securing the loans, less estimated costs of disposal.

For collateral-dependent loans, the fair value is measured based on the value of the collateral securing the loans, less estimated costs of disposal.

Collateral may be in the form of real estate or business assets, including equipment, inventory, and accounts receivable.

1 unchanged sentence

The appraisals of the collateral supporting collateral-dependent loans may utilize a single valuation approach or a combination of approaches, including comparable sales and the income approach.

Any fair value adjustments are recorded in the period incurred as provision for credit losses on the Consolidated Statements of Income.

Any fair value adjustments are recorded in the period incurred as provision for (recapture of) credit losses on the Consolidated Statements of Income.

Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business.

8 unchanged sentences

Assets that were measured at fair value on a non-recurring basis during the period are summarized below (in thousands):

Fair Value Measurements at September 30, 2024, Using:

Fair Value Measurements at March 31, 2025, Using:

Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs

8 unchanged sentences

Other real estate owned — — 2,625 2,625

Note 11— Fair Value Measurements (continued)

Fair Value Measurements at December 31, 2024, Using:

9 unchanged sentences

Other real estate owned — — 2,783 2,783

Note 11— Fair Value Measurements (continued)

The following table presents quantitative information about Level 3 Fair Value Measurements for assets measured at fair value on a non-recurring basis at September 30, 2024, and December 31, 2023 (in thousands except for percentages):

The following table presents quantitative information about Level 3 Fair Value Measurements for assets measured at fair value on a non-recurring basis at March 31, 2025, and December 31, 2024 (in thousands except for percentages):

Description Fair Value Valuation Techniques Unobservable Inputs Range

September 30, 2024

March 31, 2025

Collateral dependent loans $ 1,418 Appraisal of collateral Management adjustments (e.g., liquidity, selling costs, etc.) 5.0 % to 20.0 % for liquidity, 6.0 % to 8.0 % for selling costs

2 unchanged sentences

Collateral dependent loans $ 4,021 Appraisal of collateral Management adjustments (e.g., liquidity, selling costs, etc.) 5.0 % to 20.0 % for liquidity, 6.0 % to 8.0 % for selling costs

Other real estate owned 2,783 Appraisal of collateral Management adjustments (e.g., liquidity, selling costs, etc.) 5.0 % to 20.0 % for liquidity, 6.0 % to 8.0 % for selling costs

Fair value of financial instruments

The carrying amounts and estimated fair values of financial instruments not carried at fair value, at September 30, 2024, and December 31, 2023, were as follows (in thousands):

Fair Value Measurements at September 30, 2024, Using:

The carrying amounts and estimated fair values of financial instruments not carried at fair value, at March 31, 2025, and December 31, 2024, were as follows (in thousands):

Fair Value Measurements at March 31, 2025, Using:

Carrying Amount Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs

12 unchanged sentences

Accrued interest 6,075 — 6,075 — 6,075

Note 11— Fair Value Measurements (continued)

Fair Value Measurements at December 31, 2024, Using:

10 unchanged sentences

Short-term borrowings 365,000 — 364,985 — 364,985

Subordinated debentures, net 94,872 — 91,760 — 91,760

Subordinated debentures owed to unconsolidated subsidiary trusts 17,013 — 14,587 — 14,587

Accrued interest 6,157 — 6,157 — 6,157

Note 12— Accumulated Other Comprehensive Income (Loss)

The following table presents changes in accumulated other comprehensive income (loss) by component, net of tax, for the three and nine months ended September 30, 2024, and September 30, 2023 (in thousands):

Three months ended September 30, 2024

Gains and Losses on Cash Flow Hedges Unrealized Gains and Losses on Available-for-Sale Securities Defined Benefit Pension Items Accumulated Other Comprehensive Income

Beginning Balance $ 2,730 $ ( 97,415 ) $ ( 5,745 ) $ ( 100,430 )

Net unrealized gains (losses) ( 3,071 ) 28,628 — 25,557

net realized (gains) losses reclassified to earnings ( 853 ) ( 32 ) — ( 885 )

Net change in pension plan benefits — — — —

Ending Balance $ ( 1,194 ) $ ( 68,819 ) $ ( 5,745 ) $ ( 75,758 )

Three months ended September 30, 2023

Gains and Losses on Cash Flow Hedges Unrealized Gains and Losses on Available-for-Sale Securities Defined Benefit Pension Items Accumulated Other Comprehensive Income

Beginning Balance $ ( 1,196 ) $ ( 117,950 ) $ ( 7,031 ) $ ( 126,177 )

Net unrealized gains (losses) ( 38 ) ( 20,285 ) — ( 20,323 )

net realized (gains) losses reclassified to earnings 373 ( 32 ) — 341

Net change in pension plan benefits — — — —

Ending Balance $ ( 861 ) $ ( 138,267 ) $ ( 7,031 ) $ ( 146,159 )

Nine months ended September 30, 2024

The following table presents changes in accumulated other comprehensive income (loss) by component, net of tax, for the three months ended March 31, 2025, and March 31, 2024 (in thousands):

Three months ended March 31, 2025

Gains and Losses on Cash Flow Hedges Unrealized Gains and Losses on Available-for-Sale Securities Defined Benefit Pension Items Accumulated Other Comprehensive Income

4 unchanged sentences

Ending Balance $ 951 $ ( 84,399 ) $ ( 4,576 ) $ ( 88,024 )

Nine months ended September 30, 2023

Three months ended March 31, 2024

Gains and Losses on Cash Flow Hedges Unrealized Gains and Losses on Available-for-Sale Securities Defined Benefit Pension Items Accumulated Other Comprehensive Income

5 unchanged sentences

Note 12— Accumulated Other Comprehensive Income (Loss) (continued)

The following table presents amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2024, and September 30, 2023 (in thousands).

The following table presents amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three months ended March 31, 2025, and March 31, 2024 (in thousands).

Details about Accumulated Other Comprehensive Income Components Amount Reclassified From Accumulated Other Comprehensive Income Affected Line Item in the Statements of Income

Three months ended Nine months ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Three months ended

March 31, 2025 March 31, 2024

Cash flow hedges:

10 unchanged sentences

Note 13— Other Operating Expense

Other operating expense from the Consolidated Statements of Income for the three and nine months ended September 30, 2024, and September 30, 2023, is as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

FDIC assessment $ 1,037 $ 463 $ 2,500 $ 1,496

Other operating expense from the Consolidated Statements of Income for the three months ended March 31, 2025, and March 31, 2024, is as follows (in thousands):

Three Months Ended March 31,

FDIC & other regulatory assessments $ 914 $ 516

Historic tax credit amortization 435 632

11 unchanged sentences

Total $ 15,458 $ 6,463

The Company incurred Merger-related expenses of $ 11.3 million for the nine months ended September 30, 2024, including $ 1.8 million of which were incurred during the three months ended September 30, 2024.

The Company incurred Merger-related expenses of zero and $ 663.0 thousand for the three months ended March 31, 2025 and March 31, 2024, respectively.

These expenses are included in the consultant fees, audit fees, legal expense, donation, and other line items detailed in other operating expenses.

1 unchanged sentence

The Company has a share-based incentive plan described below that allows it to offer a variety of equity compensation awards subject to approval.

Total compensation cost that has been charged against income for the share-based awards granted was $ 566.9 thousand and $ 610.1 thousand for the three months ended September 30, 2024, and September 30, 2023, respectively.

The total income tax benefit was $ 119.0 thousand and $ 128.1 thousand for the three months ended September 30, 2024, and September 30, 2023, respectively.

Total compensation cost that has been charged against income for the share-based awards granted was $ 2.0 million and $ 1.8 million for the nine months ended September 30, 2024, and September 30, 2023, respectively.

The total income tax benefit was $ 410.5 thousand and $ 377.6 thousand for the nine months ended September 30, 2024, and September 30, 2023, respectively.

Total compensation cost that has been charged against income for the share-based awards

Note 14— Share-Based Compensation (continued)

granted was $ 1.3 million and $ 590.5 thousand for the three months ended March 31, 2025, and March 31, 2024, respectively.

The total income tax benefit was $ 264.7 thousand and $ 124.0 thousand for the three months ended March 31, 2025, and March 31, 2024, respectively.

2019 Stock Incentive Plan

In 2019, the Company’s Stock Incentive Plan (“2019 SIP”) was approved by the Bank’s Board of Directors.

In 2019, the Company’s Stock Incentive Plan (“2019 SIP”) was approved by the Bank’s Board of Directors (the “Bank Board).

The 2019 SIP provides for the issuance of share-based awards to directors and employees of the Company.

6 unchanged sentences

2023 Stock Incentive Plan

In 2023, a new stock incentive plan (“2023 SIP”) was approved by the Company’s Board of Directors and shareholders.

Upon the 2023 SIP’s shareholder approval date of March 30, 2023, no further share-based awards will be issued under the 2019 SIP.

In 2023, a new stock incentive plan (“2023 SIP”) was approved by the Company’s Board of Directors (the “Board”) and shareholders.

Upon the plan’s shareholder approval date of March 30, 2023, no further share-based awards will be issued under the 2019 SIP.

The 2023 SIP provides for the issuance of share-based awards to directors and employees of the Company.

The 2023 SIP authorized the issuance of 250,000 shares, subject to an annual increase in available shares.

A total of 64,365 and 24,705 shares were issued during the nine months ended September 30, 2024, and September 30, 2023, respectively.

The 2023 SIP authorized the issuance of 250,000 shares, subject to an annual increase in available shares and shares and shares recycled from the 2019 SIP that were cancelled.

Based on our shares outstanding as of March 31, 2025, and awards that were recycled from the 2019 SIP, the total shares authorized for issuance under the plan as of March 31, 2025 was 324,887 .

A total of 77,441 and zero shares were issued during the three months ended March 31, 2025, and March 31, 2024, respectively.

For time-based RSUs, the fair value was determined by using the closing stock price on the date prior to the grant date.

3 unchanged sentences

If the conditions are achieved, the grant recipient will receive 100 % of the units granted as these awards do not provide for a multiplier effect.

The performance/market targets are determined by the Board of Directors.

The fair value for performance-based RSU awards was determined by using a Monte Carlo simulation analysis to estimate the achievement of the market capitalization target determined by the Board of Directors.

The performance/market targets are determined by the Board.

The fair value for performance-based RSU awards was determined by using a Monte Carlo simulation analysis to estimate the achievement of the market capitalization target determined by the Board.

The Monte Carlo simulation analysis required the following inputs:

5 unchanged sentences

The dividend yield assumption was based on historical and anticipated dividend payouts.

Note 14— Share-Based Compensation (continued)

The following is a summary of all the Company’s RSU awards issued under both the 2019 SIP and 2023 SIP:

4 unchanged sentences

Forfeited — —

Non-vested at September 30, 2024 99,830 $ 55.65

As of September 30, 2024, there was $ 3.6 million of total unrecognized compensation costs related to non-vested shares granted under both the 2019 SIP and 2023 SIP.

Non-vested at March 31, 2025 202,283 $ 58.12

Note 14— Share-Based Compensation (continued)

As of March 31, 2025, there was $ 8.4 million of total unrecognized compensation costs related to non-vested shares granted under both the 2019 SIP and 2023 SIP.

The cost is expected to be recognized over a weighted average period of 1.57 years.

2023 Employee Stock Purchase Plan

In 2023, a new employee stock purchase plan (“2023 ESPP”) was approved by the Company’s Board of Directors and shareholders.

Upon the 2023 ESPP’s shareholder approval date of March 30, 2023, the 2023 ESPP reserved 250,000 shares of common stock for issuance to employees.

At September 30, 2024, 237,943 shares were available to be issued.

In 2023, an employee stock purchase plan (“2023 ESPP”) was approved by the Board and shareholders.

Upon the 2023 ESPP’s shareholder approval date of March 30, 2023, the 2023 ESPP reserved 250,000 shares of common stock for issuance to employees, subject to an annual increase in reserved shares.

At March 31, 2025, 305,210 shares were available to be issued.

Whole shares are sold to participants in the 2023 ESPP at 85 % of the lower of the stock price at the beginning or end of each semi-annual offering period.

The first semi-annual offering period began on September 1, 2023, and the current semi-annual offering period began on September 1, 2024.

The first semi-annual offering period began on September 1, 2023, and the current semi-annual offering period began on March 1, 2025.

Eligible employees may purchase shares in an amount that does not exceed the lesser of the IRS limit of $25,000 or 15 % of their annual salary.

The following table presents information for the 2023 ESPP at the end of September 30, 2024:

September 30, 2024

The following table presents information for the 2023 ESPP for the three months ended March 31, 2025:

March 31, 2025

Shares purchased 7,020

1 unchanged sentence

Compensation expense recognized (in 000's) $ 43.9

Stock Appreciation Rights (“SAR”)

Stock Appreciation Rights (“SARs”)

Upon completion of the Merger and as a part of the Merger Agreement, Burke & Herbert assumed SAR awards that had been issued to existing employees that would continue with the same terms and conditions adjusted for the exchange ratio of 0.5043 .

11 unchanged sentences

4.77 7.20 8.77

A summary of SAR and option activity during the nine months ended September 30, 2024, is as follows:

Note 14— Share-Based Compensation (continued)

A summary of SAR and option activity during the three months ended March 31, 2025, is as follows:

Weighted Average

Dollars in thousands, expect per share information SARs

Aggregate Fair Value Remaining Contractual Term (Yrs.) Exercise Price

Aggregate Intrinsic Value

Remaining Contractual Term (Yrs.) Exercise Price

Outstanding, December 31, 2024 223,873 $ 2,057 5.44 $ 46.87

3 unchanged sentences

Expired — — — —

Outstanding, September 30, 2024 233,020 $ 3,763 5.61 $ 46.34

Outstanding, March 31, 2025 223,613 $ 2,048 5.20 $ 46.90

Exercisable SARs:

At September 30, 2024 193,613 $ 3,159 5.21 $ 45.79

The total fair value of SARs exercised was $ 1.1 million during the nine months ended September 30, 2024.

The total fair value of SARs vested was $ 47.1 thousand during the nine months ended September 30, 2024.

As of September 30, 2024, there was $ 583.2 thousand of total unrecognized compensation costs related to non-vested SARs acquired through the Merger.

At March 31, 2025 188,244 $ 1,798 4.86 $ 46.56

The total fair value of SARs exercised was $ 7.5 thousand during the three months ended March 31, 2025.

The total fair value of SARs vested was $ 78.0 thousand during the three months ended March 31, 2025.

As of March 31, 2025, there was $ 508.1 thousand of total unrecognized compensation costs related to non-vested SARs acquired through the Merger.

The cost is expected to be recognized over a weighted average period of 2.38 years.

5 unchanged sentences

Dilutive potential common stock has no effect on income available to common shareholders.

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Net income applicable to common shares (in thousands) $ 26,976 $ 5,212

4 unchanged sentences

Diluted earnings per common share 1.80 0.69

For the three months ended September 30, 2024, and the nine months ended September 30, 2024, the options effect of dilutive shares is anti-dilutive and not considered in calculating diluted EPS.

Stock awards equivalent to 27,418 and 1,368 shares of common stock were not considered in computing diluted earnings per common share for the three months ended September 30, 2024, and September 30, 2023, respectively, because they are antidilutive.

Stock awards equivalent to 51,094 and zero shares of common stock are not considered in computing diluted earnings per share for the nine months ended September 30, 2024, and September 30, 2023, respectively, because they are antidilutive.

Stock awards equivalent to 41,553 and zero shares of common stock were not considered in computing diluted earnings per common share for the three months ended March 31, 2025, and March 31, 2024, respectively, because they are antidilutive.

Note 16— Business Combination

Effective on May 3, 2024, Burke & Herbert completed the Merger with Summit, pursuant to the Merger Agreement.

Note 16— Business Combination (continued)

1 unchanged sentence

Additionally, each share of Summit’s 6.0 % Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series 2021 issued and outstanding was converted into the right to receive a share of Burke & Herbert Series 2021 Preferred Stock.

Summit’s results of operations from May 3, 2024, were included in the Company’s results beginning with reporting as of June 30, 2024.

Net interest income and pre-tax net income for Summit were estimated to be $ 63.0 million and $ 68.5 million, respectively, since the date of the acquisition through September 30, 2024, and are included in the Company’s Consolidated Statement of Income.

Pre-tax net income for Summit only includes income and expense that are still being recorded on Summit’s core operating system.

As the Company is merging data and processes, certain legacy Summit expenses, including occupancy and salaries, are now merged within the Company’s core system.

Merger-related costs of $ 27.5 million are included in non-interest expense in the Company’s income statement for the nine months ended, September 30, 2024.

A portion of these Merger-related costs is captured in Other Operating Non-Interest Expense as further description in Note 13 - Other Operating Expense and an additional $ 16.3 million of such Merger-related costs is captured in Salaries and Wages, Pensions and Other Employee Benefits, Occupancy, and Equipment rentals, depreciation and maintenance.

These costs captured in those line items represent change-in-control payments, acceleration of benefit due to the change-in-control, software breakage, and other lease breakage fees.

The fair value of the common shares issued as part of the consideration paid for Summit was determined in the basis of the closing price of the Company’s common shares on the date of completion of the Merger.

We accounted for the Merger using the acquisition method of accounting in accordance with ASC 805, Business Combinations, and accordingly, the assets and liabilities of Summit were recorded at their respective fair values on the date of completion of the Merger.

The fair values of assets and liabilities are preliminary and subject to refinement for up to one year after the acquisition date as additional information relative to the acquisition date fair values becomes available.

We recognized preliminary goodwill of $ 32.8 million in connection with the acquisition, which is not amortized for financial reporting purposes, but is subject to annual impairment testing.

We recognized goodwill of $ 32.8 million in connection with the acquisition, which is not amortized for financial reporting purposes, but is subject to annual impairment testing.

The goodwill arising from the transaction is no t deductible for tax purposes and consisted largely of synergies and the cost savings resulting from the combining of the operations of the companies.

The fair values of assets and liabilities are subject to refinement for up to one year after the acquisition date if any additional information relative to the acquisition date fair values becomes available.

The following table summarizes adjustments to goodwill subsequent to December 31, 2024 (in thousands):

Balance at December 31, 2024 $ 32,783

Adjustment to goodwill acquired in conjunction with the acquisition of Summit 59

Balance at March 31, 2025 $ 32,842

The adjustment to goodwill resulted in additional review of deferred tax asset estimates that were established during the Merger.

The core deposit intangible represents the value of long-term deposit relationships acquired in this transaction and will be amortized over an estimated weighted average life of 7 years using an accelerated method which approximates the estimated run-off of the acquired deposits.

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The gross contractual amounts receivable relating to the purchased financial assets with credit deterioration was $ 442.3 million.

The Company estimates, on the date of the acquisition, that $ 23.9 million of the contractual cash flows specific to the purchased financial assets with credit deterioration will not be collected.

The following table details the total consideration paid for Summit on May 3, 2024, the fair values of the assets acquired and liabilities assumed and the resulting preliminary goodwill at the acquisition date.

After the Merger, all of the securities, held-to-maturity, were reclassified as available-for-sale.

The following table details the total consideration paid for Summit on May 3, 2024, the fair values of the assets acquired and liabilities assumed and the resulting goodwill at the acquisition date.

Note 16— Business Combination (continued)

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Fully diluted transaction value $ 397,445

Preliminary Goodwill $ 32,783

Goodwill $ 32,842

Note 16— Business Combination (continued)

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Total identifiable net assets 452,401 ( 87,798 ) 364,603

Preliminary Goodwill $ 32,783

Post Merger, all of the securities, held-to-maturity were reclassified as available-for-sale.

The following table presents supplemental pro forma information as if the Merger had occurred on January 1, 2023.

The unaudited pro forma information includes adjustments for interest income on loans and securities acquired, amortization of intangibles arising from the transaction, depreciation expense on property acquired, interest expense on deposits acquired, and the related income tax effects.

The pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transaction been effected on the assumed dates.

Three Months Ended September 30, Nine Months Ended September 30,

($ in thousands) 2024 2023 2024 2023

Net Interest Income $ 69,405 $ 74,905 $ 210,377 $ 219,460

Net Income 25,001 24,960 76,669 29,205

Goodwill $ 32,842

Note 17— Goodwill and Other Intangible Assets

The following table presents the change in goodwill for the three and nine months ended September 30, 2024, and September 30, 2023, (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

The following table presents the change in goodwill for the three months ended March 31, 2025, and March 31, 2024, (in thousands):

Three Months Ended March 31,

Beginning of period $ 32,783 $ —

Acquired goodwill — —

Goodwill adjustment 59 —

Impairment — —

End of period $ 32,842 $ —

During the nine months ended, September 30, 2024, the Company recorded $ 32.8 million of preliminary goodwill associated with the acquisition of Summit.

During the year ended December 31, 2024, the Company recorded $ 32.8 million of goodwill associated with the acquisition of Summit.

See Note 16 - Business Combination to the consolidated financial statements for additional detail regarding this transaction.

1 unchanged sentence

Other intangible assets consist of the core deposit intangible which is being amortized on an accelerated basis over its estimated useful life of 7 years.

During the nine months ended, September 30, 2024, the Company recorded $ 68.8 million of core deposit intangibles associated with the acquisition of Summit.

The gross carrying amounts and accumulated amortization of other intangible assets for the nine months ended September 30, 2024, were as follows (in thousands):

Nine Months Ended September 30,

During the year ended December 31, 2024, the Company recorded $ 68.8 million of core deposit intangibles associated with the acquisition of Summit.

The gross carrying amounts and accumulated amortization of other intangible assets for the three months ended March 31, 2025, and March 31, 2024, were as follows (in thousands):

Three Months Ended March 31,

Beginning of period $ 57,300 $ —

Core deposit intangible acquired — —

Accumulated amortization ( 7,162 )

Amortization ( 4,298 ) —

Impairment — —

Total core deposit intangible $ 53,002 $ —

The Company reviews other intangible assets for possible impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.

Total amortization expense associated with intangible assets was $ 7.2 million for the nine months ended September 30, 2024.

Total amortization expense associated with intangible assets was $ 4.3 million for the three months ended March 31, 2025.

Estimated amortization expense for future years is as follows (in thousands):

Estimated Amortization

Remaining three months ending, December 31, 2024 $ 4,298

Remaining nine months ending, December 31, 2025 $ 11,255

Thereafter 4,093

Total $ 53,002

Note 18— Segment Information

Segment performance is evaluated using consolidated net income.

The Company operates in one segment – Community Banking and the financial performance of this one segment is used to make resource allocations and performance decisions.

The Company’s Chief Executive Officer is in charge of allocating the Company’s resources and assessing performance, and has been identified as the chief operating decision maker.

While the chief decision-maker monitors the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide basis.

Individual operating results are not reviewed by senior management to make resource allocation or performance decisions.

Therefore, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements