What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-03-17 · 131 added, 115 removed, 669 unchanged (27% of the section changed)

32 unchanged sentences

Merger with Summit Financial Group, Inc.

Effective on the Closing Date, the Company completed the M erger with Summit, pursuant to the August 24, 2023 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, 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 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 Common Stock.

Additionally, each share of the Summit Series 2021 Preferred Stock issued and outstanding was converted into the right to receive a share of the newly created Burke & Herbert Series 2021 Preferred Stock.

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

The impact of this transaction, where material, is discussed in the applicable sections of this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

On May 3, 2024, the Company completed its merger with Summit, pursuant to the Agreement and Plan of Reorganization and accompanying Plan of Merger dated August 24, 2023 between the Company and Summit.

Pending Merger with LINKBANCORP, Inc.

On December 18, 2025, the Company and LNKB entered into the Merger Agreement, which provides that, upon the terms and subject to the conditions set forth therein, LNKB will merge with and into the Company, with the Company as the surviving corporation.

The LNKB Merger Agreement further provides that immediately following the Holding Company Merger, LINKBANK will merge with and into the Bank, with the Bank as the surviving bank.

Upon the terms and subject to the conditions of the Merger Agreement, at the effective time of the Holding Company Merger, each share of common stock, par value $0.01 per share, of LNKB outstanding immediately prior to the Effective Time will be converted into the right to receive 0.1350 shares of the Company’s common stock.

Holders of LNKB common stock will receive cash in lieu of fractional shares.

Completion of the LNKB Merger is subject to customary conditions, including receipt of the requisite approvals of the Company’s and LNKB’s shareholders, receipt of all required regulatory approvals.

Critical Accounting Policies and Estimates

44 unchanged sentences

The Company sources the macroeconomic variables and the macroeconomic variable forecasts that it uses in its ACL model from the Standard & Poor’s Global Market Intelligence and from CoStar Group.

The Company currently has set an initial reasonable and supportable period of two years with a subsequent straight-line loss-rate reversion for the following four quarters before then utilizing historical average loss rates in remaining periods of the modeled contractual terms.

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

As the reasonable and supportable and reversion period forecasts reflect the use of the macroeconomic variable loss drivers, management may consider that an additional or reduced reserve is warranted through qualitative risk factors based on current and expected conditions, including those that utilize supplemental information relative to the macroeconomic variable loss drivers.

The Company currently has set an initial reasonable and supportable forecast period of two years with a subsequent straight-line loss-rate reversion for the following four quarters before then utilizing historical average loss rates in remaining periods of the modeled contractual terms.

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

As the reasonable and supportable forecast and reversion period forecast reflects the use of the macroeconomic variable loss drivers, management may consider that an additional or reduced reserve is warranted through qualitative risk factors based on current and expected conditions, including those that utilize supplemental information relative to the macroeconomic variable loss drivers.

Qualitative adjustments considered by management include the following:

3 unchanged sentences

The qualitative factors applied at December 31, 2025, and the importance and levels of the qualitative factors applied, may change in future periods depending on the level of changes to items such as the uncertainty of economic conditions and management’s assessment of the level of credit risk within the loan portfolio as a result of such changes, compared to the amount of ACL calculated by the model.

Management reviews supplemental data sources including historical net charge-off rates and data measuring other specific credit

outcomes from its systems of record in supporting qualitative factors.

However, qualitative factor evaluations are inherently imprecise and require significant management judgement.

Management reviews supplemental data sources including historical net charge-off rates and data measuring other specific credit outcomes from its systems of record in supporting

qualitative factors.

However, qualitative factor evaluations are inherently imprecise and require significant management judgment.

See Note 1 — Nature of Business Activities and Significant Accounting Policies for more discussion of the qualitative factors along with information on the allowance for credit losses for the off-balance sheet credit exposures.

1 unchanged sentence

The calculation of each component of the Company’s income tax provision is complex and requires the use of estimates and judgments in its determination.

As part of the Company’s evaluation and implementation of business strategies, consideration is given to the regulations and tax laws that apply to the specific facts and circumstances for any tax positions under evaluation.

Management closely monitors tax developments on both the federal and state level in order to evaluate the effect they may have on the Company’s overall tax position and the estimates and judgments used in determining the income tax provision and records adjustments as necessary.

3 unchanged sentences

See Note 8 — Income Taxes , in Notes to the Consolidated Financial Statements of the Company for additional information.

On July 4, 2025, the President signed H.R.

1, the “One Big Beautiful Bill Act,” into law.

The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense.

The Company is currently evaluating the impact on future periods.

Non-GAAP Financial Measures

5 unchanged sentences

Commercial Real Estate Sector Concentration

The commercial real estate (“CRE”) sector has been impacted significantly by rising interest rates and higher vacancies, increasing the prospect of default that borrowers may face due to the record amount of upcoming maturities.

In addition, the office market continues to struggle with fewer employees in the office after the COVID-19 pandemic.

In recent years, commercial real estate (“CRE”) markets have been impacted by economic disruptions, including those resulting from the effects of increases in remote work in urban centers and changes in the characteristics of certain urban centers.

CRE loans are generally viewed as having a greater risk of default than other types of loans and depend on cash flows from the owner’s business or the property’s tenants to service the debt.

The borrower’s cash flows may be affected significantly by general economic conditions.

Adverse conditions in the real estate market or the general business climate and economy or in occupancy rates where the property is located could increase the likelihood of default.

In particular, CRE office borrowers in central business districts have been impacted by decreased property valuations, oversupply due to remote work trends, and rising interest rates which has increased default rates and impeded their ability to secure new financing.

CRE loans generally have large loan balances, and therefore, the deterioration of one or a few of these loans could cause a significant increase in the percentage of our non-performing loans.

An increase in non-performing loans could result in a loss of earnings from

these loans, an increase in the provision for loan losses, and an increase in charge-offs, all of which could have a material adverse effect on our financial condition and results of operations.

The Bank continues to monitor its commercial real estate portfolio by reviewing various credit risk and concentration reports.

However, in late 2024 interest rates began falling, and in January 2025 the U.S.

president signed an executive order requiring all federal employees to return to offices on a five day a week basis.

Additionally, several large private-sector employers instituted similar return to office mandates in 2024.

Given our concentration in the Washington, D.C.

MSA we would expect that the federal return to office mandate, combined with mandates at private sector employers and decreases interest rates could help the region’s struggling CRE market;

however, we cannot be certain that this would be the case or the degree to which such mandates may improve the CRE picture in 2025, if at all.

The Bank’s exposure to commercial real estate at December 31, 2025, was $2.8 billion or 51.4% of its gross loan portfolio, not including owner-occupied commercial real estate and acquisition, construction & development.

Commercial real estate as a percent of total assets at December 31, 2024, was 33.8%, not including owner-occupied commercial real estate and acquisition, construction & development.

Commercial real estate as a percentage of total assets at December 31, 2025, was 35.0%, not including owner-occupied commercial real estate and acquisition, construction & development.

Including owner-occupied commercial real estate and acquisition, construction & development, total exposure was $3.7 billion or 69.6% of our total gross loans and 47.4% of total assets at December 31, 2025.

118 unchanged sentences

• Management of credit risk and interest rate risk in our portfolio,

• Our ability to continue to attract customers and compete with other banks and financial services providers in our markets,

• Our ability to manage and implement strategic business objectives within the changing regulatory environment,

4 unchanged sentences

Our financial performance is also substantially affected by a number of external factors outside of our control, including the following:

• Economic conditions, including pandemics and political conflicts, the availability of labor, supply chain volatility, and any actions taken to mitigate and manage such impacts,

• The effect of climate change on our business and performance, including indirectly through impacts on our customers,

• The actions by the Federal Reserve, U.S.

• Economic conditions, and volatility in markets, including the effects of pandemics, wars, political conflicts, political instability, hostility and uncertainty both in the U.S.

and abroad, government spending policies, trade policies, including tariffs and tariff counter-measures, and other barriers to trade (including the threat of such actions), the availability of labor, supply chain volatility, and any actions taken to mitigate and manage such impacts;

• The actions or inactions (including assumptions about potential actions or inactions) by the Federal Reserve, U.S.

Treasury, and other government agencies, including those that impact money supply and market interest rates and inflation;

2 unchanged sentences

and global financial markets, including capital markets;

• The impact of tariffs and other trade policies of the U.S.

and its global trading partners,

• Changes in the competitive landscape;

• Impacts of changes in federal, state, and local governmental policy, including on the regulatory landscape, capital markets, taxes, infrastructure spending, and social programs,

• Impacts of changes in federal, state, and local governmental policy, including on the regulatory landscape, capital markets, employment and unemployment levels in our markets, taxes, infrastructure spending, and social programs;

• The effect of climate change on our business and performance, including indirectly through impacts on our customers;

• The impact of market credit spreads on asset valuations,

21 unchanged sentences

Total deposits 6,403,941 6,515,239 3,001,881

Borrowed funds

Short-term borrowings

450,000 365,000 272,000

8 unchanged sentences

Net interest income 295,912 226,687 94,402

Provision for (recapture of) credit losses

Provision for credit losses

1,523 24,220 214

9 unchanged sentences

Average shares of common stock outstanding, basic

15,006,614 12,393,677 7,428,042

Average shares of common stock outstanding, diluted

15,073,859 12,441,831 7,506,855

Total shares of common stock outstanding

15,028,524 14,969,104 7,428,710

Basic net income per common share

4 unchanged sentences

2.20 2.14 2.12

Dividend payout ratio (1)

Common stock dividend payout ratio (1)

28.50 % 75.89 % 70.20 %

32 unchanged sentences

__________________

(1) Dividend payout ratio represents dividends declared per common share divided by diluted earnings per common share.

(1) Common stock dividend payout ratio represents per share dividends declared divided by diluted earnings per common share.

(2) Return on average equity computed using total average equity at period-end.

4 unchanged sentences

Results of Operations for Years Ended December 31, 2025, and December 31, 2024

Consolidated net income applicable to common shares for the year ended December 31, 2024, was $35.0 million compared to $22.7 million earned during the year ended December 31, 2023.

The $12.3 million or 54.4% increase in net income applicable to common shares in 2024 compared to 2023 was primarily due to the effect of the Merger which resulted in increases in all categories of interest income exceeding increases in interest expense compared to the prior year ended December 31, 2023.

Consolidated net income applicable to common shares for the year ended December 31, 2025, was $116.4 million compared to $35.0 million during the year ended December 31, 2024.

The $81.4 million or 232.3% increase in net income applicable to common shares in 2025 compared to 2024 was primarily due to higher rates on interest-earning assets and a slight decrease in non-interest expense compared to the prior year ended December 31, 2024.

Net interest income totaled $295.9 million for the year ended December 31, 2025, compared to $226.7 million for the year ended December 31, 2024.

The $132.0 million increase in net interest income was primarily driven by the Merger which resulted in higher loan interest income partially offset by higher deposit interest expense.

Interest-bearing demand deposits and time deposits were the primary driver of increased net interest expense due mostly to an increase in volume and partly to an increase in rate.

The $69.2 million increase in net interest income was primarily driven by higher rates which resulted in higher interest income on loans and securities, partially offset by higher deposit interest expense and higher interest expense on subordinated debt.

Interest-bearing demand deposits and money market & savings accounts were the primary driver of increased net interest expense due mostly to an increase in rates, which was partially offset by a decline in volume.

For the year ended December 31, 2025, the Company recorded credit provision expense of $1.5 million compared to $24.2 million for the year ended December 31, 2024.

For the year ended December 31, 2024, the Company recognized a one-time CECL Day 2 provision for non-PCD assets acquired in the Merger, which resulted in a higher credit provision expense compared to the year ended December 31, 2023.

For the year ended December 31, 2024, the Company recognized a one-time CECL Day 2 provision for non-PCD assets acquired in the Summit merger, which resulted in a higher credit provision expense when compared to the year ended December 31, 2025.

Non-interest income increased by $10.8 million, or 30.8%, to $46.1 million for the year ended December 31, 2025, compared to $35.3 million for the year ended December 31, 2024.

The increase in non-interest income was mostly due to the Merger, and included increases in all categories of non-interest income.

The largest increase was in service charges and fees of $8.9 million followed by an increase in fiduciary and wealth management of $3.1 million and and increase in other non-interest income of $2.9 million.

The Company also realized gains on the sale of securities resulting in an increase of $1.5 million in net gains/(losses) from securities compared to the year ended December 31, 2023.

Non-interest expense increased by $111.4 million, or 128.9%, to $197.8 million for the year ended December 31, 2024, compared to $86.4 million for the year ended December 31, 2023.

The increase was mostly due to the Merger, and included increases in all categories of non-interest expense.

The largest increase was in other operating expenses which included $36.5 million of legal, consulting, and audit fees related to the Merger with Summit Financial Group, Inc.

Other large increases included salaries and wages which increased by $37.8 million and equipment rentals, depreciation and maintenance which increased $17.4 million compared to the year ended December 31, 2023.

The increase in non-interest income was mostly due to the effect of the Summit merger and included increases in all categories of non-interest income except net gains on securities.

The largest increase was income from company-owned life insurance of $3.4 million followed by an increase in other non-interest income of $3.1 million, and an increase in bank debit and other card revenue of $2.5 million compared to the year ended December 31, 2024.

Net realized gains on the sale of securities decreased by $1.2 million compared to the year ended December 31, 2024.

Non-interest expense decreased by $2.3 million, or 1.1%, to $195.6 million for the year ended December 31, 2025, compared to $197.8 million for the year ended December 31, 2024.

The decrease was mostly due to large decreases in equipment rentals, depreciation and maintenance, which decreased $7.3 million and other operating expense which decreased by $9.5 million compared to the year ended December 31, 2024.

Increases were noted in other non-interest expense categories including salaries and wages which increased by $6.4 million, core deposit intangible amortization which increased by $4.1 million during the first full year following the Summit merger, occupancy, which increased by $2.9 million, and pensions and other employee benefits which increased by $1.3 million compared to the year ended December 31, 2024.

Net Interest Income and Net Interest Margin

5 unchanged sentences

Net interest income totaled $295.9 million for the year ended December 31, 2025, compared to $226.7 million for the year ended December 31, 2024.

The $132.0 million increase in net interest income was primarily driven by

the Merger which resulted in higher loan interest income driven by higher accretion income, partially offset by higher deposit interest expense.

The $69.2 million increase in net interest income was primarily driven by higher interest income on loans and securities, partially offset by higher deposit interest expense.

Interest income on loans increased by $71.6 million while interest income on securities increased $4.1 million for the year ended December 31, 2025 compared to the year ended December 31, 2024.

Accretion income associated with acquired loans and borrowings totaled $40.9 million for the year ended, December 31, 2024.

Deposit interest expense increased by $79.5 million, while interest expense on subordinated debt assumed in the Merger led to an increase in interest expense of $7.4 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.

Accretion income associated with acquired loans and borrowings totaled $39.8 million for the year ended, December 31, 2025 compared to $40.9 million for the year ended December 31, 2024.

Deposit interest expense increased by $3.3 million, while interest expense on subordinated debt assumed in the Summit merger led to an increase in interest expense of $3.1 million for the year ended December 31, 2025 compared to the year ended December 31, 2024.

The tax adjusted net interest margin was 4.14% for the year ended December 31, 2025, compared to 3.10% for the year ended December 31, 2024.

The increase in tax-adjusted net interest margin was primarily driven by the the effect of the Merger and the acquisition of additional, higher-yielding interest-earning assets.

The increase in tax-adjusted net interest margin was primarily driven by higher rates on interest-earning assets for the year ended December 31, 2025 compared to the year ended December 31, 2024.

The yield for the year ended December 31, 2025, for the loan portfolio was 6.85% compared to 5.48% for the year ended December 31, 2024.

The increase was primarily the result of the Merger which resulted in higher accretion income and the acquisition of additional, higher-yielding loans.

The increase was primarily the result of higher rates on loans, partially offset by lower volume.

For the year ended December 31, 2025, the tax-adjusted yield on the total investment securities portfolio was 3.96% compared to 3.36% for the year ended December 31, 2024.

The decrease was primarily due to the recovery on unrealized losses that decreased the effective rate earned on investment securities.

The increase was primarily due to higher rates and was partially offset by lower volume.

The rate paid on interest-bearing deposits increased to 2.40% during the year ended December 31, 2025, from 2.27% during the year ended December 31, 2024.

The increase was a result of the Merger which resulted in the assumption of additional interest-bearing deposits with higher interest rates and to a lesser extent by higher market interest rates.

The rate paid on our borrowings for the year ended December 31, 2024, was 3.35% compared to 4.69% for the year ended December 31, 2023.

The decrease was due to the decrease in short-term borrowing costs, driven by decreases in the Federal Funds Rate during 2024.

The rate paid on subordinated debt and trust preferred securities acquired in the merger was 10.08% for the year ended December 31, 2024.

The increase was a result of higher rates, partially offset by lower volume.

The rate paid on our short-term borrowings for the year ended December 31, 2025, was 3.90% compared to 3.35% for the year ended December 31, 2024.

The increase was due to higher average rates for the year ended, December 31, 2025.

The weighted-average rate paid on subordinated debt and trust preferred securities acquired in the Summit merger was 9.85% for the year ended December 31, 2025 compared to 10.08% for the year ended December 31, 2024.

The following table sets forth the major components of net interest income and the related yields and rates for the years ended December 31, 2025, and December 31, 2024, for comparison (dollars in thousands).

4 unchanged sentences

Tax-exempt loans (1)(2)(3)

4,097 149 3.64 — — N/A

3,613 228 6.31 4,097 149 3.64

5,589,658 383,022 6.85 5,688,445 311,453 5.48

Interest-bearing deposits and fed funds sold 111,860 4,777 4.27 118,067 4,457 3.77

Taxable securities 1,156,456 40,039 3.46 1,020,707 37,179 3.64

Tax-exempt securities (3)

Taxable AFS securities and other securities (4)

1,019,031 39,879 3.91 1,156,456 40,941 3.54

Tax-exempt AFS securities (3)(4)

542,615 21,980 4.05 449,980 12,966 2.88

Total securities 1,561,646 61,859 3.96 1,606,436 53,907 3.36

5 unchanged sentences

Interest-bearing demand 2,262,564 48,740 2.15 % 2,520,273 45,926 1.82 %

Savings 1,404,870 21,836 1.55 967,306 15,819 1.64

Time 1,295,270 50,902 3.93 597,796 21,064 3.52

Money market & savings

1,661,961 33,214 2.00 1,404,870 21,836 1.55

Brokered CDs & time deposits

1,165,200 40,015 3.43 1,295,270 50,902 3.93

Total interest-bearing deposits 5,089,725 121,969 2.40 5,220,413 118,664 2.27

Total deposits 6,442,975 121,969 1.89 6,638,259 118,664 1.79

FHLB advances and other (4)

Short-term borrowings and other (5)

425,634 16,585 3.90 426,278 14,300 3.35

Subordinated debt and other

73,507 7,412 10.08 — — N/A

106,884 10,527 9.85 73,507 7,412 10.08

Total interest-bearing liabilities 5,622,243 149,081 2.65 5,720,198 140,376 2.45

12 unchanged sentences

(3) Yields and interest income on tax-exempt assets are computed on a taxable-equivalent basis assuming a 21% tax rate.

(4) FHLB Advances and other includes finance lease liabilities.

(4) Calculated based on fair value of investment securities.

(5) Short-term borrowings and other includes finance lease liabilities.

(6) The interest rate spread represents the difference between the fully taxable equivalent weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the period.

2 unchanged sentences

Net interest income, on an FTE basis, is a non-GAAP financial measure that the Company believes to provide a more accurate picture of the interest margin for comparative purposes.

Management believes FTE net interest income is a standard practice in the banking industry, and when net interest income is adjusted on an FTE basis, yields on taxable, nontaxable, and partially taxable assets are comparable;

Management believes FTE net interest income is a standard practice in the banking industry,

and when net interest income is adjusted on an FTE basis, yields on taxable, nontaxable, and partially taxable assets are comparable;

however, the adjustment to an FTE basis has no impact on net income.

FTE net interest income is

calculated by adding the tax benefit on certain financial interest earning assets, whose interest is tax-exempt, to total interest income and then subtracting total interest expense.

FTE net interest income is calculated by adding the tax benefit on certain financial interest earning assets, whose interest is tax-exempt, to total interest income and then subtracting total interest expense.

As a non-GAAP measure, FTE net interest income should not be considered as a substitute for the nearest comparable GAAP measure, net interest income.

6 unchanged sentences

Interest Income - Tax-exempt loans 180 118

Interest Income - Securities taxable 39,817 37,179

Interest Income - Securities tax-exempt 10,243 5,615

Interest Income - Taxable AFS securities and other securities 36,807 39,817

Interest Income - Tax-exempt AFS securities 17,364 10,243

Interest Income - Other interest income 7,848 5,582

22 unchanged sentences

Loans, (1) gross

Securities (1)

$ (5,409) $ 76,978 $ 71,569

AFS Securities and other securities (1)

(1,503) 9,455 7,952

Interest-bearing deposits and fed funds sold (234) 554 320

2 unchanged sentences

Interest-bearing demand deposits (4,696) 7,510 2,814

Savings deposits 6,801 (784) 6,017

Time deposits 26,850 2,988 29,838

Money market & savings 3,996 7,382 11,378

Brokered CDs & time deposits

(5,112) (5,775) (10,887)

Total interest expense on interest-bearing deposits (5,812) 9,117 3,305

Borrowings 11,745 (3,976) 7,769

Short-term borrowings

(22) 2,307 2,285

Subordinated debt and other

3,366 (251) 3,115

Total borrowings

3,344 2,056 5,400

Total interest expense on interest-bearing liabilities (2,468) 11,173 8,705

4 unchanged sentences

Total interest income was $445.0 million for the year ended December 31, 2025, compared to $367.1 million for the year ended December 31, 2024, an increase of 21.2%.

The increase in interest income was primarily driven by the Merger which resulted in higher loan and security interest income.

The increase in interest income was primarily driven by higher rates which resulted in higher loan and security interest income.

Interest income on securities increased by $4.1 million or 8.2% for the year ended December 31, 2025, compared to the year ended December 31, 2024.

2 unchanged sentences

Total interest expense was $149.1 million for the year ended December 31, 2025, compared to $140.4 million for the previous year ended December 31, 2024, an increase of 6.2%.

The increase in interest expense was primarily driven by the effect of the Merger and increases in deposit and debt balances.

The increase in interest expense was primarily driven by higher rates and was partially offset by volume.

Interest expense on interest-bearing deposits increased by $3.3 million or 2.8% for the year ended December 31, 2025, compared to the year ended December 31, 2024.

Interest expense on borrowed funds increased by $2.3 million or 16.1% for the year ended December 31, 2025, compared to the year ended December 31, 2024.

Interest expense on subordinated debt acquired in the Merger led to an increase in interest expense of $7.4 million for the year ended December 31, 2024, compared to the year ended December 31, 2023.

Interest expense on subordinated debt acquired in the Summit merger led to an increase in interest expense of $3.1 million for the year ended December 31, 2025, compared to the year ended December 31, 2024.

Provision for (Recapture of) Credit Losses

The provision for credit losses was $1.5 million for the year ended December 31, 2025, compared to $24.2 million for the year ended December 31, 2024.

For the year ended December 31, 2024, the Company recognized a one-time CECL Day 2 provision for non-PCD assets acquired in the Merger and acquired commitments for unfunded commitments, which resulted in a higher credit provision expense compared to the year ended December 31, 2023.

Additionally, loan balances have risen significantly for the year ended December 31, 2024, due to the Merger versus the year ended December 31, 2023.

For the year ended December 31, 2024, the Company recognized a one-time CECL Day 2 provision for non-PCD assets acquired in the Summit merger and acquired commitments for unfunded commitments, which resulted in a higher credit provision expense compared to the year ended December 31, 2025.

See Note 4 — Allowance for Credit Losses in Notes to Consolidated Financial Statements for further information.

5 unchanged sentences

Service charges and fees 8,197 7,199 998 13.9

Net gains (losses) on securities 1,357 (112) 1,469 NM

Net gains (losses) on securities 147 1,357 (1,210) (89.2)

Income from company-owned life insurance 8,130 4,686 3,444 73.5

Bank debit and other card revenue 12,264 9,772 2,492 25.5

Other non-interest income 6,917 3,839 3,078 80.2

1 unchanged sentence

Non-interest income increased by $10.8 million or 30.8% for the year ended December 31, 2025, compared to December 31, 2024.

The increase was primarily driven by the Merger, and included increases in all categories of non-interest income.

The increase was primarily driven by the effect of the Summit merger, and included increases in all categories of non-interest income except net gains on securities.

See Note 22 — Revenue from Contracts with Customers in Notes to Consolidated Financial Statements for further information.

The Company also realized gains on the sale of securities resulting in an increase of $1.5 million in non-interest income and an increase in income from Company-owned life insurance of $1.8 million for the year ended December 31, 2024, compared to December 31, 2023.

The Company realized a decrease of $1.2 million in net gains on securities for the year ended December 31, 2025, compared to December 31, 2024.

Non-interest Expense

6 unchanged sentences

Equipment rentals, depreciation and maintenance 15,825 23,174 (7,349) (31.7)

Core deposit intangible amortization 15,553 11,460 4,093 35.7

ATM, card, and network expense

4,753 5,398 (645) (11.9)

FDIC and other regulatory assessments 3,904 3,329 575 17.3

Other operating 39,123 48,620 (9,497) (19.5)

Total $ 195,561 $ 197,833 $ (2,272) (1.1) %

Non-interest expense increased 128.9% for the year ended December 31, 2024, compared to December 31, 2023.

The increase was mostly due to the Merger, and included increases in all categories of non-interest expense.

The largest increase was in other operating expenses which included $36.5 million of legal, consulting, and audit fees related to the Merger with Summit Financial Group, Inc.

The majority of these merger-related costs consist of legal, consulting, and audit fees.

Non-interest expense decreased by $2.3 million, 1.1% for the year ended December 31, 2025, compared to December 31, 2024.

See Note 20 — Other Operating Expenses in Notes to Consolidated Financial Statements for further information on “Other” non-interest expense.

Other large increases included salaries and wages which increased by $37.8 million, or 96.4%, and equipment rentals, depreciation and maintenance which increased $17.4 million, or 301.6%, compared to the year ended December 31, 2023.

Pensions and other employee benefits increased by $7.8 million while occupancy increased by $5.5 million for the year ended December 31, 2024, compared to December 31, 2023.

Income Tax Expense

Income tax expense was $4.2 million for the year ended December 31, 2024, a increase of $1.8 million from the tax provision for the year ended December 31, 2023.

Income tax expense was $27.6 million for the year ended December 31, 2025, an increase of $23.4 million from the tax provision for the year ended December 31, 2024.

For 2025 and 2024, our effective tax rates were 19.1% and 10.5%, respectively.

A increase in income from operations led to a slight increase in the effective tax rate for 2024.

An increase in income from operations led to an increase in the effective tax rate for 2025.

The effective tax rate going forward will continue to depend on income from operations as well as any legislative corporate tax changes.

Results of Operations for Years Ended December 31, 2024, and December 31, 2023

For a comparison of the 2023 results to the 2022 results and other 2022 information not included herein, refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of the Company’s 10-K filed with the SEC on March 22, 2024, as amended by the Company’s 10-K/A filed with the SEC on April 12, 2024.

For a comparison of the 2024 results to the 2023 results and other 2023 information not included herein, refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of the Company’s 10-K filed with the SEC on March 17, 2025.

Analysis of Financial Condition for Years Ended December 31, 2025, and December 31, 2024

Assets increased by $4.2 billion to $7.8 billion as of December 31, 2024, compared to $3.6 billion as of December 31, 2023.

The increase in assets was primarily due to the Merger and included an increase in loans, net of ACL, of $3.5 billion, and an increase of $183.9 million in the securities portfolio as of December 31, 2024 compared to December 31, 2023.

Deposits increased by $3.5 billion and amounted to $6.5 billion at December 31, 2024, compared to $3.0 billion at December 31, 2023, while short-term borrowings increased by $93.0 million to $365.0 million as of December 31, 2024, compared to $272.0 million at December 31, 2023.

Subordinated debt and subordinated debt owed to unconsolidated subsidiary trusts, which were assumed in the Merger, totaled $111.9 million at December 31, 2024, compared to zero at December 31, 2023.

Assets increased by $108.4 million to $7.9 billion as of December 31, 2025, compared to $7.8 billion as of December 31, 2024.

The increase in assets was primarily due to an increase in the securities portfolio of $183.6 million, and an increase of $153.8 million in cash and cash equivalents, partially offset by a decrease in loans, net of ACL, of $284.3 million as of December 31, 2025 compared to December 31, 2024.

Deposits decreased by $111.3 million and amounted to $6.4 billion at December 31, 2025, compared to $6.5 billion at December 31, 2024, while short-term borrowings increased by $85.0 million to $450.0 million as of December 31, 2025, compared to $365.0 million at December 31, 2024.

Subordinated debt and subordinated debt owed to unconsolidated subsidiary trusts, which were assumed in the Summit merger, totaled $87.5 million at December 31, 2025, compared to $111.9 million at December 31, 2024, due to a redemption of subordinated debt in the second half of 2025.

Investment Securities

5 unchanged sentences

The majority of our AFS investment portfolio is comprised of obligations of states and municipalities and residential mortgage-backed securities.

During the year ended December 31, 2024, the unrealized losses on our holdings decreased $6.9 million from December 31, 2023.

During the year ended December 31, 2025, the unrealized losses on our holdings decreased $45.4 million from December 31, 2024 and amounted to $71.9 million as of December 31, 2025.

The Company determined that the declines in market value were due to increases in interest rates and market movements and not due to credit factors.

61 unchanged sentences

Loans, net $ 5,319,853 $ 5,604,196

The loan portfolio, excluding ACL, increased by $3.6 billion from December 31, 2023, to December 31, 2024, primarily due to the effect of the Merger.

Additionally, the Company has continued to grow organically by continuing to serve existing customers and new customers through our expansion into newer markets.

The loan portfolio, excluding ACL, decreased by $284.6 million from December 31, 2024, to December 31, 2025, primarily due to the Company exiting non-core loans.

The Company has continued to grow organically by continuing to serve existing customers and new customers through our expansion into newer markets.

The following table shows the maturity distribution for total loans outstanding as of December 31, 2025.

18 unchanged sentences

The Company’s non-performing assets, which includes non-performing loans consisting of non-accrual loans, loans that are more than 90 days past due and still accruing, and other real estate owned, as of December 31, 2025, and December 31, 2024, totaled $76.9 million and $41.2 million, respectively.

The increase in the non-performing asset balance is mostly due to the effect of the Merger and the related increase in the loan portfolio as of December 31, 2024 when compared to December 31, 2023.

In addition, the other real estate owned assets were entirely assumed as part of the Merger.

The increase in the non-performing asset balance is mostly due to an increase in non-accrual loans of $34.7 million as of December 31, 2025 when compared to December 31, 2024.

Most of the other real estate owned assets of $2.7 million were assumed as part of the Summit merger.

The following table summarizes the Company’s non-performing assets as of December 31, 2025, and December 31, 2024 (in thousands).

13 unchanged sentences

Management believes its approach properly addresses relevant accounting and bank regulatory guidance for loans both collectively and individually evaluated.

Gross charged-off loans were $1.8 million, $0.2 million, and $3.5 million for the years ended December 31, 2024, December 31, 2023, and December 31, 2022, respectively.

The increase in charge-offs during 2024, when compared to 2023, was due to the merger and the increase in the value of the loan portfolio.

A majority of the charge-offs in 2022 related to a loan that the Company sold as part of a portfolio management strategy.

Gross recoveries totaled $0.2 million, $0.1 million, and $0.2 million for the years ended December 31, 2024, December 31, 2023, and December 31, 2022, respectively.

Gross charged-off loans were $3.8 million, $1.8 million, and $194.0 thousand for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively.

The increase in charge-offs during 2025, when compared to 2024, was due to an increase in charge-offs related to owner occupied commercial real estate loans of $1.1 million, and consumer non real estate and other loans of $1.2 million for the year ended December 31, 2025 compared to the year ended December 31, 2024.

Gross recoveries totaled $1.3 million, $161.0 thousand, and $96.0 thousand for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively.

The ACL as a percentage of gross loans, net of unearned income, was 1.26%, 1.20%, and 1.21% as of December 31, 2025, December 31, 2024, and December 31, 2023, respectively.

The Company recorded a provision for credit losses of $20.5 million, a provision for credit losses of $0.2 million, and a provision recapture of credit losses of $7.5 million for the years ended December 31, 2024, December 31, 2023, and December 31, 2022, respectively.

The increase in provision for the year ended

December 31, 2024 was due to the Merger and the requirement to record an immediate provision expense for loans classified as non-PCD versus PCD loans where the Company is allowed to establish an adjustment to the ACL.

The Company recorded a provision for credit losses of $2.3 million, a provision for credit losses of $20.5 million, and a provision recapture of credit losses of $235.0 thousand for the years ended December 31, 2025,

December 31, 2024, and December 31, 2023, respectively.

The increase in provision for the year ended December 31, 2024 was due to the Summit merger and the requirement to record an immediate provision expense for loans classified as non-PCD versus PCD loans where the Company is allowed to establish an adjustment to the ACL.

The following table summarizes the changes in the Company’s credit loss experience by portfolio for the year ended December 31, 2025, and the changes in the Company’s allowance for loan losses for the years ended December 31, 2024, and December 31, 2023 (dollars in thousands):

57 unchanged sentences

The Company recognizes derivative financial instruments at fair value as either other assets or other liabilities on the Consolidated Balance Sheets.

The Company’s use of derivative financial instruments are described more fully in Note 13 — Derivatives in Notes to Consolidated Financial Statements.

The Company’s use of derivative financial instruments is described more fully in Note 13 — Derivatives in Notes to Consolidated Financial Statements.

Off-Balance Sheet Arrangements

21 unchanged sentences

Total long-term debt $ 87,490 $ 111,885

Weighted average interest yield at end of period 10.08% N/A

Total deposits increased by $3.5 billion from December 31, 2024, to December 31, 2023, primarily driven by the Merger.

Weighted average interest yield at end of period 9.85% 10.08%

Total deposits decreased by $111.3 million from December 31, 2025, to December 31, 2024, primarily driven by a $180.4 million decrease in brokered deposits and a $43.6 million decrease in non-interest-bearing deposits, which was partially offset by a $106.6 million increase in interest-bearing deposits.

The Company’s brokered deposits balance was $64.4 million and $244.8 million at December 31, 2025, and December 31, 2024, respectively.

All of the Company’s brokered deposits are in the form of certificates of deposits that are insured by the FDIC.

Excluding the brokered deposit balance, the total deposit balance increased by $3.7 billion from December 31, 2023 to December 31, 2024 mostly due to the completion of the Merger.

Excluding the brokered deposit balance, the Company’s total core deposit balance increased by $69.1 million from December 31, 2024 to December 31, 2025.

The following table sets forth the balance of each category of deposits as of the dates indicated (dollars in thousands).

4 unchanged sentences

Brokered deposits 64,410 244,802

Time deposits

Time deposits, other

1,007,666 1,008,477

3 unchanged sentences

Management evaluates its utilization of brokered deposits, taking into consideration the interest rate curve and regulatory views on non-core funding sources, and balances this funding source with its funding needs based on growth initiatives.

The Company has deposits that meet or exceed the FDIC insurance limit of $250,000 of $1.9 billion and $677.3 million at December 31, 2024, and December 31, 2023.

The increase in uninsured deposits as of December 31, 2024 was due to the completion of the Merger and the related increase in total deposits.

The Company has deposits that meet or exceed the FDIC insurance limit of $250,000 of $2.1 billion and $1.9 billion at December 31, 2025, and December 31, 2024.

The increase in uninsured deposits as of December 31, 2025 was due to the decline in brokered CDs which are fully insured, and an increase in core deposits, some of which are uninsured.

The Company does not have material deposit concentration risk to any significant market, industry or individual at December 31, 2025.

7 unchanged sentences

Total shareholders’ equity at December 31, 2025, was $854.6 million, compared to $730.2 million at December 31, 2024.

Shareholders’ equity increased by $415.4 million primarily due to the completion of the Merger.

Shareholders’ equity increased by $124.5 million primarily due to the Company’s earnings from operations.

Additionally, accumulated other comprehensive loss decreased by $36.8 million as a result of an increase in the fair value of investment securities available-for-sale.

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-K

Item 7. Management’s Discussion and Analysis