What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2025-02-27 compared with 2024-02-29 · 92 added, 178 removed, 450 unchanged (38% of the section changed)

10 unchanged sentences

It commenced banking operations on July 20, 1998.

The Bank currently operates thirteen branch offices:

The Bank currently operates twelve branch offices:

six in Suburban Maryland;

four located in the District of Columbia;

three located in the District of Columbia;

and three in Northern Virginia.

7 unchanged sentences

focuses on lending to municipalities by buying debt on the public market as well as direct purchase issuance.

The Bank operates as a community bank alternative to the super-regional financial institutions, which dominate its primary market area.

The Bank operates as a community bank alternative to the super-regional financial institutions that dominate its primary market area.

The cornerstone of the Bank’s philosophy is to provide superior, personalized service to its clients.

The Bank focuses on relationship banking, providing each client with a number of services, familiarizing itself with, and addressing itself to, client needs in a proactive, personalized fashion.

Management believes that the Bank’s target market segments, small and medium-sized for profit and non-profit businesses and the consumer base working or living in and near the Bank’s market area, demand the convenience and personal service that an independent locally based financial institution such as the Bank can offer.

Management believes that the Bank’s target market segments, small, medium and middle-sized for profit and non-profit businesses and the consumer base working or living in and near the Bank’s market area, demand the convenience and personal service that an independent locally based financial institution such as the Bank can offer.

These themes of convenience and proactive personal service form the basis for the Bank’s business development strategies.

Over its twenty-five year history, the Company has grown primarily through organic growth, but also has completed two whole bank acquisitions.

Over its twenty-six year history, the Company has grown primarily through organic growth, but also has completed two whole bank acquisitions.

On August 31, 2008, the Company acquired Fidelity & Trust Financial Corporation ("Fidelity") and on October 31, 2014 acquired Virginia Heritage Bank ("Virginia Heritage").

Refer to Note 7 to the Consolidated Financial Statements for additional disclosure regarding intangible assets established related to mergers and acquisitions.

Description of Services.

9 unchanged sentences

The Company made the decision to cease originating residential real estate mortgage loans given the challenged nature of the business and the uncertainty of maintaining or increasing the volume or percentage of revenue or net income that has previously been produced by the residential mortgage business.

The Bank emphasizes providing commercial banking services to sole proprietors, small and medium-sized businesses, partnerships, corporations, non-profit organizations and associations and investors living and working in and near the Bank’s primary service area.

The Bank emphasizes providing commercial banking services to sole proprietors, small, medium and middle-sized businesses, partnerships, corporations, non-profit organizations and associations and investors generally living and working in and near the Bank’s primary service area.

A full range of retail banking services are offered to accommodate the individual needs of both corporate customers as well as the community the Bank serves.

The Bank also offers online banking, mobile banking and a remote deposit service, which allows clients to facilitate and expedite deposit transactions through the use of electronic devices.

The Bank also offers online banking, mobile banking and a remote deposit service, which allows clients to facilitate and expedite deposit transactions through the use of

Table o f Contents

electronic devices.

A suite of Treasury Management services is also offered to business clients.

4 unchanged sentences

Commercial real estate loans, which comprise the largest portion of the loan portfolio, are secured by both owner occupied and non-owner occupied real property and include a component of acquisition, development and construction ("ADC") lending.

The Bank’s consumer loan portfolio is a smaller portion of the loan portfolio and has historically been comprised generally of two loan types:

(i) home equity loans and lines of credit that are structured with an interest only draw period followed either by a balloon maturity or a fully amortized repayment schedule;

and, historically, (ii) first lien residential mortgage loans with the intent to sell conforming first trust loans on a servicing released basis to third party investors.

The Company completed the cessation and residual origination and sales activities of first lien residential mortgage origination for secondary sale during the year ended December 31, 2023.

The Bank’s consumer loan portfolio is a smaller portion of the loan portfolio and primarily includes home equity loans and lines of credit that are structured with an interest only draw period followed either by a balloon maturity or a fully amortized repayment schedule.

The Bank is also a preferred lender under the Small Business Administration's ("SBA") Preferred Lender Program.

4 unchanged sentences

From time to time, this dependence on legislative funding causes limitations and uncertainties with regard to the continued funding of such programs, which could potentially have an adverse financial impact on our business.

The Company originates multifamily Federal Housing Administration ("FHA") loans through the Department of Housing and Urban Development’s Multifamily Accelerated Program.

The Company securitizes these loans through the Government National Mortgage Association ("Ginnie Mae") MBS I program and sells the resulting securities in the open market to authorized dealers in the normal course of business and periodically bundles and sells the servicing rights.

Up until the second half of 2024, the Company originated multifamily Federal Housing Administration ("FHA") loans through the Department of Housing and Urban Development's Multifamily Accelerated Program.

The Company securitized these loans through the Government National Mortgage Association ("Ginnie Mae") MBS I program and sold the resulting securities in the open market to authorized dealers in the normal course of business and periodically bundled and sold the servicing rights.

During the year ended December 31, 2024, the Company sold the remaining servicing rights to all multifamily FHA loans.

However, the Company maintains its licenses to operate in this business and is evaluating options for future activity.

The Bank's lending activities carry the risk that the borrowers will be unable to perform on their obligations.

10 unchanged sentences

The combined owner and non-owner occupied and commercial real estate loans represented approximately 83% of the loan portfolio.

Real estate also serves as collateral for loans made for other purposes, resulting in 82% of all loans being secured or partially secured by real estate.

Real estate also serves as collateral for loans made for other purposes, resulting in a combined total 85% of all loans in our portfolio being secured or partially secured by real estate.

These loans are underwritten to mitigate lending risks typical of this type of loan such as declines in real estate values, changes in borrower cash flow and general economic conditions.

The Bank typically requires a maximum loan-to-value ("LTV") ratios of 80% and minimum debt service coverage ratios ("DSCRs") of 1.0 to 1.15.

The Bank typically requires a maximum loan-to-value ("LTV") ratio of 80% and a minimum debt service coverage ratio ("DSCR") of 1.0 to 1.15.

Personal guarantees may be required but may be limited.

In making real estate commercial mortgage loans, the Bank generally requires that interest rates adjust not less frequently than five years.

The Company is also an active traditional commercial lender providing loans for a variety of purposes, including working capital, equipment and accounts receivable financing.

Table o f Contents

The Company is also an active traditional commercial lender providing loans for a variety of purposes, including working capital, equipment, accounts receivable financing and other corporate purposes.

The Company's underwriting standards address collateral and debt service cash flow.

8 unchanged sentences

At December 31, 2024, the Bank had a legal lending limit of $223.0 million.

At December 31, 2023, the average loan size outstanding for Commercial Real Estate ("CRE") and C&I loans was $7.9 million and $976 thousand, respectively.

At December 31, 2024, the average loan size outstanding for Commercial Real Estate ("CRE") and C&I loans was $7.2 million and $1.2 million, respectively.

In accordance with internal lending policies, the Bank may sell participations in its loans to other banks, which allows the Bank to manage risk involved in these loans and to meet the lending needs of its clients.

27 unchanged sentences

Commercial permanent loans are generally secured by improved real property, which is generating income in the normal course of operation.

Debt service coverage, assuming stabilized occupancy, must be satisfactory to support a permanent loan.

Debt service coverage, assuming stabilized occupancy, must be satisfactory to support a permanent

Table o f Contents

The DSCR is ordinarily at least 1.0 to 1.15.

As part of the underwriting process, DSCRs are stress tested assuming a 200 basis point increase in interest rates from their current levels.

As part of the underwriting process, DSCRs are generally stress tested assuming a 200 basis point increase in interest rates from their current levels.

Commercial permanent loans generally are underwritten with a term not greater than 10 years or the remaining useful life of the property, whichever is lower.

12 unchanged sentences

and (5) the level of collateral protection.

When appropriate, an interest reserve provides an effective means of addressing the cash flow characteristics of a properly underwritten ADC loan.

although as with all lending activities the Company remains exposed to credit risk.

When appropriate, an interest reserve provides an effective means of addressing the cash flow characteristics of a properly underwritten ADC loan, although as with all lending activities the Company remains exposed to credit risk.

The Company does not significantly utilize interest reserves in other loan products.

14 unchanged sentences

In early 2024, the Bank launched a new online and mobile banking platform as the Bank seeks to further modernize its deposit offerings to its customers.

Other deposit services include cash management services, business sweep accounts, lockbox, remote deposit capture, account reconciliation services, merchant card services, safe deposit boxes and Automated Clearing House origination.

Deposit services associated with this digital platform are available and marketed outside of the Bank's immediate market area across the United States.

This digital banking platform is predominantly focused on Certificates of Deposits and High Yield Savings Accounts.

Other deposit services offered by the Bank within our Washington, D.C.

metropolitan area market include cash management services, business sweep accounts, lockbox, remote deposit capture, account reconciliation services, merchant card services, safe deposit boxes and Automated Clearing House origination.

After-hours depositories and automated teller machine ("ATM") service are also available.

8 unchanged sentences

Treasury securities, U.S.

agency securities, government sponsored enterprise MBS and high grade municipal and corporate securities, with certain exceptions for the purchase of BBB- or non-rated subordinated debentures of U.S.

agency securities, government sponsored enterprise

Table o f Contents

MBS and high grade municipal and corporate securities, with certain exceptions for the purchase of BBB- or non-rated subordinated debentures of U.S.

regulated banks following an analysis of credit worthiness.

3 unchanged sentences

The ALCO operates under established policies and practices and a Committee Charter, which practices are updated and re-approved annually.

A typical ALCO meeting includes discussion of current economic conditions and balance sheet and other strategies, including interest rate trends and, the current balance sheet and earnings position, comparisons to budget, cash flow estimates, liquidity positions, liquidity stress tests (monthly), and funding alternatives as necessary, interest rate risk position (monthly), including derivative positions, capital positions of the Company and Bank, reviews (including independent reviews) of the investment portfolio of the Bank and Company and the approval of investment transactions.

A typical ALCO meeting includes discussion of current economic conditions and balance sheet and other strategies, including interest rate trends and the current balance sheet and earnings position, comparisons to budget, cash flow estimates, liquidity positions, liquidity stress tests, and funding alternatives as necessary, interest rate risk position (monthly), including derivative positions, capital positions of the Company and Bank, reviews (including independent reviews) of the investment portfolio of the Bank and Company and the approval of investment transactions.

Additionally, ALCO meetings may include reports and analysis of outside firms to enhance the Committee’s knowledge and understanding of various financial matters.

7 unchanged sentences

Further, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.

Listed below are statistics on the primary geographic areas in which the Company operates as published by the U.S.

Census Bureau and the Federal Reserve Economic Data.

Census Bureau publishes the Economic Census every five years and uses the Economic Census data to benchmark annual, quarterly, and monthly estimates.

The 2022 Economic Census ("Economic Census") for all geographic areas was published in January 2024.

The primary market area of the Bank is the Washington, D.C.

2 unchanged sentences

Census Bureau 2023).

Total employment in the region is approximately 3.4 million per the 2024 Bureau of Labor Statistics ("BLS") report.

The unemployment rate has decreased since 2022.

As of December 31, 2023 and 2022, the region had a 2.5% and 3.10% unemployment rate, respectively.

Total employment in the region is approximately 3.4 million per the 2025 Bureau of Labor Statistics report.

The unemployment rate has increased since 2023.

As of November 30, 2024 and 2023, the region had a 3.2% and 2.5% unemployment rate, respectively.

The Washington, D.C.

metropolitan area contains a substantial federal workforce, as well as a variety of support industries that employ professionals such as attorneys, lobbyists, government contractors, real estate developers and investors, non-profit organizations and consultants.

The Gross Regional Product ("GRP") for the metropolitan area in 2022 was reported at $660.6 billion, per the Federal Reserve Economic Data.

The Gross Regional Product for the metropolitan area in 2023 was reported at $714.7 billion, per the Federal Reserve Economic Data.

This figure can be heavily attributed to the federal government, but other significant sectors include professional and business services, education, healthcare, leisure and hospitality.

The region also has a very active non-profit sector including trade associations, colleges, universities and major hospitals.

Transportation congestion and federal government spending levels remain threats to future economic development and quality of life in the area.

Montgomery County, Maryland, with an estimated total population of 1,059,329 as of 2024 and occupying an area of about 500 square miles, borders Washington, D.C.

to the north and is roughly 30 miles southwest of Baltimore.

Montgomery County represents a diverse and healthy segment of Maryland’s economy.

Montgomery County is a thriving business center and is Maryland’s most populous jurisdiction.

Population in the county is expected to grow at an annualized rate of 0.31% through 2029.

The State of Maryland boasts an attractive demographic profile, and the economy in and around Montgomery County is among the best in Maryland.

The number of jobs in Montgomery County has been relatively stable in the recent past.

The unemployment rate in Montgomery County was 1.5% in November of 2023, based on BLS data.

A highly educated population has contributed to a favorable estimated median household income of $120,728 in 2024, placing it 25th in the nation based on median household income of counties with populations over 100,000.

The estimated number of households totaled 385,170 in 2024.

Economic Census anticipates 60.0% of the County’s residents in 2024 hold college or advanced degrees, placing the population of Montgomery County among the most educated in the nation.

Major areas of employment include a substantial technology sector, biotechnology, software development, a housing construction and renovation sector and legal, financial services, health care and professional services sectors.

Major private employers include Adventist Healthcare, Lockheed Martin, Giant Food and Marriott International.

The county is also an incubator for firms engaged in biotechnology and the area has traditionally attracted significant amounts of venture capital.

Montgomery County is home to many major federal and private sector research and development and regulatory agencies, including the National Institute of Standards and Technology, the National Institutes of Health, National Oceanic and Atmospheric Administration, Naval Research and Development Center, Naval Surface Warfare Center, Nuclear Regulatory Commission, the Food and Drug Administration and the Walter Reed National Military Medical Center in Bethesda.

Prince George’s County, Maryland, covers just under 500 square miles, with an estimated total population of 951,786 as of 2024 and is located just east of Washington, D.C.

In 2024, the county has approximately 337,030 households with an estimated median income of $96,672.

The unemployment rate in the county was 1.9% in November of 2023 according to BLS.

Prince George’s County continues to promote a business friendly environment and is home to major employers such as the University of Maryland, Joint Base Andrews Naval Air Facility Washington, U.S.

Internal Revenue Service and United Parcel Service.

The District of Columbia, in addition to being the seat of the federal government, is a vibrant city with a well-educated, diverse population.

According to survey data from the latest U.S.

Economic Census, the 2024 estimated population of the District of Columbia is 679,947, down from 717,189 in 2020.

The estimated median household income in 2024 is $98,916, above the national median of $75,874.

The growth of residents in the city is due partially to improvements in the city’s services and to the many housing options available, ranging from grand old apartment buildings to Federal era town homes to the most modern condominiums.

The number of households is expected to grow to an estimated 310,328 units in 2024.

The federal government and its employees are a major factor in the economy and support a dynamic business community.

These include law and accounting firms, trade and professional associations, information technology companies, international financial institutions, health and education organizations and research and management companies.

Unemployment was 4.8% at November 2023 according to BLS.

The District of Columbia has a well-educated and highly paid work force.

Large employers include the federal government, many local universities and hospitals.

Another significant factor in the economy is the Leisure and Hospitality industry, as Washington, D.C.

remains a popular tourist destination for both national and international travelers.

Fairfax County and Fairfax City, Virginia, are just across the Potomac River and west from Washington, D.C.

and are a large, affluent jurisdiction with an estimated population of 1,166,795 as of 2024.

Fairfax County covers about 395 square miles.

Fairfax County and Fairfax City are one of the leading technology centers in the US, and are a thriving residential as well as business center with approximately 415,918 households.

The county and city are among the most affluent in the country with an estimated median annual household income of $282,714 in 2024, placing them 4th in the nation for counties with a population over 100,000.

Unemployment was 2.5% in November of 2023 according to BLS.

The population is highly educated, with an expected 63.9% of residents over 25 years of age holding at least a bachelor’s degree as of 2024.

Major companies headquartered in the county, which are also major employers, include Capital One Financial, DXC Technology, Gannett, General Dynamics, Hilton Hotels, Leidos, Sallie Mae and Inova Health Systems.

The county is also home to several federal entities including the Central Intelligence Agency, Fort Belvoir and a major facility of the Smithsonian Institution.

Arlington County, Virginia, has an estimated population of 239,054 as of 2024.

The county is made up of 26 square miles and is situated just west of Washington, D.C., directly across the Potomac River.

There are approximately 109,463 households with an estimated median household income of $134,727 for 2024, placing it 7th in the nation for counties with a population over 100,000.

Significant private sector employers include Amazon, Deloitte, Lockheed Martin, Virginia Hospital Center and Marriott International, Inc.

The unemployment rate was just 2.2% in November of 2023.

This is one of the lowest unemployment rates in the state of Virginia and compares very favorably to the U.S.

rate of 3.5%.

The population is highly educated, with an expected 76.3% of residents over 25 years of age holding at least a bachelor’s degree in 2024.

Alexandria, Virginia is a city with an estimated population of 157,427 as of 2024.

The city is made up of just over 15 square miles and sits on the west bank of the Potomac River just south of Arlington, Virginia.

There are approximately 74,047 households with an estimated median household income of $109,357 as of 2024.

The unemployment rate was 2.4% at November of 2023 according to BLS.

The population is highly educated, with an expected 65.2% of residents over 25 years of age holding at least a bachelor’s degree as of 2024.

Loudoun County, Virginia covers about 520 square miles of land 25 miles northwest of Washington, D.C.

and boasts an estimated population of 442,613 as of 2024.

The estimated median household income in 2024, according to Economic Census data, is $165,244, which is more than twice the national median household income of $75,874 and highest of any county in the nation (regardless of population).

There are approximately 143,652 households in Loudoun County.

The unemployment rate was 2.6% at November of 2023 according to BLS.

The population is highly educated, with an expected 64.3% of residents over 25 years of age holding at least a bachelor’s degree as of 2024.

The major private employers in the county include United Airlines, Inc., Raytheon Company, Loudoun Hospital Center and Swissport U.S.A., Inc.

The county is also home to public sector employees such as the Loudoun County Schools, County of Loudoun, U.S.

Department of Homeland Security and the Postal Service.

Transportation congestion and federal government spending and employment levels remain threats to future economic development and quality of life in the area.

Effective July 1, 2015, the Bank entered into a multi-faceted support agreement with George Mason University ("George Mason"), the Commonwealth of Virginia’s largest public research university.

3 unchanged sentences

market area has a high concentration of large and regional banks based outside the area, one large locally based bank that operates nationwide, numerous community banks and several large credit unions.

Although some consolidation has occurred in the market in the past few years, the Bank continues to compete with other community banks, savings and loan associations, credit unions and finance companies, as well as other kinds of financial institutions and enterprises, such as securities firms, insurance companies, savings associations, private lenders and nontraditional competitors such as fintech companies and internet-based lenders, depositories and payment systems.

Table o f Contents

insurance companies, savings associations, private lenders and nontraditional competitors such as fintech companies and internet-based lenders, depositories and payment systems.

The Bank’s most direct competition for deposits comes from large and regional banks based outside the Washington, D.C.

20 unchanged sentences

As of December 31, 2024, we employed 451 full and part time employees across our 17 locations, which includes our branch offices, corporate offices and lending and other operating facilities.

During 2023, we hired 89 employees and also implemented a reduction-in-force early in the third quarter of 2023 as part of its expense-saving initiatives.

Our voluntary turnover rate was 12%, 17% and 16%, respectively in 2023, 2022 and 2021.

During 2024, we hired 108 employees.

Our voluntary turnover rate was 18%, 12% and 17%, respectively for the years ended December 31, 2024, 2023 and 2022.

None of our employees are represented by a union or subject to a collective bargaining agreement.

Diversity and Inclusion

We strive toward a powerful and diverse team of employees, knowing we are better together with our combined wisdom and intellect.

With a commitment to equality, inclusion and workplace diversity, we focus on understanding, accepting and valuing the differences among people.

We strive toward a powerful and inclusive team of employees, knowing we are better together with our combined wisdom and intellect.

With a commitment to equality and inclusion for every employee, we focus on understanding, accepting and valuing the differences among people.

To accomplish this, we have established a Diversity & Inclusion Advisory Council made up of 20 employee representatives.

Women represented 57% of EagleBank’s employees and racial and ethnic minorities represented 65% of EagleBank’s employees as of December 31, 2023.

In 2023, 81% of our hires were from diverse groups, including women, racial and ethnic minorities, veterans and people with disabilities.

Compensation and Benefits

5 unchanged sentences

With the support of independent third-party experts in this field, we review the compensation of employees and conduct a pay equity analysis as part of our efforts to ensure consistent pay practices.

Table o f Contents

Employee Engagement

22 unchanged sentences

but if the bank is at least 5 years old, the FRB may approve the acquisition.

With certain limited exceptions, a bank holding company is prohibited from acquiring control of any voting shares of any company which is not a bank or bank holding company and from engaging directly or indirectly in any activity other than banking or managing or controlling banks or furnishing services to or performing service for its authorized subsidiaries.

With certain limited exceptions, a bank holding company is prohibited from acquiring control of any voting shares of any company that is not a bank or bank holding company and from engaging directly or indirectly in any activity other than banking or managing or controlling banks or furnishing services to or performing services for its authorized subsidiaries.

A bank holding company may, however, engage in, or acquire an interest in a company that engages in, activities which the FRB has determined by order or regulation to be so closely related to banking or managing or controlling banks as to be properly incident thereto.

3 unchanged sentences

The Gramm Leach-Bliley Act of 1999 ("GLB Act") allows a bank holding company satisfying criteria related to its and its bank subsidiaries' status as well capitalized and well managed and the bank's under the Community Reinvestment Act to certify its status as a financial holding company, which would allow such company to engage in activities that are financial in nature, that are incidental to such activities or are complementary to such activities.

The GLB Act enumerates certain activities

that are deemed financial in nature, such as underwriting insurance or acting as an insurance principal, agent or broker, underwriting, dealing in or making markets in securities and engaging in merchant banking under certain restrictions.

It also authorizes the FRB to determine by regulation what other activities are financial in nature or incidental or complementary thereto.

The GLB Act enumerates certain activities that are deemed financial in nature, such as underwriting insurance or acting as an insurance principal, agent or broker, underwriting, dealing in or making markets in securities and engaging in merchant banking under certain restrictions.

Table o f Contents

authorizes the FRB to determine by regulation what other activities are financial in nature or incidental or complementary thereto.

The Company has not elected financial holding company status.

16 unchanged sentences

The regulations of these various agencies govern most aspects of the Bank’s business, including required reserves against deposits, loans, investments, mergers and acquisitions, borrowing, dividends and location and number of branch offices.

As an institution with over $10 billion in total consolidated assets, the Bank became subject to increased regulation and supervision by the FRB and the FDIC in 2022.

As of December 31, 2024, our total assets were $11.1 billion.

Therefore, the Bank is subject to ongoing (rather than periodic) supervision, targeted examinations, more frequent loan portfolio reviews and other enhanced supervision.

In particular, the FRB and the FDIC focus on the soundness of the Bank’s risk management framework and capabilities, given the greater complexity and impact of the Bank’s risks as a larger institution.

The laws and regulations governing the Bank generally have been promulgated to protect depositors and the DIF and not for the purpose of protecting shareholders or other investors.

8 unchanged sentences

or (iii) the customer not obtain some other credit, property or service from competitors, except for reasonable requirements to assure the soundness of credit extended.

Table o f Contents

Branching and Interstate Banking .

9 unchanged sentences

Deposit brokers may attract deposits from individuals and companies throughout the United States and internationally whose deposit decisions are based primarily on obtaining the highest interest rates.

Certain reciprocal deposits of up to the lesser of $5 billion or 20% of an institution’s deposits are excluded from the definition of brokered deposits, where the institution is "well-capitalized" and has a composite rating of 1 or 2.

As of December 31, 2023, brokered deposits represented approximately 29% of our total deposits.

In addition, banks that become less than "well-capitalized" under applicable regulatory capital requirements may be restricted in their ability to accept or renew, or prohibited from accepting or renewing, brokered deposits, and less than "well capitalized" banks also are subject to the interest rate restrictions on deposits.

Banks that become less than "well-capitalized" under applicable regulatory capital requirements may be restricted in their ability to accept or renew, or prohibited from accepting or renewing, brokered deposits, and less than "well capitalized" banks also are subject to interest rate restrictions on deposits.

Bank Secrecy Act .

1 unchanged sentence

The Bank Secrecy Act requires financial institutions, including banks, to establish anti-money laundering programs, including employee training and independent audit requirements, meet minimum standards specified by the act, follow minimum standards for customer identification and maintenance of customer identification records and regularly compare customer lists against lists of suspected terrorists, terrorist organizations and money launderers.

The costs or other effects of the compliance burdens imposed by the Bank Secrecy Act or future anti-terrorist, homeland security or anti-money laundering legislation or regulation cannot be predicted with certainty.

Office of Foreign Assets Control.

7 unchanged sentences

jurisdiction (including property in the possession or control of U.S.

Blocked assets (e.g.

property and bank deposits) cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC.

Blocked assets (e.g., property and bank deposits) cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC.

Failure to comply with these sanctions could have serious legal and reputational consequences.

2 unchanged sentences

Risk-based capital requirements assign different capital requirements to various classes of assets and off-balance sheet items based on standardized supervisory measures of risk.

The Dodd-Frank Act additionally requires capital requirements to be countercyclical so that the required amount of capital increases in times of economic expansion and decreases in times of economic contraction, consistent with safety and soundness.

The Dodd-Frank Act additionally requires capital requirements to be counter cyclical so that the required amount of capital increases in times of economic expansion and decreases in times of economic contraction, consistent with safety and soundness.

The federal banking agencies have adopted rules, referred to as the Basel III Rules, to implement the framework for strengthening international capital and liquidity regulation adopted by the Basel Committee on Banking Supervision, or Basel III.

1 unchanged sentence

(ii) required that most adjustments to regulatory capital measures be made to CET1 and not to the other components of capital;

expanded the scope of the adjustments to capital that may be made as compared to prior regulations;

(iii) expanded the scope of the adjustments to capital that may be made as compared to prior regulations;

and (iv) specified that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting specified requirements.

Under the Basel III Rules, repurchase or redemption of Additional Tier 1 and Tier 2 capital instruments requires prior approval of the appropriate federal banking agency, which in our case is the FRB for both the Company and the Bank.

Prior approval to repurchase or redeem CET1 instruments is only required under the Basel III Rules to the extent that a separate legal or regulatory requirement for prior approval applies, such as the restrictions described under “Share Repurchases” above.

Prior approval to repurchase or

Table o f Contents

redeem CET1 instruments is only required under the Basel III Rules to the extent that a separate legal or regulatory requirement for prior approval applies, such as the restrictions described under “Share Repurchases” above.

The Basel III Rules require institutions to maintain:

13 unchanged sentences

However, the revised capital requirements of the proposed rule would not apply to the Company or the Bank because they have less than $100 billion in total consolidated assets and trading assets and liabilities below the threshold for market risk requirements.

The Federal Reserve has indicated that it expects to work with the other federal banking regulators in 2025 on a revised proposal.

In 2016, the Financial Accounting Standards Board ("FASB") issued the current expected credit losses model ("CECL"), which became applicable to us on January 1, 2020.

5 unchanged sentences

We have elected to adopt the option provided in the March 2020 interim final rule.

Table o f Contents

Prompt Corrective Action .

37 unchanged sentences

(iii) the institution is in an unsafe or unsound condition;

there is a willful violation of a cease-and-desist order;

(iv) there is a willful violation of a cease-and-desist order;

(v) the institution is unable to pay its obligations in the ordinary course of business;

(vi) losses or threatened losses deplete all or substantially all of an institution’s capital, and there is no reasonable prospect of becoming “adequately capitalized” without assistance;

(vi) losses or threatened losses deplete all or substantially all of an institution’s capital, and there is no reasonable

Table o f Contents

prospect of becoming “adequately capitalized” without assistance;

(vii) there is any violation of law or unsafe or unsound practice or condition that is likely to cause insolvency or substantial dissipation of assets or earnings, weaken the institution’s condition or otherwise seriously prejudice the interests of depositors or the insurance fund;

7 unchanged sentences

Other actions or inactions may provide the basis for enforcement action, including misleading or untimely reports filed with regulatory authorities.

The Dodd-Frank Act .

The Dodd-Frank Act made significant changes to the U.S.

bank regulatory structure, affecting the lending, deposit, investment, trading and operating activities of financial institutions and their holding companies.

The Dodd-Frank Act required a number of federal agencies to adopt a broad range of rules and regulations.

The following provisions are considered to be of greatest significance to the Company:

• Expanded the authority of the FRB to examine bank holding companies and their subsidiaries, including insured depository institutions.

• Required a bank holding company to be well capitalized and well managed to receive approval of an interstate bank acquisition.

• Provided mortgage reform provisions regarding a customer’s ability to pay and making more loans subject to provisions for higher-cost loans and new disclosures.

• Created the Consumer Financial Protection Bureau ("CFPB"), which has rulemaking authority for a wide range of consumer protection laws that apply to all banks and has broad powers to supervise and enforce consumer protection laws.

• Created the Financial Stability Oversight Council with authority to identify institutions and practices that might pose a systemic risk.

• Introduced additional corporate governance and executive compensation requirements on companies subject to the Securities Exchange Act of 1934, as amended ("Exchange Act").

• Permitted FDIC-insured banks to pay interest on business demand deposits.

• Adopted Section 13 of the BHC Act, commonly referred to as the Volcker Rule, which restricts the ability of institutions and their holding companies and affiliates to make proprietary investments in securities, to invest in certain covered nonpublic investment vehicles and to extend credit to such vehicles.

• Codified the requirement that holding companies and other companies that directly or indirectly control an insured depository institution serve as a source of financial strength.

• Made permanent the $250 thousand limit for federal deposit insurance.

• Permitted national and state banks to establish interstate branches to the same extent as the branch host state allows establishment of in-state branches.

The Economic Growth, Regulatory Relief, and Consumer Protection Act ("2018 Act") includes provisions revising Dodd-Frank Act provisions, that among other things:

(i) exempt banks with less than $10 billion in assets from the ability-to-repay requirements for certain qualified residential mortgage loans;

(ii) exempt certain transactions valued at less than $400,000 in rural areas from appraisal requirements;

(iii) exempt banks and credit unions that originate fewer than 500 open-end and 500 closed-end mortgages from the expanded data disclosures required under the Home Mortgage Disclosure Act ("HMDA");

(iv) amend the SAFE Mortgage Licensing Act by providing registered mortgage loan originators in good standing with 120 days of transitional authority to originate loans when moving from a federal depository institution to a non-depository institution or across state lines;

(v) require the CFPB to clarify how TILA-RESPA Integrated Disclosure applies to mortgage assumption transactions and construction-to-permanent home loans as well as outline certain liabilities related to model disclosure use;

(vi) revise treatment of high volatility CRE ("HVCRE") exposures;

and (vii) create the simplified Community Bank Leverage Capital Ratio.

The 2018 Act also exempts community banks from the Volcker Rule if they have less than $10 billion in total consolidated assets.

The 2018 Act also adds certain protections for consumers, including veterans and active duty military personnel, expands credit freezes and calls for the creation of an identity theft protection database.

In addition, other new proposals for legislation continue to be introduced in the Congress that could further substantially increase regulation of the bank and non-bank financial services industries and impose restrictions on the operations and general ability of firms within the industry to conduct business consistent with historical practices.

Federal and state regulatory agencies also frequently adopt changes to their regulations or change the manner in which existing regulations are applied.

Certain aspects of current or proposed regulatory or legislative changes to laws applicable to the financial industry, if enacted or adopted, may impact the profitability of our business activities, require more oversight or change certain of our business practices, including the ability to offer new products, obtain financing, attract deposits, make loans and achieve satisfactory interest spreads and could expose the Company to additional costs, including increased compliance costs.

These changes also may require significant management attention and resources to make any necessary changes to operations to comply and could have an adverse effect on our business, financial condition and results of operations.

Consumer Financial Protection Bureau .

3 unchanged sentences

The Dodd-Frank Act permits states to adopt consumer protection laws and standards that are more stringent than those adopted at the federal level and, in certain circumstances, permits state attorneys general to enforce compliance with both the state and federal laws and regulations.

As an institution with over $10 billion in total consolidated assets, the Bank became subject to increased regulation and supervision by the FRB and the FDIC in 2022.

As of December 31, 2023, our total assets were $11.7 billion.

Therefore, the Bank is subject to ongoing (rather than periodic) supervision, targeted examinations, more frequent loan portfolio reviews and other enhanced supervision.

The Bank is also required to provide information to the CFPB on a quarterly basis, and is subject to periodic examinations by the CFPB focused on compliance with consumer laws and regulations, as a banking organization over $10 billion in total assets.

1 unchanged sentence

The changes may also require us to dedicate significant management attention and resources to evaluate and make necessary changes to comply with the new statutory and regulatory requirements.

The CFPB has engaged in a number of rulemakings related to residential mortgage transactions.

The CFPB has issued rules related to a borrower’s ability to repay and qualified mortgage standards, mortgage servicing standards, loan originator compensation standards, requirements for high-cost mortgages, appraisal and escrow standards and requirements for higher-priced mortgages.

The CFPB has also issued rules establishing integrated disclosure requirements for lenders and settlement agents in connection with most closed end, real estate secured consumer loans and rules which, among other things, expand the scope of information lenders must report in connection with mortgage and other housing-related loan applications under HMDA.

These rules include significant regulatory and compliance changes and are expected to have a broad impact on the financial services industry.

Because the Company ceased originating residential real estate mortgage loans and completed residual origination and sales activities during the year ended December 31, 2023, these rules generally do not have a significant effect on the Company’s operations.

On October 19, 2023, the CFPB proposed a new rule that would require a provider of payment accounts or products, such as a bank, to make data available to consumers upon request regarding the products or services they obtain from the provider.

Any such data provider would also have to make such data available to third parties, with the consumer’s express authorization and through an interface that satisfies formatting, performance and security standards, for the purpose of such third parties providing the consumer with financial products or services requested by the consumer.

Data that would be required to be made available under the rule would include transaction information, account balance, account and routing numbers, terms and conditions, upcoming bill information, and certain account verification data.

The proposed rule is intended to give consumers control over their financial data, including with whom it is shared, and encourage competition in the provision of consumer financial products or services.

For banks with at least $850 million and less than $50 billion in total assets, compliance with the proposed rule’s requirements would be required approximately two and a half years after adoption of the final rule.

On January 17, 2024, the CFPB proposed significant reforms to the regulatory framework governing overdraft practices applicable to banks such as the Bank that have more than $10 billion in assets.

The proposed rule would modify or eliminate several long-standing exclusions from requirements generally applicable to consumer credit that previously exempted certain overdraft practices.

The proposal would also generally require banks to restructure many overdraft fees, overdraft lines of credit, and other overdraft practices as separate consumer credit accounts that would be subject to those requirements.

These changes to the regulatory framework could result in the Bank, among other things, facing higher compliance costs in charging overdraft fees, experiencing a decreased ability to recover amounts extended as overdraft protection, reducing the availability of overdraft protection, and/or charging lower overdraft fees.

In October 2024, the CFPB finalized a new rule that requires a provider of payment accounts or products, such as a bank, to make data available to consumers upon request regarding the products or services they obtain from the provider.

Any such data provider is also required to make such data available to third parties, with the consumer’s express authorization and through an interface that satisfies formatting, performance and security standards, for the purpose of such third parties providing the consumer with financial products or services requested by the consumer.

Data required to be made available under the rule includes transaction information, account balance, account and routing numbers, terms and conditions, upcoming bill information, and certain account verification data.

The rule is intended to give consumers control over their financial data, including with whom it is shared, and encourage competition in the provision of consumer financial products or services.

For banks with at least $10 billion but less than $250 billion in total assets, compliance with the rule’s requirements is required by April 1, 2027.

In December 2024, the CFPB issued a final rule that modifies or eliminates several long-standing exclusions from requirements generally applicable to consumer credit that previously exempted certain overdraft practices.

The rule generally requires banks to restructure many overdraft fees, overdraft lines of credit, and other overdraft practices as separate consumer credit accounts that would be subject to those requirements.

This rule applies to banks with over $10 billion in total assets, including the Bank, starting in October 2025.

Compliance with these new requirements could result in the Bank, among other things, facing higher compliance costs in charging overdraft fees, experiencing a decreased ability to recover amounts extended as overdraft protection, reducing the availability of overdraft protection, and/or charging lower overdraft fees.

Fair and Responsible Banking.

5 unchanged sentences

Department of Justice and state attorneys general.

Table o f Contents

Financial Privacy and Cybersecurity .

20 unchanged sentences

Most provisions of the final rule will become effective on January 1, 2026, and the data reporting requirements will become effective on January 1, 2027.

However, the final rule is currently enjoined as to the plaintiff trade associations while a federal court considers a lawsuit challenging the rule.

Concentration and Risk Guidance.

9 unchanged sentences

or (ii) total reported commercial real estate loans, excluding loans secured by owner-occupied commercial real estate, representing 300% or more of the institution’s total risk-based capital and the institution’s commercial real estate loan portfolio has increased 50% or more during the prior 36 months, are identified as having potential commercial real estate concentration risk.

As of December 31, 2023, non-owner-occupied commercial real estate loans (including construction, land and land development loans) represented 350.4% of consolidated risk based capital;

As of December 31, 2024, as per the regulatory guidance, commercial real estate loans (including construction, land and land

Table o f Contents

development loans) represented 372.6% of consolidated risk based capital;

however, growth in that segment over the past 36 months at 26.8% did not exceed the 50% threshold laid out in the regulatory guidance.

Construction, land and land development loans represented 122.60% of consolidated risk based capital as of December 31, 2024.

Institutions, which are deemed to have concentrations in commercial real estate lending are expected to employ heightened levels of risk management with respect to their commercial real estate portfolios, and may be required to hold higher levels of capital.

Institutions that are deemed to have concentrations in commercial real estate lending are expected to employ heightened levels of risk management with respect to their commercial real estate portfolios, and may be required to hold higher levels of capital.

FDIC Insurance Premiums .

15 unchanged sentences

Because the Bank had $4.4 billion in estimated uninsured deposits at December 31, 2022, the special assessment will not affect the Bank.

Increased Focus on Lending to Members of the Military .

The federal banking agencies and the Department of Justice have recently increased their focus on financial institution compliance with the Service members Civil Relief Act (“SCRA”).

The SCRA requires a bank to cap the interest rate at 6% for any loan to a member of the military who goes on active duty after taking out the loan.

It also limits the actions the bank can take when a service member is in foreclosure.

The Bank fully complies with this rule.

Affiliate Transactions .

10 unchanged sentences

Under Federal Reserve guidance, which covers all employees that have the ability to materially affect the risk profile of an organization, either individually or as part of a group, a banking organization’s incentive compensation arrangements should (i) provide incentives that appropriately balance risk and financial results in a manner that does not encourage employees to expose their organizations to imprudent risk, (ii) be compatible with effective internal controls and risk management and (iii) be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors.

Table o f Contents

In 2016, the U.S.

6 unchanged sentences

In recent years, federal, state and international lawmakers and regulators have increased their focus on financial institutions’ and other companies’ risk oversight, disclosures and practices in connection with climate change and other environmental, social and governance (“ESG”) matters.

For example, on March 21, 2022, the SEC issued a proposed rule on the enhancement and standardization of climate-related disclosures for investors.

The proposed rule would require public issuers, including the Company, to significantly expand the scope of climate-related disclosures in their SEC filings.

The SEC has also announced plans to propose rules to require enhanced disclosure regarding human capital management and board diversity for public issuers.

For example, in March 2024, the SEC issued a final rule on the enhancement and standardization of climate-related disclosures for investors.

The final rule requires public issuers, including us, to provide certain climate-related disclosures in their SEC filings.

In April 2024, the SEC issued an order staying the new rule pending judicial review of certain legal challenges to the rule.

In addition, several states have enacted or proposed statutes or regulations addressing climate change and other ESG issues, including “anti-ESG” statutes or regulations.

For example, California enacted climate-related disclosure laws requiring certain companies doing business in California to make certain climate-related disclosures, including but not limited to greenhouse gas emissions data and climate-related risks.

Future Legislation and Regulation

In addition to the discussion above, other new proposals for legislation continue to be introduced in the Congress that could further substantially increase regulation of the bank and non-bank financial services industries and impose restrictions on the operations and general ability of firms within the industry to conduct business consistent with historical practices.

Federal and state regulatory agencies also frequently adopt changes to their regulations or change the manner in which existing regulations are applied.

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 1. Business