FIRST UNITED CORP/MD/ 10-Q

Item 1. Financial Statements First United Corporation and Subsidiaries Consolidated Statements of Financial Condition (In thousands, except share data - Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 December 31, 2023 ​ ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ Cash and due from banks ​ $ 61,140 ​ $ 48,343 Interest bearing deposits in banks ​ ​ 1,252 ​ ​ 1,410 Cash and cash equivalents ​ ​ 62,392 ​ ​ 49,753 Investment securities – available for sale (at fair value) ​ ​ 93,160 ​ ​ 97,169 Investment securities – held to maturity, net of allowance for credit losses of $ 59 at September 30, 2024 and $ 45 at December 31, 2023 (fair value $ 149,348 at September 30, 2024 and $ 184,415 at December 31, 2023) ​ ​ 174,054 ​ ​ 214,297 Restricted investment in bank stock, at cost ​ ​ 5,765 ​ ​ 5,250 Loans held for sale ​ ​ 232 ​ ​ 443 Loans ​ ​ 1,447,883 ​ ​ 1,406,667 Unearned fees ​ ​ ( 333 ) ​ ​ ( 340 ) Allowance for credit losses ​ ​ ( 18,010 ) ​ ​ ( 17,480 ) Net loans ​ ​ 1,429,540 ​ ​ 1,388,847 Premises and equipment, net ​ ​ 30,704 ​ ​ 31,459 Goodwill and other intangibles ​ ​ 11,856 ​ ​ 12,103 Bank owned life insurance ​ ​ 48,608 ​ ​ 47,607 Deferred tax assets ​ ​ 9,357 ​ ​ 11,133 Other real estate owned, net ​ ​ 2,860 ​ ​ 4,493 Right of use assets ​ ​ 1,163 ​ ​ 1,367 Pension asset ​ ​ 16,268 ​ ​ 11,208 Accrued interest receivable ​ ​ 7,054 ​ ​ 7,487 Other assets ​ ​ 23,113 ​ ​ 23,244 Total Assets ​ $ 1,916,126 ​ $ 1,905,860 Liabilities and Shareholders’ Equity ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ ​ ​ Non-interest bearing deposits ​ $ 419,437 ​ $ 427,670 Interest bearing deposits ​ ​ 1,120,958 ​ ​ 1,123,307 Total deposits ​ ​ 1,540,395 ​ ​ 1,550,977 Short-term borrowings ​ ​ 50,206 ​ ​ 45,418 Long-term borrowings ​ ​ 120,929 ​ ​ 110,929 Operating lease liability ​ ​ 1,343 ​ ​ 1,556 SERP deferred compensation ​ ​ 10,022 ​ ​ 9,777 Allowance for credit losses on off-balance sheet credit exposures ​ ​ 856 ​ ​ 873 Accrued interest payable ​ ​ 1,854 ​ ​ 612 Other liabilities ​ ​ 15,118 ​ ​ 22,515 Dividends payable ​ ​ 1,424 ​ ​ 1,330 Total Liabilities ​ ​ 1,742,147 ​ ​ 1,743,987 Shareholders’ Equity: ​ ​ ​ ​ ​ ​ Common Stock – par value $ 0.01 per share; Authorized 25,000,000 shares; issued and outstanding 6,468,625 shares at September 30, 2024 and 6,639,888 at December 31, 2023 ​ ​ 65 ​ ​ 66 Surplus ​ ​ 20,288 ​ ​ 23,734 Retained earnings ​ ​ 184,239 ​ ​ 173,900 Accumulated other comprehensive loss ​ ​ ( 30,613 ) ​ ​ ( 35,827 ) Total Shareholders’ Equity ​ ​ 173,979 ​ ​ 161,873 Total Liabilities and Shareholders’ Equity ​ $ 1,916,126 ​ $ 1,905,860 ​ See accompanying notes to the consolidated financial statements 3 Table of Contents First United Corporation and Subsidiaries Consolidated Statements of Operations (In thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ 2024 2023 ​ ​ (Unaudited) Interest income ​ ​ ​ ​ ​ ​ Interest and fees on loans ​ $ 60,457 ​ $ 50,279 Interest on investment securities ​ ​ ​ ​ ​ ​ Taxable ​ ​ 5,088 ​ ​ 5,339 Exempt from federal income tax ​ ​ 162 ​ ​ 661 Total investment income ​ ​ 5,250 ​ ​ 6,000 Other ​ ​ 2,561 ​ ​ 2,686 Total interest income ​ ​ 68,268 ​ ​ 58,965 Interest expense ​ ​ ​ ​ ​ ​ Interest on deposits: ​ ​ ​ ​ ​ ​ Savings ​ ​ 138 ​ ​ 189 Interest-bearing transaction accounts ​ ​ 15,109 ​ ​ 8,912 Time deposits ​ ​ 3,996 ​ ​ 3,599 Total interest on deposits ​ ​ 19,243 ​ ​ 12,700 Interest on short-term borrowings ​ ​ 1,437 ​ ​ 93 Interest on long-term borrowings ​ ​ 3,310 ​ ​ 3,496 Total Interest Expense ​ ​ 23,990 ​ ​ 16,289 Net Interest income ​ ​ 44,278 ​ ​ 42,676 Credit loss expense - loans ​ ​ 2,407 ​ ​ 1,170 Credit loss expense - debt securities held to maturity ​ ​ 14 ​ ​ 45 Credit loss credit - off-balance sheet credit exposures ​ ​ ( 17 ) ​ ​ ( 14 ) Total credit loss expense ​ ​ 2,404 ​ ​ 1,201 Net interest income after provision for credit losses ​ ​ 41,874 ​ ​ 41,475 Other operating income ​ ​ ​ ​ ​ ​ Net gains on sales of residential mortgage loans ​ ​ 282 ​ ​ 322 Net gains ​ ​ 282 ​ ​ 322 Other Income ​ ​ ​ ​ ​ ​ Service charges on deposit accounts ​ ​ 1,667 ​ ​ 1,631 Other service charges ​ ​ 676 ​ ​ 706 Trust department ​ ​ 6,771 ​ ​ 6,134 Debit card income ​ ​ 2,931 ​ ​ 2,981 Bank owned life insurance ​ ​ 1,000 ​ ​ 936 Brokerage commissions ​ ​ 1,154 ​ ​ 800 Other ​ ​ 288 ​ ​ 350 Total other income ​ ​ 14,487 ​ ​ 13,538 Total other operating income ​ ​ 14,769 ​ ​ 13,860 Other operating expenses ​ ​ ​ ​ ​ ​ Salaries and employee benefits ​ ​ 21,573 ​ ​ 21,130 FDIC premiums ​ ​ 810 ​ ​ 724 Equipment expense ​ ​ 2,185 ​ ​ 2,245 Occupancy expense of premises ​ ​ 2,315 ​ ​ 2,272 Data processing expense ​ ​ 4,073 ​ ​ 4,000 Marketing expense ​ ​ 469 ​ ​ 522 Professional services ​ ​ 1,412 ​ ​ 1,502 Contract labor ​ ​ 416 ​ ​ 446 Telephone ​ ​ 309 ​ ​ 341 Other real estate owned expense, net ​ ​ 224 ​ ​ 281 Investor relations ​ ​ 228 ​ ​ 280 Contributions ​ ​ 181 ​ ​ 217 Other ​ ​ 3,364 ​ ​ 3,974 Total other operating expenses ​ ​ 37,559 ​ ​ 37,934 Income before income tax expense ​ ​ 19,084 ​ ​ 17,401 Provision for income tax expense ​ ​ 4,701 ​ ​ 4,099 Net Income ​ $ 14,383 ​ $ 13,302 Basic net income per share ​ $ 2.20 ​ $ 1.99 Diluted net income per share ​ $ 2.19 ​ $ 1.98 Weighted average number of basic shares outstanding ​ ​ 6,546 ​ ​ 6,698 Weighted average number of diluted shares outstanding ​ ​ 6,558 ​ ​ 6,714 Dividends declared per common share ​ $ 0.62 ​ $ 0.60 ​ See accompanying notes to the consolidated financial statements ​ 4 Table of Contents First United Corporation and Subsidiaries Consolidated Statements of Operations (In thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ September 30, ​ 2024 2023 ​ ​ (Unaudited) Interest income ​ ​ ​ ​ ​ ​ Interest and fees on loans ​ $ 21,018 ​ $ 18,055 Interest on investment securities ​ ​ ​ ​ ​ ​ Taxable ​ ​ 1,647 ​ ​ 1,792 Exempt from federal income tax ​ ​ 56 ​ ​ 123 Total investment income ​ ​ 1,703 ​ ​ 1,915 Other ​ ​ 536 ​ ​ 1,194 Total interest income ​ ​ 23,257 ​ ​ 21,164 Interest expense ​ ​ ​ ​ ​ ​ Interest on deposits: ​ ​ ​ ​ ​ ​ Savings ​ ​ 45 ​ ​ 54 Interest-bearing transaction accounts ​ ​ 5,397 ​ ​ 3,784 Time deposits ​ ​ 1,137 ​ ​ 1,834 Total interest on deposits ​ ​ 6,579 ​ ​ 5,672 Interest on short-term borrowings ​ ​ 467 ​ ​ 33 Interest on long-term borrowings ​ ​ 983 ​ ​ 1,475 Total Interest Expense ​ ​ 8,029 ​ ​ 7,180 Net Interest income ​ ​ 15,228 ​ ​ 13,984 Credit loss expense - loans ​ ​ 195 ​ ​ 322 Credit loss expense - debt securities held to maturity ​ ​ 14 ​ ​ 45 Credit loss expense/(credit) - off-balance sheet credit exposures ​ ​ 55 ​ ​ ( 104 ) Total credit loss expense ​ ​ 264 ​ ​ 263 Net interest income after provision for credit losses ​ ​ 14,964 ​ ​ 13,721 Other operating income ​ ​ ​ ​ ​ ​ Gains on sales of residential mortgage loans ​ ​ 141 ​ ​ 182 Net gains ​ ​ 141 ​ ​ 182 Other Income ​ ​ ​ ​ ​ ​ Service charges on deposit accounts ​ ​ 555 ​ ​ 569 Other service charges ​ ​ 236 ​ ​ 230 Trust department ​ ​ 2,328 ​ ​ 2,139 Debit card income ​ ​ 1,000 ​ ​ 995 Bank owned life insurance ​ ​ 340 ​ ​ 320 Brokerage commissions ​ ​ 297 ​ ​ 245 Other ​ ​ 156 ​ ​ 218 Total other income ​ ​ 4,912 ​ ​ 4,716 Total other operating income ​ ​ 5,053 ​ ​ 4,898 Other operating expenses ​ ​ ​ ​ ​ ​ Salaries and employee benefits ​ ​ 7,160 ​ ​ 6,964 FDIC premiums ​ ​ 256 ​ ​ 254 Equipment ​ ​ 627 ​ ​ 718 Occupancy ​ ​ 709 ​ ​ 745 Data processing ​ ​ 1,333 ​ ​ 1,388 Marketing ​ ​ 151 ​ ​ 242 Professional services ​ ​ 477 ​ ​ 488 Contract labor ​ ​ 149 ​ ​ 155 Telephone ​ ​ 97 ​ ​ 115 Other real estate owned expense, net ​ ​ 124 ​ ​ 139 Investor relations ​ ​ 84 ​ ​ 74 Contributions ​ ​ 65 ​ ​ 74 Other ​ ​ 1,082 ​ ​ 1,429 Total other operating expenses ​ ​ 12,314 ​ ​ 12,785 Income before income tax expense ​ ​ 7,703 ​ ​ 5,834 Provision for income tax expense ​ ​ 1,932 ​ ​ 1,321 Net Income ​ $ 5,771 ​ $ 4,513 Basic net income per common share ​ $ 0.89 ​ $ 0.67 Diluted net income per common share ​ $ 0.89 ​ $ 0.67 Weighted average number of basic shares outstanding ​ ​ 6,468 ​ ​ 6,714 Weighted average number of diluted shares outstanding ​ ​ 6,482 ​ ​ 6,728 Dividends declared per common share ​ $ 0.22 ​ $ 0.20 ​ See accompanying notes to the consolidated financial statements 5 Table of Contents ​ First United Corporation and Subsidiaries Consolidated Statements of Comprehensive Income (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ ​ 2024 ​ 2023 Comprehensive Income ​ (Unaudited) Net Income ​ $ 14,383 ​ $ 13,302 Other comprehensive income/(loss), net of tax and reclassification adjustments: ​ ​ ​ ​ ​ ​ Available for sale securities: ​ ​ ​ ​ ​ ​ Unrealized holding gains/(losses) on investments with credit related impairment ​ $ 103 ​ $ ( 777 ) Reclassification adjustment for accretable yield realized in income ​ ​ 152 ​ ​ 152 Other comprehensive loss on investments with credit related impairment ​ ​ ( 49 ) ​ ​ ( 929 ) ​ ​ ​ ​ ​ ​ ​ Unrealized holding gains/(losses) on all other AFS investments ​ $ 2,044 ​ $ ( 5,065 ) Other comprehensive income/(loss) on all other AFS investments ​ ​ 2,044 ​ ​ ( 5,065 ) ​ ​ ​ ​ ​ ​ ​ Held to Maturity Securities ​ ​ ​ ​ ​ ​ Unrealized holding gains on securities transferred to held to maturity ​ $ — ​ $ — Reclassification adjustment for amortization realized in income ​ ​ ( 503 ) ​ ​ ( 513 ) Other comprehensive income on HTM investments ​ ​ 503 ​ ​ 513 ​ ​ ​ ​ ​ ​ ​ Cash flow hedges: ​ ​ ​ ​ ​ ​ Unrealized holding (losses)/gains on cash flow hedges ​ $ ( 319 ) ​ $ 30 Other comprehensive (loss)/income on cash flow hedges ​ ​ ( 319 ) ​ ​ 30 ​ ​ ​ ​ ​ ​ ​ Pension plan liability: ​ ​ ​ ​ ​ ​ Unrealized holding gains/(losses) on pension plan liability ​ $ 4,181 ​ $ ( 1,250 ) Reclassification adjustment for amortization of unrecognized losses realized in income ​ ​ ( 608 ) ​ ​ ( 750 ) Other comprehensive income/(loss) on pension plan liability ​ ​ 4,789 ​ ​ ( 500 ) ​ ​ ​ ​ ​ ​ ​ SERP liability: ​ ​ ​ ​ ​ ​ Unrealized holding gains on SERP liability ​ $ — ​ $ — Reclassification adjustment for amortization of unrealized (losses)/gains realized in income ​ ​ ( 118 ) ​ ​ 6 Other comprehensive income/(loss) on SERP liability ​ ​ 118 ​ ​ ( 6 ) Other comprehensive income/(loss) before income tax ​ ​ 7,086 ​ ​ ( 5,957 ) Income tax effect related to other comprehensive income/(loss) ​ ​ ( 1,872 ) ​ ​ 1,410 ​ ​ ​ ​ ​ ​ ​ Other comprehensive income/(loss), net of tax ​ ​ 5,214 ​ ​ ( 4,547 ) Comprehensive income ​ $ 19,597 ​ $ 8,755 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ See accompanying notes to the consolidated financial statements ​ 6 Table of Contents First United Corporation and Subsidiaries Consolidated Statements of Comprehensive Income (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ September 30, ​ 2024 2023 Comprehensive Income ​ (Unaudited) Net Income ​ $ 5,771 ​ $ 4,513 Other comprehensive income/(loss), net of tax and reclassification adjustments: ​ ​ ​ ​ ​ ​ Available for sale securities: ​ ​ ​ ​ ​ ​ Unrealized holding gains on investments with credit related impairment ​ $ 740 ​ $ 633 Reclassification adjustment for accretable yield realized in income ​ ​ 51 ​ ​ 51 Other comprehensive income on investments with credit related impairment ​ ​ 689 ​ ​ 582 ​ ​ ​ ​ ​ ​ ​ Unrealized holding gains/(losses) on all other AFS investments ​ $ 3,384 ​ $ ( 4,183 ) Other comprehensive income/(loss) on all other AFS investments ​ ​ 3,384 ​ ​ ( 4,183 ) ​ ​ ​ ​ ​ ​ ​ Held to Maturity Securities ​ ​ ​ ​ ​ ​ Unrealized holding gains on HTM investments ​ $ — ​ $ — Reclassification adjustment for amortization realized in income ​ ​ ( 182 ) ​ ​ ( 167 ) Other comprehensive income on HTM investments ​ ​ 182 ​ ​ 167 ​ ​ ​ ​ ​ ​ ​ Cash flow hedges: ​ ​ ​ ​ ​ ​ Unrealized holding (losses)/gains on cash flow hedges ​ $ ( 323 ) ​ $ 14 Other comprehensive (loss)/income on cash flow hedges ​ ​ ( 323 ) ​ ​ 14 ​ ​ ​ ​ ​ ​ ​ Pension plan liability: ​ ​ ​ ​ ​ ​ Unrealized holding gains/(losses) on pension plan liability ​ $ 3,229 ​ $ ( 1,352 ) Reclassification adjustment for amortization of unrecognized losses realized in income ​ ​ ( 202 ) ​ ​ ( 251 ) Other comprehensive income/(loss) on pension plan liability ​ ​ 3,431 ​ ​ ( 1,101 ) ​ ​ ​ ​ ​ ​ ​ SERP liability: ​ ​ ​ ​ ​ ​ Unrealized holding gains on SERP liability ​ $ — ​ $ — Reclassification adjustment for amortization of unrealized (losses)/gains realized in income ​ ​ ( 39 ) ​ ​ 2 Other comprehensive income/(loss) on SERP liability ​ ​ 39 ​ ​ ( 2 ) ​ ​ ​ ​ ​ ​ ​ Other comprehensive income/(loss) before income tax ​ ​ 7,402 ​ ​ ( 4,523 ) Income tax effect related to other comprehensive income/(loss) ​ ​ ( 1,955 ) ​ ​ 1,060 ​ ​ ​ ​ ​ ​ ​ Other comprehensive income/(loss), net of tax ​ ​ 5,447 ​ ​ ( 3,463 ) Comprehensive income ​ $ 11,218 ​ $ 1,050 ​ ​ ​ See accompanying notes to the consolidated financial statements ​ 7 Table of Contents First United Corporation and Subsidiaries Consolidated Statements of Changes in Shareholders’ Equity (In thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock Surplus Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders' Equity Balance at January 1, 2024 ​ $ 66 ​ $ 23,734 ​ $ 173,900 ​ $ ( 35,827 ) ​ $ 161,873 Net income ​ ​ ​ ​ ​ ​ ​ ​ 3,698 ​ ​ ​ ​ ​ 3,698 Other comprehensive income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,105 ​ ​ 1,105 Stock based compensation ​ ​ ​ ​ ​ 57 ​ ​ ​ ​ ​ ​ ​ ​ 57 Common stock issued - 8,757 shares ​ ​ ​ ​ ​ 74 ​ ​ ​ ​ ​ ​ ​ ​ 74 Common stock dividend declared - $ 0.20 per share ​ ​ ​ ​ ​ ​ ​ ​ ( 1,326 ) ​ ​ ​ ​ ​ ( 1,326 ) Balance at March 31, 2024 ​ $ 66 ​ $ 23,865 ​ $ 176,272 ​ $ ( 34,722 ) ​ $ 165,481 Net income ​ ​ ​ ​ ​ ​ ​ ​ 4,914 ​ ​ ​ ​ ​ 4,914 Other comprehensive loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 1,338 ) ​ ​ ( 1,338 ) Stock based compensation ​ ​ ​ ​ ​ 376 ​ ​ ​ ​ ​ ​ ​ ​ 376 Common stock issued - 18,756 shares ​ ​ ​ ​ ​ 70 ​ ​ ​ ​ ​ ​ ​ ​ 70 Common stock repurchased - 201,800 shares ​ ​ ( 1 ) ​ ​ ( 4,031 ) ​ ​ ​ ​ ​ ​ ​ ​ ( 4,032 ) Common stock dividend declared - $ 0.20 per share ​ ​ ​ ​ ​ ​ ​ ​ ( 1,294 ) ​ ​ ​ ​ ​ ( 1,294 ) Balance at June 30, 2024 ​ $ 65 ​ $ 20,280 ​ $ 179,892 ​ $ ( 36,060 ) ​ $ 164,177 Net income ​ ​ ​ ​ ​ ​ ​ ​ 5,771 ​ ​ ​ ​ ​ 5,771 Other comprehensive income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 5,447 ​ ​ 5,447 Stock based compensation ​ ​ ​ ​ ​ ( 63 ) ​ ​ ​ ​ ​ ​ ​ ​ ( 63 ) Common stock issued - 2,964 shares ​ ​ ​ ​ ​ 71 ​ ​ ​ ​ ​ ​ ​ ​ 71 Common stock dividend declared- $ 0.22 per share ​ ​ ​ ​ ​ ​ ​ ​ ( 1,424 ) ​ ​ ​ ​ ​ ( 1,424 ) Balance at September 30, 2024 ​ $ 65 ​ $ 20,288 ​ $ 184,239 ​ $ ( 30,613 ) ​ $ 173,979 ​ ​ See accompanying notes to the consolidated financial statements ​ 8 Table of Contents First United Corporation and Subsidiaries Consolidated Statements of Changes in Shareholders’ Equity (In thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock Surplus Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders' Equity Balance at January 1, 2023 ​ $ 67 ​ $ 24,409 ​ $ 166,343 ​ $ ( 39,026 ) ​ $ 151,793 Adoption of ASC 326- Financial Instruments- Credit Losses ​ ​ ​ ​ ​ ​ ​ ​ ( 2,155 ) ​ ​ ​ ​ ​ ( 2,155 ) Net income ​ ​ ​ ​ ​ ​ ​ ​ 4,375 ​ ​ ​ ​ ​ 4,375 Other comprehensive income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 69 ​ ​ 69 Stock based compensation ​ ​ ​ ​ ​ 56 ​ ​ ​ ​ ​ ​ ​ ​ 56 Common stock issued - 22,282 shares ​ ​ ​ ​ ​ 64 ​ ​ ​ ​ ​ ​ ​ ​ 64 Common stock dividend declared - $ 0.20 per share ​ ​ ​ ​ ​ ​ ​ ​ ( 1,334 ) ​ ​ ​ ​ ​ ( 1,334 ) Balance at March 31, 2023 ​ $ 67 ​ $ 24,529 ​ $ 167,229 ​ $ ( 38,957 ) ​ $ 152,868 Net income ​ ​ ​ ​ ​ ​ ​ ​ 4,414 ​ ​ ​ ​ ​ 4,414 Other comprehensive loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 1,153 ) ​ ​ ( 1,153 ) Stock based compensation ​ ​ ​ ​ ​ 298 ​ ​ ​ ​ ​ ​ ​ ​ 298 Common stock issued - 18,416 shares ​ ​ ​ ​ ​ 74 ​ ​ ​ ​ ​ ​ ​ ​ 74 Common stock dividend declared - $ 0.20 per share ​ ​ ​ ​ ​ ​ ​ ​ ( 1,345 ) ​ ​ ​ ​ ​ ( 1,345 ) Balance at June 30, 2023 ​ $ 67 ​ $ 24,901 ​ $ 170,298 ​ $ ( 40,110 ) ​ $ 155,156 Net income ​ ​ ​ ​ ​ ​ ​ ​ 4,513 ​ ​ ​ ​ ​ 4,513 Other comprehensive loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 3,463 ) ​ ​ ( 3,463 ) Stock based compensation ​ ​ ​ ​ ​ 69 ​ ​ ​ ​ ​ ​ ​ ​ 69 Common stock issued - 5,046 shares ​ ​ ​ ​ ​ 80 ​ ​ ​ ​ ​ ​ ​ ​ 80 Common stock repurchased - 1,298 shares ​ ​ ​ ​ ​ ( 21 ) ​ ​ ​ ​ ​ ​ ​ ​ ( 21 ) Common stock dividend declared- $ 0.20 per share ​ ​ ​ ​ ​ ​ ​ ​ ( 1,344 ) ​ ​ ​ ​ ​ ( 1,344 ) Balance at September 30, 2023 ​ $ 67 ​ $ 25,029 ​ $ 173,467 ​ $ ( 43,573 ) ​ $ 154,990 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ See accompanying notes to the consolidated financial statements ​ ​ ​ 9 Table of Contents ​ First United Corporation and Subsidiaries Consolidated Statements of Cash Flows (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ 2024 2023 ​ ​ (Unaudited) Operating activities ​ ​ ​ ​ ​ ​ Net income ​ $ 14,383 ​ $ 13,302 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ Provision for credit losses ​ ​ 2,404 ​ ​ 1,201 Depreciation ​ ​ 2,633 ​ ​ 2,528 Stock based compensation ​ ​ 370 ​ ​ 423 Gains on sales of other real estate owned ​ ​ ( 132 ) ​ ​ ( 36 ) Write-downs of other real estate owned, net ​ ​ — ​ ​ ( 55 ) Originations of loans held for sale ​ ​ ( 7,456 ) ​ ​ ( 3,627 ) Proceeds from sales of loans held for sale ​ ​ 7,949 ​ ​ 3,741 Gains from sales of loans held for sale ​ ​ ( 282 ) ​ ​ ( 322 ) Net accretion of investment securities discounts and premiums- AFS ​ ​ ( 66 ) ​ ​ ( 32 ) Net accretion of investment securities discounts and premiums- HTM ​ ​ ( 457 ) ​ ​ ( 618 ) Amortization of intangible assets ​ ​ 247 ​ ​ 248 Earnings on bank owned life insurance ​ ​ ( 1,000 ) ​ ​ ( 936 ) Amortization of deferred loan (fees)/costs, net ​ ​ ( 137 ) ​ ​ 40 Amortization of operating lease right of use asset ​ ​ 204 ​ ​ 249 Increase in accrued interest receivable and other assets ​ ​ ( 957 ) ​ ​ ( 1,754 ) Deferred tax expense/(benefit) ​ ​ 1,776 ​ ​ ( 97 ) Operating lease liability ​ ​ ( 213 ) ​ ​ ( 282 ) (Decrease)/increase in accrued interest payable and other liabilities ​ ​ ( 6,230 ) ​ ​ 2,793 Net cash provided by operating activities ​ ​ 13,036 ​ ​ 16,766 Investing activities ​ ​ ​ ​ ​ ​ Proceeds from maturities/calls of investment securities - AFS ​ ​ 6,069 ​ ​ 5,320 Proceeds from maturities/calls of investment securities - HTM ​ ​ 42,557 ​ ​ 24,537 Purchases of investment securities - HTM ​ ​ ( 1,871 ) ​ ​ ( 3,988 ) Proceeds from sales of other real estate owned ​ ​ 1,834 ​ ​ 172 Net increase in restricted stock ​ ​ ( 515 ) ​ ​ ( 4,224 ) Net increase in loans ​ ​ ( 43,032 ) ​ ​ ( 101,320 ) Purchases of premises and equipment ​ ​ ( 1,878 ) ​ ​ ( 346 ) Net cash provided by/(used in) by investing activities ​ ​ 3,164 ​ ​ ( 79,849 ) Financing activities ​ ​ ​ ​ ​ ​ Net (decrease)/increase in deposits ​ ​ ( 10,582 ) ​ ​ 4,336 Issuance of common stock ​ ​ 215 ​ ​ 218 Cash dividends paid on common stock ​ ​ ( 3,951 ) ​ ​ ( 3,878 ) Net increase/(decrease) in short-term borrowings ​ ​ 4,788 ​ ​ ( 11,235 ) Stock repurchase ​ ​ ( 4,031 ) ​ ​ ( 21 ) Proceeds from long-term borrowings ​ ​ 90,000 ​ ​ 80,000 Payments of long-term borrowings ​ ​ ( 80,000 ) ​ ​ — Net cash (used in)/provided by financing activities ​ ​ ( 3,561 ) ​ ​ 69,420 Increase in cash and cash equivalents ​ ​ 12,639 ​ ​ 6,337 Cash and cash equivalents at beginning of the year ​ ​ 49,753 ​ ​ 74,315 Cash and cash equivalents at end of period ​ $ 62,392 ​ $ 80,652 Supplemental information ​ ​ ​ ​ ​ ​ Interest paid ​ $ 22,748 ​ $ 16,406 Taxes paid ​ $ 3,243 ​ $ 4,821 Non-cash investing activities: ​ ​ ​ ​ ​ ​ Transfers from loans to other real estate owned ​ $ 69 ​ $ 226 ​ ​ See accompanying notes to the consolidated financial statements ​ ​ 10 Table of Contents FIRST UNITED CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1 – Basis of Presentation The financial information is presented in accordance with generally accepted accounting principles and general practice for financial institutions in the United States of America (“GAAP”). First United Corporation has prepared these unaudited condensed consolidated financial statements in accordance with GAAP for interim financial information, rules of the Securities and Exchange Commission that permit reduced disclosure for interim periods, and Article 8 of Regulation S-X. Operating results for the nine- and three-month periods ended September 30, 2024 are not necessarily indicative of the results that may be expected for the full year or for any future interim period. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in First United Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023. In preparing financial statements, management is required to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities as of the date of financial statements. In addition, these estimates and assumptions affect revenues and expenses in the financial statements and, as such, actual results could differ from those estimates. Certain reclassifications have been made to prior year amounts to conform with current year classifications. These reclassifications did not have a material impact on the Corporation’s consolidated financial condition or results of operations. In the opinion of management, all adjustments (all of which are of a normal recurring nature) that are necessary for a fair statement are reflected in the unaudited condensed consolidated financial statements. Principles of Consolidation The consolidated financial statements include the accounts of First United Corporation, First United Bank & Trust (the “Bank”), First United Statutory Trust I, First United Statutory Trust II, OakFirst Loan Center, LLC, OakFirst Loan Center, Inc., First OREO Trust and FUBT OREO I, LLC. All significant inter-company accounts and transactions have been eliminated. As used in these notes, the terms “the Corporation” “we”, “us”, and “our” refer to First United Corporation and, unless the context clearly requires otherwise, its consolidated subsidiaries. The Corporation has evaluated events and transactions occurring subsequent to the statement of financial condition date of September 30, 2024 and through the date these consolidated financial statements were issued, for items of potential recognition or disclosure. Newly Adopted Pronouncements in 2024 In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of Reference Rate Reform on Financial Reporting.” The amendments in ASU 2020-04 provide optional guidance for a limited period of time to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting. The amendments provide optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from the London Interbank Offered Rate (“LIBOR”) toward new interest rate benchmarks. Modified contracts that meet certain scope guidance are eligible for relief from these modification accounting requirements in GAAP. The optional guidance generally allows for the modified contract to be accounted for as a continuation of the existing contract and does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. The amendments in ASU 2020-04 are effective for all entities between March 12, 2020 and December 31, 2022. In December 2022, FASB issued ASU No. 2022-06: “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848.” The amendments in ASU 2020-06 defer the sunset date for applying the reference rate reform relief by two years to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. ​ 11 Table of Contents The Corporation had no financial instruments tied to LIBOR at September 30, 2024. The implementation of ASU 2020-04 did not have a material impact on our financial statements. ​ Note 2 – Accounting Statements Issued but Not Yet Adopted In November 2023, FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvement to Reportable Segment Disclosures.” ASU 2023-07 expands segment disclosure requirements for public entities to require disclosure of significant segment expense and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within the fiscal years beginning after December 15, 2024. Early adoption is permitted. ASU 2023-07 is not expected to have a significant impact on our financial statements. ​ In December 2023, FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” ASU 2023-09 requires public business entities to disclose in their rate reconciliation table additional categories of information about Federal, state, and foreign income taxes and to provide more details about the reconciling items in some categories if items meet a quantitative threshold. ASU 2023-09 also requires all entities to disclose income taxes paid, net of refunds, disaggregated by Federal, state, and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold, among other things. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. ASU 2023-09 is not expected to have a significant impact on our financial statements. ​ In March 2024, FASB issued ASU No. 2024-01, “Compensation- Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards.” ASU 2024-01 provides an illustrative example that includes four fact patterns to demonstrate how an entity should apply the scope guidance in paragraph 718-10-15-3 to determine whether a profits interest award should be accounted for in accordance with Topic 718. ASU 2024-01 is effective for fiscal years beginning after December 15, 2024. ASU 2024-01 is not expected to have a significant impact on our financial statements. ​ Note 3 – Earnings Per Common Share Basic earnings per common share is derived by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period and does not include the effect of any potentially dilutive common stock equivalents. Diluted earnings per share is derived by dividing net income available to common shareholders by the weighted-average number of shares outstanding, adjusted for the dilutive effect of outstanding common stock equivalents, such as restricted stock units (“RSUs”). There were no anti-dilutive shares outstanding at September 30, 2024 or 2023. ​ 12 Table of Contents The following table sets forth the calculation of basic and diluted earnings per common share for the nine- and three-month periods ended September 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine months ended September 30, ​ ​ 2024 ​ 2023 ​ ​ ​ Average Per Share ​ ​ Average Per Share (in thousands, except for per share amount) ​ Income ​ Shares ​ Amount ​ Income ​ Shares ​ Amount Basic Earnings Per Share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 14,383 ​ 6,546 ​ $ 2.20 ​ $ 13,302 ​ 6,698 ​ $ 1.99 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted Earnings Per Share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restricted stock units ​ ​ ​ ​ 12 ​ ​ ​ ​ ​ ​ ​ 16 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 14,383 ​ 6,558 ​ $ 2.19 ​ $ 13,302 ​ 6,714 ​ $ 1.98 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended September 30, ​ ​ 2024 ​ 2023 ​ ​ ​ ​ ​ Average ​ Per Share ​ ​ ​ ​ Average ​ Per Share (in thousands, except for per share amount) ​ Income ​ Shares ​ Amount ​ Income ​ Shares ​ Amount Basic Earnings Per Share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 5,771 ​ 6,468 ​ $ 0.89 ​ $ 4,513 ​ 6,714 ​ $ 0.67 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted Earnings Per Share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restricted stock units ​ ​ ​ ​ 14 ​ ​ ​ ​ ​ ​ ​ 14 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 5,771 ​ 6,482 ​ $ 0.89 ​ $ 4,513 ​ 6,728 ​ $ 0.67 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Note 4 – Investments The following tables show a comparison of amortized cost and fair values of investment securities at September 30, 2024 and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Estimated Fair Value September 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Available for Sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ $ 7,000 ​ $ — ​ $ 761 ​ $ — ​ $ 6,239 Residential mortgage-backed agencies ​ ​ 23,202 ​ ​ — ​ ​ 3,559 ​ ​ — ​ ​ 19,643 Commercial mortgage-backed agencies ​ ​ 35,721 ​ ​ — ​ ​ 7,368 ​ ​ — ​ ​ 28,353 Collateralized mortgage obligations ​ ​ 18,533 ​ ​ — ​ ​ 2,853 ​ ​ — ​ ​ 15,680 Obligations of states and political subdivisions ​ ​ 7,803 ​ ​ 14 ​ ​ 91 ​ ​ — ​ ​ 7,726 Corporate bonds ​ ​ 1,000 ​ ​ — ​ ​ 260 ​ ​ — ​ ​ 740 Collateralized debt obligations ​ ​ 18,658 ​ ​ — ​ ​ 3,879 ​ ​ — ​ ​ 14,779 Total available for sale ​ $ 111,917 ​ $ 14 ​ $ 18,771 ​ $ — ​ $ 93,160 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 13 Table of Contents (in thousands) Amortized Cost Gross Unrecognized Gains Gross Unrecognized Losses Estimated Fair Value Allowance for Credit Losses September 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Held to Maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ $ 68,229 ​ $ — ​ $ 8,662 ​ $ 59,567 ​ $ — Residential mortgage-backed agencies ​ ​ 29,866 ​ ​ 79 ​ ​ 2,455 ​ ​ 27,490 ​ ​ — Commercial mortgage-backed agencies ​ ​ 21,177 ​ ​ — ​ ​ 5,008 ​ ​ 16,169 ​ ​ — Collateralized mortgage obligations ​ ​ 50,332 ​ ​ — ​ ​ 8,334 ​ ​ 41,998 ​ ​ — Obligations of states and political subdivisions ​ ​ 4,509 ​ ​ 218 ​ ​ 603 ​ ​ 4,124 ​ ​ 59 Total held to maturity ​ $ 174,113 ​ $ 297 ​ $ 25,062 ​ $ 149,348 ​ $ 59 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Estimated Fair Value December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Available for Sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ $ 7,000 ​ $ — ​ $ 966 ​ $ — ​ $ 6,034 Residential mortgage-backed agencies ​ ​ 24,781 ​ ​ — ​ ​ 4,218 ​ ​ — ​ ​ 20,563 Commercial mortgage-backed agencies ​ ​ 36,258 ​ ​ — ​ ​ 7,841 ​ ​ — ​ ​ 28,417 Collateralized mortgage obligations ​ ​ 19,725 ​ ​ — ​ ​ 3,369 ​ ​ — ​ ​ 16,356 Obligations of states and political subdivisions ​ ​ 10,486 ​ ​ 15 ​ ​ 189 ​ ​ — ​ ​ 10,312 Corporate bonds ​ ​ 1,000 ​ ​ — ​ ​ 222 ​ ​ — ​ ​ 778 Collateralized debt obligations ​ ​ 18,671 ​ ​ — ​ ​ 3,962 ​ ​ — ​ ​ 14,709 Total available for sale ​ $ 117,921 ​ $ 15 ​ $ 20,767 ​ $ — ​ $ 97,169 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) Amortized Cost Gross Unrecognized Gains Gross Unrecognized Losses Estimated Fair Value Allowance for Credit Losses December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Held to Maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. treasuries ​ $ 37,462 ​ $ — ​ $ 243 ​ $ 37,219 ​ $ — U.S. government agencies ​ ​ 68,014 ​ ​ — ​ ​ 10,985 ​ ​ 57,029 ​ ​ — Residential mortgage-backed agencies ​ ​ 29,588 ​ ​ 42 ​ ​ 2,913 ​ ​ 26,717 ​ ​ — Commercial mortgage-backed agencies ​ ​ 21,413 ​ ​ — ​ ​ 5,361 ​ ​ 16,052 ​ ​ — Collateralized mortgage obligations ​ ​ 53,261 ​ ​ — ​ ​ 9,973 ​ ​ 43,288 ​ ​ — Obligations of states and political subdivisions ​ ​ 4,604 ​ ​ 177 ​ ​ 671 ​ ​ 4,110 ​ ​ 45 Total held to maturity ​ $ 214,342 ​ $ 219 ​ $ 30,146 ​ $ 184,415 ​ $ 45 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Corporation utilizes FASB Accounting Standards Codification (“ASC”) Topic 326 to evaluate its available-for-sale (“AFS”) and held-to-maturity (“HTM”) debt security portfolio for expected credit losses. For AFS debt securities in an unrealized loss position, the Corporation first assesses whether it intends to sell, or whether it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either criteria is met, then the security’s amortized cost basis is written down to fair value through income. For AFS debt securities that do not meet the aforementioned criteria, the Corporation evaluates whether any decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, then the present value of cash flows expected to be collected from the security is compared to the amortized cost basis of the security. If the 14 Table of Contents present value of cash flows expected to be collected is less than the amortized cost basis, then a credit loss exists and an allowance for credit losses (“ACL”) is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income as a non-credit-related impairment. ​ Changes in the ACL are recorded as a provision for (or reversal of) credit losses. Losses are charged against the ACL when management believes the uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Any impairment not recorded through an allowance for credit loss is recognized in other comprehensive income as a non-credit-related impairment. ​ The Corporation has made the policy election to exclude accrued interest from the amortized cost basis of AFS debt securities and report accrued interest separately in other assets in the Consolidated Balance Sheets. AFS debt securities are placed on non-accrual status when we no longer expect to receive all contractual amounts due, which is generally at 90 days past due. Accrued interest receivable is reversed against interest income when a security is placed on non-accrual status. Accordingly, we do not recognize an allowance for credit loss against accrued interest receivable. ​ The Corporation separately evaluates its HTM investment securities for any credit losses. The Corporation pools similar securities and calculates expected credit losses through an estimate based on a security’s credit rating, which is recognized as part of the ACL for HTM securities and is included in the balance of HTM securities held to maturity on the Consolidated Balance Sheets. If the Corporation determines that a security indicates evidence of deteriorated credit quality, then the security is individually evaluated and a discounted cash flow analysis is performed and compared to the amortized cost basis. ​ The Corporation recorded ACL of approximately $ 59,000 as of September 30, 2024 and $ 45,000 as of December 31, 2023, both related to one non-rated municipal bond in its HTM security portfolio. ​ ​ 15 Table of Contents The following tables show the Corporation’s investment securities with gross unrealized and unrecognized losses and fair values at September 30, 2024 and December 31, 2023, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than 12 months ​ 12 months or more (in thousands) Fair Value Unrealized Losses Number of Investments Fair Value Unrealized Losses Number of Investments September 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Available for Sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ $ — ​ $ — ​ — ​ $ 6,239 ​ $ 761 ​ 2 Residential mortgage-backed agencies ​ ​ — ​ ​ — ​ — ​ ​ 19,643 ​ ​ 3,559 ​ 3 Commercial mortgage-backed agencies ​ ​ — ​ ​ — ​ — ​ ​ 28,353 ​ ​ 7,368 ​ 8 Collateralized mortgage obligations ​ ​ — ​ ​ — ​ — ​ ​ 15,680 ​ ​ 2,853 ​ 9 Obligations of states and political subdivisions ​ ​ 243 ​ ​ 2 ​ 1 ​ ​ 3,959 ​ ​ 89 ​ 3 Corporate bonds ​ ​ — ​ ​ — ​ — ​ ​ 740 ​ ​ 260 ​ 1 Collateralized debt obligations ​ ​ — ​ ​ — ​ — ​ ​ 14,779 ​ ​ 3,879 ​ 9 Total available for sale ​ $ 243 ​ $ 2 ​ 1 ​ $ 89,393 ​ $ 18,769 ​ 35 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than 12 months ​ 12 months or more (in thousands) Fair Value Unrecognized Losses Number of Investments Fair Value Unrecognized Losses Number of Investments September 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Held to Maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ $ — ​ $ — ​ — ​ $ 59,567 ​ $ 8,662 ​ 9 Residential mortgage-backed agencies ​ ​ — ​ ​ — ​ — ​ ​ 21,549 ​ ​ 2,455 ​ 35 Commercial mortgage-backed agencies ​ ​ — ​ ​ — ​ — ​ ​ 16,169 ​ ​ 5,008 ​ 2 Collateralized mortgage obligations ​ ​ — ​ ​ — ​ — ​ ​ 41,998 ​ ​ 8,334 ​ 8 Obligations of states and political subdivisions ​ ​ — ​ ​ — ​ — ​ ​ 2,277 ​ ​ 603 ​ 1 Total held to maturity ​ $ — ​ $ — ​ — ​ $ 141,560 ​ $ 25,062 ​ 55 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 16 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than 12 months ​ 12 months or more (in thousands) Fair Value Unrealized Losses Number of Investments Fair Value Unrealized Losses Number of Investments December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Available for Sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ $ — ​ $ — ​ — ​ $ 6,034 ​ $ 966 ​ 2 Residential mortgage-backed agencies ​ ​ — ​ ​ — ​ — ​ ​ 20,563 ​ ​ 4,218 ​ 3 Commercial mortgage-backed agencies ​ ​ — ​ ​ — ​ — ​ ​ 28,417 ​ ​ 7,841 ​ 8 Collateralized mortgage obligations ​ ​ — ​ ​ — ​ — ​ ​ 16,356 ​ ​ 3,369 ​ 9 Obligations of states and political subdivisions ​ ​ 1,445 ​ ​ 20 ​ 2 ​ ​ 6,668 ​ ​ 169 ​ 3 Corporate Bonds ​ ​ — ​ ​ — ​ — ​ ​ 778 ​ ​ 222 ​ 1 Collateralized debt obligations ​ ​ — ​ ​ — ​ — ​ ​ 14,709 ​ ​ 3,962 ​ 9 Total available for sale ​ $ 1,445 ​ $ 20 ​ 2 ​ $ 93,525 ​ $ 20,747 ​ 35 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than 12 months ​ 12 months or more (in thousands) Fair Value Unrecognized Losses Number of Investments Fair Value Unrecognized Losses Number of Investments December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Held to Maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. treasuries ​ $ — ​ $ — ​ — ​ $ 37,219 ​ $ 243 ​ 4 U.S. government agencies ​ ​ — ​ ​ — ​ — ​ ​ 57,029 ​ ​ 10,985 ​ 9 Residential mortgage-backed agencies ​ ​ — ​ ​ — ​ — ​ ​ 22,613 ​ ​ 2,913 ​ 35 Commercial mortgage-backed agencies ​ ​ — ​ ​ — ​ — ​ ​ 16,052 ​ ​ 5,361 ​ 2 Collateralized mortgage obligations ​ ​ — ​ ​ — ​ — ​ ​ 43,288 ​ ​ 9,973 ​ 8 Obligations of states and political subdivisions ​ ​ — ​ ​ — ​ — ​ ​ 2,205 ​ ​ 671 ​ 1 Total held to maturity ​ $ — ​ $ — ​ — ​ $ 178,406 ​ $ 30,146 ​ 59 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 17 Table of Contents The amortized cost and estimated fair value of securities by contractual maturity at September 30, 2024 are shown in the following table. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 (in thousands) Amortized Cost Fair Value Contractual Maturity ​ ​ ​ ​ ​ ​ Available for Sale: ​ ​ ​ ​ ​ ​ Due in one year or less ​ $ 1,270 ​ $ 1,270 Due after one year through five years ​ ​ 5,250 ​ ​ 5,077 Due after five years through ten years ​ ​ 3,396 ​ ​ 3,117 Due after ten years ​ ​ 24,545 ​ ​ 20,020 ​ ​ ​ 34,461 ​ ​ 29,484 Residential mortgage-backed agencies ​ ​ 23,202 ​ ​ 19,643 Commercial mortgage-backed agencies ​ ​ 35,721 ​ ​ 28,353 Collateralized mortgage obligations ​ ​ 18,533 ​ ​ 15,680 Total available for sale ​ $ 111,917 ​ $ 93,160 Held to Maturity: ​ ​ ​ ​ ​ ​ Due after one year through five years ​ $ 12,500 ​ $ 12,115 Due after five years through ten years ​ ​ 40,498 ​ ​ 35,862 Due after ten years ​ ​ 19,740 ​ ​ 15,714 ​ ​ ​ 72,738 ​ ​ 63,691 Residential mortgage-backed agencies ​ ​ 29,866 ​ ​ 27,490 Commercial mortgage-backed agencies ​ ​ 21,177 ​ ​ 16,169 Collateralized mortgage obligations ​ ​ 50,332 ​ ​ 41,998 Total held to maturity ​ $ 174,113 ​ $ 149,348 ​ ​ ​ At September 30, 2024 and December 31, 2023, AFS investment securities with a fair value of $ 76.5 and $ 50.5 million, respectively, and HTM investment securities with a book value of $ 162.8 and $ 141.8 million, respectively, were pledged as permitted or required to secure public deposits, for securities sold under agreements to repurchase as required or permitted by law and as collateral for borrowing capacity. ​ ​ 18 Table of Contents Note 5 – Loans and Related Allowance for Credit Losses The following table summarizes the primary segments of the loan portfolio at September 30, 2024 and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) Commercial Real Estate Acquisition and Development Commercial and Industrial Residential Mortgage Consumer Total September 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Individually evaluated for impairment ​ $ 599 ​ $ — ​ $ 4,849 ​ $ 1,993 ​ $ — ​ $ 7,441 Collectively evaluated for impairment ​ ​ 502,229 ​ ​ 92,909 ​ ​ 273,145 ​ ​ 517,175 ​ ​ 54,984 ​ ​ 1,440,442 Total loans ​ $ 502,828 ​ $ 92,909 ​ $ 277,994 ​ $ 519,168 ​ $ 54,984 ​ $ 1,447,883 December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Individually evaluated for impairment ​ $ 826 ​ $ — ​ $ — ​ $ 2,137 ​ $ — ​ $ 2,963 Collectively evaluated for impairment ​ ​ 492,877 ​ ​ 77,060 ​ ​ 274,604 ​ ​ 497,734 ​ ​ 61,429 ​ ​ 1,403,704 Total loans ​ $ 493,703 ​ $ 77,060 ​ $ 274,604 ​ $ 499,871 ​ $ 61,429 ​ $ 1,406,667 ​ The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and non-accrual loans at September 30, 2024 and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90 Days+ Past Due Total Past Due and Accruing Non- Accrual Total Loans September 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-owner-occupied ​ $ 293,919 ​ $ 1,387 ​ $ — ​ $ — ​ $ 1,387 ​ $ — ​ $ 295,306 All other CRE ​ ​ 205,688 ​ ​ 832 ​ ​ 319 ​ ​ — ​ ​ 1,151 ​ ​ 683 ​ ​ 207,522 Acquisition and development: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1-4 family residential construction ​ ​ 15,091 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 15,091 All other A&D ​ ​ 77,676 ​ ​ — ​ ​ 54 ​ ​ — ​ ​ 54 ​ ​ 88 ​ ​ 77,818 Commercial and industrial ​ ​ 272,856 ​ ​ 186 ​ ​ 103 ​ ​ — ​ ​ 289 ​ ​ 4,849 ​ ​ 277,994 Residential mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage - term ​ ​ 451,358 ​ ​ 70 ​ ​ 825 ​ ​ 414 ​ ​ 1,309 ​ ​ 2,308 ​ ​ 454,975 Residential mortgage - home equity ​ ​ 63,568 ​ ​ 267 ​ ​ 260 ​ ​ 13 ​ ​ 540 ​ ​ 85 ​ ​ 64,193 Consumer ​ ​ 54,282 ​ ​ 281 ​ ​ 250 ​ ​ 111 ​ ​ 642 ​ ​ 60 ​ ​ 54,984 Total ​ $ 1,434,438 ​ $ 3,023 ​ $ 1,811 ​ $ 538 ​ $ 5,372 ​ $ 8,073 ​ $ 1,447,883 December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-owner-occupied ​ $ 296,343 ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 227 ​ $ 296,570 All other CRE ​ ​ 196,123 ​ ​ 411 ​ ​ — ​ ​ — ​ ​ 411 ​ ​ 599 ​ ​ 197,133 Acquisition and development: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1-4 family residential construction ​ ​ 18,224 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 18,224 All other A&D ​ ​ 58,723 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 113 ​ ​ 58,836 Commercial and industrial ​ ​ 274,465 ​ ​ 120 ​ ​ 19 ​ ​ — ​ ​ 139 ​ ​ — ​ ​ 274,604 Residential mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage - term ​ ​ 433,878 ​ ​ 130 ​ ​ 717 ​ ​ 384 ​ ​ 1,231 ​ ​ 2,720 ​ ​ 437,829 Residential mortgage - home equity ​ ​ 61,021 ​ ​ 520 ​ ​ 158 ​ ​ 75 ​ ​ 753 ​ ​ 268 ​ ​ 62,042 Consumer ​ ​ 60,576 ​ ​ 463 ​ ​ 277 ​ ​ 84 ​ ​ 824 ​ ​ 29 ​ ​ 61,429 Total ​ $ 1,399,353 ​ $ 1,644 ​ $ 1,171 ​ $ 543 ​ $ 3,358 ​ $ 3,956 ​ $ 1,406,667 ​ ​ ​ 19 Table of Contents Non-accrual loans that have been subject to partial charge-offs totaled $ 1.2 million at September 30, 2024 and $ 0.1 million at December 31, 2023. Loans secured by 1-4 family residential real estate properties in the process of foreclosure totaled $ 1.6 million at September 30, 2024 and $ 1.8 million at December 31, 2023 . As a percentage of the loan portfolio, accruing loans past due 30 days or more was 0.37 % at September 30, 2024 compared to 0.24 % at December 31, 2023. ​ The Corporation maintains an ACL at a level that management believes will be adequate to absorb expected credit losses associated with the Corporation’s financial instruments over the life of those instruments as of the balance sheet date. The Corporation develops and documents a systematic ACL methodology based on the following portfolio segments: (i) commercial real estate; (ii) acquisition and development; (iii) commercial and industrial; (iv) residential mortgage; and (v) consumer. The Corporation’s loan portfolio is segmented by homogeneous loan types that behave similarly to economic cycles. The following is a discussion of the key risks by portfolio segment that management assesses in preparing the ACL. Commercial real estate loans are secured by commercial purpose real estate, including both owner occupied properties and properties obtained for investment purposes, such as hotels, strip malls and apartments. Operations of the individual projects as well as global cash flows of the debtors are the primary source of repayment of these loans. The condition of the local economy is an important indicator of risk, but there are more specific risks depending on the collateral type as well as the business. Acquisition and development loans include both commercial and consumer. Commercial loans are made to finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes. The risk of these loans is generally confined to the construction period. If there are problems during such period, then the project might not be completed and, as such, might not provide sufficient cash flow on its own to service the debt or have sufficient value in a liquidation to cover the outstanding principal. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the type of project and the experience and resources of the developer. Consumer loans are made for the construction of residential homes for which a binding sales contract exists and generally are for a period of time sufficient to complete construction. Residential construction loans to individuals generally provide for the payment of interest only during the construction phase. Credit risk for residential real estate construction loans can arise from construction delays, cost overruns, failure of the contractor to complete the project to specifications and economic conditions that could impact demand for supply of the property being constructed. Commercial and industrial loans are made to operating companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. Cash flow from the operations of the borrower is the primary source of repayment for these loans. The condition of the local economy is an important indicator of risk, but there are also more specific risks depending on the industry of the borrower. Collateral for these types of loans often do not have sufficient value in a distressed or liquidation scenario to satisfy the outstanding debt. These loans are also made to local municipalities for various purposes including refinancing existing obligations, infrastructure up-fit and expansion, or to purchase new equipment. The primary repayment source for local municipalities include the tax base of the municipality, specific revenue streams related to the infrastructure financed, and other business operations of the municipal authority. The health and stability of state and local economies directly impacts each municipality’s tax basis and are important indicators of risk for this segment. The ability of each municipality to increase taxes and fees to offset service requirements give this type of loan a very low risk profile in the continuum of the Corporation’s loan portfolio. Residential mortgage loans are secured by first and junior liens such as home equity lines of credit and 1-4 family residential mortgages. The primary source of repayment for these loans is the income of the borrower. The condition of the local economy, in particular the unemployment rate, is an important indicator of risk for this segment. The state of the local housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy debt. Consumer loans are made to individuals and may be either secured by assets other than 1-4 family residences or unsecured. This segment includes automobile loans and unsecured loans and lines of credit. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the local economy, in particular the unemployment rate, is an important 20 Table of Contents indicator of risk for this segment. The value of the collateral, if there is any, is less likely to be a source of repayment due to less certain collateral values. The following table summarizes the primary segments of the ACL at September 30, 2024 and December 31, 2023, segregated by the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) Commercial Real Estate Acquisition and Development Commercial and Industrial Residential Mortgage Consumer Total September 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Individually evaluated for impairment ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — Collectively evaluated for impairment ​ ​ 4,907 ​ ​ 944 ​ ​ 4,471 ​ ​ 6,841 ​ ​ 847 ​ ​ 18,010 Total ACL ​ $ 4,907 ​ $ 944 ​ $ 4,471 ​ $ 6,841 ​ $ 847 ​ $ 18,010 December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Individually evaluated for impairment ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — Collectively evaluated for impairment ​ ​ 5,120 ​ ​ 940 ​ ​ 3,717 ​ ​ 6,774 ​ ​ 929 ​ ​ 17,480 Total ACL ​ $ 5,120 ​ $ 940 ​ $ 3,717 ​ $ 6,774 ​ $ 929 ​ $ 17,480 ​ Changes in the fair value of the types of collateral for individually evaluated loans are reported as provision for credit loss in the period of change. The evaluation of the need and amount of a specific allocation of the ACL and whether a loan can be removed from impairment status is made on a quarterly basis. The following tables present the amortized cost basis of collateral-dependent individually evaluated loans as of September 30, 2024 and December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 (in thousands) Real Estate ​ ​ Other Collateral ​ Non-Accrual Loans with No Allowance Commercial real estate ​ $ 599 ​ $ — ​ $ 599 Commercial and industrial ​ ​ — ​ ​ 4,849 ​ ​ 4,849 Residential mortgage ​ ​ 1,993 ​ ​ — ​ ​ 1,993 Total Loans ​ $ 2,592 ​ $ 4,849 ​ $ 7,441 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 (in thousands) Real Estate ​ ​ Other Collateral ​ Non-Accrual Loans with No Allowance Commercial real estate ​ $ 826 ​ $ — ​ $ 826 Residential mortgage ​ ​ 2,137 ​ ​ — ​ ​ 2,137 Total Loans ​ $ 2,963 ​ $ — ​ $ 2,963 ​ ​ ​ ​ ​ ​ ​ 21 Table of Contents The following tables present the activity in the ACL for the nine- and three-month periods ended September 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine months ended (in thousands) Commercial Real Estate Acquisition and Development Commercial and Industrial Residential Mortgage Consumer Unallocated Total Beginning balance at January 1, 2024 ​ $ 5,120 ​ $ 940 ​ $ 3,717 ​ $ 6,774 ​ $ 929 ​ $ — ​ $ 17,480 Loan charge-offs ​ ​ — ​ ​ — ​ ​ ( 1,297 ) ​ ​ ( 45 ) ​ ​ ( 1,193 ) ​ ​ — ​ ​ ( 2,535 ) Recoveries collected ​ ​ 37 ​ ​ 48 ​ ​ 203 ​ ​ 68 ​ ​ 302 ​ ​ — ​ ​ 658 Credit loss (credit)/expense ​ ​ ( 250 ) ​ ​ ( 44 ) ​ ​ 1,848 ​ ​ 44 ​ ​ 809 ​ ​ — ​ ​ 2,407 ACL balance at September 30, 2024 ​ $ 4,907 ​ $ 944 ​ $ 4,471 ​ $ 6,841 ​ $ 847 ​ $ — ​ $ 18,010 Beginning balance at January 1, 2023 prior to adoption of ASC 326 ​ $ 6,345 ​ $ 979 ​ $ 2,845 ​ $ 3,160 ​ $ 877 ​ $ 430 ​ $ 14,636 Impact of adopting ASC 326 ​ ​ ( 1,143 ) ​ ​ ( 15 ) ​ ​ 1,334 ​ ​ 2,112 ​ ​ 208 ​ ​ ( 430 ) ​ ​ 2,066 Loan charge-offs ​ ​ ( 87 ) ​ ​ — ​ ​ ( 301 ) ​ ​ ( 55 ) ​ ​ ( 681 ) ​ ​ — ​ ​ ( 1,124 ) Recoveries collected ​ ​ 5 ​ ​ 8 ​ ​ 176 ​ ​ 56 ​ ​ 153 ​ ​ — ​ ​ 398 Credit loss (credit)/expense ​ ​ ( 82 ) ​ ​ 93 ​ ​ ( 577 ) ​ ​ 1,369 ​ ​ 367 ​ ​ — ​ ​ 1,170 ACL balance at September 30, 2023 ​ $ 5,038 ​ $ 1,065 ​ $ 3,477 ​ $ 6,642 ​ $ 924 ​ $ — ​ $ 17,146 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended (in thousands) ​ Commercial Real Estate ​ Acquisition and Development ​ Commercial and Industrial ​ Residential Mortgage ​ Consumer ​ Unallocated ​ Total ACL balance at July 1, 2024 ​ $ 4,852 ​ $ 992 ​ $ 3,964 ​ $ 7,162 ​ $ 953 ​ $ — ​ $ 17,923 Loan charge-offs ​ ​ — ​ ​ — ​ ​ ( 67 ) ​ ​ — ​ ​ ( 369 ) ​ ​ — ​ ​ ( 436 ) Recoveries collected ​ ​ — ​ ​ 42 ​ ​ 170 ​ ​ 41 ​ ​ 75 ​ ​ — ​ ​ 328 Credit loss expense/(credit) ​ ​ 55 ​ ​ ( 90 ) ​ ​ 404 ​ ​ ( 362 ) ​ ​ 188 ​ ​ — ​ ​ 195 ACL balance at September 30, 2024 ​ $ 4,907 ​ $ 944 ​ $ 4,471 ​ $ 6,841 ​ $ 847 ​ $ — ​ $ 18,010 ACL balance at July 1, 2023 ​ $ 4,946 ​ $ 1,134 ​ $ 3,549 ​ $ 6,417 ​ $ 859 ​ $ — ​ $ 16,905 Loan charge-offs ​ ​ — ​ ​ — ​ ​ ( 135 ) ​ ​ ( 31 ) ​ ​ ( 163 ) ​ ​ — ​ ​ ( 329 ) Recoveries collected ​ ​ — ​ ​ 1 ​ ​ 167 ​ ​ 20 ​ ​ 60 ​ ​ — ​ ​ 248 Credit loss expense/(credit) ​ ​ 92 ​ ​ ( 70 ) ​ ​ ( 104 ) ​ ​ 236 ​ ​ 168 ​ ​ — ​ ​ 322 ACL balance at September 30, 2023 ​ $ 5,038 ​ $ 1,065 ​ $ 3,477 ​ $ 6,642 ​ $ 924 ​ $ — ​ $ 17,146 ​ ​ 22 Table of Contents The Corporation’s methodology for estimating the ACL includes: Segmentation. The Corporation’s loan portfolio is segmented by homogeneous loan types that behave similarly to economic cycles. Specific Analysis. A specific reserve analysis is applied to certain individually evaluated loans. These loans are evaluated quarterly generally based on collateral value, observable market value or the present value of expected future cash flows. A specific reserve is established if the fair value is less than the loan balance. A charge-off is recognized when the loss is quantifiable. Individually evaluated loans not specifically analyzed reside in the Quantitative Analysis. Quantitative Analysis. The Corporation elected to use discounted cash flows. Economic forecasts include but are not limited to unemployment, the Consumer Price Index, the Housing Affordability Index, and Gross State Product. These forecasts are assumed to revert to the long term average and are utilized in the model to estimate the probability of default and the loss given default is the estimated loss rate, which varies over time. The estimated loss rate is applied within the appropriate periods in the cash flow model to determine the net present value. Net present value is also impacted by assumption related to the duration between default and recovery. The reserve is based on the difference between the summation of the principal balances taking amortized costs into consideration and the summation of the net present values. Qualitative Analysis. Based on management’s review and analysis of internal, external and model risks, management may adjust the model output. Management reviews the peaks and troughs of the model’s calibrations, taking into account economic forecasts to develop guardrails that serve as the basis for determining the reasonableness of the model’s output and makes adjustments as necessary. This process challenges unexpected variability resulting from outputs beyond the model’s calibrations that appear to be unreasonable. Management also enhances the calculation through the use of Moody’s economic forecast data in its calculation. Additionally, management may adjust the economic forecast if it is incompatible with known market conditions based on management’s experience and perspective. The ACL is based on estimates, and actual losses may vary from current estimates. Management believes that the granularity of the homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application of assumptions, result in an ACL that is representative of the risk found in the components of the portfolio at any given date. Credit Quality Indicators: The Corporation’s portfolio grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or at all. The Corporation’s internal credit risk grading system is based on debt service coverage, collateral values and other subjective factors. Mortgage and consumer loans are defaulted to pass grade until a loan migrates to past due status. The Corporation has a loan review policy and annual scope report that details the level of loan review for loans in a given year. The annual loan review provides the Credit Risk Committee with an independent analysis of the following: (i) credit quality of the loan portfolio; (ii) compliance with loan policy; (iii) adequacy of documentation in credit files; and (iv) validity of risk ratings. The Corporation’s internally assigned grades are as follows: Pass - The Corporation uses six grades of pass, including its watch rating. Generally, a pass rating indicates that the loan is currently performing and is of high quality. Special Mention - Assets with potential weaknesses that warrant management’s close attention and if left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Substandard - Assets that are inadequately protected by the current sound worth and paying capacity of the obligor or by the collateral pledged, if any. Assets so classified have a well-defined weakness, or weaknesses that jeopardize the liquidation of 23 Table of Contents the debt. Such assets are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful - Assets with all weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable. Loss - Assets considered of such little value that its continuance on the books is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical to defer writing off this basically worthless asset even though partial recovery may be affected in the future. The ability of borrowers to repay commercial loans is dependent upon the success of their business and general economic conditions. Due to the greater potential for loss within our commercial portfolio, we monitor the commercial loan portfolio through an internal risk rating system. Loan risk ratings are assigned based upon the creditworthiness of the borrower and are reviewed on an ongoing basis according to our internal policies. Loans rated special mention or substandard have potential or well-defined weaknesses not generally found in high quality, performing loans, and require attention from management to limit loss. ​ 24 Table of Contents The following tables present loan balances by year of origination and internally assigned risk rating for our portfolio segments for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) 2024 2023 2022 2021 2020 2019 and Prior Revolving Total Portfolio Loans September 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-owner-occupied ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 22,535 ​ $ 23,649 ​ $ 66,797 ​ $ 29,249 ​ $ 52,446 ​ $ 95,151 ​ $ 2,053 ​ $ 291,880 Special Mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 719 ​ ​ — ​ ​ — ​ ​ 719 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,707 ​ ​ — ​ ​ 2,707 Total non-owner occupied ​ ​ 22,535 ​ ​ 23,649 ​ ​ 66,797 ​ ​ 29,249 ​ ​ 53,165 ​ ​ 97,858 ​ ​ 2,053 ​ ​ 295,306 Current period gross charge-offs ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — All other CRE ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 18,646 ​ ​ 31,208 ​ ​ 30,295 ​ ​ 23,605 ​ ​ 17,114 ​ ​ 74,405 ​ ​ 5,999 ​ ​ 201,272 Special Mention ​ ​ 997 ​ ​ — ​ ​ — ​ ​ 1,431 ​ ​ 200 ​ ​ — ​ ​ — ​ ​ 2,628 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 3,549 ​ ​ 73 ​ ​ 3,622 Total all other CRE ​ ​ 19,643 ​ ​ 31,208 ​ ​ 30,295 ​ ​ 25,036 ​ ​ 17,314 ​ ​ 77,954 ​ ​ 6,072 ​ ​ 207,522 Current period gross charge-offs ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Acquisition and development: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1-4 family residential construction ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 6,248 ​ ​ 8,373 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 470 ​ ​ 15,091 Special Mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total acquisition and development ​ ​ 6,248 ​ ​ 8,373 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 470 ​ ​ 15,091 Current period gross charge-offs ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — All other A&D ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 13,552 ​ ​ 26,093 ​ ​ 16,925 ​ ​ 1,882 ​ ​ 1,840 ​ ​ 9,526 ​ ​ 7,912 ​ ​ 77,730 Special Mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 88 ​ ​ — ​ ​ 88 Total all other A&D ​ ​ 13,552 ​ ​ 26,093 ​ ​ 16,925 ​ ​ 1,882 ​ ​ 1,840 ​ ​ 9,614 ​ ​ 7,912 ​ ​ 77,818 Current period gross charge-offs ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Commercial and industrial: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 22,943 ​ ​ 43,695 ​ ​ 71,895 ​ ​ 19,146 ​ ​ 7,354 ​ ​ 15,291 ​ ​ 72,952 ​ ​ 253,276 Special Mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,911 ​ ​ — ​ ​ 9,152 ​ ​ 11,063 Substandard ​ ​ 128 ​ ​ — ​ ​ 3,993 ​ ​ 886 ​ ​ 6,573 ​ ​ 728 ​ ​ 1,347 ​ ​ 13,655 Total commercial and industrial ​ ​ 23,071 ​ ​ 43,695 ​ ​ 75,888 ​ ​ 20,032 ​ ​ 15,838 ​ ​ 16,019 ​ ​ 83,451 ​ ​ 277,994 Current period gross charge-offs ​ ​ 465 ​ ​ — ​ ​ 124 ​ ​ 651 ​ ​ 41 ​ ​ 16 ​ ​ — ​ ​ 1,297 Residential mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage - term ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 25,180 ​ ​ 65,885 ​ ​ 95,883 ​ ​ 81,319 ​ ​ 36,602 ​ ​ 141,984 ​ ​ 2,121 ​ ​ 448,974 Special Mention ​ ​ — ​ ​ — ​ ​ — ​ ​ 39 ​ ​ — ​ ​ — ​ ​ — ​ ​ 39 Substandard ​ ​ — ​ ​ — ​ ​ 61 ​ ​ 1,062 ​ ​ 15 ​ ​ 4,770 ​ ​ 54 ​ ​ 5,962 Total residential mortgage - term ​ ​ 25,180 ​ ​ 65,885 ​ ​ 95,944 ​ ​ 82,420 ​ ​ 36,617 ​ ​ 146,754 ​ ​ 2,175 ​ ​ 454,975 Current period gross charge-offs ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 30 ​ ​ — ​ ​ 30 Residential mortgage - home equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 174 ​ ​ 849 ​ ​ 4,067 ​ ​ 1,288 ​ ​ 374 ​ ​ 644 ​ ​ 56,172 ​ ​ 63,568 Special Mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 34 ​ ​ 13 ​ ​ 578 ​ ​ 625 Total residential mortgage - home equity ​ ​ 174 ​ ​ 849 ​ ​ 4,067 ​ ​ 1,288 ​ ​ 408 ​ ​ 657 ​ ​ 56,750 ​ ​ 64,193 Current period gross charge-offs ​ ​ — ​ ​ — ​ ​ 15 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 15 Consumer: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 9,307 ​ ​ 12,389 ​ ​ 7,324 ​ ​ 4,146 ​ ​ 1,287 ​ ​ 17,495 ​ ​ 2,790 ​ ​ 54,738 Special Mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Substandard ​ ​ — ​ ​ 158 ​ ​ 6 ​ ​ 44 ​ ​ 25 ​ ​ 3 ​ ​ 10 ​ ​ 246 Total consumer ​ ​ 9,307 ​ ​ 12,547 ​ ​ 7,330 ​ ​ 4,190 ​ ​ 1,312 ​ ​ 17,498 ​ ​ 2,800 ​ ​ 54,984 Current period gross charge-offs ​ ​ 154 ​ ​ 251 ​ ​ 78 ​ ​ 227 ​ ​ 14 ​ ​ 469 ​ ​ — ​ ​ 1,193 Total Portfolio Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 118,585 ​ ​ 212,141 ​ ​ 293,186 ​ ​ 160,635 ​ ​ 117,017 ​ ​ 354,496 ​ ​ 150,469 ​ ​ 1,406,529 Special Mention ​ ​ 997 ​ ​ — ​ ​ — ​ ​ 1,470 ​ ​ 2,830 ​ ​ — ​ ​ 9,152 ​ ​ 14,449 Substandard ​ ​ 128 ​ ​ 158 ​ ​ 4,060 ​ ​ 1,992 ​ ​ 6,647 ​ ​ 11,858 ​ ​ 2,062 ​ ​ 26,905 Total Portfolio Loans ​ $ 119,710 ​ $ 212,299 ​ $ 297,246 ​ $ 164,097 ​ $ 126,494 ​ $ 366,354 ​ $ 161,683 ​ $ 1,447,883 Current YTD Period: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current period gross charge-offs ​ $ 619 ​ $ 251 ​ $ 217 ​ $ 878 ​ $ 55 ​ $ 515 ​ $ — ​ $ 2,535 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 25 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) 2023 2022 2021 2020 2019 2018 and Prior Revolving Total Portfolio Loans December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-owner-occupied ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 23,511 ​ $ 65,878 ​ $ 30,332 ​ $ 54,270 ​ $ 40,575 ​ $ 65,134 ​ $ 1,138 ​ $ 280,838 Special Mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 4,331 ​ ​ — ​ ​ 4,331 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 11,401 ​ ​ — ​ ​ 11,401 Total non-owner occupied ​ ​ 23,511 ​ ​ 65,878 ​ ​ 30,332 ​ ​ 54,270 ​ ​ 40,575 ​ ​ 80,866 ​ ​ 1,138 ​ ​ 296,570 Current period gross charge-offs ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 87 ​ ​ — ​ ​ 87 All other CRE ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 30,130 ​ ​ 27,379 ​ ​ 27,042 ​ ​ 20,691 ​ ​ 22,879 ​ ​ 60,054 ​ ​ 4,495 ​ ​ 192,670 Special Mention ​ ​ — ​ ​ — ​ ​ — ​ ​ 644 ​ ​ — ​ ​ — ​ ​ — ​ ​ 644 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,847 ​ ​ 1,372 ​ ​ 600 ​ ​ 3,819 Total all other CRE ​ ​ 30,130 ​ ​ 27,379 ​ ​ 27,042 ​ ​ 21,335 ​ ​ 24,726 ​ ​ 61,426 ​ ​ 5,095 ​ ​ 197,133 Current period gross charge-offs ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Acquisition and development: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1-4 family residential construction ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 13,745 ​ ​ 3,446 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,033 ​ ​ 18,224 Special Mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total acquisition and development ​ ​ 13,745 ​ ​ 3,446 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,033 ​ ​ 18,224 Current period gross charge-offs ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — All other A&D ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 12,184 ​ ​ 25,099 ​ ​ 2,966 ​ ​ 3,046 ​ ​ 1,301 ​ ​ 9,946 ​ ​ 4,181 ​ ​ 58,723 Special Mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 113 ​ ​ — ​ ​ 113 Total all other A&D ​ ​ 12,184 ​ ​ 25,099 ​ ​ 2,966 ​ ​ 3,046 ​ ​ 1,301 ​ ​ 10,059 ​ ​ 4,181 ​ ​ 58,836 Current period gross charge-offs ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Commercial and industrial: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 52,004 ​ ​ 66,559 ​ ​ 24,387 ​ ​ 11,753 ​ ​ 8,872 ​ ​ 10,052 ​ ​ 78,992 ​ ​ 252,619 Special Mention ​ ​ 558 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 558 Substandard ​ ​ — ​ ​ 9,352 ​ ​ 1,854 ​ ​ 6,806 ​ ​ 98 ​ ​ 837 ​ ​ 2,480 ​ ​ 21,427 Total commercial and industrial ​ ​ 52,562 ​ ​ 75,911 ​ ​ 26,241 ​ ​ 18,559 ​ ​ 8,970 ​ ​ 10,889 ​ ​ 81,472 ​ ​ 274,604 Current period gross charge-offs ​ ​ 100 ​ ​ 103 ​ ​ 35 ​ ​ 166 ​ ​ — ​ ​ 19 ​ ​ — ​ ​ 423 Residential mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage - term ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 51,625 ​ ​ 94,723 ​ ​ 88,835 ​ ​ 38,228 ​ ​ 25,375 ​ ​ 130,402 ​ ​ 1,577 ​ ​ 430,765 Special Mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Substandard ​ ​ — ​ ​ 138 ​ ​ 929 ​ ​ 17 ​ ​ 98 ​ ​ 5,825 ​ ​ 57 ​ ​ 7,064 Total residential mortgage - term ​ ​ 51,625 ​ ​ 94,861 ​ ​ 89,764 ​ ​ 38,245 ​ ​ 25,473 ​ ​ 136,227 ​ ​ 1,634 ​ ​ 437,829 Current period gross charge-offs ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 13 ​ ​ — ​ ​ 13 Residential mortgage - home equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 1,127 ​ ​ 4,657 ​ ​ 864 ​ ​ 475 ​ ​ 286 ​ ​ 489 ​ ​ 53,467 ​ ​ 61,365 Special Mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ 38 ​ ​ — ​ ​ 16 ​ ​ 623 ​ ​ 677 Total residential mortgage - home equity ​ ​ 1,127 ​ ​ 4,657 ​ ​ 864 ​ ​ 513 ​ ​ 286 ​ ​ 505 ​ ​ 54,090 ​ ​ 62,042 Current period gross charge-offs ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 42 ​ ​ — ​ ​ 42 Consumer: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 18,299 ​ ​ 10,616 ​ ​ 6,361 ​ ​ 2,206 ​ ​ 510 ​ ​ 20,365 ​ ​ 2,873 ​ ​ 61,230 Special Mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Substandard ​ ​ 14 ​ ​ 35 ​ ​ 113 ​ ​ 23 ​ ​ 6 ​ ​ 2 ​ ​ 6 ​ ​ 199 Total consumer ​ ​ 18,313 ​ ​ 10,651 ​ ​ 6,474 ​ ​ 2,229 ​ ​ 516 ​ ​ 20,367 ​ ​ 2,879 ​ ​ 61,429 Current period gross charge-offs ​ ​ 236 ​ ​ 223 ​ ​ 74 ​ ​ 8 ​ ​ 4 ​ ​ 329 ​ ​ — ​ ​ 874 Total Portfolio Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ ​ 202,625 ​ ​ 298,357 ​ ​ 180,787 ​ ​ 130,669 ​ ​ 99,798 ​ ​ 296,442 ​ ​ 147,756 ​ ​ 1,356,434 Special Mention ​ ​ 558 ​ ​ — ​ ​ — ​ ​ 644 ​ ​ — ​ ​ 4,331 ​ ​ — ​ ​ 5,533 Substandard ​ ​ 14 ​ ​ 9,525 ​ ​ 2,896 ​ ​ 6,884 ​ ​ 2,049 ​ ​ 19,566 ​ ​ 3,766 ​ ​ 44,700 Total Portfolio Loans ​ $ 203,197 ​ $ 307,882 ​ $ 183,683 ​ $ 138,197 ​ $ 101,847 ​ $ 320,339 ​ $ 151,522 ​ $ 1,406,667 Current YTD Period: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current period gross charge-offs ​ $ 336 ​ $ 326 ​ $ 109 ​ $ 174 ​ $ 4 ​ $ 490 ​ $ — ​ $ 1,439 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past. ​ ​ 26 Table of Contents The following tables present loan balances by year of origination segregated by performing and non-performing loans for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) 2024 2023 2022 2021 2020 2019 and Prior Revolving Total Portfolio Loans September 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-owner-occupied ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ $ 22,535 ​ $ 23,649 ​ $ 66,797 ​ $ 29,249 ​ $ 53,165 ​ $ 97,858 ​ $ 2,053 ​ $ 295,306 Nonperforming ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total non-owner occupied ​ ​ 22,535 ​ ​ 23,649 ​ ​ 66,797 ​ ​ 29,249 ​ ​ 53,165 ​ ​ 97,858 ​ ​ 2,053 ​ ​ 295,306 All other CRE ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ ​ 19,643 ​ ​ 31,208 ​ ​ 30,295 ​ ​ 25,036 ​ ​ 17,314 ​ ​ 77,271 ​ ​ 6,072 ​ ​ 206,839 Nonperforming ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 683 ​ ​ — ​ ​ 683 Total all other CRE ​ ​ 19,643 ​ ​ 31,208 ​ ​ 30,295 ​ ​ 25,036 ​ ​ 17,314 ​ ​ 77,954 ​ ​ 6,072 ​ ​ 207,522 Acquisition and development: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1-4 family residential construction ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ ​ 6,248 ​ ​ 8,373 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 470 ​ ​ 15,091 Nonperforming ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total acquisition and development ​ ​ 6,248 ​ ​ 8,373 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 470 ​ ​ 15,091 All other A&D ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ ​ 13,552 ​ ​ 26,093 ​ ​ 16,925 ​ ​ 1,882 ​ ​ 1,840 ​ ​ 9,526 ​ ​ 7,912 ​ ​ 77,730 Nonperforming ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 88 ​ ​ — ​ ​ 88 Total all other A&D ​ ​ 13,552 ​ ​ 26,093 ​ ​ 16,925 ​ ​ 1,882 ​ ​ 1,840 ​ ​ 9,614 ​ ​ 7,912 ​ ​ 77,818 Commercial and industrial: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ ​ 23,071 ​ ​ 43,695 ​ ​ 71,895 ​ ​ 19,176 ​ ​ 15,838 ​ ​ 16,019 ​ ​ 83,451 ​ ​ 273,145 Nonperforming ​ ​ — ​ ​ — ​ ​ 3,993 ​ ​ 856 ​ ​ — ​ ​ — ​ ​ — ​ ​ 4,849 Total commercial and industrial ​ ​ 23,071 ​ ​ 43,695 ​ ​ 75,888 ​ ​ 20,032 ​ ​ 15,838 ​ ​ 16,019 ​ ​ 83,451 ​ ​ 277,994 Residential mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage - term ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ ​ 25,180 ​ ​ 65,885 ​ ​ 95,944 ​ ​ 82,140 ​ ​ 36,464 ​ ​ 144,494 ​ ​ 2,146 ​ ​ 452,253 Nonperforming ​ ​ — ​ ​ — ​ ​ — ​ ​ 280 ​ ​ 153 ​ ​ 2,260 ​ ​ 29 ​ ​ 2,722 Total residential mortgage - term ​ ​ 25,180 ​ ​ 65,885 ​ ​ 95,944 ​ ​ 82,420 ​ ​ 36,617 ​ ​ 146,754 ​ ​ 2,175 ​ ​ 454,975 Residential mortgage - home equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ ​ 174 ​ ​ 849 ​ ​ 4,067 ​ ​ 1,288 ​ ​ 374 ​ ​ 644 ​ ​ 56,699 ​ ​ 64,095 Nonperforming ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 34 ​ ​ 13 ​ ​ 51 ​ ​ 98 Total residential mortgage - home equity ​ ​ 174 ​ ​ 849 ​ ​ 4,067 ​ ​ 1,288 ​ ​ 408 ​ ​ 657 ​ ​ 56,750 ​ ​ 64,193 Consumer: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ ​ 9,307 ​ ​ 12,464 ​ ​ 7,324 ​ ​ 4,190 ​ ​ 1,310 ​ ​ 17,418 ​ ​ 2,800 ​ ​ 54,813 Nonperforming ​ ​ — ​ ​ 83 ​ ​ 6 ​ ​ — ​ ​ 2 ​ ​ 80 ​ ​ — ​ ​ 171 Total consumer ​ ​ 9,307 ​ ​ 12,547 ​ ​ 7,330 ​ ​ 4,190 ​ ​ 1,312 ​ ​ 17,498 ​ ​ 2,800 ​ ​ 54,984 Total Portfolio Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ ​ 119,710 ​ ​ 212,216 ​ ​ 293,247 ​ ​ 162,961 ​ ​ 126,305 ​ ​ 363,230 ​ ​ 161,603 ​ ​ 1,439,272 Nonperforming ​ ​ — ​ ​ 83 ​ ​ 3,999 ​ ​ 1,136 ​ ​ 189 ​ ​ 3,124 ​ ​ 80 ​ ​ 8,611 Total Portfolio Loans ​ $ 119,710 ​ $ 212,299 ​ $ 297,246 ​ $ 164,097 ​ $ 126,494 ​ $ 366,354 ​ $ 161,683 ​ $ 1,447,883 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 27 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) 2023 2022 2021 2020 2019 2018 and Prior Revolving Total Portfolio Loans December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-owner-occupied ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ $ 23,511 ​ $ 65,878 ​ $ 30,332 ​ $ 54,270 ​ $ 40,575 ​ $ 80,639 ​ $ 1,138 ​ $ 296,343 Nonperforming ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 227 ​ ​ — ​ ​ 227 Total non-owner occupied ​ ​ 23,511 ​ ​ 65,878 ​ ​ 30,332 ​ ​ 54,270 ​ ​ 40,575 ​ ​ 80,866 ​ ​ 1,138 ​ ​ 296,570 All other CRE ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ ​ 30,130 ​ ​ 27,379 ​ ​ 27,042 ​ ​ 21,335 ​ ​ 24,726 ​ ​ 60,827 ​ ​ 5,095 ​ ​ 196,534 Nonperforming ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 599 ​ ​ — ​ ​ 599 Total all other CRE ​ ​ 30,130 ​ ​ 27,379 ​ ​ 27,042 ​ ​ 21,335 ​ ​ 24,726 ​ ​ 61,426 ​ ​ 5,095 ​ ​ 197,133 Acquisition and development: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1-4 family residential construction ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ ​ 13,745 ​ ​ 3,446 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,033 ​ ​ 18,224 Nonperforming ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total acquisition and development ​ ​ 13,745 ​ ​ 3,446 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,033 ​ ​ 18,224 All other A&D ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ ​ 12,184 ​ ​ 25,099 ​ ​ 2,966 ​ ​ 3,046 ​ ​ 1,301 ​ ​ 9,946 ​ ​ 4,181 ​ ​ 58,723 Nonperforming ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 113 ​ ​ — ​ ​ 113 Total all other A&D ​ ​ 12,184 ​ ​ 25,099 ​ ​ 2,966 ​ ​ 3,046 ​ ​ 1,301 ​ ​ 10,059 ​ ​ 4,181 ​ ​ 58,836 Commercial and industrial: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ ​ 52,562 ​ ​ 75,911 ​ ​ 26,241 ​ ​ 18,559 ​ ​ 8,970 ​ ​ 10,889 ​ ​ 81,472 ​ ​ 274,604 Nonperforming ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total commercial and industrial ​ ​ 52,562 ​ ​ 75,911 ​ ​ 26,241 ​ ​ 18,559 ​ ​ 8,970 ​ ​ 10,889 ​ ​ 81,472 ​ ​ 274,604 Residential mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential mortgage - term ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ ​ 51,625 ​ ​ 94,722 ​ ​ 89,629 ​ ​ 38,245 ​ ​ 25,375 ​ ​ 133,526 ​ ​ 1,603 ​ ​ 434,725 Nonperforming ​ ​ — ​ ​ 139 ​ ​ 135 ​ ​ — ​ ​ 98 ​ ​ 2,701 ​ ​ 31 ​ ​ 3,104 Total residential mortgage - term ​ ​ 51,625 ​ ​ 94,861 ​ ​ 89,764 ​ ​ 38,245 ​ ​ 25,473 ​ ​ 136,227 ​ ​ 1,634 ​ ​ 437,829 Residential mortgage - home equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ ​ 1,127 ​ ​ 4,657 ​ ​ 864 ​ ​ 475 ​ ​ 286 ​ ​ 488 ​ ​ 53,802 ​ ​ 61,699 Nonperforming ​ ​ — ​ ​ — ​ ​ — ​ ​ 38 ​ ​ — ​ ​ 17 ​ ​ 288 ​ ​ 343 Total residential mortgage - home equity ​ ​ 1,127 ​ ​ 4,657 ​ ​ 864 ​ ​ 513 ​ ​ 286 ​ ​ 505 ​ ​ 54,090 ​ ​ 62,042 Consumer: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ ​ 18,304 ​ ​ 10,616 ​ ​ 6,405 ​ ​ 2,229 ​ ​ 516 ​ ​ 20,367 ​ ​ 2,879 ​ ​ 61,316 Nonperforming ​ ​ 9 ​ ​ 35 ​ ​ 69 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 113 Total consumer ​ ​ 18,313 ​ ​ 10,651 ​ ​ 6,474 ​ ​ 2,229 ​ ​ 516 ​ ​ 20,367 ​ ​ 2,879 ​ ​ 61,429 Total Portfolio Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performing ​ ​ 203,188 ​ ​ 307,708 ​ ​ 183,479 ​ ​ 138,159 ​ ​ 101,749 ​ ​ 316,682 ​ ​ 151,203 ​ ​ 1,402,168 Nonperforming ​ ​ 9 ​ ​ 174 ​ ​ 204 ​ ​ 38 ​ ​ 98 ​ ​ 3,657 ​ ​ 319 ​ ​ 4,499 Total Portfolio Loans ​ $ 203,197 ​ $ 307,882 ​ $ 183,683 ​ $ 138,197 ​ $ 101,847 ​ $ 320,339 ​ $ 151,522 ​ $ 1,406,667 ​ ​ Loan Modifications for Borrowers Experiencing Financial Difficulty ​ The Corporation evaluates all loan modifications according to the accounting guidance in ASU 2022-02 to determine if the modification results in a new loan or a continuation of the existing loan. Loan modifications to borrowers experiencing financial difficulties that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, or combinations of the listed 28 Table of Contents modifications. Therefore, the disclosures related to loan restructurings are for modifications which have a direct impact on cash flows. ​ The Corporation may offer various types of modifications when restructuring a loan. Commercial and industrial loans modified in a loan restructuring often involve temporary interest-only payments, term extensions, and converting credit lines to term loans. Additional collateral, a co-borrower, or a guarantor is often requested. ​ Commercial mortgage and construction loans modified in a loan restructuring often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a new borrower or guarantor. Construction loans modified in a loan restructuring may also involve extending the interest-only payment period. ​ Loans modified in a loan restructuring for the Corporation may have the financial effect of increasing the specific allowance associated with the loan. An allowance for loans that have been modified in a loan restructuring is measured based on the present value of expected cash flows discounted at the loan’s effective interest rate or the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent. Management exercises significant judgment in developing these estimates. ​ Commercial and consumer loans modified in a loan restructuring are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a loan restructuring subsequently default, the Corporation evaluates the loan for possible further loss. The allowance may be increased, adjustments may be made in the allocation of the allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan. ​ The following tables present the amortized cost basis as of September 30, 2024 and the financial effect of loans modified to borrowers experiencing financial difficulty during the nine- and three-month periods ended September 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ Term Extension Percentage of Total Loan Type Weighted Average Term and Principal Payment Extension Nine months ended September 30, 2024 ​ ​ ​ ​ ​ Owner-occupied commercial real estate ​ $ 888 0.43 % 12 months Commercial and industrial ​ ​ 127 0.05 % 60 months Total ​ $ 1,015 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ Term Extension Percentage of Total Loan Type Weighted Average Term and Principal Payment Extension Three months ended September 30, 2024 ​ ​ ​ ​ ​ Commercial and industrial ​ $ 127 0.05 % 60 months Total ​ $ 127 ​ ​ ​ ​ ​ ​ ​ ​ ​ There were no loan modifications made to borrowers experiencing financial difficulty during the nine- or three-month periods ended September 30, 2023. ​ The Corporation monitors loan payments on performing and non-performing loans on an ongoing basis to determine if a loan is considered to have a payment default. The loans that were modified in the nine- and three-month periods ended September 30, 2024 have made all contractual payments. ​ If a modified loan with an outstanding balance of $ 0.1 million or greater subsequently defaults and goes on non-accrual status, then the Corporation individually evaluates the loan when performing its CECL estimate to calculate the ACL. Upon determination that a modified loan (or a portion of a modified loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is charged off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is adjusted by the same amount. 29 Table of Contents ​ Note 6 – Fair Value of Financial Instruments The Corporation complies with the guidance of ASC Topic 820, Fair Value Measurements and Disclosures , which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements required under other accounting pronouncements. The Corporation also follows the guidance on matters relating to all financial instruments found in ASC Subtopic 825-10, Financial Instruments – Overall . Fair value is defined as the price to sell an asset or to transfer a liability in an orderly transaction between willing market participants as of the measurement date. Fair value is best determined by values quoted through active trading markets. Active trading markets are characterized by numerous transactions of similar financial instruments between willing buyers and willing sellers. Because no active trading market exists for various types of financial instruments, many of the fair values disclosed were derived using present value discounted cash flows or other valuation techniques described below. As a result, the Corporation’s ability to actually realize these derived values cannot be assumed. The Corporation measures fair values based on the fair value hierarchy established in ASC Paragraph 820-10-35-37. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of inputs that may be used to measure fair value under the hierarchy are as follows: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities. This level is the most reliable source of valuation. Level 2: Quoted prices that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability. Level 2 inputs include inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates). It also includes inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs). Several sources are utilized for valuing these assets, including a contracted valuation service, Standard & Poor’s evaluations and pricing services, and other valuation matrices. Level 3: Prices or valuation techniques that require inputs that are both significant to the valuation assumptions and not readily observable in the market (i.e. supported with little or no market activity). Level 3 instruments are valued based on the best available data, some of which is internally developed, and consider risk premiums that a market participant would require. The level established within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Transfers in and out of Level 1, 2 or 3 are recorded at fair value at the beginning of the reporting period. Investments – The investment portfolio is classified and accounted for based on the guidance of ASC Topic 320, Investments – Debt and Equity Securities . The fair value of investments is determined using a market approach. As of September 30, 2024, the U.S. Government agencies and treasuries, residential and commercial mortgage-backed securities, collateralized mortgage obligations, and state and political subdivisions bonds, excluding tax increment financing (“TIF”) bonds, were classified as Level 2 within the valuation hierarchy. Their fair values were determined based upon market-corroborated inputs and valuation matrices, which were obtained through third party data service providers or securities brokers through which the Corporation has historically transacted both purchases and sales of investment securities. The TIF bonds and collateralized debt obligation (“CDO”) portfolio, which consists of pooled trust preferred securities issued by banks, thrifts, and insurance companies, are classified as Level 3 within the valuation hierarchy. The CDO fair values are determined by a third party using a discounted cash flow model. Derivative financial instruments (Cash flow hedge) – The Corporation’s open derivative positions are interest rate swap agreements. Those classified as Level 2 open derivative positions are valued using externally developed pricing models based on 30 Table of Contents observable market inputs provided by a third party and validated by management. The Corporation has considered counterparty credit risk in the valuation of its interest rate swap assets. Nonrecurring Basis – Individually Evaluated Loans- Individual loans with borrowers experiencing financial difficulty and with a remaining principal balance of $ 0.1 million or more are evaluated for potential specific reserves and adjusted, if a shortfall exists, to fair value less costs to sell. Fair value is measured based on the value of the underlying collateral securing the loan if repayment is expected solely from the sale of operation of the collateral or present value of estimated future cash flows discounted at the loan’s contractual interest rate if the loan is not determined to be collateral dependent. Fair value for individually evaluated loans is determined using several methods. Generally, the fair value of real estate is determined based on appraisals by qualified licensed appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. These routine adjustments are made to adjust the value of a specific property relative to comparable properties for variations in qualities such as location, size, and income production capacity relative to the subject property of the appraisal. Subsequent to the initial impairment date, existing individually evaluated loans are reevaluated quarterly for additional impairment and adjustments to fair value less costs to sell are made, where appropriate. For individually evaluated loans, the first state of our impairment analysis involves inspection of the property in question to affirm the condition has not deteriorated since the previous impairment analysis date. Management also engages in conversations with local real estate professionals and market participants to determine the likely marketing time and value range for the property. The second state involves an assessment of current trends in the regional market. After thorough consideration of these factors, management will order a new appraisal. For non-individually evaluated loans, the fair value is determined by updating the present value of estimated future cash flows using the loan’s existing rate to reflect the payment schedule for the remaining life of the loan. Equity Investment- Equity investments included in the table below are considered impaired with losses recognized on the income statement in net gains. Fair value of the equity investment was based on an independent third party valuation report where the value was determined based on the revenue multiples of like kind information technology businesses. These assets are included as Level 3 fair values based upon the lowest level of input that is significant to the fair value measurements. Other real estate owned – Other real estate owned included in the table below are considered impaired with specific write-downs. Fair value of other real estate owned was based on independent third party appraisals of the properties. These values were determined based on the sales prices of similar properties in the approximate geographic area. These assets are included as Level 3 fair values based upon the lowest level of input that is significant to the fair value measurements. ​ 31 Table of Contents For assets measured at fair value on a recurring and non-recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2024 and December 31, 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements at September 30, 2024 Using ​ ​ ​ ​ Quoted ​ ​ ​ ​ ​ ​ ​ ​ ​ Prices in ​ Significant ​ ​ ​ ​ ​ Assets ​ Active Markets ​ Other ​ Significant ​ ​ Measured at ​ for Identical ​ Observable ​ Unobservable ​ ​ Fair Value ​ Assets ​ Inputs ​ Inputs (in thousands) 09/30/24 (Level 1) (Level 2) (Level 3) Recurring: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment securities available-for-sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ $ 6,239 ​ ​ ​ ​ $ 6,239 ​ ​ ​ Residential mortgage-backed agencies ​ $ 19,643 ​ ​ ​ ​ $ 19,643 ​ ​ ​ Commercial mortgage-backed agencies ​ $ 28,353 ​ ​ ​ ​ $ 28,353 ​ ​ ​ Collateralized mortgage obligations ​ $ 15,680 ​ ​ ​ ​ $ 15,680 ​ ​ ​ Obligations of states and political subdivisions ​ $ 7,726 ​ ​ ​ ​ $ 7,726 ​ ​ ​ Corporate bonds ​ $ 740 ​ ​ ​ ​ $ 740 ​ ​ ​ Collateralized debt obligations ​ $ 14,779 ​ ​ ​ ​ ​ ​ ​ $ 14,779 Financial derivatives ​ $ 438 ​ ​ ​ ​ $ 438 ​ ​ ​ Non-recurring: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Individually evaluated loans, net ​ $ 1,111 ​ ​ ​ ​ ​ ​ ​ $ 1,111 Equity investment ​ $ 3,569 ​ ​ ​ ​ ​ ​ ​ $ 3,569 Other real estate owned ​ $ 2,698 ​ ​ ​ ​ ​ ​ ​ $ 2,698 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements at December 31, 2023 Using ​ ​ ​ ​ Quoted ​ ​ ​ ​ ​ ​ ​ ​ Prices in ​ Significant ​ ​ ​ ​ Assets/(liabilities) ​ Active Markets ​ Other ​ Significant ​ ​ Measured at ​ for Identical ​ Observable ​ Unobservable ​ ​ Fair Value ​ Assets ​ Inputs ​ Inputs (in thousands) 12/31/23 (Level 1) (Level 2) (Level 3) Recurring: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment securities available-for-sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ $ 6,034 ​ ​ ​ ​ $ 6,034 ​ ​ ​ Residential mortgage-backed agencies ​ $ 20,563 ​ ​ ​ ​ $ 20,563 ​ ​ ​ Commercial mortgage-backed agencies ​ $ 28,417 ​ ​ ​ ​ $ 28,417 ​ ​ ​ Collateralized mortgage obligations ​ $ 16,356 ​ ​ ​ ​ $ 16,356 ​ ​ ​ Obligations of states and political subdivisions ​ $ 10,312 ​ ​ ​ ​ $ 10,312 ​ ​ ​ Corporate bonds ​ $ 778 ​ ​ ​ ​ ​ 778 ​ ​ ​ Collateralized debt obligations ​ $ 14,709 ​ ​ ​ ​ ​ ​ ​ $ 14,709 Financial derivatives ​ $ 756 ​ ​ ​ ​ $ 756 ​ ​ ​ Non-recurring: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Individually evaluated loans, net ​ $ — ​ ​ ​ ​ ​ ​ ​ $ — Equity investment ​ $ 3,087 ​ ​ ​ ​ ​ ​ ​ $ 3,087 Other real estate owned ​ $ 4,443 ​ ​ ​ ​ ​ ​ ​ $ 4,443 ​ Individually evaluated loans had a net carrying amount of $ 7.4 million and $ 3.0 million with no valuation allowance at September 30, 2024 or December 31, 2023, respectively. Individually evaluated loans recorded at fair value at September 30, 2024 totalled $ 1.1 million which was inclusive of $ 0.5 million in partial charge-offs. No individually evaluated loans were recorded at fair value at December 31, 2023. ​ 32 Table of Contents There were no transfers of assets between any of the fair value hierarchy for the nine-month periods ended September 30, 2024 or 2023. For Level 3 assets and liabilities measured at fair value on a recurring and non-recurring basis as of September 30, 2024 and December 31, 2023, the significant unobservable inputs used in the fair value measurements were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) Fair Value at September 30, 2024 Valuation Technique Significant Unobservable Inputs Significant Unobservable Input Value Recurring: ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment securities – available for sale -CDO ​ $ 14,779 ​ Discounted Cash Flow ​ Discount Margin ​ Range of high 300 to low 500 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-recurring: ​ ​ ​ ​ ​ ​ ​ ​ ​ Individually evaluated loans, net ​ $ 1,111 ​ Market Comparable Properties ​ Marketability Discount ​ N/A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity investment ​ $ 3,569 ​ Market Method ​ Revenue Multiples ​ 2.8 x ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other real estate owned ​ $ 2,698 ​ Market Comparable Properties ​ Marketability Discount ​ 5.0 % to 15.0 % (weighted avg 5.9 %) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) Fair Value at December 31, 2023 Valuation Technique Significant Unobservable Inputs Significant Unobservable Input Value Recurring: ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment securities – available for sale -CDO ​ $ 14,709 ​ Discounted Cash Flow ​ Discount Margin ​ Range of low to mid 500 and low to mid 600 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-recurring: ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity investment ​ $ 3,087 ​ Market Method ​ Revenue Multiples ​ 2.8 x ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other real estate owned ​ $ 4,443 ​ Market Comparable Properties ​ Marketability Discount ​ 5.0 % to 15.0 % (weighted avg 5.9 %) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Range would include discounts taken since appraisal and estimated values 33 Table of Contents The following tables show a reconciliation of the beginning and ending balances for fair valued assets measured on a recurring basis using Level 3 significant unobservable inputs for the nine- and three-month periods ended September 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements ​ ​ Using Significant Unobservable Inputs ​ ​ (Level 3) ​ ​ Investment Securities (in thousands) Available for Sale Beginning balance January 1, 2024 ​ $ 14,709 Total gains realized/unrealized: ​ ​ ​ Included in other comprehensive income ​ ​ 70 Ending balance September 30, 2024 ​ $ 14,779 ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements ​ ​ Using Significant Unobservable Inputs ​ ​ (Level 3) ​ ​ Investment Securities (in thousands) Available for Sale Beginning balance January 1, 2023 ​ $ 15,871 Total losses realized/unrealized: ​ ​ ​ Included in other comprehensive loss ​ ​ ( 1,087 ) Ending balance September 30, 2023 ​ $ 14,784 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements Using Significant Unobservable Inputs (Level 3) (in thousands) ​ Investment Securities Available for Sale Beginning balance July 1, 2024 ​ $ 13,975 Total gains realized/unrealized: ​ ​ ​ Included in other comprehensive income ​ ​ 804 Ending balance September 30, 2024 ​ $ 14,779 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements Using Significant Unobservable Inputs (Level 3) (in thousands) ​ Investment Securities Available for Sale Beginning balance July 1, 2023 ​ $ 14,105 Total gains realized/unrealized: ​ ​ ​ Included in other comprehensive loss ​ ​ 679 Ending balance September 30, 2023 ​ $ 14,784 ​ There were no gains or losses included in earnings attributable to the change in realized/unrealized gains or losses related to the assets for the nine- or three-month periods ended September 30, 2024 or 2023. The disclosed fair values may vary significantly between institutions based on the estimates and assumptions used in the various valuation methodologies. The derived fair values are subjective in nature and involve uncertainties and significant judgment. Therefore, they cannot be determined with precision. Changes in the assumptions could significantly impact the derived estimates of fair value. Disclosure of non-financial assets such as buildings, as well as certain financial instruments such as leases is not required. Accordingly, the aggregate fair values presented do not represent the underlying value of the Corporation. 34 Table of Contents The following tables present fair value information about financial instruments, whether or not recognized in the Consolidated Statement of Financial Condition, for which it is practicable to estimate that value. The actual carrying amounts and estimated fair values of the Corporation’s financial instruments that are included in the Consolidated Statement of Financial Condition are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 ​ Fair Value Measurements ​ ​ ​ ​ ​ ​ Quoted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Prices in ​ Significant ​ ​ ​ ​ ​ ​ ​ ​ Active Markets ​ Other ​ Significant ​ ​ ​ ​ ​ ​ for Identical ​ Observable ​ Unobservable ​ ​ Carrying ​ Fair ​ Assets ​ Inputs ​ Inputs (in thousands) Amount Value (Level 1) (Level 2) (Level 3) Financial Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and due from banks ​ $ 61,140 ​ $ 61,140 ​ $ 61,140 ​ ​ ​ ​ ​ ​ Interest bearing deposits in banks ​ ​ 1,252 ​ ​ 1,252 ​ ​ 1,252 ​ ​ ​ ​ ​ ​ Investment securities - AFS ​ ​ 93,160 ​ ​ 93,160 ​ ​ ​ ​ $ 78,381 ​ $ 14,779 Investment securities - HTM ​ ​ 174,054 ​ ​ 149,348 ​ ​ ​ ​ ​ 147,501 ​ ​ 1,847 Restricted bank stock ​ ​ 5,765 ​ ​ N/A ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans, net ​ ​ 1,429,540 ​ ​ 1,370,031 ​ ​ ​ ​ ​ ​ ​ ​ 1,370,031 Financial derivatives ​ ​ 438 ​ ​ 438 ​ ​ ​ ​ ​ 438 ​ ​ ​ Accrued interest receivable ​ ​ 7,054 ​ ​ 7,054 ​ ​ ​ ​ ​ 710 ​ ​ 6,344 Financial Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposits - non-maturity ​ ​ 1,398,567 ​ ​ 1,398,567 ​ ​ ​ ​ ​ 1,398,567 ​ ​ ​ Deposits - time deposits ​ ​ 141,828 ​ ​ 140,400 ​ ​ ​ ​ ​ 140,400 ​ ​ ​ Short-term borrowed funds ​ ​ 50,206 ​ ​ 50,206 ​ ​ ​ ​ ​ 50,206 ​ ​ ​ Long-term borrowed funds ​ ​ 120,929 ​ ​ 120,915 ​ ​ ​ ​ ​ 120,915 ​ ​ ​ Accrued interest payable ​ ​ 1,854 ​ ​ 1,854 ​ ​ ​ ​ ​ 1,854 ​ ​ ​ ​ ​ 35 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ Fair Value Measurements ​ ​ ​ ​ ​ ​ Quoted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Prices in ​ Significant ​ ​ ​ ​ ​ ​ ​ ​ Active Markets ​ Other ​ Significant ​ ​ ​ ​ ​ ​ for Identical ​ Observable ​ Unobservable ​ ​ Carrying ​ Fair ​ Assets ​ Inputs ​ Inputs (in thousands) Amount Value (Level 1) (Level 2) (Level 3) Financial Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and due from banks ​ $ 48,343 ​ $ 48,343 ​ $ 48,343 ​ ​ ​ ​ ​ ​ Interest bearing deposits in banks ​ ​ 1,410 ​ ​ 1,410 ​ ​ 1,410 ​ ​ ​ ​ ​ ​ Investment securities - AFS ​ ​ 97,169 ​ ​ 97,169 ​ ​ ​ ​ $ 82,460 ​ $ 14,709 Investment securities - HTM ​ ​ 214,297 ​ ​ 184,415 ​ ​ ​ ​ ​ 182,510 ​ ​ 1,905 Restricted bank stock ​ ​ 5,250 ​ ​ N/A ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans, net ​ ​ 1,388,847 ​ ​ 1,319,456 ​ ​ ​ ​ ​ ​ ​ ​ 1,319,456 Financial derivative ​ ​ 778 ​ ​ 778 ​ ​ ​ ​ ​ 778 ​ ​ ​ Accrued interest receivable ​ ​ 7,487 ​ ​ 7,487 ​ ​ ​ ​ ​ 828 ​ ​ 6,659 Financial Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposits - non-maturity ​ ​ 1,355,444 ​ ​ 1,355,444 ​ ​ ​ ​ ​ 1,355,444 ​ ​ ​ Deposits - time deposits ​ ​ 195,533 ​ ​ 193,337 ​ ​ ​ ​ ​ 193,337 ​ ​ ​ Short-term borrowed funds ​ ​ 45,418 ​ ​ 45,418 ​ ​ ​ ​ ​ 45,418 ​ ​ ​ Long-term borrowed funds ​ ​ 110,929 ​ ​ 110,809 ​ ​ ​ ​ ​ 110,809 ​ ​ ​ Accrued interest payable ​ ​ 612 ​ ​ 612 ​ ​ ​ ​ ​ 612 ​ ​ ​ ​ 36 Table of Contents Note 7 – Accumulated Other Comprehensive Loss The following table presents the changes in each component of accumulated other comprehensive loss for the three-month periods ended September 30, 2024, June 30, 2024, March 31, 2024, September 30, 2023, June 30, 2023 and March 31,2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ securities- ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ with credit ​ Investment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ related ​ securities- ​ Investment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ impairment ​ all other ​ securities- ​ Cash Flow ​ Pension ​ ​ ​ ​ ​ ​ (in thousands) AFS AFS HTM Hedge Plan SERP Total Accumulated OCL, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance - January 1, 2024 ​ ​ ( 2,482 ) ​ ​ ( 13,217 ) ​ ​ ( 5,201 ) ​ ​ 569 ​ ​ ( 14,263 ) ​ ​ ( 1,233 ) ​ ​ ( 35,827 ) Other comprehensive income/(loss) before reclassifications ​ ​ 155 ​ ​ ( 459 ) ​ ​ — ​ ​ 54 ​ ​ 1,096 ​ ​ — ​ ​ 846 Amounts reclassified from accumulated other comprehensive income ​ ​ ( 37 ) ​ ​ — ​ ​ 118 ​ ​ — ​ ​ 149 ​ ​ 29 ​ ​ 259 Balance - March 31, 2024 ​ $ ( 2,364 ) ​ $ ( 13,676 ) ​ $ ( 5,083 ) ​ $ 623 ​ $ ( 13,018 ) ​ $ ( 1,204 ) ​ $ ( 34,722 ) Other comprehensive (loss)/income before reclassifications ​ ​ ( 620 ) ​ ​ ( 528 ) ​ ​ — ​ ​ ( 51 ) ​ ​ ( 396 ) ​ ​ — ​ ​ ( 1,595 ) Amounts reclassified from accumulated other comprehensive income ​ ​ ( 40 ) ​ ​ — ​ ​ 118 ​ ​ — ​ ​ 150 ​ ​ 29 ​ ​ 257 Balance - June 30, 2024 ​ $ ( 3,024 ) ​ $ ( 14,204 ) ​ $ ( 4,965 ) ​ $ 572 ​ $ ( 13,264 ) ​ $ ( 1,175 ) ​ $ ( 36,060 ) Other comprehensive income/(loss)before reclassifications ​ ​ 544 ​ ​ 2,491 ​ ​ — ​ ​ ( 238 ) ​ ​ 2,377 ​ ​ — ​ ​ 5,174 Amounts reclassified from accumulated other comprehensive income ​ ​ ( 38 ) ​ ​ — ​ ​ 134 ​ ​ — ​ ​ 148 ​ ​ 29 ​ ​ 273 Balance - September 30, 2024 ​ $ ( 2,518 ) ​ $ ( 11,713 ) ​ $ ( 4,831 ) ​ $ 334 ​ $ ( 10,739 ) ​ $ ( 1,146 ) ​ $ ( 30,613 ) ​ ​ Investment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ securities- ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ with credit ​ Investment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ related ​ securities- ​ Investment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ impairment ​ all other ​ securities- ​ Cash Flow ​ Pension ​ ​ ​ ​ ​ ​ (in thousands) AFS AFS HTM Hedge Plan SERP Total Balance - January 1, 2023 ​ $ ( 1,711 ) ​ $ ( 16,380 ) ​ $ ( 5,703 ) ​ $ 797 ​ $ ( 16,603 ) ​ $ 574 ​ $ ( 39,026 ) Other comprehensive (loss)/income before reclassifications ​ ​ ( 1,180 ) ​ ​ 985 ​ ​ — ​ ​ ( 138 ) ​ ​ 123 ​ ​ — ​ ​ ( 210 ) Amounts reclassified from accumulated other comprehensive income ​ ​ ( 37 ) ​ ​ — ​ ​ 133 ​ ​ — ​ ​ 184 ​ ​ ( 1 ) ​ ​ 279 Balance - March 31, 2023 ​ $ ( 2,928 ) ​ $ ( 15,395 ) ​ $ ( 5,570 ) ​ $ 659 ​ $ ( 16,296 ) ​ $ 573 ​ $ ( 38,957 ) Other comprehensive income/(loss) before reclassifications ​ ​ 111 ​ ​ ( 1,654 ) ​ ​ — ​ ​ 150 ​ ​ ( 42 ) ​ ​ — ​ ​ ( 1,435 ) Amounts reclassified from accumulated other comprehensive loss ​ ​ ( 40 ) ​ ​ — ​ ​ 129 ​ ​ — ​ ​ 195 ​ ​ ( 2 ) ​ ​ 282 Balance - June 30, 2023 ​ $ ( 2,857 ) ​ $ ( 17,049 ) ​ $ ( 5,441 ) ​ $ 809 ​ $ ( 16,143 ) ​ $ 571 ​ $ ( 40,110 ) Other comprehensive income/(loss) before reclassifications ​ ​ 475 ​ ​ ( 3,201 ) ​ ​ — ​ ​ 11 ​ ​ ( 1,033 ) ​ ​ — ​ ​ ( 3,748 ) Amounts reclassified from accumulated other comprehensive loss ​ ​ ( 38 ) ​ ​ — ​ ​ 130 ​ ​ — ​ ​ 194 ​ ​ ( 1 ) ​ ​ 285 Balance - September 30, 2023 ​ $ ( 2,420 ) ​ $ ( 20,250 ) ​ $ ( 5,311 ) ​ $ 820 ​ $ ( 16,982 ) ​ $ 570 ​ $ ( 43,573 ) ​ ​ ​ 37 Table of Contents ​ The following tables present the components of other comprehensive income/(loss) for the nine- and three-month periods ended September 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Before ​ Tax ​ ​ Components of Other Comprehensive Income ​ Tax ​ (Expense) ​ ​ (in thousands) Amount Benefit Net For the nine months ended September 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ Available for sale (AFS) securities with credit related impairment: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized holding gains ​ $ 103 ​ $ ( 24 ) ​ $ 79 Less: accretable yield recognized in income ​ ​ 152 ​ ​ ( 37 ) ​ ​ 115 Net unrealized loss on investments with credit related impairment ​ ​ ( 49 ) ​ ​ 13 ​ ​ ( 36 ) Available for sale securities – all other: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized holding gains ​ ​ 2,044 ​ ​ ( 540 ) ​ ​ 1,504 Held to maturity securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized holding gains on securities transferred to held to maturity ​ ​ — ​ ​ — ​ ​ — Less: amortization recognized in income ​ ​ ( 503 ) ​ ​ 133 ​ ​ ( 370 ) Net unrealized gains on HTM securities ​ ​ 503 ​ ​ ( 133 ) ​ ​ 370 Cash flow hedges: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized holding losses ​ ​ ( 319 ) ​ ​ 84 ​ ​ ( 235 ) Pension Plan: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized net actuarial gains ​ ​ 4,181 ​ ​ ( 1,104 ) ​ ​ 3,077 Less: amortization of unrecognized losses ​ ​ ( 608 ) ​ ​ 161 ​ ​ ( 447 ) Net pension plan liability adjustment ​ ​ 4,789 ​ ​ ( 1,265 ) ​ ​ 3,524 SERP: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized net actuarial gain ​ ​ — ​ ​ — ​ ​ — Less: amortization of unrecognized losses ​ ​ ( 118 ) ​ ​ 31 ​ ​ ( 87 ) Net SERP liability adjustment ​ ​ 118 ​ ​ ( 31 ) ​ ​ 87 Other comprehensive income ​ $ 7,086 ​ $ ( 1,872 ) ​ $ 5,214 ​ ​ ​ 38 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Before ​ Tax ​ ​ Components of Other Comprehensive Loss ​ Tax ​ (Expense) ​ ​ (in thousands) Amount Benefit Net For the nine months ended September 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ Available for sale (AFS) securities with credit related impairment: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized holding losses ​ $ ( 777 ) ​ $ 183 ​ $ ( 594 ) Less: accretable yield recognized in income ​ ​ 152 ​ ​ ( 37 ) ​ ​ 115 Net unrealized losses on investments with credit related impairment ​ ​ ( 929 ) ​ ​ 220 ​ ​ ( 709 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Available for sale securities – all other: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized holding losses ​ ​ ( 5,065 ) ​ ​ 1,195 ​ ​ ( 3,870 ) Held to maturity securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized holding gains on securities transferred to held to maturity ​ ​ — ​ ​ — ​ ​ — Less: amortization recognized in income ​ ​ ( 513 ) ​ ​ 121 ​ ​ ( 392 ) Net unrealized gains on HTM securities ​ ​ 513 ​ ​ ( 121 ) ​ ​ 392 Cash flow hedges: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized holding gains ​ ​ 30 ​ ​ ( 7 ) ​ ​ 23 Pension Plan: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized net actuarial losses ​ ​ ( 1,250 ) ​ ​ 298 ​ ​ ( 952 ) Less: amortization of unrecognized losses ​ ​ ( 750 ) ​ ​ 177 ​ ​ ( 573 ) Net pension plan liability adjustment ​ ​ ( 500 ) ​ ​ 121 ​ ​ ( 379 ) SERP: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized net actuarial gains ​ ​ — ​ ​ — ​ ​ — Less: amortization of unrecognized gains ​ ​ 6 ​ ​ ( 2 ) ​ ​ 4 Net SERP liability adjustment ​ ​ ( 6 ) ​ ​ 2 ​ ​ ( 4 ) Other comprehensive loss ​ $ ( 5,957 ) ​ $ 1,410 ​ $ ( 4,547 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Components of Other Comprehensive Income (in thousands) ​ Before Tax Amount ​ Tax (Expense) Benefit ​ Net For the three months ended September 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ Available for sale (AFS) securities with credit related impairment: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized holding gains ​ $ 740 ​ $ ( 196 ) ​ $ 544 Less: accretable yield recognized in income ​ ​ 51 ​ ​ ( 13 ) ​ ​ 38 Net unrealized losses on investments with credit related impairment ​ ​ 689 ​ ​ ( 183 ) ​ ​ 506 Available for sale securities – all other: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized holding gains ​ ​ 3,384 ​ ​ ( 893 ) ​ ​ 2,491 Held to maturity securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized holding gains ​ ​ — ​ ​ — ​ ​ — Less: amortization recognized in income ​ ​ ( 182 ) ​ ​ 48 ​ ​ ( 134 ) Net unrealized gains on HTM securities ​ ​ 182 ​ ​ ( 48 ) ​ ​ 134 Cash flow hedges: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized holding losses ​ ​ ( 323 ) ​ ​ 85 ​ ​ ( 238 ) Pension Plan: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized net actuarial gains ​ ​ 3,229 ​ ​ ( 852 ) ​ ​ 2,377 Less: amortization of unrecognized loss ​ ​ ( 202 ) ​ ​ 54 ​ ​ ( 148 ) Net pension plan liability adjustment ​ ​ 3,431 ​ ​ ( 906 ) ​ ​ 2,525 SERP: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized net actuarial loss ​ ​ — ​ ​ — ​ ​ — Less: amortization of unrecognized losses ​ ​ ( 39 ) ​ ​ 10 ​ ​ ( 29 ) Net SERP liability adjustment ​ ​ 39 ​ ​ ( 10 ) ​ ​ 29 Other comprehensive income ​ $ 7,402 ​ $ ( 1,955 ) ​ $ 5,447 ​ 39 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Components of Other Comprehensive Loss (in thousands) ​ Before Tax Amount ​ Tax (Expense) Benefit ​ Net For the three months ended September 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ Available for sale (AFS) securities with credit related impairment: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized holding gains ​ $ 633 ​ $ ( 158 ) ​ $ 475 Less: accretable yield recognized in income ​ ​ 51 ​ ​ ( 13 ) ​ ​ 38 unrealized losses on investments with credit related impairment ​ ​ 582 ​ ​ ( 145 ) ​ ​ 437 Available for sale securities – all other: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized holding losses ​ ​ ( 4,183 ) ​ ​ 982 ​ ​ ( 3,201 ) Held to maturity securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized holding gains ​ ​ — ​ ​ — ​ ​ — Less: amortization recognized in income ​ ​ ( 167 ) ​ ​ 37 ​ ​ ( 130 ) Net unrealized gains on HTM securities ​ ​ 167 ​ ​ ( 37 ) ​ ​ 130 Cash flow hedges: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized holding gains ​ ​ 14 ​ ​ ( 3 ) ​ ​ 11 Pension Plan: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized net actuarial loss ​ ​ ( 1,352 ) ​ ​ 319 ​ ​ ( 1,033 ) Less: amortization of unrecognized loss ​ ​ ( 251 ) ​ ​ 57 ​ ​ ( 194 ) Net pension plan liability adjustment ​ ​ ( 1,101 ) ​ ​ 262 ​ ​ ( 839 ) SERP: ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized net actuarial loss ​ ​ — ​ ​ — ​ ​ — Less: amortization of unrecognized gains ​ ​ 2 ​ ​ ( 1 ) ​ ​ 1 Net SERP liability adjustment ​ ​ ( 2 ) ​ ​ 1 ​ ​ ( 1 ) Other comprehensive loss ​ $ ( 4,523 ) ​ $ 1,060 ​ $ ( 3,463 ) ​ The following table presents the details of amounts reclassified from accumulated other comprehensive income/(loss) for the nine- and three-month periods ended September 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amounts Reclassified from ​ Nine Months Ended ​ ​ Accumulated Other Comprehensive Income/(Loss) ​ September 30, ​ Affected Line Item in the Statement (in thousands) 2024 2023 Where Net Income is Presented Net unrealized gains on available for sale investment securities with credit related impairment: ​ ​ ​ ​ ​ ​ ​ ​ Accretable yield ​ $ 152 ​ $ 152 ​ Interest income on taxable investment securities Taxes ​ ​ ( 37 ) ​ ​ ( 37 ) ​ Credit for income tax expense ​ ​ $ 115 ​ $ 115 ​ Net of tax Net unrealized losses on held to maturity securities: ​ ​ ​ ​ ​ ​ ​ ​ Amortization ​ $ ( 503 ) ​ $ ( 513 ) ​ Interest income on taxable investment securities Taxes ​ ​ 133 ​ ​ 121 ​ Provision for income tax expense ​ ​ $ ( 370 ) ​ $ ( 392 ) ​ Net of tax Net pension plan liability adjustment: ​ ​ ​ ​ ​ ​ ​ ​ Amortization of unrecognized losses ​ $ ( 608 ) ​ $ ( 750 ) ​ Other Expense Taxes ​ ​ 161 ​ ​ 177 ​ Provision for income tax expense ​ ​ $ ( 447 ) ​ $ ( 573 ) ​ Net of tax Net SERP liability adjustment: ​ ​ ​ ​ ​ ​ ​ ​ Amortization of unrecognized (losses)/gains ​ $ ( 118 ) ​ $ 6 ​ Other Expense Taxes ​ ​ 31 ​ ​ ( 2 ) ​ Provision/(credit) for income tax expense ​ ​ $ ( 87 ) ​ $ 4 ​ Net of tax Total reclassifications for the period ​ $ ( 789 ) ​ $ ( 846 ) ​ Net of tax ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 40 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amounts Reclassified from ​ Three Months Ended ​ ​ Accumulated Other Comprehensive Income/(Loss) ​ September 30, ​ Affected Line Item in the Statement (in thousands) ​ 2024 ​ 2023 ​ Where Net Income is Presented Net unrealized gains on available for sale investment securities with credit related impairment: ​ ​ ​ ​ ​ ​ ​ ​ Accretable yield ​ $ 51 ​ $ 51 ​ Interest income on taxable investment securities Taxes ​ ​ ( 13 ) ​ ​ ( 13 ) ​ Credit for income tax expense ​ ​ $ 38 ​ $ 38 ​ Net of tax Net unrealized losses on held to maturity securities: ​ ​ ​ ​ ​ ​ ​ ​ Amortization ​ $ ( 182 ) ​ $ ( 167 ) ​ Interest income on taxable investment securities Taxes ​ ​ 48 ​ ​ 37 ​ Provision for income tax expense ​ ​ $ ( 134 ) ​ $ ( 130 ) ​ Net of tax Net pension plan liability adjustment: ​ ​ ​ ​ ​ ​ ​ ​ Amortization of unrecognized losses ​ $ ( 202 ) ​ $ ( 251 ) ​ Other expense Taxes ​ ​ 54 ​ ​ 57 ​ Provision for income tax expense ​ ​ $ ( 148 ) ​ $ ( 194 ) ​ Net of tax Net SERP liability adjustment: ​ ​ ​ ​ ​ ​ ​ ​ Amortization of unrecognized (losses)/gains ​ $ ( 39 ) ​ $ 2 ​ Other expense Taxes ​ ​ 10 ​ ​ ( 1 ) ​ Provision/(credit) for income tax expense ​ ​ $ ( 29 ) ​ $ 1 ​ Net of tax Total reclassifications for the period ​ $ ( 273 ) ​ $ ( 285 ) ​ Net of tax ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Note 8 - Equity Compensation Plan Information ​ At the 2018 Annual Meeting of Shareholders, First United Corporation’s shareholders approved the First United Corporation 2018 Equity Compensation Plan (the “Equity Plan”), which authorizes the issuance of up to 325,000 shares of common stock to employees, directors and qualifying consultants pursuant to stock options, stock appreciation rights, stock awards, dividend equivalents, and other stock-based awards. The Corporation complies with the provisions of ASC Topic 718, Compensation - Stock Compensation , in measuring and disclosing stock compensation cost. The measurement objective in ASC Paragraph 718-10-30-6 requires public companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. The cost is recognized in expense over the period in which an employee is required to provide service in exchange for the award (the vesting period). Pursuant to First United Corporation’s director compensation policy, each director receives an annual retainer of 1,000 shares of First United Corporation common stock, plus $ 15,000 to be paid, at the director’s election, in cash or additional shares of common stock. In May 2024, a total of 14,325 fully vested shares of common stock were issued to directors, which had a grant date fair value of $ 21.94 per share. In May 2023, a total of 16,931 fully vested shares of common stock were issued to directors, which had a grant date fair value of $ 13.23 per share. In January 2023, a total of 333 fully vested shares of common stock were issued to a new director, which had a grant date fair value of $ 19.36 per share. In October 2023, a total of 852 fully vested shares of common stock were issued to a new director which had a grant date fair value of $ 16.26 per share. Director stock compensation was $ 213,536 and $ 194,001 for the nine-month periods ended September 30, 2024 and 2023, respectively. Director stock compensation expense was $ 78,573 and $ 56,000 for the three-month periods ended September 30, 2024 and 2023, respectively. Employee stock compensation expense was $ 8,240 and $ 12,092 for the nine-month periods ended September 30, 2024 and 2023, respectively. Employee stock compensation expense was $ 2,483 and $ 4,892 for the three-month periods ended September 30, 2024 and 2023, respectively. 41 Table of Contents Restricted Stock Units On March 26, 2020, pursuant to the Corporation’s Long Term Incentive Plan (the "LTIP"), which is a sub-plan of the Equity Plan, the Compensation Committee of First United Corporation’s Board of Directors (the "Compensation Committee") granted RSUs to the Corporation’s principal executive officer, its principal financial officer, and certain of its other executive officers. An RSU contemplates the issuance of shares of common stock of First United Corporation if and when the RSU vests. The RSUs granted to each of the foregoing officers consist of (i) a performance vesting award for a three year performance period and (ii) a time-vesting award that will vest ratably over a three year period. Target performance levels were set based on the annual budget which supports the Corporation’s long-term objective of achieving high performance as compared to peers. Threshold performance is the minimum level of acceptable performance as defined by the Compensation Committee and maximum performance represented a level potentially achievable under ideal circumstances. Achievement of all threshold performance levels would result in each executive participant earning a payout at 50 % of his or her respective target award opportunity. Achievement of all target performance levels would result in the executive participant earning the target award. Achievement at or above all maximum performance levels would result in the executive participant earning 150 % of the target opportunity. Actual results for any goal that falls between performance levels would be interpolated to calculate a proportionate award. To receive any shares under an RSU, a grantee must be employed by the Corporation or one of its subsidiaries on the applicable vesting date, except that a grantee whose employment terminates prior to such vesting date due to death, disability or retirement will be entitled to a pro-rated portion of the shares subject to the RSUs, assuming that, in the case of performance-vesting RSUs, the performance goals had been met at their "target" levels. In May 2021, RSUs relating to 7,389 performance vesting shares and 3,693 time vesting shares (target level) for plan year 2021 were granted, which had a grant date fair market value of $ 17.93 per share of common stock underlying each RSU. The performance period for the performance-vesting RSUs was the three-year period ended December 31, 2023. On March 9, 2024, it was determined that 7,389 performance-vesting RSUs failed to vest. The time-vesting RSUs will vest ratably over a three year period that began on May 5, 2022. On May 5, 2022, 1,230 shares of the 3,693 time-vesting RSUs were issued to participants. On May 5, 2023, 1,230 additional shares of the 3,693 time-vesting RSUs were issued to participants. On May 5, 2024, the remaining 1,233 shares of the 3,693 time-vesting RSUs were issued to participants. Stock compensation expense was $ 7,365 and $ 49,714 for the nine-month periods ended September 30, 2024 and 2023, respectively. Stock compensation expense was $ 0 and $ 16,571 for the three-month periods ended September 30, 2024 and 2023, respectively. All compensation expense related to the 2021 LTIP plans was recognized as of September 30, 2024. In March 2022, RSUs relating to 8,096 performance vesting shares and 6,238 time vesting shares (target level) for plan year 2022 were granted, which had a grant date fair market value of $ 21.88 per share of common stock underlying each RSU. The performance period for the performance-vesting RSUs is the three-year period ending December 31, 2024. The time-vesting RSUs will vest ratably over a three year period that began on March 9, 2023. On March 9, 2023, 2,079 shares of the 6,238 time-vesting RSUs were issued to participants. On March 9, 2024, 2,079 additional shares of the 6,238 time-vesting RSUs were issued to participants. In the third quarter of 2024, it was projected that the performance metric will fail to vest; and, the stock compensation expense was adjusted accordingly. Net stock compensation (credit)/expense was ($ 69,228 ) and $ 78,436 for the nine-month periods ended September 30, 2024 and 2023, respectively. Net stock compensation (credit)/expense was ($ 121,518 ) and $ 26,145 for the three-month periods ended September 30, 2024 and 2023, respectively. Unrecognized compensation expense as of September 30, 2024 related to unvested RSUs was $ 22,758 . In March 2023, RSUs relating to 10,214 performance vesting shares and 7,920 time vesting shares (target level) for plan year 2023 were granted, which had a grant date fair market value of $ 18.25 per share of common stock underlying each RSU. The performance period for the performance-vesting RSUs is the three-year period ending December 31, 2025. The time-vesting RSUs will vest ratably over a three year period that began on March 15, 2024. On March 15, 2024, 2,639 shares of the 7,920 time-vesting RSUs were issued to participants. Stock compensation expense was $ 82,755 and $ 55,170 for the nine-month periods ended September 30, 2024 and 2023, respectively. Stock compensation expense was $ 27,585 for both of the three-month periods ended September 30, 2024 and 2023. Unrecognized compensation expense as of September 30, 2024 related to unvested RSUs was $ 165,509 . 42 Table of Contents In May 2024, RSUs relating to 8,593 performance vesting shares and 6,662 time vesting shares (target level) for plan year 2024 were granted, which had a grant date fair market value of $ 22.26 per share of common stock underlying each RSU. The performance period for the performance-vesting RSUs is the three-year period ending December 31, 2026. The time-vesting RSUs will vest ratably over a three-year period that began on May 20, 2025. Stock compensation expense was $ 37,752 for the nine-month period ended September 30, 2024. Stock compensation expense was $ 28,314 for the three-month period ended September 30, 2024. Unrecognized compensation expense as of September 30, 2024 related to unvested RSUs was $ 302,016 . Note 9– Derivative Financial Instruments As a part of managing interest rate risk, the Corporation entered into interest rate swap agreements to modify the re-pricing characteristics of certain interest-bearing liabilities. The Corporation has designated its interest rate swap agreements as cash flow hedges under the guidance of ASC Subtopic 815-30, Derivatives and Hedging – Cash Flow Hedges . Cash flow hedges have the effective portion of changes in the fair value of the derivative, net of taxes, recorded in net accumulated other comprehensive income. In March 2016, the Corporation entered into four interest rate swap contracts totaling $ 30.0 million notional amount, hedging future cash flows associated with floating rate trust preferred debt. As of September 30, 2024, $ 15.0 million notional amount remains. The interest rate swap creates an effective fixed interest rate of 4.6550 % on the $ 15.0 million notional amount of the Corporation’s junior subordination debt until the interest rate swap’s maturity in March 2026. The fair value of the interest rate swap contracts was $ 0.4 million and $ 0.8 million at September 30, 2024 and December 31, 2023, respectively. For the nine- and three-month periods ended September 30, 2024, the Corporation recorded decreases in the value of the derivatives of $ 319,000 and $ 323,000 , respectively, and the related deferred tax benefits of $ 84,000 and $ 85,000 , respectively, in net accumulated other comprehensive income to reflect the effective portion of cash flow hedges. This compares to an increases of $ 30,000 and $ 14,000 , respectively, and related deferred taxes of $ 7,000 and $ 3,000 , respectively, for the nine-and three-months ended September 30, 2023. ASC Subtopic 815-30 requires the net accumulated other comprehensive income/(loss) to be reclassified to earnings if the hedge becomes ineffective or is terminated. There was no hedge ineffectiveness recorded for any of the nine-month periods or three-month periods ended September 30, 2024 or 2023. The Corporation does not expect any material losses relating to these hedges to be reclassified into earnings within the next 12 months. Interest rate swap agreements are entered into with counterparties that meet established credit standards and the Corporation believes that the credit risk inherent in these contracts is not significant as of September 30, 2024. The table below discloses the impact of derivative financial instruments on the Corporation’s Consolidated Financial Statements for the nine- and three-month periods ended September 30, 2024 and 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative in Cash Flow Hedging Relationships ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount of gain or ​ ​ ​ ​ ​ ​ ​ ​ (loss) recognized in ​ ​ Amount of gain or ​ Amount of gain or ​ income or derivative ​ ​ (loss) recognized in ​ (loss) reclassified from ​ (ineffective portion ​ ​ OCI on derivative ​ accumulated OCI into ​ and amount excluded ​ ​ (effective portion), ​ income (effective ​ from effectiveness (in thousands) net of tax portion) (a) testing) (b) Interest rate contracts: ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine months ended: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 ​ $ ( 235 ) ​ $ — ​ $ — September 30, 2023 ​ ​ 23 ​ ​ — ​ ​ — Three months ended: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 ​ $ ( 238 ) ​ $ — ​ $ — September 30, 2023 ​ ​ 11 ​ ​ — ​ ​ — ​ Notes: (a) Reported as interest expense (b) Reported as other income 43 Table of Contents ​ Note 10 – Regulatory Capital Requirements The following table presents the Bank’s capital ratios as of September 30, 2024 and December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 December 31, 2023 Required for Capital Adequacy Purposes Required to be Well Capitalized Total Capital (to risk-weighted assets) ​ 14.53 % 14.05 % 8.00 % 10.00 % Tier 1 Capital (to risk-weighted assets) ​ 13.28 % 12.81 % 6.00 % 8.00 % Common Equity Tier 1 Capital (to risk-weighted assets) ​ 13.28 % 12.81 % 4.50 % 6.50 % Tier 1 Capital (to average assets) ​ 10.68 % 9.92 % 4.00 % 5.00 % ​ As of September 30, 2024 and December 31, 2023, the Bank was considered “well capitalized” under the regulatory framework for prompt corrective action. ​ Note 11 – Deposits The following table summarizes deposits at September 30, 2024 and December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) September 30, 2024 December 31, 2023 ​ ​ ​ Balance ​ Percent ​ ​ Balance ​ Percent Non-Interest-bearing deposits: ​ $ 419,437 27 % ​ $ 427,670 ​ 28 % Interest-bearing deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Demand ​ ​ 382,453 ​ 25 % ​ ​ 350,860 ​ 22 % Money market-retail ​ ​ 420,200 ​ 27 % ​ ​ 385,649 ​ 25 % Money market- brokered ​ ​ 1 ​ 0 % ​ ​ — ​ — Savings deposits ​ ​ 176,476 ​ 12 % ​ ​ 191,265 ​ 12 % Time deposits- retail ​ ​ 141,828 ​ 9 % ​ ​ 165,533 ​ 11 % Time deposits- brokered ​ ​ — ​ — ​ ​ 30,000 ​ 2 % Total Deposits ​ $ 1,540,395 ​ 100 % ​ $ 1,550,977 ​ 100 % ​ ​ Note 12 – Borrowed Funds The following is a summary of borrowings at September 30, 2024 and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ September 30, 2024 ​ December 31, 2023 Short-term borrowings: ​ ​ ​ ​ ​ ​ Securities sold under agreements to repurchase: ​ ​ ​ ​ ​ ​ Outstanding at end of period ​ $ 21,206 ​ $ 45,418 Weighted average interest rate at end of period ​ ​ 0.24 % ​ ​ 0.27 % Maximum amount outstanding as of any month end ​ $ 44,415 ​ $ 59,777 Average amount outstanding ​ $ 33,290 ​ $ 50,498 Approximate weighted average rate during the period ​ ​ 0.26 % ​ ​ 0.24 % Overnight borrowings, weighted average interest rate of 5.00 % at September 30, 2024 ​ $ 29,000 ​ $ — Long-term borrowings: ​ ​ ​ ​ ​ ​ FHLB advances, bearing fixed interest rate ranging from 3.84 % to 4.04 % at September 30, 2024 and rates ranging from 4.53 % to 4.69 % at December 31, 2023. ​ $ 90,000 ​ $ 80,000 Junior subordinated debt, bearing variable interest rate of 7.95 % at September 30, 2024 and 8.39 % at December 31, 2023 ​ ​ 30,929 ​ ​ 30,929 Total borrowings outstanding ​ $ 171,135 ​ $ 156,347 44 Table of Contents ​ Short-term borrowings increased by $ 4.8 million when compared to December 31, 2023, which were comprised of $ 29.0 million in overnight borrowings from the Federal Reserve offset by a shift of approximately $ 22.0 million in overnight investment sweep balances into FDIC insured accounts due to management’s strategy to release pledging of investment securities for municipalities to provide additional liquidity. Overnight borrowings outstanding at September 30, 2024 are secured by AFS and HTM investment securities. ​ At September 30, 2024, the repurchase agreements were secured by $ 32.5 million in investment securities issued by government related agencies. A minimum of 102 % of fair value is pledged against account balances. ​ Long-term borrowings increased by $ 10.0 million when compared to December 31, 2023. Maturities of Federal Home Loan Bank (“FHLB”) advances of $ 40.0 million in March and $ 40.0 million in September were fully repaid. During the third quarter and after the Federal Reserve announced that it would reduce rates by 50 basis points, the Bank borrowed $ 90.0 million in three new FHLB advances with maturities of 12 - and 18-months and a weighted average rate of 3.89 %. All outstanding FHLB advances at September 30, 2024 and December 31, 2023 are secured by certain eligible residential real estate and commercial real estate loans as permitted by FHLB. ​ The following table presents contractual maturities of long-term borrowings outstanding at September 30, 2024 and December 31 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 ​ December 31, 2023 (in thousands) ​ Fixed Rate ​ Floating Rate ​ Total ​ Fixed Rate ​ Floating Rate ​ Total Due in 2024 ​ $ — ​ $ — ​ $ — ​ $ 80,000 ​ $ — ​ $ 80,000 Due in 2025 ​ ​ 25,000 ​ ​ — ​ ​ 25,000 ​ ​ — ​ ​ — ​ ​ — Due in 2026 ​ ​ 65,000 ​ ​ — ​ ​ 65,000 ​ ​ — ​ ​ — ​ ​ — Thereafter ​ ​ — ​ ​ 30,929 ​ ​ 30,929 ​ ​ — ​ ​ 30,929 ​ ​ 30,929 Total long-term debt ​ $ 90,000 ​ $ 30,929 ​ $ 120,929 ​ $ 80,000 ​ $ 30,929 ​ $ 110,929 ​ ​ ​ Note 13 – Segment Reporting Currently, the Corporation conducts business in two operating segments: (i) Community Banking; and (ii) Trust and Investment Services. The accounting policies of the segments are the same as those described in the summary of significant accounting policies provided earlier in this report. Business activity for the operating segments are as follows: Community Banking : The Community Banking segment is conducted through the Bank and involves delivering a broad range of financial products and services, including various loan and deposit products, to consumer, business, and not-for-profit customers. Parent company income and assets are included in the Community Banking segment, as the majority of parent company functions are related to this segment. Major revenue sources include net interest income, gains on sales of mortgage loans, and service charges on deposit accounts. Expenses include personnel, occupancy, marketing, equipment, and other expenses. Non-cash charges other than depreciation of fixed assets were immaterial for the nine- and three-month periods ended September 30, 2024 and 2023. Trust and Investment Services : The Trust and Investment Services segment is conducted through the Bank and offers corporate trustee services, trust and estate administration, IRA administration and custody services. Revenues for this segment is generated from administration, service and custody fees, as well as management fees that are derived from Assets Under Management. Expenses include personnel, occupancy, marketing, equipment, and other expenses. Non-cash charges associated with amortization of intangibles were approximately $ 156,000 for both of the nine-month periods ended September 30, 2024 and 2023 and $ 52,000 for both of the three-month periods ended September 30, 2024 and 2023. ​ 45 Table of Contents Information for the operating segments for the nine- and three-month periods ended September 30, 2024 and 2023 are presented in the following tables: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ ​ ​ September 30, 2024 ​ ​ ​ ​ ​ ​ ​ Trust and ​ ​ ​ ​ ​ ​ ​ Community ​ ​ Investment ​ ​ ​ (in thousands) ​ ​ ​ Banking ​ ​ Services ​ ​ Total Interest income ​ ​ $ 68,268 ​ $ - ​ $ 68,268 Interest expense ​ ​ ​ 23,990 ​ ​ - ​ ​ 23,990 Credit loss expense ​ ​ ​ 2,404 ​ ​ - ​ ​ 2,404 Non-interest income ​ ​ ​ 6,844 ​ ​ 7,925 ​ ​ 14,769 Non-interest expense ​ ​ ​ 33,663 ​ ​ 3,896 ​ ​ 37,559 Income before income taxes and intercompany fees ​ ​ ​ 15,055 ​ ​ 4,029 ​ ​ 19,084 Intercompany management fee income (expense) ​ ​ ​ 9 ​ ​ ( 9 ) ​ ​ - Income before income taxes ​ ​ ​ 15,064 ​ ​ 4,020 ​ ​ 19,084 Income tax expense ​ ​ ​ 3,857 ​ ​ 844 ​ ​ 4,701 Net income ​ ​ $ 11,207 ​ $ 3,176 ​ $ 14,383 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ ​ ​ September 30, 2023 ​ ​ ​ ​ ​ ​ ​ Trust and ​ ​ ​ ​ ​ ​ ​ Community ​ ​ Investment ​ ​ ​ (in thousands) ​ ​ ​ Banking ​ ​ Services ​ ​ Total Interest income ​ ​ $ 58,965 ​ $ - ​ $ 58,965 Interest expense ​ ​ ​ 16,289 ​ ​ - ​ ​ 16,289 Credit loss expense ​ ​ ​ 1,201 ​ ​ - ​ ​ 1,201 Non-interest income ​ ​ ​ 6,927 ​ ​ 6,933 ​ ​ 13,860 Non-interest expense ​ ​ ​ 34,070 ​ ​ 3,864 ​ ​ 37,934 Income before income taxes and intercompany fees ​ ​ ​ 14,332 ​ ​ 3,069 ​ ​ 17,401 Intercompany management fee income (expense) ​ ​ ​ 9 ​ ​ ( 9 ) ​ ​ - Income before income taxes ​ ​ ​ 14,341 ​ ​ 3,060 ​ ​ 17,401 Income tax expense ​ ​ ​ 3,456 ​ ​ 643 ​ ​ 4,099 Net income ​ ​ $ 10,885 ​ $ 2,417 ​ $ 13,302 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ ​ September 30, 2024 ​ ​ ​ ​ ​ ​ ​ Trust and ​ ​ ​ ​ ​ ​ ​ Community ​ ​ Investment ​ ​ ​ (in thousands) ​ ​ ​ Banking ​ ​ Services ​ ​ Total Interest income ​ ​ $ 23,257 ​ $ - ​ $ 23,257 Interest expense ​ ​ ​ 8,029 ​ ​ - ​ ​ 8,029 Credit loss expense ​ ​ ​ 264 ​ ​ - ​ ​ 264 Non-interest income ​ ​ ​ 2,428 ​ ​ 2,625 ​ ​ 5,053 Non-interest expense ​ ​ ​ 11,048 ​ ​ 1,266 ​ ​ 12,314 Income before income taxes and intercompany fees ​ ​ ​ 6,344 ​ ​ 1,359 ​ ​ 7,703 Intercompany management fee income (expense) ​ ​ ​ 3 ​ ​ ( 3 ) ​ ​ - Income before income taxes ​ ​ ​ 6,347 ​ ​ 1,356 ​ ​ 7,703 Income tax expense ​ ​ ​ 1,647 ​ ​ 285 ​ ​ 1,932 Net income ​ ​ $ 4,700 ​ $ 1,071 ​ $ 5,771 46 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ ​ September 30, 2023 ​ ​ ​ ​ ​ ​ ​ Trust and ​ ​ ​ ​ ​ ​ ​ Community ​ ​ Investment ​ ​ ​ (in thousands) ​ ​ ​ Banking ​ ​ Services ​ ​ Total Interest income ​ ​ $ 21,164 ​ $ - ​ $ 21,164 Interest expense ​ ​ ​ 7,180 ​ ​ - ​ ​ 7,180 Credit loss credit ​ ​ ​ 263 ​ ​ - ​ ​ 263 Non-interest income ​ ​ ​ 2,515 ​ ​ 2,383 ​ ​ 4,898 Non-interest expense ​ ​ ​ 11,507 ​ ​ 1,278 ​ ​ 12,785 Income before income taxes and intercompany fees ​ ​ ​ 4,729 ​ ​ 1,105 ​ ​ 5,834 Intercompany management fee income (expense) ​ ​ ​ 3 ​ ​ ( 3 ) ​ ​ - Income before income taxes ​ ​ ​ 4,732 ​ ​ 1,102 ​ ​ 5,834 Income tax expense ​ ​ ​ 1,090 ​ ​ 231 ​ ​ 1,321 Net income ​ ​ $ 3,642 ​ $ 871 ​ $ 4,513 ​ Total non-fiduciary assets of the trust and investment services segment were $ 0.6 million (including $ 0.5 million in intangible assets) at September 30, 2024 and $ 0.7 million (including $ 0.6 million in intangible assets) at December 31, 2023. All other assets (including goodwill of $ 11.0 million at both September 30, 2024 and December 31, 2023 and other intangible assets of $ 0.4 million and $ 0.5 million at September 30, 2024 and December 31, 2023, respectively) were held by the community banking segment. ​