Meridian Corp 10-K

Item 8. Financial Statements and Supplementary Data The consolidated financial statements are set forth in this Annual Report on Form 10-K as follows: i. Report of Crowe LLP, Independent Registered Public Accounting Firm (PCAOB ID 173 ) ii. Consolidated Balance Sheets iii. Consolidated Statements of Income iv. Consolidated Statements of Comprehensive Income v. Consolidated Statements of Stockholders’ Equity vi. Consolidated Statements of Cash Flows vii. Notes to Consolidated Financial Statements 41 Report of Independent Registered Public Accounting Firm Shareholders and the Board of Directors of Meridian Corporation and Subsidiaries Malvern, Pennsylvania Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Meridian Corporation and Subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO. Basis for Opinions The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by 42 communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Allowance for Credit Losses - Qualitative Risk Factors The Company has identified the allowance for credit losses (“ACL”) as a critical accounting estimate. The ACL includes quantitative and qualitative factors that comprise management’s current estimate of expected credit losses, including portfolio mix and segmentation, modeling methodology, historical loss experience, relevant available information from internal and external sources relating to reasonable and supportable forecasts about future economic conditions, prepayment speeds and qualitative adjustment factors as discussed in Note 1 and 6 in the consolidated financial statements. As of December 31, 2025, the allowance for credit losses attributable to loans held for investment is $21.6 million. We determined that auditing the qualitative factors in the allowance for credit losses on loans was a critical audit matter because of the extent of auditor judgment applied and significant audit effort to evaluate the significant subjective and complex judgments made by management. The primary procedures we performed to address this critical audit matter included: • Testing the effectiveness of the following controls: ◦ Management’s review of the completeness and accuracy of internally produced data and the relevance and reliability of the external data used in the determination of the qualitative adjustment factors. ◦ Management’s review of the accuracy of the calculation of the qualitative adjustment factors. ◦ Management’s review of the reasonableness of the judgments applied in the qualitative adjustment factors. • Substantively testing management’s process to determine the allowance for credit losses, including: ◦ Testing the relevance and reliability of the external data utilized and the completeness and accuracy of internally produced data utilized in the determination of the qualitative adjustment factors. ◦ Testing the mathematical accuracy of the calculation of the qualitative adjustment factors. ◦ Evaluating the reasonableness of management’s judgments used in the determination of the qualitative adjustment factors. /s/ Crowe LLP We have served as the Company’s auditor since 2020. Washington, D.C. March 13, 2026 43 MERIDIAN CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in thousands) December 31, 2025 December 31, 2024 Assets: Cash and due from banks $ 10,358 $ 5,598 Interest-bearing deposits at other banks 25,420 21,864 Cash and cash equivalents 35,778 27,462 Securities available-for-sale, at fair value (amortized cost of $ 199,127 and $ 183,764 , respectively) 193,457 174,304 Securities held-to-maturity, at amortized cost (fair value of $ 30,152 and $ 30,492 , respectively) 32,544 33,771 Equity investments 2,166 2,086 Mortgage loans held for sale 33,762 32,413 Loans and other finance receivables, net of fees and costs 2,170,600 2,030,437 Allowance for credit losses ( 21,573 ) ( 18,438 ) Loans and other finance receivables, net of the allowance for credit losses 2,149,027 2,011,999 Restricted investment in bank stock 7,811 7,753 Bank premises and equipment, net 12,402 12,151 Bank owned life insurance 30,687 29,712 Accrued interest receivable 10,724 9,958 OREO and other repossessed assets 5,997 276 Deferred income taxes 4,215 4,669 Servicing assets 3,932 4,382 Goodwill 899 899 Intangible assets 2,563 2,767 Other assets 36,031 31,265 Total assets $ 2,561,995 $ 2,385,867 Liabilities: Deposits: Non-interest bearing $ 245,377 $ 240,858 Interest bearing 1,912,751 1,764,510 Total deposits 2,158,128 2,005,368 Borrowings 117,338 124,471 Subordinated debentures 49,853 49,743 Accrued interest payable 6,531 6,860 Other liabilities 30,429 27,903 Total liabilities 2,362,279 2,214,345 Stockholders’ equity: Common stock, $ 1 par value: 25,000,000 shares authorized; 13,829,645 and 13,243,258 shares issued, respectively; and 11,826,462 and 11,240,075 shares outstanding, respectively. 13,830 13,243 Surplus 90,352 81,545 Treasury stock - 2,003,183 and 2,003,183 shares, respectively, at cost ( 26,079 ) ( 26,079 ) Unearned common stock held by ESOP ( 1,232 ) ( 1,006 ) Retained earnings 128,124 111,961 Accumulated other comprehensive loss ( 5,279 ) ( 8,142 ) Total stockholders’ equity 199,716 171,522 Total liabilities and stockholders’ equity $ 2,561,995 $ 2,385,867 The accompanying notes are an integral part of these consolidated financial statements. 44 MERIDIAN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31, (dollars in thousands, except per share data) 2025 2024 Interest income: Loans and other finance receivables, including fees $ 155,987 $ 147,157 Securities - taxable 7,271 5,739 Securities - tax-exempt 1,256 1,283 Cash and cash equivalents 1,800 1,848 Total interest income 166,314 156,027 Interest expense: Deposits 68,169 74,037 Borrowings and subordinated debentures 10,467 10,994 Total interest expense 78,636 85,031 Net interest income 87,678 70,996 Provision for credit losses 15,152 11,400 Net interest income after provision for credit losses 72,526 59,596 Non-interest income: Mortgage banking income 20,783 21,044 Wealth management income 6,316 5,735 SBA loan income 5,452 3,458 Earnings on investment in life insurance 956 868 Net gain on sale of MSRs 403 3,992 Net (loss) gain on sale of loans ( 434 ) 15 Net change in the fair value of derivative instruments 373 30 Net change in the fair value of loans held-for-sale 310 ( 25 ) Net change in the fair value of loans held-for-investment 659 214 Net (loss) on hedging activity ( 151 ) ( 87 ) Net gain (loss) on sale of investments AFS 501 ( 57 ) Other 4,012 6,152 Total non-interest income 39,180 41,339 Non-interest expense: Salaries and employee benefits 51,280 47,268 Occupancy and equipment 4,576 5,976 Professional fees 4,095 4,767 Data processing and software 7,031 6,144 Advertising and promotion 3,877 3,293 Pennsylvania bank shares tax 1,016 972 Other 11,429 10,729 Total non-interest expense 83,304 79,149 Income before income taxes 28,402 21,786 Income tax expense 6,566 5,440 Net income $ 21,836 $ 16,346 Basic earnings per common share $ 1.93 $ 1.47 Diluted earnings per common share $ 1.89 $ 1.45 Basic weighted average shares outstanding 11,326 11,113 Diluted weighted average shares outstanding 11,538 11,243 The accompanying notes are an integral part of these consolidated financial statements. 45 MERIDIAN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year Ended December 31, (dollars in thousands) 2025 2024 Net income: $ 21,836 $ 16,346 Net change in unrealized gains on investment securities available for sale: Change in fair value of investment securities available for sale, net of tax of $ 992 , and $ 239 , respectively 3,327 718 Reclassification adjustment for net (gains) losses realized in net income, net of tax effect of $( 116 ), and $ 14 , respectively ( 385 ) 43 Reclassification adjustment for securities transferred from available-for-sale to held-to-maturity, net of tax effect of $ 28 , and $ 28 , respectively 88 88 Unrealized investment gains, net of tax effect of $ 904 , and $ 281 , respectively 3,030 849 Net change in unrealized (losses) gains on interest rate swaps used in cash flow hedges, net of tax effect of $ 53 and $( 129 ), respectively ( 167 ) 431 Total other comprehensive income 2,863 1,280 Total comprehensive income $ 24,699 $ 17,626 The accompanying notes are an integral part of these consolidated financial statements. 46 MERIDIAN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (dollars in thousands, except per share data) Common Stock Surplus Treasury Stock Unearned ESOP Retained Earnings AOCI Total Balance at January 1, 2024 $ 13,186 $ 80,325 $ ( 26,079 ) $ ( 1,204 ) $ 101,216 $ ( 9,422 ) $ 158,022 Net income — — — — 16,346 — 16,346 Other comprehensive income — — — — — 1,280 1,280 Dividends declared, $ 0.50 per share — — — — ( 5,601 ) — ( 5,601 ) Common stock issued through share-based awards and exercises ( 57,000 ) 57 442 — — — — 499 ESOP shares committed to be released ( 26,656 ) — 322 — 198 — — 520 Stock based compensation expense — 456 — — — — 456 Balance at December 31, 2024 $ 13,243 $ 81,545 $ ( 26,079 ) $ ( 1,006 ) $ 111,961 $ ( 8,142 ) $ 171,522 Net income — — — — 21,836 — 21,836 Other Comprehensive income — — — — — 2,863 2,863 Dividends declared, $ 0.50 per share — — — — ( 5,673 ) — ( 5,673 ) Shares purchased for ESOP plan ( 29,253 ) — — — ( 425 ) — — ( 425 ) Net issuance of common stock ( 488,478 ) 489 7,030 — — — — 7,519 Common stock issued through share-based awards and exercises ( 98,000 ) 98 787 — — — — 885 ESOP shares committed to be released ( 26,656 ) — 394 — 199 — — 593 Stock based compensation expense — 596 — — — — 596 Balance at December 31, 2025 $ 13,830 $ 90,352 $ ( 26,079 ) $ ( 1,232 ) $ 128,124 $ ( 5,279 ) $ 199,716 (1) See Note 1 - Summary of Significant Accounting Policies for additional information. The accompanying notes are an integral part of these consolidated financial statements. 47 MERIDIAN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (dollars in thousands) 2025 2024 Net income $ 21,836 $ 16,346 Adjustments to reconcile net income to net cash provided by operating activities: (Gain) loss on sale of investment securities available-for-sale ( 501 ) 57 Net amortization of investment premiums and discounts and change in fair value of equity securities 1,738 3,991 Depreciation and amortization (accretion), net ( 292 ) 818 Provision for credit losses 15,152 11,400 Amortization of issuance costs on subordinated debt 123 122 Stock based compensation 1,189 976 Net change in fair value of derivative instruments ( 373 ) ( 30 ) Net change in fair value of loans held for sale ( 310 ) 25 Net change in fair value of loans held for investment ( 659 ) ( 214 ) Amortization and net impairment of servicing rights ( 529 ) 1,481 Net gain on sale of MSRs ( 403 ) ( 3,992 ) Gain on sale of OREO ( 15 ) ( 317 ) SBA loan income ( 5,452 ) ( 3,458 ) Proceeds from sale of loans 800,565 807,803 Loans originated for sale ( 780,821 ) ( 794,381 ) Mortgage banking income ( 20,783 ) ( 21,044 ) Increase in accrued interest receivable ( 766 ) ( 633 ) Lease early termination — 1,097 Increase in other assets ( 6,885 ) ( 4,559 ) Earnings from investment in bank owned life insurance ( 956 ) ( 868 ) Increase in deferred income tax ( 373 ) ( 799 ) Decrease in accrued interest payable ( 329 ) ( 3,464 ) Increase (decrease) in other liabilities 3,142 ( 760 ) Net cash provided by operating activities 24,298 9,597 Cash flows from investing activities: Activity in available-for-sale securities: Maturities, repayments and calls 19,019 19,824 Sales 14,365 16,004 Purchases ( 49,937 ) ( 66,764 ) Activity in held-to-maturity securities: Maturities, repayments and calls 3,000 1,720 Purchases ( 2,000 ) — Proceeds from sale of OREO 15 1,861 Proceeds from sale of MSRs 1,382 9,877 Proceeds from sale of loans held for investment 122,721 59,446 Net purchases of restricted investments in bank stocks ( 58 ) 319 Net increase in loans ( 270,698 ) ( 206,715 ) Purchases of premises and equipment ( 1,732 ) ( 568 ) Net purchase of bank owned life insurance ( 19 ) — Disposal of premise and equipment 40 — Net cash used in investing activities ( 163,902 ) ( 164,996 ) 48 Cash flows from financing activities: Net increase in deposits 152,760 181,906 Increase (decrease) in short-term borrowings 8,112 ( 42,592 ) Decrease in long-term debt ( 15,245 ) ( 7,833 ) Repayment of subordinated debt ( 13 ) ( 215 ) Dividends paid ( 5,673 ) ( 5,601 ) Stock based awards and exercises 885 499 Shares purchased for ESOP plan ( 425 ) — Proceeds from issuance of common stock 7,519 — Net cash provided by financing activities 147,920 126,164 Net change in cash and cash equivalents 8,316 ( 29,235 ) Cash and cash equivalents at beginning of period 27,462 56,697 Cash and cash equivalents at end of period $ 35,778 $ 27,462 Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 78,965 $ 88,495 Income taxes: Federal 10,224 2,500 State 989 583 Total Income taxes 11,213 3,083 Carrying value of residential portfolio loans sold 24,480 — Net loans sold, not settled 1,834 9,674 Non-cash transfers from loans receivable to OREO 3,592 — Non-cash transfers from loans receivable to repossessed assets 2,405 — The accompanying notes are an integral part of these consolidated financial statements. 49 MERIDIAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Summary of Significant Accounting Policies Nature of Operations Meridian Corporation (“Meridian” or the “Corporation”) is a bank holding company engaged in banking activities through its wholly-owned subsidiary, Meridian Bank (the “Bank”), a full-service, state-chartered commercial bank with offices in the Delaware Valley tri-state market, which includes Pennsylvania, New Jersey and Delaware, as well as the Central Maryland market area, and Florida. We have a financial services business model with significant noninterest income streams from mortgage banking, SBA lending and wealth management services. We provide services to small and middle market businesses, professionals and retail customers throughout our market area. We have a modern, progressive, consultative approach to creating innovative solutions for our customers. We are technology driven, with a culture that incorporates significant use of customer preferred alternative delivery channels, such as mobile banking, remote deposit capture and bank-to-bank ACH. Our ‘Meridian everywhere’ philosophy of community presence, along with our strategic business footprint, allows us to provide the high degree of service, convenience and products our customers need to achieve their financial objectives. We provide this service through three principal business line distribution channels, described further below. The Corporation operates in highly competitive market areas that includes local, regional, and national banks as competitors along with savings banks, credit unions, fintech companies, insurance companies, trust companies and registered investment advisors. The Corporation and its subsidiaries are regulated by many regulatory agencies including the SEC, FDIC, the FRB and the PDBS. The Bank was incorporated on March 16, 2004 under the laws of the Commonwealth of Pennsylvania and is a Pennsylvania state-chartered bank. The Bank commenced operations on July 8, 2004 and is a full-service bank providing personal and business lending and deposit services through 7 full-service banking offices ( 6 in Pennsylvania and 1 in Florida), 5 mortgage loan production offices throughout the Delaware Valley, 2 mortgage loan production offices in Maryland, and a lending office in Florida. The Bank and Corporation are headquartered in Malvern, Pennsylvania, located in the western suburbs of Philadelphia. Basis of Presentation The accounting policies of the Corporation conform to U.S. GAAP. The consolidated financial statements include accounts of the Corporation and its wholly owned subsidiary, the Bank, and the wholly owned subsidiaries of the Bank: Meridian Land Settlement Services LLC (“MLSS”); APEX Realty LLC (“APEX”); Meridian Wealth Partners LLC (“MWP”); and Meridian Equipment Finance LLC (“MEF”). All significant intercompany balances and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year’s presentation. Reclassifications had no effect on prior year net income or total stockholders’ equity. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant Concentrations of Credit Risk Most of the Corporation’s activities are with customers located in the Delaware Valley tri-state market and the central Maryland market area. Note 4 discusses the types of securities that the Corporation invests in, and Note 5 discusses types of lending that the Corporation engages in. Although the Corporation has a diversified loan portfolio, its debtors’ ability to honor their contracts is influenced by the region’s economy. The Corporation does not have any significant concentrations to any one industry or customer, however there is significant concentration of commercial real estate-backed loans, amounting to 41 % and 41 % of total loans held for investment, as of December 31, 2025 and December 31, 2024, respectively. Presentation of Cash Flows For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and federal funds sold. Generally, federal funds are purchased or sold for one day periods. The FRB removed cash minimum reserve requirements in March 2020. Net cash flows are reported for customer loan and deposit transactions, interest bearing deposits in other financial institutions, and the federal funds purchased and repurchased agreements. Securities Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date. Securities classified as available-for-sale are those securities that the Corporation intends to hold for an indefinite period of time but not necessarily to maturity. Securities available-for-sale are carried at fair value. Unrealized gains and losses are reported as increases or decreases in other comprehensive income. Gains or losses on disposition are based on the net proceeds and cost of the securities sold, adjusted for the amortization of premiums and accretion of discounts, using the specific identification method. Securities classified as held to maturity are those debt securities the Corporation has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs or changes in general economic conditions. These securities are carried at cost adjusted for the amortization of premium and accretion of discount, computed on a level yield basis. 50 Investments in equity securities are recorded in accordance with ASC 321-10, Investments - Equity Securities. Equity securities are carried at fair value, with changes in fair value reported in net income. At December 31, 2025 and 2024, investments in equity securities consisted of an investment in mutual funds with a fair value of $ 2.2 million, and $ 2.1 million, respectively. Allowance for Credit Losses - Held-to-Maturity Debt Securities We follow ASC 326-20, Financial Instruments - Credit Loss - Measured at Amortized Cost, to measure expected credit losses on held-to-maturity debt securities on a collective basis by security investment grade. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Corporation classifies the held-to-maturity debt securities into the following major security types: state and municipal securities. These securities are highly rated with a history of no credit losses, and are assigned ratings based on the most recent data from ratings agencies depending on the availability of data for the security. Credit ratings of held-to-maturity debt securities, which are a significant input in calculating the expected credit loss, are reviewed on a quarterly basis. Accrued interest receivable on held-to-maturity debt securities is excluded from the estimate of credit losses and is included in Accrued interest receivable on the Consolidated Balance Sheets. Allowance for Credit Losses - Available-for-Sale Debt Securities We follow ASC 326-30, Financial Instruments - Credit Loss - Available-for-Sale Debt Securities, which provides guidance related to the recognition of and expanded disclosure requirements for expected credit losses on available-for-sale debt securities. For available-for-sale debt securities in an unrealized loss position, the Corporation first evaluates whether it intends to sell, or 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, the security's amortized cost basis is reduced to fair value and recognized as a reduction to Noninterest income in the Consolidated Statements of Income. For debt securities available-for-sale which the Corporation does not intend to sell, or it is not likely the security would be required to be sold before recovery, we evaluate whether a decline in fair value has resulted from credit losses or other adverse factors, such as a change in the security's credit rating. In assessing whether a credit loss exists, the Corporation compares the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance is recorded, limited to the fair value of the security. Management performs this analysis on a quarterly basis to review the conditions and risks associated with the individual securities. Credit losses on an impaired security shall continue to be measured using the present value of expected future cash flows. Any impairment not recorded through an allowance for credit loss is included in other comprehensive income (loss), net of the tax effect. We are required to use our judgment in determining impairment in certain circumstances. For additional detail regarding debt securities, see Note 4. Loans and Other Finance Receivables Loans and other finance receivables that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at their outstanding unpaid principal balances, net of an allowance for credit losses and any deferred fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Corporation generally amortizes these amounts over the contractual life of the loan. Loans that were originated by the Corporation and intended for sale in the secondary market to permanent investors, but were either repurchased or unsalable due to defect, are held for the foreseeable future or until maturity or payoff, are carried at fair value. Past Due and Nonaccrual Loans Past due loans and leases are defined as loans and leases contractually past due 30 - 89 days as to principal or interest payments but which remain in accrual status, or loans delinquent 90 days or more but are considered well secured and in the process of collection. Nonaccruing loans and leases are those on which the accrual of interest has ceased. Loans are placed on nonaccrual status immediately if, in the opinion of management, collection is doubtful, or when principal or interest is past due 90 days or more and the loan is not well secured and in the process of collection. Interest accrued but not collected at the date a loan is placed on nonaccrual status is reversed and charged against interest income. A loan that is not past due more than 90 days could be classified as nonaccrual if management comes to the conclusion that we will not be in a position to collect all principal and interest. In addition, the amortization of net deferred loan fees is suspended when a loan is placed on nonaccrual status. Subsequent cash receipts are applied either to the outstanding principal balance or recorded as interest income, depending on management’s assessment of the ultimate collectability of principal and interest. Loans are returned to accrual status when it is determined that the borrower has the ability to make all principal and interest payments in accordance with the terms of the loan (i.e. a consistent repayment record, generally six consecutive payments, has been demonstrated). Unless loans are well-secured and collection is imminent, for loans greater than 90 days past due their respective reserves are generally charged off once the loss has been confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off. 51 Allowance for Credit Losses - Loans and Leases The Corporation's portfolio segments, established based on similar risk characteristics and loss behaviors, are: • Commercial mortgage, commercial and industrial, construction, SBA loans, and commercial small business leases (commercial loans), and • Residential, equity secured lines and loans, and installment loans (retail loans). Commercial mortgage – Our commercial real estate loans are secured by real estate that is both owner-occupied and investor owned. Owner-occupied commercial real estate loans generally involve less risk than an investment property and are distinctly reported from non-owner occupied commercial real estate loans for measuring loan concentrations for regulatory purposes. Repayment of commercial real estate loans depends on the cash flow of the borrower and the net operating income of the property, the borrower’s profitability, and the value of the underlying property. Of primary concern in commercial real estate lending is the borrower’s creditworthiness and the cash flows from the property. Payments on loans secured by income properties often depend on successful operation and management of the properties. As a result, repayment of such loans may be subject, to a greater extent than residential real estate loans, to adverse conditions in the real estate market or the economy. Commercial real estate is also subject to adverse market conditions that cause a decrease in market value or lease rates, obsolescence in location or function and market conditions associated with oversupply of units in a specific region. Commercial and Industrial – We provide a variety of variable and fixed rate commercial business loans, lines of credit, and other finance receivables. These credit facilities are made to small and medium-sized manufacturers and wholesale, retail and service-related businesses. Commercial business loans generally include lines of credit and term loans with a maturity of 5 years or less. The primary source of repayment for commercial business loans and other finance receivables is generally operating cash flows of the business and may also include collateralization of inventory, accounts receivable, equipment and/or personal guarantees. As a result, the availability of funds for repayment may depend substantially on the success of the business itself. Furthermore, any collateral may depreciate over time, may be difficult to appraise, and may fluctuate in value. Construction – Construction financing is generally considered to involve a higher degree of risk of loss than long-term financing on improved, occupied real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the property’s value at completion of construction and the estimated cost of construction. During the construction phase, a number of factors could result in delays and cost overruns. If the estimate of construction costs proves to be inaccurate, additional funds may be required to be advanced in excess of the amount originally committed to permit completion of the building. Leases – Meridian Equipment Finance specializes in small ticket equipment leases for small and mid-sized businesses nationally and through a broad range of industries. The Bank’s credit risk generally results from the potential default of borrowers which may be driven by customer specific or broader industry related conditions. Residential mortgage – Residential loans held in portfolio are primarily secured by single-family homes located in our market areas. Residential loans are generally made on the basis of the borrower’s ability to make repayment from employment income or other income, and are secured by real property whose value tends to be more easily ascertainable. Repayment of single-family loans are subject to adverse employment conditions in the local economy leading to increased default rates and decreased market values, including from oversupply in a geographic area. In general, these loans depend on the borrower’s continuing financial stability and, therefore, are likely to be adversely affected by various factors, including job loss, divorce, illness, or personal bankruptcy. Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans. Consumer, including home equity – Our consumer-lending department principally originates home equity based products for our clients and prospects. These loans typically fund completely at closing. Additional products include smaller dollar personal loans and our student loan refinance product, designed to provide additional flexibility in repayment terms desired in the marketplace. Most consumer loans are originated in Meridian’s primary market and surrounding areas. The largest component of Meridian’s consumer loan portfolio consists of fixed rate home equity loans and variable rate home equity lines of credit. Substantially all home equity loans and lines of credit are secured by junior lien mortgages on principal residences. The Bank will lend amounts, which, together with all prior liens, typically may be up to 90 % of the appraised value of the property securing the loan. Home equity term loans may have maximum terms up to 20 years, while home equity lines of credit generally have maximum terms of 15 years. Credit risk on such loans is mitigated through prudent underwriting standards, including evaluation of the creditworthiness of the borrower through credit scores and debt-to-income ratios and, if secured, the collateral value of the assets. Expected credit losses are estimated over the contractual term, adjusted for expected prepayments and recoveries. The contractual term excludes any extensions, renewals and modifications unless the Corporation has reasonable expectations at the reporting date that it will result in a modification, or they are not unconditionally cancellable. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. The allowance includes two primary components: (i) an allowance established on loans which share similar risk characteristics collectively evaluated for credit losses (collective basis) and (ii) an allowance established on loans which do not share similar risk characteristics with any loan segment and are individually evaluated for credit losses (individual basis). 52 Loans that share similar risk characteristics are collectively reviewed for credit loss and are evaluated based on the Corporation’s historical loss experience and peer loss rate data, adjusted for current economic conditions and future economic forecasts. Estimated losses are determined differently for commercial and consumer loans, and each portfolio segment is further segmented by internally assessed risk ratings. Management uses a third-party economic forecast to modify the calculated historical loss rates of the portfolio segments. The Corporation's economic forecast extends out 4 quarters (the forecast period) and reverts to the historical loss rates on a straight-line basis over 1 quarter (the reversion period) as we believe this to be reasonable and supportable in the current environment. The economic forecast and reversion periods will be evaluated periodically by management and updated as appropriate. During the fourth quarter of 2025 the third-party macroeconomic model we use was upgraded based on re-assessing the current macroeconomic variable relationships to expected results, and by expanding the dataset used to estimate losses to include more recent periods.. The resulting ACL from the model upgrade, before applying qualitative adjustments, was consistent with the ACL level before the upgrade. The historical loss rates for commercial loans are estimated by determining the PD and expected LGD. The PD is calculated based on the historical rate of migration to an event of credit loss during the look-back period. The historical loss rates for retail loans is calculated based solely on average net loss rates over the same look-back period. The Corporation's current look-back period is 44 quarters which helps to ensure that historical loss rates are adequately considering losses over a full economic cycle. Qualitative adjustment factors consider various internal and external conditions which are allocated among loan segments and take into consideration: • Current underwriting policies, staff and portfolio concentrations, • Risk rating accuracy, credit and administration, • Internal risk emergence (including internal trends of delinquency, portfolio growth, and collateral value), and • , Competitive environment, as it could impact loan structure and underwriting. These factors are based on their relative standing compared to the period in which historical losses are used in quantitative reserve estimates and current directional trends, and reasonable and supportable forecasts. Qualitative factors in the model can add to or subtract from quantitative reserves. Loans that do not share similar risk characteristics with any loan segments are evaluated on an individual basis. These loans, which may include borrowers experiencing financial difficulties, are not included in the collective basis evaluation. When it is probable that collection of all principal and interest due according to their contractual terms is not likely, which is assessed based on the credit characteristics of the loan and/or payment status, these loans are individually reviewed and measured for potential credit loss. The amount of the potential credit loss is measured using one of three methods: (i) the present value of expected future cash flows discounted at the loan’s effective interest rate; (ii) the fair value of collateral, if the loan is collateral dependent; or (iii) the loan’s observable market price. If the measured fair value of the loan is less than the amortized cost basis of the loan, an allowance for credit loss is recorded. For collateral dependent loans, the expected credit losses at the individual asset level is the difference between the collateral's fair value (less cost to sell) and the amortized cost. Loan officers and risk managers meet at least quarterly to discuss and review the conditions and risks associated with individual problem loans. In addition, various regulatory agencies periodically review our loan ratings and allowance for credit losses and the Bank’s internal loan review department performs loan reviews. Accrued interest receivable on loans is excluded from the estimate of credit losses and is included in accrued interest receivable on the Consolidated Balance Sheets. For additional detail regarding the allowance for credit losses and the provision for credit losses, see Note 6. Mortgage Banking Activities and Mortgage Loans Held for Sale The Corporation’s mortgage banking division operates 5 offices in the tri-state area of Pennsylvania, Delaware and New Jersey and another 2 offices in Maryland. The mortgage banking division originates conventional mortgages, FHA, VA, USDA, and other state insured mortgages. The loans are generally sold to various investors in the secondary market. Mortgage loans originated by the Corporation and intended for sale in the secondary market to permanent investors are classified as mortgage loans held for sale on the balance sheet as the Corporation has elected to measure loans held for sale at fair value. Fair value is based on outstanding investor commitments or, in the absence of such commitments, on current investor yield requirements based on third party models. Gains and losses on sales of these loans, as well as loan origination costs, are recorded as a component of non-interest income in the consolidated statements of income. The Corporation’s current practice is to sell residential mortgage loans and retain the servicing rights, as discussed further below. Interest on loans held for sale is credited to income based on the principal amounts outstanding. The Corporation enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (interest rate lock commitments). Rate lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. Time elapsing between the issuance of a loan commitment and closing and sale of the loan generally ranges from 30 days to 120 days. The Corporation protects itself from changes in interest rates through the use of best efforts forward sale contracts, whereby the Corporation commits to sell a loan at the time the borrower commits to an interest rate with the intent that the buyer has assumed interest rate risk 53 on the loan. The Corporation may also commit to loan sales through a mandatory sales channel which are economically hedged by the future sale of mortgage-backed securities to third-party counterparties to mitigate the effect of changes in interest rates on the values of both the interest rate locks and mortgage loans held for sale. By entering into best efforts commitments and economically hedging the mandatory commitments, the Corporation limits its exposure to loss and its realization of significant gains related to its rate lock commitments due to changes in interest rates. The Corporation utilizes a third-party model to determine the fair value of rate lock commitments or forward sale contracts. This model uses investor quotes while taking into consideration the probability that the rate lock commitments will close. Net derivative assets and liabilities are recorded within other assets or other liabilities, respectively, on the consolidated balance sheets, with changes in fair value during the period recorded within net change in the fair value of derivative instruments on the consolidated statements of income. Loan Servicing Rights The Corporation sells substantially all of the residential mortgage loans originated for sale in the secondary market; however, the Corporation may retain the servicing rights related to some of these loans. A fee, usually based on a percentage of the outstanding principal balance of the loan, is received in return for these services. MSRs are recognized when a loan’s servicing rights are retained upon sale of a loan. When mortgage loans are sold with servicing retained, MSRs are initially recorded at fair value with the income effect recorded in non-interest income. The Corporation also sells the guaranteed portion of certain SBA loans to third parties and retains servicing rights and receives servicing fees. All such transfers are accounted for as sales. While the Corporation may retain a portion of certain sold SBA loans, its continuing involvement in the portion of the loan that was sold is limited to certain servicing responsibilities. These servicing assets amortize in proportion to, and over the period of, the estimated future net servicing life of the underlying loans. The servicing assets are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the servicing assets. The Corporation may elect, from time to time, to sell portions of its servicing portfolio. Such sales are recorded in income at the time of the sale when servicing fee income is transferred to the buyer. During the year ended December 31, 2025, the Corporation sold approximately $ 979 thousand of residential mortgage loan servicing rights associated with $ 110.2 million of serviced loans, and recorded a net gain on sale of $ 403 thousand. Other Real Estate Owned OREO is comprised of property acquired through a foreclosure proceeding or acceptance of a deed-in-lieu of foreclosure. The Corporation acquires OREO through the wholly owned subsidiary of the Bank, Apex Realty. OREO is recorded at the fair value of the collateral less estimated selling costs, at the date of foreclosure. The cost basis of OREO is its recorded value at the time of acquisition. After acquisition, valuations are periodically performed by management and subsequent changes in the valuation allowance are charged to OREO expense. Revenues, such as rental income, and holding expenses, as applicable, are included in other income and other expenses, respectively. The Corporation had four properties totalling $ 3.6 million and one property of $ 159 thousand OREO at December 31, 2025 and December 31, 2024, respectively. During the year-ended December 31, 2025, one property was sold and a gain of $ 15 thousand was recognized, while for the year-ended December 31, 2024, one property was sold and a gain of $ 317 thousand was recognized. Repossessed Assets Repossessed assets, which exclude OREO, is comprised of other loan and lease related collateral acquired through foreclosure or similar proceedings. These assets are initially recorded at the lower of cost or fair value less estimated selling costs at the time of acquisition. Subsequent to acquisition, the assets are periodically evaluated, and any declines in fair value below the carrying amount are recognized as a valuation allowance or direct write-down, with such losses reflected in non-interest expense. The $ 2.4 million balance of repossessed assets as of December 31, 2025 was comprised of a billboard that was collateral for a non-performing commercial loan, in addition to small equipment items that were previously collateralizing leases, while the $ 117 thousand balance as of December 31, 2024 was comprised of small equipment items that were previously collateralizing leases. Restricted Investment in Bank Stock Restricted bank stock is principally comprised of stock in the FHLB. Federal law requires a member institution of the FHLB to hold stock according to a predetermined formula. As of December 31, 2025, and 2024, the Corporation had an investment of $ 7.8 million and $ 7.7 million, respectively, related to the FHLB stock. Also included in restricted stock is secondary stock from a correspondent bank in the amount of $ 50 thousand as of December 31, 2025 and 2024. All restricted stock is carried at cost. Management’s determination of whether these investments are impaired is based on their assessment of the ultimate recoverability of their cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of their cost is influenced by criteria such as (1) significance of the decline in net assets of the banks as compared to the capital stock amount and the length of time this situation has persisted, (2) commitments by the banks to make payments required by law or regulation and the level of such payments in relation to the operating performance of the banks, and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the banks. Management believes no impairment charge is necessary related to these bank restricted stocks as of December 31, 2025 or 2024. Transfers of Financial Assets Transfers of financial assets, including loan and loan participation sales, are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the 54 Corporation, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Corporation does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. Bank Premises and Equipment Bank premises and equipment are stated at cost less accumulated depreciation. Land is carried at cost. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 12 to 40 years Furniture, fixtures and equipment are depreciated using the straight-line method with useful lives ranging from 3 to 7 years and 3 to 5 years for computer software and hardware, respectively. Leasehold improvements are amortized over the terms of the respective leases or the estimated useful lives of the improvements, whichever is shorter. The costs of maintenance and repairs are expensed as incurred; while major replacements, improvements and additions are capitalized. Lease Liabilities and Right of Use Assets The Corporation is obligated under non-cancelable operating leases for premises for various retail branch locations and loan production offices. The Corporation determines if an arrangement is a lease at inception by assessing whether a contract contains a right to control an identified asset for a period of time in exchange for consideration. Operating leases are included in operating lease right-of-use assets and operating lease liabilities in the consolidated balance sheets. For purposes of calculating operating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that the Corporation will exercise that option and begins when the Corporation has control and possession of the leased property, which may be before rental payments are due under the lease. Right-of use assets and operating lease liabilities are recognized based on the present value of lease payments, discounted using the Corporation's incremental borrowing rate, over the lease term at the possession date. The Corporation determines its incremental borrowing rate using publicly available information available for debt issuers with similar credit ratings as the Bank, as the substantial majority of the Corporation's leases are related to properties of the Bank. The Corporation separately accounts for lease and non-lease components such as property taxes, insurance, and maintenance costs. Operating lease expense for the Corporation's leases, which generally have escalating rental payments over the term of the lease, is recognized on a straight-line basis over the lease term. At December 31, 2025, the Corporation's leases have remaining terms of 8 months to 14 years. Bank-Owned Life Insurance The Corporation invests in BOLI as a source of funding for employee benefit expenses. BOLI involves the purchasing of life insurance by the Corporation on a chosen group of employees. The Corporation is the owner and beneficiary of the policies. This life insurance investment is carried at the cash surrender value of the underlying policies. Earnings from the increase in cash surrender value of the policies are included in non-interest income on the consolidated statements of income. Advertising Costs The Corporation follows the policy of charging the costs of advertising to expense as incurred. Employee Benefit Plans The Corporation has a 401(k) Plan (the Plan) and an ESOP. All employees are eligible to participate in the Plan and ESOP after they have attained the age of 21 and have also completed three months consecutively of service. Employees must participate in the Plan to be eligible for participation in the ESOP. The employees may contribute to the Plan up to the maximum percentage allowable by law of their compensation. The Corporation may make a discretionary matching contribution to the Plan and the ESOP. Full vesting in the Corporation’s contribution to the Plan and ESOP is over a three-year period. The Corporation recorded expense for the Plan and ESOP of $ 1.0 million and $ 918 thousand, respectively for the year ended December 31, 2025 and $ 905 thousand and $ 799 thousand, respectively for the year ended December 31, 2024. The expense recorded by the Corporation for the ESOP for the year ended December 31, 2025 included a $ 525 thousand employer contribution, in addition to $ 593 thousand in stock compensation related expense. The expense recorded by the Corporation for the ESOP for the year ended December 31, 2024 included a $ 490 thousand employer contribution, in addition to $ 520 thousand in stock compensation related expense. During 2020 the Corporation established a $ 2 million loan with the ESOP, and the ESOP used all of the loan proceeds to purchase 266,560 Corporation common shares in that year (the “2020 ESOP Loan”). As of December 31, 2025, 159,936 of these common shares were released to the ESOP, leaving 106,624 unallocated shares. During 2025 the Corporation established a second $ 2 million loan with the ESOP, and the ESOP used a portion of the loan proceeds to purchase 29,253 Corporation common shares in the year (the “2025 ESOP Loan”). As of December 31, 2025, 0 of these common shares were released to the ESOP, leaving all 29,253 common shares unallocated. Overall between the two ESOP loans, during the year ended December 31, 2025, 29,253 shares were purchased by the ESOP, and for the year ended December 31, 2024, 0 shares were purchased by the ESOP. Overall, as of December 31, 2025, 159,936 of these common shares were released to the ESOP leaving 135,877 unallocated shares. Shares in the ESOP that are committed to be released to employees are treated as outstanding shares in the Corporation’s computation of earnings per share. There were 483,205 shares in the ESOP as of December 31, 2025. Shares in the ESOP would be impacted by any stock dividends and stock splits in the same manner as all other outstanding common shares of the Corporation. Income Taxes Deferred income taxes are provided on the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and net operating losses and deferred tax liabilities are recognized for taxable temporary differences. Temporary 55 differences are the differences between the reported amounts of assets and liabilities and net operating loss carry-forwards and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Corporation follows accounting guidance related to accounting for uncertainty in income taxes. Under the “more likely than not” threshold guidelines, the Corporation believes no significant uncertain tax positions exist, either individually or in the aggregate, that would give rise to the non-recognition of an existing tax benefit. As of December 31, 2025, and 2024, the Corporation had no material unrecognized tax benefits or accrued interest and penalties. The Corporation’s policy is to account for interest as a component of interest expense and penalties as a component of other expense. The Corporation is no longer subject to examination by federal, state and local taxing authorities for years before January 1, 2022. Stock Compensation Plans Stock compensation accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in the consolidated financial statements. That cost will be measured based on the grant date fair value of the equity or liability instruments issued. The stock compensation accounting guidance covers a wide range of share-based compensation arrangements including stock options and restricted share plans. The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees’ service period, generally defined as the vesting period. For awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. A Black-Scholes model is used to estimate the fair value of stock options, while the market price of the Corporation’s common stock at the date of grant is used for restricted stock awards. Comprehensive Income Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income. The components of other comprehensive income (loss) for the years ended December 31, 2025 and 2024 consist of unrealized holding gains and (losses) arising during the year on available-for-sale securities, unrealized gains and (losses) arising during the year on interest rate swaps used in cash flow hedges. Off-Balance Sheet Financial Instruments In the ordinary course of business, the Corporation has entered into off-balance sheet financial instruments consisting of commitments to extend credit and letters of credit. Such financial instruments are recorded in the balance sheet when they are funded. Unfunded Lending Commitments For unfunded lending commitments, the Corporation estimates expected credit losses over the contractual period in which the Corporation is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Corporation. The estimate includes consideration of the probability of default and utilization rate at default to calculate expected credit losses on commitments expected to be funded over its estimated life of one year, based on historical losses, and qualitative adjustment factors. The allowance for credit losses for off-balance sheet exposures is included in Other liabilities on the Consolidated Balance Sheets and the provision for credit losses for off-balance sheet exposure is included in the provision for credit losses on the Consolidated Statements of Income for the periods ended December 31, 2025, and December 31, 2024. The allowance for credit losses for off-balance sheet exposures was $ 976 thousand and $ 817 thousand as of December 31, 2025 and December 31, 2024, respectively. Derivative Financial Instruments The Corporation recognizes all derivative financial instruments related to its mortgage banking activities on its balance sheet at fair value. The Corporation utilizes investor quotes to determine the fair value of interest rate lock commitment derivatives and market pricing to determine the fair value of forward security purchase commitment derivatives. All changes in fair value of derivative instruments are recognized in earnings. The Corporation enters into interest rate swaps that allow commercial loan customers to effectively convert a variable-rate commercial loan agreement to a fixed-rate commercial loan agreement. The interest rate swaps are recognized on the Corporation’s balance sheet at fair value. Under these agreements, the Corporation originates variable-rate loans with customers in addition to interest rate swap agreements, which serve to effectively swap the customers’ variable-rate loans into fixed-rate loans. The Corporation then enters into corresponding swap agreements with swap dealer counterparties to economically hedge its exposure on the variable and fixed components of the customer agreements. The interest rate swaps with both the customers and third parties are not designated as hedges under ASC 815 and are marked to market through earnings. As the interest rate swaps are structured to offset each other, changes to the underlying benchmark interest rates considered in the valuation of these instruments do not result in an impact to earnings; however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by ASC 820. Cash flow hedges are used to mitigate the variability in the cash flows of borrowings, caused by interest rate fluctuations. The changes in the fair value of cash flow hedges are initially reported in other comprehensive income. Amounts are subsequently reclassified from 56 accumulated other comprehensive income to earnings when the hedged transactions occur, specifically within the same line item as the hedged item. Earnings per Common Share Basic earnings per common share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average common shares outstanding during the period reduced by unearned ESOP Plan shares and treasury stock. Diluted earnings per common share takes into account the potential dilution that would occur if in the-money stock options were exercised and converted into shares of common stock and restricted stock awards and performance-based stock awards were vested. Proceeds assumed to have been received on options exercises are assumed to be used to purchase shares of the Corporation’s common stock at the average market price during the period, as required by the treasury stock method of accounting. The effects of stock options are excluded from the computation of diluted earnings per share in periods in which the effect would be antidilutive. Revenue Recognition The Corporation recognizes all sources of income on the accrual method, with the exception of nonaccrual loans and leases. In addition to lending and related activities, the Corporation offers various services that generate revenue, certain of which are in the scope of ASC 606, and are recognized within non-interest income and include wealth management fees and transaction based fees. Revenue is recognized when the transactions occur or as services as performed over primarily monthly or quarterly periods. Payment is typically received in the period the transactions occur. Fees may be fixed or, where applicable based on a percentage of transaction size. Wealth management income for the years ended December 31, 2025 and 2024 was $ 6.3 million and $ 5.7 million. Within other non-interest income is $ 815 thousand and $ 716 thousand for the years ended December 31, 2025 and 2024, respectively, which are in the scope of ASC 606. These amounts include wire transfer fees, ATM/debit card commissions, title fee income. The Corporation earns wealth management fee income from investment advisory services provided to individual and 401k customers. Fees that are determined based on the market value of the assets held in their accounts are generally billed quarterly, in advance, based on the market value of assets at the end of the previous billing period. Other related services that are based on a fixed fee schedule are recognized when the services are rendered. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed, i.e. the trade date. Included in other assets on the balance sheet is a receivable for wealth management fees that have been earned but not yet collected. The Corporation earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Corporation fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Corporation satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance. Other sources of the Corporation’s non-interest income that are not within the scope of ASC 606 include mortgage banking income, SBA loan income, net changes in fair values, hedging gains and losses, earnings on investments in life insurance, gains or losses on sale of investment securities, and dividends on FHLB stock. Loss Contingencies Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe such matters will have a material effect on the financial statements. Operating Segments While the chief operating decision maker monitors the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Corporation-wide basis. The Corporation has identified three segments: a banking segment, a wealth management segment and a mortgage banking segment, as more fully disclosed in Note 21 - Segments. Fair Value of Financial Instruments Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 19 - Fair Value Measurements and Disclosures. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates. Recent Accounting Pronouncements Pronouncements Adopted in 2025 The following pronouncements were adopted in 2025, but did not have a material impact on our consolidated financial statements. FASB ASU 2024-01 Stock Compensation - Scope Application of Profits Interest and Similar Awards The amendments in this update improve the understandability of paragraph 718-10-15-3 and apply to all entities that enter into share-based payments transactions and are effective for fiscal years beginning after December 15, 2024 and are to be applied on a prospective basis. The adoption of this guidance did not have a material impact on the Corporation's consolidated financial statements. 57 FASB ASU 2023-09, “Income Taxes (Topic 740) Improvements to Income Tax Disclosures” On December 31, 2025, the Corporation adopted ASU 2023-09 which enhances income tax disclosures to help investors better assess how a company's operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. The amendments in this update led to a further disaggregation of information about our effective tax rate reconciliation and information on income taxes paid in these footnotes. We adopted ASU 2023-09 on a retrospective basis. The adoption of this guidance did not have a material impact on the Corporation's consolidated financial statements. Pronouncements Not Effective as of December 31, 2025: FASB ASU No. 2023-06, "Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative". This ASU amends the disclosure or presentation requirements related to various subtopics in the ASC. The amendments are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC's existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC's regulations. For entities subject to the SEC's existing disclosure requirements the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules. For all other entities, the amendments will be effective two years later. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective for any entity. FASB ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)" This amendment requires enhanced disaggregation of certain expense categories within the income statement to provide more detailed information about the nature and function of expenses. The objective is to improve the transparency and usefulness of financial statements for users by offering greater insight into the components of operating expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2026. These changes may be applied prospectively or retroactively. Early adoption is permitted. The Corporation is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures. FASB ASU 2025-01, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date" This amendment addresses questions that were raised regarding the effective date of ASU 2024-03 for public business entities with non-calendar year ends. The amendment clarifies that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Corporation is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures. FASB ASU 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40).” This update modernizes internal-use software guidance to apply regardless of the method used to develop software. The amendment will be effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The Corporation is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures. FASB ASU 2025-07, “Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) – Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract” This update refines the scope of Topic 815 to clarify which contracts are subject to derivative accounting and clarifies guidance under Topic 606 for share-based noncash consideration from a customer in revenue contracts. The amendments in this update are effective for annual reporting periods beginning after December 15, 2026. The Corporation is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures. FASB ASU 2025-08, “Financial Instruments - Credit Losses (Topic 326): Purchased Loans”. This ASU changes the accounting for certain acquired loans by requiring entities to apply a “gross-up” approach at acquisition for purchased seasoned loans, recognizing an allowance for credit losses as part of the acquisition accounting rather than through a post-acquisition provision. The amendments are to be applied prospectively to loans acquired on or after the initial application date. The ASU will be effective for the annual reporting period beginning after December 15, 2026. Early adoption is permitted. The Corporation is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures. FASB ASU 2025-11, “Interim Reporting (Topic 270) Narrow-Scope Improvements.” This ASU clarifies when Topic 270 applies and enhances usability by (among other changes) specifying the form/content of interim financial statements, providing a comprehensive list of required interim disclosures, and introducing a disclosure principle for material events since the last annual period-without intending to significantly expand or reduce interim disclosure requirements. The amendments in this update are effective for the annual reporting period beginning after December 15, 2027. The Corporation is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures. 58 FASB ASU 2025-12, “Codification Improvements.” This ASU is part of the FASB's standing "evergreen" project and makes a broad set of technical corrections, clarifications, and other minor improvements across many Topics to make the Codification easier to understand and apply. The amendments in this update are effective for the annual reporting period beginning after December 15, 2026, and interim periods within that fiscal year. The Corporation is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures. (2) Earnings per Common Share Basic earnings per common share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average common shares outstanding during the period reduced by unearned ESOP Plan shares and treasury shares. Diluted earnings per common share takes into account the potential dilution, computed pursuant to the treasury stock method, that could occur if stock options were exercised and converted into common stock; and if restricted stock awards were vested. The effects of stock options are excluded from the computation of diluted earnings per share in periods in which the effect would be anti-dilutive. Year Ended December 31, (dollars in thousands, except per share data) 2025 2024 Numerator for earnings per share: Net income available to common stockholders $ 21,836 $ 16,346 Denominators for earnings per share: Weighted average shares outstanding 11,446 11,260 Average unearned ESOP shares ( 120 ) ( 147 ) Basic weighted average shares outstanding 11,326 11,113 Dilutive effects of assumed exercises of stock options 212 130 Diluted weighted average shares outstanding 11,538 11,243 Basic earnings per share $ 1.93 $ 1.47 Diluted earnings per share $ 1.89 $ 1.45 Antidilutive shares excluded from computation of average dilutive earnings per share 502 603 (3) Goodwill and Other Intangibles The Corporation’s goodwill and intangible assets are detailed below: (dollars in thousands) December 31, 2024 Amortization Expense December 31, 2025 Amortization Period (in years) Goodwill $ 899 $ — $ 899 Indefinite Intangible assets - customer relationships 266 — 266 Indefinite Intangible assets - non competition agreements 2,501 ( 204 ) 2,297 20 Total Intangible Assets $ 2,767 $ ( 204 ) $ 2,563 Accumulated amortization of intangible assets was $ 2.0 million and $ 1.8 million as of December 31, 2025 and 2024, respectively. In accordance with ASC Topic 350, the Corporation performed a qualitative assessment of goodwill and identifiable intangible assets as of December 31, 2025 and determined it was more likely than not that the fair value of the Corporation was more than its carrying amount. At December 31, 2025, the schedule of future intangible asset amortization is as follows (in thousands): 2026 $ 204 2027 204 2028 204 2029 204 2030 204 Thereafter 1,277 Total $ 2,297 59 (4) Securities The following table presents the amortized cost, allowance for credit losses, and fair value of securities at the dates indicated: December 31, 2025 (dollars in thousands) Amortized cost Gross unrealized gains Gross unrealized losses Allowance for credit losses Fair value # of Securities in unrealized loss position Securities available-for-sale: U.S. asset backed securities $ 26,385 $ 51 $ ( 219 ) $ — $ 26,217 13 U.S. government agency MBS 22,396 223 ( 268 ) — 22,351 6 U.S. government agency CMO 67,216 441 ( 1,526 ) — 66,131 38 State and municipal securities 43,282 151 ( 3,401 ) — 40,032 31 U.S. Treasuries 17,039 — ( 833 ) — 16,206 16 Non-U.S. government agency CMO 8,786 27 ( 207 ) — 8,606 9 Corporate bonds 14,023 266 ( 375 ) — 13,914 11 Total securities available-for-sale $ 199,127 $ 1,159 $ ( 6,829 ) $ — $ 193,457 124 Amortized cost Gross unrecognized gains Gross unrecognized losses Allowance for credit losses Fair value # of Securities in unrecognized loss position Securities held-to-maturity: State and municipal securities $ 32,544 $ 22 $ ( 2,414 ) $ — $ 30,152 19 Total securities held-to-maturity $ 32,544 $ 22 $ ( 2,414 ) $ — $ 30,152 19 December 31, 2024 (dollars in thousands) Amortized cost Gross unrealized gains Gross unrealized losses Allowance for credit losses Fair value # of Securities in unrealized loss position Securities available-for-sale: U.S. asset backed securities $ 29,931 $ 73 $ ( 160 ) $ — $ 29,844 12 U.S. government agency MBS 21,392 96 ( 617 ) — 20,871 14 U.S. government agency CMO 48,051 23 ( 2,461 ) — 45,613 42 State and municipal securities 40,854 1 ( 4,159 ) — 36,696 31 U.S. Treasuries 17,039 — ( 1,589 ) — 15,450 16 Non-U.S. government agency CMO 12,082 59 ( 412 ) — 11,729 9 Corporate bonds 14,415 448 ( 762 ) — 14,101 15 Total securities available-for-sale $ 183,764 $ 700 $ ( 10,160 ) $ — $ 174,304 139 Amortized cost Gross unrecognized gains Gross unrecognized losses Allowance for credit losses Fair value # of Securities in unrecognized loss position Securities held-to-maturity: State and municipal securities $ 33,771 $ 7 $ ( 3,286 ) $ — $ 30,492 19 Total securities held-to-maturity $ 33,771 $ 7 $ ( 3,286 ) $ — $ 30,492 19 Although the Corporation’s investment portfolio overall is in a net unrealized loss position at December 31, 2025, the temporary impairment in the above noted securities is primarily the result of changes in market interest rates subsequent to purchase and it is more likely than not that the Corporation will not be required to sell these securities prior to recovery to satisfy liquidity needs, and therefore, no securities warranted an ACL. 60 The following table shows the Corporation’s investment gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position at the dates indicated: December 31, 2025 Less than 12 Months 12 Months or more Total (dollars in thousands) Fair value Unrealized losses Fair value Unrealized losses Fair value Unrealized losses Securities available-for-sale: U.S. asset backed securities $ 6,504 $ ( 39 ) $ 11,285 $ ( 180 ) $ 17,789 $ ( 219 ) U.S. government agency MBS 3,881 ( 38 ) 3,945 ( 230 ) 7,826 ( 268 ) U.S. government agency CMO 20,511 ( 178 ) 17,074 ( 1,348 ) 37,585 ( 1,526 ) State and municipal securities — — 35,212 ( 3,401 ) 35,212 ( 3,401 ) U.S. Treasuries — — 16,206 ( 833 ) 16,206 ( 833 ) Non-U.S. government agency CMO 456 — 5,235 ( 207 ) 5,691 ( 207 ) Corporate bonds 1,476 ( 26 ) 4,879 ( 349 ) 6,355 ( 375 ) Total securities available-for-sale $ 32,828 $ ( 281 ) $ 93,836 $ ( 6,548 ) $ 126,664 $ ( 6,829 ) Less than 12 Months 12 Months or more Total Fair value Unrecognized losses Fair value Unrecognized losses Fair value Unrecognized losses Securities held-to-maturity: State and municipal securities $ 2,087 $ ( 69 ) $ 25,842 $ ( 2,345 ) $ 27,929 $ ( 2,414 ) Total securities held-to-maturity $ 2,087 $ ( 69 ) $ 25,842 $ ( 2,345 ) $ 27,929 $ ( 2,414 ) December 31, 2024 Less than 12 Months 12 Months or more Total (dollars in thousands) Fair value Unrealized losses Fair value Unrealized losses Fair value Unrealized losses Securities available-for-sale: U.S. asset backed securities $ 12,708 $ ( 56 ) $ 3,568 $ ( 104 ) $ 16,276 $ ( 160 ) U.S. government agency MBS 5,773 ( 183 ) 9,050 ( 434 ) 14,823 ( 617 ) U.S. government agency CMO 22,351 ( 506 ) 18,876 ( 1,955 ) 41,227 ( 2,461 ) State and municipal securities — — 35,199 ( 4,159 ) 35,199 ( 4,159 ) U.S. Treasuries — — 15,450 ( 1,589 ) 15,450 ( 1,589 ) Non-U.S. government agency CMO 1,403 ( 12 ) 5,204 ( 400 ) 6,607 ( 412 ) Corporate bonds 1,688 ( 41 ) 7,479 ( 721 ) 9,167 ( 762 ) Total securities available-for-sale $ 43,923 $ ( 798 ) $ 94,826 $ ( 9,362 ) $ 138,749 $ ( 10,160 ) Less than 12 Months 12 Months or more Total Fair value Unrecognized losses Fair value Unrecognized losses Fair value Unrecognized losses Securities held-to-maturity: State and municipal securities $ 1,048 $ ( 15 ) $ 27,271 $ ( 3,271 ) $ 28,319 $ ( 3,286 ) Total securities held-to-maturity $ 1,048 $ ( 15 ) $ 27,271 $ ( 3,271 ) $ 28,319 $ ( 3,286 ) 61 Amortized cost and carrying value of securities are shown below by contractual maturities at the dates indicated. Actual maturities may differ from contractual maturities as issuers may have the right to call or repay obligations with or without call or prepayment penalties. December 31, 2025 Available-for-sale Held-to-maturity (dollars in thousands) Amortized cost Fair value Amortized cost Fair value Due in one year or less $ — $ — $ — $ — Due after one year through five years 22,746 21,762 2,967 2,842 Due after five years through ten years 19,640 19,456 5,775 5,095 Due after ten years 58,343 55,151 23,802 22,215 Subtotal 100,729 96,369 32,544 30,152 Mortgage-related securities 98,398 97,088 — — Total $ 199,127 $ 193,457 $ 32,544 $ 30,152 The following table presents the gross gains and losses on sale of investment securities available for sale on the dates indicated: Year Ended December 31, (dollars in thousands) 2025 2024 Proceeds from sale of investment securities $ 14,365 $ 16,004 Gross gain on sale of available for sale investments 594 — Gross loss on sale of available for sale investments ( 93 ) ( 57 ) ACL on Securities AFS and HTM We use credit ratings quarterly and the most recent financial information of securities' issuers annually to help evaluate the credit quality of our securities AFS and HTM portfolios on a quarterly basis. The securities portfolio consists primarily of U.S. government treasuries and U.S. government agency asset backed securities which have no probability of default. The remaining portfolio consists of highly rated municipal bonds, non-agency CMO, and corporate bonds that have a low probability of default. For the years ended December 31, 2025 and December 31, 2024, we had no ACL or provision expense and no charge-offs or recoveries on AFS or HTM securities. Pledged Securities At December 31, 2025 and December 31, 2024, securities having a carrying value of $ 69.5 million and $ 43.3 million, respectively, were specifically pledged as collateral for public funds, the FRB discount window program, FHLB borrowings and other purposes. There is a blanket lien on non-pledged, mortgage-related loans and securities as part of the Corporation’s borrowing agreement with the FHLB. (5) Loans and Other Finance Receivables The following table presents loans and other finance receivables, net of fees and costs detailed by category at the dates indicated: (dollars in thousands) December 31, 2025 December 31, 2024 Real estate loans: Commercial mortgage $ 879,440 $ 823,976 Home equity lines and loans 107,002 90,721 Residential mortgage 236,135 252,565 Construction 330,543 259,553 Total real estate loans 1,553,120 1,426,815 Commercial, industrial & other finance receivables 428,981 367,366 Small business loans 139,765 155,775 Consumer 329 349 Leases, net 45,489 75,987 Loans and other finance receivables $ 2,167,684 $ 2,026,292 Balances included in loans and other finance receivables Residential mortgage real estate loans accounted under fair value option, at fair value $ 14,396 $ 14,501 Residential mortgage real estate loans accounted under fair value option, at amortized cost 16,169 16,543 Unearned lease income included in leases, net ( 4,980 ) ( 9,057 ) Unamortized net deferred loan origination costs, not included in loans above 2,916 4,145 62 Fair Value Option for Residential Mortgage Real Estate Loans Residential mortgage real estate loans that were originated by the Corporation and intended for sale in the secondary market to permanent investors, but in prior years were either repurchased or unsalable due to defect and that the Corporation has the ability and intent to hold for the foreseeable future or until maturity or payoff are carried at fair value pursuant to the Corporation's election of the fair value option for these loans. The remaining loans, net of fees and costs are stated at their outstanding unpaid principal balances, net of deferred fees or costs since the original intent for these loans was to hold them until payoff or maturity. Past Due and Nonaccrual Loans The following tables present an aging of the Corporation’s loans at the dates indicated: December 31, 2025 (dollars in thousands) 30-59 days past due 60-89 days past due Total past due Current Total Accruing Loans and leases Nonaccrual loans and leases Total loans % Delinquent Commercial mortgage $ 1,059 $ 328 $ 1,387 $ 875,581 $ 876,968 $ 2,472 $ 879,440 0.44 % Home equity lines and loans 513 — 513 104,466 104,979 2,023 107,002 2.37 Residential mortgage (1) 1,843 621 2,464 223,286 225,750 10,385 236,135 5.44 Construction — — — 323,893 323,893 6,650 330,543 2.01 Commercial, industrial & other finance receivables 1,099 — 1,099 421,112 422,211 6,770 428,981 1.83 Small business loans 739 — 739 114,245 114,984 24,781 139,765 18.26 Consumer — — — 329 329 — 329 — Leases, net 699 249 948 42,562 43,510 1,979 45,489 6.43 % Total $ 5,952 $ 1,198 $ 7,150 $ 2,105,474 $ 2,112,624 $ 55,060 $ 2,167,684 2.87 % (1) Includes $ 14.4 million of loans at fair value of which $ 13.3 million are current, $ 604 thousand are 30-89 days past due, and $ 510 thousand are nonaccrual. December 31, 2024 (dollars in thousands) 30-59 days past due 60-89 days past due Total past due Current Total Accruing Loans and leases Nonaccrual loans and leases Total loans % Delinquent Commercial mortgage $ 1,290 $ — $ 1,290 $ 821,877 $ 823,167 $ 809 $ 823,976 0.25 % Home equity lines and loans 176 154 330 88,675 89,005 1,716 90,721 2.26 Residential mortgage (1) 3,259 — 3,259 241,406 244,665 7,900 252,565 4.42 Construction 1,000 — 1,000 249,940 250,940 8,613 259,553 3.70 Commercial, industrial & other finance receivables — — — 355,400 355,400 11,966 367,366 3.26 Small business loans 1,351 — 1,351 142,154 143,505 12,270 155,775 8.74 Consumer — — — 349 349 — 349 — Leases, net 1,046 457 1,503 72,633 74,136 1,851 75,987 4.41 % Total $ 8,122 $ 611 $ 8,733 $ 1,972,434 $ 1,981,167 $ 45,125 $ 2,026,292 2.66 % (1) Includes $ 14.5 million of loans at fair value of which $ 13.7 million are current, $ 473 thousand are 30-89 days past due and $ 340 thousand are nonaccrual. There were no loans in the tables above as of December 31, 2025 or December 31, 2024 that were 90+days past due and still accruing interest. Foreclosed and Repossessed Assets At December 31, 2025 and December 31, 2024, there were 11 and 4 consumer mortgage loans, respectively, totaling $ 3.1 million and $ 1.3 million, respectively, secured by residential real estate properties (included in loans, net of fees and costs on the Consolidated Balance Sheets) for which formal foreclosure proceedings were in process. Risks and Uncertainties We have no particular credit concentration. Our commercial loans have been proactively managed in an effort to achieve a balanced portfolio with no unusual exposure to one industry. Additionally, most of our lending activity occurs within our primary market areas which are concentrated in southeastern Pennsylvania, Delaware, and Maryland as well as other contiguous markets and represents a geographic concentration. Additionally, our loan portfolio is concentrated in commercial loans. Commercial loans are generally viewed as having more inherent risk of default than residential real estate loans or other consumer loans. Also, the commercial loan balance 63 per borrower is typically larger than that for residential real estate loans and consumer loans, implying higher potential losses on an individual loan basis. Past Due and Nonaccrual Status The following table presents the amortized costs basis of loans and leases on nonaccrual status, net of fees and costs as of December 31, 2025 and 2024. As of these dates there were no loans 90 days or more past due and still accruing. December 31, 2025 December 31, 2024 (dollars in thousands) Nonaccrual Without ACL Nonaccrual With ACL Total Nonaccrual Nonaccrual Without ACL Nonaccrual With ACL Total Nonaccrual Commercial mortgage $ 2,472 $ — $ 2,472 $ 809 $ — $ 809 Home equity lines and loans 2,023 — 2,023 1,716 — 1,716 Residential mortgage 9,020 1,365 10,385 7,518 382 7,900 Construction 1,889 4,761 6,650 8,613 — 8,613 Commercial, industrial & other finance receivables 6,770 — 6,770 9,166 2,800 11,966 Small business loans (1) 18,050 6,731 24,781 8,179 4,091 12,270 Leases, net — 1,979 1,979 1,851 — 1,851 Total $ 40,224 $ 14,836 $ 55,060 $ 37,852 $ 7,273 $ 45,125 (1) Included in non-performing small business loans as of December 31, 2025, and 2024, respectively, are $ 13.2 million and $6.5 million in SBA guarantees. Collateral-dependent Loans The following table presents the amortized cost basis of non-accruing collateral-dependent loans by class of loans and type of collateral identified as of December 31, 2025 and 2024 under the current expected credit loss model: December 31, 2025 December 31, 2024 (dollars in thousands) Real Estate Equipment and Other Total Real Estate Equipment and Other Total Commercial mortgage $ 2,472 $ — $ 2,472 $ 809 $ — $ 809 Home equity lines and loans 2,023 — 2,023 1,716 — 1,716 Residential mortgage 10,385 — 10,385 7,900 — 7,900 Construction 6,650 — 6,650 8,613 — 8,613 Commercial, industrial & other finance receivables 1,372 5,398 6,770 1,344 10,622 11,966 Small business loans 19,287 5,494 24,781 10,164 2,106 12,270 Total $ 42,189 $ 10,892 $ 53,081 $ 30,546 $ 12,728 $ 43,274 64 (6) Allowance for Credit Losses The ACL is maintained at a level considered adequate to provide for estimated expected credit losses within the loan portfolio over the contractual life of an instrument that considers our historical loss experience, current conditions and forecasts of future economic conditions as of the balance sheet date. Management’s periodic evaluation of the adequacy of the ACL is based on known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is subjective as it requires material estimates that may be susceptible to significant revisions as more information becomes available. Roll-Forward of Allowance by Portfolio Segment The following tables provide the activity of our ACL for the years ended December 31, 2025 and 2024 under the CECL model in accordance with ASC 326: Year Ended December 31, 2025 (dollars in thousands) Beginning Balance Charge-offs Recoveries Provision (recovery of provision) for credit losses Ending Balance Commercial mortgage $ 3,469 $ — $ — $ 207 $ 3,676 Home equity lines and loans 1,147 — 6 9 1,162 Residential mortgage 1,021 — 2 ( 97 ) 926 Construction 923 ( 738 ) — 1,882 2,067 Commercial, industrial & other finance receivables 3,098 ( 4,788 ) 156 4,516 2,982 Small business loans 6,304 ( 4,989 ) 38 7,968 9,321 Consumer — ( 11 ) 4 7 — Leases 2,476 ( 2,358 ) 820 501 1,439 Total $ 18,438 $ ( 12,884 ) $ 1,026 $ 14,993 $ 21,573 Year Ended December 31, 2024 (dollars in thousands) Beginning Balance Initial PCD on purchased loan (1) Charge-offs Recoveries Provision (recovery of provision) for credit losses Ending Balance Commercial mortgage $ 4,375 $ — $ — $ — $ ( 906 ) $ 3,469 Home equity lines and loans 998 — ( 86 ) 30 205 1,147 Residential mortgage 1,020 — — 13 ( 12 ) 1,021 Construction 485 — — — 438 923 Commercial, industrial & other finance receivables 4,518 574 ( 6,367 ) 63 4,310 3,098 Small business loans 7,005 — ( 4,300 ) 136 3,463 6,304 Consumer — — ( 5 ) 4 1 — Leases 3,706 — ( 5,916 ) 592 4,094 2,476 Total $ 22,107 $ 574 $ ( 16,674 ) $ 838 $ 11,593 $ 18,438 (1) - Meridian repurchased, at a discount of $ 574 thousand, the remaining balance of a commercial loan participation to another bank. The discount was recorded as a PCD loan in the ACL rollforward as presented above.At the time of purchase the determination was made that this loan had experienced more than insignificant deterioration in credit quality since origination. The impact of this loan repurchase increased the balance of non-performing loans by $ 2.1 million and also increased the ACL by $ 574 thousand as this loan is classified as a PCD loan. This initial measurement of expected credit losses on a PCD loan has no impact on net income. Subsequent changes to the ACL on the PCD loan would be recognized through a provision for credit losses. 65 Reconciliation of Provision for Credit Losses The following table provides a reconciliation of the provision for credit losses on the consolidated statements of income between the funded and unfunded components at the dates indicated: Year Ended December 31, (dollars in thousands) 2025 2024 Provision for credit losses - funded loans $ 14,993 $ 11,593 Provision (recovery) for credit losses - unfunded loans 159 ( 193 ) Total provision for credit losses $ 15,152 $ 11,400 Allowance Allocated by Portfolio Segment The following tables detail the allocation of the ACL and the carrying value for loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases at the dates indicated: December 31, 2025 Allowance for credit losses Carrying value of loans and leases (dollars in thousands) Individually evaluated Collectively evaluated Total Individually evaluated Collectively evaluated Total Commercial mortgage $ — $ 3,676 $ 3,676 $ 2,472 $ 876,968 $ 879,440 Home equity lines and loans — 1,162 1,162 2,023 104,979 107,002 Residential mortgage (1) 122 804 926 9,875 211,864 221,739 Construction 331 1,736 2,067 6,650 323,893 330,543 Commercial, industrial & other finance receivables — 2,982 2,982 6,770 422,211 428,981 Small business loans 2,986 6,335 9,321 24,781 114,984 139,765 Consumer — — — — 329 329 Leases, net — 1,439 1,439 — 45,489 45,489 Total (2) $ 3,439 $ 18,134 $ 21,573 $ 52,571 $ 2,100,717 $ 2,153,288 (1) Excludes $ 14.4 million of loans at fair value. (2) Excludes deferred fees. December 31, 2024 Allowance for credit losses Carrying value of loans and leases (dollars in thousands) Individually evaluated Collectively evaluated Total Individually evaluated Collectively evaluated Total Commercial mortgage $ — $ 3,469 $ 3,469 $ 809 $ 823,167 $ 823,976 Home equity lines and loans — 1,147 1,147 1,716 89,005 90,721 Residential mortgage (1) 29 992 1,021 7,560 230,504 238,064 Construction — 923 923 8,613 250,940 259,553 Commercial, industrial & other finance receivables 855 2,243 3,098 11,966 355,400 367,366 Small business loans 1,808 4,496 6,304 12,270 143,505 155,775 Consumer — — — — 349 349 Leases — 2,476 2,476 — 75,987 75,987 Total (2) $ 2,692 $ 15,746 $ 18,438 $ 42,934 $ 1,968,857 $ 2,011,791 (1) Excludes $ 14.5 million of loans at fair value. (2) Excludes deferred fees. The $ 3.1 million increase in the overall funded ACL from December 31, 2024 to December 31, 2025 was driven by increases in the ACL on small business loans due to an increase in nonperforming loans and net charge-offs, combined with an increase in net charge-offs on construction loans during 2025. These increases in ACL were partially offset by a decline in the ACL on the lease portfolio as this portfolio continues to run off. 66 Credit Quality Indicators As part of the process of determining the ACL to the different segments of the loan and lease portfolio, Management considers certain credit quality indicators. For the commercial mortgage, construction and commercial and industrial loan segments, periodic reviews of the individual loans are performed by Management. The results of these reviews are reflected in the risk grade assigned to each loan. These internally assigned grades are as follows: • Pass – Loans considered to be satisfactory with no indications of deterioration. • Special mention – Loans classified as special mention have a potential weakness that deserves Management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. • Substandard – Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. • Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loan balances classified as doubtful have been reduced by partial charge-offs and are carried at their net realizable values. 67 The following tables detail the carrying value of loans and leases by portfolio segment based on the credit quality indicators used to determine the allowance for credit losses at the dates indicated: December 31, 2025 Revolving Loans Converted to Term Loans Revolving Loans Total Term Loans (dollars in thousands) 2025 2024 2023 2022 2021 Prior Commercial mortgage Pass/Watch $ 116,630 $ 116,852 $ 102,516 $ 162,329 $ 127,627 $ 227,348 $ — $ — $ 853,302 Special Mention — — 4,487 1,474 — 4,159 — — 10,120 Substandard — — 1,029 8,074 — 6,915 — — 16,018 Total $ 116,630 $ 116,852 $ 108,032 $ 171,877 $ 127,627 $ 238,422 $ — $ — $ 879,440 Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Construction Pass/Watch $ 117,778 $ 118,733 $ 19,858 $ 9,212 $ 3,373 $ 8,263 $ — $ 29,906 $ 307,123 Special Mention — — 6,245 — — — — — 6,245 Substandard 1,430 211 1,185 9,096 1,826 492 — 2,935 17,175 Total $ 119,208 $ 118,944 $ 27,288 $ 18,308 $ 5,199 $ 8,755 $ — $ 32,841 $ 330,543 Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ ( 738 ) $ ( 738 ) Commercial, industrial & other finance receivables Pass/Watch $ 84,183 $ 62,904 $ 16,119 $ 17,270 $ 9,224 $ 21,836 $ — $ 193,356 $ 404,892 Special Mention — — — 145 3,857 — — 4,608 8,610 Substandard — — 850 — 523 5,360 — 8,746 15,479 Total $ 84,183 $ 62,904 $ 16,969 $ 17,415 $ 13,604 $ 27,196 $ — $ 206,710 $ 428,981 Year-to-date gross charge-offs $ ( 739 ) $ ( 1,487 ) $ ( 160 ) $ ( 23 ) $ ( 1,089 ) $ — $ — $ ( 1,290 ) $ ( 4,788 ) Small business loans Pass/Watch $ 29,760 $ 17,403 $ 17,955 $ 16,903 $ 9,448 $ 8,935 $ — $ 10,713 $ 111,117 Special Mention — 477 134 — — — — 140 751 Substandard 2,567 2,127 3,893 874 10,523 4,002 — 3,911 27,897 Total $ 32,327 $ 20,007 $ 21,982 $ 17,777 $ 19,971 $ 12,937 $ — $ 14,764 $ 139,765 Year-to-date gross charge-offs $ ( 1,211 ) $ ( 433 ) $ ( 550 ) $ ( 233 ) $ ( 692 ) $ ( 1,057 ) $ — $ ( 813 ) $ ( 4,989 ) Total by risk rating Pass/Watch $ 348,351 $ 315,892 $ 156,448 $ 205,714 $ 149,672 $ 266,382 $ — $ 233,975 1,676,434 Special Mention — 477 10,866 1,619 3,857 4,159 — 4,748 25,726 Substandard 3,997 2,338 6,957 18,044 12,872 16,769 — 15,592 76,569 Total $ 352,348 $ 318,707 $ 174,271 $ 225,377 $ 166,401 $ 287,310 $ — $ 254,315 $ 1,778,729 Total year-to-date gross charge-offs $ ( 1,950 ) $ ( 1,920 ) $ ( 710 ) $ ( 256 ) $ ( 1,781 ) $ ( 1,057 ) $ — $ ( 2,841 ) $ ( 10,515 ) 68 December 31, 2024 Revolving Loans Converted to Term Loans Revolving Loans Total Term Loans (dollars in thousands) 2024 2023 2022 2021 2020 Prior Commercial mortgage Pass/Watch $ 118,289 $ 99,971 $ 162,831 $ 140,046 $ 92,705 $ 184,157 $ 511 $ 189 $ 798,699 Special Mention — 3,471 11,258 972 47 767 667 — 17,182 Substandard — 200 30 — 4,681 3,184 — — 8,095 Total $ 118,289 $ 103,642 $ 174,119 $ 141,018 $ 97,433 $ 188,108 $ 1,178 $ 189 $ 823,976 Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Construction Pass/Watch $ 89,417 $ 61,040 $ 38,315 $ 10,935 $ 7,015 $ 4,229 $ 123 $ 34,613 $ 245,687 Special Mention 160 1,185 2,948 — — — — — 4,293 Substandard — — 1,277 1,605 516 2,608 — 3,567 9,573 Total $ 89,577 $ 62,225 $ 42,540 $ 12,540 $ 7,531 $ 6,837 $ 123 $ 38,180 $ 259,553 Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial, industrial & other finance receivables Pass/Watch $ 81,352 $ 23,658 $ 16,844 $ 15,634 $ 8,499 $ 23,220 $ — $ 162,980 $ 332,187 Special Mention — 850 2,599 438 — — — 2,455 6,342 Substandard — 115 3,813 2,365 — 9,978 — 12,566 28,837 Total $ 81,352 $ 24,623 $ 23,256 $ 18,437 $ 8,499 $ 33,198 $ — $ 178,001 $ 367,366 Year-to-date gross charge-offs $ ( 351 ) $ ( 1,136 ) $ ( 41 ) $ — $ — $ ( 1,324 ) $ — $ ( 3,515 ) $ ( 6,367 ) Small business loans Pass/Watch $ 35,720 $ 23,714 $ 24,446 $ 22,800 $ 6,699 $ 6,226 $ — $ 13,818 $ 133,423 Special Mention — 425 507 2,335 1,332 — — — 4,599 Substandard — 1,804 1,294 8,481 4,085 — — 2,089 17,753 Total $ 35,720 $ 25,943 $ 26,247 $ 33,616 $ 12,116 $ 6,226 $ — $ 15,907 $ 155,775 Year-to-date gross charge-offs $ — $ ( 118 ) $ ( 1,986 ) $ ( 1,064 ) $ ( 352 ) $ — $ — $ ( 780 ) $ ( 4,300 ) Total by risk rating Pass/Watch $ 324,778 $ 208,383 $ 242,436 $ 189,415 $ 114,918 $ 217,832 $ 634 $ 211,600 1,509,996 Special Mention 160 5,931 17,312 3,745 1,379 767 667 2,455 32,416 Substandard — 2,119 6,414 12,451 9,282 15,770 — 18,222 64,258 Total $ 324,938 $ 216,433 $ 266,162 $ 205,611 $ 125,579 $ 234,369 $ 1,301 $ 232,277 $ 1,606,670 Total year-to-date gross charge-offs $ ( 351 ) $ ( 1,254 ) $ ( 2,027 ) $ ( 1,064 ) $ ( 352 ) $ ( 1,324 ) $ — $ ( 4,295 ) $ ( 10,667 ) The Corporation had no loans with a risk rating of Doubtful included within recorded investment in loans and leases held for investment at December 31, 2025 and December 31, 2024. 69 In addition to credit quality indicators as shown in the above tables, allowance allocations for residential mortgages, consumer loans and leases are also applied based on their performance status at the dates indicated: December 31, 2025 Revolving Loans Total Term Loans (dollars in thousands) 2025 2024 2023 2022 2021 Prior Home equity lines and loans Performing $ 1,103 $ 658 $ 196 $ 534 $ 207 $ 3,102 $ 99,179 $ 104,979 Nonperforming — — — — 91 342 1,590 2,023 Total $ 1,103 $ 658 $ 196 $ 534 $ 298 $ 3,444 $ 100,769 $ 107,002 Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Residential mortgage (1) Performing $ 25,957 $ 8,080 $ 26,278 $ 122,566 $ 15,775 $ 13,208 $ — $ 211,864 Nonperforming — 437 672 3,398 737 4,631 — 9,875 Total $ 25,957 $ 8,517 $ 26,950 $ 125,964 $ 16,512 $ 17,839 $ — $ 221,739 Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Consumer Performing $ — $ 5 $ 22 $ 12 $ — $ 220 $ 70 $ 329 Nonperforming — — — — — — — — Total $ — $ 5 $ 22 $ 12 $ — $ 220 $ 70 $ 329 Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ ( 11 ) $ ( 11 ) Leases, net Performing $ 6,232 $ 482 $ 10,149 $ 19,369 $ 6,561 $ 717 $ — $ 43,510 Nonperforming — — 518 1,099 342 20 — 1,979 Total $ 6,232 $ 482 $ 10,667 $ 20,468 $ 6,903 $ 737 $ — $ 45,489 Year-to-date gross charge-offs $ — $ — $ ( 90 ) $ ( 1,472 ) $ ( 756 ) $ ( 40 ) $ — $ ( 2,358 ) Total by Payment Performance Performing $ 33,292 $ 9,225 $ 36,645 142,481 $ 22,543 $ 17,247 $ 99,249 $ 360,682 Nonperforming — 437 1,190 4,497 1,170 4,993 1,590 13,877 Total $ 33,292 $ 9,662 $ 37,835 $ 146,978 $ 23,713 $ 22,240 $ 100,839 $ 374,559 Total year-to-date gross charge-offs $ — $ — $ ( 90 ) $ ( 1,472 ) $ ( 756 ) $ ( 40 ) $ ( 11 ) $ ( 2,369 ) (1) Excludes $ 14.4 million of loans at fair value. 70 December 31, 2024 Revolving Loans Total Term Loans (dollars in thousands) 2024 2023 2022 2021 2020 Prior Home equity lines and loans Performing $ 705 $ 332 $ 620 $ 211 $ 328 $ 3,313 $ 83,016 $ 88,525 Nonperforming — — — 91 — 342 1,763 2,196 Total $ 705 $ 332 $ 620 $ 302 $ 328 $ 3,655 $ 84,779 $ 90,721 Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ ( 86 ) $ ( 86 ) Residential mortgage (1) Performing $ 13,878 $ 43,860 $ 140,953 $ 16,761 $ 6,808 $ 8,245 $ — $ 230,505 Nonperforming 129 253 2,323 752 357 3,745 — 7,559 Total $ 14,007 $ 44,113 $ 143,276 $ 17,513 $ 7,165 $ 11,990 $ — $ 238,064 Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Consumer Performing $ 14 $ 32 $ 22 $ — $ — $ 241 $ 40 $ 349 Nonperforming — — — — — — — — Total $ 14 $ 32 $ 22 $ — $ — $ 241 $ 40 $ 349 Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ ( 5 ) $ ( 5 ) Leases, net Performing $ 741 $ 15,594 $ 36,229 $ 17,253 $ 4,326 $ — $ — $ 74,143 Nonperforming — 298 945 493 108 — — 1,844 Total $ 741 $ 15,892 $ 37,174 $ 17,746 $ 4,434 $ — $ — $ 75,987 Year-to-date gross charge-offs $ — $ ( 968 ) $ ( 3,606 ) $ ( 1,077 ) $ ( 265 ) $ — $ — $ ( 5,916 ) Total by Payment Performance Performing $ 15,338 $ 59,818 $ 177,824 $ 34,225 $ 11,462 $ 11,799 $ 83,056 $ 393,522 Nonperforming 129 551 3,268 1,336 465 4,087 1,763 11,599 Total $ 15,467 $ 60,369 $ 181,092 $ 35,561 $ 11,927 $ 15,886 $ 84,819 $ 405,121 Total year-to-date gross charge-offs $ — $ ( 968 ) $ ( 3,606 ) $ ( 1,077 ) $ ( 265 ) $ — $ ( 91 ) $ ( 6,007 ) (1) Excludes $ 14.5 million of loans at fair value. 71 Modifications to Borrowers Experiencing Financial Difficulty An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the ACL on loans and leases, a change to the allowance for credit losses is generally not recorded upon modification. However, when principal forgiveness is provided, the amortized cost basis of the asset is written off against the ACL on loans and leases. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses. The following presents, by class of loans, information regarding accruing and nonaccrual modified loans to borrowers experiencing financial difficulty during the years ended December 31, 2025 and 2024. Year Ended December 31, 2025 Year Ended December 31, 2024 Number of Loans Amortized Cost Basis % of Total Class of Financing Receivable Related Reserve Number of Loans Amortized Cost Basis % of Total Class of Financing Receivable Related Reserve (dollars in thousands) Accruing Modified Loans to Borrowers Experiencing Financial Difficulty: Small business loans 4 $ 1,556 1.1 % $ — 6 $ 3,534 2.3 % $ — Construction 2 10,526 3.2 % — — — —% — Commercial mortgage 3 1,388 0.2 % — — — —% — Commercial, industrial & other finance receivables 1 1,099 0.3 % — 7 3,156 0.9 % — Leases 7 271 0.6 % 9 — — —% — Total 17 $ 14,840 $ 9 13 $ 6,690 $ — Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty: Small business loans 9 $ 4,083 2.9 % $ 1,512 3 $ 1,663 1.1 % $ — Construction 3 4,331 1.3 % 185 2 1,856 0.7 % — Commercial, industrial & other finance receivables 2 850 0.2 % — 5 2,792 0.8 % — Leases 18 606 1.3 % 19 — — —% — Home equity lines and loans 1 456 0.4% — — — —% — Residential mortgage 2 905 0.4 % — 3 546 0.2 % 19 Total 35 $ 11,231 $ 1,716 13 $ 6,857 $ 19 The following presents, by class of loans, information regarding accruing and nonaccrual modified loans to borrowers experiencing financial difficulty during the years ended December 31, 2025 and 2024. Year Ended December 31, 2025 Year Ended December 31, 2024 Number of Loans Number of Loans Financial Effect Financial Effect Accruing Modified Loans to Borrowers Experiencing Financial Difficulty: Small business loans 4 Extend maturity date 6 Extend maturity date Construction 2 Extend maturity date and allow additional funding — Extend maturity date Commercial mortgage 3 Extend maturity date and allow additional funding — Commercial, industrial & other finance receivables 1 Extend maturity date 7 Extend maturity date and allow additional funding Leases 7 Extend maturity date — Total 17 13 Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty: Small business loans 9 Extend maturity date 3 Extend maturity date Construction 3 Extend maturity date 2 Extend maturity date Commercial, industrial & other finance receivables 2 Extend maturity date 5 Extend maturity date and allow additional funding Leases 18 Extend maturity date — Home equity lines and loans 1 Extend maturity date — Residential mortgage 2 Extend maturity date 3 Extend maturity date Total 35 13 72 There were 52 and 26 modifications granted to borrowers experiencing financial difficulty for the year ended December 31, 2025 and December 31, 2024, respectively. There were no loans that had a payment default that were modified in the 12 months before the years ended December 31, 2025 and December 31, 2024. There were $ 2.1 million and zero , in commitments to lend additional funds to the borrowers experiencing financial difficulty that had modifications during the years ended December 31, 2025 and December 31, 2024, respectively. The increase period over period in assistance provided to borrowers experiencing financial difficulty was seen in small business loans, leases, and construction loans. The primary factor for the financial difficulty generally comes from higher interest rates (small business loans) or higher rates for longer periods (which for construction, caused the borrower to go through their interest reserve quicker). The following presents, by class of loans, the amortized cost and performance status of accruing and nonaccrual modified loans to borrowers experiencing financial difficulty that have been modified in the last 12 months as of December 31, 2025 and 2024. December 31, 2025 Current 30-59 days past due 60-89 days past due 90+ days past due and still accruing Nonaccrual loans and leases Total (dollars in thousands) Small business loans $ 1,556 $ — $ — $ — $ 4,083 $ 5,639 Construction 10,526 — — — 4,331 14,857 Commercial mortgage — 1,060 328 — — 1,388 Commercial, industrial & other finance receivables — 1,099 — — 850 1,949 Leases 271 — — — 606 877 Home equity lines and loans — — — — 456 456 Residential mortgage — — — — 905 905 Total $ 12,353 $ 2,159 $ 328 $ — $ 11,231 $ 26,071 December 31, 2024 Current 30-59 days past due 60-89 days past due 90+ days past due and still accruing Nonaccrual loans and leases Total (dollars in thousands) Small business loans $ 3,534 $ — $ — $ — $ 1,663 $ 5,197 Construction — — — — 1,856 1,856 Commercial, industrial & other finance receivables 3,156 — — — 2,792 5,948 Residential mortgage — — — — 546 546 Total $ 6,690 $ — $ — $ — $ 6,857 $ 13,547 (7) OREO and Other Repossessed Assets Changes in the balance of OREO is summarized as follows: (dollars in thousands) December 31, 2025 December 31, 2024 OREO balance, beginning of year $ 159 $ — Loans transferred to other real estate owned 3,592 159 Valuation allowance for losses — — Sales ( 159 ) — OREO balance, end of year $ 3,592 $ 159 During the year ended December 31, 2025, the Corporation foreclosed on four commercial loans and transferred the collateral property to OREO. Additionally, during the year ended December 31, 2025, the Corporation sold a residential real estate property and recorded a gain of $ 15 thousand. During the year ended December 31, 2024, the Corporation foreclosed on one residential real estate property and transferred the collateral property to OREO. Additionally, during the year ended December 31, 2024, the Corporation sold a residential real estate property and recorded a gain of $ 317 thousand. There were no valuation allowances against OREO for either period presented above. 73 Changes in the balance of repossessed assets are summarized as follows: (dollars in thousands) December 31, 2025 December 31, 2024 Repossessed asset balance, beginning of year $ 117 $ — Loans & leases transferred to repossessed assets 2,357 117 Valuation allowance for losses — — Sales ( 69 ) — Repossessed asset balance, end of year $ 2,405 $ 117 Total OREO and other repossessed assets $ 5,997 $ 276 During the year ended December 31, 2025, the Corporation repossessed a billboard asset from a commercial loan relationship, as well as equipment from lease relationships, and reclassified into other repossessed assets. Additionally, during the year ended December 31, 2025, the Corporation sold approximately $ 69 thousand in repossessed equipment that had previously been used as collateral on leases. During the year ended December 31, 2024, the Corporation repossessed equipment from lease relationships and reclassified into other repossessed assets. There were no valuation allowances against repossessed assets for either period presented above. (8) Bank Premises and Equipment The components of premises and equipment at December 31, 2025 and 2024 are as follows: (dollars in thousands) December 31, 2025 December 31, 2024 Buildings $ 9,416 $ 9,416 Leasehold improvements 4,479 3,256 Land 600 600 Land Improvements 218 218 Furniture, fixtures and equipment 3,415 3,613 Computer equipment and data processing software 9,975 9,575 Construction in process — 50 Less: accumulated depreciation ( 15,703 ) ( 14,577 ) Total $ 12,402 $ 12,151 Total depreciation expense for the years ended December 31, 2025 and 2024 totaled $ 1.4 million and $ 2.0 million, respectively. Leasehold improvements decreased during the year ended December 31, 2025 due to the early termination of our Blue Bell office lease. (9) Deposits The components of deposits at December 31, 2025 and 2024 are as follows: (dollars in thousands) December 31, 2025 December 31, 2024 Demand, non-interest bearing $ 245,377 $ 240,858 Demand, interest bearing 157,360 141,439 Savings accounts 11,842 15,710 Money market accounts 1,011,448 897,826 Time deposits 732,101 709,535 Total $ 2,158,128 $ 2,005,368 Included in time deposits as of December 31, 2025, and 2024, are $ 484.3 million and $ 500.4 million of brokered time deposits, respectively. The aggregate amount of time deposits in denominations over $250 thousand were $ 522.7 million and $ 545.7 million as of December 31, 2025 and 2024, respectively. 74 At December 31, 2025, the scheduled maturities of time deposits are as follows (in thousands): 2026 $ 661,114 2027 70,265 2028 298 2029 413 2030 11 Total $ 732,101 (10) Short-Term Borrowings and Long-Term Debt The Corporation’s short-term borrowings generally consist of federal funds purchased and short-term borrowings extended under agreements with the FHLB or other correspondent banks. The Corporation has 4 unsecured borrowing facilities with correspondent banks for up to $ 56.0 million in total. Federal funds purchased generally represent one-day borrowings. The Corporation had $ 0 and $ 0 in Federal funds purchased at December 31, 2025 and December 31, 2024, respectively. The Corporation also has a facility with the Federal Reserve Bank discount window of $ 4.2 million. This facility is fully secured by investment securities and pledged loans. There were no borrowings under this at December 31, 2025 and December 31, 2024. The Corporation’s facility with the Federal Reserve’s BTFP expired in March 2024. The Corporation has a revolving line of credit with ACBB of $ 5.0 million that is used to fund operating activities of the Corporation and had an outstanding balance of $ 1.5 million at December 31, 2025. The following table presents short-term borrowings at the dates indicated: (dollars in thousands) Maturity date Interest rate December 31, 2025 December 31, 2024 FHLB Open Repo Plus Weekly 6/15/2026 3.93 % $ 89,999 $ 75,205 FHLB Mid-term Repo Fixed 7/14/2026 4.57 % 15,245 — ACBB Holding Company Revolving LOC 7/24/2026 7.00 % 1,500 5,000 FHLB Mid-term Repo Fixed 10/14/2025 5.16 % — 9,492 FHLB Mid-term Repo Fixed 12/22/2025 4.23 % — 8,935 Total Short-Term Borrowings $ 106,744 $ 98,632 The following table presents long-term borrowings at the dates indicated: (dollars in thousands) Maturity date Interest rate December 31, 2025 December 31, 2024 FHLB Mid-term Repo Fixed 5/20/2027 4.70 % $ 10,594 $ 10,594 FHLB Mid-term Repo Fixed 7/14/2026 4.57 % — 15,245 Total Long-Term Borrowings $ 10,594 $ 25,839 The FHLB has also issued $ 178.6 million of letters of credit to the Corporation for the benefit of the Corporation’s public deposit funds and loan customers. These letters of credit expire throughout 2026. The Corporation has a maximum borrowing capacity with the FHLB of $ 751.5 million as of December 31, 2025 and $ 699.3 million as of December 31, 2024. All advances and letters of credit from the FHLB are secured by a blanket lien on non-pledged, mortgage-related loans and securities as part of the Corporation’s borrowing agreement with the FHLB. (11) Subordinated Debentures The following table presents subordinated debentures at the dates indicated: (dollars in thousands) Maturity date Interest rate December 31, 2025 December 31, 2024 2023 Debentures 08/31/2033 8.00 % $ 9,740 $ 9,740 2019 Debentures 12/30/2029 8.26 % 40,000 40,000 2013 Debentures 12/31/2028 6.50 % 398 398 2011 Debentures 12/31/2026 6.00 % 219 231 Debt Origination Costs ( 504 ) ( 626 ) Total Subordinated Debentures $ 49,853 $ 49,743 Interest accrues at fixed rates of 8.00 %, 6.50 %, and 6.00 % on the 2023, 2013 and 2011 Debentures, respectively. Interest accrued at a fixed rate of 5.38 % on the 2019 Debentures from the date of issuance up to and including December 30, 2024. Starting on December 75 31, 2024, the 2019 Debentures converted to a floating rate instrument resetting quarterly at 395 basis points over the 30 day term SOFR. Interest is paid semi-annually on the 2023 and 2019 Debentures, and paid quarterly on the 2013 and 2011 debentures. The 2013 and 2011 Debentures are included in Tier 2 capital for the Bank. The 2019 and 2023 Debentures are included as Tier 2 capital for the Corporation and as Tier 1 capital for the Bank through it investment in sub. The debt issuance costs are included as a direct deduction from the debt liability and these costs are amortized to interest expense using the effective yield method. (12) Servicing Assets The Corporation sells certain residential mortgage loans and the guaranteed portion of certain SBA loans to third parties and retains servicing rights and receives servicing fees. All such transfers are accounted for as sales. When the Corporation sells a residential mortgage loan, it does not retain any portion of that loan and its continuing involvement in such transfers is limited to certain servicing responsibilities. While the Corporation may retain a portion of certain sold SBA loans, its continuing involvement in the portion of the loan that was sold is limited to certain servicing responsibilities. When the contractual servicing fees on loans sold with servicing retained are expected to be more than adequate compensation to a servicer for performing the servicing, a capitalized servicing asset is recognized. Residential Mortgage Loans The related MSR asset is amortized over the period of the estimated future net servicing life of the underlying assets. MSRs are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the MSR. During the year ended December 31, 2025, the Corporation sold approximately $ 979 thousand of residential mortgage loan servicing rights associated with $ 110.2 million of serviced loans, while for the year ended 2024 approximately $ 6.6 million of residential mortgage loan servicing rights associated with $ 777.2 million of serviced loans were sold. The Corporation has $ 10.3 million of residential mortgage loans being serviced as of December 31, 2025 compared to $ 121.8 million as of December 31, 2024. During the year ended December 31, 2025 the Corporation recognized servicing fee income of $ 108 thousand compared to $ 2.0 million, during the year ended December 31, 2024. Changes in the MSR balance are summarized as follows: Year Ended December 31, (dollars in thousands) 2025 2024 Balance at beginning of the period $ 1,124 $ 8,621 Servicing rights capitalized 31 97 Amortization of servicing rights ( 90 ) ( 1,136 ) Sale of servicing rights ( 979 ) ( 6,458 ) Balance at end of the period $ 86 $ 1,124 ​ The Corporation uses assumptions and estimates in determining the fair value of MSRs. These assumptions include prepayment speeds and discount rates. The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge. At December 31, 2025, the key assumptions used to determine the fair value of the Corporation’s MSRs included a lifetime constant prepayment rate equal to 9.60 % and a discount rate equal to 9.50 %. At December 31, 2024, the key assumptions used to determine the fair value of the Corporation’s MSRs included a lifetime constant prepayment rate equal to 10.97 % and a discount rate equal to 9.50 %. As interest rates increased and the number of mortgage refinancings have declined, model inputs have been adjusted to align the MSRs fair value with market conditions. 76 The sensitivity of the current fair value of the residential mortgage servicing rights to immediate 10% and 20% favorable and unfavorable changes in key economic assumptions are included in the following table. (dollars in thousands) December 31, 2025 December 31, 2024 Fair value of residential mortgage servicing rights $ 114 $ 1,494 Weighted average life (months) 43 43 Prepayment speed 9.60 % 10.97 % Impact on fair value: 10% adverse change $ ( 5 ) $ ( 63 ) 20% adverse change ( 10 ) ( 121 ) Discount rate 9.50 % 9.50 % Impact on fair value: 10% adverse change $ ( 4 ) $ ( 53 ) 20% adverse change ( 9 ) ( 102 ) The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change. SBA Loans SBA loan servicing assets are amortized over the period of the estimated future net servicing life of the underlying assets. SBA loan servicing assets are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the SBA loan servicing asset. The Corporation serviced $ 305.3 million and $ 246.3 million of SBA loans, as of December 31, 2025 and December 31, 2024, respectively. Changes in the SBA loan servicing asset balance are summarized as follows: Year Ended December 31, (dollars in thousands) 2025 2024 Balance at beginning of the period $ 3,258 $ 3,127 Servicing rights capitalized 1,719 998 Amortization of servicing rights ( 1,166 ) ( 1,061 ) Change in valuation allowance 35 194 Balance at end of the period $ 3,846 $ 3,258 Activity in the valuation allowance for SBA loan servicing assets was as follows: Year Ended December 31, (dollars in thousands) 2025 2024 Valuation allowance, beginning of period $ ( 74 ) $ ( 268 ) Impairment ( 3 ) ( 7 ) Recovery 38 201 Valuation allowance, end of period $ ( 39 ) $ ( 74 ) The Corporation uses assumptions and estimates in determining the fair value of SBA loan servicing rights. These assumptions include prepayment speeds, discount rates, and other assumptions. The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge. At December 31, 2025, the key assumptions used to determine the fair value of the Corporation’s SBA loan servicing rights included a lifetime constant prepayment rate equal to 17.10 % and a discount rate equal to 12.91 %. At December 31, 2024, the key assumptions used to determine the fair value of the Corporation’s SBA loan servicing rights included a lifetime constant prepayment rate equal to 17.18 % and a discount rate equal to 13.40 %. 77 The sensitivity of the current fair value of the SBA loan servicing rights to immediate 10% and 20% favorable and unfavorable changes in key economic assumptions are included in the following table. (dollars in thousands) December 31, 2025 December 31, 2024 Fair value of SBA loan servicing rights $ 4,522 $ 3,670 Weighted average life (years) 3.3 3.2 Prepayment speed 17.10 % 17.18 % Impact on fair value: 10% adverse change $ ( 207 ) $ ( 166 ) 20% adverse change ( 397 ) ( 317 ) Discount rate 12.91 % 13.40 % Impact on fair value: 10% adverse change $ ( 101 ) $ ( 81 ) 20% adverse change ( 197 ) ( 159 ) The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the SBA servicing rights is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change. (13) Lease Commitments The Corporation’s operating leases consist of various retail branch locations and loan production offices. As of December 31, 2025, the Corporation’s leases have remaining lease terms ranging from 8 months to 14 years, including extension options. The Corporation’s leases include fixed rental payments, and certain of our leases also include variable rental payments where lease payments may increase at pre-determined dates based on the change in the consumer price index. The Corporation’s lease agreements include gross leases as well as leases in which we make separate payments to the lessor for items such as the property taxes assessed on the property or a portion of the common area maintenance associated with the property. We have elected the practical expedient not to separate lease and non-lease components for all of our building leases. The Corporation also elected to not recognize ROU assets and lease liabilities for short-term leases. As of December 31, 2025, the Corporation’s ROU assets and related lease liabilities were $ 10.4 million and $ 10.7 million, respectively. As of December 31, 2024, the Corporation’s ROU assets and related lease liabilities were $ 6.9 million and $ 7.0 million, respectively. . These amounts are included within other assets and other liabilities , respectively. The components of lease expense were as follows: Year Ended December 31, (dollars in thousands) 2025 2024 Operating lease expense $ 1,739 $ 3,031 Short term lease expense 35 — Total lease expense $ 1,775 $ 3,031 Operating lease expense decreased $ 1.4 million, net, due to fees, credits and other disposal costs for the early termination of the Blue Bell lease. Supplemental cash flow information related to leases was as follows: (dollars in thousands) December 31, 2025 December 31, 2024 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,553 $ 2,890 ROU asset obtained in exchange for lease liabilities 4,941 ( 491 ) 78 Maturities of operating lease liabilities were as follows for the period indicated: (dollars in thousands) December 31, 2025 2026 $ 1,651 2027 1,692 2028 1,256 2029 1,260 2030 1,028 Thereafter 6,666 $ 13,553 Less: Present value discount ( 2,823 ) Total operating lease liabilities $ 10,730 As of December 31, 2025, the weighted-average remaining lease term for all operating leases, including extension options that the Corporation is reasonably certain will be exercised for retail branch locations, is 10.3 years. Because we generally do not have access to the rate implicit in the lease, we utilize our incremental borrowing rate as the discount rate. The weighted average discount rate associated with operating leases as of December 31, 2025 and 2024 was 4.13 % and 3.09 %, respectively. (14) Stock-Based Compensation The Corporation has issued stock options under the Meridian Bank 2004 Stock Option Plan (2004 Plan). The 2004 Plan authorized the Board of Directors to grant options up to an aggregate of 892,182 shares, as adjusted for the 5 % stock dividends in 2012, 2014 and 2016, and the two -for-one stock split effective February 28, 2023, to officers, other employees and directors of the Corporation. No additional shares are available for future grants. The shares granted under the 2004 Plan to directors are nonqualified options. The shares granted under the 2004 Plan to officers and other employees are incentive stock options, and are subject to the limitations under Section 422 of the Internal Revenue Code. The Meridian Bank 2016 Equity Incentive Plan (2016 Plan) was amended on May 25, 2023 to authorize the Board of Directors to grant up to an aggregate of 1,673,800 stock awards that can take different forms. A total of 1,513,000 stock options and 91,776 shares of restricted stock have been granted under the 2016 Plan through December 31, 2025. As of December 31, 2025 there were 208,980 stock awards remaining to be issued after adjusting for 139,956 options previously forfeited and available for future grant. Options granted under the 2016 Plan to directors are nonqualified options, while options granted to officers and other employees are incentive stock options, and are subject to the limitations under Section 422 of the Internal Revenue Code. Stock Options Stock-based compensation cost is measured at the grant date, based on the fair value of the award and the cost is recognized as an expense over the vesting period. The fair value of stock option grants is determined using the Black-Scholes pricing model. The assumptions necessary for the calculation of the fair value are expected life of options, annual volatility of stock price, risk-free interest rate and annual dividend yield. Stock option awards granted under the 2016 Plan have a term that does not exceed 10 years and vest according to each award’s specific vesting schedule. Currently, all option awards granted to date vest 25 % upon grant and become fully exercisable after 3 years of service from the grant date. The following table provides information about stock options outstanding as of December 31, 2025 and 2024: Shares Weighted average exercise price Weighted average grant date fair value Outstanding at December 31, 2023 1,099,798 $ 11.55 $ 3.56 Exercised ( 51,700 ) 8.74 2.49 Granted 143,250 14.46 6.36 Forfeited ( 29,550 ) 14.39 4.86 Outstanding at December 31, 2024 1,161,798 $ 11.96 $ 3.92 Exercised ( 102,530 ) 9.38 2.87 Granted 147,750 14.44 6.60 Forfeited ( 12,250 ) 15.47 5.16 Outstanding at December 31, 2025 1,194,768 $ 12.45 $ 4.33 Exercisable at December 31, 2025 988,070 12.14 3.97 Nonvested at December 31, 2025 206,698 13.93 6.02 79 The weighted average remaining contractual life of the outstanding stock options at December 31, 2025 is 6 years. At December 31, 2025 the range of exercise prices is $ 6.74 to $ 17.76 . The aggregate intrinsic value of options outstanding and exercisable was $ 6.1 million and $ 5.4 million, respectively, as of December 31, 2025. The fair value of each option granted in 2025 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: dividend yield of 3.6 %, risk-free interest rate of 3.90 %, expected life of 5.75 years, and volatility of 33.4 % based on an average of the Corporation’s share price since going public. The weighted average fair value of options granted in 2025 was $ 6.60 per share. The fair value of each option granted in 2024 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: dividend yield of 3.6 %, risk-free interest rate of 4.36 %, expected life of 5.75 years, and volatility of 33.1 % based on an average of the Corporation’s share price since going public. The weighted average fair value of options granted in 2024 was $ 6.36 per share. Total stock option compensation cost for the years ended December 31, 2025 and 2024 was $ 596 thousand and $ 456 thousand, respectively. During the year ended December 31, 2025 and 2024, the Corporation received $ 787 thousand and $ 442 thousand from the exercise of stock options, respectively. The Corporation recognized $ 52 thousand and $ 18 thousand in excess tax benefits related to stock compensation cost for the twelve months ended December 31, 2025 and 2024. In accordance with ASU 2016-09 – Compensation – Stock Compensation (ASU 2016-09), forfeitures are recognized as they occur instead of applying an estimated forfeiture rate to each grant. For purposes of the determination of stock-based compensation expense for the years ended December 31, 2025, and 2024, we recognized the forfeiture of 12,250 , and 29,550 of shares of stock options that were previously granted to officers and other employees, respectively. As of December 31, 2025, there was $ 1.2 million of unrecognized compensation cost related to issued but nonvested stock options. This cost will be recognized over a weighted average period of 6.2 years. During 2025, the intrinsic value of options exercised was $ 627 thousand. (15) Income Taxes The following table presents the components of federal and state income tax expense for the periods indicated. The Corporation did not have any foreign operations. (dollars in thousands) December 31, 2025 December 31, 2024 Current Expense Federal $ 6,042 $ 5,551 State 897 688 Total current income tax expense $ 6,939 $ 6,239 Deferred Expense Federal $ ( 330 ) $ ( 725 ) State ( 43 ) ( 74 ) Total deferred income tax expense $ ( 373 ) $ ( 799 ) Total income tax expense $ 6,566 $ 5,440 A reconciliation of the statutory income tax at 21% to the income tax expense included in the statement of operations is as follows for 2025 and 2024, respectively: (dollars in thousands) December 31, 2025 December 31, 2024 Federal income tax at statutory rate $ 5,965 21.0 % $ 4,575 21.0 % State tax expense, net of federal benefit (1) 675 2.4 485 2.2 Tax credits, net of amortization ( 548 ) ( 1.9 ) ( 164 ) ( 0.8 ) Nontaxable or nondeductible items Tax exempt interest, net 76 0.3 ( 11 ) ( 0.1 ) Bank owned life insurance 46 0.2 ( 182 ) ( 0.8 ) Stock based compensation 34 0.1 70 0.3 ESOP 38 0.1 23 0.1 Prior year return to provision adjustment 195 0.7 490 2.3 Other 85 0.2 154 0.8 Effective income tax rate $ 6,566 23.1 % $ 5,440 25.0 % (1) State taxes in Maryland and Delaware made up the majority (greater than 50%) of the tax effect in this category for both periods presented. 80 The components of the net deferred tax asset at December 31, 2025 and 2024 are as follows: (dollars in thousands) December 31, 2025 December 31, 2024 Deferred tax assets: Allowance for credit losses $ 4,920 $ 4,179 Accrued retirement 1,196 948 Unrealized loss on available for sale securities 1,496 2,373 Unrealized loss on derivatives 64 14 Mortgage pipeline fair-value adjustment 324 541 Deferred rent 70 30 Mortgage repurchase reserve 116 113 Unfunded commitment reserve 222 185 Other 206 187 Total deferred tax asset $ 8,614 $ 8,570 Deferred tax liabilities: Property and equipment $ ( 735 ) $ ( 616 ) Intangibles ( 201 ) ( 154 ) Loan servicing rights ( 897 ) ( 993 ) Hedge instrument fair-value adjustment ( 77 ) ( 50 ) Prepaid expenses ( 375 ) ( 293 ) Deferred loan costs ( 1,975 ) ( 1,612 ) Other ( 139 ) ( 183 ) Total deferred tax liability $ ( 4,399 ) $ ( 3,901 ) Net deferred tax asset $ 4,215 $ 4,669 The effective tax rates for the twelve-month periods ended December 31, 2025 and 2024 were 23.1 % and 25.0 % respectively. The decrease in rate between 2024 and 2025 was primarily related to the impact of solar related tax credits purchased at the end of 2025, partially offset by the tax impact of a surrender of certain bank owned life insurance policies. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Corporation will realize the benefits of these deferred tax assets. As of December 31, 2025, the Corporation had an investment in low-income housing tax credits of $ 4.2 million on which it recognized tax credits of $ 448 thousand, amortization of $ 413 thousand and tax benefits from losses of $ 91 thousand during the year ended December 31, 2025. As of December 31, 2024, the Corporation had an investment in low-income housing tax credits of $ 4.6 million on which it recognized tax credits of $ 415 thousand, amortization of $ 448 thousand and tax benefits from losses of $ 99 thousand during the year ended December 31, 2024. (16) Transactions with Executive Officers, Directors and Principal Stockholders The Corporation has had, and may be expected to have in the future, banking transactions in the ordinary course of business with its executive officers, directors, principal stockholders, their immediate families and affiliated companies (commonly referred to as related parties) Year Ended December 31, (dollars in thousands) 2025 2024 Loans receivable from related parties - balance at beginning of period $ 1,518 $ 1,579 Advances to related parties 1,282 106 Repayments from related parties ( 828 ) ( 167 ) Loans receivable from related parties - balance at end of period $ 1,972 $ 1,518 Deposits of related parties totaled $ 40.9 million and $ 36.5 million at December 31, 2025 and 2024, respectively. Subordinated debt held by related parties totaled $ 844 thousand and $ 844 thousand at December 31, 2025 and 2024, respectively. 81 (17) Financial Instruments with Off-Balance Sheet Risk, Commitments and Contingencies The Corporation is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The Corporation’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Corporation uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. A summary of the Corporation’s financial instrument commitments at the dates indicated: (dollars in thousands) December 31, 2025 December 31, 2024 Commitments to fund loans and commitments under lines of credit $ 641,906 $ 603,144 Letters of credit 9,367 15,456 Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Corporation evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Corporation upon extension of credit, is based on management’s credit evaluation. Collateral held varies but may include personal or commercial real estate, accounts receivable, inventory and equipment. Outstanding letters of credit are conditional commitments issued by the Corporation to guarantee the performance of a customer to a third party. The majority of these are standby letters of credit that expire within the next twelve months. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending other loan commitments. The Corporation requires collateral supporting these letters of credit as deemed necessary. Management believes that the proceeds obtained through a liquidation of such collateral would be sufficient to cover the maximum potential amount of future payments required under the corresponding guarantees. Loans sold under FHA or investor programs are subject to indemnification or repurchase if they fail to meet the origination criteria of those programs or if the loan is two or three months delinquent during a set period that usually varies from the first six months to a year after the loan is sold. There was 6 indemnifications signed for the year ended December 31, 2025 for $ 1.3 million, and 4 indemnification signed for the year ended December 31, 2024 for $ 1.2 million. A repurchase reserve of $ 510 thousand was recorded at December 31, 2025, as compared to $ 500 thousand as of December 31, 2024. There was 2 loan repurchased for the year ended December 31, 2025 with a total unpaid principal balance of $ 720 thousand, as compared to 5 loans repurchased for the year ended December 31, 2024 with an unpaid principal balance of $ 1.1 million. (18) Regulatory Matters The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet the minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk-weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets, and of Tier 1 capital to average assets. Management believes, as of December 31, 2025, that the Bank met all capital adequacy requirements to which it is subject. Community banks have long raised concerns with bank regulators about the regulatory burden, complexity, and costs associated with certain provisions of the Basel III Rule. In response, Congress provided an “off-ramp” for institutions, like us, with total consolidated assets of less than $10 billion. Section 201 of the Regulatory Relief Act instructed the federal banking regulators to establish a single CBLR of between 8% and 10%. Under the Community Bank Leverage Ratio framework, a community banking organization that is less than $10 billion in total consolidated assets, and has limited amounts of certain assets and off-balance sheet exposures, and a CBLR greater than 9% can elect to report a single regulatory capital ratio. The Corporation has elected to be measured under this framework for Bank capital adequacy and had ratios of 9.50 % and 9.21 % at December 31, 2025 and December 31, 2024, respectively. The Corporation is exempt from CBLR. As of December 31, 2025, the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank’s category. The Bank is subject to certain restrictions on the amount of dividends that it may declare and pay to the Corporation due to regulatory considerations. The Pennsylvania Banking Code provides that cash dividends may be declared and paid only out of accumulated net earnings. The Banks’s actual and required capital amounts and ratios under the CBLR rules at December 31, 2025 and 2024 are presented below. 82 Bank Well-capitalized minimum December 31, 2025 December 31, 2024 Tier 1 leverage ratio (CBLR) 9.50 % 9.21 % 5.00 % Common tier 1 risk-based capital ratio 10.66 % 10.33 % 6.50 % Tier 1 risk-based capital ratio 10.66 % 10.33 % 8.00 % Total risk-based capital ratio 11.65 % 11.20 % 10.00 % ​ (19) Fair Value Measurements and Disclosures The Corporation uses fair value measurements to record fair value adjustments to certain assets and liabilities. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Corporation’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation techniques or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions. In accordance with this guidance, the Corporation groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 – Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation. Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis. Securities The fair value of securities available-for-sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. The fair value of certain other securities available-for-sale (carried at fair value) are based on quoted prices obtained from dealers or brokers in active over-the-counter markets (Level 1). Mortgage Loans Held for Sale The fair value of loans held for sale is based on secondary market prices. Mortgage Loans Held for Investment The fair value of mortgage loans held for investment is based on the price secondary markets are currently offering for similar loans using observable market data. Derivative Financial Instruments The fair values of forward commitments and interest rate swaps are based on market pricing and therefore are considered Level 2. Derivatives classified as Level 3 consist of interest rate lock commitments related to mortgage loan commitments. The determination of fair value includes assumptions related to the likelihood that a commitment will ultimately result in a closed loan, which is a significant unobservable assumption. A significant increase or decrease in the external market price would result in a significantly higher or lower fair value measurement. 83 The following table presents the fair value of financial assets measured at fair value on a recurring basis by level within the fair value hierarchy at the dates indicated : December 31, 2025 (dollars in thousands) Total Level 1 Level 2 Level 3 Assets Securities available for sale: U.S. asset backed securities $ 26,217 $ — $ 26,217 $ — U.S. government agency MBS 22,351 — 22,351 — U.S. government agency CMO 66,131 — 66,131 — State and municipal securities 40,032 — 40,032 — U.S. Treasuries 16,206 16,206 — — Non-U.S. government agency CMO 8,606 — 8,606 — Corporate bonds 13,914 — 13,914 — Equity investments 2,166 — 2,166 — Mortgage loans held for sale 33,762 — 33,762 — Mortgage loans held for investment 14,396 — 14,396 — Interest rate lock commitments 402 — — 402 Customer derivatives - interest rate swaps 1,909 — 1,909 — Fair Value Hedge 21 — 21 — Total $ 246,112 $ 16,206 $ 229,504 $ 402 Liabilities Interest rate lock commitments $ 13 $ — $ — $ 13 Forward commitments 32 — — 32 Customer derivatives - interest rate swaps 1,929 — 1,929 — Customer derivatives - Risk Participation Agreements 23 — 23 — Interest rate swaps 281 — 281 — Total $ 2,278 $ — $ 2,233 $ 45 December 31, 2024 (dollars in thousands) Total Level 1 Level 2 Level 3 Assets Securities available for sale: U.S. asset backed securities $ 29,844 $ — $ 29,844 $ — U.S. government agency MBS 20,871 — 20,871 — U.S. government agency CMO 45,613 — 45,613 — State and municipal securities 36,696 — 36,696 — U.S. Treasuries 15,450 15,450 — — Non-U.S. government agency CMO 11,729 — 11,729 — Corporate bonds 14,101 — 14,101 — Equity investments 2,086 — 2,086 — Mortgage loans held for sale 32,413 — 32,413 — Mortgage loans held for investment 14,501 — 14,501 — Interest rate lock commitments 216 — — 216 Forward commitments 30 — 30 — Customer derivatives - interest rate swaps 2,755 — 2,755 — Fair Value Hedge 3 — 3 — Interest rate swaps 9 — 9 — Total $ 226,317 $ 15,450 $ 210,651 $ 216 Liabilities Interest rate lock commitments $ 35 $ — $ — $ 35 Customer derivatives - interest rate swaps 2,745 — 2,745 — Customer derivatives - Risk Participation Agreements 91 — 91 — Interest rate swaps 61 — 61 — Total $ 2,932 $ — $ 2,897 $ 35 84 The following table presents assets measured at fair value on a nonrecurring basis at the dates indicated: (dollars in thousands) December 31, 2025 December 31, 2024 Mortgage servicing rights $ 86 $ 1,124 SBA loan servicing rights 3,846 3,258 OREO and other repossessed assets 5,997 276 Individually evaluated loans (1) Commercial and industrial — 1,944 Construction 4,430 — Small business loans 3,745 2,284 Total $ 18,103 $ 8,886 (1) Individually evaluated loans are those in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral. The following table details the valuation techniques for Level 3 collateral dependent loans. (dollars in thousands) December 31, 2025 Financial Instrument Fair Value Valuation Technique Unobservable Input Range of Inputs Weighted Average OREO and other repossessed assets $ 5,997 Appraisal of collateral Costs to sell 6 % - 13 % discount 10 % Individually evaluated loans 8,175 Appraisal of collateral Costs to sell 2 %- 48 % discount 24 % (dollars in thousands) December 31, 2024 Financial Instrument Fair Value Valuation Technique Unobservable Input Range of Inputs Weighted Average OREO and other repossessed assets $ 276 Appraisal of collateral Costs to sell NM NM Individually evaluated loans 4,228 Appraisal of collateral Costs to sell 2 %- 33 % discount 12 % Below is management’s estimate of the fair value of all financial instruments, whether carried at cost or fair value on the Corporation’s balance sheet. The following information should not be interpreted as an estimate of the fair value of the entire Corporation since a fair value calculation is only provided for a limited portion of the Corporation’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Corporation’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair value of the Corporation’s financial instruments: Cash and Cash Equivalents The carrying amounts reported in the balance sheet for cash and short-term instruments approximate those assets’ fair values. Loans Receivable The fair value of loans receivable is estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair value below is reflective of an exit price. Servicing Assets The Corporation estimates the fair value of mortgage servicing rights and SBA loan servicing rights using discounted cash flow models that calculate the present value of estimated future net servicing income. The model uses readily available prepayment speed assumptions for the interest rates of the portfolios serviced. These servicing rights are classified within Level 3 in the fair value hierarchy based upon management’s assessment of the inputs. The Corporation reviews the servicing rights portfolios on a quarterly basis for impairment. Other Real Estate Owned Other real estate owned (“OREO”) consists of loan collateral which has been repossessed through foreclosure or other measures. Initially, foreclosed assets are recorded at the fair value of the collateral less estimated selling costs. Subsequent to foreclosure, valuations are updated periodically and the assets may be marked down further, reflecting a new cost basis. The fair value of OREO was estimated using Level 3 inputs based on appraisals, letters of intent or agreement of sale received from third parties. Repossessed Assets Repossessed assets represents non-real estate assets that the Corporation has acquired by taking possession of the asset that collateralized a loan or lease. The Corporation reports repossessed assets at the fair value less cost to sell, adjusted periodically based on a current appraisal provided by a third party based on their assumptions and quoted market prices for similar assets, when available. 85 Write-downs and any gain or loss upon the sale of repossessed assets is recorded in other noninterest income. The fair value of repossessed assets was estimated using Level 3 inputs based on appraisals, letters of intent or agreement of sale received from third parties. Individually Evaluated Loans Individually evaluated loans are those in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third party appraisals of the properties, or discounted cash flows based upon the expected proceeds. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. Individually evaluated loans are evaluated on a quarterly basis for additional impairment and adjusted in accordance with the ACL policy. Accrued Interest Receivable and Payable The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value. Deposit Liabilities The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits. Short-Term Borrowings The carrying amounts of short-term borrowings approximate their fair values. Long-Term Debt Fair values of FHLB advances and the acquisition purchase note payable are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity. These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party. Subordinated Debt Fair values of junior subordinated debt are estimated using discounted cash flow analysis, based on market rates currently offered on such debt with similar credit risk characteristics, terms and remaining maturity. Off-Balance Sheet Financial Instruments Off-balance sheet instruments are primarily comprised of loan commitments, which are generally priced at market at the time of funding. Fees on commitments to extend credit and stand-by letters of credit are deemed to be immaterial and these instruments are expected to be settled at face value or expire unused. It is impractical to assign any fair value to these instruments and as a result they are not included in the table below. Fair values assigned to the notional value of interest rate lock commitments and forward sale contracts are based on market quotes. Derivative Financial Instruments The fair value of forward commitments and interest rate swaps is based on market pricing and therefore are considered Level 2. Derivatives classified as Level 3 consist of interest rate lock commitments related to mortgage loan commitments. The determination of fair value includes assumptions related to the likelihood that a commitment will ultimately result in a closed loan, which is a significant unobservable assumption. A significant increase or decrease in the external market price would result in a significantly higher or lower fair value measurement. The following table presents the estimated fair values of the Corporation’s financial instruments at the dates indicated: December 31, 2025 December 31, 2024 (dollars in thousands) Fair Value Hierarchy Level Carrying amount Fair value Carrying amount Fair value Financial assets: Cash and cash equivalents Level 1 $ 35,778 $ 35,778 $ 27,462 $ 27,462 Mortgage loans held for sale Level 2 33,762 33,762 32,413 32,413 Loans and other finance receivables, net of ACL Level 3 2,134,630 2,108,242 1,997,498 1,967,986 Mortgage loans held for investment Level 2 14,396 14,396 14,501 14,501 Financial liabilities: Deposits Level 2 $ 2,158,128 $ 2,179,800 $ 2,005,368 $ 2,014,200 Borrowings Level 2 117,338 117,700 124,471 133,200 Subordinated debentures Level 2 49,853 49,597 49,743 48,752 86 The following table includes a rollforward of interest rate lock commitments for which the Corporation utilized Level 3 inputs to determine fair value on a recurring basis for the periods indicated. Year Ended December 31, (dollars in thousands) 2025 2024 Balance at beginning of the period $ 216 $ 214 Increase in value 186 2 Balance at end of the period $ 402 $ 216 The following table details the valuation techniques for Level 3 interest rate lock commitments. (dollars in thousands) Fair Value Valuation Technique Unobservable Input Range of Inputs Weighted Average December 31, 2025 $ 402 Market comparable pricing Pull through 1 % - 99 % 85.31 % December 31, 2024 216 Market comparable pricing Pull through 1 % - 99 % 83.27 % (20) Derivative Financial Instruments Risk Management Objective of Using Derivatives The Corporation is exposed to certain risk arising from both its business operations and economic conditions. The Corporation principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Corporation manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Corporation enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Corporation’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Corporation’s known or expected cash receipts and its known or expected cash payments principally related to the Corporation’s loan portfolio. Interest Rate Swaps The Corporation uses interest rate swap agreements to modify interest rate characteristics from variable to fixed or fixed to variable in order to reduce the impact of interest rate changes on future net interest income. The Corporation’s credit exposure on interest rate swaps includes changes in fair value and any collateral that is held by a third party. In June 2023, the Corporation entered into three interest rate swaps classified as cash flow hedges with notional amounts of $ 25 million each, to hedge the interest payments received on short term borrowings. Under the terms of the three swap agreements, the Corporation pays average fixed rates of 4.070 %, 4.027 % and 4.117 %, and receives variable rates in return indexed to SOFR. The swaps mature between May, June, and December 2026. The Corporation performed an assessment of the hedge for effectiveness at the inception of the hedge and performs an assessment on a recurring basis and determined that the derivative currently is and is expected to be highly effective in offsetting changes in cash flows of the hedged item. For the years ended December 31, 2025 and 2024, $ 167 thousand and $ 431 thousand, net of tax, are recorded in total comprehensive income as unrealized losses and unrealized gains, respectively. This amount could differ from amounts actually recognized due to changes in interest rates, hedge de-designations and the addition of other hedges subsequent to December 31, 2025. As of December 31, 2025 and 2024, the combined notional amount of the interest rate swaps was $ 75 million in each period and the fair value was a liability of $ 281 thousand and $ 52 thousand, respectively. In August 2024 the Corporation entered into an interest rate swap classified as a fair value hedge with a notional amount of $ 40 million, to hedge the interest payments received on a pool of residential mortgage loans held in portfolio. Under the terms of the swap agreement, the Corporation pays an average fixed rate of 3.60 % and receives a variable rate in return indexed to SOFR. The swap matures August 2027. The Corporation performed an assessment of the hedge for effectiveness at the inception of the hedge and performs an assessment on a recurring basis and determined that the derivative currently is and is expected to be highly effective in offsetting changes in fair value of the hedged item. For the years ended December 31, 2025 and 2024, approximately $ 18 thousand and $ 3 thousand, respectively and net of tax, is recorded as fair value adjustments. These amounts could differ from amounts actually recognized due to changes in interest rates, hedge de-designations and the addition of other hedges subsequent to December 31, 2025. Mortgage Banking Derivatives In connection with its mortgage banking activities, the Corporation enters into commitments to originate certain fixed rate residential mortgage loans for customers, also referred to as interest rate locks. In addition, the Corporation may enter into forward commitments for the future sales or purchases of mortgage-backed securities to or from third-party counterparties to hedge the effect of changes in interest rates on the values of both the interest rate locks and mortgage loans held for sale. Forward sales commitments may also be in 87 the form of commitments to sell individual mortgage loans or interest rate locks at a fixed price at a future date. The amount necessary to settle each interest rate lock is based on the price that secondary market investors would pay for loans with similar characteristics, including interest rate and term, as of the date fair value is measured. Interest rate lock commitments and forward commitments are recorded within other assets/liabilities on the consolidated balance sheets, with changes in fair values during the period recorded within net change in the fair value of derivative instruments on the consolidated statements of income. Customer Derivatives Derivatives not designated as hedges are not speculative and result from a service the Corporation provides to certain customers to swap a fixed rate product for a variable rate product, or vice versa. The Corporation executes interest rate derivatives with commercial banking customers to facilitate their respective risk management strategies. Those interest rate derivatives are simultaneously hedged by offsetting derivatives that the Corporation executes with a third party, such that the Corporation minimizes its net interest rate risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings. The following table presents a summary of notional amounts and fair values of derivative financial instruments at the dates indicated: December 31, 2025 December 31, 2024 (dollars in thousands) Balance Sheet Line Item Notional Amount Asset (Liability) Fair Value Notional Amount Asset (Liability) Fair Value Interest Rate Lock Commitments Positive fair values Other assets $ 40,370 $ 402 $ 35,820 $ 216 Negative fair values Other liabilities 2,735 ( 13 ) 9,049 ( 35 ) Total $ 43,105 $ 389 $ 44,869 $ 181 Forward Commitments Positive fair values Other assets $ — $ — $ 4,250 $ 30 Negative fair values Other liabilities 8,000 ( 32 ) 500 — Total $ 8,000 $ ( 32 ) $ 4,750 $ 30 Customer Derivatives - Interest Rate Swaps Positive fair values Other assets $ 53,954 $ 1,909 $ 47,676 $ 2,755 Negative fair values Other liabilities 53,954 ( 1,929 ) 47,676 ( 2,745 ) Total $ 107,908 $ ( 20 ) $ 95,352 $ 10 Customer Derivatives - Risk Participation Agreements Positive fair values Other assets $ — $ — $ — $ — Negative fair values Other liabilities 24,166 ( 23 ) 7,382 ( 91 ) Total $ 24,166 $ ( 23 ) $ 7,382 $ ( 91 ) Fair Value Hedge Positive fair values Other assets $ 40,000 $ 21 $ 40,000 $ 3 Negative fair values Other liabilities — — — — Total $ 40,000 $ 21 $ 40,000 $ 3 Interest Rate Swaps Positive fair values Other assets $ — $ — $ 25,000 $ 9 Negative fair values Other liabilities 75,000 ( 281 ) 50,000 ( 61 ) Total $ 75,000 $ ( 281 ) $ 75,000 $ ( 52 ) Total derivative financial instruments $ 298,179 $ 54 $ 267,353 $ 81 Interest rate lock commitments are considered Level 3 in the fair value hierarchy, while the forward commitments and interest rate swaps are considered Level 2 in the fair value hierarchy. 88 The following table presents a summary of the fair value (losses) gains on derivative financial instruments: Year Ended December 31, (dollars in thousands) 2025 2024 Interest Rate Lock Commitments $ 208 $ ( 16 ) Forward Commitments ( 62 ) 71 Customer Derivatives - Interest Rate Swaps ( 30 ) 26 Customer Derivatives - Risk Participation Agreements 257 ( 51 ) Net change in the fair value of derivative instruments $ 373 $ 30 Net realized activity on derivative hedging activities were losses of $ 151 thousand and gains of $ 87 thousand for the years ended December 31, 2025 and 2024, respectively, and are included in non-interest income in the consolidated statements of income. (21) Segments The Corporation’s reportable segments are determined by the Chief Executive Officer, who is designated as the chief operating decision maker, based upon information provided about the Corporation’s products and services offered, primarily distinguished between banking, wealth management, and mortgage banking operations. They are also distinguished by the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business, which are then aggregated if operating performance, products/services, and customers are similar. The chief operating decision maker evaluates the financial performance of the Corporation’s business components such as by evaluating revenue streams, significant expenses, and budget to actual results in assessing the performance of the Corporation’s segments and in the determination of allocating resources. The chief operating decision maker uses revenue streams to evaluate product pricing and significant expenses to assess performance of each segment. All operations are domestic. Our Banking segment (“Bank”) consists of commercial and consumer banking. Segment income before income taxes is used to assess the performance of the banking segment by monitoring the margin between interest income and interest expense. The Banking segment generates interest income from its lending and investing activities and is dependent on the gathering of deposits from its branch network or borrowed funds from other sources for funding its loans, resulting in the generation of net interest income. The Banking segment also derives revenues from other sources including gains on the sale of SBA loans, sales of available for sale investment securities, service charges on deposit accounts, cash sweep fees, overdraft fees, BOLI income, title insurance fees, and other less significant non-interest income. Interest expense, provisions for credit losses, and payroll provide the significant expenses in the banking operation. Meridian Wealth (“Wealth”), a registered investment advisor and wholly-owned subsidiary of the Bank, provides a comprehensive array of wealth management services and products and the trusted guidance to help its clients and our banking customers prepare for the future. Segment income before income taxes is used to assess the performance of the wealth segment by monitoring the generation of wealth management income as the wealth segment generates non-interest income through advisory fees. The cost of marketing, business development, and payroll provide the significant expenses in wealth. Meridian’s mortgage banking segment (“Mortgage”) consists of 7 loan production offices throughout suburban Philadelphia and Maryland. Segment income before income taxes is used to assess the performance of the mortgage banking segment by monitoring the gains received on loan sales. The Mortgage segment originates 1 – 4 family residential mortgages and sells nearly all of its production to third party investors. The unit generates net interest income on the loans it originates and holds temporarily, then earns fee income (primarily gain on sales) at the time of the sale. The unit also recognizes income from document preparation fees, changes in portfolio pipeline fair values and related net hedging gains (losses). The cost of loans sales and payroll provide the significant expenses in mortgage banking. The table below summarizes income and expenses, directly attributable to each business line, which has been included in the statement of operations. Total assets for each segment is also provided. Segment Information Year Ended December 31, 2025 Year Ended December 31, 2024 (dollars in thousands) Bank Wealth Mortgage Total Bank Wealth Mortgage Total Interest income $ 164,474 $ — $ 1,840 $ 166,314 $ 153,809 $ — $ 2,218 $ 156,027 Interest expense 77,295 ( 176 ) 1,517 78,636 83,103 ( 146 ) 2,074 85,031 Net interest income 87,179 176 323 87,678 70,706 146 144 70,996 Provision for loan losses 15,152 — — 15,152 11,400 — — 11,400 Net interest income after provision 72,027 176 323 72,526 59,306 146 144 59,596 Non-interest Income: Mortgage banking income 185 — 20,598 20,783 188 — 20,856 21,044 Wealth management income — 6,316 — 6,316 1 5,734 — 5,735 SBA income 5,452 — — 5,452 3,458 — — 3,458 89 Gain on sale of MSRs 20 — 383 403 — — 3,992 3,992 Net loss on sale of loans ( 434 ) — — ( 434 ) 15 — — 15 Net change in fair values 228 — 1,114 1,342 ( 23 ) — 242 219 Net gain on hedging activity ( 1 ) — ( 150 ) ( 151 ) 1 — ( 88 ) ( 87 ) Other 4,798 — 671 5,469 3,936 1 3,026 6,963 Non-interest income 10,248 6,316 22,616 39,180 7,576 5,735 28,028 41,339 Non-interest expense: Salaries and employee benefits 31,385 2,928 16,967 51,280 27,891 2,252 17,125 47,268 Occupancy and equipment 3,154 29 1,393 4,576 3,307 237 2,432 5,976 Professional fees 3,556 174 365 4,095 3,598 40 1,129 4,767 Data processing and software 5,342 175 1,514 7,031 4,577 169 1,398 6,144 Advertising and promotion 3,000 409 468 3,877 2,465 362 466 3,293 Pennsylvania bank shares tax 999 17 — 1,016 953 19 — 972 Other 9,851 423 1,155 11,429 8,793 427 1,509 10,729 Non-interest expense 57,287 4,155 21,862 83,304 51,584 3,506 24,059 79,149 Income before income taxes $ 24,988 $ 2,337 $ 1,077 $ 28,402 $ 15,298 $ 2,375 $ 4,113 $ 21,786 Total Assets $ 2,484,836 $ 13,059 $ 64,100 $ 2,561,995 $ 2,337,092 $ 10,893 $ 37,882 $ 2,385,867 (22) Parent Company Financial Statements The condensed financial statements of the Corporation (parent company only) are presented below. These statements should be read in conjunction with the notes to the consolidated financial statements. Condensed Balance Sheets (dollars in thousands, except share data) December 31, 2025 December 31, 2024 Assets: Cash and due from banks $ 5,240 $ 3,028 Investments in subsidiaries 243,943 219,119 Other assets 1,600 4,083 Total assets $ 250,783 $ 226,230 Liabilities: Short-term borrowing $ 1,500 $ 5,000 Subordinated debentures 49,238 49,115 Accrued interest payable 318 320 Other liabilities 11 273 Total liabilities $ 51,067 $ 54,708 Stockholders’ equity: Common stock, $ 1 par value: 25,000,000 shares authorized; 13,829,645 and 13,243,258 shares issued, respectively; and 11,826,462 and 11,240,075 shares outstanding, respectively. 13,830 13,243 Surplus 90,352 81,545 Treasury Stock - 2,003,183 and 2,003,183 shares, respectively, at cost ( 26,079 ) ( 26,079 ) Unearned common stock held by employee stock ownership plan ( 1,232 ) ( 1,006 ) Retained earnings 128,124 111,961 Accumulated other comprehensive income ( 5,279 ) ( 8,142 ) Total stockholders’ equity $ 199,716 $ 171,522 Total liabilities and stockholders’ equity $ 250,783 $ 226,230 90 Condensed Statements of Income Year Ended December 31, (dollars in thousands) 2025 2024 Dividends from Bank $ 10,164 $ 6,404 Other income 163 494 Total operating income 10,327 6,898 Interest expense 4,412 3,136 Other expense 1,421 982 Income before equity in undistributed income of subsidiaries 4,494 2,780 Equity in undistributed income of subsidiaries 16,100 12,753 Income before income taxes 20,594 15,533 Income tax benefit ( 1,242 ) ( 813 ) Net income 21,836 16,346 Total other comprehensive income 2,863 1,280 Total comprehensive income $ 24,699 $ 17,626 Condensed Statements of Cash Flows Year Ended December 31, (dollars in thousands) 2025 2024 Cash flows from operating activities: Net Income $ 21,836 $ 16,346 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Equity in undistributed income of subsidiaries ( 16,100 ) ( 12,753 ) Share-based compensation 1,189 976 Amortization of issuance costs on subordinated debt 123 123 Increase (decrease) in accrued interest payable ( 2 ) 100 Other, net 740 ( 4,262 ) Net cash provided by operating activities 7,786 530 Cash flows from investing activities: Investment in subsidiaries ( 4,380 ) — Net cash used in investing activities ( 4,380 ) — Cash flows from financing activities: Increase (decrease) in short-term borrowings ( 3,500 ) 5,000 Dividends paid ( 5,673 ) ( 5,601 ) Shares purchased for ESOP plan ( 425 ) — Share based awards and exercises 885 499 Proceeds from issuance of common stock 7,519 — Net cash (used in) provided by financing activities ( 1,194 ) ( 102 ) Net change in cash and cash equivalents 2,212 428 Cash and cash equivalents at beginning of period 3,028 2,600 Cash and cash equivalents at end of period $ 5,240 $ 3,028 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures None. 91