What changed in this filing

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Item 1. Financial Statements

2025-08-07 compared with 2025-05-08 · 182 added, 132 removed, 936 unchanged (25% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

($ in thousands, except per share data) March 31, 2025 December 31, 2024

($ in thousands, except per share data) June 30, 2025 December 31, 2024

ASSETS (Unaudited)

3 unchanged sentences

Investment securities:

Available for sale, at fair value (amortized cost of $ 187,862 and $ 159,593 at March 31, 2025 and December 31, 2024, respectively)

Available for sale, at fair value (amortized cost of $ 195,389 and $ 159,593 at June 30, 2025 and December 31, 2024, respectively)

187,679 149,212

Held to maturity, net of allowance for credit losses of $ 178 and $ 203 (fair value of $ 421,428 and $ 424,734 at March 31, 2025 and December 31, 2024, respectively)

Held to maturity, net of allowance for credit losses of $ 199 and $ 203 (fair value of $ 414,699 and $ 424,734 at June 30, 2025 and December 31, 2024, respectively)

459,246 481,077

8 unchanged sentences

Other intangible assets, net 33,761 38,311

Mortgage servicing rights, at fair value 5,535 5,874

Mortgage servicing rights 5,396 5,874

Right-of-use assets 11,052 11,385

8 unchanged sentences

Time deposits 1,273,285 1,181,561

Brokered deposits 10,806 —

Total deposits 5,313,958 5,528,336

10 unchanged sentences

shares authorized 50,000,000 ;

shares issued and outstanding 33,374,265 and 33,332,177 at March 31, 2025 and December 31, 2024, respectively

shares issued and outstanding 33,374,265 and 33,332,177 at June 30, 2025 and December 31, 2024, respectively

Additional paid in capital 359,063 358,112

6 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in thousands, except per share data) 2025 2024 2025 2024

19 unchanged sentences

Interchange credits 1,788 1,717 3,365 3,304

Title Company revenue 117 78

Other noninterest income 2,690 2,351 4,538 4,289

21 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in thousands) 2025 2024 2025 2024

16 unchanged sentences

Balances, March 31, 2025 333 358,572 199,898 ( 6,333 ) 552,470

Net income — — 15,507 — 15,507

Other comprehensive loss — — — 730 730

Stock-based compensation 1 491 — — 492

Cash dividends declared — — ( 4,005 ) — ( 4,005 )

Balances, June 30, 2025 $ 334 $ 359,063 $ 211,400 $ ( 5,603 ) $ 565,194

SHORE BANCSHARES, INC.

9 unchanged sentences

Balances, March 31, 2024 332 356,464 166,490 ( 8,058 ) 515,228

Net income — — 11,234 — 11,234

Other comprehensive loss — — — ( 202 ) ( 202 )

Common shares issued for employee stock purchase plan 1 120 — — 121

Stock-based compensation — 410 — — 410

Cash dividends declared — — ( 4,008 ) — ( 4,008 )

Balances, June 30, 2024 $ 333 $ 356,994 $ 173,716 $ ( 8,260 ) $ 522,783

See accompanying notes to unaudited consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Three Months Ended March 31,

Six Months Ended June 30,

($ in thousands) 2025 2024

17 unchanged sentences

Loss on disposal of premises held for sale 61 —

Valuation adjustments on premises transferred to held for sale — 2

Fair value adjustment on equity securities ( 106 ) 84

9 unchanged sentences

Proceeds from maturities and principal payments of held to maturity securities 23,899 19,291

Proceeds from life insurance death benefits — 150

Purchases of available for sale securities ( 48,171 ) ( 81,904 )

Purchases of held to maturity securities ( 2,326 ) ( 5,800 )

Purchases of equity securities ( 90 ) ( 80 )

10 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - Continued

Three Months Ended March 31,

Six Months Ended June 30,

($ in thousands) 2025 2024

3 unchanged sentences

Interest-bearing deposits ( 227,461 ) ( 567,238 )

Short-term borrowings — 31,000

Long-term borrowings — 50,000

Common stock dividends paid ( 8,037 ) ( 7,992 )

9 unchanged sentences

Transfers from loans to repossessed assets 947 1,845

Transfer from loans held for sale to loans held for investment 649 —

Unrealized gains (losses) on available for sale securities 2,671 ( 1,054 )

Unsettled securities transaction — 14,083

Transfer of premises to held for sale (included in other assets) — 1,387

See accompanying notes to unaudited consolidated financial statements.

16 unchanged sentences

Mid-Maryland Title Company, Inc.

(the “Title Company”), engages in title work related to real estate transactions.

(the “Title Company”), engaged in title work related to real estate transactions.

The Title Company ceased conducting real estate closings effective March 31, 2025.

19 unchanged sentences

Note 2 – Investment Securities

The following tables provide information on the amortized cost and estimated fair values of investment securities at March 31, 2025 and December 31, 2024.

The following tables provide information on the amortized cost and estimated fair values of investment securities at June 30, 2025 and December 31, 2024.

($ in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

Available for sale securities (1) :

March 31, 2025

June 30, 2025

Treasury and government agency securities $ 22,593 $ 3 $ 2,074 $ 20,522

10 unchanged sentences

____________________________________

(1) No available for sale (“AFS”) securities were sold during the three months ended March 31, 2025 and 2024.

(1) No available for sale (“AFS”) securities were sold during the three and six months ended June 30, 2025 and 2024.

(2) Other debt securities includes corporate and municipal bond obligations of state and political entities.

1 unchanged sentence

Held to maturity securities:

March 31, 2025

June 30, 2025

Treasury and government agency securities $ 129,269 $ 3 $ 6,253 $ 123,019 $ —

11 unchanged sentences

(1) Other debt securities includes corporate and municipal bond obligations of state and political entities.

Equity securities with aggregate fair values of $ 5.9 million and $ 5.8 million at March 31, 2025 and December 31, 2024, respectively, are presented separately on the consolidated balance sheets.

The fair value adjustments recorded through earnings totaled a gain of $ 131 thousand for the three months ended March 31, 2025 and a loss of $ 22 thousand for the three months ended March 31, 2024.

Equity securities with aggregate fair values of $ 6.0 million and $ 5.8 million at June 30, 2025 and December 31, 2024, respectively, are presented separately on the consolidated balance sheets.

The fair value adjustments recorded through earnings totaled a gain of $ 65 thousand and $ 18 thousand for the three months ended June 30, 2025 and 2024, respectively.

The fair value adjustments recorded through earnings totaled a gain of $ 196 thousand and a loss of $ 171 thousand for the six months ended June 30, 2025 and 2024, respectively.

The following table summarizes the activity in the allowance for credit losses (“ACL”) on held to maturity (“HTM”) securities for the periods presented.

Three Months Ended

($ in thousands) March 31, 2025 March 31, 2024

Three Months Ended Six Months Ended

($ in thousands) June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Balance, beginning of period $ 178 $ 116 $ 203 $ 94

1 unchanged sentence

Balance, end of period $ 199 $ 108 $ 199 $ 108

A reversal of the provision for credit losses of $ 25 thousand and a provision for credit losses of $ 22 thousand was recorded on HTM corporate and municipal bonds for the three months ended March 31, 2025 and 2024.

The following tables provide information about gross unrealized losses and fair value by length of time that the individual securities have been in a continuous unrealized loss position at March 31, 2025 and December 31, 2024.

A provision for credit losses of $ 21 thousand and a reversal of the provision for credit losses of $ 8 thousand was recorded on HTM corporate and municipal bonds for the three months ended June 30, 2025 and 2024, respectively.

A reversal of the provision for credit losses of $ 4 thousand and a provision for credit losses of $ 14 thousand was recorded on HTM corporate and municipal bonds for the six months ended June 30, 2025 and 2024, respectively.

Less than 12 Months More than 12 Months Total

($ in thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses

March 31, 2025

June 30, 2025

Available for sale securities:

11 unchanged sentences

Total $ 57,120 $ 710 $ 68,192 $ 10,228 $ 125,312 $ 10,938

There were 115 AFS debt securities with a fair value below the amortized cost basis, with unrealized losses totaling $ 9.3 million as of March 31, 2025.

The Company concluded that a credit loss does not exist in its AFS securities portfolio as of March 31, 2025, and no impairment loss has been recognized based on the fact that (1) changes in fair value were primarily caused by fluctuations in interest rates, (2) securities with unrealized losses had generally high credit quality, (3) the Company intends to hold these investments in debt securities to maturity and it is more-likely-than-not the Company will not be required to sell these investments before a recovery of its investment, and (4) issuers have continued to make timely payments of principal and interest.

There were 118 AFS debt securities with a fair value below the amortized cost basis, with unrealized losses totaling $ 8.3 million as of June 30, 2025.

The Company concluded that a credit loss does not exist in its AFS securities portfolio as of June 30, 2025, and no impairment loss has been recognized based on the fact that (1) changes in fair value were primarily caused by fluctuations in interest rates, (2) securities with unrealized losses had generally high credit quality, (3) the Company intends to hold these investments in debt securities to maturity and it is more-likely-than-not the Company will not be required to sell these investments before a recovery of its investment, and (4) issuers have continued to make timely payments of principal and interest.

Additionally, the Company’s mortgage-backed securities are issued by either U.S.

3 unchanged sentences

government, that investors in such mortgage-backed securities will receive timely principal and interest payments.

All HTM and AFS securities were current with no securities past due or on nonaccrual as of March 31, 2025 and December 31, 2024.

All HTM and AFS securities were current with no securities past due or on nonaccrual as of June 30, 2025 and December 31, 2024.

All of the securities with unrealized losses in the portfolio have modest duration risk, low credit risk and minimal losses when compared to total amortized cost.

1 unchanged sentence

Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell these securities before recovery of their amortized cost bases, which may be at maturity for debt securities, the Company considers the unrealized losses to be temporary.

There were 115 AFS and 184 HTM securities in an unrealized loss position at March 31, 2025.

There were 118 AFS and 181 HTM securities in an unrealized loss position at June 30, 2025.

There were 111 AFS and 187 HTM securities in an unrealized loss position at December 31, 2024.

Net unrealized losses of the AFS securities totaled $ 8.7 million and $ 10.4 million as of March 31, 2025 and December 31, 2024, respectively.

The following table provides information on the amortized cost and estimated fair values of investment securities by contractual maturity date at March 31, 2025.

Net unrealized losses of the AFS securities totaled $ 7.7 million and $ 10.4 million as of June 30, 2025 and December 31, 2024, respectively.

The following table provides information on the amortized cost and estimated fair values of investment securities by contractual maturity date at June 30, 2025.

Available for Sale Held to Maturity

10 unchanged sentences

The Company has securities that have been pledged as collateral for obligations to federal, state and local government agencies, and other purposes as required or permitted by law, or sold under agreements to repurchase.

At March 31, 2025, the aggregate carrying value of pledged AFS and HTM pledged securities was $ 67.8 million and $ 214.6 million, respectively.

At June 30, 2025, the aggregate carrying value of pledged AFS and HTM pledged securities was $ 69.9 million and $ 213.0 million, respectively.

The comparable amounts for December 31, 2024 were $ 67.9 million and $ 197.5 million, respectively.

The following table sets forth the amortized cost and estimated fair values of securities that have been pledged as collateral for obligations to federal, state and local government agencies, and other purposes as required or permitted by law, or sold under agreements to repurchase at March 31, 2025 and December 31, 2024.

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

($ in thousands) Amortized Cost Fair Value Amortized Cost Fair Value

1 unchanged sentence

Pledged held to maturity securities 212,963 191,357 197,474 173,248

There were no obligations to any issuer exceeding 10% of stockholders’ equity at March 31, 2025 or December 31, 2024.

There were no obligations to any issuer exceeding 10% of stockholders’ equity at June 30, 2025 or December 31, 2024.

Note 3 – Loans and Allowance for Credit Losses

2 unchanged sentences

of the 2024 Annual Report.

The following table provides information about the principal classes of the loan portfolio at March 31, 2025 and December 31, 2024.

($ in thousands) March 31, 2025 % of Total Loans December 31, 2024 % of Total Loans

The following table provides information about the principal classes of the loan portfolio at June 30, 2025 and December 31, 2024.

($ in thousands) June 30, 2025 % of Total Loans December 31, 2024 % of Total Loans

Commercial real estate $ 2,603,974 53.95 % $ 2,557,806 53.60 %

5 unchanged sentences

Total loans 4,827,628 100.00 % 4,771,988 100.00 %

Allowance for credit losses on loans ( 58,042 ) ( 57,910 )

allowance for credit losses ( 58,483 ) ( 57,910 )

Total loans, net $ 4,769,145 $ 4,714,078

Loans are stated at their principal amount outstanding, net of any purchase premiums/discounts and deferred fees and costs.

Included in loans were deferred costs, net of fees, of $ 3.2 million and $ 3.2 million at March 31, 2025 and December 31, 2024, respectively.

At March 31, 2025 and December 31, 2024, loans included $ 1.64 billion and $ 1.69 billion, respectively, of aggregate loans that were acquired as part of the acquisitions of Severn Bancorp, Inc.

Included in loans were deferred costs, net of fees, of $ 3.0 million and $ 3.2 million at June 30, 2025 and December 31, 2024, respectively.

At June 30, 2025 and December 31, 2024, loans included $ 1.63 billion and $ 1.69 billion, respectively, of aggregate loans that were acquired as part of the acquisitions of Severn Bancorp, Inc.

(“Severn”) and The Community Financial Corporation (“TCFC”).

These balances were presented net of the related aggregate discounts, which totaled $ 88.1 million and $ 92.0 million at March 31, 2025 and December 31, 2024, respectively.

At March 31, 2025, the Bank was servicing $ 366.9 million in loans for the Federal National Mortgage Association and $ 115.4 million in loans for Federal Home Loan Mortgage Corporation.

The following tables provide information on amortized cost basis on nonaccrual loans by loan class as of March 31, 2025 and December 31, 2024.

These balances were presented net of the related aggregate discounts, which totaled $ 86.1 million and $ 92.0 million at June 30, 2025 and December 31, 2024, respectively.

At June 30, 2025, the Bank was servicing $ 232.9 million in loans for the Federal National Mortgage Association and $ 1,337.6 million in loans for Federal Home Loan Mortgage Corporation.

The following tables provide information on amortized cost basis on nonaccrual loans by loan class as of June 30, 2025 and December 31, 2024.

($ in thousands) Nonaccrual With No Allowance For Credit Loss Nonaccrual With An Allowance For Credit Loss Total Nonaccrual Loans

March 31, 2025

June 30, 2025

Nonaccrual loans:

19 unchanged sentences

($ in thousands) Nonaccrual Delinquent Loans Nonaccrual Current Loans Total Nonaccrual Loans

March 31, 2025

June 30, 2025

Nonaccrual loans:

21 unchanged sentences

Credit card loans are classified as performing and are typically charged off no later than 180 days past due when, or in the opinion of management, the collection of principal or interest is considered doubtful.

As of March 31, 2025, there w ere seven cred it cards that were evaluated based on economic conditions specific to the loans or borrowers, and were downgraded to substandard and nonperforming.

As of June 30, 2025, there w ere seven cred it cards that were evaluated based on economic conditions specific to the loans or borrowers, and were downgraded to substandard and nonperforming.

Loans subject to risk rating are graded on a scale of one to ten.

22 unchanged sentences

Rating 10 – Loss – Loss assets are uncollectible or of little value.

The following table provides information on loan risk ratings as of March 31, 2025 and gross write-offs during the three months ended March 31, 2025.

The following table provides information on loan risk ratings as of June 30, 2025 and gross write-offs during the six months ended June 30, 2025.

Term Loans by Origination Year Revolving Loans Revolving Converted to Term Loans Total

($ in thousands) Prior 2021 2022 2023 2024 2025

March 31, 2025

June 30, 2025

Commercial real estate

30 unchanged sentences

Total gross charge-offs $ ( 237 ) $ ( 99 ) $ ( 332 ) $ ( 96 ) $ ( 302 ) $ — $ ( 16 ) $ — $ ( 1,082 )

The following table presents the amortized cost in credit card loans based on performing status and gross charge-off as of March 31, 2025 and gross write-offs during the three months ended March 31, 2025.

The following table presents the amortized cost in credit card loans based on performing status and gross charge-off as of June 30, 2025 and gross write-offs during the six months ended June 30, 2025.

Nonperforming loans consisted of nonaccrual loans and loans past due 90 days or more and still accruing.

1 unchanged sentence

($ in thousands) Prior 2021 2022 2023 2024 2025

March 31, 2025

June 30, 2025

Performing $ — $ — $ — $ — $ — $ — $ 6,238 $ — $ 6,238

60 unchanged sentences

investment $ 1,195,244 $ 405,932 $ 764,538 $ 1,052,957 $ 634,525 $ 461,566 $ 239,292 $ 17,934 $ 4,771,988

The following tables provide information on the aging of the Company’s loan portfolio as of March 31, 2025 and December 31, 2024.

The following tables provide information on the aging of the Company’s loan portfolio as of June 30, 2025 and December 31, 2024.

($ in thousands) 30‑59 Days Past Due 60‑89 Days Past Due 90 Days Past Due and Still Accruing 30-89 Days Past Due and Not Accruing 90 Days Past Due and Not Accruing Total Past Due Current Accrual Loans Current Nonaccrual Loans Total

March 31, 2025

June 30, 2025

Commercial real estate $ 1,279 $ 126 $ — $ 2,234 $ 476 $ 4,115 $ 2,596,786 $ 3,073 $ 2,603,974

16 unchanged sentences

Percent of total loans 0.2 % 0.0 % 0.0 % 0.1 % 0.2 % 0.5 % 99.4 % 0.2 % 100.0 %

The following tables provide a summary of the activity in the ACL allocated by loan class for the three months ended March 31, 2025 and 2024.

The following tables provide a summary of the activity in the ACL allocated by loan class for the three and six months ended June 30, 2025 and 2024.

Allocation of a portion of the allowance to one loan class does not preclude its availability to absorb losses from other loan classes.

($ in thousands) Beginning Balance Charge-offs Recoveries Provisions Ending Balance

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

Commercial real estate $ 21,988 $ — $ — $ ( 1,809 ) $ 20,179

3 unchanged sentences

Consumer 6,574 ( 598 ) 55 157 6,188

Credit card 407 ( 242 ) — 225 390

Credit cards 390 ( 189 ) — 37 238

Total $ 58,042 $ ( 787 ) $ 138 $ 1,090 $ 58,483

($ in thousands) Beginning Balance Charge-offs Recoveries Provisions Ending

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Commercial real estate $ 23,013 $ — $ — $ ( 29 ) $ 22,984

3 unchanged sentences

Consumer 8,682 ( 861 ) 68 256 8,145

Credit card 220 ( 116 ) 8 87 199

Credit cards 199 ( 78 ) — 391 512

Total $ 57,336 $ ( 962 ) $ 76 $ 2,028 $ 58,478

($ in thousands) Beginning

Balance Charge-offs Recoveries Provisions Ending

Six Months Ended June 30, 2025

Commercial real estate $ 22,846 $ — $ 78 $ ( 2,745 ) $ 20,179

Residential real estate 21,776 — 3 1,424 23,203

Construction 2,854 — 1 2,950 5,805

Commercial 3,138 ( 2 ) 87 ( 353 ) 2,870

Consumer 6,889 ( 1,080 ) 141 238 6,188

Credit cards 407 ( 431 ) — 262 238

Total $ 57,910 $ ( 1,513 ) $ 310 $ 1,776 $ 58,483

($ in thousands) Beginning Balance Charge-offs Recoveries Provisions Ending

Six Months Ended June 30, 2024

Commercial real estate $ 23,015 $ — $ — $ ( 31 ) $ 22,984

Residential real estate 19,909 ( 1 ) 4 588 20,500

Construction 3,935 ( 12 ) 6 ( 458 ) 3,471

Commercial 2,671 ( 23 ) 3 215 2,866

Consumer 7,601 ( 1,386 ) 144 1,786 8,145

Credit cards 220 ( 194 ) 8 478 512

Total $ 57,351 $ ( 1,616 ) $ 165 $ 2,578 $ 58,478

The following tables present the amortized cost basis of collateral-dependent loans by loan portfolio segment.

March 31, 2025

June 30, 2025

($ in thousands) Real Estate Collateral Other Collateral Total

15 unchanged sentences

Modifications to borrowers experiencing financial difficulty may include interest rate reduction, principal or interest forgiveness, forbearance, term extensions, and other combinations of actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral.

During the three months ended March 31, 2025 and 2024, no loan modifications were made to borrowers experiencing financial difficulty.

During the three months ended March 31, 2025 and 2024, there were no defaults on loan modifications made to borrowers experiencing financial difficulty.

As of March 31, 2025, one loan modification balance with a borrower experiencing financial difficulty that was modified during the preceding 12 months was classified as current accrual and was for a $ 1.4 million commercial real estate loan.

During the three and six months ended June 30, 2025, nine loan modifications were made to borrowers experiencing financial difficulty.

During the three and six months ended June 30, 2024, zero loan modifications were made to borrowers experiencing financial difficulty.

During the three and six months ended June 30, 2025 and 2024, there were no defaults on loan modifications made to borrowers experiencing financial difficulty in the preceding 12 months.

As of June 30, 2025, nine loan modification balances with borrowers experiencing financial difficulty that were modified during the preceding 12 months were classified as current accrual and were for $ 6.6 million of commercial real estate loans.

Foreclosure Proceedings

There were $ 124 thousand of consumer mortgage loans collateralized by residential real estate property that were in the process of foreclosure as of March 31, 2025 and December 31, 2024.

There were $ 135 thousand of consumer mortgage loans collateralized by residential real estate property that were in the process of foreclosure as of June 30, 2025 and $ 124 thousand in December 31, 2024.

There were $ 93 thousand of commercial real estate loans collateralized by commercial real estate that were in the process of foreclosure as of June 30, 2025 and $ 554 thousand in December 31, 2024.

Other Real Estate Owned (“OREO”) and Repossessed Assets

1 unchanged sentence

Subsequently, foreclosed assets are carried at the lower of carrying value or fair value.

The Company had OREO and repossessed asset balances of $ 179 thousand and $ 2.4 million as of March 31, 2025 and $ 179 thousand and $ 3.3 million as of December 31, 2024, respectively.

The Company had OREO and repossessed asset balances of $ 179 thousand and $ 2.5 million as of June 30, 2025 and $ 179 thousand and $ 3.3 million as of December 31, 2024, respectively.

Mortgage Servicing Rights (“MSRs”)

Mortgage loans are sold with servicing retained and the MSRs are initially recorded at fair value with the income statement effect recorded in mortgage banking revenue.

The Company recognized a net servicing loss of $ 65 thousand and net servicing income of $ 88 thousand for the three months ended March 31, 2025 and 2024, respectively.

The following table presents activity in MSRs for the three months ended March 31, 2025.

($ in thousands) Three Months Ended March 31, 2025

Mortgage loans are sold with servicing retained and the MSRs are initially recorded at fair value with the income statement effect recorded in the income statement.

Subsequently the MSRs are amortized to the income statement in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

Servicing rights are evaluated for impairment based upon fair value of the rights as compared to carrying amount.

No impairment was recognized for the six months ended June 30, 2025.

The Company recognized net servicing income of $ 168 thousand and $ 418 thousand for the three months ended June 30, 2025 and 2024, respectively.

The Company recognized net servicing income of $ 103 thousand and $ 506 thousand for the six months ended June 30, 2025 and 2024, respectively.

The following table presents activity in MSRs for the three and six months ended June 30, 2025.

($ in thousands) Three Months Ended

June 30, 2025 Six Months Ended

June 30, 2025

Beginning balance $ 5,535 $ 5,874

3 unchanged sentences

Ending balance $ 5,396 $ 5,396

The fair value of MSRs were determined using discount rates ranging from 9.0 % to 11.0 % at March 31, 2025 and December 31, 2024, respectively.

Depending on the stratification of the specific mortgage servicing right, prepayment speeds ranged from 5.84 % to 8.94 % and 6.0 % to 52.22 % for the three months ended March 31, 2025 and 2024, respectively.

The associated weighted-average default rates were 0.15 % and 1.19 % for the three months ended March 31, 2025 and 2024, respectively.

The fair value of MSRs were determined using discount rates ranging from 9.5 % to 10.0 % at June 30, 2025 and December 31, 2024, respectively.

The valuation on MSRs was not material at June 30, 2025 and December 31, 2024.

Depending on the stratification of the specific mortgage servicing right, prepayment speeds ranged from 5.84 % to 8.48 % for the three months ended June 30, 2025 and 5.69 % to 8.22 % for the six months ended June 30, 2025.

The associated weighted-average default rates were 0.14 % for the three and six months ended June 30, 2025, respectively.

Note 4 – Goodwill and Other Intangible Assets

The following table provides information on the significant components of goodwill and other acquired intangible assets at March 31, 2025 and December 31, 2024.

March 31, 2025

The following table provides information on the significant components of goodwill and other acquired intangible assets at June 30, 2025 and December 31, 2024.

June 30, 2025

($ in thousands) Goodwill Core Deposit Intangible

9 unchanged sentences

Net carrying amount $ 63,266 $ 38,311

The aggregate amortization expense for the core deposit intangible was $ 2.3 million and $ 2.6 million for the three months ended March 31, 2025 and 2024, respectively.

At March 31, 2025, estimated future remaining amortization for amortizing core deposit intangibles within the years ending December 31, is as follows:

The aggregate amortization expense for the core deposit intangible was $ 2.3 million and $ 2.6 million for the three months ended June 30, 2025 and 2024, respectively and $ 4.5 million and $ 5.1 million for the six months ended June 30, 2025 and 2024, respectively.

At June 30, 2025, estimated future remaining amortization for amortizing core deposit intangibles within the years ending December 31, is as follows:

($ in thousands) Amortization Expense

9 unchanged sentences

The following tables present information about the Company’s leases as of and for the periods presented.

($ in thousands) March 31, 2025 December 31, 2024

($ in thousands) June 30, 2025 December 31, 2024

Lease liabilities $ 11,541 $ 11,844

4 unchanged sentences

Remaining lease term - max 16.18 years 16.68 years

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

Lease cost ($ in thousands)

2025 2024 2025 2024

Operating lease cost $ 494 $ 494 $ 986 $ 986

1 unchanged sentence

Cash paid for amounts included in the measurement of lease liabilities $ 479 $ 466 $ 946 $ 928

The following table presents a maturity analysis of operating lease liabilities and a reconciliation of the undiscounted cash flows to total operating lease liabilities at March 31, 2025.

The following table presents a maturity analysis of operating lease liabilities and a reconciliation of the undiscounted cash flows to total operating lease liabilities at June 30, 2025.

Lease payments due ($ in thousands)

March 31, 2025

June 30, 2025

Thereafter 5,573

2 unchanged sentences

Lease liabilities $ 11,541

Total gross rental income was $ 335 thousand and $ 278 thousand for the three months ended March 31, 2025 and 2024, respectively.

Total gross rental income was $ 280 thousand and $ 256 thousand for the three months ended June 30, 2025 and 2024, respectively.

Total gross rental income was $ 615 thousand and $ 533 thousand for the six months ended June 30, 2025 and 2024, respectively.

Note 6 - Deposits

Deposits consist of the following categories as of the dates indicated:

($ in thousands) March 31, 2025 December 31, 2024

($ in thousands) June 30, 2025 December 31, 2024

Balance % of Total Deposits Balance % of Total Deposits

4 unchanged sentences

Time deposits 1,273,285 23.96 1,181,561 21.37

Brokered deposits 10,806 0.20 — —

Total interest-bearing 3,738,838 70.36 3,965,521 71.73

Total deposits $ 5,313,958 100.00 % $ 5,528,336 100.00 %

The following table provides information on the approximate maturities of total time deposits at March 31, 2025.

($ in thousands) March 31, 2025

The following table provides information on the approximate maturities of total time deposits at June 30, 2025.

($ in thousands) June 30, 2025

Within one year $ 1,111,488

2 unchanged sentences

Total $ 1,273,285

The approximate amount of certificates of deposit that met or exceeded the FDIC insurance limit of $250,000 or more was $ 402.2 million and $ 374.1 million at March 31, 2025 and December 31, 2024, respectively.

The approximate amount of certificates of deposit that met or exceeded the FDIC insurance limit of $250,000 or more was $ 410.6 million and $ 374.1 million at June 30, 2025 and December 31, 2024, respectively.

Note 7 - Borrowings

The following table summarizes certain information of the Company’s long-term debt at March 31, 2025 and December 31, 2024.

($ in thousands) March 31, 2025 December 31, 2024 Issue Date Stated Maturity Date Earliest Call Date Interest Rate

The following table summarizes certain information of the Company’s long-term debt at June 30, 2025 and December 31, 2024.

($ in thousands) June 30, 2025 December 31, 2024 Issue Date Stated Maturity Date Earliest Call Date Interest Rate

September 2030 Subordinated Debentures $ 25,000 $ 25,000 2020 2030 2025 5.375 % through September 2025, 3-month SOFR* + 5.265 % thereafter

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* Secured Overnight Financing Rate (“SOFR”).

At March 31, 2025, subordinated notes consisted of $ 25.0 million of long-term debt issued by the Company in August 2020, and $ 19.5 million of long-term debt assumed as a result of the merger with TCFC.

As of March 31, 2025, the recorded balance of subordinated debt issued by the Company and the assumed subordinated debt from TCFC, net of unamortized issuance costs and fair value discounts, were $ 24.9 million and $ 19.1 million, respectively.

At June 30, 2025, subordinated notes consisted of $ 25.0 million of long-term debt issued by the Company in August 2020, and $ 19.5 million of long-term debt assumed as a result of the merger with TCFC.

As of June 30, 2025, the recorded balance of subordinated debt issued by the Company and the assumed subordinated debt from TCFC, net of unamortized issuance costs and fair value discounts, were $ 25.0 million and $ 19.3 million, respectively.

The Company also assumed trust preferred securities in the aggregate of $ 33.0 million as a result of the merger with TCFC in 2023 and the acquisition of Severn in 2021.

Trust preferred securities consisted of $ 20.6 million issued to Severn Capital Trust I, $ 7.2 million issued by Tri-County Capital Trust I and $ 5.2 million issued by Tri-County Capital Trust II.

The recorded balance of the debt acquired from Severn at March 31, 2025 was $ 18.8 million, net of the unamortized fair value adjustment of $ 1.8 million.

At March 31, 2025, the junior subordinated debt securities of Tri-County Capital Trust I and Tri-County Capital Trust II had a recorded balance of $ 6.7 million and $ 4.4 million, respectively, which are presented as net of the unamortized fair value adjustments of $ 553 thousand and $ 713 thousand, respectively.

The recorded balance of the debt acquired from Severn at June 30, 2025 was $ 18.9 million, net of the unamortized fair value adjustment of $ 1.8 million.

At June 30, 2025, the junior subordinated debt securities of Tri-County Capital Trust I and Tri-County Capital Trust II had a recorded balance of $ 6.7 million and $ 4.5 million, respectively, which are presented as net of the unamortized fair value adjustments of $ 538 thousand and $ 696 thousand, respectively.

The Company may periodically borrow from a correspondent federal funds line of credit arrangement, under a secured reverse repurchase agreement, or from the Federal Home Loan Bank (“FHLB”) to meet short-term liquidity needs.

There were $ 50.0 million of outstanding borrowings from the FHLB at March 31, 2025 and December 31, 2024.

The $ 50.0 million FHLB advance originated on May 7, 2024 was for an initial term of 18 -months at a rate of 4.79 %.The Company did not have any short-term borrowings from the FHLB at March 31, 2025 and December 31, 2024.

There were $ 50.0 million of outstanding borrowings from the FHLB at June 30, 2025 and December 31, 2024.

The $ 50.0 million FHLB advance originated on May 7, 2024 was for an initial term of 18 -months at a rate of 4.79 %.

The Company did not have any short-term borrowings from the FHLB at June 30, 2025 and December 31, 2024.

Further information on these obligations is provided in the 2024 A nnual Report.

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These assets and liabilities are included in the consolidated balance sheets in other assets and accrued expenses and other liabilities, respectively.

The following table provides information pertaining to the carrying amounts of the Company’s derivative financial instruments at March 31, 2025 and December 31, 2024.

March 31, 2025 December 31, 2024

The following table provides information pertaining to the carrying amounts of the Company’s derivative financial instruments at June 30, 2025 and December 31, 2024.

June 30, 2025 December 31, 2024

($ in thousands) Notional Amount Estimated Fair Value Notional Amount Estimated Fair Value

7 unchanged sentences

The Company records unrealized holding gains (losses), net of tax, on AFS securities as accumulated other comprehensive income (loss), a separate component of stockholders’ equity.

The following table provides information on the changes in the component of accumulated other comprehensive income (loss) for the three months ended March 31, 2025 and 2024.

The following table provides information on the changes in the component of accumulated other comprehensive income (loss) for the three and six months ended June 30, 2025 and 2024.

Accumulated Other Comprehensive Loss

($ in thousands) Three Months Ended March 31, 2025 Three Months Ended March 31, 2024

($ in thousands) Three Months Ended June 30, 2025 Three Months Ended June 30, 2024 Six Months Ended June 30, 2025 Six Months Ended June 30, 2024

Beginning of period $ ( 6,333 ) $ ( 8,058 ) $ ( 7,545 ) $ ( 7,494 )

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Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain amounts and ratios (set forth in the table below) of common equity Tier 1 (“CET1”), Tier 1 and total capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (leverage ratio).

As of March 31, 2025 and December 31, 2024, management believes that the Company and the Bank met all capital adequacy requirements to which they were subject.

As of June 30, 2025 and December 31, 2024, management believes that the Company and the Bank met all capital adequacy requirements to which they were subject.

As of December 31, 2024, the most recent notification from our primary regulator categorized the Bank, as “well-capitalized” under the regulatory framework for prompt corrective action.

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To be categorized as “well-capitalized,” the Bank must maintain minimum CET1, Tier 1 risk-based and total risk-based capital ratios, and Tier 1 leverage ratios, which are outlined in the table below.

The following table presents the capital amounts and ratios for the Company and the Bank as of March 31, 2025 and December 31, 2024.

The following table presents the capital amounts and ratios for the Company and the Bank as of June 30, 2025 and December 31, 2024.

2025 December 31,

2024 Regulatory Minimum Ratio + Capital Conservation Buffer To Be Well-Capitalized Under Prompt Corrective Action Regulation (1)

Amount Regulatory Minimum Ratio + Capital Conservation Buffer To Be Well-Capitalized Under Prompt Corrective Action Regulation (1)

($ in thousands)

The Company Amounts

Common Equity Tier 1 Capital $ 470,223 $ 458,258

Tier 1 Capital 500,149 488,105

Total Capital 603,928 591,228

Risk-Weighted Assets 4,823,833 4,852,564

Common Equity Tier 1 Capital $ 483,947 $ 342,348 N/A $ 458,258

Tier 1 Capital 513,952 415,708 N/A 488,105

Total Capital 618,793 513,521 N/A 591,228

Risk-Weighted Assets 4,890,679 237,725 N/A 4,852,564

The Company Ratios

Common Equity Tier 1 Capital to RWA 9.75 % 9.44 % 7.00 %

Tier 1 Capital to RWA 10.37 10.06 8.50

Total Capital to RWA 12.52 12.18 10.50

Common Equity Tier 1 Capital to Risk-Weighted Assets (“RWA”) 9.90 % 7.00 % N/A 9.44 %

Tier 1 Capital to RWA 10.51 8.50 N/A 10.06

Total Capital to RWA 12.65 10.50 N/A 12.18

Tier 1 Capital to AA (Leverage) (2)

8.27 8.02 4.00

8.65 4.00 N/A 8.02

The Bank Amounts

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The PCA well-capitalized threshold is defined as 5.00 %.

As of June 30, 2025, both the Company and the Bank satisfy the capital conservation buffer requirements applicable to them.

The lowest ratio at the Company is the Tier 1 Capital to RWA, which was 4.51 % above the minimum buffer ratio and, at the Bank, the lowest ratio was the Total Capital to RWA, which was 4.42 % above the minimum buffer ratio.

The Company is a separate legal entity from the Bank and must provide for its own liquidity.

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The Company’s primary source of income is dividends received from the Bank.

The amount of dividends that the Bank may declare and pay to the Company in any calendar year, without the receipt of prior approval from the Federal Reserve Bank, cannot exceed net income for that

year to date plus retained net income (as defined) for the preceding two calendar years.

At March 31, 2025, the Bank could pay dividends to the Company to the extent of its earnings, so long as it maintained required capital ratios.

The amount of dividends that the Bank may declare and pay to the Company in any calendar year, without the receipt of prior approval from the Federal Reserve Bank, cannot exceed net income for that year to date plus retained net income (as defined) for the preceding two calendar years.

At June 30, 2025, the Bank could pay dividends to the Company to the extent of its earnings, so long as it maintained required capital ratios.

Note 11 – Fair Value Measurements

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($ in thousands) Fair Value Valuation Technique Unobservable Input Range

March 31, 2025

June 30, 2025

IRLCs - net asset $ 426 Market Approach Range of pull through rate 77 % - 100 %

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Average pull through rate 98 %

The following table presents activity in the IRLCs - net asset for the three months ended March 31, 2025.

($ in thousands) Three Months Ended March 31, 2025

The following table presents activity in the IRLCs - net asset for the three and six months ended June 30, 2025.

($ in thousands) Three Months Ended June 30, 2025 Six Months Ended June 30, 2025

Beginning balance $ 392 $ 113

13 unchanged sentences

Additionally market assumptions such as spec pool payups may result in a significantly higher fair value measurement at time of loan allocation to specific trades.

The following tables present the recorded amount of assets measured at fair value on a recurring basis at March 31, 2025 and December 31, 2024.

No assets were transferred from one hierarchy level to another during the three months ended March 31, 2025 or 2024.

The following tables present the recorded amount of assets measured at fair value on a recurring basis at June 30, 2025 and December 31, 2024.

No assets were transferred from one hierarchy level to another during the six months ended June 30, 2025 or 2024.

($ in thousands) Fair Value Quoted Prices

1 unchanged sentence

(Level 2) Significant Unobservable Inputs

March 31, 2025

June 30, 2025

Available for sale securities:

46 unchanged sentences

Fair value adjustments for these assets are recorded in other noninterest expense in the consolidated statements of income.

The following tables set forth the Company’s financial and nonfinancial assets subject to fair value adjustments (impairment) on a nonrecurring basis at March 31, 2025 and December 31, 2024 that are valued at lower of cost or market.

The following tables set forth the Company’s assets subject to fair value adjustments (impairment) on a nonrecurring basis at June 30, 2025 and December 31, 2024 that are valued at lower of cost or market.

Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

1 unchanged sentence

($ in thousands) Fair Value Valuation Technique Unobservable Input Range Weighted-Average

March 31, 2025

June 30, 2025

Nonrecurring measurements:

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Liquidation expense (2)

Residential real estate 383 Appraisal of collateral (1)

Appraisal adjustment (2)

Liquidation expense (2)

Commercial 413 Appraisal of collateral (1)

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Certain items are specifically excluded from the financial instrument fair value disclosure requirements, including the Company’s common stock, OREO, premises and equipment and other assets and liabilities.

The following tables present the carrying amounts and estimated fair values of the Company’s financial instruments as of March 31, 2025 and December 31, 2024.

Fair values for March 31, 2025 and December 31, 2024 were estimated using an exit price notion.

March 31, 2025 Carrying Amount Fair Value Fair Value Measurements

The following tables present the carrying amounts and estimated fair values of the Company’s financial instruments as of June 30, 2025 and December 31, 2024.

Fair values for June 30, 2025 and December 31, 2024 were estimated using an exit price notion.

June 30, 2025 Carrying Amount Fair Value Fair Value Measurements

($ in thousands) Level 1 Level 2 Level 3

14 unchanged sentences

Time deposits 1,273,285 1,271,570 — 1,271,570 —

Brokered deposits 10,806 10,014 — 10,014 —

FHLB advances 50,000 50,065 — 50,065 —

33 unchanged sentences

Commitments to make loans are generally made for a period of 90 days or less.

As of March 31, 2025 , the Company’s outstanding fixed rate loan commitments have interest rates ranging from 6.50 % to 9.75 %.

The following table provides information on commitments outstanding at March 31, 2025 and December 31, 2024.

($ in thousands) March 31, 2025 December 31, 2024

As of June 30, 2025 , the Company’s outstanding fixed rate loan commitments have interest rates ra nging from 6.50 % to 9.75 %.

The following table provides information on commitments outstanding at June 30, 2025 and December 31, 2024.

($ in thousands) June 30, 2025 December 31, 2024

Commitments to extend credit

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Total commitments outstanding $ 802,988 $ 787,441

The Bank had a reserve for off-balance sheet credit exposures of $ 1.5 million and $ 1.1 million as of March 31, 2025 and December 31, 2024, respectively.

The Bank had a reserve for off-balance sheet credit exposures of $ 1.9 million and $ 1.1 million as of June 30, 2025 and December 31, 2024, respectively.

The reserve was estimated based on the historic losses experienced by the Company.

6 unchanged sentences

Diluted earnings per common share is calculated by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents (stock-based awards).

The following table provides information relating to the calculation of earnings per common share for the three months ended March 31, 2025 and 2024.

Three Months Ended March 31,

The following table provides information relating to the calculation of earnings per common share for the three months ended June 30, 2025 and 2024.

Three Months Ended June 30, Six Months Ended June 30,

($ in thousands, except per share data) 2025 2024 2025 2024

6 unchanged sentences

Diluted net income per common share $ 0.46 $ 0.34 $ 0.88 $ 0.58

There were seven thousand and one thousand anti-dilutive unvested restricted stock and performance stock unit awards excluded from the calculation of diluted earnings per share for the three months ended March 31, 2025 and 2024, respectively.

There were three thousand and zero anti-dilutive unvested restricted stock and performance stock unit awards excluded from the calculation of diluted earnings per share for the three months ended June 30, 2025 and 2024, respectively.

There were three thousand and zero anti-dilutive unvested restricted stock and performance stock unit awards excluded from the calculation of diluted earnings per share for the six months ended June 30, 2025 and 2024, respectively.

Note 15 – Revenue Recognition

21 unchanged sentences

All contract issuance costs are expensed as incurred.

The Company had no contract assets or liabilities at March 31, 2025.

The Company had no contract assets or liabilities at June 30, 2025.

Other Noninterest Income

9 unchanged sentences

The Company determined that rentals and renewals of safe deposit boxes will be recognized on a monthly basis consistent with the duration of the performance obligation.

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three months ended March 31, 2025 and 2024.

Three Months Ended March 31,

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and six months ended June 30, 2025 and 2024.

Three Months Ended June 30, Six Months Ended June 30,

($ in thousands) 2025 2024 2025 2024

4 unchanged sentences

Interchange income 1,788 1,717 3,365 3,304

Title Company revenue 117 78

Other noninterest income 1,458 1,146 2,184 2,026

11 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements