SHORE BANCSHARES INC 10-Q

Item 1. FINANCIAL STATEMENTS SHORE BANCSHARES, INC. CONSOLIDATED BALANCE SHEETS ($ in thousands, except per share data) September 30, 2025 December 31, 2024 ASSETS (Unaudited) Cash and due from banks $ 62,289 $ 44,008 Interest-bearing deposits with other banks 354,224 415,843 Cash and cash equivalents 416,513 459,851 Investment securities: Available for sale, at fair value (amortized cost of $ 188,267 and $ 159,593 at September 30, 2025 and December 31, 2024, respectively) 181,720 149,212 Held to maturity, net of allowance for credit losses of $ 95 and $ 203 (fair value of $ 393,540 and $ 424,734 at September 30, 2025 and December 31, 2024, respectively) 433,440 481,077 Equity securities, at fair value 6,113 5,814 Restricted securities, at cost 20,364 20,253 Loans held for sale, at fair value 21,500 19,606 Loans held for investment 4,882,969 4,771,988 Less: allowance for credit losses ( 59,554 ) ( 57,910 ) Loans, net 4,823,415 4,714,078 Premises and equipment, net 80,812 81,806 Goodwill 63,266 63,266 Other intangible assets, net 31,722 38,311 Mortgage servicing rights 5,293 5,874 Right-of-use assets 10,896 11,385 Cash surrender value on life insurance 105,055 104,421 Accrued interest receivable 20,408 19,570 Deferred income taxes 30,328 31,857 Other assets 27,634 24,382 TOTAL ASSETS $ 6,278,479 $ 6,230,763 LIABILITIES Deposits: Noninterest-bearing $ 1,594,212 $ 1,562,815 Interest-bearing checking 851,963 978,076 Money market and savings 1,790,001 1,805,884 Time deposits 1,281,132 1,181,561 Brokered deposits 10,857 — Total deposits 5,528,165 5,528,336 FHLB advances 50,000 50,000 Guaranteed preferred beneficial interest in junior subordinated debentures (“TRUPS”), net 30,085 29,847 Subordinated debt, net 44,409 43,870 Total borrowings 124,494 123,717 Lease liabilities 11,395 11,844 Other liabilities 37,218 25,800 TOTAL LIABILITIES 5,701,272 5,689,697 COMMITMENTS AND CONTINGENCIES (Note 13) STOCKHOLDERS’ EQUITY Common stock, $ 0.01 par value per share; shares authorized 50,000,000 ; shares issued and outstanding 33,421,672 and 33,332,177 at September 30, 2025 and December 31, 2024, respectively 334 333 Additional paid in capital 359,939 358,112 Retained earnings 221,693 190,166 Accumulated other comprehensive loss ( 4,759 ) ( 7,545 ) TOTAL STOCKHOLDERS’ EQUITY 577,207 541,066 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 6,278,479 $ 6,230,763 See accompanying notes to unaudited consolidated financial statements. 3 Table of Contents SHORE BANCSHARES, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, ($ in thousands, except per share data) 2025 2024 2025 2024 INTEREST INCOME Interest and fees on loans $ 70,930 $ 69,157 $ 208,273 $ 202,203 Interest and dividends on taxable investment securities 5,036 4,962 15,368 14,611 Interest and dividends on tax-exempt investment securities 6 6 18 18 Interest on deposits with other banks 1,215 564 6,212 2,102 Total interest income 77,187 74,689 229,871 218,934 INTEREST EXPENSE Interest on deposits 26,474 28,856 81,914 84,938 Interest on short-term borrowings 640 491 1,843 2,131 Interest on long-term borrowings 1,418 2,079 4,178 5,327 Total interest expense 28,532 31,426 87,935 92,396 NET INTEREST INCOME 48,655 43,263 141,936 126,538 Provision for credit losses 2,992 1,470 5,548 3,958 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 45,663 41,793 136,388 122,580 NONINTEREST INCOME Service charges on deposit accounts 1,599 1,543 4,632 4,543 Trust and investment fee income 898 880 2,663 2,510 Mortgage banking revenue 1,278 1,177 4,897 3,961 Interchange credits 1,858 1,711 5,223 5,015 Other noninterest income 2,068 1,976 6,606 6,265 Total noninterest income 7,701 7,287 24,021 22,294 NONINTEREST EXPENSE Salaries and employee benefits 18,642 16,523 52,824 49,370 Occupancy expense 2,406 2,384 7,416 7,232 Furniture and equipment expense 892 876 2,542 2,681 Software and data processing 5,155 4,419 14,665 12,658 Directors’ fees 318 443 885 1,097 Amortization of other intangible assets 2,039 2,336 6,589 7,482 FDIC insurance premium expense 794 1,160 2,908 3,400 Legal and professional fees 989 1,362 3,827 4,315 Fraud losses 45 673 233 5,237 Other noninterest expense 3,099 3,938 10,647 10,839 Total noninterest expense 34,379 34,114 102,536 104,311 Income before income taxes 18,985 14,966 57,873 40,563 Income tax expense 4,637 3,777 14,254 9,956 NET INCOME $ 14,348 $ 11,189 $ 43,619 $ 30,607 Basic net income per common share $ 0.43 $ 0.34 $ 1.31 $ 0.92 Diluted net income per common share $ 0.43 $ 0.34 $ 1.31 $ 0.92 Dividends paid per common share $ 0.12 $ 0.12 $ 0.36 $ 0.36 See accompanying notes to unaudited consolidated financial statements. 4 Table of Contents SHORE BANCSHARES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, ($ in thousands) 2025 2024 2025 2024 Net income $ 14,348 $ 11,189 $ 43,619 $ 30,607 Other comprehensive income: Investment securities: Unrealized holding gains on available for sale securities 1,163 3,762 3,834 2,708 Tax effect ( 319 ) ( 1,028 ) ( 1,048 ) ( 740 ) Total other comprehensive income 844 2,734 2,786 1,968 Comprehensive income $ 15,192 $ 13,923 $ 46,405 $ 32,575 See accompanying notes to unaudited consolidated financial statements. 5 Table of Contents SHORE BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) ($ in thousands) Common Stock Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders’ Equity Balances, December 31, 2024 $ 333 $ 358,112 $ 190,166 $ ( 7,545 ) $ 541,066 Net income — — 13,764 — 13,764 Other comprehensive income — — — 1,212 1,212 Stock-based compensation — 460 — — 460 Cash dividends declared — — ( 4,032 ) — ( 4,032 ) 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 Net income — — 14,348 — 14,348 Other comprehensive income — — — 844 844 Stock-based compensation — 876 — — 876 Cash dividends declared — — ( 4,055 ) — ( 4,055 ) Balances, September 30, 2025 $ 334 $ 359,939 $ 221,693 $ ( 4,759 ) $ 577,207 See accompanying notes to unaudited consolidated financial statements. 6 Table of Contents SHORE BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) - Continued ($ in thousands) Common Stock Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders’ Equity Balances, December 31, 2023 $ 332 $ 356,007 $ 162,290 $ ( 7,494 ) $ 511,135 Net income — — 8,184 — 8,184 Other comprehensive loss — — — ( 564 ) ( 564 ) Common shares issued for employee stock purchase plan — 103 — — 103 Stock-based compensation — 354 — — 354 Cash dividends declared — — ( 3,984 ) — ( 3,984 ) 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 Net income — — 11,189 — 11,189 Other comprehensive income — — — 2,734 2,734 Common shares issued for employee stock purchase plan — 98 — — 98 Stock-based compensation — 488 — — 488 Cash dividends declared — — ( 4,021 ) — ( 4,021 ) Balances, September 30, 2024 $ 333 $ 357,580 $ 180,884 $ ( 5,526 ) $ 533,271 See accompanying notes to unaudited consolidated financial statements. 7 Table of Contents SHORE BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, ($ in thousands) 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 43,619 $ 30,607 Adjustments to reconcile net income to net cash provided by operating activities: Net accretion of acquisition accounting estimates ( 9,549 ) ( 11,528 ) Provision for credit losses 5,548 3,958 Depreciation and amortization 11,741 12,040 Net amortization of securities 92 ( 622 ) Amortization of debt issuance costs 82 91 Gain on mortgage loans held for sale ( 4,586 ) ( 2,331 ) Gain on other mortgage loan activity ( 36 ) ( 566 ) Proceeds from sale of mortgage loans held for sale 145,714 117,230 Originations of loans held for sale ( 143,697 ) ( 131,851 ) Stock-based compensation expense 1,357 1,252 Deferred income tax expense 482 7,776 Loss on sales of repossessed assets 164 375 Loss (gain) on valuation adjustments on mortgage servicing rights 691 ( 253 ) Loss on disposal of fixed assets 147 10 Loss on disposal of premises held for sale 61 — Valuation adjustments on premises transferred to held for sale — 2 Loss on sales and valuation adjustments on other real estate owned 59 — Fair value adjustment on equity securities ( 163 ) ( 124 ) Bank owned life insurance income ( 2,127 ) ( 2,037 ) Net changes in: Accrued interest receivable ( 838 ) ( 775 ) Other assets ( 4,114 ) ( 3,267 ) Accrued interest payable 5 ( 1,084 ) Other liabilities 9,261 ( 4,435 ) Net cash provided by operating activities 53,913 14,468 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturities and principal payments of available for sale securities 19,840 64,896 Proceeds from maturities and principal payments of held to maturity securities 49,661 39,653 Proceeds from life insurance death benefits 1,714 150 Purchases of available for sale securities ( 48,198 ) ( 83,990 ) Purchases of held to maturity securities ( 2,325 ) ( 11,449 ) Purchases of equity securities ( 136 ) ( 123 ) Purchase of restricted securities ( 111 ) ( 35,682 ) Net change in loans ( 104,368 ) ( 84,580 ) Purchases of premises and equipment ( 2,491 ) ( 3,969 ) Proceeds from sales of repossessed assets 1,852 1,807 Redemption of restricted securities — 33,329 Purchases of bank owned life insurance ( 221 ) ( 138 ) Proceeds from disposal of premises held for sale 843 — Net cash used in investing activities $ ( 83,940 ) $ ( 80,096 ) See accompanying notes to unaudited consolidated financial statements. 8 Table of Contents SHORE BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - Continued Nine Months Ended September 30, ($ in thousands) 2025 2024 CASH FLOWS FROM FINANCING ACTIVITIES: Net changes in: Noninterest-bearing deposits $ 31,397 $ 313,356 Interest-bearing deposits ( 32,616 ) ( 474,828 ) Long-term borrowings — 50,000 Common stock dividends paid ( 12,092 ) ( 12,013 ) Issuance of common stock — 321 Net cash used in financing activities ( 13,311 ) ( 123,164 ) Net decrease in cash and cash equivalents ( 43,338 ) ( 188,792 ) Cash and cash equivalents at beginning of period 459,851 372,413 Cash and cash equivalents at end of period $ 416,513 $ 183,621 Supplemental cash flows information: Interest paid $ 86,106 $ 91,619 Income taxes paid 12,205 — Recognition of lease liabilities arising from right-of-use assets 1,166 25 Transfers from loans to repossessed assets 2,300 2,488 Transfer from loans held for sale to loans held for investment 649 — Unrealized gains on available for sale securities 3,834 2,708 Transfer of premises to held for sale, included in other assets — 1,387 See accompanying notes to unaudited consolidated financial statements. 9 Table of Contents Shore Bancshares, Inc. Notes to Consolidated Financial Statements (Unaudited) Note 1 – Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying unaudited interim consolidated financial statements include the accounts of Shore Bancshares, Inc. and its subsidiaries (collectively referred to in these Notes as the “Company”), with all significant intercompany transactions eliminated. The accounting and reporting policies of the Company conform with generally accepted accounting principles in the United States of America (“GAAP”). For purposes of comparability, certain reclassifications have been made to amounts previously reported to conform with the current period presentation. Reclassifications had no effect on prior year net income or stockholders’ equity. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements, and related notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report”). Nature of Operations The Company engages in the banking business through Shore United Bank, N.A. (the “Bank”), a national banking association with trust powers. The Company’s primary source of revenue is derived from interest earned on commercial, residential mortgage and other loans, and fees charged in connection with lending and other banking services located in Maryland, Delaware and Virginia. The Company engages in financial service offerings through Wye Financial Partners and offers corporate trustee services through Wye Trust, a division of the Bank. The Bank also conducts secondary market lending activities through a division of the Bank. Mid-Maryland Title Company, Inc. (the “Title Company”), engaged in title work related to real estate transactions. The Title Company ceased conducting real estate closings effective March 31, 2025. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and in the related disclosures. These estimates are based on information available as of the date of the consolidated financial statements. Actual amounts or results could differ from these estimates. In the opinion of management, all normal, recurring adjustments have been included for a fair presentation of this interim financial information. Recent Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . The amendments in this ASU require an entity to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, which is greater than five percent of the amount computed by multiplying pretax income by the entity’s applicable statutory rate, on an annual basis. Additionally, the amendments in this ASU require an entity to disclose the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions that are equal to or greater than five percent of total income taxes paid (net of refunds received). Lastly, the amendments in this ASU require an entity to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign. This ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied on a prospective basis; however, retrospective application is permitted. The Company does not expect the adoption of ASU No. 2023-09 to have a material impact on its consolidated financial statements. 10 Table of Contents Note 2 – Investment Securities The following tables provide information on the amortized cost and estimated fair values of investment securities at September 30, 2025 and December 31, 2024. ($ in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Available for sale securities (1) : September 30, 2025 U.S. Treasury and government agency securities $ 22,409 $ 3 $ 1,847 $ 20,565 Mortgage-backed securities 161,614 287 5,459 156,442 Other debt securities (2) 4,244 469 — 4,713 Total $ 188,267 $ 759 $ 7,306 $ 181,720 December 31, 2024 U.S. Treasury and government agency securities $ 22,984 $ 4 $ 2,786 $ 20,202 Mortgage-backed securities 130,439 84 8,139 122,384 Other debt securities (2) 6,170 469 13 6,626 Total $ 159,593 $ 557 $ 10,938 $ 149,212 ____________________________________ (1) No available for sale (“AFS”) securities were sold during the three and nine months ended September 30, 2025 and 2024. (2) Other debt securities includes corporate and municipal bond obligations of state and political entities. ($ in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Allowance for Credit Losses Held to maturity securities: September 30, 2025 U.S. Treasury and government agency securities $ 114,884 $ — $ 5,200 $ 109,684 $ — Mortgage-backed securities 311,689 101 34,436 277,354 — Other debt securities (1) 6,962 26 486 6,502 95 Total $ 433,535 $ 127 $ 40,122 $ 393,540 $ 95 December 31, 2024 U.S. Treasury and government agency securities $ 132,560 $ — $ 8,555 $ 124,005 $ — Mortgage-backed securities 336,755 — 47,234 289,521 — Other debt securities (1) 11,965 19 776 11,208 203 Total $ 481,280 $ 19 $ 56,565 $ 424,734 $ 203 ____________________________________ (1) Other debt securities includes corporate and municipal bond obligations of state and political entities. Equity securities with aggregate fair values of $ 6.1 million and $ 5.8 million at September 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 $ 104 thousand and $ 79 thousand for the three months ended September 30, 2025 and 2024, respectively. The fair value adjustments recorded through earnings totaled a gain of $ 299 thousand and $ 38 thousand for the nine months ended September 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 Nine Months Ended ($ in thousands) September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 Balance, beginning of period $ 199 $ 108 $ 203 $ 94 Provision for (reversal of) credit losses, other debt securities ( 104 ) ( 7 ) ( 108 ) 7 Balance, end of period $ 95 $ 101 $ 95 $ 101 11 Table of Contents A reversal of the provision for credit losses of $ 104 thousand and $ 7 thousand was recorded on HTM corporate and municipal bonds for the three months ended September 30, 2025 and 2024, respectively. A reversal of the provision for credit losses of $ 108 thousand and a provision for credit losses of $ 7 thousand was recorded on HTM corporate and municipal bonds for the nine months ended September 30, 2025 and 2024, respectively. 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 September 30, 2025 and December 31, 2024. Less than 12 Months More than 12 Months Total ($ in thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses September 30, 2025 Available for sale securities: U.S. Treasury and government agency securities $ 129 $ 1 $ 17,843 $ 1,846 $ 17,972 $ 1,847 Mortgage-backed securities 58,809 299 44,034 5,160 102,843 5,459 Total $ 58,938 $ 300 $ 61,877 $ 7,006 $ 120,815 $ 7,306 Less than 12 Months More than 12 Months Total ($ in thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses December 31, 2024 Available for sale securities: U.S. Treasury and government agency securities $ 207 $ — $ 17,422 $ 2,786 $ 17,629 $ 2,786 Mortgage-backed securities 56,913 710 48,782 7,429 105,695 8,139 Other debt securities — — 1,988 13 1,988 13 Total $ 57,120 $ 710 $ 68,192 $ 10,228 $ 125,312 $ 10,938 There were 114 AFS debt securities with a fair value below the amortized cost basis, with unrealized losses totaling $ 7.3 million as of September 30, 2025. The Company concluded that a credit loss does not exist in its AFS securities portfolio as of September 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. government agencies or U.S. government-sponsored enterprises. Collectively, these entities provide a guarantee, which is either explicitly or implicitly supported by the full faith and credit of the U.S. 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 September 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. The unrealized losses on debt securities that exist are the result of market changes in interest rates since original purchase and are not related to credit concerns. 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 114 AFS and 173 HTM securities in an unrealized loss position at September 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 $ 6.5 million and $ 10.4 million as of September 30, 2025 and December 31, 2024, respectively. 12 Table of Contents The following table provides information on the amortized cost and estimated fair values of investment securities by contractual maturity date at September 30, 2025. Available for Sale Held to Maturity ($ in thousands) Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 2,481 $ 2,483 $ 28,563 $ 28,348 Due after one year through five years 21,363 19,690 77,589 74,265 Due after five years through ten years 2,556 2,868 5,490 5,026 Due after ten years 253 237 10,204 8,547 $ 26,653 $ 25,278 $ 121,846 $ 116,186 Mortgage-backed securities 161,614 156,442 311,689 277,354 Total $ 188,267 $ 181,720 $ 433,535 $ 393,540 The maturity dates for debt securities are determined using contractual maturity dates. Actual maturities may differ from amounts presented because certain issuers have the right to call or prepay obligations without prepayment penalties. 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 September 30, 2025, the aggregate carrying value of pledged AFS and HTM pledged securities was $ 67.6 million and $ 211.4 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 September 30, 2025 and December 31, 2024. September 30, 2025 December 31, 2024 ($ in thousands) Amortized Cost Fair Value Amortized Cost Fair Value Pledged available for sale securities $ 73,816 $ 67,644 $ 76,280 $ 67,926 Pledged held to maturity securities 211,434 191,089 197,474 173,248 There were no obligations of any issuer exceeding 10% of stockholders’ equity at September 30, 2025 or December 31, 2024. Note 3 – Loans and Allowance for Credit Losses The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables. For further discussion on the most significant accounting policies that the Company follows, see Note 1 – “Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements” included in Part II, Item 8. of the 2024 Annual Report. The following table provides information about the principal classes of the loan portfolio at September 30, 2025 and December 31, 2024. ($ in thousands) September 30, 2025 % of Total Loans December 31, 2024 % of Total Loans Commercial real estate $ 2,642,601 54.12 % $ 2,557,806 53.60 % Residential real estate 1,383,348 28.33 1,329,406 27.85 Construction 352,116 7.21 335,999 7.04 Commercial 221,598 4.54 237,932 4.99 Consumer 278,242 5.70 303,746 6.37 Credit cards 5,064 0.10 7,099 0.15 Total loans 4,882,969 100.00 % 4,771,988 100.00 % Less: allowance for credit losses ( 59,554 ) ( 57,910 ) Total loans, net $ 4,823,415 $ 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 $ 2.9 million and $ 3.2 million at September 30, 2025 and December 31, 2024, respectively. At September 30, 2025 and December 31, 2024, loans included $ 1.58 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 13 Table of Contents balances are presented net of the related aggregate discounts, which totaled $ 82.5 million and $ 92.0 million at September 30, 2025 and December 31, 2024, respectively. At September 30, 2025, the Bank was servicing $ 352.7 million in loans for the Federal National Mortgage Association and $ 109.1 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 September 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 September 30, 2025 Nonaccrual loans: Commercial real estate $ 8,100 $ 2,062 $ 10,162 Residential real estate 9,362 547 9,909 Construction 52 — 52 Commercial 2,410 1,279 3,689 Consumer 518 — 518 Credit cards — 48 48 Total $ 20,442 $ 3,936 $ 24,378 Interest income $ 359 $ 62 $ 421 ($ in thousands) Nonaccrual With No Allowance For Credit Loss Nonaccrual With An Allowance For Credit Loss Total Nonaccrual Loans December 31, 2024 Nonaccrual loans: Commercial real estate $ 8,192 $ 2,194 $ 10,386 Residential real estate 6,741 873 7,614 Construction 360 — 360 Commercial 458 549 1,007 Consumer 761 712 1,473 Credit cards — 168 168 Total $ 16,512 $ 4,496 $ 21,008 Interest income $ 274 $ 65 $ 339 ($ in thousands) Nonaccrual Delinquent Loans Nonaccrual Current Loans Total Nonaccrual Loans September 30, 2025 Nonaccrual loans: Commercial real estate $ 2,991 $ 7,171 $ 10,162 Residential real estate 4,396 5,513 9,909 Construction 52 — 52 Commercial 172 3,517 3,689 Consumer 30 488 518 Credit cards — 48 48 Total $ 7,641 $ 16,737 $ 24,378 14 Table of Contents ($ in thousands) Nonaccrual Delinquent Loans Nonaccrual Current Loans Total Nonaccrual Loans December 31, 2024 Nonaccrual loans: Commercial real estate $ 7,268 $ 3,118 $ 10,386 Residential real estate 3,979 3,635 7,614 Construction 360 — 360 Commercial 70 937 1,007 Consumer 1,431 42 1,473 Credit cards 146 22 168 Total $ 13,254 $ 7,754 $ 21,008 The overall quality of the Bank’s loan portfolio is primarily assessed using the Bank’s risk-grading scale. This review process is assisted by frequent internal reporting of loan production, loan quality, concentrations of credit, loan delinquencies and nonperforming and potential problem loans. Credit quality indicators are adjusted based on management’s judgment during the quarterly review process. Consumer credit cards are monitored based on a borrower payment history. Credit card loans are classified as performing and are typically charged off no later than 180 days past due or when, in the opinion of management, the collection of principal or interest is considered doubtful. As of September 30, 2025, there w ere two 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. Ratings 1 thru 6 – Pass – Ratings 1 thru 6 have asset risks ranging from excellent-low to adequate. The specific rating assigned considers customer history of earnings, cash flows, liquidity, leverage, capitalization, consistency of debt service coverage, the nature and extent of customer relationship and other relevant specific business factors such as the stability of the industry or market area, changes to management, litigation or unexpected events that could have an impact on risks. Rating 7 – Special Mention – These credits have potential weaknesses due to economic conditions, less than adequate earnings performance or other factors which require the lending officer to direct more than normal attention to the credit. Financing alternatives may be limited and/or command higher risk interest rates. Special mention loan relationships are reviewed at least quarterly. Rating 8 – Substandard – Substandard assets are assets that are inadequately protected by the sound worth or paying capacity of the borrower or of the collateral pledged. Substandard loans are the first adversely classified loans on the Bank’s watchlist. These assets have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the possibility that the Bank will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified substandard. The loans may have a delinquent history or combination of weak collateral, weak guarantor or operating losses. When a loan is assigned to this category the Bank may estimate a specific reserve in the credit loss allowance analysis and/or place the loan on nonaccrual. These assets listed may include assets with histories of repossessions or some that are nonperforming bankruptcies. These relationships will be reviewed at least quarterly. Rating 9 – Doubtful – Doubtful assets have many of the same characteristics of substandard with the exception that the Bank has determined that loss is not only possible but is probable. The amount of loss is not discernible due to factors such as merger, acquisition, or liquidation; a capital injection; a pledge of additional collateral; the sale of assets; or alternative refinancing plans. Credits receiving a doubtful classification are required to be on nonaccrual. These relationships will be reviewed at least quarterly. Rating 10 – Loss – Loss assets are uncollectible or of little value. 15 Table of Contents The following table provides information on loan risk ratings as of September 30, 2025 and gross write-offs during the nine months ended September 30, 2025. Term Loans by Origination Year Revolving Loans Revolving Converted to Term Loans Total ($ in thousands) Prior 2021 2022 2023 2024 2025 September 30, 2025 Commercial real estate Pass $ 969,316 $ 399,232 $ 549,420 $ 255,268 $ 140,264 $ 201,680 $ 16,859 $ 27,384 $ 2,559,423 Special mention 15,429 2,905 34,190 346 — — — — 52,870 Substandard 23,069 5,268 735 — 295 — 941 — 30,308 Total $ 1,007,814 $ 407,405 $ 584,345 $ 255,614 $ 140,559 $ 201,680 $ 17,800 $ 27,384 $ 2,642,601 Gross charge-offs $ ( 109 ) $ — $ — $ — $ — $ — $ — $ — $ ( 109 ) Residential real estate Pass $ 330,559 $ 187,331 $ 281,330 $ 220,723 $ 123,221 $ 84,798 $ 126,646 $ 703 $ 1,355,311 Special mention 1,730 14,860 — — — — — — 16,590 Substandard 7,755 1,691 272 396 — — 1,333 — 11,447 Total $ 340,044 $ 203,882 $ 281,602 $ 221,119 $ 123,221 $ 84,798 $ 127,979 $ 703 $ 1,383,348 Gross charge-offs $ ( 4 ) $ — $ — $ — $ — $ — $ ( 45 ) $ — $ ( 49 ) Construction Pass $ 32,373 $ 7,395 $ 23,910 $ 35,391 $ 134,353 $ 98,992 $ 18,775 $ 631 $ 351,820 Special mentions — — — — — — — — — Substandard 52 — — — — 244 — — 296 Total $ 32,425 $ 7,395 $ 23,910 $ 35,391 $ 134,353 $ 99,236 $ 18,775 $ 631 $ 352,116 Gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial Pass $ 28,427 $ 26,853 $ 22,025 $ 25,952 $ 32,990 $ 21,407 $ 54,883 $ 1,671 $ 214,208 Special mention 110 38 125 115 82 57 1,010 — 1,537 Substandard 483 1,117 1,327 556 — — 2,231 139 5,853 Total $ 29,020 $ 28,008 $ 23,477 $ 26,623 $ 33,072 $ 21,464 $ 58,124 $ 1,810 $ 221,598 Gross charge-offs $ ( 51 ) $ — $ — $ ( 329 ) $ — $ — $ ( 31 ) $ ( 31 ) $ ( 442 ) Consumer Pass $ 8,369 $ 49,271 $ 94,831 $ 45,560 $ 35,514 $ 43,354 $ 825 $ — $ 277,724 Special mention — — — — — — — — — Substandard 2 19 61 408 28 — — — 518 Total $ 8,371 $ 49,290 $ 94,892 $ 45,968 $ 35,542 $ 43,354 $ 825 $ — $ 278,242 Gross charge-offs $ ( 359 ) $ ( 99 ) $ ( 1,538 ) $ ( 136 ) $ ( 314 ) $ — $ ( 16 ) $ — $ ( 2,462 ) Total Pass $ 1,369,044 $ 670,082 $ 971,516 $ 582,894 $ 466,342 $ 450,231 $ 217,988 $ 30,389 $ 4,758,486 Special mention 17,269 17,803 34,315 461 82 57 1,010 — 70,997 Substandard 31,361 8,095 2,395 1,360 323 244 4,505 139 48,422 Total loans by risk category $ 1,417,674 $ 695,980 $ 1,008,226 $ 584,715 $ 466,747 $ 450,532 $ 223,503 $ 30,528 $ 4,877,905 Total gross charge-offs $ ( 523 ) $ ( 99 ) $ ( 1,538 ) $ ( 465 ) $ ( 314 ) $ — $ ( 92 ) $ ( 31 ) $ ( 3,062 ) The following table presents the amortized cost in credit card loans based on performing status and gross charge-off as of September 30, 2025 and gross write-offs during the nine months ended September 30, 2025. Nonperforming loans consisted of nonaccrual loans and loans past due 90 days or more and still accruing. 16 Table of Contents Term Loans by Origination Year Revolving Loans Revolving Converted to Term Loans Total ($ in thousands) Prior 2021 2022 2023 2024 2025 September 30, 2025 Credit cards Performing $ — $ — $ — $ — $ — $ — $ 5,016 $ — $ 5,016 Nonperforming — — — — — — 48 — 48 Total $ — $ — $ — $ — $ — $ — $ 5,064 $ — $ 5,064 Gross charge-offs $ — $ — $ — $ — $ — $ — $ ( 525 ) $ — $ ( 525 ) Total loans evaluated by performing status $ — $ — $ — $ — $ — $ — $ 5,064 $ — $ 5,064 Total gross charge-offs $ ( 523 ) $ ( 99 ) $ ( 1,538 ) $ ( 465 ) $ ( 314 ) $ — $ ( 617 ) $ ( 31 ) $ ( 3,587 ) Total recorded investment $ 1,417,674 $ 695,980 $ 1,008,226 $ 584,715 $ 466,747 $ 450,532 $ 228,567 $ 30,528 $ 4,882,969 17 Table of Contents The following table provides information on loan risk ratings as of December 31, 2024 and gross write-offs during the year ended December 31, 2024. Term Loans by Origination Year Revolving Loans Revolving Converted to Term Loans Total ($ in thousands) Prior 2020 2021 2022 2023 2024 December 31, 2024 Commercial real estate Pass $ 822,391 $ 297,098 $ 435,084 $ 534,936 $ 250,482 $ 136,891 $ 24,966 $ 14,084 $ 2,515,932 Special mention 7,514 — 2,964 19,746 — — 417 — $ 30,641 Substandard 7,684 — 2,991 — — — 558 — 11,233 Total $ 837,589 $ 297,098 $ 441,039 $ 554,682 $ 250,482 $ 136,891 $ 25,941 $ 14,084 $ 2,557,806 Gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Residential real estate Pass $ 291,306 $ 78,568 $ 211,938 $ 295,402 $ 220,753 $ 101,005 $ 119,367 $ 613 $ 1,318,952 Special mention 1,529 518 — — — — — — 2,047 Substandard 5,414 — 1,342 290 885 — 476 — 8,407 Total $ 298,249 $ 79,086 $ 213,280 $ 295,692 $ 221,638 $ 101,005 $ 119,843 $ 613 $ 1,329,406 Gross charge-offs $ ( 1 ) $ — $ — $ — $ — $ — $ — $ — $ ( 1 ) Construction Pass $ 31,884 $ 8,191 $ 8,628 $ 56,685 $ 70,232 $ 131,383 $ 26,785 $ 1,851 $ 335,639 Special mentions — — — — — — — — — Substandard 360 — — — — — — — 360 Total $ 32,244 $ 8,191 $ 8,628 $ 56,685 $ 70,232 $ 131,383 $ 26,785 $ 1,851 $ 335,999 Gross charge-offs $ — $ — $ ( 12 ) $ — $ — $ — $ — $ — $ ( 12 ) Commercial Pass $ 25,214 $ 11,088 $ 40,817 $ 29,142 $ 29,458 $ 39,489 $ 57,982 $ 874 $ 234,064 Special mention 116 — — — — — 703 11 830 Substandard 515 — 8 1,257 500 — 257 501 3,038 Total $ 25,845 $ 11,088 $ 40,825 $ 30,399 $ 29,958 $ 39,489 $ 58,942 $ 1,386 $ 237,932 Gross charge-offs $ ( 54 ) $ ( 11 ) $ — $ ( 56 ) $ ( 69 ) $ — $ — $ — $ ( 190 ) Consumer Pass $ 1,315 $ 10,469 $ 60,718 $ 114,639 $ 61,652 $ 52,798 $ 682 $ — $ 302,273 Special mention — — — — — — — — — Substandard 2 — 48 860 563 — — — 1,473 Total $ 1,317 $ 10,469 $ 60,766 $ 115,499 $ 62,215 $ 52,798 $ 682 $ — $ 303,746 Gross charge-offs $ ( 1,287 ) $ ( 12 ) $ ( 389 ) $ ( 1,764 ) $ ( 177 ) $ — $ ( 17 ) $ — $ ( 3,646 ) Total Pass $ 1,172,110 $ 405,414 $ 757,185 $ 1,030,804 $ 632,577 $ 461,566 $ 229,782 $ 17,422 $ 4,706,860 Special mention 9,159 $ 518 $ 2,964 $ 19,746 $ — $ — $ 1,120 $ 11 33,518 Substandard 13,975 — 4,389 2,407 1,948 — 1,291 501 24,511 Total loans by risk category $ 1,195,244 $ 405,932 $ 764,538 $ 1,052,957 $ 634,525 $ 461,566 $ 232,193 $ 17,934 $ 4,764,889 Total gross charge-offs $ ( 1,342 ) $ ( 23 ) $ ( 401 ) $ ( 1,820 ) $ ( 246 ) $ — $ ( 17 ) $ — $ ( 3,849 ) The following table presents the amortized cost in credit card loans based on performing status and gross charge-off as of December 31, 2024 and gross write-offs during the year ended December 31, 2024. Nonperforming loans consisted of nonaccrual loans and loans past due 90 days or more and still accruing. 18 Table of Contents Term Loans by Origination Year Revolving Loans Revolving Converted to Term Loans Total ($ in thousands) Prior 2020 2021 2022 2023 2024 December 31, 2024 Credit cards Performing $ — $ — $ — $ — $ — $ — $ 6,931 $ — $ 6,931 Nonperforming — — — — — — 168 — 168 Total $ — $ — $ — $ — $ — $ — $ 7,099 $ — $ 7,099 Gross charge-offs $ — $ — $ — $ — $ — $ — $ ( 584 ) $ — $ ( 584 ) Total loans evaluated by performing status $ — $ — $ — $ — $ — $ — $ 7,099 $ — $ 7,099 Total gross charge-offs $ — $ — $ — $ — $ — $ — $ ( 584 ) $ — $ ( 584 ) Total recorded 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 September 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 September 30, 2025 Commercial real estate $ 1,594 $ — $ — $ 2,512 $ 479 $ 4,585 $ 2,630,845 $ 7,171 $ 2,642,601 Residential real estate 1,972 414 128 1,869 2,527 6,910 1,370,925 5,513 1,383,348 Construction 82 — — — 52 134 351,982 — 352,116 Commercial 9 — — 8 164 181 217,900 3,517 221,598 Consumer 1,356 103 1 15 15 1,490 276,264 488 278,242 Credit cards 4 25 24 — — 53 4,963 48 5,064 Total $ 5,017 $ 542 $ 153 $ 4,404 $ 3,237 $ 13,353 $ 4,852,879 $ 16,737 $ 4,882,969 Percent of total loans 0.1 % 0.0 % 0.0 % 0.1 % 0.1 % 0.3 % 99.4 % 0.3 % 100.0 % ($ 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 December 31, 2024 Commercial real estate $ 75 $ — $ — $ 2,328 $ 4,940 $ 7,343 $ 2,547,345 $ 3,118 $ 2,557,806 Residential real estate 3,828 246 127 655 3,324 8,180 1,317,591 3,635 1,329,406 Construction 30 — — — 360 390 335,609 — 335,999 Commercial 152 2 — — 70 224 236,771 937 237,932 Consumer 4,068 55 — 1,180 251 5,554 298,150 42 303,746 Credit cards 161 190 167 — 146 664 6,413 22 7,099 Total $ 8,314 $ 493 $ 294 $ 4,163 $ 9,091 $ 22,355 $ 4,741,879 $ 7,754 $ 4,771,988 Percent of total loans 0.2 % 0.0 % 0.0 % 0.1 % 0.2 % 0.5 % 99.4 % 0.2 % 100.0 % 19 Table of Contents The following tables provide a summary of the activity in the ACL allocated by loan class for the three and nine months ended September 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 September 30, 2025 Commercial real estate $ 21,662 $ ( 109 ) $ — $ ( 484 ) $ 21,069 Residential real estate 21,720 ( 49 ) 190 949 22,810 Construction 5,805 — — 416 6,221 Commercial 2,870 ( 440 ) 5 1,207 3,642 Consumer 6,188 ( 1,382 ) 54 842 5,702 Credit cards 238 ( 94 ) — ( 34 ) 110 Total $ 58,483 $ ( 2,074 ) $ 249 $ 2,896 $ 59,554 ($ in thousands) Beginning Balance Charge-offs Recoveries Provisions Ending Balance Three Months Ended September 30, 2024 Commercial real estate $ 22,984 $ — $ — $ 115 $ 23,099 Residential real estate 20,500 — 1 1,206 21,707 Construction 3,471 — 1 ( 578 ) 2,894 Commercial 2,866 ( 154 ) 1 512 3,225 Consumer 8,145 ( 1,015 ) 88 36 7,254 Credit cards 512 ( 210 ) — 188 490 Total $ 58,478 $ ( 1,379 ) $ 91 $ 1,479 $ 58,669 ($ in thousands) Beginning Balance Charge-offs Recoveries Provisions Ending Balance Nine Months Ended September 30, 2025 Commercial real estate $ 22,846 $ ( 109 ) $ 78 $ ( 1,746 ) $ 21,069 Residential real estate 21,776 ( 49 ) 193 890 22,810 Construction 2,854 — 1 3,366 6,221 Commercial 3,138 ( 442 ) 92 854 3,642 Consumer 6,889 ( 2,462 ) 195 1,080 5,702 Credit cards 407 ( 525 ) — 228 110 Total $ 57,910 $ ( 3,587 ) $ 559 $ 4,672 $ 59,554 ($ in thousands) Beginning Balance Charge-offs Recoveries Provisions Ending Balance Nine Months Ended September 30, 2024 Commercial real estate $ 23,015 $ — $ — $ 84 $ 23,099 Residential real estate 19,909 ( 1 ) 5 1,794 21,707 Construction 3,935 ( 12 ) 7 ( 1,036 ) 2,894 Commercial 2,671 ( 177 ) 4 727 3,225 Consumer 7,601 ( 2,401 ) 232 1,822 7,254 Credit cards 220 ( 405 ) 9 666 490 Total $ 57,351 $ ( 2,996 ) $ 257 $ 4,057 $ 58,669 The following tables present the amortized cost basis of collateral-dependent loans by loan portfolio segment. 20 Table of Contents September 30, 2025 ($ in thousands) Real Estate Collateral Other Collateral Total Commercial real estate $ 10,162 $ — $ 10,162 Residential real estate 9,909 — 9,909 Construction 52 — 52 Commercial — 3,689 3,689 Consumer — 518 518 Total $ 20,123 $ 4,207 $ 24,330 December 31, 2024 ($ in thousands) Real Estate Collateral Other Collateral Total Commercial real estate $ 10,386 $ — $ 10,386 Residential real estate 7,614 — 7,614 Construction 360 — 360 Commercial — 1,007 1,007 Consumer — 1,473 1,473 Total $ 18,360 $ 2,480 $ 20,840 Loan Modifications to Borrowers Experiencing Financial Difficulty 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 September 30, 2025, one loan modification in the form of an interest rate reduction was made to a borrower experiencing financial difficulty. For the nine months ended September 30, 2025, ten loan modifications in the form of interest rate reductions were made to borrowers experiencing financial difficulty. During the three and nine months ended September 30, 2024, zero loan modifications were made to borrowers experiencing financial difficulty. During the three and nine months ended September 30, 2025 and 2024, there were no defaults on loan modifications made to borrowers experiencing financial difficulty in the preceding 12 months. As of September 30, 2025, ten commercial real estate loans with an aggregate balance of $ 6.8 million with borrowers experiencing financial difficulty that were modified during the preceding 12 months were classified as current accrual and current nonaccrual, of which $ 6.6 million were for commercial real estate loans, $ 177 thousand were for commercial loans and $ 33 thousand were for residential 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 September 30, 2025 and $ 124 thousand as of 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 September 30, 2025 and $ 554 thousand as of December 31, 2024. Other Real Estate Owned (“OREO”) and Repossessed Assets OREO and repossessed assets are adjusted for fair value upon transfer from loans to foreclosed assets, establishing a new cost basis. Subsequently, foreclosed assets are carried at the lower of carrying value or fair value. The Company had OREO and repossessed asset balances of $ 120 thousand and $ 3.4 million as of September 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 in the consolidated statements of income. 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 nine months ended September 30, 2025. The Company recognized net servicing income of $ 147 thousand and $ 425 thousand for the three months ended September 30, 2025 and 2024, respectively. The Company recognized net servicing income of $ 251 thousand and $ 81 thousand for the nine months ended September 30, 2025 and 2024, respectively. 21 Table of Contents The following table presents activity in MSRs for the three and nine months ended September 30, 2025. ($ in thousands) Three Months Ended September 30, 2025 Nine Months Ended September 30, 2025 Beginning balance $ 5,396 $ 5,874 Net additions 54 111 Amortization expense ( 157 ) ( 362 ) Other — ( 330 ) Ending balance $ 5,293 $ 5,293 The fair value of MSRs were determined using discount rates ranging from 9.5 % to 10.0 % at September 30, 2025 and December 31, 2024, respectively. The valuation on MSRs was not material at September 30, 2025 and December 31, 2024. Depending on the stratification of the specific mortgage servicing right, prepayment speeds ranged from 6.08 % to 9.27 % for the three months ended September 30, 2025 and 5.69 % to 8.22 % for the nine months ended September 30, 2025. The associated weighted-average default rates were 0.14 % for the three and nine months ended September 30, 2025, respectively. 22 Table of Contents Note 4 – Goodwill and Other Intangible Assets The following table provides information on the significant components of goodwill and other acquired intangible assets at September 30, 2025 and December 31, 2024. September 30, 2025 ($ in thousands) Goodwill Core Deposit Intangible Gross carrying amount $ 63,266 $ 59,151 Accumulated amortization — ( 27,429 ) Net carrying amount $ 63,266 $ 31,722 December 31, 2024 ($ in thousands) Goodwill Core Deposit Intangible Gross carrying amount $ 63,266 $ 59,151 Accumulated amortization — ( 20,840 ) Net carrying amount $ 63,266 $ 38,311 The aggregate amortization expense for the core deposit intangible was $ 2.0 million and $ 2.3 million for the three months ended September 30, 2025 and 2024, respectively and $ 6.6 million and $ 7.5 million for the nine months ended September 30, 2025 and 2024, respectively. At September 30, 2025, the estimated future remaining amortization for amortizing core deposit intangibles within the years ending December 31 is as follows: ($ in thousands) Amortization Expense 2025 $ 2,000 2026 7,398 2027 6,208 2028 5,060 2029 3,980 Thereafter 7,076 Total amortizing intangible assets $ 31,722 23 Table of Contents Note 5 – Leases Lease liabilities represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows. Cash flows are discounted at the Company’s incremental borrowing rate in effect at the commencement date of the lease. Right-of-use assets represent the Company’s right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor. The Company’s long-term lease agreements for branches and offices are classified as operating leases. Certain of these leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably certain of being exercised. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations. The following tables present information about the Company’s leases as of and for the periods presented. ($ in thousands) September 30, 2025 December 31, 2024 Lease liabilities $ 11,395 $ 11,844 Right-of-use assets $ 10,896 $ 11,385 Weighted-average remaining lease term 9.06 years 10.20 years Weighted-average discount rate 3.44 % 3.29 % Remaining lease term - min 0.62 years 0.01 years Remaining lease term - max 15.93 years 16.68 years Three Months Ended September 30, Nine Months Ended September 30, Lease cost ($ in thousands) 2025 2024 2025 2024 Operating lease cost $ 511 $ 473 $ 1,497 $ 1,445 Total lease cost $ 511 $ 473 $ 1,497 $ 1,445 Cash paid for amounts included in the measurement of lease liabilities $ 501 $ 449 $ 1,446 $ 1,367 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 September 30, 2025. Lease payments due ($ in thousands) September 30, 2025 2025 $ 508 2026 1,994 2027 1,850 2028 1,779 2029 1,354 Thereafter 5,576 Total undiscounted cash flows 13,061 Less: imputed interest 1,666 Lease liabilities $ 11,395 Total gross rental income was $ 225 thousand and $ 266 thousand for the three months ended September 30, 2025 and 2024, respectively. Total gross rental income was $ 839 thousand and $ 799 thousand for the nine months ended September 30, 2025 and 2024, respectively. 24 Table of Contents Note 6 - Deposits Deposits consist of the following categories as of the dates indicated: ($ in thousands) September 30, 2025 December 31, 2024 Balance % of Total Deposits Balance % of Total Deposits Noninterest-bearing $ 1,594,212 28.84 % $ 1,562,815 28.27 % Interest-bearing: Interest-bearing checking 851,963 15.41 978,076 17.69 Money market and savings 1,790,001 32.38 1,805,884 32.67 Time deposits 1,281,132 23.17 1,181,561 21.37 Brokered deposits 10,857 0.20 — — Total interest-bearing 3,933,953 71.16 3,965,521 71.73 Total deposits $ 5,528,165 100.00 % $ 5,528,336 100.00 % The following table provides information on the approximate maturities of total time deposits at September 30, 2025. ($ in thousands) September 30, 2025 Within one year $ 1,155,615 Year 2 101,932 Year 3 12,120 Year 4 4,815 Year 5 6,649 Thereafter 1 Total $ 1,281,132 The approximate amount of certificates of deposit that exceeded the FDIC insurance limit of $250,000 or more was $ 411.1 million and $ 374.1 million at September 30, 2025 and December 31, 2024, respectively. 25 Table of Contents Note 7 - Borrowings The following table summarizes certain information of the Company’s long-term debt at September 30, 2025 and December 31, 2024. ($ in thousands) September 30, 2025 December 31, 2024 Issue Date Stated Maturity Date Earliest Call Date Interest Rate Subordinated Debentures due September 2030 $ 25,000 $ 25,000 2020 2030 2025 5.375 % through September 2025, 3-month SOFR* + 5.265 % thereafter Subordinated Debentures due October 2030 19,500 19,500 2020 2030 2025 4.75 % through October 2025, 3-month SOFR + 4.58 % thereafter Total subordinated debentures 44,500 44,500 Severn Capital Trust I 20,619 20,619 2004 2035 3-month SOFR + 2.00 % Tri-County Capital Trust I 7,217 7,217 2004 2034 90-day SOFR + 2.60 % Tri-County Capital Trust II 5,155 5,155 2005 2035 90-day SOFR + 1.70 % Total trust preferred securities 32,991 32,991 Less: net discount and unamortized issuance costs ( 2,997 ) ( 3,774 ) Total long-term debt $ 74,494 $ 73,717 ____________________________________ * Secured Overnight Financing Rate (“SOFR”). At September 30, 2025, subordinated debentures 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 September 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 $ 19.4 million, respectively. The Company has the option to redeem the subordinate notes in part or whole as of September 1, 2025. As of September 30, 2025, 80 % of the subordinated debt was considered Tier 2 capital under current regulatory guidelines. The Company 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 by 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 junior subordinated debt securities of Severn Capital Trust I at September 30, 2025 was $ 18.9 million, net of the unamortized fair value adjustment of $ 1.7 million. At September 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 net of the unamortized fair value adjustments of $ 523 thousand and $ 678 thousand, respectively. As of September 30, 2025, the entire amount of trust preferred securities debt is considered Tier 2 capital under current regulatory guidelines. 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 September 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 September 30, 2025 and December 31, 2024. Further information on these obligations is provided in the Company’s A nnual Report on Form 10-K for the year ended December 31, 2024 . 26 Table of Contents Note 8 – Derivatives The Company maintains and accounts for derivatives, in the form of interest rate lock commitments (“IRLCs”) and mandatory forward contracts, in accordance with the FASB guidance on accounting for derivative instruments and hedging activities. The Company recognizes gains and losses through mortgage banking revenue in the consolidated statements of income. IRLCs on mortgage loans that the Company intends to sell in the secondary market are considered derivatives. The Company is exposed to price risk from the time a mortgage loan is locked in until the time the loan is sold. The period of time between issuance of a loan commitment, closing and sale of the loan generally ranges from 14 days to 120 days, however, this period may be longer for construction to permanent loans that are originated with the intent of selling in the secondary market upon permanent financing. For these IRLCs and closed inventory in loans held for sale, the Company attempts to protect itself from changes in interest rates through the use of to be announced (“TBA”) securities, which are forward contracts, as well as, to a significantly lesser degree, loan level commitments in the form of best efforts and mandatory forward contracts. 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 September 30, 2025 and December 31, 2024. September 30, 2025 December 31, 2024 ($ in thousands) Notional Amount Estimated Fair Value Notional Amount Estimated Fair Value Asset – IRLCs $ 12,278 $ 216 $ 7,527 $ 113 Asset – TBA securities 24,250 38 22,100 164 Liability – IRLCs 180 1 — — Liability – TBA securities 16,250 47 7,550 23 Note 9 – Accumulated Other Comprehensive Loss 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 and nine months ended September 30, 2025 and 2024. Accumulated Other Comprehensive Loss Three Months Ended Nine Months Ended ($ in thousands) September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 Beginning of period $ ( 5,603 ) $ ( 8,260 ) $ ( 7,545 ) $ ( 7,494 ) Other comprehensive income, net of tax 844 2,734 2,786 1,968 End of period $ ( 4,759 ) $ ( 5,526 ) $ ( 4,759 ) $ ( 5,526 ) Note 10 – Regulatory Capital Requirements Banks and bank holding companies are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet 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 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 the Banks’ 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 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 September 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 the Bank’s primary regulator 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 would change the Bank’s classification. 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 September 30, 2025 and December 31, 2024. 27 Table of Contents September 30, 2025 December 31, 2024 Amount Regulatory Minimum Ratio + Capital Conservation Buffer To Be Well-Capitalized Under Prompt Corrective Action Regulation (1) Amount ($ in thousands) The Company Amounts Common Equity Tier 1 Capital $ 496,709 $ 340,707 N/A $ 458,258 Tier 1 Capital 526,794 413,715 N/A 488,105 Total Capital 627,055 511,060 N/A 591,228 Risk-Weighted Assets 4,867,237 237,716 N/A 4,852,564 The Company Ratios Common Equity Tier 1 Capital to Risk-Weighted Assets (“RWA”) 10.21 % 7.00 % N/A 9.44 % Tier 1 Capital to RWA 10.82 8.50 N/A 10.06 Total Capital to RWA 12.88 10.50 N/A 12.18 Tier 1 Capital to Average Assets (Leverage) (2) 8.86 4.00 N/A 8.02 The Bank Amounts Common Equity Tier 1 Capital $ 559,212 $ 340,541 $ 316,217 $ 521,453 Tier 1 Capital 559,212 413,514 389,190 521,453 Total Capital 620,034 510,811 486,487 580,706 Risk-Weighted Assets 4,864,871 237,596 296,995 4,851,903 The Bank Ratios Common Equity Tier 1 Capital to RWA 11.49 % 7.00 % 6.50 % 10.75 % Tier 1 Capital to RWA 11.49 8.50 8.00 10.75 Total Capital to RWA 12.75 10.50 10.00 11.97 Tier 1 Capital to Average Assets (Leverage) (2) 9.41 4.00 5.00 8.58 ____________________________________ (1) Applies to the Bank only. (2) Tier 1 Capital to Average Assets (Leverage) has no capital conservation buffer defined. The PCA well-capitalized threshold is defined as 5.00 %. As of September 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 4.82 % above the minimum buffer ratio and, at the Bank, the lowest ratio was the Total Capital to RWA, which was 4.75 % above the minimum buffer ratio. The Company is a separate legal entity from the Bank and must provide for its own liquidity. In addition to its operating expenses, the Company is responsible for paying any dividends declared to its common stockholders and interest and principal on outstanding debt. 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 September 30, 2025, the Bank could pay dividends to the Company to the extent of its earnings, so long as it maintained required capital ratios. 28 Table of Contents Note 11 – Fair Value Measurements Accounting guidance under GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This accounting guidance also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities on a recurring basis and to determine fair value disclosures. Available for sale securities and equity securities with readily determinable fair values are recorded at fair value on a recurring basis, along with other mortgage-related items identified in the recurring fair value table below. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as collateral dependent loans, repossessed assets and OREO (foreclosed assets). These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets. Under fair value accounting guidance, assets and liabilities are grouped 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 their fair values. These hierarchy levels are: • Level 1 inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. • Level 2 inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. • Level 3 inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities. Assets Measured at Fair Value on a Recurring Basis Available for Sale Securities Fair value measurement of AFS securities is based on quoted prices from an independent pricing service. The fair value measurements consider observable data that may include present value of future cash flows, prepayment assumptions, credit loss assumptions and other factors. The Company classifies its investments in U.S. Treasury securities, if any, as Level 1 in the fair value hierarchy, and it classifies its investments in U.S. government agency securities and mortgage-backed securities issued or guaranteed by U.S. government-sponsored entities as Level 2. Equity Securities Fair value measurement for equity securities is based on quoted market prices retrieved by the Company via online resources. Although these securities have readily available fair market values, the Company determined that they should be classified as level 2 investments in the fair value hierarchy due to not being considered traded in a highly active market. Loans Held for Sale Loans held for sale are carried at fair value, which is determined based on Mark to Trade for allocated/committed loans or Mark to Market analysis for unallocated/uncommitted loans based on third-party pricing models (Level 2). IRLCs The Company utilizes a third-party specialist model to estimate the fair value of IRLCs, which are valued based upon mortgage securities (TBA) prices less estimated costs to process and settle the loan. Fair value is adjusted for the estimated probability of the loan closing with the borrower (Level 3). ($ in thousands) Fair Value Valuation Technique Unobservable Input Range September 30, 2025 IRLCs – net asset $ 215 Market Approach Range of pull through rate 79 % - 100 % Average pull through rate 89 % 29 Table of Contents ($ in thousands) Fair Value Valuation Technique Unobservable Input Range December 31, 2024 IRLCs – net asset $ 113 Market Approach Range of pull through rate 78 % - 100 % Average pull through rate 89 % The following table presents activity in the IRLCs – net asset for the three and nine months ended September 30, 2025. ($ in thousands) Three Months Ended September 30, 2025 Nine Months Ended September 30, 2025 Beginning balance $ 426 $ 113 Valuation adjustment ( 211 ) 102 Ending balance $ 215 $ 215 Forward Contracts To avoid interest rate risk, the Company hedges the open locked/closed position with TBA forward trades. On a regular basis, the Company allocates disbursed loans to mandatory commitments with government-sponsored enterprises and private investors delivering the loans within 120 days of origination to maximize interest earnings. For a small percentage of business, the Company enters into best efforts forward sales commitments with investors at the time it makes an IRLC to a borrower. Once a loan has been closed and funded, the best efforts commitments convert to mandatory forward sales commitments. The mandatory commitments are derivatives, and the Company measures and reports them at fair value. Fair value is based on the gain or loss that would occur if the Company were to pair-off the transaction with the investor at the measurement date. This is a Level 2 input. The Company has elected to measure and report best efforts commitments at fair value using a valuation methodology similar to that used for mandatory commitments. Market assumptions utilized in the fair value measurement of the reporting entity’s residential mortgage derivatives, inclusive of IRLCs, Closed Loan Inventory, TBA derivative trades, and Mandatory Forwards may be subject to investor overlays that may result in a significantly lower fair value measurement. Generally such overlays are announced with advanced notice in order to include the risk adjuster, however there are times when announcements are mandated resulting in a lower fair value measurement. 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. 30 Table of Contents The following tables present the recorded amount of assets measured at fair value on a recurring basis at September 30, 2025 and December 31, 2024. No assets were transferred from one hierarchy level to another during the nine months ended September 30, 2025 or 2024. ($ in thousands) Fair Value Quoted Prices (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) September 30, 2025 Assets: Available for sale securities: U.S. government agency securities $ 20,565 $ — $ 20,565 $ — Mortgage-backed securities 156,442 — 156,442 — Other debt securities 4,713 — 4,713 — Total available for sale securities 181,720 — 181,720 — Equity securities 6,113 — 6,113 — TBA forward trades 38 — 38 — Loans held for sale 21,500 — 21,500 — IRLCs 216 — — 216 Total assets at fair value $ 209,587 $ — $ 209,371 $ 216 Liabilities: IRLCs $ 1 $ — $ — $ 1 TBA forward trades 47 — 47 — Total liabilities at fair value $ 48 $ — $ 47 $ 1 ($ in thousands) Fair Value Quoted Prices (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2024 Assets: Available for sale securities: U.S. government agency securities $ 20,202 $ — $ 20,202 $ — Mortgage-backed securities 122,384 — 122,384 — Other debt securities 6,626 — 6,626 — Total available for sale securities 149,212 — 149,212 — Equity securities 5,814 — 5,814 — TBA forward trades 164 — 164 — Loans held for sale 19,606 — 19,606 — IRLCs 113 — — 113 Total assets at fair value $ 174,909 $ — $ 174,796 $ 113 Liabilities: TBA forward trades $ 23 $ — $ 23 $ — Total liabilities at fair value $ 23 $ — $ 23 $ — Assets Measured at Fair Value on a Nonrecurring Basis Individually Evaluated Collateral-Dependent Loans 31 Table of Contents Loans for which repayment is substantially expected to be provided through the operation or sale of collateral are considered collateral dependent and are valued based on the estimated fair value of the collateral, less estimated costs to sell at the reporting date, where applicable. Accordingly, collateral dependent loans are classified within Level 3 of the fair value hierarchy. OREO (Foreclosed Assets) Foreclosed assets are adjusted for fair value upon transfer of loans to foreclosed assets establishing a new cost basis. Subsequently, foreclosed assets are carried at the lower of carrying value or fair value. The estimated fair value for foreclosed assets included in Level 3 are determined by independent market-based appraisals and other available market information, less costs to sell, that may be reduced further based on market expectations or an executed sales agreement. If the fair value of the collateral deteriorates subsequent to the initial recognition, the Company records the foreclosed asset as a non-recurring Level 3 adjustment. Valuation techniques are consistent with those techniques applied in prior periods. Repossessed Assets All repossessed assets are recorded at lower of the estimated fair value of the properties, less expected selling costs, or the carrying amount of the defaulted loans. From time to time, nonrecurring fair value adjustments are recorded to reflect partial write-downs based on current appraised value of an asset. The Company considers any valuation inputs related to repossessed assets to be Level 3 inputs. Fair value adjustments for these assets are recorded in other noninterest expense in the consolidated statements of income. Other Assets Held for Sale Other assets held for sale are carried at the lower of the carrying amount or fair value. The fair value is determined based on the appraisal value, listing price of the property or collateral provided by independent appraisers, and is adjusted for the estimated costs to sell. Due to the use of significant unobservable inputs, these assets are classified as Level 3 under the fair value hierarchy. 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 assets subject to fair value adjustments (impairment) on a nonrecurring basis at September 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. Quantitative Information about Level 3 Fair Value Measurements ($ in thousands) Fair Value Valuation Technique Unobservable Input Range Weighted-Average September 30, 2025 Nonrecurring measurements: Individually evaluated collateral dependent loan Commercial real estate $ 6,781 Appraisal of collateral (1) Appraisal adjustment (2) Liquidation expense (2) 1 % - 61 % 10 % 26 % 10 % Residential real estate 456 Appraisal of collateral (1) Appraisal adjustment (2) Liquidation expense (2) 54 % 10 % 3 % 10 % Commercial 112 Appraisal of collateral (1) Appraisal adjustment (2) Liquidation expense (2) 100 % 10 % 2 % 10 % Other real estate owned 120 Appraisal of collateral (1) Appraisal adjustment (2) N/A 0 % Repossessed assets 3,432 Appraisal of collateral (1) Appraisal adjustment (2) N/A 56 % 32 Table of Contents Quantitative Information about Level 3 Fair Value Measurements ($ in thousands) Fair Value Valuation Technique Unobservable Input Range Weighted-Average December 31, 2024 Nonrecurring measurements: Individually evaluated collateral dependent loan Commercial real estate $ 2,220 Appraisal of collateral (1) Appraisal adjustment (2) Liquidation expense (2) 62 % 10 % 38 % 10 % Residential real estate 817 Appraisal of collateral (1) Appraisal adjustment (2) Liquidation expense (2) 55 % - 100 % 10 % 17 % 10 % Consumer 624 Appraisal of collateral (1) Appraisal adjustment (2) Liquidation expense (2) 80 % - 86 % 10 % 15 % 10 % Other real estate owned 179 Appraisal of collateral (1) Appraisal adjustment (2) N/A 0 % Repossessed assets 3,315 Appraisal of collateral (1) Appraisal adjustment (2) N/A 39 % Assets held for sale 900 Appraisal of collateral (1) Appraisal adjustment (2) N/A 0 % _________________________________ (1) Unobservable inputs were weighted by the relative fair value of the instruments. No range is presented only when one instrument was available. (2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal. 33 Table of Contents Note 12 – Fair Value of Financial Instruments Financial instruments require disclosure of fair value information, whether or not recognized in the consolidated balance sheets, when it is practical to estimate the fair value. A financial instrument is defined as cash, evidence of an ownership interest in an entity or a contractual obligation which requires the exchange of cash. 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 September 30, 2025 and December 31, 2024. Fair values for September 30, 2025 and December 31, 2024 were estimated using an exit price notion. September 30, 2025 Carrying Amount Fair Value Fair Value Measurements ($ in thousands) Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 416,513 $ 416,513 $ 416,513 $ — $ — Available for sale securities 181,720 181,720 — 181,720 — Held to maturity securities 433,440 393,540 — 393,540 — Equity securities 6,113 6,113 — 6,113 — Restricted securities 20,364 N/A — N/A — Loans held for sale 21,500 21,500 — 21,500 — TBA securities 38 38 — 38 — Loans held for investment, at amortized cost, net 4,823,415 4,731,552 — — 4,731,552 Mortgage servicing rights 5,293 5,293 — 5,293 — Accrued interest receivable 20,408 20,408 — 20,408 — IRLCs 216 216 — — 216 Liabilities Deposits: Noninterest-bearing $ 1,594,212 $ 1,594,212 $ — $ 1,594,212 $ — Interest-bearing checking 851,963 851,963 — 851,963 — Money market and savings 1,790,001 1,790,001 — 1,790,001 — Time deposits 1,281,132 1,279,762 — 1,279,762 — Brokered deposits 10,857 10,863 — 10,863 — FHLB advances 50,000 50,024 — 50,024 — TRUPS 30,085 28,499 — 28,499 — Subordinated debt 44,409 44,535 — 44,535 — TBA Securities 47 47 — 47 — Accrued interest payable 3,403 3,403 — 3,403 — IRLCs 1 1 — — 1 34 Table of Contents December 31, 2024 Carrying Amount Fair Value Fair Value Measurements ($ in thousands) Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 459,851 $ 459,851 $ 459,851 $ — $ — Available for sale securities 149,212 149,212 — 149,212 — Held to maturity securities 481,077 424,734 — 424,734 — Equity securities 5,814 5,814 — 5,814 — Restricted securities 20,253 20,253 — 20,253 — Loans held for sale 19,606 19,606 — 19,606 — TBA securities 164 164 — 164 — Loans held for investment, at amortized cost, net 4,714,078 4,561,449 — — 4,561,449 Mortgage servicing rights 5,874 5,874 — 5,874 — Accrued interest receivable 19,570 19,570 — 19,570 — IRLCs 113 113 — — 113 Liabilities Deposits: Noninterest-bearing $ 1,562,815 $ 1,562,815 $ — $ 1,562,815 $ — Interest bearing checking 978,076 978,076 — 978,076 — Money market and savings 1,805,884 1,805,884 — 1,805,884 — Time deposits 1,181,561 1,179,716 — 1,179,716 — FHLB advances 50,000 50,201 — 50,201 — TRUPS 29,847 27,952 — 27,952 — Subordinated debt 43,870 43,669 — 43,669 — TBA securities 23 23 — 23 — Accrued interest payable 3,398 3,398 — 3,398 — Note 13 – Commitments and Contingencies In the normal course of business, to meet the financial needs of its customers, the Bank is a party to financial instruments with off-balance sheet risk. These financial instruments include commitments to extend credit and standby letters of credit. 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. Letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Letters of credit and other commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because many of the letters of credit and commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. Commitments to make loans are generally made for a period of 90 days or less. As of September 30, 2025 , the Company’s outstanding fixed rate loan commitments have interest rates ra nging from 6.49 % to 9.24 %. The following table provides information on commitments outstanding at September 30, 2025 and December 31, 2024. ($ in thousands) September 30, 2025 December 31, 2024 Commitments to extend credit Fixed $ 218,027 $ 261,794 Variable 495,157 497,686 Total commitments to extend credit $ 713,184 $ 759,480 Letters of credit Fixed $ 7,020 $ 8,980 Variable 18,332 18,981 Total letters of credit $ 25,352 $ 27,961 Total commitments outstanding $ 738,536 $ 787,441 35 Table of Contents The Bank had a reserve for off-balance sheet credit exposures of $ 2.1 million and $ 1.1 million as of September 30, 2025 and December 31, 2024, respectively. The reserve was estimated based on the historic losses experienced by the Company. Losses are charged against the allowance when management believes the required funding of these exposures is uncollectible. While this evaluation is completed on a regular basis, it is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. In the normal course of business, the Company may become involved in litigation arising from banking, financial and other activities. Management, after consultation with legal counsel, does not anticipate that the future liability, if any, arising out of current proceedings will have a material effect on the Company’s financial condition, operating results, or liquidity. 36 Table of Contents Note 14 – Earnings per Common Share Basic 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. 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 September 30, 2025 and 2024. Three Months Ended September 30, Nine Months Ended September 30, ($ in thousands, except per share data) 2025 2024 2025 2024 Net income $ 14,348 $ 11,189 $ 43,619 $ 30,607 Average number of common shares outstanding 33,419,291 33,317,739 33,381,568 33,247,210 Dilutive effect of common stock equivalents 16,571 21,266 10,730 7,496 Average number of common shares used to calculate diluted EPS 33,435,862 33,339,005 33,392,298 33,254,706 Anti-dilutive shares — — 483 — Basic net income per common share $ 0.43 $ 0.34 $ 1.31 $ 0.92 Diluted net income per common share $ 0.43 $ 0.34 $ 1.31 $ 0.92 There were zero anti-dilutive unvested restricted stock and performance stock unit awards excluded from the calculation of diluted earnings per share for both the three months ended September 30, 2025 and 2024. There were 483 and zero anti-dilutive unvested restricted stock and performance stock unit awards excluded from the calculation of diluted earnings per share for the nine months ended September 30, 2025 and 2024, respectively. Note 15 – Revenue Recognition Topic 606 is applicable to noninterest revenue streams such as trust and asset management income, deposit related fees, interchange fees and merchant income. Noninterest revenue streams in-scope of Topic 606 are discussed below. Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities. Service Charges on Deposit Accounts Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, and other deposit account related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account-related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or at the end of the month through a direct charge to customers’ accounts. Trust and Investment Fee Income Trust and investment fee income primarily comprise fees earned from the management and administration of trusts and other customer assets. The Company’s performance obligation is generally satisfied over time, and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days after month end through a direct charge to customers’ accounts. The Company does not earn performance-based incentives. Optional services such as real estate sales and tax return preparation services are also available to existing trust and asset management customers. The Company’s performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e., as incurred). Payment is received shortly after services are rendered. Other Noninterest Income Other noninterest income consists of fees, exchange, other service charges, safety deposit box rental fees, and other miscellaneous revenue streams. Fees and other service charges primarily comprise debit and credit card income, automated teller machine (“ATM”) fees, merchant services income, and other service charges. Debit and credit card income primarily comprises interchange fees earned whenever the Company’s debit and credit cards are processed through card payment networks such as Mastercard and Visa. ATM fees are primarily 37 Table of Contents generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. Merchant services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees. Other service charges include revenue from processing wire transfers, bill pay service, cashier’s checks, and other services. The Company’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment. The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and nine months ended September 30, 2025 and 2024. Three Months Ended September 30, Nine Months Ended September 30, ($ in thousands) 2025 2024 2025 2024 Noninterest income In-scope of Topic 606: Service charges on deposit accounts $ 1,599 $ 1,543 $ 4,632 $ 4,543 Trust and investment fee income 898 880 2,663 2,510 Interchange income 1,858 1,711 5,223 5,015 Other noninterest income 777 606 2,961 2,633 Noninterest income (in-scope of Topic 606) 5,132 4,740 15,479 14,701 Noninterest income (out-of-scope of Topic 606) 2,569 2,547 8,542 7,593 Total noninterest income $ 7,701 $ 7,287 $ 24,021 $ 22,294 Note 16 – Segment Reporting The Company’s reportable segment is determined by the Chief Executive Officer, who is designated the chief operating decision maker (“CODM”), based upon information provided about the Company’s product and services offered. The segment is also distinguished by the level of information provided to the CODM, who uses such information to review performance of various components of the business, which are then aggregated if operating performance of product and customers are similar. The CODM evaluates the financial performance of the Company’s business components such as revenue streams, significant expenses, and budget to actual results in assessing the Company’s segment and in determination of allocated resources. While the CODM monitors the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the financial services operations are considered by management to be aggregated in one reportable operating segment. Refer to the “Consolidated Financial Statements” included in Part I, Item 1. of this Quarterly Report on Form 10-Q. 38 Table of Contents