SHORE BANCSHARES INC 10-Q

Item 1. FINANCIAL STATEMENTS SHORE BANCSHARES, INC. CONSOLIDATED BALANCE SHEETS ($ in thousands, except per share data) June 30, 2026 December 31, 2025 ASSETS (Unaudited) Cash and due from banks $ 53,335 $ 50,164 Interest-bearing deposits with other banks 204,335 305,402 Cash and cash equivalents 257,670 355,566 Investment securities: Available for sale, at fair value (amortized cost of $ 295,747 and $ 226,677 at June 30, 2026 and December 31, 2025, respectively) 287,369 220,358 Held to maturity, net of allowance for credit losses of $ 76 and $ 99 (fair value of $ 328,696 and $ 378,116 at June 30, 2026 and December 31, 2025, respectively) 366,213 414,827 Equity securities, at fair value 6,218 6,186 Restricted securities, at cost 18,003 17,989 Loans held for sale, at fair value 30,827 32,540 Loans held for investment 4,877,749 4,900,302 Less: allowance for credit losses ( 58,737 ) ( 58,836 ) Loans, net 4,819,012 4,841,466 Premises and equipment, net 79,580 80,168 Goodwill 63,266 63,266 Other intangible assets, net 25,767 29,722 Right-of-use assets 9,691 10,523 Cash surrender value on life insurance 107,724 105,839 Accrued interest receivable 20,021 18,551 Deferred income taxes 30,657 29,825 Other assets 29,413 31,992 TOTAL ASSETS $ 6,151,431 $ 6,258,818 LIABILITIES Deposits: Noninterest-bearing $ 1,606,809 $ 1,587,953 Interest-bearing checking 833,602 852,585 Money market and savings 1,710,570 1,814,928 Time deposits 1,247,973 1,267,487 Brokered deposits 796 10,911 Total deposits 5,399,750 5,533,864 Guaranteed preferred beneficial interest in junior subordinated debentures (“TRUPS”), net 30,327 30,168 Subordinated debt, net 58,825 58,893 Total borrowings 89,152 89,061 Lease liabilities 10,199 11,027 Other liabilities 36,255 34,993 TOTAL LIABILITIES 5,535,356 5,668,945 COMMITMENTS AND CONTINGENCIES (Note 13) STOCKHOLDERS’ EQUITY Common stock, $ 0.01 par value per share; shares authorized 50,000,000 ; shares issued and outstanding 33,416,336 and 33,413,503 at June 30, 2026 and December 31, 2025, respectively 334 334 Additional paid-in capital 361,048 360,554 Retained earnings 260,782 233,578 Accumulated other comprehensive loss ( 6,089 ) ( 4,593 ) TOTAL STOCKHOLDERS’ EQUITY 616,075 589,873 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 6,151,431 $ 6,258,818 See accompanying notes to unaudited consolidated financial statements. 3 Table of Contents SHORE BANCSHARES, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended June 30, Six Months Ended June 30, ($ in thousands, except per share data) 2026 2025 2026 2025 INTEREST INCOME Interest on loans $ 70,456 $ 69,607 $ 141,270 $ 137,123 Interest and dividends on taxable investment securities 5,387 5,331 10,501 10,332 Interest and dividends on tax-exempt investment securities 6 6 12 12 Interest on deposits with other banks 1,600 1,588 4,058 4,997 Total interest income 77,449 76,532 155,841 152,464 INTEREST EXPENSE Interest on deposits 22,943 27,370 47,207 55,440 Interest on short-term borrowings 16 605 16 1,203 Interest on long-term borrowings 1,571 1,394 3,144 2,760 Total interest expense 24,530 29,369 50,367 59,403 NET INTEREST INCOME 52,919 47,163 105,474 93,061 Provision for credit losses 896 1,528 981 2,556 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 52,023 45,635 104,493 90,505 NONINTEREST INCOME Service charges on deposit accounts 1,651 1,519 3,247 3,033 Trust and investment fee income 1,103 942 2,240 1,765 Mortgage banking revenue 1,554 2,379 3,004 3,619 Interchange credits 1,960 1,788 3,658 3,365 Other noninterest income 2,562 2,778 3,925 4,758 Total noninterest income 8,830 9,406 16,074 16,540 NONINTEREST EXPENSE Salaries and employee benefits 18,462 17,742 38,101 34,182 Occupancy expense 2,495 2,472 5,062 5,010 Furniture and equipment expense 966 797 1,821 1,650 Software and data processing 5,335 4,819 10,475 9,510 Amortization of other intangible assets 1,975 2,272 3,955 4,550 Legal and professional fees 1,355 1,225 2,960 2,838 FDIC insurance premium expense 968 1,023 1,963 2,114 Marketing and advertising 275 384 586 638 Fraud losses 147 83 258 188 Other noninterest expense 3,690 3,593 7,543 7,477 Total noninterest expense 35,668 34,410 72,724 68,157 Income before income taxes 25,185 20,631 47,843 38,888 Income tax expense 6,320 5,124 11,890 9,617 NET INCOME $ 18,865 $ 15,507 $ 35,953 $ 29,271 Basic net income per common share $ 0.56 $ 0.46 $ 1.08 $ 0.88 Diluted net income per common share $ 0.56 $ 0.46 $ 1.07 $ 0.88 Dividends paid per common share $ 0.14 $ 0.12 $ 0.26 $ 0.24 See accompanying notes to unaudited consolidated financial statements. 4 Table of Contents SHORE BANCSHARES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended June 30, Six Months Ended June 30, ($ in thousands) 2026 2025 2026 2025 Net income $ 18,865 $ 15,507 $ 35,953 $ 29,271 Other comprehensive income (loss): Investment securities: Unrealized holding (losses) gains on available for sale securities ( 1,128 ) 1,004 ( 2,059 ) 2,671 Tax effect 309 ( 274 ) 563 ( 729 ) Total other comprehensive (loss) income ( 819 ) 730 ( 1,496 ) 1,942 Comprehensive income $ 18,046 $ 16,237 $ 34,457 $ 31,213 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, except per share data) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders’ Equity Balances, December 31, 2025 $ 334 $ 360,554 $ 233,578 $ ( 4,593 ) $ 589,873 Net income — — 17,088 — 17,088 Other comprehensive loss — — — ( 677 ) ( 677 ) Common shares issued for employee stock purchase plan — 90 — — 90 Stock-based compensation 1 369 — — 370 Cash dividends at $ 0.12 per common share — — ( 4,030 ) — ( 4,030 ) Balances, March 31, 2026 $ 335 $ 361,013 $ 246,636 $ ( 5,270 ) $ 602,714 Net income — — 18,865 — 18,865 Other comprehensive loss — — — ( 819 ) ( 819 ) Retirement of common stock ( 1 ) ( 1,059 ) — — ( 1,060 ) Common shares issued for employee stock purchase plan — 82 — — 82 Stock-based compensation — 1,012 — — 1,012 Cash dividends at $ 0.14 per common share — — ( 4,719 ) — ( 4,719 ) Balances, June 30, 2026 $ 334 $ 361,048 $ 260,782 $ ( 6,089 ) $ 616,075 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, except per share data) 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 at $ 0.12 per common share — — ( 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 income — — — 730 730 Stock-based compensation 1 491 — — 492 Cash dividends at $ 0.12 per common share — — ( 4,005 ) — ( 4,005 ) Balances, June 30, 2025 $ 334 $ 359,063 $ 211,400 $ ( 5,603 ) $ 565,194 See accompanying notes to unaudited consolidated financial statements. 7 Table of Contents SHORE BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, ($ in thousands) 2026 2025 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 35,953 $ 29,271 Adjustments to reconcile net income to net cash provided by operating activities: Net accretion of acquisition accounting estimates ( 7,949 ) ( 6,737 ) Provision for credit losses 981 2,556 Depreciation and amortization 7,150 8,126 Net amortization of securities ( 201 ) 64 Amortization of and valuation adjustments on mortgage servicing rights 322 536 Amortization of debt issuance costs 139 61 Gain on mortgage loans held for sale ( 2,608 ) ( 2,291 ) Gain on other mortgage loan activity ( 135 ) ( 938 ) Proceeds from sale of mortgage loans held for sale 95,830 82,070 Originations of loans held for sale ( 91,477 ) ( 94,125 ) Stock-based compensation expense 1,925 970 Deferred income tax expense (benefit) ( 270 ) 156 Loss on sales and valuation adjustments of repossessed assets 621 123 Loss on disposal of fixed assets — 48 Loss on disposal of premises held for sale — 61 Loss on sales and valuation adjustments on other real estate owned 44 — Fair value adjustment on equity securities 65 ( 106 ) Bank-owned life insurance income ( 981 ) ( 1,287 ) Net changes in: Accrued interest receivable ( 1,470 ) ( 253 ) Other assets 1,170 ( 1,696 ) Accrued interest payable ( 409 ) 88 Other liabilities 446 ( 5,251 ) Net cash provided by operating activities 39,146 11,446 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturities and principal payments of available for sale securities 26,823 12,573 Proceeds from maturities and principal payments of held to maturity securities 48,343 23,899 Purchases of available for sale securities ( 95,397 ) ( 48,171 ) Purchases of held to maturity securities — ( 2,326 ) Purchases of equity securities ( 97 ) ( 90 ) Purchase of restricted securities ( 14 ) ( 158 ) Net change in loans 28,859 ( 49,173 ) Purchases of premises and equipment ( 1,654 ) ( 1,905 ) Proceeds from sales of other real estate owned 69 — Proceeds from sales of repossessed assets 728 1,531 Purchases of bank-owned life insurance ( 408 ) ( 152 ) Proceeds from disposal of premises held for sale — 843 Net cash provided by (used in) investing activities $ 7,252 $ ( 63,129 ) See accompanying notes to unaudited consolidated financial statements. 8 Table of Contents SHORE BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) – Continued Six Months Ended June 30, ($ in thousands) 2026 2025 CASH FLOWS FROM FINANCING ACTIVITIES: Net changes in: Noninterest-bearing deposits $ 18,856 $ 12,314 Interest-bearing deposits ( 152,970 ) ( 227,461 ) Shares withheld as tax payments associated with settlement of restricted stock units ( 543 ) — Common stock dividends paid ( 8,749 ) ( 8,037 ) Retirement of common stock ( 1,060 ) — Issuance of common stock 172 — Net cash used in financing activities ( 144,294 ) ( 223,184 ) Net decrease in cash and cash equivalents ( 97,896 ) ( 274,867 ) Cash and cash equivalents at beginning of period 355,566 459,851 Cash and cash equivalents at end of period $ 257,670 $ 184,984 Supplemental cash flow information: Interest paid $ 50,478 $ 58,022 Income taxes paid 12,830 7,985 Recognition of lease liabilities arising from right-of-use assets — 912 Transfers from loans to repossessed assets 832 947 Transfer from loans held for sale to loans held for investment — 649 Unrealized (losses) gains on available for sale securities ( 2,059 ) 2,671 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, 2025 (the “2025 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 locations in Maryland, Delaware and Virginia. 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. The Company engages in financial service offerings through Wye Financial Partners, a division of the Bank, and offers corporate trustee services through Wye Trust, a division of the Bank. 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. While management makes its best judgments, actual amounts or results could differ from these estimates. Recent Accounting Pronouncements In January 2026, the Company adopted Accounting Standards Update (“ASU”) 2025‑08, Financial Instruments—Credit Losses (Topic 326): Purchased Loans, which expanded the use of the gross‑up method beyond purchased credit‑deteriorated (“PCD”) assets to include purchased seasoned loans (“PSLs”). Under the amended guidance, a non‑PCD loan (excluding credit cards) is considered seasoned if it is acquired in a business combination, or if it is purchased at least 90 days after origination and the acquirer was not involved in the origination of the loan. Qualifying PSLs are recorded at acquisition at their purchase price plus an allowance for expected credit losses, with no corresponding provision for credit losses recognized at acquisition, thereby eliminating the Day 1 provision for credit losses previously required for non‑PCD acquired loans. The early adoption of this guidance did not result in a material impact on the Company’s (consolidated) financial statements at the time of adoption; however, it is expected to reduce income statement volatility in future periods by eliminating Day 1 provisions for credit losses on qualifying acquired loans and improving comparability in acquisition accounting. 10 Table of Contents Note 2 – Investment Securities The following tables provide information on the amortized cost and estimated fair values of investment securities as of June 30, 2026 and December 31, 2025. ($ in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Available for sale securities (1) : June 30, 2026 U.S. Treasury and government agency securities $ 22,029 $ — $ 1,774 $ 20,255 Mortgage-backed securities 253,895 170 7,079 246,986 Other debt securities (2) 19,823 520 215 20,128 Total $ 295,747 $ 690 $ 9,068 $ 287,369 December 31, 2025 U.S. Treasury and government agency securities $ 22,303 $ 2 $ 1,689 $ 20,616 Mortgage-backed securities 200,105 331 5,409 195,027 Other debt securities (2) 4,269 446 — 4,715 Total $ 226,677 $ 779 $ 7,098 $ 220,358 ____________________________________ (1) No available for sale (“AFS”) securities were sold during the three and six months ended June 30, 2026 and 2025. (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: June 30, 2026 U.S. Treasury and government agency securities $ 74,767 $ — $ 4,384 $ 70,383 $ — Mortgage-backed securities 284,564 130 33,069 251,625 — Other debt securities (1) 6,958 23 293 6,688 76 Total $ 366,289 $ 153 $ 37,746 $ 328,696 $ 76 December 31, 2025 U.S. Treasury and government agency securities $ 104,836 $ 2 $ 4,513 $ 100,325 $ — Mortgage-backed securities 303,129 255 32,167 271,217 — Other debt securities (1) 6,961 33 420 6,574 99 Total $ 414,926 $ 290 $ 37,100 $ 378,116 $ 99 ____________________________________ (1) Other debt securities includes corporate and municipal bond obligations of state and political entities. Equity securities with aggregate fair values of $ 6.2 million as of both June 30, 2026 and December 31, 2025 are presented separately on the consolidated balance sheets. The fair value adjustments recorded through earnings totaled a loss of $ 26 thousand and a gain of $ 19 thousand for the three months ended June 30, 2026 and 2025, respectively. The fair value adjustments recorded through earnings totaled loss of $ 65 thousand and a gain of $ 106 thousand for the six months ended June 30, 2026 and 2025, 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 June 30, Six Months Ended June 30, ($ in thousands) 2026 2025 2026 2025 Balance, beginning of period $ 81 $ 178 $ 99 $ 203 Reversal of credit losses, other debt securities ( 5 ) 21 ( 23 ) ( 4 ) Balance, end of period $ 76 $ 199 $ 76 $ 199 11 Table of Contents A reversal of the provision for credit losses of $ 5 thousand and an additional allowance of $ 21 thousand was recorded on HTM corporate and municipal bonds for the three months ended June 30, 2026 and 2025, respectively. A reversal of the provision for credit losses of $ 23 thousand and $ 4 thousand was recorded on HTM corporate and municipal bonds for the six months ended June 30, 2026 and 2025, 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 as of June 30, 2026 and December 31, 2025. Less than 12 Months More than 12 Months Total ($ in thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses June 30, 2026 Available for sale securities: U.S. Treasury and government agency securities $ 2,473 $ 1 $ 17,726 $ 1,773 $ 20,199 $ 1,774 Mortgage-backed securities 136,596 2,018 61,412 5,061 198,008 7,079 Other debt securities 13,535 215 — — 13,535 215 Total $ 152,604 $ 2,234 $ 79,138 $ 6,834 $ 231,742 $ 9,068 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, 2025 Available for sale securities: U.S. Treasury and government agency securities $ — $ — $ 18,027 $ 1,689 $ 18,027 $ 1,689 Mortgage-backed securities 102,954 531 47,656 4,878 150,610 5,409 Total $ 102,954 $ 531 $ 65,683 $ 6,567 $ 168,637 $ 7,098 There were 143 AFS debt securities with a fair value below the amortized cost basis, with unrealized losses totaling $ 9.1 million as of June 30, 2026. The Company concluded that a credit loss did not exist in its AFS securities portfolio as of June 30, 2026, 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 AFS and HTM securities were current with no securities past due or on nonaccrual as of June 30, 2026 and December 31, 2025. There were 143 AFS and 164 HTM securities in an unrealized loss position at June 30, 2026. 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 122 AFS and 169 HTM securities in an unrealized loss position at December 31, 2025. Net unrealized losses with respect to the AFS securities totaled $ 8.4 million and $ 6.3 million as of June 30, 2026 and December 31, 2025, 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 June 30, 2026. Available for Sale Held to Maturity ($ in thousands) Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 2,460 $ 2,459 $ 24,305 $ 23,865 Due after one year through five years 21,115 19,487 43,176 40,839 Due after five years through ten years 18,208 18,368 10,456 9,043 Due after ten years 69 69 3,788 3,324 Total non-mortgage-backed securities $ 41,852 $ 40,383 $ 81,725 $ 77,071 Mortgage-backed securities 253,895 246,986 284,564 251,625 Total $ 295,747 $ 287,369 $ 366,289 $ 328,696 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 June 30, 2026, the aggregate carrying value of AFS and HTM pledged securities was $ 87.7 million and $ 215.4 million, respectively. The comparable amounts for December 31, 2025 were $ 69.4 million and $ 218.6 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 June 30, 2026 and December 31, 2025. June 30, 2026 December 31, 2025 ($ in thousands) Amortized Cost Fair Value Amortized Cost Fair Value Pledged available for sale securities $ 91,010 $ 87,668 $ 75,123 $ 69,369 Pledged held to maturity securities 215,410 191,781 218,556 197,146 There were no obligations of any issuer exceeding 10% of stockholders’ equity at June 30, 2026 or December 31, 2025. Note 3 – Loans and Allowance for Credit Losses The measurement of expected credit losses under the current expected credit loss methodology promulgated by ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , 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 2025 Annual Report. The following table provides information about the principal classes of the loan portfolio at June 30, 2026 and December 31, 2025. ($ in thousands) June 30, 2026 % of Total Loans December 31, 2025 % of Total Loans Commercial real estate $ 2,603,014 53.37 % $ 2,643,996 53.95 % Residential real estate 1,470,401 30.15 1,414,964 28.88 Construction 337,779 6.92 344,903 7.04 Commercial 220,712 4.52 226,006 4.61 Consumer 241,751 4.96 265,912 5.43 Credit cards 4,092 0.08 4,521 0.09 Total loans 4,877,749 100.00 % 4,900,302 100.00 % Less: allowance for credit losses ( 58,737 ) ( 58,836 ) Total loans, net $ 4,819,012 $ 4,841,466 13 Table of Contents Loans are stated at their principal amount outstanding, net of any purchase premiums or discounts, deferred fees, and costs. Included in loans were deferred costs, net of fees, of $ 3.1 million at both June 30, 2026 and December 31, 2025. At June 30, 2026 and December 31, 2025, loans included $ 1.34 billion and $ 1.49 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 are presented net of the related aggregate discounts, which totaled $ 70.0 million and $ 78.2 million at June 30, 2026 and December 31, 2025, respectively. The following tables provide information on the amortized cost basis of nonaccrual loans by loan class as of June 30, 2026 and December 31, 2025. ($ in thousands) Nonaccrual With No Allowance For Credit Losses Nonaccrual With An Allowance For Credit Losses Total Nonaccrual Loans June 30, 2026 Nonaccrual loans: Commercial real estate $ 50,428 $ 667 $ 51,095 Residential real estate 9,032 1,542 10,574 Construction 154 — 154 Commercial 203 2,286 2,489 Consumer 450 38 488 Credit cards — 18 18 Total $ 60,267 $ 4,551 $ 64,818 Interest income $ 966 $ 80 $ 1,046 ($ in thousands) Nonaccrual With No Allowance For Credit Losses Nonaccrual With An Allowance For Credit Losses Total Nonaccrual Loans December 31, 2025 Nonaccrual loans: Commercial real estate $ 6,135 $ 19,498 $ 25,633 Residential real estate 9,594 544 10,138 Construction 88 — 88 Commercial 2,297 784 3,081 Consumer 898 74 972 Credit cards — 48 48 Total $ 19,012 $ 20,948 $ 39,960 Interest income $ 285 $ 363 $ 648 ($ in thousands) Nonaccrual Delinquent Loans Nonaccrual Current Loans Total Nonaccrual Loans June 30, 2026 Nonaccrual loans: Commercial real estate $ 3,437 $ 47,658 $ 51,095 Residential real estate 5,740 4,834 10,574 Construction 154 — 154 Commercial 17 2,472 2,489 Consumer 88 400 488 Credit cards — 18 18 Total $ 9,436 $ 55,382 $ 64,818 14 Table of Contents ($ in thousands) Nonaccrual Delinquent Loans Nonaccrual Current Loans Total Nonaccrual Loans December 31, 2025 Nonaccrual loans: Commercial real estate $ 2,809 $ 22,824 $ 25,633 Residential real estate 3,808 6,330 10,138 Construction 88 — 88 Commercial 196 2,885 3,081 Consumer 491 481 972 Credit cards 32 16 48 Total $ 7,424 $ 32,536 $ 39,960 The overall quality of the Company’s loan portfolio is primarily assessed using the Company’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’s payment history. Credit card loans are classified as performing and are typically charged-off no later than 180 days or when, in the opinion of management, the collection of principal or interest is considered doubtful. As of June 30, 2026, there were two credit 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 1 to 10. Ratings 1 through 6 – Pass – Ratings 1 through 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 Company 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 Company 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. Substandard loan relationships are reviewed at least quarterly. Rating 9 – Doubtful – Doubtful assets have many of the same characteristics of substandard assets, with the exception that the Company 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. Doubtful loan relationships are 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 June 30, 2026 and gross charge-offs during the six months ended June 30, 2026. Term Loans by Origination Year Revolving loans Revolving Converted to Term Loans Total ($ in thousands) Prior to 2022 2022 2023 2024 2025 2026 June 30, 2026 Commercial real estate Pass $ 1,227,989 $ 511,763 $ 193,215 $ 153,536 $ 258,137 $ 121,339 $ 17,791 $ 150 $ 2,483,920 Special mention 17,063 33,701 2,977 — — — — — 53,741 Substandard 26,182 17,822 19,536 1,070 608 — 135 — 65,353 Total $ 1,271,234 $ 563,286 $ 215,728 $ 154,606 $ 258,745 $ 121,339 $ 17,926 $ 150 $ 2,603,014 Gross charge-offs $ ( 64 ) $ — $ — $ — $ — $ — $ — $ — $ ( 64 ) Residential real estate Pass $ 456,836 $ 274,381 $ 194,586 $ 163,825 $ 144,243 $ 60,452 $ 145,231 $ 40 $ 1,439,594 Special mention 17,407 189 — — — — 1,498 — 19,094 Substandard 8,051 1,535 308 512 — — 1,307 — 11,713 Total $ 482,294 $ 276,105 $ 194,894 $ 164,337 $ 144,243 $ 60,452 $ 148,036 $ 40 $ 1,470,401 Gross charge-offs $ ( 139 ) $ — $ — $ — $ — $ — $ ( 4 ) $ — $ ( 143 ) Construction Pass $ 31,094 $ 6,767 $ 15,864 $ 72,192 $ 146,213 $ 47,513 $ 17,271 $ 469 $ 337,383 Substandard 155 — — — 241 — — — 396 Total $ 31,249 $ 6,767 $ 15,864 $ 72,192 $ 146,454 $ 47,513 $ 17,271 $ 469 $ 337,779 Gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial Pass $ 44,280 $ 15,652 $ 13,274 $ 23,950 $ 32,384 $ 25,246 $ 57,574 $ 1,913 $ 214,273 Special mention 4 — — — — — 118 — 122 Substandard 832 546 428 528 17 280 3,686 — 6,317 Total $ 45,116 $ 16,198 $ 13,702 $ 24,478 $ 32,401 $ 25,526 $ 61,378 $ 1,913 $ 220,712 Gross charge-offs $ ( 2 ) $ ( 37 ) $ ( 149 ) $ — $ — $ — $ ( 15 ) $ — $ ( 203 ) Consumer Pass $ 45,221 $ 78,112 $ 32,361 $ 24,531 $ 39,041 $ 21,260 $ 737 $ — $ 241,263 Substandard 3 52 377 — 56 — — — 488 Total $ 45,224 $ 78,164 $ 32,738 $ 24,531 $ 39,097 $ 21,260 $ 737 $ — $ 241,751 Gross charge-offs $ ( 542 ) $ ( 380 ) $ ( 12 ) $ ( 43 ) $ ( 19 ) $ — $ ( 2 ) $ — $ ( 998 ) Total Pass $ 1,805,420 $ 886,675 $ 449,300 $ 438,034 $ 620,018 $ 275,810 $ 238,604 $ 2,572 $ 4,716,433 Special mention 34,474 33,890 2,977 — — — 1,616 — 72,957 Substandard 35,223 19,955 20,649 2,110 922 280 5,128 — 84,267 Total loans by risk category $ 1,875,117 $ 940,520 $ 472,926 $ 440,144 $ 620,940 $ 276,090 $ 245,348 $ 2,572 $ 4,873,657 Total gross charge-offs $ ( 747 ) $ ( 417 ) $ ( 161 ) $ ( 43 ) $ ( 19 ) $ — $ ( 21 ) $ — $ ( 1,408 ) 16 Table of Contents The following table presents the amortized cost of credit card loans based on performing status and gross charge-offs during the six months ended June 30, 2026. Nonperforming loans consisted of nonaccrual loans and loans past due 90 days or more and still accruing. Term Loans by Origination Year Revolving Loans Revolving Converted to Term Loans Total ($ in thousands) Prior to 2022 2022 2023 2024 2025 2026 June 30, 2026 Credit cards Performing $ — $ — $ — $ — $ — $ — $ 4,074 $ — $ 4,074 Nonperforming — — — — — — 18 — 18 Total $ — $ — $ — $ — $ — $ — $ 4,092 $ — $ 4,092 Gross charge-offs $ — $ — $ — $ — $ — $ — $ ( 115 ) $ — $ ( 115 ) Total loans evaluated by performing status $ — $ — $ — $ — $ — $ — $ 4,092 $ — $ 4,092 Total gross charge-offs $ ( 747 ) $ ( 417 ) $ ( 161 ) $ ( 43 ) $ ( 19 ) $ — $ ( 136 ) $ — $ ( 1,523 ) Total recorded investment $ 1,875,117 $ 940,520 $ 472,926 $ 440,144 $ 620,940 $ 276,090 $ 249,440 $ 2,572 $ 4,877,749 17 Table of Contents The following table provides information on loan risk ratings as of December 31, 2025 and gross charge-offs during the year ended December 31, 2025. Term Loans by Origination Year Revolving Loans Revolving Converted to Term Loans Total ($ in thousands) Prior 2021 2022 2023 2024 2025 December 31, 2025 Commercial real estate Pass $ 939,986 $ 364,719 $ 556,924 $ 242,170 $ 139,929 $ 265,405 $ 14,703 $ 27,136 $ 2,550,972 Special mention 15,105 2,884 34,014 344 — — — — 52,347 Substandard 20,056 16,806 2,840 — 283 — 692 — 40,677 Total $ 975,147 $ 384,409 $ 593,778 $ 242,514 $ 140,212 $ 265,405 $ 15,395 $ 27,136 $ 2,643,996 Gross charge-offs $ ( 109 ) $ ( 2,640 ) $ — $ — $ — $ — $ — $ — $ ( 2,749 ) Residential real estate Pass $ 317,764 $ 182,198 $ 275,869 $ 215,397 $ 147,517 $ 114,300 $ 131,075 $ 695 $ 1,384,815 Special mention 3,719 14,777 — 504 — — 65 — 19,065 Substandard 6,990 2,012 267 330 — 112 1,373 — 11,084 Total $ 328,473 $ 198,987 $ 276,136 $ 216,231 $ 147,517 $ 114,412 $ 132,513 $ 695 $ 1,414,964 Gross charge-offs $ ( 5 ) $ — $ — $ — $ — $ — $ ( 45 ) $ — $ ( 50 ) Construction Pass $ 27,094 $ 7,238 $ 7,047 $ 28,868 $ 108,885 $ 151,738 $ 13,070 $ 632 $ 344,572 Substandard 88 — — — — 243 — — 331 Total $ 27,182 $ 7,238 $ 7,047 $ 28,868 $ 108,885 $ 151,981 $ 13,070 $ 632 $ 344,903 Gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial Pass $ 23,379 $ 25,518 $ 19,739 $ 14,925 $ 29,307 $ 35,202 $ 70,493 $ 1,870 $ 220,433 Special mention 104 27 107 105 76 54 845 — 1,318 Substandard 424 1,055 758 527 — — 1,318 173 4,255 Total $ 23,907 $ 26,600 $ 20,604 $ 15,557 $ 29,383 $ 35,256 $ 72,656 $ 2,043 $ 226,006 Gross charge-offs $ ( 71 ) $ — $ — $ ( 329 ) $ — $ — $ ( 381 ) $ ( 31 ) $ ( 812 ) Consumer Pass $ 7,954 $ 45,750 $ 88,990 $ 39,576 $ 31,597 $ 49,634 $ 769 $ — $ 264,270 Special mention — — 671 — — — — — 671 Substandard 1 29 396 445 41 59 — — 971 Total $ 7,955 $ 45,779 $ 90,057 $ 40,021 $ 31,638 $ 49,693 $ 769 $ — $ 265,912 Gross charge-offs $ ( 451 ) $ ( 99 ) $ ( 1,595 ) $ ( 646 ) $ ( 324 ) $ — $ ( 18 ) $ — $ ( 3,133 ) Total Pass $ 1,316,177 $ 625,423 $ 948,569 $ 540,936 $ 457,235 $ 616,279 $ 230,110 $ 30,333 $ 4,765,062 Special mention 18,928 17,688 34,792 953 76 54 910 — 73,401 Substandard 27,559 19,902 4,261 1,302 324 414 3,383 173 57,318 Total loans by risk category $ 1,362,664 $ 663,013 $ 987,622 $ 543,191 $ 457,635 $ 616,747 $ 234,403 $ 30,506 $ 4,895,781 Total gross charge-offs $ ( 636 ) $ ( 2,739 ) $ ( 1,595 ) $ ( 975 ) $ ( 324 ) $ — $ ( 444 ) $ ( 31 ) $ ( 6,744 ) 18 Table of Contents The following table presents the amortized cost of credit card loans based on performing status and gross charge-offs during the year ended December 31, 2025. Nonperforming loans consisted of nonaccrual loans and loans past due 90 days or more and still accruing. Term Loans by Origination Year Revolving Loans Revolving Converted to Term Loans Total ($ in thousands) Prior 2021 2022 2023 2024 2025 December 31, 2025 Credit cards Performing $ — $ — $ — $ — $ — $ — $ 4,473 $ — $ 4,473 Nonperforming — — — — — — 48 — 48 Total $ — $ — $ — $ — $ — $ — $ 4,521 $ — $ 4,521 Gross charge-offs $ — $ — $ — $ — $ — $ — $ ( 535 ) $ — $ ( 535 ) Total loans evaluated by performing status $ — $ — $ — $ — $ — $ — $ 4,521 $ — $ 4,521 Total gross charge-offs $ ( 636 ) $ ( 2,739 ) $ ( 1,595 ) $ ( 975 ) $ ( 324 ) $ — $ ( 979 ) $ ( 31 ) $ ( 7,279 ) Total recorded investment $ 1,362,664 $ 663,013 $ 987,622 $ 543,191 $ 457,635 $ 616,747 $ 238,924 $ 30,506 $ 4,900,302 The following tables provide information on the aging of the Company’s loan portfolio as of June 30, 2026 and December 31, 2025. ($ 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 June 30, 2026 Commercial real estate $ 605 $ 334 $ — $ 1,964 $ 1,473 $ 4,376 $ 2,550,980 $ 47,658 $ 2,603,014 Residential real estate 4,271 470 — 1,456 4,284 10,481 1,455,086 4,834 1,470,401 Construction — — — 34 120 154 337,625 — 337,779 Commercial 337 24 — 17 — 378 217,862 2,472 220,712 Consumer 366 97 — 10 78 551 240,800 400 241,751 Credit cards 51 — 20 — — 71 4,003 18 4,092 Total $ 5,630 $ 925 $ 20 $ 3,481 $ 5,955 $ 16,011 $ 4,806,356 $ 55,382 $ 4,877,749 Percent of total loans 0.12 % 0.02 % 0.00 % 0.07 % 0.12 % 0.33 % 98.53 % 1.14 % 100.00 % ($ 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, 2025 Commercial real estate $ 1,684 $ — $ — $ 68 $ 2,741 $ 4,493 $ 2,616,679 $ 22,824 $ 2,643,996 Residential real estate 1,663 397 71 1,225 2,583 5,939 1,402,695 6,330 1,414,964 Construction — 43 79 — 88 210 344,693 — 344,903 Commercial — 4 — 46 150 200 222,921 2,885 226,006 Consumer 390 690 — 43 448 1,571 263,860 481 265,912 Credit cards 14 19 105 32 — 170 4,335 16 4,521 Total $ 3,751 $ 1,153 $ 255 $ 1,414 $ 6,010 $ 12,583 $ 4,855,183 $ 32,536 $ 4,900,302 Percent of total loans 0.08 % 0.02 % 0.01 % 0.03 % 0.12 % 0.26 % 99.08 % 0.66 % 100.00 % 19 Table of Contents 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, 2026 and 2025. 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 Gross Charge-offs Recoveries Provisions (Reversal of Provisions) Ending Balance Three Months Ended June 30, 2026 Commercial real estate $ 21,672 $ ( 64 ) $ — $ ( 828 ) $ 20,780 Residential real estate 22,993 ( 1 ) 8 531 23,531 Construction 4,806 — 1 1,346 6,153 Commercial 3,497 — 22 ( 142 ) 3,377 Consumer 5,415 ( 167 ) 93 ( 513 ) 4,828 Credit cards 98 ( 35 ) 20 ( 15 ) 68 Total (1) $ 58,481 $ ( 267 ) $ 144 $ 379 $ 58,737 ($ in thousands) Beginning Balance Gross Charge-offs Recoveries Provisions (Reversal of Provisions) Ending Balance Three Months Ended June 30, 2025 Commercial real estate $ 21,988 $ — $ — $ ( 1,809 ) $ 20,179 Residential real estate 22,394 — 2 807 23,203 Construction 3,842 — — 1,963 5,805 Commercial 2,854 — 81 ( 65 ) 2,870 Consumer 6,574 ( 598 ) 55 157 6,188 Credit cards 390 ( 189 ) — 37 238 Total (1) $ 58,042 $ ( 787 ) $ 138 $ 1,090 $ 58,483 ($ in thousands) Beginning Balance Gross Charge-offs Recoveries Provisions (Reversal of Provisions) Ending Balance Six Months Ended June 30, 2026 Commercial real estate $ 21,387 $ ( 64 ) $ — $ ( 543 ) $ 20,780 Residential real estate 22,510 ( 143 ) 31 1,133 23,531 Construction 5,968 — 1 184 6,153 Commercial 3,005 ( 203 ) 49 526 3,377 Consumer 5,767 ( 998 ) 449 ( 390 ) 4,828 Credit cards 199 ( 115 ) 23 ( 39 ) 68 Total (1) $ 58,836 $ ( 1,523 ) $ 553 $ 871 $ 58,737 ($ in thousands) Beginning Balance Gross Charge-offs Recoveries Provisions (Reversal of Provisions) Ending Balance 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 (1) $ 57,910 $ ( 1,513 ) $ 310 $ 1,776 $ 58,483 ____________________________________ (1) Excludes amounts pertaining to unfunded commitments. 20 Table of Contents The following tables present the amortized cost basis of collateral-dependent loans by loan portfolio segment as of June 30, 2026 and December 31, 2025. June 30, 2026 ($ in thousands) Real Estate Collateral Other Collateral Total Commercial real estate $ 65,352 $ — $ 65,352 Residential real estate 11,713 — 11,713 Construction 396 — 396 Commercial (1) — 6,316 6,316 Consumer (2) — 487 487 Total $ 77,461 $ 6,803 $ 84,264 December 31, 2025 ($ in thousands) Real Estate Collateral Other Collateral Total Commercial real estate $ 40,676 $ — $ 40,676 Residential real estate 11,084 — 11,084 Construction 332 — 332 Commercial (1) — 4,164 4,164 Consumer (2) — 971 971 Total $ 52,092 $ 5,135 $ 57,227 ____________________________________ (1) Commercial loans are primarily secured by underlying business assets of the borrower. (2) Consumer loans are primarily secured by automobiles and boats of the borrower. Loan Modifications to Borrowers Experiencing Financial Difficulty Loan modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, forbearance, term extensions and other combinations of actions intended to minimize economic loss and avoid foreclosure or repossession of collateral. During the three and six months ended June 30, 2026, no loan modifications were made to borrowers experiencing financial difficulty. The following table presents details of portfolio loans that were modified during the three and six months ended June 30, 2025, by loan category. ($ in thousands) Quantity of Loans Modified Principal Forgiveness Payment Delay Term Extension Interest Rate Reduction Payment Delay and Term Extension Term Extension and Interest Rate Reduction Total % of Total Portfolio Segment Commercial real estate 6 $ — $ — $ 1,351 $ 5,242 $ — $ — $ 6,593 0.25 % Commercial 3 — — 72 116 — — 188 0.08 Total 9 $ — $ — $ 1,423 $ 5,358 $ — $ — $ 6,781 0.14 As of June 30, 2026, of the loans with borrowers experiencing financial difficulty that were modified during the preceding 12 months, $ 140 thousand and zero were classified as current accrual and current nonaccrual, respectively. As of December 31, 2025, of the loans with borrowers experiencing financial difficulty that were modified during the preceding 12 months, $ 5.3 million and $ 170 thousand were classified as current accrual and current nonaccrual, respectively. During the three and six months ended June 30, 2026 and 2025, there were no defaults on loan modifications made to borrowers experiencing financial difficulty in the preceding 12 months. 21 Table of Contents Foreclosure Proceedings The Company had $ 64 thousand and $ 124 thousand of consumer mortgage loans collateralized by residential real estate property that were in the process of foreclosure as of June 30, 2026 and December 31, 2025, respectively. The Company had $ 151 thousand and $ 95 thousand of commercial real estate loans collateralized by commercial real estate that were in the process of foreclosure as of June 30, 2026 and December 31, 2025, respectively. 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 zero and $ 2.4 million as of June 30, 2026, respectively, and $ 113 thousand and $ 2.9 million as of December 31, 2025, 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 impairments of MSRs were recognized for the three and six months ended June 30, 2026 and 2025, respectively. The Company recognized net servicing income of $ 122 thousand and $ 168 thousand during the three months ended June 30, 2026 and 2025, respectively, and net servicing income of $ 261 thousand and $ 103 thousand for the six months ended June 30, 2026 and 2025, respectively. At June 30, 2026, the Company was servicing $ 324.2 million in loans for the Federal National Mortgage Association and $ 98.7 million in loans for Federal Home Loan Mortgage Corporation. The following table presents activity in MSRs for the three and six months ended June 30, 2026 and 2025. Three Months Ended June 30, Six Months Ended June 30, ($ in thousands) 2026 2025 2026 2025 Beginning balance $ 4,983 $ 5,535 $ 5,142 $ 5,874 Net additions — 15 — 58 Amortization expense ( 163 ) ( 154 ) ( 322 ) ( 206 ) Other — — — ( 330 ) Ending balance $ 4,820 $ 5,396 $ 4,820 $ 5,396 The fair value of MSRs was determined using discount rates ranging from 9.0 % to 9.0 % at June 30, 2026 and 9.0 % to 10.0 % at December 31, 2025. The valuation on MSRs was not material at June 30, 2026 and December 31, 2025. Depending on the stratification of the specific mortgage servicing right, prepayment speeds ranged from 5.72 % to 8.00 % and 5.84 % to 8.48 % for the three months ended June 30, 2026 and 2025, respectively, and 5.72 % to 8.60 % and 5.69 % to 8.22 % for the six months ended June 30, 2026 and 2025, respectively. The associated weighted-average default rates were 0.21 % and 0.14 % for the three months ended June 30, 2026 and 2025, respectively, and 0.21 % and 0.14 % for the six months ended June 30, 2026 and 2025, respectively. 22 Table of Contents Note 4 – Goodwill and Other Intangible Assets The following tables provide information on the significant components of goodwill and other acquired intangible assets as of June 30, 2026 and December 31, 2025. June 30, 2026 ($ in thousands) Goodwill Core Deposit Intangible Gross carrying amount $ 63,266 $ 59,151 Accumulated amortization — ( 33,384 ) Net carrying amount $ 63,266 $ 25,767 December 31, 2025 ($ in thousands) Goodwill Core Deposit Intangible Gross carrying amount $ 63,266 $ 59,151 Accumulated amortization — ( 29,429 ) Net carrying amount $ 63,266 $ 29,722 The aggregate amortization expense for the core deposit intangible was $ 2.0 million and $ 2.3 million for the three months ended June 30, 2026 and 2025, respectively, and was $ 4.0 million and $ 4.5 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, the estimated future remaining amortization for core deposit intangibles within the years ending December 31 is as follows: ($ in thousands) Amortization Expense 2026 $ 3,443 2027 6,208 2028 5,060 2029 3,980 2030 3,096 Thereafter 3,980 Total amortizing intangible assets $ 25,767 23 Table of Contents Note 5 – Leases 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. 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. 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) June 30, 2026 December 31, 2025 Right-of-use assets $ 9,691 $ 10,523 Lease liabilities $ 10,199 $ 11,027 Weighted-average remaining lease term 8.70 years 8.91 years Weighted-average discount rate 3.38 % 3.42 % Remaining lease term – min 0.17 years 0.36 years Remaining lease term – max 15.18 years 15.68 years Three Months Ended June 30, Six Months Ended June 30, ($ in thousands) 2026 2025 2026 2025 Operating lease cost $ 513 $ 494 $ 1,025 $ 986 Total lease cost $ 513 $ 494 $ 1,025 $ 986 Cash paid for amounts included in the measurement of lease liabilities $ 512 $ 479 $ 1,021 $ 946 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, 2026. ($ in thousands) June 30, 2026 2026 $ 1,002 2027 1,875 2028 1,785 2029 1,360 2030 1,003 Thereafter 4,581 Total undiscounted cash flows 11,606 Less: imputed interest 1,407 Lease liabilities $ 10,199 Total gross rental income was $ 275 thousand and $ 280 thousand for the three months ended June 30, 2026 and 2025, respectively, and $ 581 thousand and $ 615 thousand for the six months ended June 30, 2026 and 2025, respectively. 24 Table of Contents Note 6 – Deposits Deposits consist of the following categories as of the dates indicated: ($ in thousands) June 30, 2026 December 31, 2025 Balance % of Total Deposits Balance % of Total Deposits Noninterest-bearing deposits $ 1,606,809 29.76 % $ 1,587,953 28.69 % Interest-bearing deposits: Interest-bearing checking 833,602 15.44 852,585 15.41 Money market and savings 1,710,570 31.68 1,814,928 32.80 Time deposits 1,247,973 23.11 1,267,487 22.90 Brokered deposits 796 0.01 10,911 0.20 Total interest-bearing 3,792,941 70.24 3,945,911 71.31 Total deposits $ 5,399,750 100.00 % $ 5,533,864 100.00 % The following table provides information on the approximate maturities of total time deposits at June 30, 2026. ($ in thousands) June 30, 2026 Within one year $ 1,067,447 Year 2 155,036 Year 3 13,118 Year 4 5,821 Year 5 6,438 Thereafter 113 Total $ 1,247,973 The approximate amount of certificates of deposit that exceeded the FDIC insurance limit of $250,000 or more was $ 398.4 million and $ 403.5 million at June 30, 2026 and December 31, 2025, respectively. 25 Table of Contents Note 7 – Borrowings The following table summarizes certain information of the Company’s long-term debt as of June 30, 2026 and December 31, 2025. ($ in thousands) June 30, 2026 December 31, 2025 Issue Date Stated Maturity Date Earliest Call Date Interest Rate Subordinated Debentures due November 2035 60,000 60,000 2025 2035 2030 6.25 % through November 2030, 3-month SOFR + 2.88 % thereafter Total subordinated debentures 60,000 60,000 Severn Capital Trust I 20,619 20,619 2004 2035 3-month SOFR + 2.26 % Tri-County Capital Trust I 7,217 7,217 2004 2034 3-month SOFR + 2.86 % Tri-County Capital Trust II 5,155 5,155 2005 2035 3-month SOFR + 1.96 % Total trust preferred securities 32,991 32,991 Less: net discount and unamortized issuance costs ( 3,839 ) ( 3,930 ) Total long-term debt $ 89,152 $ 89,061 At June 30, 2026, subordinated debentures consisted of $ 60.0 million of long-term debt issued by the Company in November 2025. As of June 30, 2026, the recorded balance of subordinated debt issued by the Company, net of unamortized issuance costs, was $ 58.8 million. The Company has the option to redeem the subordinated notes in part or whole as of November 15, 2030. As of June 30, 2026, 100 % 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 June 30, 2026 was $ 19.1 million, net of the unamortized fair value adjustment of $ 1.6 million. At June 30, 2026, 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 $ 474 thousand and $ 626 thousand, respectively. As of June 30, 2026, 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. The Company had no outstanding borrowings from the FHLB at June 30, 2026 and December 31, 2025. The Company did not have any borrowings against correspondent federal fund lines at June 30, 2026 and December 31, 2025. Further information on these obligations is provided in the Company’s 2025 A nnual Report. 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 as of June 30, 2026 and December 31, 2025. June 30, 2026 December 31, 2025 ($ in thousands) Notional Amount Estimated Fair Value Notional Amount Estimated Fair Value Asset – IRLCs $ 15,194 $ 218 $ 6,172 $ 91 Asset – TBA securities 20,250 42 9,750 11 Liability – IRLCs — — 193 1 Liability – TBA securities 33,250 115 20,150 59 With respect to interest rate products, the Company recognized gains of $ 373 thousand and $ 654 thousand for the three months ended June 30, 2026 and 2025, respectively, and gains of $ 135 thousand and $ 938 thousand for the six months ended June 30, 2026 and 2025, respectively. 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 six months ended June 30, 2026 and 2025. Three Months Ended Six Months Ended ($ in thousands) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 Beginning of period $ ( 5,270 ) $ ( 6,333 ) $ ( 4,593 ) $ ( 7,545 ) Other comprehensive income (loss), net of tax ( 819 ) 730 ( 1,496 ) 1,942 End of period $ ( 6,089 ) $ ( 5,603 ) $ ( 6,089 ) $ ( 5,603 ) 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 (“PCA”), the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s 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 June 30, 2026 and December 31, 2025, management believes that the Company and the Bank met all capital adequacy requirements to which they were subject. As of June 30, 2026, the most recent notification from the Bank’s primary regulator categorized the Bank, as “well-capitalized” under the regulatory framework for PCA. 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. 27 Table of Contents The following tables present the capital amounts and ratios for the Company and the Bank as of June 30, 2026 and December 31, 2025. June 30, 2026 Amount Regulatory Minimum Ratio + Capital Conservation Buffer To Be Well-Capitalized Under PCA Regulation (1) ($ in thousands) Company Amounts Common Equity Tier 1 Capital $ 541,577 $ 341,783 N/A Tier 1 Capital 571,904 415,023 N/A Total Capital 691,720 512,675 N/A Leverage Exposure 6,007,717 240,309 N/A Risk-Weighted Assets 4,882,618 N/A N/A Company Ratios Common Equity Tier 1 Capital to Risk-Weighted Assets (“RWA”) 11.09 % 7.00 % N/A Tier 1 Capital to RWA 11.71 8.50 N/A Total Capital to RWA 14.17 10.50 N/A Tier 1 Capital to AA (Leverage) (2) 9.52 4.00 N/A Bank Amounts Common Equity Tier 1 Capital $ 600,541 $ 341,547 $ 317,151 Tier 1 Capital 600,541 414,736 390,340 Total Capital 661,531 512,321 487,925 Leverage Exposure 6,002,596 240,104 300,130 Risk-Weighted Assets 4,879,247 N/A N/A Bank Ratios Common Equity Tier 1 Capital to RWA 12.31 % 7.00 % 6.50 % Tier 1 Capital to RWA 12.31 8.50 8.00 Total Capital to RWA 13.56 10.50 10.00 Tier 1 Capital to AA (Leverage) (2) 10.00 4.00 5.00 ____________________________________ (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 %. 28 Table of Contents December 31, 2025 Amount Regulatory Minimum Ratio + Capital Conservation Buffer To Be Well-Capitalized Under PCA Regulation (1) ($ in thousands) Company Amounts Common Equity Tier 1 Capital $ 510,729 $ 339,680 N/A Tier 1 Capital 540,897 412,469 N/A Total Capital 660,451 509,520 N/A Leverage Exposure 6,129,306 245,172 N/A Risk-Weighted Assets 4,852,573 N/A N/A Company Ratios Common Equity Tier 1 Capital to RWA 10.52 % 7.00 % N/A Tier 1 Capital to RWA 11.15 8.50 N/A Total Capital to RWA 13.61 10.50 N/A Tier 1 Capital to AA (Leverage) (2) 8.82 4.00 N/A Bank Amounts Common Equity Tier 1 Capital $ 569,183 $ 339,125 $ 314,902 Tier 1 Capital 569,183 411,794 387,571 Total Capital 629,746 508,687 484,464 Leverage Exposure 6,122,775 244,911 306,139 Risk-Weighted Assets 4,844,639 N/A N/A Bank Ratios Common Equity Tier 1 Capital to RWA 11.75 % 7.00 % 6.50 % Tier 1 Capital to RWA 11.75 8.50 8.00 Total Capital to RWA 13.00 10.50 10.00 Tier 1 Capital to AA (Leverage) (2) 9.30 4.00 5.00 _________________________________ (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 June 30, 2026, both the Company and the Bank satisfied the capital conservation buffer requirements applicable to them. The lowest capital buffer ratio at the Company was the Tier 1 Capital to RWA, which was 5.71 % above the minimum capital ratio requirement, and the lowest capital buffer ratio at the Bank was the Total Capital to RWA, which was 5.56 % above the minimum capital ratio requirement. 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 OCC, cannot exceed net income for that year to date plus retained net income (as defined) for the preceding two calendar years. As of June 30, 2026, the Bank could pay dividends to the Company to the extent of its current period earnings plus the earnings of the preceding two years, so long as it maintained required capital ratios. 29 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). June 30, 2026 ($ in thousands) Fair Value Valuation Technique Unobservable Input Rate IRLCs – net asset $ 218 Market approach Range of pull through rate 79 % - 100 % Average pull through rate 89 % 30 Table of Contents December 31, 2025 ($ in thousands) Fair Value Valuation Technique Unobservable Input Rate IRLCs – net asset $ 90 Market approach Range of pull through rate 81 % - 100 % Average pull through rate 98 % The following table presents activity in the IRLCs – net asset for the three and six months ended June 30, 2026 and 2025. Three Months Ended June 30, Six Months Ended June 30, ($ in thousands) 2026 2025 2026 2025 Beginning balance $ 139 $ 392 $ 90 $ 113 Valuation adjustment 79 34 128 313 Ending balance $ 218 $ 426 $ 218 $ 426 Forward Contracts To manage 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 businesses, 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 forward contracts 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. 31 Table of Contents The following tables present the recorded amounts of assets and liabilities measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025. No assets or liabilities were transferred from one hierarchy level to another during the three and six months ended June 30, 2026 and 2025. June 30, 2026 ($ in thousands) Fair Value Quoted Prices (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Available for sale securities: U.S. government agency securities $ 20,255 $ — $ 20,255 $ — Mortgage-backed securities 246,986 — 246,986 — Other debt securities 20,128 — 20,128 — Total available for sale securities 287,369 — 287,369 — Equity securities 6,218 — 6,218 — TBA forward trades 42 — 42 — Loans held for sale 30,827 — 30,827 — IRLCs 218 — — 218 Total assets at fair value $ 324,674 $ — $ 324,456 $ 218 Liabilities: TBA forward trades 115 — 115 — Total liabilities at fair value $ 115 $ — $ 115 $ — December 31, 2025 ($ in thousands) Fair Value Quoted Prices (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Available for sale securities: U.S. government agency securities $ 20,616 $ — $ 20,616 $ — Mortgage-backed securities 195,027 — 195,027 — Other debt securities 4,715 — 4,715 — Total available for sale securities 220,358 — 220,358 — Equity securities 6,186 — 6,186 — TBA forward trades 11 — 11 — Loans held for sale 32,540 — 32,540 — IRLCs 91 — — 91 Total assets at fair value $ 259,186 $ — $ 259,095 $ 91 Liabilities: IRLCs $ 1 $ — $ — $ 1 TBA forward trades 59 — 59 — Total liabilities at fair value $ 60 $ — $ 59 $ 1 32 Table of Contents Assets Measured at Fair Value on a Nonrecurring Basis Individually Evaluated Collateral-Dependent Loans 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. Management utilizes various methods to estimate fair value of the collateral including appraisals, discounted cashflow and automated valuation methods. 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 is 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 nonrecurring Level 3 adjustment. Valuation techniques are consistent with those techniques applied in prior periods. Repossessed Assets All repossessed assets are recorded at the lower of the estimated fair value of the assets, 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 the 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 as of June 30, 2026 and December 31, 2025 that are valued at the lower of cost or market. The Company had no other assets subject to Level 3 fair value measurements as of June 30, 2026 and December 31, 2025. 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 (1) Unobservable Input (2) Range Weighted-Average June 30, 2026 Nonrecurring measurements: Individually-evaluated collateral dependent loans: Commercial real estate $ 450 Appraisal of collateral Appraisal adjustment Liquidation expense 49 % - 50 % 10 % 49 % 10 % Residential real estate 1,102 Appraisal of collateral Appraisal adjustment Liquidation expense 44 % - 74 % 10 % 49 % 10 % Repossessed assets 2,362 Appraisal of collateral Appraisal adjustment N/A 21 % 33 Table of Contents Quantitative Information about Level 3 Fair Value Measurements ($ in thousands) Fair Value Valuation Technique (1) Unobservable Input (2) Range Weighted-Average December 31, 2025 Nonrecurring measurements: Individually-evaluated collateral dependent loans: Commercial real estate $ 19,696 Appraisal of collateral Appraisal adjustment Liquidation expense 60 % - 71 % 10 % 68 % 10 % Residential real estate 520 Appraisal of collateral Appraisal adjustment Liquidation expense 0 % - 1 % 10 % 1 % 10 % Other real estate owned 113 Appraisal of collateral Appraisal adjustment N/A 0 % Repossessed assets 2,879 Appraisal of collateral Appraisal adjustment N/A 60 % _________________________________ (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. 34 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, repossessed assets, 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 June 30, 2026 and December 31, 2025. Fair values for June 30, 2026 and December 31, 2025 were estimated using an exit price notion. Carrying Amount Fair Value Fair Value Measurements ($ in thousands) Level 1 Level 2 Level 3 June 30, 2026 Assets Cash and cash equivalents $ 257,670 $ 257,670 $ 257,670 $ — $ — Available for sale securities 287,369 287,369 — 287,369 — Held to maturity securities 366,213 328,696 — 328,696 — Equity securities 6,218 6,218 — 6,218 — Restricted securities 18,003 N/A — N/A — Loans held for sale 30,827 30,827 — 30,827 — TBA securities 42 42 — 42 — Loans held for investment, at amortized cost, net 4,819,012 4,766,085 — — 4,766,085 Mortgage servicing rights 4,820 5,868 — 5,868 — Accrued interest receivable 20,021 20,021 — 20,021 — IRLCs 218 218 — — 218 Liabilities Deposits: Noninterest-bearing $ 1,606,809 $ 1,606,809 $ — $ 1,606,809 $ — Interest-bearing checking 833,602 833,602 — 833,602 — Money market and savings 1,710,570 1,710,570 — 1,710,570 — Time deposits 1,247,973 1,241,851 — 1,241,851 — Brokered deposits 796 793 — 793 — TRUPS 30,327 30,965 — 30,965 — Subordinated debt 58,825 59,426 — 59,426 — TBA Securities 115 115 — 115 — Accrued interest payable 2,568 2,568 — 2,568 — 35 Table of Contents Carrying Amount Fair Value Fair Value Measurements ($ in thousands) Level 1 Level 2 Level 3 December 31, 2025 Assets Cash and cash equivalents $ 355,566 $ 355,566 $ 355,566 $ — $ — Available for sale securities 220,358 220,358 — 220,358 — Held to maturity securities 414,827 378,116 — 378,116 — Equity securities 6,186 6,186 — 6,186 — Restricted securities 17,989 N/A — N/A — Loans held for sale 32,540 32,540 — 32,540 — TBA securities 11 11 — 11 — Loans held for investment, at amortized cost, net 4,841,466 4,767,143 — — 4,767,143 Mortgage servicing rights 5,142 5,861 — 5,861 — Accrued interest receivable 18,551 18,551 — 18,551 — IRLCs 91 91 — — 91 Liabilities Deposits: Noninterest-bearing $ 1,587,953 $ 1,587,953 $ — $ 1,587,953 $ — Interest bearing checking 852,585 852,585 — 852,585 — Money market and savings 1,814,928 1,814,928 — 1,814,928 — Time deposits 1,267,487 1,265,740 — 1,265,740 — Brokered deposits 10,911 10,923 — 10,923 — TRUPS 30,168 29,586 — 29,586 — Subordinated debt 58,893 58,064 — 58,064 — TBA securities 59 59 — 59 — Accrued interest payable 2,977 2,977 — 2,977 — IRLCs 1 1 — — 1 36 Table of Contents Note 13 – Commitments and Contingencies In the normal course of business, to meet the financial needs of its customers, the Company 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 Company 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. The following table provides information on commitments outstanding as of June 30, 2026 and December 31, 2025. ($ in thousands) June 30, 2026 December 31, 2025 Commitments to extend credit Fixed $ 245,061 $ 209,737 Variable 532,557 503,713 Total commitments to extend credit $ 777,618 $ 713,450 Letters of credit Fixed $ 5,257 $ 6,495 Variable 16,788 17,830 Total letters of credit $ 22,045 $ 24,325 Total commitments outstanding $ 799,663 $ 737,775 The Company had a reserve for off-balance sheet credit exposures of $ 2.2 million and $ 2.0 million as of June 30, 2026 and December 31, 2025, respectively. The reserve was estimated based on current expected credit losses to be 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. 37 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 and six months ended June 30, 2026 and 2025. Three Months Ended June 30, Six Months Ended June 30, ($ in thousands, except per share data) 2026 2025 2026 2025 Net income $ 18,865 $ 15,507 $ 35,953 $ 29,271 Average number of common shares outstanding 33,451,484 33,374,265 33,440,028 33,362,632 Dilutive effect of common stock equivalents 27,214 13,748 22,909 14,533 Average number of common shares used to calculate diluted EPS 33,478,698 33,388,013 33,462,937 33,377,165 Anti-dilutive shares — 3,323 1,098 3,363 Basic net income per common share $ 0.56 $ 0.46 $ 1.08 $ 0.88 Diluted net income per common share $ 0.56 $ 0.46 $ 1.07 $ 0.88 There were zero and 3,323 anti-dilutive unvested restricted stock and performance stock unit awards excluded from the calculation of diluted earnings per common share for the three months ended June 30, 2026 and 2025, respectively. There were 1,098 and 3,363 anti-dilutive unvested restricted stock and performance stock unit awards excluded from the calculation of diluted earnings per common share for the six months ended June 30, 2026 and 2025, respectively. Share Repurchase Program In May 2026, the Company’s Board of Directors authorized the repurchase of up to $ 30 million of the Company’s outstanding common stock over the next 12 months (the “Repurchase Program”). Under the Repurchase Program, the shares may be repurchased from time to time through a combination of open market transactions at prevailing market prices, in privately negotiated transactions, through block trades and pursuant to any trading plan that may be adopted in accordance with Rules 10b5-1 and/or 10b-18 of the Exchange Act. The actual timing, number and value of shares repurchased under the Repurchase Program will be determined by management at its discretion and will depend on a number of factors, including the market price of the Company’s stock, general market and economic conditions, applicable legal requirements, and other factors. The Repurchase Program may be modified, amended or terminated by the Board of Directors at any time. The following table presents information regarding the Company’s Repurchase Program for each of the periods presented. ($ in thousands, except per share amounts) Three and Six Months Ended June 30, 2026 Number of shares repurchased 40,093 Average price paid per share $ 22.22 Amount repurchased $ 891 All share repurchases were made in open market transactions. As of June 30, 2026, the Company was authorized to repurchase a remaining $ 29.1 million of outstanding shares of common stock under the Repurchase Program. 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. 38 Table of Contents 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 is primarily comprised of 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. Interchange Income Interchange fees are primarily fees earned on payment card transactions processed through card networks such as Visa, Mastercard, and other debit and credit card networks. These fees are generally calculated as a percentage of the transaction value, plus a fixed fee per transaction, and are primarily paid by acquiring banks to issuing banks. Merchant services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees. Other Noninterest Income Other noninterest income consists of fees, other service charges, safety deposit box rental fees, and other miscellaneous revenue streams. Fees and other service charges are primarily comprised of debit income, automated teller machine (“ATM”) fees, merchant services income, and other service charges. ATM fees are primarily generated when a Company cardholder uses a third-party ATM or a non-Company cardholder uses a Company ATM. 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 six months ended June 30, 2026 and 2025. Three Months Ended June 30, Six Months Ended June 30, ($ in thousands) 2026 2025 2026 2025 Noninterest income In-scope of Topic 606: Service charges on deposit accounts $ 1,651 $ 1,519 $ 3,247 $ 3,033 Trust and investment fee income 1,103 942 2,240 1,765 Interchange income 1,960 1,788 3,658 3,365 Other noninterest income 1,286 1,547 2,245 2,403 Noninterest income (in-scope of Topic 606) 6,000 5,796 11,390 10,566 Noninterest income (out-of-scope of Topic 606) 2,830 3,610 4,684 5,974 Total noninterest income $ 8,830 $ 9,406 $ 16,074 $ 16,540 39 Table of Contents