What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2024-11-07 · 436 added, 532 removed, 632 unchanged (61% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

($ in thousands, except per share data) September 30, 2024 December 31, 2023

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

ASSETS (Unaudited)

3 unchanged sentences

Investment securities:

Available-for-sale, at fair value (amortized cost of $ 140,941 (2024) and $ 120,832 (2023))

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

179,148 149,212

Held to maturity, net of allowance for credit losses of $ 101 (2024) and $ 94 (2023) (fair value of $ 440,296 (2024) and $ 457,830 (2023))

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

469,572 481,077

2 unchanged sentences

Loans held for sale, at fair value 15,717 19,606

Loans held for investment ($ 10,023 (2024) and $ 9,944 (2023), at fair value)

4,733,909 4,641,010

Loans held for investment 4,777,489 4,771,988

allowance for credit losses ( 58,042 ) ( 57,910 )

3 unchanged sentences

Other intangible assets, net 36,033 38,311

Other real estate owned, net 179 179

Repossessed assets 306 —

Assets held for sale 1,387 —

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

6 unchanged sentences

Noninterest-bearing $ 1,565,017 $ 1,562,815

Interest-bearing 3,654,330 4,128,083

Interest-bearing checking 852,480 978,076

Money market and savings 1,800,529 1,805,884

Time deposits 1,242,319 1,181,561

Total deposits 5,460,345 5,528,336

Advances from FHLB - long-term 50,000 —

FHLB advances 50,000 50,000

Guaranteed preferred beneficial interest in junior subordinated debentures (“TRUPS”), net 29,926 29,847

4 unchanged sentences

TOTAL LIABILITIES 5,624,093 5,689,697

COMMITMENTS AND CONTINGENCIES (Note 13)

STOCKHOLDERS’ EQUITY

1 unchanged sentence

shares authorized 50,000,000 ;

shares issued and outstanding - 33,326,772 (2024) and 33,161,532 (2023)

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

Additional paid in capital 358,572 358,112

6 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

For Three Months Ended September 30, For Nine Months Ended September 30,

Three Months Ended March 31,

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

3 unchanged sentences

Interest and dividends on tax-exempt investment securities 6 6

Interest on federal funds sold — 92 — 92

Interest on deposits with other banks 3,409 960

11 unchanged sentences

Trust and investment fee income 823 734

Loss on sales and calls of investment securities — ( 2,166 ) — ( 2,166 )

Interchange credits 1,711 1,557 5,015 4,081

Gain on sale of loans held for sale 966 708

Mortgage-banking revenue 274 93

Interchange credits 1,577 1,587

Title Company revenue 117 78

Bargain purchase gain — 8,816 — 8,816

Other noninterest income 1,732 1,860

1 unchanged sentence

NONINTEREST EXPENSE

Salaries and wages 13,197 14,183 38,355 31,822

Employee benefits 3,326 3,607 11,015 8,968

Salaries and employee benefits 16,440 15,949

Occupancy expense 2,538 2,416

Furniture and equipment expense 853 904

Data processing 3,081 2,485 8,925 6,022

Software and data processing 4,691 4,021

Directors’ fees 348 295

3 unchanged sentences

Fraud losses 105 4,502

673 262 5,237 376

Merger-related expenses — 14,866 — 16,754

Other noninterest expenses 5,276 3,996 14,572 9,582

Other noninterest expense 3,790 3,286

Total noninterest expense 33,747 36,698

Income (loss) before income taxes 14,966 ( 14,728 ) 40,563 ( 322 )

Income tax expense (benefit) 3,777 ( 4,991 ) 9,956 ( 1,060 )

NET INCOME (LOSS) $ 11,189 $ ( 9,737 ) $ 30,607 $ 738

Basic net income (loss) per common share $ 0.34 $ ( 0.29 ) $ 0.92 $ 0.03

Diluted net income (loss) per common share $ 0.34 $ ( 0.29 ) $ 0.92 $ 0.03

Income before income taxes 18,257 10,597

Income tax expense 4,493 2,413

NET INCOME $ 13,764 $ 8,184

Basic net income per common share $ 0.41 $ 0.25

Diluted net income per common share $ 0.41 $ 0.25

Dividends paid per common share $ 0.12 $ 0.12

____________________________________

(1) Fraud losses includes $ 337 thousand and $ 4.7 million of credit card fraud losses for the three and nine months ended September 30, 2024, respectively .

See accompanying notes to unaudited consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

For Three Months Ended September 30, For Nine Months Ended September 30,

Three Months Ended March 31,

($ in thousands) 2025 2024

Net income (loss) $ 11,189 $ ( 9,737 ) $ 30,607 $ 738

Net income $ 13,764 $ 8,184

Other comprehensive income (loss):

3 unchanged sentences

Total other comprehensive income (loss) 1,212 ( 564 )

Comprehensive income (loss) $ 13,923 $ ( 11,285 ) $ 32,575 $ ( 350 )

Comprehensive income $ 14,976 $ 7,620

See accompanying notes to unaudited consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)

For the Three and Nine Months Ended September 30, 2024 and 2023

($ in thousands) Common Stock Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Loss

Total Stockholders’ Equity

Balances, January 1, 2024 $ 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

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, January 1, 2023 $ 199 $ 201,494 $ 171,613 $ ( 9,021 ) $ 364,285

Cumulative effect adjustment due to the adoption of ASC 326, net of tax — — ( 7,818 ) — ( 7,818 )

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

Common shares issued for employee stock purchase plan — 87 — — 87

Stock-based compensation — 460 — — 460

1 unchanged sentence

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

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

3 unchanged sentences

Cash dividends declared — — ( 3,984 ) — ( 3,984 )

Balances, June 30, 2023 199 202,008 169,494 ( 8,561 ) 363,140

Net loss — — ( 9,737 ) — ( 9,737 )

Other comprehensive loss — — — ( 1,548 ) ( 1,548 )

TCFC acquisition 132 152,955 — — 153,087

Common shares issued for employee stock purchase plan — 83 — — 83

Stock-based compensation — 529 — — 529

Cash dividends declared — — ( 3,976 ) — ( 3,976 )

Balances, September 30, 2023 $ 331 $ 355,575 $ 155,781 $ ( 10,109 ) $ 501,578

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

See accompanying notes to unaudited consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

For Nine Months Ended September 30,

Three Months Ended March 31,

($ in thousands) 2025 2024

7 unchanged sentences

Amortization of debt issuance costs 30 31

Bargain purchase gain — ( 8,816 )

Gain on mortgage banking activities ( 2,897 ) ( 2,602 )

Gain on mortgage loans held for sale ( 966 ) ( 708 )

Gain on other mortgage loan activity ( 284 ) ( 112 )

Proceeds from sale of mortgage loans held for sale 33,739 22,737

1 unchanged sentence

Stock-based compensation expense 511 354

Deferred income tax expense (benefit) 7,776 ( 934 )

Losses on sales and calls of securities — 2,166

Deferred income tax (benefit) expense ( 26 ) 1,941

Loss on sales of repossessed assets 94 —

(Gain) loss on valuation adjustments on mortgage servicing rights ( 253 ) 5

Loss on valuation adjustments on mortgage servicing rights 330 223

Loss on disposal of fixed assets 27 —

Valuation adjustments on premises transferred to held for sale 2 271

Gain on sales and valuation adjustments on other real estate owned — ( 3 )

Fair value adjustments on loans held for investments, at fair value ( 246 ) 492

Loss on disposal of premises held for sale 61 —

Fair value adjustment on equity securities ( 87 ) 61

5 unchanged sentences

Other liabilities 777 ( 296 )

Net cash provided by (used in) operating activities 14,468 ( 13,355 )

Net cash provided by operating activities 19,783 2,387

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from maturities and principal payments of investment securities available for sale 64,896 12,304

Proceeds from the sale of acquired AFS securities — 434,215

Proceeds from maturities and principal payments of investment securities held to maturity 39,653 35,023

Proceeds from life insurance death benefits 150 —

Purchases of investment securities available for sale ( 83,990 ) —

Purchases of investment securities held to maturity ( 11,449 ) —

Proceeds from the sale of loans held for investment — 8,611

Proceeds from maturities and principal payments of available for sale securities 3,701 3,849

Proceeds from maturities and principal payments of held to maturity securities 11,388 9,215

Purchases of available for sale securities ( 31,865 ) ( 59,431 )

Purchases of equity securities ( 44 ) ( 39 )

2 unchanged sentences

Purchases of premises and equipment ( 1,024 ) ( 1,773 )

Proceeds from sales of other real estate owned — 21

Proceeds from sales of repossessed assets 1,234 —

2 unchanged sentences

Proceeds from disposal of premises held for sale 843 —

Cash acquired in the acquisition of TCFC, net of cash paid — 25,372

Net cash (used in) provided by investing activities $ ( 80,096 ) $ 216,534

Net cash used in investing activities $ ( 18,271 ) $ ( 54,151 )

See accompanying notes to unaudited consolidated financial statements.

SHORE BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - Continued

For Nine Months Ended September 30,

Three Months Ended March 31,

($ in thousands) 2025 2024

3 unchanged sentences

Interest-bearing deposits ( 70,527 ) ( 144,851 )

Short-term borrowings — ( 109,000 )

Long-term borrowings 50,000 —

Common stock dividends paid ( 4,032 ) ( 3,984 )

1 unchanged sentence

Net cash used in financing activities ( 72,357 ) ( 206,089 )

Net (decrease) increase in cash and cash equivalents ( 188,792 ) 53,210

Net decrease in cash and cash equivalents ( 70,845 ) ( 257,853 )

Cash and cash equivalents at beginning of period 459,851 372,413

3 unchanged sentences

Income taxes paid — 87

Recognition (remeasurement) of lease liabilities arising from right-of-use assets $ 25 $ 45

Recognition of lease liabilities arising from right-of-use assets 915 71

Transfers from loans to repossessed assets 569 1,845

Unrealized gains (losses) on available for sale securities 1,667 ( 776 )

Transfer of premises to held for sale (included in other assets) $ 1,387 $ 750

Unsettled securities transaction — 14,083

See accompanying notes to unaudited consolidated financial statements.

1 unchanged sentence

Notes to Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2024 and 2023

Note 1 – Basis of Presentation

The consolidated financial statements include the accounts of Shore Bancshares, Inc.

and its subsidiaries with all significant intercompany transactions eliminated.

The consolidated financial statements conform to accounting principles generally accepted in the United States of America (“GAAP”) and to prevailing practices within the banking industry.

The accompanying interim financial statements are unaudited;

however, in the opinion of management all adjustments necessary to present fairly the consolidated financial position at September 30, 2024, the consolidated results of income and comprehensive income for the three and nine months ended September 30, 2024 and 2023, changes in stockholders’ equity for the three and nine months ended September 30, 2024 and 2023 and cash flows for the nine months ended September 30, 2024 and 2023, have been included.

All such adjustments were of a normal recurring nature.

The amounts as of December 31, 2023 were derived from the 2023 audited financial statements.

The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for any other interim period or for the full year.

This Quarterly Report on Form 10-Q should be read in conjunction with the Annual Report of Shore Bancshares, Inc.

on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”).

For purposes of comparability, certain immaterial reclassifications have been made to amounts previously reported to conform with the current period presentation.

When used in these notes, the term “the Company” refers to Shore Bancshares, Inc.

and, unless the context requires otherwise, its consolidated subsidiaries, Shore United Bank, N.A.

(the “Bank”) and Mid-Maryland Title Company, Inc.

(the “Title Company”).

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 Maryland commercial bank 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”), engages in title work related to real estate transactions.

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

Operations will continue for as long as necessary to ensure that work in progress is adequately addressed.

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

ASU Update 2023-09 – In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 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.

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).

4 unchanged sentences

however, retrospective application is permitted.

The Company does not expect the adoption of ASU 2023-09 to have a material impact on its consolidated financial statements.

ASU Update 2023-07 – In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” The amendments in this ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

This ASU requires disclosure of significant segment expenses that are regularly provided to the chief operating decision mark (CODM), an amount for other segment items by reportable segment and a description of its composition, all annual disclosures required by FASB ASU Topic 280 in interim periods as well, and the title and position of the CODM and how the CODM uses the reported measures.

Additionally, this ASU requires that at least one of the reported segment profit and loss measures should be the measure that is most consistent with the measurement principles used in an entity’s consolidated financial statements.

Lastly, this ASU requires public business entities with a single reportable segment to provide all disclosures required by these amendments in this ASU and all existing segment disclosures in Topic 280.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoptions permitted.

The amendments should be applied retrospectively.

The Company does not expect the adoption of ASU 2023-07 to have a material impact on its consolidated financial statements.

Note 2 – Business Combinations

The Company accounts for business combinations utilizing the acquisition method of accounting, which necessitates that purchased assets and assumed liabilities be recorded at their respective fair values.

In numerous instances, the fair values of acquired assets and assumed liabilities are ascertained by estimating the anticipated cash flows from those assets and liabilities and discounting them at appropriate market rates.

The Company determines the fair values of loans, core deposit intangibles, and deposits with the assistance of a third-party vendor.

Loans acquired in business combinations are recorded in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations.” Accordingly, acquired loans are segregated between purchase credit impaired (“PCI”) loans (ASC 310-30) and Non-PCI loans (ASC-310-20) and are recorded at fair value without the carryover of the related allowance for loan losses.

The excess of expected cash flows above the fair value of the majority of loans will be accreted to interest income over the remaining lives of the loans in accordance with FASB ASC 310-20.

The estimated fair values are subject to refinement as additional information regarding the closing date fair values becomes available through the measurement period.

Although significant changes to the closing date fair values are not anticipated, any information pertinent to changes in these fair values will be evaluated to determine if such changes are attributable to events and circumstances that existed as of the acquisition date.

During the measurement period, any such changes will be recorded as part of the closing date fair value.

The Company completed the acquisition of The Community Financial Corporation (“TCFC”), a Maryland corporation, on July 1, 2023 (the “Acquisition Date”).

This followed the definitive agreement signed on December 14, 2022, by both the Company and TCFC.

The merger was motivated by several primary reasons:

extending the branch network and securing dominant market share positions in attractive Maryland markets, along with expanding in Virginia and Delaware;

benefiting from a favorable low-cost funding base;

ensuring strong cultural alignment and a deep commitment to stockholders, customers, employees, and communities served by both organizations;

generating substantial value for shareholders;

and improving trading liquidity for both companies while boosting dividends for TCFC shareholders.

Following the merger’s completion, TCFC’s former shareholders were granted 2.3287 shares of the Company’s common stock.

The total transaction consideration amounted to approximately $ 153.6 million.

It included the issuance of 13,201,693 shares of the Company’s common stock, each valued at $ 11.56 , based on the closing price on June 30, 2023, the final trading day before the acquisition’s finalization.

The total consideration also comprised cash for any fractional shares, converted share-based payment awards, and TCFC’s debt, which was effectively settled at closing.

The Company's 2023 Annual Report on Form 10-K, filed with the U.S.

Securities and Exchange Commission (“SEC”) and accessible on the SEC’s website (http://www.sec.gov), discusses the acquisition of TCFC.

This acquisition was treated as a business combination under the acquisition method of accounting, with assets acquired, liabilities assumed, and consideration paid all recorded at their estimated fair values on the Acquisition Date.

The Company does not expect the adoption of ASU No.

2023-09 to have a material impact on its consolidated financial statements.

Note 2 – Investment Securities

The following tables provide information on the amortized cost and estimated fair values of debt securities.

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

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

Available for sale securities (1) :

September 30, 2024

Treasury and government agencies $ 23,047 $ 6 $ 2,363 $ 20,690

Mortgage-backed-residential 111,748 234 5,761 106,221

March 31, 2025

Treasury and government agency securities $ 22,673 $ 3 $ 2,332 $ 20,344

Mortgage-backed securities 158,997 32 6,920 152,109

Other debt securities (2)

6,192 503 — 6,695

Total $ 187,862 $ 538 $ 9,252 $ 179,148

December 31, 2024

Treasury and government agencies $ 23,472 $ 5 $ 3,002 $ 20,475

Mortgage-backed-residential 91,280 5 7,258 84,027

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

No AFS securities were sold during the three and nine months ended September 30, 2024 and 2023.

____________________________________

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

Treasury and government agencies $ 132,870 $ 3 $ 7,375 $ 125,498 $ —

Mortgage-backed-residential 339,848 51 36,293 303,606 —

States and political subdivisions 1,466 42 9 1,499 —

March 31, 2025

Treasury and government agency securities $ 129,327 $ — $ 7,001 $ 122,326 $ —

Mortgage-backed securities 328,459 2 40,631 287,830 —

Other debt securities (1)

11,964 15 707 11,272 178

Total $ 469,750 $ 17 $ 48,339 $ 421,428 $ 178

December 31, 2024

Treasury and government agencies $ 143,442 $ — $ 10,377 $ 133,065 $ —

Mortgage-backed-residential 357,870 — 43,864 314,006 —

States and political subdivisions 1,470 57 19 1,508 —

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

Equity securities with an aggregate fair value of $ 6.0 million at September 30, 2024 and $ 5.7 million at December 31, 2023 are presented separately on the balance sheet.

The fair value adjustment recorded through earnings totaled a gain of $ 79 thousand for the three months ended September 30, 2024 and a gain of $ 151 thousand for the three months ended September 30, 2023.

The fair value adjustment recorded through earnings totaled a gain of $ 38 thousand for the nine months ended September 30, 2024 and a gain of $ 300 thousand for the nine months ended September 30, 2023.

On January 1, 2023, the Company adopted ASC 326, which made changes to accounting for AFS debt securities whereby credit losses are presented as an allowance, rather than as a write-down when management does not intend to sell and does not believe that it is more likely than not they will be required to sell prior to maturity.

In addition, ASC 326 requires an ACL to be recorded on HTM debt securities measured at amortized cost.

The following table summarizes the activity in the ACL on HTM securities as of the three and nine months ended September 30, 2024 and September 30, 2023.

($ in thousands) Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023

____________________________________

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

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

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

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

Three Months Ended

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

Balance, beginning of period $ 203 $ 94

Other debt securities, (reversal of) provision for credit losses ( 7 ) ( 37 ) 7 126

Provision for (reversal of) credit losses, other debt securities ( 25 ) 22

Balance, end of period $ 178 $ 116

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, 2024 and December 31, 2023.

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

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, 2024

March 31, 2025

Available for sale securities:

Treasury and government agencies $ — $ — $ 17,951 $ 2,363 $ 17,951 $ 2,363

Mortgage-backed-residential 20,768 53 45,536 5,708 66,304 5,761

Treasury and government agency securities $ 84 $ 1 $ 17,564 $ 2,331 $ 17,648 $ 2,332

Mortgage-backed securities 76,833 663 55,375 6,257 132,208 6,920

Other debt securities — — 2,000 — 2,000 —

4 unchanged sentences

Available for sale securities:

Treasury and government agencies $ 74 $ — $ 17,750 $ 3,002 $ 17,824 $ 3,002

Mortgage-backed-residential 24,405 150 52,864 7,108 77,269 7,258

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 101 AFS debt securities with a fair value below the amortized cost basis, totaling $ 8.2 million of aggregate fair value as of September 30, 2024.

The Company concluded that a credit loss does not exist in its AFS securities portfolio as of September 30, 2024, and no impairment loss has been recognized based on the fact that (1) changes in fair value were caused primarily 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-back securities are issued by either U.S.

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

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

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

government agencies or U.S.

2 unchanged sentences

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

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

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

At September 30, 2024, the carrying value of pledged AFS securities was $ 54.1 million and $ 191.4 million of pledged HTM securities.

The comparable amounts for December 31, 2023 were $ 54.5 million and $ 185.9 million, respectively.

There were no obligations of states or political subdivisions with carrying values, as to any issuer, exceeding 10% of stockholders’ equity at September 30, 2024 or December 31, 2023.

The following table provides information on the amortized cost and estimated fair values of investment securities by maturity date at September 30, 2024.

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

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

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

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

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

Available for Sale Held to Maturity

4 unchanged sentences

Due after ten years 313 294 10,590 8,747

$ 28,865 $ 27,039 $ 141,291 $ 133,598

Mortgage-backed securities 158,997 152,109 328,459 287,830

Total $ 187,862 $ 179,148 $ 469,750 $ 421,428

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

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

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

March 31, 2025 December 31, 2024

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

Pledged available for sale securities $ 75,003 $ 67,805 $ 76,280 $ 67,926

Pledged held to maturity securities 214,583 191,952 197,474 173,248

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

Note 3 – Loans and Allowance for Credit Losses

On January 1, 2023, the Company adopted ASC 326.

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 of the Company’s 2023 Annual Report.

The following table provides information about the principal classes of the loan portfolio at September 30, 2024 and December 31, 2023.

($ in thousands) September 30, 2024 % of Total Loans December 31, 2023 % of Total Loans

Construction $ 337,113 7.12 % $ 299,000 6.40 %

Residential real estate 1,570,998 33.19 % 1,490,438 32.10 %

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 March 31, 2025 and December 31, 2024.

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

Commercial real estate $ 2,544,107 53.2 % $ 2,557,806 53.6 %

Residential real estate 1,325,858 27.8 1,329,406 27.9

Construction 366,218 7.7 335,999 7.0

Commercial 234,499 4.9 237,932 5.0

4 unchanged sentences

Total loans, net $ 4,719,447 $ 4,714,078

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

Included in loans were deferred costs, net of fees, of $ 3.4 million and $ 2.2 million at September 30, 2024 and December 31, 2023.

At September 30, 2024 and December 31, 2023 included in total loans were $ 1.52 billion and $ 1.64 billion in loans acquired as part of the acquisition of TCFC, effective July 1, 2023.

These balances were presented net of the related discount which totaled $ 92.3 million and $ 108.4 million at September 30, 2024 and December 31, 2023, respectively.

At September 30, 2024 and December 31, 2023, included in total loans were $ 263.4 million and $ 297.9 million in loans, acquired as part of the acquisition of Severn Bancorp, Inc.

(“Severn”), effective October 31, 2021.

These balances were presented net of the related discount which totaled $ 3.6 million and $ 4.7 million at September 30, 2024 and December 31, 2023, respectively.

At September 30, 2024, the Bank was servicing $ 368.0 million in loans for the Federal National Mortgage Association and $ 118.5 million in loans for Freddie Mac.

The following table provides information on nonaccrual loans by loan class as of September 30, 2024 and December 31, 2023.

($ in thousands) Non-Accrual with no allowance for credit loss Non-Accrual with an allowance for credit loss Total Non-Accrual Loans

September 30, 2024

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

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

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

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

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

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

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

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

March 31, 2025

Nonaccrual loans:

Construction $ 207 $ — $ 207

Residential real estate 6,500 438 6,938

Commercial real estate $ 3,283 $ 2,135 $ 5,418

Residential real estate 7,558 418 7,976

Construction 345 — 345

Commercial 405 961 1,366

3 unchanged sentences

Interest income $ 191 $ 58 $ 249

($ in thousands) Non-Accrual with no allowance for credit loss Non-Accrual with an allowance for credit loss Total Non-Accrual Loans

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

December 31, 2024

Nonaccrual loans:

Construction $ 626 $ — $ 626

Residential real estate 5,865 480 6,345

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) Non-Accrual Delinquent Loans Non-Accrual Current Loans Total Non-Accrual Loans

September 30, 2024

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

March 31, 2025

Nonaccrual loans:

Construction $ 207 $ — $ 207

Residential real estate 4,516 2,422 6,938

Commercial real estate $ 701 $ 4,717 $ 5,418

Residential real estate 4,976 3,000 7,976

Construction 345 — 345

Commercial 216 1,150 1,366

2 unchanged sentences

Total $ 6,486 $ 8,916 $ 15,402

($ in thousands) Non-Accrual Delinquent Loans Non-Accrual Current Loans Total Non-Accrual Loans

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

December 31, 2024

Nonaccrual loans:

Construction $ 221 $ 405 $ 626

Residential real estate 4,137 2,208 6,345

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

4 unchanged sentences

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

As of September 30, 2024, there w ere 7 cred it cards that were evaluated based on economic conditions specific to the loans or borrowers, and were downgraded to substandard and non-performing.

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

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

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.

5 unchanged sentences

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.

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.

2 unchanged sentences

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 non-performing bankruptcies.

These assets listed may include assets with histories of repossessions or some that are nonperforming bankruptcies.

These relationships will be reviewed at least quarterly.

8 unchanged sentences

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

The following tables provides information on loan risk ratings as of September 30, 2024 and gross write-offs during the nine months ended September 30, 2024.

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

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

($ in thousands) Prior 2021 2022 2023 2024 2025

September 30, 2024

March 31, 2025

Commercial real estate

Pass $ 1,086,053 $ 416,624 $ 543,786 $ 252,723 $ 136,600 $ 45,532 $ 26,176 $ — $ 2,507,494

Special mention 7,435 2,945 19,752 — — — 355 — 30,487

Substandard 2,670 2,899 — — — — 557 — 6,126

7 unchanged sentences

Gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —

Commercial real estate

Pass $ 37,068 $ 8,240 $ 56,341 $ 59,151 $ 154,069 $ 24,141 $ 26,459 $ 187 $ 365,656

Special Mention 7,162 — 5,428 — — — 531 — 13,121

Special mentions — 217 — — — — — — 217

Substandard 345 — — — — — — — 345

16 unchanged sentences

Total gross charge-offs $ ( 142 ) $ ( 34 ) $ ( 287 ) $ ( 17 ) $ — $ — $ ( 4 ) $ — $ ( 484 )

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

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

September 30, 2024

March 31, 2025

Performing $ — $ — $ — $ — $ — $ — $ 6,779 $ — $ 6,779

Non-Performing — — — — — — 179 — 179

Nonperforming — — — — — — 21 — 21

Total $ — $ — $ — $ — $ — $ — $ 6,800 $ — $ 6,800

3 unchanged sentences

Total recorded investment $ 1,541,278 $ 735,929 $ 1,047,708 $ 620,781 $ 476,641 $ 107,132 $ 247,338 $ 682 $ 4,777,489

The following tables provides information on loan risk ratings as of December 31, 2023 and gross write-offs during twelve months ended December 31, 2023.

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

3 unchanged sentences

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

7 unchanged sentences

Gross charge-offs $ ( 1 ) $ — $ — $ — $ — $ — $ — $ — $ ( 1 )

Commercial real estate

Pass $ 31,884 $ 8,191 $ 8,628 $ 56,685 $ 70,232 $ 131,383 $ 26,785 $ 1,851 $ 335,639

Special Mention 14,986 331 — 5,501 4,446 — 100 409 25,773

Special mentions — — — — — — — — —

Substandard 360 — — — — — — — 360

17 unchanged sentences

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.

Term Loans by Origination Year Revolving

Loans Revolving

Term Loans Total

($ in thousands) Prior 2020 2021 2022 2023 2024

December 31, 2024

Performing $ — $ — $ — $ — $ — $ — $ 6,931 $ — $ 6,931

Non-Performing — — — — — — — — —

Nonperforming — — — — — — 168 — 168

Total $ — $ — $ — $ — $ — $ — $ 7,099 $ — $ 7,099

5 unchanged sentences

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

The following tables provide information on the aging of the loan portfolio as of September 30, 2024 and December 31, 2023.

($ 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 (1)

Current Non-Accrual Loans Total

September 30, 2024

Construction $ 410 $ — $ — $ — $ 207 $ 617 $ 336,496 $ — $ 337,113

Residential real estate 956 389 205 2,377 2,139 6,066 1,562,510 2,422 1,570,998

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

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

March 31, 2025

Commercial real estate $ 1,079 $ 353 $ 147 $ 475 $ 226 $ 2,280 $ 2,537,110 $ 4,717 $ 2,544,107

Residential real estate 2,128 1,953 — 1,977 2,999 9,057 1,313,801 3,000 1,325,858

Construction 2,864 — — — 345 3,209 363,009 — 366,218

Commercial — 59 — 194 22 275 233,074 1,150 234,499

3 unchanged sentences

Percent of total loans 0.1 % 0.1 % 0.0 % 0.1 % 0.1 % 0.4 % 99.4 % 0.2 % 100.0 %

____________________________________

(1) Includes loans measured at fair value of $ 10.0 million at September 30, 2024.

Current Non-Accrual Loans Total

($ 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

Construction $ 1,919 $ — $ — $ — $ 221 $ 2,140 $ 296,455 $ 405 $ 299,000

Residential real estate 2,420 271 108 1,469 2,668 6,936 1,481,294 2,208 1,490,438

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

3 unchanged sentences

Percent of total loans 0.2 % 0.0 % 0.0 % 0.1 % 0.2 % 0.5 % 99.3 % 0.2 % 100.0 %

____________________________________

(1) Includes loans measured at fair value of $ 9.9 million at December 31, 2023.

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, 2024 and September 30, 2023.

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

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

For three months ended September 30, 2024

Construction $ 3,471 $ — $ 1 $ 1 $ ( 578 ) $ 2,894

Residential real estate 22,060 — 1 1 1,468 23,529

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

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

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

Three Months Ended March 31, 2025

Commercial real estate $ 22,846 $ — $ 78 $ ( 936 ) $ 21,988

Commercial 2,866 ( 154 ) 1 ( 153 ) 512 3,225

8,145 ( 1,015 ) 88 ( 927 ) 36 7,254

Credit Card 512 ( 210 ) — ( 210 ) 188 490

Total $ 58,478 $ ( 1,379 ) $ 91 $ ( 1,288 ) $ 1,479 $ 58,669

____________________________________

(1) Gross charge-offs of consumer loans for the three months ended September 30, 2024 included $ 156 thousand of demand deposit overdrafts.

($ in thousands) Beginning Balance Merger Adjustments (2)

Charge-offs Recoveries Net (charge-offs) recoveries Provisions Ending Balance

For Three Months Ended September 30, 2023

Construction $ 2,386 $ 3 $ — $ 3 $ 3 $ 1,439 $ 3,831

Residential real estate 21,776 — 1 616 22,393

Commercial real estate 10,267 985 ( 1,327 ) — ( 1,327 ) 12,875 22,800

Commercial 1,956 278 — 2 2 2,101 4,337

5,254 14 ( 115 ) 45 ( 70 ) 1,658 6,856

Credit Card — 18 ( 60 ) — ( 60 ) 94 52

Total $ 29,014 $ 1,513 $ ( 1,502 ) $ 53 $ ( 1,449 ) $ 27,973 $ 57,051

____________________________________

(1) Gross charge-offs of consumer loans for the three months ended September 30, 2023 included $ 1.5 million of demand deposit overdrafts.

(2) Merger adjustments consist of gross-up for acquired PCD loans in the TCFC merger.

($ in thousands) Beginning

Balance Charge-

offs Recoveries Net (charge-offs)

recoveries Provisions Ending

For Nine Months Ended September 30, 2024

Construction 2,854 — 1 987 3,842

Residential real estate 21,949 ( 1 ) 5 4 1,576 23,529

Commercial real estate 20,975 — — — 302 21,277

Commercial 3,138 ( 2 ) 6 ( 287 ) 2,855

7,601 ( 2,401 ) 232 ( 2,169 ) 1,822 7,254

Consumer 6,889 ( 482 ) 86 81 6,574

Credit card 407 ( 242 ) — 225 390

Total $ 57,910 $ ( 726 ) $ 172 $ 686 $ 58,042

____________________________________

(1) Gross charge-offs of consumer loans for the nine months ended September 30, 2024 included $ 512 thousands of demand deposit overdrafts.

($ in thousands) Beginning Balance Impact of ASC 326 Adoption Merger Adjustments (2)

Charge-offs Recoveries Net (charge-offs) recoveries Provisions Ending Balance

For Nine Months Ended September 30, 2023

Construction $ 2,973 $ 1,222 $ 3 $ — 10 $ 10 $ ( 377 ) $ 3,831

Residential real estate 2,622 4,974 215 — 37 37 11,327 19,175

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

Three Months Ended March 31, 2024

Commercial real estate $ 23,015 $ — $ — $ ( 2 ) $ 23,013

Residential real estate 19,909 ( 1 ) 2 ( 905 ) 19,005

Construction 3,935 ( 12 ) 2 ( 367 ) 3,558

Commercial 2,671 — 1 207 2,879

4,497 452 14 ( 399 ) 210 ( 189 ) 2,082 6,856

Consumer 7,601 ( 525 ) 76 1,530 8,682

Credit card 220 ( 116 ) 8 87 199

Total $ 57,351 $ ( 654 ) $ 89 $ 550 $ 57,336

____________________________________

(1) Gross charge-offs of consumer loans for the nine months ended September 30, 2023 included $ 1.8 million of demand deposit overdrafts.

(2) Merger adjustments consist of gross-up for acquired PCD loans in the TCFC merger.

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

September 30, 2024

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

March 31, 2025

($ in thousands) Real Estate Collateral Other Collateral Total

Construction $ 207 $ — $ 207

Residential real estate 19,600 — 19,600

Commercial real estate $ 5,418 $ — $ 5,418

Residential real estate 7,976 — 7,976

Construction 345 — 345

Commercial — 1,366 1,366

3 unchanged sentences

($ in thousands) Real Estate Collateral Other Collateral Total

Construction $ 662 $ — $ 662

Residential real estate 8,047 — 8,047

Commercial real estate $ 10,386 $ — $ 10,386

Residential real estate 7,614 — 7,614

Construction 360 — 360

Commercial — 1,007 1,007

2 unchanged sentences

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 actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral.

During the three and nine months ended September 30, 2024 and 2023, no loan modifications were made to borrowers experiencing financial difficulty.

During the three and nine months ended September 30, 2024 and 2023, there were no defaults on loan modifications made to borrowers experiencing financial difficulty.

As of September 30, 2024, all loan modification balances with borrowers experiencing financial difficulty that were modified during the preceding 12 months were classified as current non-accrual, of which $ 98 thousand were for commercial real estate loans and $ 216 thousand were for commercial loans.

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

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

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

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

Foreclosure Proceedings

There were $ 127 thousand of consumer mortgage loans collateralized by residential real estate property and $ 552 thousand of Commercial Real Estate loans collateralized by Owner Occupied nonfarm nonresidential properties that were in the process of foreclosure as of September 30, 2024 and $ 175 thousand as of December 31, 2023, respectively.

There were no residential real estate properties included in the balance of other real estate owned (“OREO”) at September 30, 2024 and December 31, 2023.

Note 5 – Goodwill and Other Intangibles

The following table provides information on the significant components of goodwill and other acquired intangible assets at September 30, 2024 and December 31, 2023.

September 30, 2024

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

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 $ 179 thousand and $ 2.4 million as of March 31, 2025 and $ 179 thousand and $ 3.3 million as of December 31, 2024, respectively.

Mortgage Servicing Rights (“MSRs”)

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

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

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

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

Beginning balance $ 5,874

Net additions 43

Amortization expense ( 52 )

Other ( 330 )

Ending balance $ 5,535

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

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

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

Note 4 – Goodwill and Other Intangible Assets

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

March 31, 2025

($ in thousands) Goodwill Core Deposit Intangible

Gross carrying amount $ 64,809 $ 59,151

Additions — —

Accumulated impairment charges ( 1,543 ) —

1 unchanged sentence

Net carrying amount $ 63,266 $ 36,033

Weighted Average Remaining Life (in years) 0.00 years 3.60 years

December 31, 2024

1 unchanged sentence

Gross carrying amount $ 64,809 $ 59,151

Additions — 48,648

Accumulated impairment charges ( 1,543 ) —

1 unchanged sentence

Net carrying amount $ 63,266 $ 38,311

Weighted Average Remaining Life (in years) 0.00 years 3.70 years

The aggregate amortization expense was $ 2.3 million for the three months ended September 30, 2024 and $ 2.6 million for the three months ended September 30, 2023.

The aggregate amortization expense was $ 7.5 million for the nine months ended September 30, 2024 and $ 3.5 million for the nine months ended September 30, 2023.

At September 30, 2024, estimated future remaining amortization for amortizing core deposit intangibles within the years ending December 31, is as follows:

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

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

($ in thousands) Amortization Expense

5 unchanged sentences

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 are classified as operating leases.

Certain 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 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.

($ in thousands) September 30, 2024 December 31, 2023

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

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

Lease liabilities $ 12,183 $ 11,844

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Remaining lease term - max 16.43 years 16.68 years

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Lease cost ($ in thousands)

2024 2023 2024 2023

Operating lease cost $ 492 $ 492

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Cash paid for amounts included in the measurement of lease liabilities $ 467 $ 462

A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total of operating lease liabilities is as follows:

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

Lease payments due ($ in thousands)

As of September 30, 2024

Three months ending December 31, 2024 $ 431

March 31, 2025

Thereafter 5,997

Total undiscounted cash flows 14,119

Discount 2,116

imputed interest 1,936

Lease liabilities $ 12,183

Total gross rental income was $ 266 thousand and $ 253 thousand for the three months ended September 30, 2024 and 2023, respectively.

Total gross rental income was $ 799 thousand and $ 937 thousand for the nine months ended September 30, 2024 and 2023, respectively.

The following table presents our minimum future annual rental income on such leases as of September 30, 2024.

($ in thousands) As of September 30, 2024

Three months ending December 31, 2024 $ 224

Thereafter 2,478

Total $ 5,779

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

Note 6 - Deposits

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

($ in thousands) September 30, 2024 December 31, 2023

Balance % Balance %

Noninterest-bearing demand $ 1,571,393 30.07 % $ 1,258,037 23.36 %

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

Balance % of Total Deposits Balance % of Total Deposits

Noninterest-bearing $ 1,565,017 28.7 % $ 1,562,815 28.3 %

Interest-bearing:

Demand 751,533 14.38 % 1,165,546 21.64 %

Money market deposits 1,297,237 24.82 % 1,430,603 26.56 %

Savings 336,903 6.45 % 347,324 6.45 %

Certificates of deposit 1,268,657 24.28 % 1,184,610 21.99 %

Interest-bearing checking 852,480 15.6 978,076 17.7

Money market and savings 1,800,529 32.9 1,805,884 32.6

Time deposits 1,242,319 22.8 1,181,561 21.4

Total interest-bearing 3,895,328 71.3 3,965,521 71.7

Total deposits $ 5,460,345 100.0 % $ 5,528,336 100.0 %

At September 30, 2024, the scheduled contractual maturities of certificates of deposit are as follows:

($ in thousands) September 30, 2024

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

($ in thousands) March 31, 2025

Within one year $ 1,005,008

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Year 3 13,335

The aggregate amount of certificates of deposit that met or exceeded the FDIC insurance limit of $250,000 at September 30, 2024 and December 31, 2023 was $ 417.8 million and $ 354.6 million, respectively.

Total $ 1,242,319

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

Note 7 - Borrowings

Long-term debt consisted of the following:

($ in thousands) September 30, 2024 December 31, 2023 Issue Date Stated Maturity Date Earliest Call Date Interest Rate

FHLB Advances $ 50,000 — 2024 2025 4.786 %

Total long-term advances 50,000 —

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

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

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

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Total trust preferred securities 32,991 32,991

Less net discount and unamortized issuance costs ( 4,035 ) ( 4,822 )

net discount and unamortized issuance costs ( 3,512 ) ( 3,774 )

Total long-term debt $ 73,979 $ 73,717

At September 30, 2024, subordinated notes consisted of $ 25.0 million of long-term debt issued by the Company in August 2020, and $ 19.5 million of long-term debt assumed as a result of the merger with TCFC.

The recorded balance of subordinated debt issued in 2020 and the assumed subordinated debt from TCFC, net of unamortized issuance costs and fair value discounts, respectively, were $ 24.9 million and $ 18.8 million, respectively.

The Company also assumed TRUPS in the aggregate of $ 33.0 million as a result of the merger with TCFC in the third quarter of 2023 and the acquisition of Severn in the fourth quarter of 2022.

____________________________________

* Secured Overnight Financing Rate (“SOFR”).

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

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

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

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

The recorded balance of the debt acquired from Severn at September 30, 2024 was $ 18.7 million, net of the unamortized fair value adjustment of $ 1.9 million.

At September 30, 2024, the junior subordinated debt securities of Tri-County Capital Trust I and Tri-County Capital Trust II had a recorded balance of $ 6.6 million and $ 4.4 million, which are presented as net of the unamortized fair value adjustment of $ 583 thousand and $ 748 thousand, respectively.

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

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

The 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 outstanding long-term borrowings from the FHLB at September 30, 2024 and zero at December 31, 2023.

The Company did not have any short-term borrowings from the FHLB at September 30, 2024 and December 31, 2023.

Further information on these obligations is provided in the Company’s 2023 Annual Report.

Note 9 - Stock-Based Compensation

At the 2016 annual meeting, stockholders approved the Shore Bancshares, Inc.

2016 Stock and Incentive Plan (“2016 Equity Plan”), replacing the Shore Bancshares, Inc.

2006 Stock and Incentive Plan (“2006 Equity Plan”), which expired on that date.

The Company may issue shares of common stock or grant other equity-based awards pursuant to the 2016 Equity Plan.

Stock-based awards granted to date generally are time-based, vest in equal installments on each anniversary of the grant date and range over a one - to five-year period of time, and, in the case of stock options, expire 10 years from the grant date.

As part of the 2016 Equity Plan, a performance equity incentive award program, known as the “Long-term incentive plan” allows participating officers of the Company to earn incentive awards of performance share/restricted stock units if certain pre-determined targets are achieved at the end of a three-year performance cycle.

Stock-based compensation expense based on the grant date fair value is recognized ratably over the requisite service period for all awards and reflects forfeitures as they occur.

The 2016 Equity Plan originally reserved 750,000 shares of common stock for grant, and 190,166 shares remained available for grant at September 30, 2024.

The Company assumed 3,977 shares of restricted stock and 90,783 of restricted stock units at a fair market value of $ 11.56 per share as a result of the merger with TCFC.

The vesting period for the outstanding restricted stock grants is between three and five years .

Restricted stock units and performance stock units vesting period is between one to three years .

The recipients of the restricted stock units and performance stock units do not have any stockholder rights, including voting, dividend, or liquidation rights, with respect to the shares underlying awarded restricted stock units until the recipient becomes the record holder of those shares.

The following table summarizes restricted stock award and restricted stock unit activity for the Company under the 2016 Equity Plan for the nine months ended September 30, 2024.

Restricted Stock Restricted Stock Units Performance Stock Units

Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value

Nonvested at beginning of period 45,322 $ 15.42 165,055 $ 11.56 — $ —

Granted 51,610 11.39 53,279 11.31 43,651 11.32

Vested ( 44,655 ) 15.33 ( 79,553 ) 11.56 — —

Forfeited — — ( 3,256 ) 11.56 — —

Nonvested at end of period 52,277 $ 11.52 135,525 $ 11.46 43,651 $ 11.32

The fair value of restricted stock awards that vested during the three months ended September 30, 2024 and 2023 was $ 241 thousand and $ 12 thousand, respectively.

The fair value of restricted stock units vested during the three months ended September 30, 2024 and 2023 was $ 505 thousand and $ 122 thousand respectively.

The fair value of restricted stock awards vested during the nine months ended September 30, 2024 and 2023 was $ 577 thousand and $ 535 thousand, respectively.

The fair value of restricted stock units that vested during the nine months ended September 30, 2024 and 2023 was $ 907 thousand and $ 122 thousand, respectively.

There were no performance stock units that vested during the three and nine months ended September 30, 2024 and 2023.

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

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

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

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.

We recognize gains and losses through mortgage-banking revenue in the Consolidated Statements of Income.

The Company recognizes gains and losses through mortgage-banking revenue in the consolidated statements of income.

IRLCs on mortgage loans that we intend to sell in the secondary market are considered derivatives.

We are 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 and 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.

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 our closed inventory in loans held for sale, we attempt to protect the Bank 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 our derivative financial instruments at September 30, 2024 and December 31, 2023.

September 30, 2024 December 31, 2023

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

March 31, 2025 December 31, 2024

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

Asset – IRLCs

$ 23,061 $ 392 $ 7,527 $ 113

Asset – TBA securities

7,500 12 22,100 164

Liability – TBA securities

27,350 78 7,550 23

Note 9 – Accumulated Other Comprehensive Loss

The Company records unrealized holding gains (losses), net of tax, on investment securities AFS 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, 2024 and 2023.

Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023

($ in thousands) Net Unrealized Gains (Losses) Net Unrealized Losses Net Unrealized Gains (Losses) Net Unrealized Losses

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

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

Accumulated Other Comprehensive Loss

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

Beginning of period $ ( 7,545 ) $ ( 7,494 )

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End of period $ ( 6,333 ) $ ( 8,058 )

Note 12 – Regulatory Capital

Note 10 – Regulatory Capital Requirements

Banks and bank holding companies are subject to various regulatory capital requirements administered by the federal banking agencies.

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The Banks’ 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, 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, 2024 and December 31, 2023, management believes that the Company and the Bank met all capital adequacy requirements to which they were subject.

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

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

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

At September 30, 2024, there were 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 common equity Tier 1, Tier 1 risk-based and total risk-based capital ratios, and Tier 1 leverage ratios, which are described below.

The minimum ratios for capital adequacy purposes are 7.00 %, 8.50 %, 10.50 % and 4.00 % for the common equity Tier 1, Tier 1 risk-based capital, total risk-based capital and leverage ratios, respectively which include a capital conservation buffer of 2.50% for common equity Tier 1, Tier 1, and total capital ratios.

To be categorized as well capitalized, a bank must maintain minimum ratios of 6.50 %, 8.00 %, 10.00 % and 5.00 % for its common equity Tier 1, Tier 1 risk-based capital, total risk-based capital and leverage ratios, respectively.

The table presents the actual and required capital ratios for the Company and the Bank as of September 30, 2024 and December 31, 2023.

The Company The Bank Regulatory min ratio + CCB (1)

To Be Well-Capitalized Under Prompt Corrective Action Regulation (5)

($ in thousands) Amount Ratio Amount Ratio

September 30, 2024

Common Tier 1 Capital to RWA $ 446,402 9.27 % 509,511 10.60 % 7.00 % 6.50 %

Tier 1 Capital to RWA 476,170 9.89 % 509,511 10.60 % 8.50 % 8.00 %

Total Capital to RWA 579,664 12.04 % 569,317 11.84 % 10.50 % 10.00 %

Tier 1 Capital to AA (Leverage) (2)

476,170 8.31 % 509,511 8.90 % 4.00 % 5.00 %

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 March 31, 2025 and December 31, 2024.

2025 December 31,

Common Tier 1 Capital to RWA $ 408,317 8.69 % 470,200 10.02 % 7.00 % 6.50 %

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

($ in thousands)

The Company Amounts

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

Tier 1 Capital 500,149 488,105

Total Capital 603,928 591,228

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

The Company Ratios

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

Tier 1 Capital to RWA 10.37 10.06 8.50

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8.27 8.02 4.00

Regulatory Capital and Ratios The Company The Bank

($ in thousands) September 30, 2024 December 31, 2023 September 30, 2024 December 31, 2023

Common equity $ 533,271 $ 511,135 $ 595,954 $ 570,100

( 61,397 ) ( 63,266 ) ( 61,397 ) ( 63,266 )

Core deposit intangible (3)

( 30,572 ) ( 38,069 ) ( 30,572 ) ( 38,069 )

DTAs that arise from net operating loss and tax credit carry forwards ( 426 ) ( 8,977 ) — ( 6,059 )

5,526 7,494 5,526 7,494

The Bank Amounts

Common Equity Tier 1 Capital $ 534,824 $ 521,453

TRUPs 29,768 29,530 — —

Tier 1 Capital 534,824 521,453

Allowable reserve for credit losses and other Tier 2 adjustments 59,806 58,586 59,806 58,586

Subordinated debentures 43,688 43,139 — —

Total Capital 594,550 580,706

Risk-Weighted Assets (“RWA”) $ 4,816,165 $ 4,697,504 $ 4,808,058 $ 4,693,009

Average Assets (“AA”) $ 5,729,576 $ 5,649,116 $ 5,721,995 $ 5,644,930

Risk-Weighted Assets 4,821,975 4,851,903

The Bank Ratios

Common Equity Tier 1 Capital to RWA 11.09 % 10.75 % 7.00 % 6.50 %

Tier 1 Capital to RWA 11.09 10.75 8.50 8.00

Total Capital to RWA 12.33 11.97 10.50 10.00

Tier 1 Capital to AA (Leverage) (2)

8.84 8.58 4.00 5.00

(1) The regulatory minimum capital ratio ("Min.

Ratio") + the capital conservation buffer ("CCB").

(2) Tier 1 Capital to AA (Leverage) has no capital conservation buffer defined.

The PCA well capitalized is defined as 5.00 %.

(3) Core deposit intangible is net of deferred tax liability.

(4) Goodwill is net of deferred tax liability.

____________________________________

(1) Applies to the Bank only.

Bank and holding company regulations impose certain restrictions on dividend payments by the Bank, as well as restricting extensions of credit and transfers of assets between the Bank and the Company.

At September 30, 2024, 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.

(2) Tier 1 Capital to AA (Leverage) has no capital conservation buffer defined.

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

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

Note 11 – Fair Value Measurements

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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.

Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis.

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.

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• 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.

Below is a discussion on the Company’s assets measured at fair value on a recurring basis.

Investment Securities Available for Sale

Fair value measurement for investment securities AFS is based on quoted prices from an independent pricing service.

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.

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Treasury securities, if any, as Level 1 in the fair value hierarchy, and it classifies its investments in U.S.

Government agencies securities and mortgage-backed securities issued or guaranteed by 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 on-line resources.

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.

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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).

Mortgage Servicing Rights

The fair value of mortgage servicing rights (“MSRs”) is determined using a valuation model administered by a third party that calculates the present value of estimated future net servicing income (Level 3).

The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds, discount rate, default rates, cost to service (including delinquency and foreclosure costs), escrow account earnings, contractual servicing fee income, and other ancillary income such as late fees.

Management reviews all significant assumptions on a quarterly basis.

Mortgage loan prepayment speed, a key assumption in the model, is the annual rate at which borrowers are forecasted to repay their mortgage loan principal.

The discount rate used to determine the present value of estimated future net servicing income, another key assumption in the model, is an estimate of the required rate of return investors in the market would require for an asset with similar risk.

Both assumptions can, and generally will, change as market conditions and interest rates change.

The significant unobservable inputs used in the fair value measurement of the reporting entity’s residential MSRs are prepayment speeds, probability of default, rate of return, and cost of servicing.

Significant increases/decreases in any of those inputs in isolation would have resulted in a significantly lower/higher fair value measurement.

Generally, a change in the assumption used for prepayment speeds would have been accompanied by a directionally similar change in the markets, i.e.

the 10-Year Treasury, and in the probability of default.

We utilize a third-party specialist model to estimate the fair value of our IRLCs, which are valued based upon mortgage securities (TBA) prices less estimated costs to process and settle the loan.

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

September 30, 2024

$ 5,309 Market Approach Weighted average prepayment speed (PSA) (2)

March 31, 2025

IRLCs - net asset $ 392 Market Approach Range of pull through rate 77 % - 100 %

2 unchanged sentences

December 31, 2024

$ 5,926 Market Approach Weighted average prepayment speed (PSA) (2)

IRLCs - net asset $ 113 Market Approach Range of pull through rate 78 % - 100 %

Average pull through rate 98 %

____________________________________

(1) The weighted average was calculated with reference to the principal balance of the underlying mortgages.

(2) PSA = Public Securities Association Standard Prepayment Model.

The following table presents activity in MSRs for the three and nine months ended September 30, 2024.

($ in thousands) Three Months Ended September 30, 2024 Nine Months Ended September 30, 2024

Beginning balance $ 5,995 $ 5,926

Servicing rights resulting from sales of loans 55 253

Valuation adjustment ( 741 ) ( 870 )

Ending balance $ 5,309 $ 5,309

The following table presents activity in the IRLCs - net asset for the three and nine months ended September 30, 2024.

($ in thousands) Three Months Ended September 30, 2024 Nine Months Ended September 30, 2024

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

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

Beginning balance $ 113

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This is a Level 2 input.

We have elected to measure and report best efforts commitments at fair value, when outstanding, using a valuation methodology similar to that used for mandatory commitments.

We have 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.

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

The following tables present the recorded amount of assets measured at fair value on a recurring basis at September 30, 2024 and December 31, 2023.

No assets were transferred from one hierarchy level to another during the first nine months of 2024 or 2023.

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

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

($ in thousands) Fair Value Quoted Prices

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(Level 2) Significant Unobservable Inputs

September 30, 2024

Securities available for sale:

Government agencies $ 20,690 $ — $ 20,690 $ —

Mortgage-backed 106,221 — 106,221 —

March 31, 2025

Available for sale securities:

government agency securities $ 20,344 $ — $ 20,344 $ —

Mortgage-backed securities 152,109 — 152,109 —

Other debt securities 6,695 — 6,695 —

133,339 — 133,339 —

Total available for sale securities 179,148 — 179,148 —

Equity securities 5,945 — 5,945 —

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Loans held for sale 15,717 — 15,717 —

Loans Held for Investment, at fair value 10,023 — 10,023 —

MSRs 5,309 — — 5,309

IRLCs 392 — — 392

Total assets at fair value $ 201,214 $ — $ 200,822 $ 392

TBA securities 37 — 37 —

TBA forward trades $ 78 $ — $ 78 $ —

Total liabilities at fair value $ 78 $ — $ 78 $ —

3 unchanged sentences

December 31, 2024

Securities available for sale:

Government agencies $ 20,475 $ — $ 20,475 $ —

Mortgage-backed 84,027 — 84,027 —

Available for sale securities:

government agency securities $ 20,202 $ — $ 20,202 $ —

Mortgage-backed securities 122,384 — 122,384 —

Other debt securities 6,626 — 6,626 —

110,521 — 110,521 —

Total available for sale securities 149,212 — 149,212 —

Equity securities 5,814 — 5,814 —

1 unchanged sentence

Loans held for sale 19,606 — 19,606 —

Loans Held for Investment, at fair value 9,944 — 9,944 —

MSRs 5,926 — — 5,926

IRLCs 113 — — 113

Total assets at fair value $ 174,909 $ — $ 174,796 $ 113

TBA securities $ 176 $ — $ 176 $ —

TBA forward trades $ 23 $ — $ 23 $ —

Total liabilities at fair value $ 23 $ — $ 23 $ —

Below is a discussion on the Company’s assets measured at fair value on a nonrecurring basis.

Assets Measured at Fair Value on a Nonrecurring Basis

Individually Evaluated Collateral-Dependent Loans

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Accordingly, collateral dependent loans are classified within Level 3 of the fair value hierarchy.

Other Real Estate Owned (Foreclosed Assets)

OREO (Foreclosed Assets)

Foreclosed assets are adjusted for fair value upon transfer of loans to foreclosed assets establishing a new cost basis.

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Repossessed Assets

The Company records repossessed assets at fair value on a nonrecurring basis.

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.

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The Company considers any valuation inputs related to repossessed assets to be Level 3 inputs.

The following tables set forth the Company’s financial and nonfinancial assets subject to fair value adjustments (impairment) on a nonrecurring basis at September 30, 2024 and December 31, 2023.

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 financial and nonfinancial assets subject to fair value adjustments (impairment) on a nonrecurring basis at March 31, 2025 and December 31, 2024 that are valued at lower of cost or market.

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

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

September 30, 2024

March 31, 2025

Nonrecurring measurements:

Individually evaluated collateral dependent loans $ 2,983 Appraisal of collateral (1)

Individually evaluated collateral dependent loan

Commercial real estate $ 2,220 Appraisal of collateral (1)

Appraisal adjustment (2)

Liquidation expense (2)

Residential real estate 383 Appraisal of collateral (1)

Appraisal adjustment (2)

Liquidation expense (2)

Commercial 413 Appraisal of collateral (1)

Appraisal adjustment (2)

Liquidation expense (2)

Other real estate owned 179 Appraisal of collateral (1)

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Nonrecurring measurements:

Individually evaluated collateral dependent loan $ 633 Appraisal of collateral (1)

Individually evaluated collateral dependent loan

Commercial real estate $ 2,220 Appraisal of collateral (1)

Appraisal adjustment (2)

Liquidation expense (2)

Residential real estate 817 Appraisal of collateral (1)

Appraisal adjustment (2)

Liquidation expense (2)

Consumer 624 Appraisal of collateral (1)

Appraisal adjustment (2)

Liquidation expense (2)

Other real estate owned 179 Appraisal of collateral (1)

Appraisal adjustment (2)

Repossessed assets 3,315 Appraisal of collateral (1)

Appraisal adjustment (2)

Assets held for sale 900 Appraisal of collateral (1)

Appraisal adjustment (2)

_________________________________

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

The carrying amounts and estimated fair values of the Company’s financial instruments are presented in the following table.

Fair values for September 30, 2024 and December 31, 2023 were estimated using an exit price notion.

September 30, 2024 Carrying Amount Fair Value Fair Value Measurements

Description of Asset ($ in thousands)

Level 1 Level 2 Level 3

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

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

March 31, 2025 Carrying Amount Fair Value Fair Value Measurements

($ in thousands) Level 1 Level 2 Level 3

Cash and cash equivalents $ 389,006 $ 389,006 $ 389,006 $ — $ —

Investment securities - AFS 133,339 133,339 — 133,339 —

Investment securities - HTM, net 484,583 440,296 — 440,296 —

Available for sale securities 179,148 179,148 — 179,148 —

Held to maturity securities 469,572 421,428 — 421,428 —

Equity securities 5,945 5,945 — 5,945 —

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Loans held for sale 15,717 15,717 — 15,717 —

TBA derivatives trades 46 46 — 46 —

Cash surrender value on life insurance 103,729 103,729 — 103,729 —

Loans, at fair value 10,023 10,023 — 10,023 —

Loans, net 4,665,217 4,499,722 — — 4,499,722

MSRs 5,309 5,309 — — 5,309

TBA securities 12 12 — 12 —

Loans held for investment, at amortized cost, net 4,719,447 4,599,414 — — 4,599,414

Mortgage servicing rights 5,535 5,535 — 5,535 —

Accrued interest receivable 20,555 20,555 — 20,555 —

IRLCs 392 392 — — 392

Noninterest-bearing demand $ 1,571,393 $ 1,571,393 $ — $ 1,571,393 $ —

Checking plus interest 751,533 751,533 — 751,533 —

Money Market 1,297,237 1,297,237 — 1,297,237 —

Savings 335,161 335,161 — 335,161 —

Club 1,742 1,742 — 1,742 —

Certificates of Deposit 1,268,657 1,270,865 — 1,270,865 —

Advances from FHLB 50,000 50,545 — 50,545 —

Subordinated debt, net 43,688 43,461 — 43,461 —

TRUPS, net 29,768 28,572 — 28,572 —

Noninterest-bearing $ 1,565,017 $ 1,565,017 $ — $ 1,565,017 $ —

Interest-bearing checking 852,480 852,480 — 852,480 —

Money market and savings 1,800,529 1,800,529 — 1,800,529 —

Time deposits 1,242,319 1,241,089 — 1,241,089 —

FHLB advances 50,000 50,152 — 50,152 —

TRUPS 29,926 28,044 — 28,044 —

Subordinated debt 44,053 43,928 — 43,928 —

TBA Securities 78 78 — 78 —

Accrued interest payable 3,359 3,359 — 3,359 —

December 31, 2024 Carrying Amount Fair Value Fair Value Measurements

Description of Asset ($ in thousands)

Level 1 Level 2 Level 3

($ in thousands) Level 1 Level 2 Level 3

Cash and cash equivalents $ 459,851 $ 459,851 $ 459,851 $ — $ —

Investment securities - AFS 110,521 110,521 — 110,521 —

Investment securities - HTM 513,188 457,830 — 457,830 —

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 —

Cash surrender value on life insurance 101,704 101,704 — 101,704 —

Loans, at fair value 9,944 9,944 — 9,944 —

Loans, net 4,573,715 4,477,468 — — 4,477,468

MSRs 5,926 5,926 — — 5,926

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

Noninterest-bearing demand $ 1,258,037 $ 1,258,037 $ — $ 1,258,037 $ —

Checking plus interest 1,165,546 1,165,546 — 1,165,546 —

Money Market 1,430,603 1,430,603 — 1,430,603 —

Savings 347,324 347,324 — 347,324 —

Certificates of Deposit 1,184,610 1,184,447 — 1,184,447 —

Subordinated debt, net 43,139 42,579 — 42,579 —

TRUPS, net 29,530 28,266 — 28,266 —

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

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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.

The following table provides information on commitments outstanding at September 30, 2024 and December 31, 2023.

($ in thousands) September 30, 2024 December 31, 2023

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

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

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

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

Commitments to extend credit

Fixed $ 224,291 $ 261,794

Variable 488,744 497,686

Total commitments to extend credit $ 713,035 $ 759,480

Letters of credit

Total $ 723,070 $ 641,785

Fixed $ 8,750 $ 8,980

Variable 21,165 18,981

Total letters of credit $ 29,915 $ 27,961

Total commitments outstanding $ 742,950 $ 787,441

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

The 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.

Note 16 – Earnings Per Share

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 potential common stock equivalents (stock-based awards).

The following table provides information relating to the calculation of earnings per common share.

Three Months Ended September 30, Nine Months Ended September 30,

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

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

Three Months Ended March 31,

(In thousands, except per share data) 2025 2024

Net income (loss) $ 11,189 $ ( 9,737 ) $ 30,607 $ 738

Net income $ 13,764 $ 8,184

Average number of common shares outstanding 33,351 33,189

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Anti-dilutive shares 7 1

Earnings (loss) per common share

Basic $ 0.34 $ ( 0.29 ) $ 0.92 $ 0.03

Diluted $ 0.34 $ ( 0.29 ) $ 0.92 $ 0.03

There were 0 and 219 thousand anti-dilutive unvested restricted stock and performance stock unit awards excluded from the calculation of diluted earnings (loss) per share for the three months ended September 30, 2024 and 2023, respectively.

There were 0 and 219 thousand 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, 2024 and 2023, respectively.

Basic net income per common share $ 0.41 $ 0.25

Diluted net income per common share $ 0.41 $ 0.25

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

Note 15 – Revenue Recognition

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Payment for such performance obligations generally occurs at the time of the settlement of a real estate transaction.

As such settlement is generally within 90 days of the performance of the title work, we recognize the revenue at the time of the settlement.

As such settlement is generally within 90 days of the performance of the title work, the Company recognizes the revenue at the time of the settlement.

All contract issuance costs are expensed as incurred.

We had no contract assets or liabilities at September 30, 2024.

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

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 are primarily comprised of debit and credit card income, ATM fees, merchant services income, and other service charges.

Debit and credit card income is primarily comprised of interchange fees earned whenever the Company’s debit and credit cards are processed through card payment networks such as Mastercard and VISA.

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 generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM.

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

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and nine months ended September 30, 2024 and 2023.

Three Months Ended September 30, Nine Months Ended September 30,

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

Three Months Ended March 31,

($ in thousands) 2025 2024

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Total noninterest income $ 7,003 $ 6,567

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.

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

What changed 10-Q

Item 1. Financial Statements