Earnings climb at Shore Bancshares (NASDAQ: SHBI) but nonaccrual loans grow

Rhea-AI Filing Summary

Shore Bancshares, Inc. reported stronger Q1 2026 results, with net income rising to $17.1 million from $13.8 million a year earlier. Basic and diluted EPS were $0.51, up from $0.41.

Net interest income increased to $52.6 million from $45.9 million as interest income on loans grew and deposit funding costs eased, with total interest expense falling to $25.8 million from $30.0 million. The provision for credit losses was modest at $0.1 million, down from $1.0 million.

Total assets were $6.21 billion and loans held for investment were $4.85 billion, both slightly lower than at year-end 2025, while deposits declined to $5.46 billion. Credit quality showed some pressure as nonaccrual loans increased to $65.0 million from $40.0 million, and net charge-offs for the quarter were $1.3 million.

The Company remained well capitalized. At the bank level, the Common Equity Tier 1 capital ratio was 12.18% and the Tier 1 leverage ratio was 9.58%, both comfortably above regulatory minimums and well‑capitalized thresholds.

Positive

• Stronger profitability: Net income increased to $17.1 million from $13.8 million, and net interest income rose to $52.6 million from $45.9 million, supported by lower interest expense.
• Robust capital position: The bank reported a Common Equity Tier 1 capital ratio of 12.18% and a Tier 1 leverage ratio of 9.58%, comfortably above well‑capitalized regulatory thresholds.

Negative

• Credit quality deterioration: Nonaccrual loans rose to $65.0 million from $40.0 million, and quarterly net charge-offs increased to $1.3 million, signaling higher problem loan levels.

Insights

Banking sector analyst

Q1 2026 shows solid earnings growth but higher problem loans.

Shore Bancshares delivered meaningfully higher profitability, with net income rising to $17.1M and net interest income improving to $52.6M. Lower deposit and borrowing costs helped offset only modest growth in interest income and supported earnings expansion.

Credit costs were low, with a $0.1M provision for credit losses and an allowance of $58.5M against loans of $4.85B. However, nonaccrual loans increased to $65.0M from $40.0M, and quarterly net charge-offs rose to $1.3M, indicating some emerging credit strain.

Capitalization remains a clear strength. The bank’s Common Equity Tier 1 ratio of 12.18% and Total capital ratio of 13.43% at March 31, 2026 sit well above “well‑capitalized” thresholds, providing a substantial buffer to absorb potential future losses. Future disclosures in company filings may clarify whether elevated nonaccrual levels stabilize or continue to build.

Key Figures

Net income: $17.1M Net income prior year: $13.8M Net interest income: $52.6M +5 more

8 metrics

Net income $17.1M Three months ended March 31, 2026

Net income prior year $13.8M Three months ended March 31, 2025

Net interest income $52.6M Three months ended March 31, 2026

Total assets $6.21B Balance at March 31, 2026

Loans held for investment $4.85B Balance at March 31, 2026

Total deposits $5.46B Balance at March 31, 2026

Nonaccrual loans $65.0M Balance at March 31, 2026

Bank CET1 capital ratio 12.18% As of March 31, 2026

Key Terms

allowance for credit losses, nonaccrual loans, mortgage servicing rights, trust preferred securities, +2 more

6 terms

allowance for credit losses financial

"Less: allowance for credit losses | ( 58,481 ) | ( 58,836 )"

Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.

nonaccrual loans financial

"The following tables provide information on the amortized cost basis of nonaccrual loans by loan class"

Nonaccrual loans are loans a lender has stopped counting toward interest income because the borrower is overdue or unlikely to pay; the lender only records cash payments received and may set aside extra funds to cover potential losses. For investors, a rising number or amount of nonaccrual loans signals weaker credit quality, lower future interest revenue and larger potential write-downs — similar to pausing expected subscription income when many customers stop paying.

mortgage servicing rights financial

"Mortgage Servicing Rights (“MSRs”) Mortgage loans are sold with servicing retained and the MSRs are initially recorded at fair value"

Mortgage servicing rights are the contractual right to collect mortgage payments, manage escrow accounts, handle customer service and delinquency actions on a pool of home loans, in exchange for a portion of the loan’s payments. They matter to investors because their value behaves like a revenue stream that can rise or fall with interest rates and borrower behavior — similar to owning a toll bridge where income depends on traffic volume and maintenance costs — and thus affect a lender’s earnings and risk profile.

trust preferred securities financial

"The Company assumed trust preferred securities in the aggregate of $33.0 million as a result of the merger"

Trust preferred securities are a hybrid investment that blends features of bonds and stocks: an issuing company places assets into a separate trust which sells these securities and passes regular payments to holders much like bond interest. They can behave like equity for regulatory or accounting purposes while still offering a fixed-income stream, so they matter to investors because they carry higher income than plain bonds but also higher risk and potential sensitivity to issuer capital and credit moves.

Common Equity Tier 1 Capital financial

"Common Equity Tier 1 Capital | $ | 583,733 | $ | 335,386 | $ | 311,429"

Core capital a bank holds consisting mainly of common shares and retained profits that can absorb losses without forcing the bank to sell assets or seek emergency help; items that can’t reliably cover losses are excluded. Think of it as the bank’s shock-absorbing cushion: a higher common equity tier 1 (CET1) level and ratio means regulators and investors view the bank as better able to survive bad loans or market shocks, so it signals lower risk to shareholders and creditors.

noninterest income (out-of-scope of Topic 606) financial

"Noninterest income (out-of-scope of Topic 606) | 1,855 | 2,363"

10-Q Quarterly Reports: What Changes Quarter to Quarter →

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2026

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 000-22345

SHORE BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

Maryland

52-1974638

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

18 E. Dover Street, Easton, Maryland

21601

(Address of Principal Executive Offices)

(Zip Code)

(410) 763-7800

Registrant’s Telephone Number, Including Area Code

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common stock, $0.01 par value per share

SHBI

The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

o

Accelerated filer

☑

Non-accelerated filer

o

Smaller reporting company

o

Emerging growth company

o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No ☑

The number of shares outstanding of the registrant’s common stock as of April 30, 2026 was 33,455,931.

Table of Contents

TABLE OF CONTENTS

Page

PART I – FINANCIAL INFORMATION

3

Item 1.

Financial Statements

3

Consolidated Balance Sheets at March 31, 2026 (unaudited) and December 31, 2025

3

Consolidated Statements of Income for the three months ended March 31, 2026 and 2025 (unaudited)

4

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2026 and 2025 (unaudited)

5

Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2026 and 2025 (unaudited)

6

Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025 (unaudited)

8

Notes to Consolidated Financial Statements (unaudited)

10

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

39

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

62

Item 4.

Controls and Procedures

63

PART II – OTHER INFORMATION

64

Item 1.

Legal Proceedings

64

Item 1A.

Risk Factors

64

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

64

Item 3.

Defaults Upon Senior Securities

64

Item 4.

Mine Safety Disclosures

64

Item 5.

Other Information

64

Item 6.

Exhibits

65

SIGNATURES

66

2

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

SHORE BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS

($ in thousands, except per share data)						March 31, 2026						December 31, 2025
ASSETS						(Unaudited)
Cash and due from banks						$	44,054					$	50,164
Interest-bearing deposits with other banks						296,768						305,402
Cash and cash equivalents						340,822						355,566
Investment securities:
Available for sale, at fair value (amortized cost of $271,276 and $226,677 at March 31, 2026 and December 31, 2025, respectively)						264,026						220,358
Held to maturity, net of allowance for credit losses of $81 and $99 (fair value of $356,390 and $378,116 at March 31, 2026 and December 31, 2025, respectively)						393,615						414,827
Equity securities, at fair value						6,195						6,186
Restricted securities, at cost						18,003						17,989
Loans held for sale, at fair value						24,034						32,540
Loans held for investment						4,848,030						4,900,302
Less: allowance for credit losses						(58,481)						(58,836)
Loans, net						4,789,549						4,841,466
Premises and equipment, net						80,137						80,168
Goodwill						63,266						63,266
Other intangible assets, net						27,742						29,722
Right-of-use assets						10,102						10,523
Cash surrender value on life insurance						106,684						105,839
Accrued interest receivable						20,676						18,551
Deferred income taxes						29,752						29,825
Other assets						31,460						31,992
TOTAL ASSETS						$	6,206,063					$	6,258,818
LIABILITIES
Deposits:
Noninterest-bearing						$	1,567,425					$	1,587,953
Interest-bearing checking						812,847						852,585
Money market and savings						1,795,619						1,814,928
Time deposits						1,274,766						1,267,487
Brokered deposits						10,963						10,911
Total deposits						5,461,620						5,533,864
Guaranteed preferred beneficial interest in junior subordinated debentures (“TRUPS”), net						30,247						30,168
Subordinated debt, net						58,782						58,893
Total borrowings						89,029						89,061
Lease liabilities						10,608						11,027
Other liabilities						42,092						34,993
TOTAL LIABILITIES						5,603,349						5,668,945
COMMITMENTS AND CONTINGENCIES (Note 13)
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value per share; shares authorized 50,000,000; shares issued and outstanding 33,451,063 and 33,413,503 at March 31, 2026 and December 31, 2025, respectively						335						334
Additional paid-in capital						361,013						360,554
Retained earnings						246,636						233,578
Accumulated other comprehensive loss						(5,270)						(4,593)
TOTAL STOCKHOLDERS’ EQUITY						602,714						589,873
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY						$	6,206,063					$	6,258,818

See accompanying notes to unaudited consolidated financial statements.

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SHORE BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

						Three Months Ended March 31,
($ in thousands, except per share data)						2026						2025
INTEREST INCOME
Interest on loans						$	70,814					$	67,516
Interest and dividends on taxable investment securities						5,114						5,001
Interest and dividends on tax-exempt investment securities						6						6
Interest on deposits with other banks						2,458						3,409
Total interest income						78,392						75,932
INTEREST EXPENSE
Interest on deposits						24,264						28,070
Interest on short-term borrowings						—						598
Interest on long-term borrowings						1,573						1,366
Total interest expense						25,837						30,034
NET INTEREST INCOME						52,555						45,898
Provision for credit losses						85						1,028
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES						52,470						44,870
NONINTEREST INCOME
Service charges on deposit accounts						1,596						1,514
Trust and investment fee income						1,137						823
Mortgage banking revenue						1,450						1,240
Interchange credits						1,698						1,577
Other noninterest income						1,363						1,980
Total noninterest income						7,244						7,134
NONINTEREST EXPENSE
Salaries and employee benefits						19,639						16,440
Occupancy expense						2,567						2,538
Furniture and equipment expense						855						853
Software and data processing						5,140						4,691
Amortization of other intangible assets						1,980						2,278
Legal and professional fees						1,605						1,613
FDIC insurance premium expense						995						1,091
Marketing and advertising						311						254
Fraud losses						111						105
Other noninterest expense						3,853						3,884
Total noninterest expense						37,056						33,747
Income before income taxes						22,658						18,257
Income tax expense						5,570						4,493
NET INCOME						$	17,088					$	13,764
Basic net income per common share						$	0.51					$	0.41
Diluted net income per common share						$	0.51					$	0.41
Dividends paid per common share						$	0.12					$	0.12

See accompanying notes to unaudited consolidated financial statements.

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SHORE BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

						Three Months Ended March 31,
($ in thousands)						2026						2025
Net income						$	17,088					$	13,764
Other comprehensive income (loss):
Investment securities:
Unrealized holding (losses) gains on available for sale securities						(931)						1,667
Tax effect						254						(455)
Total other comprehensive (loss) income						(677)						1,212
Comprehensive income						$	16,411					$	14,976

See accompanying notes to unaudited consolidated financial statements.

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SHORE BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)

($ in thousands)						Common Stock						Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Loss						Total Stockholders’ Equity
Balances, December 31, 2025						$	334					$	360,554					$	233,578					$	(4,593)					$	589,873
Net income						—						—						17,088						—						17,088
Other comprehensive loss						—						—						—						(677)						(677)
Common shares issued for employee stock purchase plan						—						90						—						—						90
Stock-based compensation						1						369						—						—						370
Cash dividends at $0.12 per common share						—						—						(4,030)						—						(4,030)
Balances, March 31, 2026						$	335					$	361,013					$	246,636					$	(5,270)					$	602,714

See accompanying notes to unaudited consolidated financial statements.

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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, 2024						$	333					$	358,112					$	190,166					$	(7,545)					$	541,066
Net income						—						—						13,764						—						13,764
Other comprehensive income						—						—						—						1,212						1,212
Stock-based compensation						—						460						—						—						460
Cash dividends at $0.12 per common share						—						—						(4,032)						—						(4,032)
Balances, March 31, 2025						$	333					$	358,572					$	199,898					$	(6,333)					$	552,470

See accompanying notes to unaudited consolidated financial statements.

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SHORE BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

						Three Months Ended March 31,
($ in thousands)						2026						2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income						$	17,088					$	13,764
Adjustments to reconcile net income to net cash provided by operating activities:
Net accretion of acquisition accounting estimates						(4,263)						(3,153)
Provision for credit losses						85						1,028
Depreciation and amortization						3,578						4,077
Net amortization of securities						(69)						36
Amortization of debt issuance costs						72						30
Gain on mortgage loans held for sale						(1,549)						(966)
Loss (gain) on other mortgage loan activity						238						(284)
Proceeds from sale of mortgage loans held for sale						50,845						33,739
Originations of loans held for sale						(41,379)						(29,362)
Stock-based compensation expense						913						511
Deferred income tax expense (benefit)						327						(26)
Loss (gain) on sales and valuation adjustments of repossessed assets						127						94
Loss on valuation adjustments on mortgage servicing rights						159						330
Loss on disposal of fixed assets						—						27
Loss (gain) on disposal of premises held for sale						—						61
Loss (gain) on sales and valuation adjustments on other real estate owned						44						—
Fair value adjustment on equity securities						39						(87)
Bank-owned life insurance income						(33)						(529)
Net changes in:
Accrued interest receivable						(2,125)						(985)
Other assets						587						740
Accrued interest payable						932						(39)
Other liabilities						5,957						777
Net cash provided by operating activities						31,573						19,783
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and principal payments of available for sale securities						5,518						3,701
Proceeds from maturities and principal payments of held to maturity securities						21,108						11,388
Purchases of available for sale securities						(49,926)						(31,865)
Purchases of equity securities						(48)						(44)
Purchase of restricted securities						(14)						(158)
Net change in loans						55,093						(2,256)
Purchases of premises and equipment						(1,087)						(1,024)
Proceeds from sales of repossessed assets						82						1,234
Purchases of bank owned life insurance						(316)						(90)
Proceeds from disposal of premises held for sale						—						843
Net cash provided (used in) by investing activities						$	30,410					$	(18,271)

See accompanying notes to unaudited consolidated financial statements.

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SHORE BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) – Continued

						Three Months Ended March 31,
($ in thousands)						2026						2025
CASH FLOWS FROM FINANCING ACTIVITIES:
Net changes in:
Noninterest-bearing deposits						$	(20,528)					$	2,202
Interest-bearing deposits						(51,716)						(70,527)
Shares withheld as tax payments associated with settlement of restricted stock units						(543)						—
Common stock dividends paid						(4,030)						(4,032)
Issuance of common stock						90						—
Net cash used in financing activities						(76,727)						(72,357)
Net decrease in cash and cash equivalents						(14,744)						(70,845)
Cash and cash equivalents at beginning of period						355,566						459,851
Cash and cash equivalents at end of period						$	340,822					$	389,006
Supplemental cash flow information:
Interest paid						$	24,754					$	29,477
Recognition of lease liabilities arising from right-of-use assets						—						915
Transfers from loans to repossessed assets						674						569
Unrealized (losses) gains on available for sale securities						(931)						1,667

See accompanying notes to unaudited consolidated financial statements.

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Shore Bancshares, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 – Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited interim consolidated financial statements include the accounts of Shore Bancshares, Inc. and its subsidiaries (collectively referred to in these Notes as the “Company”), with all significant intercompany transactions eliminated. The accounting and reporting policies of the Company conform with generally accepted accounting principles in the United States of America (“GAAP”). For purposes of comparability, certain reclassifications have been made to amounts previously reported to conform with the current period presentation. Reclassifications had no effect on prior year net income or stockholders’ equity.

These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements, and related notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”).

Nature of Operations

The Company engages in the banking business through Shore United Bank, N.A. (the “Bank”), a national banking association with locations in Maryland, Delaware and Virginia. The Company’s primary source of revenue is derived from interest earned on commercial, residential mortgage and other loans, and fees charged in connection with lending and other banking services. The Company engages in financial service offerings through Wye Financial Partners, a division of the Bank, and offers corporate trustee services through Wye Trust, a division of the Bank.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and in the related disclosures. These estimates are based on information available as of the date of the consolidated financial statements. While management makes its best judgments, actual amounts or results could differ from these estimates.

Recent Accounting Pronouncements

On January 2026, the Company adopted ASU 2025‑08, Financial Instruments—Credit Losses (Topic 326): Purchased Loans, which expanded the use of the gross‑up method beyond purchased credit‑deteriorated (“PCD”) assets to include purchased seasoned loans (“PSLs”). Under the amended guidance, a non‑PCD loan (excluding credit cards) is considered seasoned if it is acquired in a business combination, or if it is purchased at least 90 days after origination and the acquirer was not involved in the origination of the loan. Qualifying PSLs are recorded at acquisition at their purchase price plus an allowance for expected credit losses, with no corresponding provision for credit losses recognized at acquisition, thereby eliminating the Day 1 provision for credit losses previously required for non‑PCD acquired loans. The early adoption of this guidance did not result in a material impact on the Bank’s/Company’s (consolidated) financial statements at the time of adoption; however, it is expected to reduce income statement volatility in future periods by eliminating Day 1 provisions for credit losses on qualifying acquired loans and improving comparability in acquisition accounting.

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Note 2 – Investment Securities

The following tables provide information on the amortized cost and estimated fair values of investment securities as of March 31, 2026 and December 31, 2025.

($ in thousands)						Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Estimated Fair Value
Available for sale securities(1):
March 31, 2026
U.S. Treasury and government agency securities						$	22,092					$	—					$	1,728					$	20,364
Mortgage-backed securities						236,638						195						6,157						230,676
Other debt securities(2)						12,546						440						—						12,986
Total						$	271,276					$	635					$	7,885					$	264,026
December 31, 2025
U.S. Treasury and government agency securities						$	22,303					$	2					$	1,689					$	20,616
Mortgage-backed securities						200,105						331						5,409						195,027
Other debt securities(2)						4,269						446						—						4,715
Total						$	226,677					$	779					$	7,098					$	220,358

____________________________________

(1)No available for sale (“AFS”) securities were sold during the three months ended March 31, 2026 and 2025.

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

($ in thousands)						Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Estimated Fair Value						Allowance for Credit Losses
Held to maturity securities:
March 31, 2026
U.S. Treasury and government agency securities						$	92,514					$	—					$	4,503					$	88,011					$	—
Mortgage-backed securities						294,223						123						32,526						261,820						—
Other debt securities(1)						6,959						19						419						6,559						81
Total						$	393,696					$	142					$	37,448					$	356,390					$	81
December 31, 2025
U.S. Treasury and government agency securities						$	104,836					$	2					$	4,513					$	100,325					$	—
Mortgage-backed securities						303,129						255						32,167						271,217						—
Other debt securities(1)						6,961						33						420						6,574						99
Total						$	414,926					$	290					$	37,100					$	378,116					$	99

____________________________________

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

Equity securities with aggregate fair values of $6.2 million as of both March 31, 2026 and December 31, 2025, respectively, are presented separately on the consolidated balance sheets. The fair value adjustments recorded through earnings totaled gains of $8 thousand and $131 thousand for the three months ended March 31, 2026 and 2025, respectively.

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

						Three Months Ended
($ in thousands)						March 31, 2026						March 31, 2025
Balance, beginning of period						$	99					$	203
Reversal of credit losses, other debt securities						(18)						(25)
Balance, end of period						$	81					$	178

A reversal of the provision for credit losses of $18 thousand and $25 thousand was recorded on HTM corporate and municipal bonds for the three months ended March 31, 2026 and 2025, respectively.

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The following tables provide information about gross unrealized losses and fair value by length of time that the individual securities have been in a continuous unrealized loss position as of March 31, 2026 and December 31, 2025.

						Less than 12 Months												More than 12 Months												Total
($ in thousands)						Fair Value						Unrealized Losses						Fair Value						Unrealized Losses						Fair Value						Unrealized Losses
March 31, 2026
Available for sale securities:
U.S. Treasury and government agency securities						$	14					$	—					$	17,808					$	1,728					$	17,822					$	1,728
Mortgage-backed securities						127,521						1,173						63,314						4,984						190,835						6,157
Total						$	127,535					$	1,173					$	81,122					$	6,712					$	208,657					$	7,885

						Less than 12 Months												More than 12 Months												Total
($ in thousands)						Fair Value						Unrealized Losses						Fair Value						Unrealized Losses						Fair Value						Unrealized Losses
December 31, 2025
Available for sale securities:
U.S. Treasury and government agency securities						$	—					$	—					$	18,027					$	1,689					$	18,027					$	1,689
Mortgage-backed securities						102,954						531						47,656						4,878						150,610						5,409
Total						$	102,954					$	531					$	65,683					$	6,567					$	168,637					$	7,098

There were 134 AFS debt securities with a fair value below the amortized cost basis, with unrealized losses totaling $7.9 million as of March 31, 2026. The Company concluded that a credit loss does not exist in its AFS securities portfolio as of March 31, 2026, and no impairment loss has been recognized based on the fact that (1) changes in fair value were primarily caused by fluctuations in interest rates, (2) securities with unrealized losses had generally high credit quality, (3) the Company intends to hold these investments in debt securities to maturity and it is more likely than not the Company will not be required to sell these investments before a recovery of its investment, and (4) issuers have continued to make timely payments of principal and interest. Additionally, the Company’s mortgage-backed securities are issued by either U.S. government agencies or U.S. government-sponsored enterprises. Collectively, these entities provide a guarantee, which is either explicitly or implicitly supported by the full faith and credit of the U.S. government, that investors in such mortgage-backed securities will receive timely principal and interest payments.

All HTM and AFS securities were current with no securities past due or on nonaccrual as of March 31, 2026 and December 31, 2025.

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 134 AFS and 167 HTM securities in an unrealized loss position at March 31, 2026. There were 122 AFS and 169 HTM securities in an unrealized loss position at December 31, 2025. Net unrealized losses with respect to the AFS securities totaled $7.3 million and $6.3 million as of March 31, 2026 and December 31, 2025, respectively.

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The following table provides information on the amortized cost and estimated fair values of investment securities by contractual maturity date at March 31, 2026.

						Available for Sale												Held to Maturity
($ in thousands)						Amortized Cost						Fair Value						Amortized Cost						Fair Value
Due in one year or less						$	2,484					$	2,484					$	23,801					$	23,650
Due after one year through five years						21,130						19,557						60,173						57,447
Due after five years through ten years						10,942						11,227						10,457						8,926
Due after ten years						82						82						5,042						4,547
Total non-mortgage-backed securities						$	34,638					$	33,350					$	99,473					$	94,570
Mortgage-backed securities						236,638						230,676						294,223						261,820
Total						$	271,276					$	264,026					$	393,696					$	356,390

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, 2026, the aggregate carrying value of AFS and HTM pledged securities was $71.9 million and $220.6 million, respectively. The comparable amounts for December 31, 2025 were $69.4 million and $218.6 million, respectively.

The following table sets forth the amortized cost and estimated fair values of securities that have been pledged as collateral for obligations to federal, state and local government agencies, and other purposes as required or permitted by law, or sold under agreements to repurchase at March 31, 2026 and December 31, 2025.

						March 31, 2026												December 31, 2025
($ in thousands)						Amortized Cost						Fair Value						Amortized Cost						Fair Value
Pledged available for sale securities						$	74,643					$	71,914					$	75,123					$	69,369
Pledged held to maturity securities						220,597						198,537						218,556						197,146

There were no obligations of any issuer exceeding 10% of stockholders’ equity at March 31, 2026 or December 31, 2025.

Note 3 – Loans and Allowance for Credit Losses

The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables. For further discussion on the most significant accounting policies that the Company follows, see Note 1 – “Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements” included in Part II, Item 8 of the 2025 Annual Report.

The following table provides information about the principal classes of the loan portfolio at March 31, 2026 and December 31, 2025.

($ in thousands)						March 31, 2026						% of Total Loans						December 31, 2025						% of Total Loans
Commercial real estate						$	2,599,815					53.62		%				$	2,643,996					53.95		%
Residential real estate						1,425,733						29.41						1,414,964						28.88
Construction						342,835						7.07						344,903						7.04
Commercial						220,833						4.56						226,006						4.61
Consumer						254,478						5.25						265,912						5.43
Credit cards						4,336						0.09						4,521						0.09
Total loans						4,848,030						100.00		%				4,900,302						100.00		%
Less: allowance for credit losses						(58,481)												(58,836)
Total loans, net						$	4,789,549											$	4,841,466

Loans are stated at their principal amount outstanding, net of any purchase premiums or discounts, deferred fees, and costs. Included in loans were deferred costs, net of fees, of $3.0 million and $3.1 million at March 31, 2026 and December 31, 2025, respectively. At March 31, 2026 and December 31, 2025, loans included $1.42 billion and $1.49 billion, respectively, of aggregate loans that were acquired as part of the acquisitions of Severn Bancorp, Inc. (“Severn”) and The Community Financial Corporation (“TCFC”). These balances are

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presented net of the related aggregate discounts, which totaled $73.9 million and $78.2 million at March 31, 2026 and December 31, 2025, respectively.

The following tables provide information on the amortized cost basis of nonaccrual loans by loan class as of March 31, 2026 and December 31, 2025.

($ in thousands)						Nonaccrual With No Allowance For Credit Losses						Nonaccrual With An Allowance For Credit Losses						Total Nonaccrual Loans
March 31, 2026
Nonaccrual loans:
Commercial real estate						$	40,989					$	11,292					$	52,281
Residential real estate						8,116						961						9,077
Construction						161						—						161
Commercial						256						2,586						2,842
Consumer						475						59						534
Credit cards						—						63						63
Total						$	49,997					$	14,961					$	64,958
Interest income						$	655					$	295					$	950

($ in thousands)						Nonaccrual With No Allowance For Credit Losses						Nonaccrual With An Allowance For Credit Losses						Total Nonaccrual Loans
December 31, 2025
Nonaccrual loans:
Commercial real estate						$	6,135					$	19,498					$	25,633
Residential real estate						9,594						544						10,138
Construction						88						—						88
Commercial						2,297						784						3,081
Consumer						898						74						972
Credit cards						—						48						48
Total						$	19,012					$	20,948					$	39,960
Interest income						$	285					$	363					$	648

($ in thousands)						Nonaccrual Delinquent Loans						Nonaccrual Current Loans						Total Nonaccrual Loans
March 31, 2026
Nonaccrual loans:
Commercial real estate						$	1,838					$	50,443					$	52,281
Residential real estate						4,651						4,426						9,077
Construction						161						—						161
Commercial						—						2,842						2,842
Consumer						75						459						534
Credit cards						63						—						63
Total						$	6,788					$	58,170					$	64,958

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($ in thousands)						Nonaccrual Delinquent Loans						Nonaccrual Current Loans						Total Nonaccrual Loans
December 31, 2025
Nonaccrual loans:
Commercial real estate						$	2,809					$	22,824					$	25,633
Residential real estate						3,808						6,330						10,138
Construction						88						—						88
Commercial						196						2,885						3,081
Consumer						491						481						972
Credit cards						32						16						48
Total						$	7,424					$	32,536					$	39,960

The overall quality of the Company’s loan portfolio is primarily assessed using the Company’s risk-grading scale. This review process is assisted by frequent internal reporting of loan production, loan quality, concentrations of credit, loan delinquencies and nonperforming and potential problem loans. Credit quality indicators are adjusted based on management’s judgment during the quarterly review process.

Consumer credit cards are monitored based on a borrower’s payment history. Credit card loans are classified as performing and are typically charged-off no later than 180 days or when, in the opinion of management, the collection of principal or interest is considered doubtful. As of March 31, 2026, there were five credit cards that were evaluated based on economic conditions specific to the loans or borrowers, and were downgraded to substandard and nonperforming.

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

Ratings 1 through 6 – Pass – Ratings 1 through 6 have asset risks ranging from excellent-low to adequate. The specific rating assigned considers customer history of earnings, cash flows, liquidity, leverage, capitalization, consistency of debt service coverage, the nature and extent of customer relationship and other relevant specific business factors such as the stability of the industry or market area, changes to management, litigation or unexpected events that could have an impact on risks.

Rating 7 – Special Mention – These credits have potential weaknesses due to economic conditions, less than adequate earnings performance or other factors which require the lending officer to direct more than normal attention to the credit. Financing alternatives may be limited and/or command higher risk interest rates. Special mention loan relationships are reviewed at least quarterly.

Rating 8 – Substandard – Substandard assets are assets that are inadequately protected by the sound worth or paying capacity of the borrower or of the collateral pledged. Substandard loans are the first adversely classified loans on the Bank’s watchlist. These assets have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the possibility that the Company will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified substandard. The loans may have a delinquent history or combination of weak collateral, weak guarantor or operating losses. When a loan is assigned to this category, the Company may estimate a specific reserve in the credit loss allowance analysis and/or place the loan on nonaccrual. These assets listed may include assets with histories of repossessions or some that are nonperforming bankruptcies. Substandard loan relationships are reviewed at least quarterly.

Rating 9 – Doubtful – Doubtful assets have many of the same characteristics of substandard assets, with the exception that the Company has determined that loss is not only possible but is probable. The amount of loss is not discernible due to factors such as merger, acquisition, or liquidation; a capital injection; a pledge of additional collateral; the sale of assets; or alternative refinancing plans. Credits receiving a doubtful classification are required to be on nonaccrual. Doubtful loan relationships are reviewed at least quarterly.

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

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The following table provides information on loan risk ratings as of March 31, 2026 and gross charge-offs during the three months ended March 31, 2026.

						Term Loans by Origination Year																																				Revolving loans						Revolving converted to term loans						Total
($ in thousands)						Prior						2022						2023						2024						2025						2026
March 31, 2026
Commercial real estate
Pass						$	1,263,079					$	522,428					$	218,721					$	150,567					$	262,491					$	19,074					$	19,093					$	150					$	2,455,603
Special mention						28,222						50,924						341						272						—						—						—						—						79,759
Substandard						26,233						16,287						19,723						1,239						621						—						350						—						64,453
Total						$	1,317,534					$	589,639					$	238,785					$	152,078					$	263,112					$	19,074					$	19,443					$	150					$	2,599,815
Gross charge-offs						$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—
Residential real estate
Pass						$	484,287					$	272,211					$	199,154					$	157,905					$	123,083					$	25,120					$	136,107					$	40					$	1,397,907
Special mention						16,841						191						504						—						—						—						65						—						17,601
Substandard						7,965						715						316						—						110						—						1,119						—						10,225
Total						$	509,093					$	273,117					$	199,974					$	157,905					$	123,193					$	25,120					$	137,291					$	40					$	1,425,733
Gross charge-offs						$	(138)					$	—					$	—					$	—					$	—					$	—					$	(4)					$	—					$	(142)
Construction
Pass						$	32,869					$	6,929					$	27,791					$	90,705					$	151,703					$	17,237					$	14,252					$	946					$	342,432
Special mentions						—						—						—						—						—						—						—						—						—
Substandard						161						—						—						—						242						—						—						—						403
Total						$	33,030					$	6,929					$	27,791					$	90,705					$	151,945					$	17,237					$	14,252					$	946					$	342,835
Gross charge-offs						$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—
Commercial
Pass						$	48,218					$	17,998					$	14,055					$	26,743					$	34,088					$	5,557					$	65,685					$	1,419					$	213,763
Special mention						22						89						95						70						52						—						83						—						411
Substandard						920						661						484						577						18						290						3,709						—						6,659
Total						$	49,160					$	18,748					$	14,634					$	27,390					$	34,158					$	5,847					$	69,477					$	1,419					$	220,833
Gross charge-offs						$	(2)					$	(37)					$	(149)					$	—					$	—					$	—					$	(15)					$	—					$	(203)
Consumer
Pass						$	49,914					$	83,717					$	35,458					$	27,786					$	44,744					$	11,598					$	727					$	—					$	253,944
Special mention						—						—						—						—						—						—						—						—						—
Substandard						8						60						407						—						59						—						—						—						534
Total						$	49,922					$	83,777					$	35,865					$	27,786					$	44,803					$	11,598					$	727					$	—					$	254,478
Gross charge-offs						$	(437)					$	(362)					$	—					$	(17)					$	(15)					$	—					$	—					$	—					$	(831)
Total
Pass						$	1,878,367					$	903,283					$	495,179					$	453,706					$	616,109					$	78,586					$	235,864					$	2,555					$	4,663,649
Special mention						45,085						51,204						940						342						52						—						148						—						97,771
Substandard						35,287						17,723						20,930						1,816						1,050						290						5,178						—						82,274
Total loans by risk category						$	1,958,739					$	972,210					$	517,049					$	455,864					$	617,211					$	78,876					$	241,190					$	2,555					$	4,843,694
Total gross charge-offs						$	(577)					$	(399)					$	(149)					$	(17)					$	(15)					$	—					$	(19)					$	—					$	(1,176)

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The following table presents the amortized cost of credit card loans based on performing status and gross charge-offs during the three months ended March 31, 2026. Nonperforming loans consisted of nonaccrual loans and loans past due 90 days or more and still accruing.

						Term Loans by Origination Year																																				Revolving Loans						Revolving Converted to Term Loans						Total
($ in thousands)						Prior						2022						2023						2024						2025						2026
March 31, 2026
Credit cards
Performing						$	—					$	—					$	—					$	—					$	—					$	—					$	4,273					$	—					$	4,273
Nonperforming						—						—						—						—						—						—						63						—						63
Total						$	—					$	—					$	—					$	—					$	—					$	—					$	4,336					$	—					$	4,336
Gross charge-offs						$	—					$	—					$	—					$	—					$	—					$	—					$	(80)					$	—					$	(80)
Total loans evaluated by performing status						$	—					$	—					$	—					$	—					$	—					$	—					$	4,336					$	—					$	4,336
Total gross charge-offs						$	(577)					$	(399)					$	(149)					$	(17)					$	(15)					$	—					$	(99)					$	—					$	(1,256)
Total recorded investment						$	1,958,739					$	972,210					$	517,049					$	455,864					$	617,211					$	78,876					$	245,526					$	2,555					$	4,848,030

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The following table provides information on loan risk ratings as of December 31, 2025 and gross charge-offs during the year ended December 31, 2025.

						Term Loans by Origination Year																																				Revolving Loans						Revolving Converted to Term Loans						Total
($ in thousands)						Prior						2021						2022						2023						2024						2025
December 31, 2025
Commercial real estate
Pass						$	939,986					$	364,719					$	556,924					$	242,170					$	139,929					$	265,405					$	14,703					$	27,136					$	2,550,972
Special mention						15,105						2,884						34,014						344						—						—						—						—						52,347
Substandard						20,056						16,806						2,840						—						283						—						692						—						40,677
Total						$	975,147					$	384,409					$	593,778					$	242,514					$	140,212					$	265,405					$	15,395					$	27,136					$	2,643,996
Gross charge-offs						$	(109)					$	(2,640)					$	—					$	—					$	—					$	—					$	—					$	—					$	(2,749)
Residential real estate
Pass						$	317,764					$	182,198					$	275,869					$	215,397					$	147,517					$	114,300					$	131,075					$	695					$	1,384,815
Special mention						3,719						14,777						—						504						—						—						65						—						19,065
Substandard						6,990						2,012						267						330						—						112						1,373						—						11,084
Total						$	328,473					$	198,987					$	276,136					$	216,231					$	147,517					$	114,412					$	132,513					$	695					$	1,414,964
Gross charge-offs						$	(5)					$	—					$	—					$	—					$	—					$	—					$	(45)					$	—					$	(50)
Construction
Pass						$	27,094					$	7,238					$	7,047					$	28,868					$	108,885					$	151,738					$	13,070					$	632					$	344,572
Special mentions						—						—						—						—						—						—						—						—						—
Substandard						88						—						—						—						—						243						—						—						331
Total						$	27,182					$	7,238					$	7,047					$	28,868					$	108,885					$	151,981					$	13,070					$	632					$	344,903
Gross charge-offs						$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—					$	—
Commercial
Pass						$	23,379					$	25,518					$	19,739					$	14,925					$	29,307					$	35,202					$	70,493					$	1,870					$	220,433
Special mention						104						27						107						105						76						54						845						—						1,318
Substandard						424						1,055						758						527						—						—						1,318						173						4,255
Total						$	23,907					$	26,600					$	20,604					$	15,557					$	29,383					$	35,256					$	72,656					$	2,043					$	226,006
Gross charge-offs						$	(71)					$	—					$	—					$	(329)					$	—					$	—					$	(381)					$	(31)					$	(812)
Consumer
Pass						$	7,954					$	45,750					$	88,990					$	39,576					$	31,597					$	49,634					$	769					$	—					$	264,270
Special mention						—						—						671						—						—						—						—						—						671
Substandard						1						29						396						445						41						59						—						—						971
Total						$	7,955					$	45,779					$	90,057					$	40,021					$	31,638					$	49,693					$	769					$	—					$	265,912
Gross charge-offs						$	(451)					$	(99)					$	(1,595)					$	(646)					$	(324)					$	—					$	(18)					$	—					$	(3,133)
Total
Pass						$	1,316,177					$	625,423					$	948,569					$	540,936					$	457,235					$	616,279					$	230,110					$	30,333					$	4,765,062
Special mention						18,928						17,688						34,792						953						76						54						910						—						73,401
Substandard						27,559						19,902						4,261						1,302						324						414						3,383						173						57,318
Total loans by risk category						$	1,362,664					$	663,013					$	987,622					$	543,191					$	457,635					$	616,747					$	234,403					$	30,506					$	4,895,781
Total gross charge-offs						$	(636)					$	(2,739)					$	(1,595)					$	(975)					$	(324)					$	—					$	(444)					$	(31)					$	(6,744)

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The following table presents the amortized cost of credit card loans based on performing status and gross charge-offs during the year ended December 31, 2025. Nonperforming loans consisted of nonaccrual loans and loans past due 90 days or more and still accruing.

						Term Loans by Origination Year																																				Revolving Loans						Revolving Converted to Term Loans						Total
($ in thousands)						Prior						2021						2022						2023						2024						2025
December 31, 2025
Credit cards
Performing						$	—					$	—					$	—					$	—					$	—					$	—					$	4,473					$	—					$	4,473
Nonperforming						—						—						—						—						—						—						48						—						48
Total						$	—					$	—					$	—					$	—					$	—					$	—					$	4,521					$	—					$	4,521
Gross charge-offs						$	—					$	—					$	—					$	—					$	—					$	—					$	(535)					$	—					$	(535)
Total loans evaluated by performing status						$	—					$	—					$	—					$	—					$	—					$	—					$	4,521					$	—					$	4,521
Total gross charge-offs						$	(636)					$	(2,739)					$	(1,595)					$	(975)					$	(324)					$	—					$	(979)					$	(31)					$	(7,279)
Total recorded investment						$	1,362,664					$	663,013					$	987,622					$	543,191					$	457,635					$	616,747					$	238,924					$	30,506					$	4,900,302

The following tables provide information on the aging of the Company’s loan portfolio as of March 31, 2026 and December 31, 2025.

($ in thousands)						30‑59 Days Past Due						60‑89 Days Past Due						90 Days Past Due and Still Accruing						30-89 Days Past Due and Not Accruing						90 Days Past Due and Not Accruing						Total Past Due						Current Accrual Loans						Current Nonaccrual Loans						Total
March 31, 2026
Commercial real estate						$	761					$	881					$	—					$	1,183					$	655					$	3,480					$	2,545,892					$	50,443					$	2,599,815
Residential real estate						2,272						8						—						3,444						1,207						6,931						1,414,376						4,426						1,425,733
Construction						42						—						—						35						126						203						342,632						—						342,835
Commercial						45						—						—						—						—						45						217,946						2,842						220,833
Consumer						239						136						—						—						75						450						253,569						459						254,478
Credit cards						71						11						—						17						46						145						4,191						—						4,336
Total						$	3,430					$	1,036					$	—					$	4,679					$	2,109					$	11,254					$	4,778,606					$	58,170					$	4,848,030
Percent of total loans						0.07		%				0.02		%				0.00		%				0.10		%				0.04		%				0.23		%				98.57		%				1.20		%				100.00		%

($ in thousands)						30‑59 days Past Due						60‑89 Days Past Due						90 Days Past Due and Still Accruing						30-89 Days Past Due and Not Accruing						90 Days Past Due and Not Accruing						Total Past Due						Current Accrual Loans						Current Nonaccrual Loans						Total
December 31, 2025
Commercial real estate						$	1,684					$	—					$	—					$	68					$	2,741					$	4,493					$	2,616,679					$	22,824					$	2,643,996
Residential real estate						1,663						397						71						1,225						2,583						5,939						1,402,695						6,330						1,414,964
Construction						—						43						79						—						88						210						344,693						—						344,903
Commercial						—						4						—						46						150						200						222,921						2,885						226,006
Consumer						390						690						—						43						448						1,571						263,860						481						265,912
Credit cards						14						19						105						32						—						170						4,335						16						4,521
Total						$	3,751					$	1,153					$	255					$	1,414					$	6,010					$	12,583					$	4,855,183					$	32,536					$	4,900,302
Percent of total loans						0.08		%				0.02		%				0.01		%				0.03		%				0.12		%				0.26		%				99.08		%				0.66		%				100.00		%

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The following tables provide a summary of the activity in the ACL allocated by loan class for the three months ended March 31, 2026 and 2025. Allocation of a portion of the allowance to one loan class does not preclude its availability to absorb losses from other loan classes.

($ in thousands)						Beginning Balance						Charge-offs						Recoveries												Provisions						Ending Balance
Three Months Ended March 31, 2026
Commercial real estate						$	21,387					$	—					$	—											$	285					$	21,672
Residential real estate						22,510						(142)						23												602						22,993
Construction						5,968						—						—												(1,162)						4,806
Commercial						3,005						(203)						27												668						3,497
Consumer						5,767						(831)						356												123						5,415
Credit cards						199						(80)						3												(24)						98
Total						$	58,836					$	(1,256)					$	409											$	492					$	58,481

($ 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
Residential real estate						21,776						—						1												616						22,393
Construction						2,854						—						1												987						3,842
Commercial						3,138						(2)						6												(287)						2,855
Consumer						6,889						(482)						86												81						6,574
Credit cards						407						(242)						—												225						390
Total						$	57,910					$	(726)					$	172											$	686					$	58,042

The following tables present the amortized cost basis of collateral-dependent loans by loan portfolio segment as of March 31, 2026 and December 31, 2025.

						March 31, 2026
($ in thousands)						Real Estate Collateral						Other Collateral						Total
Commercial real estate						$	64,453					$	—					$	64,453
Residential real estate						10,225						—						10,225
Construction						404						—						404
Commercial(1)						—						6,658						6,658
Consumer(2)						—						533						533
Total						$	75,082					$	7,191					$	82,273

						December 31, 2025
($ in thousands)						Real Estate Collateral						Other Collateral						Total
Commercial real estate						$	40,676					$	—					$	40,676
Residential real estate						11,084						—						11,084
Construction						332						—						332
Commercial(1)						—						4,164						4,164
Consumer(2)						—						971						971
Total						$	52,092					$	5,135					$	57,227

____________________________________

(1)Commercial loans are primarily secured by underlying business assets of the borrower.

(2)Consumer loans are primarily secured by automobiles and boats of the borrower.

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Loan Modifications to Borrowers Experiencing Financial Difficulty

Loan 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 avoid foreclosure or repossession of collateral.

During the three months ended March 31, 2026 and 2025, no loan modifications were made to borrowers experiencing financial difficulty.

As of March 31, 2026, of the loans with borrowers experiencing financial difficulty that were modified during the preceding 12 months, $5.3 million and $164 thousand were classified as current accrual and current nonaccrual, respectively. As of December 31, 2025, of the loans with borrowers experiencing financial difficulty that were modified during the preceding 12 months, $5.3 million and $170 thousand were classified as current accrual and current nonaccrual, respectively.

During the three months ended March 31, 2026 and 2025, there were no defaults on loan modifications made to borrowers experiencing financial difficulty in the preceding 12 months.

Foreclosure Proceedings

The Company had $124 thousand and $124 thousand of consumer mortgage loans collateralized by residential real estate property that were in the process of foreclosure as of March 31, 2026 and December 31, 2025, respectively. The Company had $151 thousand and $95 thousand of commercial real estate loans collateralized by commercial real estate that were in the process of foreclosure as of March 31, 2026 and December 31, 2025, respectively.

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

OREO and repossessed assets are adjusted for fair value upon transfer from loans to foreclosed assets, establishing a new cost basis. Subsequently, foreclosed assets are carried at the lower of carrying value or fair value. The Company had OREO and repossessed asset balances of $69 thousand and $3.3 million as of March 31, 2026 and $113 thousand and $2.9 million as of December 31, 2025, respectively.

Mortgage Servicing Rights (“MSRs”)

Mortgage loans are sold with servicing retained and the MSRs are initially recorded at fair value with the income statement effect recorded in mortgage banking revenue in the consolidated statements of income. Subsequently, the MSRs are amortized to the income statement in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Servicing rights are evaluated for impairment based upon fair value of the rights as compared to carrying amount. No impairments of MSRs were recognized for the three months ended March 31, 2026 or 2025. The Company recognized net servicing income of $139 thousand and a net servicing loss of $65 thousand for the three months ended March 31, 2026 and 2025, respectively. At March 31, 2026, the Company was servicing $334.0 million in loans for the Federal National Mortgage Association and $101.8 million in loans for Federal Home Loan Mortgage Corporation.

The following table presents activity in MSRs for the three months ended March 31, 2026 and 2025.

						Three Months Ended March 31,
($ in thousands)						2026						2025
Beginning balance						$	5,142					$	5,874
Net additions						—						43
Amortization expense						(159)						(52)
Other						—						(330)
Ending balance						$	4,983					$	5,535

The fair value of MSRs were determined using discount rates ranging from 9.0% to 9.0% at March 31, 2026 and 9.0% to 10.0% at December 31, 2025. The valuation on MSRs was not material at March 31, 2026 and December 31, 2025. Depending on the stratification of the specific mortgage servicing right, prepayment speeds ranged from 5.88% to 8.60% for the three months ended March 31, 2026. The associated weighted-average default rate was 0.20% for the three months ended March 31, 2026.

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Note 4 – Goodwill and Other Intangible Assets

The following tables provide information on the significant components of goodwill and other acquired intangible assets as of March 31, 2026 and December 31, 2025.

						March 31, 2026
($ in thousands)						Goodwill																		Core Deposit Intangible
Gross carrying amount						$	63,266																	$	59,151
Accumulated amortization						—																		(31,409)
Net carrying amount						$	63,266																	$	27,742

						December 31, 2025
($ in thousands)						Goodwill																		Core Deposit Intangible
Gross carrying amount						$	63,266																	$	59,151
Accumulated amortization						—																		(29,429)
Net carrying amount						$	63,266																	$	29,722

The aggregate amortization expense for the core deposit intangible was $2.0 million and $2.3 million for the three months ended March 31, 2026 and 2025, respectively.

As of March 31, 2026, the estimated future remaining amortization for core deposit intangibles within the years ending December 31 is as follows:

($ in thousands)						Amortization Expense
2026						$	5,418
2027						6,208
2028						5,060
2029						3,980
2030						3,096
Thereafter						3,980
Total amortizing intangible assets						$	27,742

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Note 5 – Leases

Right-of-use assets represent the Company’s right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor. Lease liabilities represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows. Cash flows are discounted at the Company’s incremental borrowing rate in effect at the commencement date of the lease.

The Company’s long-term lease agreements for branches and offices are classified as operating leases. Certain of these leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably certain of being exercised. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.

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

($ in thousands)						March 31, 2026						December 31, 2025
Right-of-use assets						$	10,102					$	10,523
Lease liabilities						$	10,608					$	11,027
Weighted-average remaining lease term						8.80 years						8.91 years
Weighted-average discount rate						3.40		%				3.42		%
Remaining lease term – min						0.12 years						0.36 years
Remaining lease term – max						15.43 years						15.68 years

												Three Months Ended March 31,
($ in thousands)																		2026						2025
Operating lease cost																		$	512					$	492
Total lease cost																		$	512					$	492
Cash paid for amounts included in the measurement of lease liabilities																		$	509					$	467

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, 2026.

($ in thousands)						March 31, 2026
2026						$	1,511
2027						1,869
2028						1,779
2029						1,354
2030						997
Thereafter						4,578
Total undiscounted cash flows						12,088
Less: imputed interest						1,480
Lease liabilities						$	10,608

Total gross rental income was $306 thousand and $335 thousand for the three months ended March 31, 2026 and 2025, respectively.

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Note 6 – Deposits

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

($ in thousands)						March 31, 2026												December 31, 2025
						Balance						% of Total Deposits						Balance						% of Total Deposits
Noninterest-bearing deposits						$	1,567,425					28.70		%				$	1,587,953					28.69		%
Interest-bearing deposits:
Interest-bearing checking						812,847						14.88						852,585						15.41
Money market and savings						1,795,619						32.88						1,814,928						32.80
Time deposits						1,274,766						23.34						1,267,487						22.90
Brokered deposits						10,963						0.20						10,911						0.20
Total interest-bearing						3,894,195						71.30						3,945,911						71.31
Total deposits						$	5,461,620					100.00		%				$	5,533,864					100.00		%

The following table provides information on the approximate maturities of total time deposits at March 31, 2026.

($ in thousands)						March 31, 2026
Within one year						$	1,171,773
Year 2						76,182
Year 3						14,391
Year 4						5,191
Year 5						7,229
Thereafter						—
Total						$	1,274,766

The approximate amount of certificates of deposit that exceeded the FDIC insurance limit of $250,000 or more was $406.7 million and $403.5 million at March 31, 2026 and December 31, 2025, respectively.

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Note 7 – Borrowings

The following table summarizes certain information of the Company’s long-term debt as of March 31, 2026 and December 31, 2025.

($ in thousands)						March 31, 2026						December 31, 2025						Issue Date						Stated Maturity Date						Earliest Call Date						Interest Rate
Subordinated Debentures due November 2035						60,000						60,000						2025						2035						2030						6.25% through November 2030, 3-month SOFR + 2.88% thereafter
Total subordinated debentures						60,000						60,000
Severn Capital Trust I						20,619						20,619						2004						2035												3-month SOFR + 2.26%
Tri-County Capital Trust I						7,217						7,217						2004						2034												3-month SOFR + 2.86%
Tri-County Capital Trust II						5,155						5,155						2005						2035												3-month SOFR + 1.96%
Total trust preferred securities						32,991						32,991
Less: net discount and unamortized issuance costs						(3,962)						(3,930)
Total long-term debt						$	89,029					$	89,061

At March 31, 2026, subordinated debentures consisted of $60.0 million of long-term debt issued by the Company in November 2025. As of March 31, 2026, the recorded balance of subordinated debt issued by the Company, net of unamortized issuance costs and fair value discounts, was $58.8 million. The Company has the option to redeem the subordinated notes in part or whole as of November 15, 2030. As of March 31, 2026, 100% of the subordinated debt was considered Tier 2 capital under current regulatory guidelines.

The Company assumed trust preferred securities in the aggregate of $33.0 million as a result of the merger with TCFC in 2023 and the acquisition of Severn in 2021. Trust preferred securities consisted of $20.6 million issued by Severn Capital Trust I, $7.2 million issued by Tri-County Capital Trust I and $5.2 million issued by Tri-County Capital Trust II. The recorded balance of the junior subordinated debt securities of Severn Capital Trust I at March 31, 2026 was $19.0 million, net of the unamortized fair value adjustment of $1.6 million. At March 31, 2026, the junior subordinated debt securities of Tri-County Capital Trust I and Tri-County Capital Trust II had a recorded balance of $6.7 million and $4.5 million, respectively, which are presented net of the unamortized fair value adjustments of $489 thousand and $644 thousand, respectively. As of March 31, 2026, the entire amount of trust preferred securities debt is considered Tier 2 capital under current regulatory guidelines.

The Company may periodically borrow from a correspondent federal funds line of credit arrangement, under a secured reverse repurchase agreement, or from the Federal Home Loan Bank (“FHLB”) to meet short-term liquidity needs. The Company had no outstanding borrowings from the FHLB at March 31, 2026 and December 31, 2025. The Company did not have any correspondent federal fund lines at March 31, 2026 and December 31, 2025. Further information on these obligations is provided in the Company’s 2025 Annual Report.

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Note 8 – Derivatives

The Company maintains and accounts for derivatives, in the form of interest rate lock commitments (“IRLCs”) and mandatory forward contracts, in accordance with the FASB guidance on accounting for derivative instruments and hedging activities. The Company recognizes gains and losses through mortgage banking revenue in the consolidated statements of income.

IRLCs on mortgage loans that the Company intends to sell in the secondary market are considered derivatives. The Company is exposed to price risk from the time a mortgage loan is locked in until the time the loan is sold. The period of time between issuance of a loan commitment, closing and sale of the loan generally ranges from 14 days to 120 days, however, this period may be longer for construction to permanent loans that are originated with the intent of selling in the secondary market upon permanent financing. For these IRLCs and closed inventory in loans held for sale, the Company attempts to protect itself from changes in interest rates through the use of to be announced (“TBA”) securities, which are forward contracts, as well as, to a significantly lesser degree, loan level commitments in the form of best efforts and mandatory forward contracts. These assets and liabilities are included in the consolidated balance sheets in other assets and accrued expenses and other liabilities, respectively.

The following table provides information pertaining to the carrying amounts of the Company’s derivative financial instruments as of March 31, 2026 and December 31, 2025.

						March 31, 2026												December 31, 2025
($ in thousands)						Notional Amount						Estimated Fair Value						Notional Amount						Estimated Fair Value
Asset – IRLCs						$	12,816					$	147					$	6,172					$	91
Asset – TBA securities						31,050						310						9,750						11
Liability – IRLCs						1,366						8						193						1
Liability – TBA securities						16,500						56						20,150						59

Note 9 – Accumulated Other Comprehensive Loss

The Company records unrealized holding gains (losses), net of tax, on AFS securities as accumulated other comprehensive income (loss), a separate component of stockholders’ equity. The following table provides information on the changes in the component of accumulated other comprehensive income (loss) for the three months ended March 31, 2026 and 2025.

												Three Months Ended
($ in thousands)																		March 31, 2026						March 31, 2025
Beginning of period																		$	(4,593)					$	(7,545)
Other comprehensive income (loss), net of tax																		(677)						1,212
End of period																		$	(5,270)					$	(6,333)

Note 10 – Regulatory Capital Requirements

Banks and bank holding companies are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory – and possibly additional discretionary – actions by regulators that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action (“PCA”), the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain amounts and ratios (set forth in the table below) of common equity Tier 1 (“CET1”), Tier 1 and total capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (leverage ratio). As of March 31, 2026 and December 31, 2025, management believes that the Company and the Bank met all capital adequacy requirements to which they were subject.

As of March 31, 2026, the most recent notification from the Bank’s primary regulator categorized the Bank, as “well-capitalized” under the regulatory framework for PCA. There are no conditions or events since that notification that management believes would change the Bank’s classification. To be categorized as “well-capitalized,” the Bank must maintain minimum CET1, Tier 1 risk-based and total risk-based capital ratios, and Tier 1 leverage ratios, which are outlined in the table below.

The following table presents the capital amounts and ratios for the Company and the Bank as of March 31, 2026 and December 31, 2025.

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						March 31, 2026
						Amount						Regulatory Minimum Ratio + Capital Conservation Buffer						To Be Well-Capitalized Under PCA Regulation(1)
($ in thousands)
Company Amounts
Common Equity Tier 1 Capital						$	525,849					$	335,606					N/A
Tier 1 Capital						556,096						407,522						N/A
Total Capital						674,811						503,409						N/A
Leverage Exposure						6,098,196						243,928						N/A
Risk-Weighted Assets						4,794,374						N/A						N/A
Company Ratios
Common Equity Tier 1 Capital to Risk-Weighted Assets (“RWA”)						10.97		%				7.00		%				N/A
Tier 1 Capital to RWA						11.60						8.50						N/A
Total Capital to RWA						14.08						10.50						N/A
Tier 1 Capital to AA (Leverage)(2)						9.12						4.00						N/A
Bank Amounts
Common Equity Tier 1 Capital						$	583,733					$	335,386					$	311,429
Tier 1 Capital						583,733						407,254						383,298
Total Capital						643,627						503,078						479,122
Leverage Exposure						6,093,905						243,756						304,695
Risk-Weighted Assets						4,791,223						N/A						N/A
Bank Ratios
Common Equity Tier 1 Capital to RWA						12.18		%				7.00		%				6.50		%
Tier 1 Capital to RWA						12.18						8.50						8.00
Total Capital to RWA						13.43						10.50						10.00
Tier 1 Capital to AA (Leverage)(2)						9.58						4.00						5.00

____________________________________

(1)Applies to the Bank only.

(2)Tier 1 Capital to Average Assets (Leverage) has no capital conservation buffer defined. The PCA well-capitalized threshold is defined as 5.00%.

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						December 31, 2025
						Amount						Regulatory Minimum Ratio + Capital Conservation Buffer						To Be Well-Capitalized Under PCA Regulation(1)
($ in thousands)
Company Amounts
Common Equity Tier 1 Capital						$	510,729					$	339,680					N/A
Tier 1 Capital						540,897						412,469						N/A
Total Capital						660,451						509,520						N/A
Leverage Exposure						6,129,306						245,172						N/A
Risk-Weighted Assets						4,852,573						N/A						N/A
Company Ratios
Common Equity Tier 1 Capital to RWA						10.52		%				7.00		%				N/A
Tier 1 Capital to RWA						11.15						8.50						N/A
Total Capital to RWA						13.61						10.50						N/A
Tier 1 Capital to AA (Leverage)(2)						8.82						4.00						N/A
Bank Amounts
Common Equity Tier 1 Capital						$	569,183					$	339,125					$	314,902
Tier 1 Capital						569,183						411,794						387,571
Total Capital						629,746						508,687						484,464
Leverage Exposure						6,122,775						244,911						306,139
Risk-Weighted Assets						4,844,639						N/A						N/A
Bank Ratios
Common Equity Tier 1 Capital to RWA						11.75		%				7.00		%				6.50		%
Tier 1 Capital to RWA						11.75						8.50						8.00
Total Capital to RWA						13.00						10.50						10.00
Tier 1 Capital to AA (Leverage)(2)						9.30						4.00						5.00

_________________________________

(1)Applies to the Bank only.

(2)Tier 1 Capital to Average Assets (Leverage) has no capital conservation buffer defined. The PCA well-capitalized threshold is defined as 5.00%.

As of March 31, 2026, both the Company and the Bank satisfied the capital conservation buffer requirements applicable to them. The lowest capital buffer ratio at the Company was the Tier 1 Capital to RWA, which was 5.60% above the minimum capital conservation buffer ratio requirement, and the lowest capital buffer ratio at the Bank was the Total Capital to RWA, which was 5.43% above the minimum capital conservation buffer ratio requirement.

The Company is a separate legal entity from the Bank and must provide for its own liquidity. In addition to its operating expenses, the Company is responsible for paying any dividends declared to its common stockholders and interest and principal on outstanding debt. The Company’s primary source of income is dividends received from the Bank. The amount of dividends that the Bank may declare and pay to the Company in any calendar year, without the receipt of prior approval from the OCC, cannot exceed net income for that year to date plus retained net income (as defined) for the preceding two calendar years. As of March 31, 2026, the Bank could pay dividends to the Company to the extent of its current period earnings plus the earnings of the preceding two years, so long as it maintained required capital ratios.

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Note 11 – Fair Value Measurements

Accounting guidance under GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This accounting guidance also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities on a recurring basis and to determine fair value disclosures. Available for sale securities and equity securities with readily determinable fair values are recorded at fair value on a recurring basis, along with other mortgage-related items identified in the recurring fair value table below. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as collateral-dependent loans, repossessed assets and OREO (foreclosed assets). These non-recurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets.

Under fair value accounting guidance, assets and liabilities are grouped at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine their fair values. These hierarchy levels are:

•Level 1 inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date.

•Level 2 inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

•Level 3 inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

Assets Measured at Fair Value on a Recurring Basis

Available for Sale Securities

Fair value measurement of AFS securities is based on quoted prices from an independent pricing service. The fair value measurements consider observable data that may include present value of future cash flows, prepayment assumptions, credit loss assumptions and other factors. The Company classifies its investments in U.S. Treasury securities, if any, as Level 1 in the fair value hierarchy, and it classifies its investments in U.S. government agency securities and mortgage-backed securities issued or guaranteed by U.S. government-sponsored entities as Level 2.

Equity Securities

Fair value measurement for equity securities is based on quoted market prices retrieved by the Company via online resources. Although these securities have readily available fair market values, the Company determined that they should be classified as Level 2 investments in the fair value hierarchy due to not being considered traded in a highly active market.

Loans Held for Sale

Loans held for sale are carried at fair value, which is determined based on mark to trade for allocated/committed loans or mark to market analysis for unallocated/uncommitted loans based on third-party pricing models (Level 2).

IRLCs

The Company utilizes a third-party specialist model to estimate the fair value of IRLCs, which are valued based upon mortgage securities (TBA) prices less estimated costs to process and settle the loan. Fair value is adjusted for the estimated probability of the loan closing with the borrower (Level 3).

March 31, 2026

($ in thousands)

Fair Value

Valuation Technique

Unobservable Input

Rate

IRLCs – net asset

$

139

Market approach

Range of pull through rate

79% - 100%

Average pull through rate

92%

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December 31, 2025

($ in thousands)

Fair Value

Valuation Technique

Unobservable Input

Rate

IRLCs – net asset

$

90

Market approach

Range of pull through rate

81% - 100%

Average pull through rate

98%

The following table presents activity in the IRLCs – net asset for the three months ended March 31, 2026 and 2025.

						Three Months Ended March 31,
($ in thousands)						2026						2025
Beginning balance						$	90					$	113
Valuation adjustment						49						279
Ending balance						$	139					$	392

Forward Contracts

To manage interest rate risk, the Company hedges the open locked/closed position with TBA forward trades. On a regular basis, the Company allocates disbursed loans to mandatory commitments with government-sponsored enterprises and private investors delivering the loans within 120 days of origination to maximize interest earnings. For a small percentage of business, the Company enters into best efforts forward sales commitments with investors at the time it makes an IRLC to a borrower. Once a loan has been closed and funded, the best efforts commitments convert to mandatory forward sales commitments. The mandatory commitments are derivatives, and the Company measures and reports them at fair value. Fair value is based on the gain or loss that would occur if the Company were to pair-off the transaction with the investor at the measurement date. This is a Level 2 input. The Company has elected to measure and report best efforts commitments at fair value using a valuation methodology similar to that used for mandatory commitments.

Market assumptions utilized in the fair value measurement of the reporting entity’s residential mortgage derivatives, inclusive of IRLCs, closed loan inventory, TBA derivative trades, and mandatory forward contracts may be subject to investor overlays that may result in a significantly lower fair value measurement. Generally such overlays are announced with advanced notice in order to include the risk adjuster, however there are times when announcements are mandated resulting in a lower fair value measurement. Additionally market assumptions such as spec pool payups may result in a significantly higher fair value measurement at time of loan allocation to specific trades.

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The following tables present the recorded amounts of assets and liabilities measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025. No assets or liabilities were transferred from one hierarchy level to another during the three months ended March 31, 2026 or 2025.

						March 31, 2026
($ in thousands)						Fair Value						Quoted Prices (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
Assets:
Available for sale securities:
U.S. government agency securities						$	20,364					$	—					$	20,364					$	—
Mortgage-backed securities						230,676						—						230,676						—
Other debt securities						12,986						—						12,986						—
Total available for sale securities						264,026						—						264,026						—
Equity securities						6,195						—						6,195						—
TBA forward trades						310						—						310						—
Loans held for sale						24,034						—						24,034						—
IRLCs						147						—						—						147
Total assets at fair value						$	294,712					$	—					$	294,565					$	147
Liabilities:
IRLCs						$	8					$	—					$	—					$	8
TBA forward trades						56						—						56						—
Total liabilities at fair value						$	64					$	—					$	56					$	8

						December 31, 2025
($ in thousands)						Fair Value						Quoted Prices (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
Assets:
Available for sale securities:
U.S. government agency securities						$	20,616					$	—					$	20,616					$	—
Mortgage-backed securities						195,027						—						195,027						—
Other debt securities						4,715						—						4,715						—
Total available for sale securities						220,358						—						220,358						—
Equity securities						6,186						—						6,186						—
TBA forward trades						11						—						11						—
Loans held for sale						32,540						—						32,540						—
IRLCs						91						—						—						91
Total assets at fair value						$	259,186					$	—					$	259,095					$	91
Liabilities:
IRLCs						$	1					$	—					$	—					$	1
TBA forward trades						59						—						59						—
Total liabilities at fair value						$	60					$	—					$	59					$	1

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Assets Measured at Fair Value on a Non-recurring Basis

Individually Evaluated Collateral-Dependent Loans

Loans for which repayment is substantially expected to be provided through the operation or sale of collateral are considered collateral dependent and are valued based on the estimated fair value of the collateral, less estimated costs to sell at the reporting date, where applicable. Management utilizes various methods to estimate fair value of the collateral including appraisals, discounted cashflow and automated valuation methods. Accordingly, collateral-dependent loans are classified within Level 3 of the fair value hierarchy.

OREO (Foreclosed Assets)

Foreclosed assets are adjusted for fair value upon transfer of loans to foreclosed assets establishing a new cost basis. Subsequently, foreclosed assets are carried at the lower of carrying value or fair value. The estimated fair value for foreclosed assets included in Level 3 is determined by independent market-based appraisals and other available market information, less costs to sell, that may be reduced further based on market expectations or an executed sales agreement. If the fair value of the collateral deteriorates subsequent to the initial recognition, the Company records the foreclosed asset as a non-recurring Level 3 adjustment. Valuation techniques are consistent with those techniques applied in prior periods.

Repossessed Assets

All repossessed assets are recorded at the lower of the estimated fair value of the properties, less expected selling costs, or the carrying amount of the defaulted loans. From time to time, non-recurring fair value adjustments are recorded to reflect partial write-downs based on the current appraised value of an asset. The Company considers any valuation inputs related to repossessed assets to be Level 3 inputs. Fair value adjustments for these assets are recorded in other noninterest expense in the consolidated statements of income.

Other Assets Held for Sale

Other assets held for sale are carried at the lower of the carrying amount or fair value. The fair value is determined based on the appraisal value, listing price of the property or collateral provided by independent appraisers, and is adjusted for the estimated costs to sell. Due to the use of significant unobservable inputs, these assets are classified as Level 3 under the fair value hierarchy. Fair value adjustments for these assets are recorded in other noninterest expense in the consolidated statements of income.

The following tables set forth the Company’s assets subject to fair value adjustments (impairment) on a non-recurring basis as of March 31, 2026 and December 31, 2025 that are valued at the lower of cost or market. Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Quantitative Information about Level 3 Fair Value Measurements

($ in thousands)

Fair Value

Valuation Technique(1)

Unobservable Input(2)

Range

Weighted-Average

March 31, 2026

Non-recurring measurements:

Individually-evaluated collateral dependent loans:

Commercial real estate

$

6,623

Appraisal of collateral

Appraisal adjustment Liquidation expense

70% 10%

70% 10%

Residential real estate

625

Appraisal of collateral

Appraisal adjustment Liquidation expense

50% - 100% 10%

52% 10%

Other real estate owned

69

Appraisal of collateral

Appraisal adjustment

N/A

0%

Repossessed assets

3,344

Appraisal of collateral

Appraisal adjustment

N/A

9%

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Quantitative Information about Level 3 Fair Value Measurements

($ in thousands)

Fair Value

Valuation Technique(1)

Unobservable Input(2)

Range

Weighted-Average

December 31, 2025

Nonrecurring measurements:

Individually-evaluated collateral dependent loans:

Commercial real estate

$

19,696

Appraisal of collateral

Appraisal adjustment Liquidation expense

60% - 71% 10%

68% 10%

Residential real estate

520

Appraisal of collateral

Appraisal adjustment Liquidation expense

0% - 1% 10%

1% 10%

Other real estate owned

113

Appraisal of collateral

Appraisal adjustment

N/A

0%

Repossessed assets

2,879

Appraisal of collateral

Appraisal adjustment

N/A

60%

_________________________________

(1)Unobservable inputs were weighted by the relative fair value of the instruments. No range is presented only when one instrument was available.

(2)Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

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Note 12 – Fair Value of Financial Instruments

Financial instruments require disclosure of fair value information, whether or not recognized in the consolidated balance sheets, when it is practical to estimate the fair value. A financial instrument is defined as cash, evidence of an ownership interest in an entity or a contractual obligation which requires the exchange of cash. Certain items are specifically excluded from the financial instrument fair value disclosure requirements, including the Company’s common stock, OREO, repossessed assets, premises and equipment and other assets and liabilities.

The following tables present the carrying amounts and estimated fair values of the Company’s financial instruments as of March 31, 2026 and December 31, 2025. Fair values for March 31, 2026 and December 31, 2025 were estimated using an exit price notion.

						Carrying Amount						Fair Value						Fair Value Measurements
($ in thousands)																		Level 1						Level 2						Level 3
March 31, 2026
Assets
Cash and cash equivalents						$	340,822					$	340,822					$	340,822					$	—					$	—
Available for sale securities						264,026						264,026						—						264,026						—
Held to maturity securities						393,615						356,390						—						356,390						—
Equity securities						6,195						6,195						—						6,195						—
Restricted securities						18,003						N/A						—						N/A						—
Loans held for sale						24,034						24,034						—						24,034						—
TBA securities						310						310						—						310						—
Loans held for investment, at amortized cost, net						4,789,549						4,730,092						—						—						4,730,092
Mortgage servicing rights						4,983						5,716						—						5,716						—
Accrued interest receivable						20,676						20,676						—						20,676						—
IRLCs						147						147						—						—						147
Liabilities
Deposits:
Noninterest-bearing						$	1,567,425					$	1,567,425					$	—					$	1,567,425					$	—
Interest-bearing checking						812,847						812,847						—						812,847						—
Money market and savings						1,795,619						1,795,619						—						1,795,619						—
Time deposits						1,274,766						1,272,334						—						1,272,334						—
Brokered deposits						10,963						10,964						—						10,964						—
TRUPS						30,247						30,939						—						30,939						—
Subordinated debt						58,782						60,079						—						60,079						—
TBA Securities						56						56						—						56						—
Accrued interest payable						3,909						3,909						—						3,909						—
IRLCs						8						8						—						—						8

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						Carrying Amount						Fair Value						Fair Value Measurements
($ in thousands)																		Level 1						Level 2						Level 3
December 31, 2025
Assets
Cash and cash equivalents						$	355,566					$	355,566					$	355,566					$	—					$	—
Available for sale securities						220,358						220,358						—						220,358						—
Held to maturity securities						414,827						378,116						—						378,116						—
Equity securities						6,186						6,186						—						6,186						—
Restricted securities						17,989						N/A						—						N/A						—
Loans held for sale						32,540						32,540						—						32,540						—
TBA securities						11						11						—						11						—
Loans held for investment, at amortized cost, net						4,841,466						4,767,143						—						—						4,767,143
Mortgage servicing rights						5,142						5,861						—						5,861						—
Accrued interest receivable						18,551						18,551						—						18,551						—
IRLCs						91						91						—						—						91
Liabilities
Deposits:
Noninterest-bearing						$	1,587,953					$	1,587,953					$	—					$	1,587,953					$	—
Interest bearing checking						852,585						852,585						—						852,585						—
Money market and savings						1,814,928						1,814,928						—						1,814,928						—
Time deposits						1,267,487						1,265,740						—						1,265,740						—
Brokered deposits						10,911						10,923						—						10,923						—
TRUPS						30,168						29,586						—						29,586						—
Subordinated debt						58,893						58,064						—						58,064						—
TBA securities						59						59						—						59						—
Accrued interest payable						2,977						2,977						—						2,977						—
IRLCs						1						1						—						—						1

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Note 13 – Commitments and Contingencies

In the normal course of business, to meet the financial needs of its customers, the Company is a party to financial instruments with off-balance sheet risk. These financial instruments include commitments to extend credit and standby letters of credit. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Letters of credit and other commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because many of the letters of credit and commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. Commitments to make loans are generally made for a period of 90 days or less.

The following table provides information on commitments outstanding as of March 31, 2026 and December 31, 2025.

($ in thousands)						March 31, 2026						December 31, 2025
Commitments to extend credit
Fixed						$	233,298					$	209,737
Variable						472,740						503,713
Total commitments to extend credit						$	706,038					$	713,450
Letters of credit
Fixed						$	5,951					$	6,495
Variable						17,702						17,830
Total letters of credit						$	23,653					$	24,325
Total commitments outstanding						$	729,691					$	737,775

The Company had a reserve for off-balance sheet credit exposures of $1.7 million and $2.0 million as of March 31, 2026 and December 31, 2025, respectively. The reserve was estimated based on current expected credit losses to be experienced by the Company. Losses are charged against the allowance when management believes the required funding of these exposures is uncollectible. While this evaluation is completed on a regular basis, it is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

In the normal course of business, the Company may become involved in litigation arising from banking, financial and other activities. Management, after consultation with legal counsel, does not anticipate that the future liability, if any, arising out of current proceedings will have a material effect on the Company’s financial condition, operating results or liquidity.

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Note 14 – Earnings per Common Share

Basic earnings per common share is calculated by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is calculated by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents (stock-based awards). The following table provides information relating to the calculation of earnings per common share for the three months ended March 31, 2026 and 2025.

												Three Months Ended March 31,
($ in thousands, except per share data)																		2026						2025
Net income																		$	17,088					$	13,764
Average number of common shares outstanding																		33,428,444						33,350,869
Dilutive effect of common stock equivalents																		19,323						24,449
Average number of common shares used to calculate diluted EPS																		33,447,767						33,375,318
Anti-dilutive shares																		—						6,515
Basic net income per common share																		$	0.51					$	0.41
Diluted net income per common share																		$	0.51					$	0.41

There were zero and 6,515 anti-dilutive unvested restricted stock and performance stock unit awards excluded from the calculation of diluted earnings per common share for the three months ended March 31, 2026 and 2025, respectively.

Note 15 – Revenue Recognition

Topic 606 is applicable to noninterest revenue streams such as trust and asset management income, deposit related fees, interchange fees and merchant income. Noninterest revenue streams in-scope of Topic 606 are discussed below. Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities.

Service Charges on Deposit Accounts

Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, and other deposit account related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided.

Check orders and other deposit account-related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or at the end of the month through a direct charge to customers’ accounts.

Trust and Investment Fee Income

Trust and investment fee income is primarily comprised of fees earned from the management and administration of trusts and other customer assets. The Company’s performance obligation is generally satisfied over time, and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days after month end through a direct charge to customers’ accounts. The Company does not earn performance-based incentives.

Optional services such as real estate sales and tax return preparation services are also available to existing trust and asset management customers. The Company’s performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e., as incurred). Payment is received shortly after services are rendered.

Interchange Income

Interchange fees is primarily fees earned on payment card transactions processed through card networks such as Visa, Mastercard, and other debit and credit card networks. These fees are generally calculated as a percentage of the transaction value, plus a fixed fee per transaction, and are primarily paid by acquiring banks to issuing banks. Merchant services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees.

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Other Noninterest Income

Other noninterest income consists of fees, other service charges, safety deposit box rental fees, and other miscellaneous revenue streams. Fees and other service charges are primarily comprised of debit income, automated teller machine (“ATM”) fees, merchant services income, and other service charges. ATM fees are primarily generated when a Company cardholder uses a third-party ATM or a non-Company cardholder uses a Company ATM. Other service charges include revenue from processing wire transfers, bill pay service, cashier’s checks, and other services.

The Company’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment.

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three months ended March 31, 2026 and 2025.

												Three Months Ended March 31,
($ in thousands)																		2026						2025
Noninterest income
In-scope of Topic 606:
Service charges on deposit accounts																		$	1,596					$	1,514
Trust and investment fee income																		1,137						823
Interchange income																		1,698						1,577
Other noninterest income																		958						857
Noninterest income (in-scope of Topic 606)																		5,389						4,771
Noninterest income (out-of-scope of Topic 606)																		1,855						2,363
Total noninterest income																		$	7,244					$	7,134

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context clearly suggests otherwise, references to “the Company,” “we,” “our” and “us” in the remainder of this Quarterly Report on Form 10-Q are to Shore Bancshares, Inc. and its consolidated subsidiaries.

FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q contains forward-looking statements. The statements contained herein that are not historical facts are forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995) based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions, or future or conditional verbs such as “should,” “could,” or “may.” Although forward-looking statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. These forward-looking statements involve risk and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements:

•the strength of the United States (“U.S.”) economy and general economic conditions, (including the interest rate environment, government economic and monetary policies, the strength of global financial markets and inflation/deflation and supply chain issues), whether national or regional, and conditions in the lending markets in which we participate that may have an adverse effect on the demand for our loans and other products, our credit quality and related levels of nonperforming assets and loan losses, and the value and salability of the real estate that we own or that is the collateral for our loans;

•the ability to effectively manage the information technology systems, including third-party vendors, cyber or data privacy incidents or other failures, disruptions or security breaches, and risk related to the development and use of artificial intelligence;

•the ability to develop and use technologies to provide products and services that will satisfy customer demands;

•results of examinations of us by our regulators, including the possibility that our regulators may, among other things, require us to increase our reserve for loan losses or to write-down assets;

•changing bank regulatory conditions, policies or programs, whether arising as new legislation or regulatory initiatives, which could lead to restrictions on activities of banks generally, or our subsidiary bank in particular, more restrictive regulatory capital requirements, increased costs, including deposit insurance premiums, regulation or prohibition of certain income producing activities or changes in the secondary market for loans and other products;

•changes in market rates and prices may adversely impact the value of securities, loans, deposits and other financial instruments and the interest rate sensitivity of our balance sheet;

•our liquidity requirements could be adversely affected by changes in our assets and liabilities;

•our ability to prudently manage our growth and execute our strategy;

•impairment of our goodwill and intangible assets;

•competitive factors among financial services organizations, including product and pricing pressures and our ability to attract, develop and retain qualified banking professionals;

•the effect of acquisitions we have made or may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target into our operations;

•the growth and profitability of noninterest or fee income being less than expected;

•the effect of legislative or regulatory developments, including changes in laws concerning taxes, banking, securities, insurance and other aspects of the financial services industry;

•the effect of any change in federal government enforcement of federal laws affecting the cannabis industry;

•the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the U.S. Securities and Exchange Commission (the “SEC”), the Public Company Accounting Oversight Board and other regulatory agencies;

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•changes in U.S. trade policies, including the implementation of tariffs and other protectionist trade policies;

•the impact of governmental efforts to restructure or adjust the U.S. financial regulatory system;

•the impact of recent or future changes in Federal Deposit Insurance Corporation (the “FDIC”) insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount, including any special assessments;

•the effects of federal government shutdowns, debt ceiling standoff, or other uncertainty regarding fiscal and governmental policies of the U.S. federal government;

•climate change and other catastrophic events or disasters;

•geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts of terrorism, and/or military conflicts, which could impact business and economic conditions in the United States and abroad;

•and other factors that may affect our future results.

Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”) filed with SEC and available at the SEC’s website (www.sec.gov). The information on, or accessible through, our website or any other website cited in this Quarterly Report on Form 10-Q is not part of, or incorporated by reference into, this Quarterly Report on Form 10-Q and should not be relied upon in determining whether to make an investment decision.

The Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.

INTRODUCTION

The following management’s discussion and analysis of financial condition and results of operations is intended as a review of significant factors affecting the Company’s financial condition and results of operations for the periods indicated. This discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and related notes presented elsewhere in this report, as well as the audited consolidated financial statements and related notes included in the 2025 Annual Report.

Shore Bancshares, Inc. is headquartered on the Eastern Shore of Maryland. It is the parent company of Shore United Bank, N.A. (the “Bank”). The Bank currently operates 40 full-service branches in Maryland, Delaware and Virginia. The Company, through Wye Financial Partners, a division of the Bank, offers full-service investment, insurance and financial planning services through our broker/dealer, LPL Financial. The Company, through Wye Trust, a division of the Bank, offers wealth management, corporate trustee services and trust administration to customers within our market areas and nationwide.

The shares of common stock of Shore Bancshares, Inc. are listed on the NASDAQ Global Select Market under the symbol “SHBI.”

Shore Bancshares, Inc. maintains an Internet site at www.shorebancshares.com on which it makes available free of charge its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to the foregoing as soon as reasonably practicable after these reports are electronically filed with, or furnished to, the SEC.

CRITICAL ACCOUNTING POLICIES

The Company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and follow general practices within the industries in which it operates. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments. Certain policies inherently have a greater reliance on the use of estimates, assumptions, and judgments and as such have a greater possibility of producing results that could be materially different than originally reported.

The Company’s most significant accounting policies are presented in Note 1 – “Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements” included in Part II, Item 8 of the 2025 Annual Report. These policies, along with the disclosures presented in the notes to consolidated financial statements and in this management’s discussion and analysis of financial condition and results of operations, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has determined that the accounting policy for the allowance for credit losses (“ACL”) on loans is a critical accounting policy. This policy is considered critical because it relates to an accounting area that requires the most subjective or complex judgments, and, as such, could be most subject to revision as new information becomes available.

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Allowance for Credit Losses on Loans

The ACL represents management’s best estimate of expected lifetime credit losses within the Company’s loan portfolio as of the balance sheet date. The ACL is established through a provision for credit losses and is increased by recoveries of loans previously charged off. Loan losses are charged against the allowance when management’s assessments confirm that the Company will not collect the full amortized cost basis of a loan. The calculation of expected credit losses is determined using a cash flow methodology, and includes considerations of historical experience, current conditions, and reasonable and supportable economic forecasts that may affect collection of the recorded balances. The Company assesses an ACL to groups of loans which share similar risk characteristics or on an individual basis, as deemed appropriate. Changes in the ACL on loans and the related provision for credit losses can materially affect financial results. Although the overall balance is determined based on specific portfolio segments and individually assessed assets, the entire balance is available to absorb credit losses for loans in the portfolio.

The determination of the appropriate level of the ACL on loans inherently involves a high degree of subjectivity and requires the Company to make significant judgments concerning credit risks and trends using quantitative and qualitative information, as well as reasonable and supportable forecasts of future economic conditions, all of which may undergo frequent and significant changes. Changes in conditions, including unforeseen events, changes in asset-specific risk characteristics, and other economic factors, both within and outside the Company’s control, may indicate the need for an increase or decrease in the ACL on loans. While management seeks to utilize the best information available in making its assessment of the ACL estimate, the estimation process is inherently challenging as potential changes in any one factor or input may occur at different rates and/or impact pools of loans in different ways. Further, changes in factors and inputs may also be directionally inconsistent, such that improvement in one factor may offset deterioration in others.

The Company’s management reviews the adequacy of the ACL on loans on at least a quarterly basis. Refer to Note 1 – “Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements” included in Part II, Item 8 of the 2025 Annual Report for additional details concerning the determination of the ACL on loans.

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PERFORMANCE OVERVIEW

The Company’s net income for the first quarter of 2026 was $17.1 million, or $0.51 per diluted common share, compared to $15.9 million, or $0.48 per diluted common share, for the fourth quarter of 2025. The Company had net income of $13.8 million, or $0.41 per diluted common share, for the first quarter of 2025.

First Quarter 2026 Highlights

•Net Income – Net income for the first quarter of 2026 increased $1.2 million to a record $17.1 million from $15.9 million in the fourth quarter of 2025. Net income increased primarily due to an increase in net interest income of $2.4 million and a decrease in the provision for credit losses of $2.7 million, partially offset by lower noninterest income of $1.7 million and an increase in noninterest expense of $1.6 million. The lower noninterest income was due to a one-time receipt of insurance proceeds in the fourth quarter of 2025.

•Return on Average Assets (“ROAA”) – The Company reported ROAA of 1.12% for the first quarter of 2026, compared to 1.02% for the fourth quarter of 2025 and 0.91% for the first quarter of 2025. Adjusted ROAA – non-U.S. generally accepted accounting principles (“GAAP”)(1), which excludes amortization of other intangible assets (net of tax), was 1.22% for the first quarter of 2026, compared to 1.11% for the fourth quarter of 2025 and 1.02% for the first quarter of 2025.

•Net Interest Margin (“NIM”) – Net interest income for the first quarter of 2026 increased $2.4 million to $52.6 million compared to the fourth quarter of 2025. NIM increased 21 basis points (“bps”) to 3.64% during the first quarter of 2026 compared to the fourth quarter of 2025. NIM excluding accretion(1) increased for the comparable periods from 3.24% to 3.35%. Excluding accretion interest, loan yields decreased 1 bp and funding costs decreased 13 bps for the comparable periods. Net interest income increased due to accelerated accretion due to loan payoffs coupled with a lower cost of deposits and lower long-term borrowing expenses. These favorable changes were partially offset by lower yields on interest-bearing deposits with other institutions.

•Book Value per Share – Book value per share increased to $18.02 at March 31, 2026 from $17.65 at December 31, 2025 and $16.55 at March 31, 2025.

•Asset Quality – Nonperforming assets were 1.10% of total assets at March 31, 2026, an increase from 0.69% at December 31, 2025 and 0.31% at March 31, 2025. Classified assets were 1.38% of total assets at March 31, 2026, an increase when compared to 0.96% at December 31, 2025 and 0.36% at March 31, 2025. The allowance for credit losses (“ACL”) was $58.5 million at March 31, 2026, compared to $58.8 million at December 31, 2025 and $58.0 million at March 31, 2025. The ACL as a percentage of loans increased to 1.21% at March 31, 2026 compared to 1.20% at December 31, 2025 and remained flat compared to March 31, 2025.

•Operating Leverage – The efficiency ratio for the first quarter of 2026 was 61.97%, compared to 60.06% in the fourth quarter of 2025 and 63.64% for the first quarter of 2025. The adjusted efficiency ratio – non-GAAP(1), which excludes amortization of intangibles, was 58.57% for the first quarter of 2026, compared to 56.59% for the fourth quarter of 2025 and 59.25% for the first quarter of 2025. Management anticipates ongoing expense management of professional services and technology investments will result in continued improvements in operating leverage over time.

____________________________________

(1)See the Reconciliation of GAAP and non-GAAP Measures tables.

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RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

Summary of Financial Results

The Company reported net income for the three months ended March 31, 2026 of $17.1 million, or $0.51 per diluted common share, compared to $13.8 million, or $0.41 per diluted common share, for the three months ended March 31, 2025.

The following table presents selected consolidated statement of operations data for each of the periods indicated.

						Three Months Ended March 31,
($ in thousands)						2026						2025						$ Change						% Change
Interest and dividend income						$	78,392					$	75,932					$	2,460					3.2		%
Interest expense						25,837						30,034						(4,197)						(14.0)
Net interest income						52,555						45,898						6,657						14.5
Provision for credit losses						85						1,028						(943)						(91.7)
Noninterest income						7,244						7,134						110						1.5
Noninterest expense						37,056						33,747						3,309						9.8
Income before income taxes						22,658						18,257						4,401						24.1
Income tax expense						5,570						4,493						1,077						24.0
Net income						$	17,088					$	13,764					$	3,324					24.1

Net Interest Income

Taxable-equivalent NII is NII adjusted for the tax-favored status of income from certain loans and investments. As shown in the table below, taxable-equivalent NII was $52.6 million for the first quarter of 2026 and $46.0 million for the first quarter of 2025. The increase was primarily due to a decrease in interest expense on deposits of $3.8 million, an increase in interest and fees on loans of $3.3 million and a decrease in interest expense on borrowings of $391 thousand, partially offset by a decrease in interest on deposits with other banks of $951 thousand.

The following table presents taxable-equivalent net interest income for each of the periods indicated.

						Three Months Ended March 31,
($ in thousands)						2026						2025						$ Change						% Change
Interest and dividend income
Interest on loans						$	70,814					$	67,516					$	3,298					4.9		%
Interest and dividends on investment securities						5,120						5,007						113						2.3
Interest on deposits with banks						2,458						3,409						(951)						(27.9)
Total interest and dividend income						$	78,392					$	75,932					$	2,460					3.2
Interest expense
Deposits						$	24,264					$	28,070					$	(3,806)					(13.6)		%
Short-term borrowings						—						598						(598)						(100.0)
Long-term borrowings						1,573						1,366						207						15.2
Total interest expense						$	25,837					$	30,034					$	(4,197)					(14.0)
Taxable-equivalent adjustment						$	89					$	81					$	8					9.9		%
Taxable-equivalent net interest income						$	52,644					$	45,979					$	6,665					14.5		%

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Average Balances and Yields

The following table presents the distribution of the average consolidated balance sheets, interest income, interest expense and annualized yields earned and rates paid for the three months ended March 31, 2026 and 2025.

						Three Months Ended March 31,
						2026																		2025
($ in thousands)						Average Balance						Interest						Yield/Rate						Average Balance						Interest						Yield/Rate
Earning assets
Loans(1), (2), (3)
Commercial real estate						$	2,601,316					$	39,029					6.08		%				$	2,541,527					$	35,822					5.72		%
Residential real estate						1,450,114						19,311						5.33						1,347,035						18,433						5.47
Construction						347,973						5,631						6.56						352,323						5,526						6.36
Commercial						221,542						3,296						6.03						232,900						3,695						6.43
Consumer						262,174						3,534						5.47						304,520						4,042						5.38
Credit cards						4,369						100						9.29						6,686						77						4.67
Total loans						4,887,488						70,901						5.86						4,784,991						67,595						5.71
Investment securities
Taxable						665,729						5,114						3.07						664,002						5,001						3.01
Tax-exempt(1)						647						8						4.95						653						8						4.90
Interest-bearing deposits						269,380						2,458						3.70						318,434						3,409						4.34
Total earning assets						5,823,244						$	78,481					5.44						5,768,080						$	76,013					5.32
Cash and due from banks						44,182																		43,526
Other assets						365,971																		375,929
Allowance for credit losses						(58,742)																		(58,294)
Total assets						$	6,174,655																	$	6,129,241
Interest-bearing liabilities
Interest-bearing checking						$	780,713					$	4,840					2.51		%				$	859,698					$	7,025					3.31		%
Money market and savings deposits						1,812,071						8,696						1.95						1,799,707						10,015						2.26
Time deposits						1,270,156						10,624						3.39						1,208,250						11,030						3.70
Brokered deposits						11,107						104						3.80						—						—						—
Interest-bearing deposits(4)						3,874,047						24,264						2.54						3,867,655						28,070						2.94
FHLB advances						—						—						—						50,000						598						4.85
Subordinated debt and Guaranteed preferred beneficial interest in junior subordinated debentures (“TRUPS”)(4)						89,024						1,573						7.17						73,840						1,366						7.50
Total interest-bearing liabilities						3,963,071						25,837						2.64						3,991,495						30,034						3.05
Noninterest-bearing deposits						1,564,867																		1,549,859
Accrued expenses and other liabilities						46,505																		40,444
Stockholders’ equity						600,212																		547,443
Total liabilities and stockholders’ equity						$	6,174,655																	$	6,129,241
Taxable-equivalent net interest income												$	52,644																	$	45,979
Net interest spread																		2.80		%																2.27		%
Net interest margin																		3.64																		3.21
Net interest margin excluding accretion(3)																		3.35																		2.99
Cost of funds																		1.90																		2.20
Cost of deposits																		1.81																		2.10
Cost of debt																		7.17																		6.43

____________________________________

(1) All amounts are reported on a taxable-equivalent basis computed using the statutory federal income tax rate of 21.0%, exclusive of nondeductible interest expense.

(2) Average loan balances include nonaccrual loans.

(3) Interest income on loans includes accreted loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations. There were $4.3 million and $3.7 million of accretion interest on loans for the three months ended March 31, 2026 and 2025, respectively.

(4) Interest expense on deposits and borrowings includes amortization of deposit discounts and amortization of borrowing fair value adjustments. There were zero and $334 thousand of amortization of deposit discounts and $79 thousand and $232 thousand of amortization of borrowing fair value adjustments for the three months ended March 31, 2026 and 2025, respectively.

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Rate and Volume Analysis

The following table presents changes in interest income and interest expense for the periods indicated. For each category of interest-earning asset and interest-bearing liability, information is provided on changes attributable to (1) changes in volume (changes in volume multiplied by old rate); and (2) changes in rate (changes in rate multiplied by old volume). Changes in rate-volume (changes in rate multiplied by the change in volume) have been allocated to changes due to volume.

Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025
($ in thousands)						Volume						Due to Rate						Total
Interest income from earning assets:
Loans
Commercial real estate						$	951					$	2,256					$	3,207
Residential real estate						1,343						(465)						878
Construction						(69)						174						105
Commercial						(169)						(230)						(399)
Consumer						(576)						68						(508)
Credit cards						(53)						76						23
Taxable investment securities						15						98						113
Interest-bearing deposits						(448)						(503)						(951)
Total interest income						$	994					$	1,474					$	2,468
Interest-bearing liabilities:
Interest-bearing checking deposits						$	(489)					$	(1,696)					$	(2,185)
Money market and savings deposits						57						(1,376)						(1,319)
Time deposits						518						(924)						(406)
Brokered deposits						104						—						104
Advances from FHLB						—						(598)						(598)
Subordinated debt						267						(60)						207
Total interest-bearing liabilities						457						(4,654)						(4,197)
Net change in net interest income						$	537					$	6,128					$	6,665

Fluctuations in NII can result from the combination of changes in the average balances of asset and liability categories and changes in interest rates. Interest rates earned and paid are affected by general economic conditions, particularly changes in market interest rates, and by competitive factors, government policies and actions of regulatory authorities.

The Company’s NIM increased to 3.64% for the three months ended March 31, 2026, from 3.21% for the three months ended March 31, 2025. Comparing the three months ended March 31, 2026 to the three months ended March 31, 2025, the Company’s interest-earning asset yields increased to 5.44% from 5.32%, while the cost of funds repriced at a faster pace, which resulted in a decrease of 30 bps, to 1.90% from 2.20%, for the same periods.

Provision for Credit Losses (“PCL”) and ACL

Refer to the discussion of the Bank’s PCL and ACL in the asset quality discussion in the analysis of financial condition in this management’s discussion and analysis of financial condition and results of operations.

Noninterest Income

Total noninterest income for the three months ended March 31, 2026 was $7.2 million, an increase of $110 thousand from $7.1 million for the three months ended March 31, 2025. The increase was primarily due to an increase in trust and investment fee income of $314 thousand, an increase in mortgage banking revenue of $210 thousand driven by increased mortgage servicing activity, and a $121 thousand increase in interchange credits. These favorable changes were partially offset by a decrease in other noninterest income of $617 thousand due to the absence of one-time bank-owned life insurance income recorded in the first quarter of 2025.

Noninterest Expense

Noninterest expense of $37.1 million for the three months ended March 31, 2026 increased $3.3 million when compared to the $33.7 million for the three months ended March 31, 2025. The increase was primarily due to higher salaries and employee benefits expense of

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$3.2 million and higher software and data processing costs of $449 thousand, partially offset by the decrease in the amortization of other intangible assets of $298 thousand.

Income Taxes

The Company reported income tax expense of $5.6 million and $4.5 million for the three months ended March 31, 2026 and 2025, respectively. The effective tax rate was 24.58% and 24.61% for the three months ended March 31, 2026 and 2025, respectively.

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ANALYSIS OF FINANCIAL CONDITION

Balance Sheet Summary

Total assets were $6.21 billion at March 31, 2026, a decrease of $52.8 million, or 0.8%, when compared to $6.26 billion at December 31, 2025. The decrease was primarily due to a decrease in our loan portfolio of $52.3 million and a decrease in cash and cash equivalents of $14.7 million, which were partially offset by an increase in our investment securities portfolio of $22.5 million. The ratio of the ACL as a percentage of loans was 1.21% and 1.20% at March 31, 2026 and December 31, 2025, respectively.

Cash and Cash Equivalents

Cash and cash equivalents totaled $340.8 million at March 31, 2026 compared to $355.6 million at December 31, 2025. Total cash and cash equivalents fluctuate due to transactions in process and other liquidity demands. Management believes liquidity needs are satisfied by the current balance of cash and cash equivalents, readily available access to traditional and wholesale funding sources, and the portions of the investment and loan portfolios that mature within one year. The decrease in cash and cash equivalents was primarily driven by seasonal run-off of the municipal deposits.

Investment Securities

The investment portfolio includes debt and equity securities. Debt securities are classified as either AFS or HTM. AFS investment securities are stated at estimated fair value based on market prices. They represent securities which may be sold as part of the asset/liability management strategy or in response to changing interest rates. Net unrealized holding gains and losses on these securities are reported net of related income taxes as accumulated other comprehensive income (“AOCI”) (loss), a separate component of stockholders’ equity. Investment securities in the HTM category are stated at cost adjusted for amortization of premiums and accretion of discounts and the ACL. We have the intent and ability to hold such securities until maturity. At March 31, 2026, 40.15% of the portfolio of debt securities was classified as AFS and 59.85% was classified as HTM, compared to 34.69% and 65.31%, respectively, at December 31, 2025. See Note 2 – “Investment Securities” in the “Notes to Consolidated Financial Statements” included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details on the composition of the investment portfolio.

Investment securities, including restricted stock and equity securities, totaled $681.8 million at March 31, 2026, an increase of $22.5 million, or 3.4%, compared to $659.4 million at December 31, 2025. At March 31, 2026, AFS securities, carried at fair value, totaled $264.0 million compared to $220.4 million at December 31, 2025. At March 31, 2026, AFS securities consisted of 87.37% mortgage-backed securities, 7.71% U.S. government agency securities and 4.92% corporate bonds, compared to 88.50%, 9.36% and 2.14%, respectively, at December 31, 2025. At March 31, 2026, the gross unrealized losses on AFS securities were all related to changes in interest rates and were $7.9 million, or less than 1% of total assets and 2% of total stockholders’ equity. At March 31, 2026, the AOCI loss was $5.3 million, compared to $4.6 million at December 31, 2025.

At March 31, 2026, HTM securities, carried at amortized cost, totaled $393.6 million, compared to $414.8 million at December 31, 2025. At March 31, 2026, HTM securities consisted of 74.74% mortgage-backed securities, 23.49% U.S. government agency securities and 1.77% other debt securities, compared to 73.06%, 25.26% and 1.68%, respectively, at December 31, 2025.

At March 31, 2026 and December 31, 2025, 96.98% and 98.18%, respectively, of the Bank’s carrying value of its investment portfolio consisted of securities issued or guaranteed by U.S. government agencies or government-sponsored agencies.

Credit Quality Information

The Company monitors the credit quality of HTM securities through credit ratings provided by Standard & Poor’s Rating Services and Moody’s Investor Services. Credit ratings express opinions about the credit quality of a security and are updated at each quarter end. Investment grade securities are rated BBB- or higher by S&P and Baa3 or higher by Moody’s and are generally considered by the rating agencies and market participants to be of low credit risk. Conversely, securities rated below investment grade, which are labeled as speculative grade by the rating agencies, are considered to have distinctively higher credit risk than investment grade securities. There were no speculative grade HTM securities at March 31, 2026 or December 31, 2025. HTM securities that are not rated are agency mortgage-backed securities sponsored by U.S. government agencies, as well as direct obligations of the agencies, with the remainder being subordinated debt securities of other banks.

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The following tables present the amortized cost of HTM securities based on their lowest publicly available credit rating as of March 31, 2026 and December 31, 2025.

						March 31, 2026
						Investment Grade
($ in thousands)						Aaa						Aa1						A3						Baa1						Baa2												NR						Total
U.S. Treasury and government agency securities						$	5,069					$	87,445					$	—					$	—					$	—											$	—					$	92,514
Mortgage-backed securities						294,223						—						—						—						—												—						294,223
Other debt securities						—						1,459						2,000						1,000						500												2,000						6,959
Total held to maturity securities						$	299,292					$	88,904					$	2,000					$	1,000					$	500											$	2,000					$	393,696

						December 31, 2025
						Investment Grade
($ in thousands)						Aaa						Aa1						A3						Baa1						Baa2												NR						Total
U.S. Treasury and government agency securities						$	5,399					$	99,437					$	—					$	—					$	—											$	—					$	104,836
Mortgage-backed securities						303,129						—						—						—						—												—						303,129
Other debt securities						—						1,461						2,000						1,000						500												2,000						6,961
Total held to maturity securities						$	308,528					$	100,898					$	2,000					$	1,000					$	500											$	2,000					$	414,926

Loans Held for Sale

The Company originates residential mortgage loans for sale on the secondary market, which are recorded at fair value. At March 31, 2026 and December 31, 2025, the fair value of loans held for sale amounted to $24.0 million and $32.5 million, respectively. The Bank makes certain representations to purchasers in the sale of mortgage loans related to loan ownership, loan compliance and legality, and accurate documentation. If a loan is found to be out of compliance with any of the representations subsequent to the date of purchase, the Bank may be required to repurchase the loan or indemnify the purchaser. During the three months ended March 31, 2026, the Bank repurchased no loans. During the three months ended March 31, 2025, the Bank repurchased one loan with an aggregate value of $415 thousand.

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Loans Held for Investment

The following table summarizes the Company’s loan portfolio at March 31, 2026 and December 31, 2025.

($ in thousands)						March 31, 2026						% of Total Loans						December 31, 2025						% of Total Loans						$ Change						% Change
Commercial real estate						$	2,599,815					53.62		%				$	2,643,996					53.95		%				$	(44,181)					(1.7)		%
Residential real estate						1,425,733						29.41						1,414,964						28.88						10,769						0.8
Construction						342,835						7.07						344,903						7.04						(2,068)						(0.6)
Commercial						220,833						4.56						226,006						4.61						(5,173)						(2.3)
Consumer						254,478						5.25						265,912						5.43						(11,434)						(4.3)
Credit cards						4,336						0.09						4,521						0.09						(185)						(4.1)
Total loans						4,848,030						100.00		%				4,900,302						100.00		%				(52,272)						(1.1)
Less: allowance for credit losses						(58,481)												(58,836)												355						(0.6)
Total loans, net						$	4,789,549											$	4,841,466											$	(51,917)					(1.1)

CRE Loan Portfolio

The Company’s loan portfolio has a CRE loan concentration, which is generally defined as a combination of certain construction and CRE loans. The federal banking regulators have issued guidance for those institutions which are deemed to have concentrations in CRE lending. Pursuant to the supervisory criteria contained in the guidance for identifying institutions with a potential CRE concentration risk, institutions which have (1) total reported loans for construction, land development, and other land acquisitions which represent 100% or more of an institution’s total risk-based capital; or (2) total non-owner occupied CRE loans representing 300% or more of the institution’s total risk-based capital and the institution’s non-owner occupied CRE loan portfolio (including construction) has increased 50% or more during the prior 36 months are identified as having potential CRE concentration risk. Institutions which are deemed to have concentrations in CRE lending are expected to employ heightened levels of risk management with respect to their CRE portfolios and may be required to hold higher levels of capital. Non-owner occupied CRE loans, including construction loans, totaled $2.14 billion and $2.15 billion at March 31, 2026 and December 31, 2025, respectively, and as a percentage of the Bank’s Tier 1 Capital plus ACL were 332.94% and 342.55%, respectively.

Management has extensive experience in CRE lending and has implemented and continues to maintain heightened risk management procedures, as well as strong underwriting criteria with respect to the Bank’s CRE portfolio. Monitoring practices are part of the Bank’s credit and risk departments’ annual test plans and are adjusted as needed on a quarterly basis if external or internal conditions merit changes. The Bank’s CRE monitoring plans include stress testing analysis to evaluate changes in collateral values and changes in cash flow debt service coverage ratios as a result of increasing interest rates or declines in customer net operating revenues. We may be required to maintain higher levels of capital as a result of our CRE concentrations, which could require us to obtain additional capital, or be required to sell/participate portions of loans, either of which may adversely affect shareholder returns.

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Non-Owner Occupied CRE Loans

						March 31, 2026
($ in thousands)						Amount						Average Loan Size						% of Non-Owner Occupied CRE Loans						% of Total Portfolio Loans, Gross
Loan type:
Retail						$	482,785					$	2,554					26.0		%				10.0		%
Office						361,703						1,574						19.5						7.5
Multifamily (5+ units)						261,226						2,353						14.1						5.4
Industrial/warehouse						184,927						1,412						10.0						3.8
1-4 family dwelling						7,922						193						0.4						0.2
Motel/hotel						190,614						4,056						10.3						3.9
Other(1)						366,082						616						19.7						7.5
Total non-owner occupied CRE loans(2)						1,855,259						1,584						100.0		%				38.3		%
Total portfolio loans, gross(3)						$	4,848,030

____________________________________

(1)Other non-owner occupied CRE loans include commercial – improved loans of $160.1 million, self storage loans of $67.0 million, farm real estate loans of $46.4 million, lot/land loans of $3.3 million and other loans $89.3 million.

(2)The balances for the non-owner occupied CRE portfolio as of March 31, 2026, as presented in this table, coincide with our internal evaluation of risk for the purpose of monitoring loan concentrations in accordance with internal and regulatory guidelines.

(3)Excludes loans held for sale of $24.0 million.

Owner Occupied CRE Loans

						March 31, 2026
($ in thousands)						Amount						Average Loan Size						% of Owner Occupied CRE Loans						% of Total Portfolio Loans, Gross
Loan type:
Commercial – improved						$	217,492					$	1,182					29.2		%				4.5		%
Office						119,147						507						16.0						2.5
Industrial/warehouse						92,883						654						12.5						1.9
Retail						65,223						610						8.8						1.3
Restaurant						54,657						976						7.3						1.1
Other(1)						195,154						1,184						26.2						4.1
Total owner occupied CRE loans						744,556						830						100.0		%				15.4		%
Total portfolio loans, gross(2)						$	4,848,030

____________________________________

(1)Other owner occupied CRE loans include church loans of $56.8 million, marina/boat slip loans of $17.7 million, fire/EMS building loans of $38.0 million and other loans $82.7 million.

(2)Excludes loans held for sale of $24.0 million.

Office CRE Loan Portfolio

The Bank’s office CRE loan portfolio, which includes owner occupied and non-owner occupied CRE loans, was $480.9 million, or 9.9% of total loans of $4.85 billion at March 31, 2026. The Bank’s office CRE loan portfolio included $113.6 million, or 23.6% of total office CRE loans, with medical tenants, and $69.3 million, or 14.4%, of total office CRE loans, with government or government contractor tenants. At March 31, 2026, there were 467 loans in the office CRE loan portfolio with an average and median loan size of $1.0 million and $378 thousand, respectively. Loan-to-value (“LTV”) estimates are less than or equal to 50% for $167.3 million, or 34.8%, of the office CRE loan portfolio, and greater than 80% for $11.1 million, or 2.3%, of the office CRE loan portfolio at March 31, 2026. LTV collateral values are based on the most recent appraisal, which varies from the initial loan boarding to interim credit reviews. LTV estimates for the office CRE loan portfolio March 31, 2026 are summarized in the table below and LTV collateral values are based on the most recent appraisal, which may vary from the appraised value at loan origination.

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LTV Range ($ in thousands)						Loan Count						Loan Balance						% of Office CRE
Less than or equal to 50%						234						$	167,305					34.8		%
Greater than 50% and less than or equal to 60%						75						122,649						25.5
Greater than 60% and less than or equal to 70%						92						142,127						29.6
Greater than 70% and less than or equal to 80%						52						37,694						7.8
Greater than 80%						14						11,075						2.3
Total						467						$	480,850					100.0		%

There were 17 office CRE loans with balances greater than $5.0 million, totaling $164.8 million at March 31, 2026, compared to 17 loans totaling $166.1 million at December 31, 2025. The decrease in this portfolio segment was the result of normal amortization. Of the office CRE portfolio balance, 81.1% of the loans were secured by properties in rural or suburban areas with limited exposure to metropolitan cities and 97.5% were secured by properties with five stories or less at March 31, 2026. Of the office CRE loans, $28.7 million were classified as special mention or substandard at March 31, 2026. There were no charge-offs within the office CRE portfolio during the three months ended March 31, 2026.

Maturity of Loan Portfolio

The following table sets forth the maturities and interest rate sensitivity of the loan portfolio at March 31, 2026. Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are reported as maturing within one year.

($ in thousands)						Maturing Within One Year						Maturing After One But Within Five Years						Maturing After Five But Within 15 Years						Maturing After 15 Years						Total
Commercial real estate						$	273,337					$	814,174					$	709,035					$	803,269					$	2,599,815
Residential real estate						58,264						126,654						118,401						1,122,414						1,425,733
Construction						214,770						100,606						25,984						1,475						342,835
Commercial						62,153						77,693						61,395						19,592						220,833
Consumer						2,103						82,014						89,090						81,271						254,478
Credit cards						1,881						2,137						318						—						4,336
Total						$	612,508					$	1,203,278					$	1,004,223					$	2,028,021					$	4,848,030
Rate Terms:
Fixed-interest rate loans						$	428,451					$	1,011,106					$	555,629					$	282,167					$	2,277,353
Adjustable-interest rate loans						184,057						192,172						448,594						1,745,854						2,570,677
Total						$	612,508					$	1,203,278					$	1,004,223					$	2,028,021					$	4,848,030

Loans Related to Cannabis Business

Loan balances related to our cannabis business were $91.9 million and $86.2 million, or 1.90% and 1.76% of total gross loans, as of March 31, 2026 and December 31, 2025, respectively.

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Asset Quality

ACL and Provision for Credit Losses

The ACL as a percentage of loans increased to 1.21% at March 31, 2026, compared to 1.20% at December 31, 2025. At March 31, 2026, the Company’s ACL decreased $355 thousand, to $58.5 million from $58.8 million at December 31, 2025. The decrease in the general allowance was primarily due to loan payoffs, partially offset by unfavorable economic conditions in 2026.

The Company recorded a provision for credit losses on loans of $85 thousand for the three months ended March 31, 2026, compared to $1.0 million for the three months ended March 31, 2025, primarily due to loan growth and net charge-offs, which amounted to $847 thousand, or 0.02% of average loans, for the three months ended March 31, 2026, compared to net charge-offs of $554 thousand, or 0.01% of average loans, for the three months ended March 31, 2025. The increase in charge-offs in 2026 was primarily due to the marine and CRE portfolio. The ratio of annualized net charge-offs to average loans was 0.07% and 0.05% for the three months ended March 31, 2026 and 2025, respectively.

Management remains focused on its efforts to dispose of problem loans and to prudently charge-off nonperforming loans to enable the Company to maintain overall credit quality.

The following table allocates the ACL by loan portfolio category as of the dates indicated. The allocation of the ACL to each category is not necessarily indicative of future losses and does not restrict the use of the ACL to absorb losses in any category.

						Three Months Ended
						March 31, 2026																		March 31, 2025
($ in thousands)						ACL Balance						Average Loan Balance(1)						%(2)						ACL Balance						Average Loan Balance(1)						%(2)
Commercial real estate						$	21,672					$	2,601,316					0.83		%				$	21,988					$	2,541,527					0.87		%
Residential real estate						22,993						1,424,583						1.61						22,393						1,333,781						1.68
Construction						4,806						347,973						1.38						3,842						352,323						1.09
Commercial						3,497						221,542						1.58						2,855						232,900						1.23
Consumer						5,415						262,174						2.07						6,574						304,520						2.16
Credit cards						98						4,369						2.24						390						6,686						5.83
Total						$	58,481					$	4,861,957					1.20						$	58,042					$	4,771,737					1.22

____________________________________

(1)Excludes loans held for sale.

(2)ACL balance as a percent of average loan balance of each category.

The following table presents the net charge-offs or recoveries by average loan portfolio category for the three months ended March 31, 2026 and 2025.

						Three Months Ended
						March 31, 2026																		March 31, 2025
($ in thousands)						Net Charge-offs (Recoveries)						Average Loan Balance(1)						Net Charge-off (Recovery) %						Net Charge-offs (Recoveries)						Average Loan Balance(1)						Net Charge-off (Recovery) %
Commercial real estate						$	—					$	2,601,316					0.00		%				$	(78)					$	2,541,527					(0.01)		%
Residential real estate						119						1,424,583						0.03						(1)						1,333,781						0.00
Construction						—						347,973						0.00						(1)						352,323						0.00
Commercial						176						221,542						0.32						(4)						232,900						(0.01)
Consumer(2)						475						262,174						0.73						396						304,520						0.53
Credit cards						77						4,369						7.15						242						6,686						14.68
Total						$	847					$	4,861,957					0.07						$	554					$	4,771,737					0.05

____________________________________

(1)Excludes loans held for sale.

(2)Includes the marine portfolio.

Classified Assets

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Classified assets are substandard loans, repossessed assets and OREO. The following tables present the Company’s classified assets by loan portfolio category at March 31, 2026 and December 31, 2025.

						March 31, 2026
($ in thousands)						Classified Loans						Other Real Estate Owned						Repossessed Assets						Total Classified Assets
Commercial real estate						$	64,453					$	—					$	—					$	64,453
Residential real estate						10,225						—						—						10,225
Construction						403						69						—						472
Commercial						6,659						—						—						6,659
Consumer						534						—						3,345						3,879
Credit cards						63						—						—						63
Total						$	82,337					$	69					$	3,345					$	85,751

						December 31, 2025
($ in thousands)						Classified Loans						Other Real Estate Owned						Repossessed Assets						Total Classified Assets
Commercial real estate						$	40,677					$	—					$	—					$	40,677
Residential real estate						11,084						—						—						11,084
Construction						331						113						—						444
Commercial						4,255						—						—						4,255
Consumer						971						—						2,879						3,850
Credit cards						48						—						—						48
Total						$	57,366					$	113					$	2,879					$	60,358

The following table presents the Company’s total classified assets as a percentage of total assets and risk-based capital at March 31, 2026 and December 31, 2025.

						March 31, 2026						December 31, 2025
Total classified assets as a percentage of total assets						1.38		%				0.96		%
Total classified assets as a percentage of risk-based capital						12.71						9.14

Classified assets increased $25.4 million to $85.8 million, or 1.38% of total assets, at March 31, 2026, from $60.4 million, or 0.96% of total assets, at December 31, 2025.

Special Mention Loans

The following table presents the Company’s special mention loans by loan portfolio category at March 31, 2026 and December 31, 2025.

($ in thousands)						March 31, 2026						December 31, 2025
Commercial real estate						$	79,759					$	52,347
Residential real estate						17,601						19,065
Construction						—						—
Commercial						411						1,318
Consumer						—						671
Credit cards						—						—
Total special mention loans						$	97,771					$	73,401

Special mention loans increased to $97.8 million at March 31, 2026 compared to $73.4 million at December 31, 2025 and $33.5 million at March 31, 2025. As of March 31, 2026, there were six special mention loans with individual balances greater than $5.0 million, totaling $79.1 million. These loans consist primarily of multifamily commercial real estate and other commercial real estate exposures that are well-collateralized. Management does not currently expect material losses on these credits and is actively engaged in credit oversight and timely execution of workout strategies.

Nonperforming Assets

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Nonperforming assets were $68.4 million and $43.2 million, or 1.10% and 0.69% of total assets, as of March 31, 2026 and December 31, 2025, respectively. Nonperforming assets primarily consist of two large relationships with an aggregate loan balance of $45.6 million. These non performing loans primarily consists of multifamily and office commercial real estate based in North Carolina and Virginia. As of March 31, 2026, these loans are well-secured by collateral and required minimal individual reserves. When comparing March 31, 2026 to March 31, 2025, nonperforming assets increased $49.5 million, primarily due to an increase in nonaccrual loans of $49.6 million and an increase in repossessed marine and auto loans of $806 thousand, partially offset by a decrease in loans 90 days past due and accruing of $894 thousand. Substandard loans, which include nonaccrual loans and accruing loans 90 days or more past due were $82.3 million at March 31, 2026 compared to $57.4 million at December 31, 2025 and $19.4 million at March 31, 2025.

The following table summarizes our nonperforming assets as of March 31, 2026 and December 31, 2025.

($ in thousands)						March 31, 2026						December 31, 2025
Nonperforming assets
Nonaccrual loans						$	64,958					$	39,960
Total loans 90 days or more past due and still accruing						—						255
OREO						69						113
Repossessed assets						3,345						2,879
Total nonperforming assets						$	68,372					$	43,207
As a percent of total loans:
Nonaccrual loans						1.34		%				0.82		%
As a percent of total loans and OREO:
Nonperforming assets						1.41		%				0.88		%
As a percent of total assets:
Nonaccrual loans						1.05		%				0.64		%
Nonperforming assets						1.10						0.69

Off-Balance Sheet Credit Exposure Reserve

The Company’s reserve for off-balance sheet credit exposure was $1.7 million and $2.0 million at March 31, 2026 and December 31, 2025, respectively. The Company monitors line of credit usage and did not see substantive increases in usage or expected usage during the three months ended March 31, 2026.

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Deposits

The following is a breakdown of the Company’s deposit portfolio at March 31, 2026 and December 31, 2025:

($ in thousands)						March 31, 2026												December 31, 2025
						Balance						% of Total Deposits						Balance						% of Total Deposits						$ Change						% Change
Noninterest-bearing deposits						$	1,567,425					28.70		%				$	1,587,953					28.69		%				$	(20,528)					(1.3)		%
Interest-bearing deposits:
Interest-bearing checking						812,847						14.88						852,585						15.41						(39,738)						(4.7)
Money market and savings						1,795,619						32.88						1,814,928						32.80						(19,309)						(1.1)
Time deposits						1,274,766						23.34						1,267,487						22.90						7,279						0.6
Brokered deposits						10,963						0.20						10,911						0.20						52						0.5
Total interest-bearing						3,894,195						71.30						3,945,911						71.31						(51,716)						(1.3)
Total deposits						$	5,461,620					100.00		%				$	5,533,864					100.00		%				$	(72,244)					(1.3)

Total deposits decreased $72.2 million, to $5.46 billion at March 31, 2026 when compared to December 31, 2025. The decrease in total deposits was primarily due to a decrease in interest-bearing checking deposits of $39.7 million, a decrease in noninterest-bearing accounts of $20.5 million and a decrease in money market and savings accounts of $19.3 million. These decreases were partially offset by an increase in time deposits of $7.3 million. The decrease was due to seasonal municipal deposit run offs.

Total estimated uninsured deposits were $933.0 million, or 17.1% of total deposits, at March 31, 2026 and $937.2 million, or 16.9% of total deposits, at December 31, 2025. At March 31, 2026 there were $147.0 million included in uninsured deposits that the Bank secured using the market value of pledged collateral. The Bank’s uninsured deposits at March 31, 2026, excluding the market value of pledged collateral, were $786.0 million, or 14.4%, of total deposits.

The Bank is required to monitor large deposit relationships and concentration risks in accordance with regulatory guidance. This includes monitoring deposit concentrations and maintaining fund management policies and strategies that take into account potentially volatile concentrations and significant deposits that mature simultaneously. Regulatory guidance defines a large depositor as a customer or entity that owns or controls 2% or more of the Bank’s total deposits. At March 31, 2026, the Bank had two local municipal customer deposit relationships that exceeded 2% of total deposits, totaling $334.9 million, which represented 6.10% of total deposits of $5.49 billion. At December 31, 2025, there were three customer deposit relationships that exceeded 2% of total deposits, totaling $539.0 million, which represented 9.70% of total deposits of $5.56 billion. Deposit balances related to the cannabis business were $154.4 million and $159.4 million, or 2.83% and 2.88% of total deposits, as of March 31, 2026 and December 31, 2025, respectively.

Wholesale Funding – Short-Term Borrowings

The Company borrows from the FHLB on a short-term basis to meet liquidity needs. There were no short-term borrowings outstanding as of March 31, 2026 and December 31, 2025.

The Company’s wholesale funding, which includes FHLB advances and brokered deposits, was $11.0 million and $10.9 million at March 31, 2026 and December 31, 2025, respectively. At March 31, 2026, the Company had $11.0 million of brokered deposits and no FHLB advances or securities sold under agreements to repurchase or overnight borrowings from correspondent banks. At December 31, 2025, the Company had $10.9 million of brokered deposits and no FHLB advances or securities sold under agreements to repurchase or overnight borrowings from correspondent banks.

Long-Term Debt

The Company occasionally borrows from the FHLB to meet longer-term liquidity needs, specifically to fund loan growth when liquidity from deposit growth is not sufficient. The Company had no long-term borrowings with the FHLB as of March 31, 2026.

In November 2025, the Company issued $60 million in subordinated debt maturing in 2035, carrying a fixed interest rate of 6.25% through November 2030. The proceeds were used to fully redeem two existing subordinated debt issuances totaling $44.5 million.

As a result of the merger with Severn Bancorp, Inc., effective October 31, 2021, the Company assumed liability for Junior Subordinated Debt Securities due in 2035, which had an outstanding principal balance of $20.6 million. The debt balances of $19.0 million at March 31, 2026 and $19.0 million at December 31, 2025 were presented net of fair value adjustments of $1.6 million and $1.7 million, respectively.

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Additionally, as a result of the merger with The Community Financial Corporation in 2023, the Company assumed liability for Junior Subordinated Debt Securities with an outstanding principal balance of $12.4 million. The debt balances of $11.2 million and $11.2 million were presented net of fair value adjustments of $1.1 million and $1.2 million at March 31, 2026 and December 31, 2025, respectively.

Stockholders’ Equity

Total stockholders’ equity increased $12.8 million, or 2.2%, to $602.7 million at March 31, 2026 when compared to December 31, 2025, primarily due to $17.1 million of net income, partially offset by dividends declared of $4.0 million and an increase in accumulated other comprehensive loss of $677 thousand.

($ in thousands, except per share data)						March 31, 2026						December 31, 2025						$ Change						% Change
Common stock, $0.01 par value per share						$	335					$	334					$	1					0.3		%
Additional paid-in capital						361,013						360,554						459						0.1
Retained earnings						246,636						233,578						13,058						5.6
Accumulated other comprehensive loss						(5,270)						(4,593)						(677)						14.7
Total stockholders’ equity						$	602,714					$	589,873					$	12,841					2.2

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LIQUIDITY

Liquidity is our ability to meet cash demands as they arise. Cash needs may come from loan demand, deposit withdrawals or acquisition opportunities. Potential obligations, resulting from the issuance of standby letters of credit and commitments to fund future borrowings to our loan customers, are other factors affecting our liquidity needs. Many of these obligations and commitments are expected to expire without being drawn upon; therefore, the total commitment amounts do not necessarily represent future cash requirements affecting our liquidity position.

Shore Bancshares’ principal sources of liquidity are cash on hand and dividends received from the Bank. The Bank’s most liquid assets are cash, cash equivalents and federal funds sold. The levels of such assets are dependent upon the Bank’s operating, financing and investment activities at any given time. The variations in levels of cash and cash equivalents are influenced by deposit flows and anticipated future deposit flows. Customer deposits are considered the primary source of funds supporting the Bank’s lending and investment activities.

Based on management’s going concern evaluation, management believes that there are no conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date of the issuance of the financial statements.

The Bank’s principal sources of funds for investment and operations are net income, deposits, sales of loans, borrowings, principal and interest payments on loans, principal and interest received on investment securities and proceeds from the maturity and sale of investment securities. The Bank’s principal funding commitments are for the origination or purchase of loans, the purchase of securities and the payment of maturing deposits.

The Bank’s most liquid assets are cash, cash equivalents and federal funds sold. The levels of such assets are dependent on the Bank’s operating, financing and investment activities at any given time. The variations in levels of cash and cash equivalents are influenced by deposit flows and anticipated future deposit flows.

Liquidity is provided by access to funding sources, which include core deposits and brokered deposits. Other sources of funds include our ability to borrow, such as purchasing federal funds from correspondent banks, sales of securities under agreements to repurchase and advances from the FHLB. The Bank uses wholesale funding (brokered deposits and other sources of funds) to supplement funding when loan growth exceeds core deposit growth and for asset-liability management purposes.

The Company derives liquidity through increased customer deposits, cash flow from the investment portfolio, loan repayments, borrowings and income from earning assets. The net decrease in cash and cash equivalents was $14.7 million for the three months ended March 31, 2026, compared to a net decrease of $70.8 million for the three months ended March 31, 2025. The decrease in cash and cash equivalents in the three months ended March 31, 2026 was primarily due to a $51.7 million decrease in interest-bearing deposits and a $20.5 million decrease in noninterest-bearing deposits.

To the extent that deposits are not adequate to fund customer loan demand, liquidity needs can be met in the short-term funds markets. At March 31, 2026, the Bank had approximately $1.43 billion of available liquidity, including $340.8 million in cash and cash equivalents, $328.0 million in unpledged securities, $14.7 million in secured borrowing capacity with the FRB and $777.6 million in secured borrowing capacity at the FHLB of Atlanta, partially offset by a letter of credit of $33.7 million. In addition, the Bank has arrangements with other correspondent banks whereby it has $376.3 million available in federal funds lines of credit and a reverse repurchase agreement available to meet any short-term needs that may not otherwise be funded by the Bank’s portfolio of readily marketable investments that can be converted to cash. Through the FHLB, the Bank had available lendable collateral of approximately $777.6 million and $788.1 million at March 31, 2026 and December 31, 2025, respectively. The Bank has pledged, under a blanket lien, all qualifying residential and commercial real estate loans under borrowing agreements with the FHLB of Atlanta. The Bank has pledged investment securities with the FRB under the FRB Discount Window program. The following table presents the Company’s liquidity in use and liquidity available as of March 31, 2026.

						March 31, 2026
($ in thousands)						Liquidity in Use						Liquidity Available
FHLB secured borrowings(1)						$	33,667					$	777,552
Unsecured federal fund purchase lines						—						376,295
FRB discount window						—						14,691
Unpledged assets
Cash and cash equivalents						N/A						$	340,822
Investment securities						N/A						327,958
Total						$	33,667					$	1,837,318

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____________________________________

(1)The Bank has pledged a portion of the commercial real estate and residential loan portfolio to the FHLB to secure the line of credit.

For information about risks relating to liquidity, see “Risk Factors – Risks Relating to Our Business” included in Part I, Item 1A in the 2025 Annual Report.

CAPITAL RESOURCES

The Bank and the Company are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action (“PCA”), the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank and the Company to maintain minimum ratios of common equity Tier 1 (“CET1”), Tier 1, and total capital as a percentage of assets and off-balance sheet exposures, adjusted for risk weights ranging from 0% to 12.50%. The Bank and Company are also required to maintain capital at a minimum level based on quarterly average assets, which is known as the leverage ratio. The Bank was deemed “well-capitalized” under applicable regulatory capital requirements at March 31, 2026.

The Company evaluates capital resources by the ability to maintain adequate regulatory capital ratios. The Company and the Bank annually update its strategic plan, which includes a three-year capital plan. In developing its plan, the Company considers the impact to capital of asset growth, loan concentrations, income accretion, dividends, holding company liquidity, investment in markets and people and stress testing.

As of March 31, 2026, the Bank and the Company were in compliance with all applicable regulatory capital requirements to which they were subject, and the Bank was classified as “well-capitalized” for purposes of the PCA regulations. The following tables present the applicable capital ratios for the Company and the Bank as of March 31, 2026 and December 31, 2025.

March 31, 2026						Tier 1 Leverage Ratio						Common Equity Tier 1 Ratio						Tier 1 Risk-Based Capital Ratio						Total Risk-Based Capital Ratio
The Company						9.12		%				10.97		%				11.60		%				14.08		%
The Bank						9.58						12.18						12.18						13.43

December 31, 2025						Tier 1 Leverage Ratio						Common Equity Tier 1 Ratio						Tier 1 Risk-Based Capital Ratio						Total Risk-Based Capital Ratio
The Company						8.82		%				10.52		%				11.15		%				13.61		%
The Bank						9.30						11.75						11.75						13.00

On February 18, 2026, the Company announced that its Board of Directors declared a cash dividend of $0.12 per share, payable on March 18, 2026, to holders of record of shares of common stock as of March 4, 2026.

The Company has no business other than holding the stock of the Bank and does not currently have any material funding requirements, except for the payment of dividends on common stock, and the payment of interest on subordinated debentures and subordinated notes, and noninterest expense.

See Note 10 – “Regulatory Capital Requirements” in the “Notes to Consolidated Financial Statements” included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information about the regulatory capital positions of the Bank and the Company. For information about risks relating to liquidity, see “Risk Factors” included in Part I, Item 1A of the 2025 Annual Report.

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USE OF NON-GAAP FINANCIAL MEASURES

Statements included in the Management’s Discussion and Analysis of Financial Condition and Results of Operations include non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of non-GAAP financial measures to GAAP financial measures. The Company’s management uses these non-GAAP financial measures and believes that non-GAAP financial measures provide additional useful information that allows readers to evaluate the ongoing performance of the Company. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP. See non-GAAP reconciliation schedules that immediately follow.

Reconciliation of Non-GAAP Measures

This Quarterly Report on Form 10-Q, including the accompanying financial statement tables, contains financial information determined by methods other than in accordance with GAAP. This financial information includes certain performance measures, which exclude intangible assets. These non-GAAP measures are included because the Company believes they may provide useful supplemental information for evaluating the underlying performance trends of the Company.

($ in thousands, except per share data)						March 31, 2026						December 31, 2025
Total assets						$	6,206,063					$	6,258,818
Less: intangible assets
Goodwill						(63,266)						(63,266)
Core deposit intangible						(27,742)						(29,722)
Total intangible assets						(91,008)						(92,988)
Tangible assets						$	6,115,055					$	6,165,830
Total common equity						$	602,714					$	589,873
Less: intangible assets						(91,008)						(92,988)
Tangible common equity						$	511,706					$	496,885
Common shares outstanding at period end						33,451,063						33,413,503
Common equity to assets						9.71		%				9.42		%
Tangible common equity to tangible assets						8.37						8.06
Book value per common share at period end						$	18.02					$	17.65
Tangible book value per common share at period end						15.30						14.87

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Return on Average Common Equity (“ROACE”)

ROACE is a financial ratio that measures the profitability of a company in relation to the average stockholders’ equity. This financial metric is expressed in the form of a percentage which is equal to net income divided by the average stockholders’ equity for a specific period of time.

						Three Months Ended March 31,
($ in thousands)						2026						2025
Net income						$	17,088					$	13,764
Annualized net income						$	69,301					$	55,821
ROACE						11.55		%				10.20		%
Average stockholders’ equity						$	600,212					$	547,443

Return on Average Tangible Common Equity (“ROATCE”)

ROATCE is computed by dividing net earnings applicable to common stockholders by average tangible common equity. Management believes that ROATCE is meaningful because it measures the performance of a business consistently, whether acquired or internally-developed. ROATCE is a non-GAAP measure and may not be comparable to similar non-GAAP measures used by other companies.

						Three Months Ended March 31,
($ in thousands)						2026						2025
Net income						$	17,088					$	13,764
Add: amortization of other intangible assets, net of tax						1,493						1,717
Net income excluding amortization of other intangible assets – non-GAAP						$	18,581					$	15,481
Annualized net income excluding amortization of other intangible assets – non-GAAP						$	75,356					$	62,784
ROATCE – non-GAAP						14.83		%				14.05		%
Average stockholders’ equity						$	600,212					$	547,443
Less: Average goodwill and core deposit intangible						(92,086)						(100,514)
Average tangible common equity						$	508,126					$	446,929

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Adjusted Efficiency Ratio – Non-GAAP

Adjusted efficiency ratio – non-GAAP is computed by dividing (i) noninterest expense less amortization of other intangible assets and credit card fraud losses by (ii) the sum of taxable-equivalent NII and noninterest income less the sale and the fair value of held for sale assets, as applicable. Adjusted efficiency ratio – non-GAAP may not be comparable to similar non-GAAP measures used by other companies.

						Three Months Ended March 31,
($ in thousands)						2026						2025
Noninterest expense						$	37,056					$	33,747
Less: Amortization of other intangible assets						(1,980)						(2,278)
Adjusted noninterest expense						$	35,076					$	31,469
Adjusted efficiency ratio – non-GAAP						58.57		%				59.25		%
Net interest income						$	52,555					$	45,898
Add: taxable-equivalent adjustment						89						81
Taxable-equivalent net interest income						$	52,644					$	45,979
Noninterest income						$	7,244					$	7,134
Adjusted noninterest income						$	7,244					$	7,134

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s primary market risk is interest rate fluctuation, and management has procedures in place to evaluate and mitigate this risk. This risk and these procedures are discussed in Part II, Item 7A of the 2025 Annual Report under the caption “Quantitative and Qualitative Disclosures About Market Risk.” Management recognizes that recent changes in interest rates have had an impact on the Company’s market risk. The procedures used to evaluate and mitigate these risks remain unchanged, and we continue to monitor actual and simulated sensitivity positions since December 31, 2025.

The Company prepares a current base case and several alternative simulations at least quarterly. Current interest rates are shocked by +/- 100, 200, 300 and 400 bps. In addition, the Company simulates additional rate curve scenarios. The Company may elect not to use particular scenarios that it determines are impractical in a current rate environment.

The Company’s internal limits for parallel shock scenarios are as follows:

Shock in bps						Net Interest Income						Economic Value of Equity
+/- 400						- 25%						- 40%
+/- 300						- 20%						- 30%
+/- 200						- 15%						- 20%
+/- 100						- 10%						- 10%

It is management’s goal to manage the Bank’s portfolios so that NII at risk over 12 and 24-month periods and the economic value of equity at risk do not exceed policy guidelines at the various interest rate shock levels. As of March 31, 2026 and December 31, 2025, the Company did not exceed any Board-approved limits for the percentage changes in NII or economic value of equity.

Measures of NII at risk produced by simulation analysis are indicators of an institution’s short-term performance in alternative rate environments.

The following schedule estimates the changes in NII over a 12-month period for parallel rate shocks for up 400, 300, 200 and 100 bps, and down 100, 200 and 300 bps scenarios.

Change in Interest Rates:						+ 400 bps						+ 300 bps						+ 200 bps						+ 100 bps						- 100 bps						- 200 bps						- 300 bps
Policy limit						- 25%						- 20%						- 15%						-10%						- 10%						- 15%						- 20%
March 31, 2026						(11.8)		%				(8.8)		%				(5.8)		%				(2.9)		%				3.2		%				5.1		%				5.6		%
December 31, 2025						(10.1)		%				(7.5)		%				(5.0)		%				(2.5)		%				1.8		%				1.8		%				0.9		%

Measures of equity value at risk indicate the ongoing economic value of the Company by considering the effects of changes in interest rates on all of the Company’s cash flows, and by discounting the cash flows to estimate the present value of assets and liabilities.

The following schedule estimates the changes in the economic value of equity over a 12-month period for parallel shocks for up 400, 300, 200 and 100 bps, and down 100, 200 and 300 bps scenarios.

Change in Interest Rates:						+ 400 bps						+ 300 bps						+ 200 bps						+ 100 bps						- 100 bps						- 200 bps						- 300 bps
Policy limit						- 40%						- 30%						- 20%						- 10%						- 10%						- 20%						- 30%
March 31, 2026						(15.5)		%				(10.7)		%				(6.6)		%				(2.8)		%				1.9		%				0.3		%				(3.3)		%
December 31, 2025						(18.9)		%				(13.3)		%				(8.4)		%				(3.8)		%				2.5		%				1.9		%				0.9		%

As with any method of measuring interest rate risk, certain shortcomings are inherent in the method of analysis presented in the foregoing tables. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Additionally, certain assets, such as adjustable rate mortgage loans, have features which restrict changes in interest rates on a short-term basis and over the life of the asset. Further, if interest rates change, expected rates of prepayments on loans and early withdrawals from certificates of deposit could deviate significantly from those assumed in calculating the tables. As of January 1, 2026, the Company adopted a new vendor and updated the model and related assumptions used to calculate NII and economic value of equity. The new model is more reflective of current economic conditions. Accordingly, the economic value of equity as of December 31, 2025 has been restated to conform to the new model and assumptions.

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Item 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As required by SEC rules, the Company’s management evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as define Exchange Act Rules 13a-15(f) and 15d-15(f)) as of March 31, 2026. The Company’s chief executive officer and chief financial officer participated in the evaluation. Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures as of March 31, 2026 were effective.

Management’s annual report on internal control over financial reporting is located on page 55 of the 2025 Annual Report.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as such term is defined by Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

From time to time the Company may become involved in legal proceedings. At the present time, there are no proceedings which the Company believes will have a material adverse impact on the financial condition or earnings of the Company.

Item 1A. RISK FACTORS

There have been no material changes to the risk factors as previously disclosed under Part I, Item 1A in our 2025 Annual Report.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no repurchases or unregistered sales of the Company’s common stock, $0.01 par value per share, during the three months ended March 31, 2026.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4.    MINE SAFETY DISCLOSURES

This item is not applicable.

Item 5.    OTHER INFORMATION

Rule 10b5-1 Trading Plans

During the three months ended March 31, 2026, no officer or director of the Company adopted or terminated any contract, instruction, or written plan for the purchase or sale of securities of the Company’s common stock that is intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c) or any non-Rule 10b5-1 trading arrangement as defined in 17 CFR § 229.408(c).

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Item 6. EXHIBITS

Exhibit No.						Description
31.1						Certifications of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act (filed herewith).
31.2						Certifications of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act (filed herewith).
32						Certification pursuant to Section 906 of the Sarbanes-Oxley Act (furnished herewith).
101						Inline Interactive Data File.
101.INS						Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH						Inline XBRL Taxonomy Extension Schema (filed herewith).
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase (filed herewith).
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase (filed herewith).
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase (filed herewith).
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase (filed herewith).
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

65

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

						SHORE BANCSHARES, INC.
Date: May 4, 2026						By:			/s/ James M. Burke
									James M. Burke
									President & Chief Executive Officer
Date: May 4, 2026						By:			/s/ Charles S. Cullum
									Charles S. Cullum
									Executive Vice President & Chief Financial Officer

66

FAQ

How did Shore Bancshares (SHBI) perform financially in Q1 2026?

Shore Bancshares reported stronger Q1 2026 results, with net income of $17.1 million versus $13.8 million a year earlier. Net interest income increased to $52.6 million, while EPS rose to $0.51 from $0.41, reflecting improved core banking profitability.

What were Shore Bancshares (SHBI) key balance sheet figures at March 31, 2026?

At March 31, 2026, Shore Bancshares had total assets of $6.21 billion and loans held for investment of $4.85 billion. Total deposits were $5.46 billion, slightly below year-end 2025, indicating modest balance sheet contraction during the quarter.

How strong is Shore Bancshares (SHBI) capital position after Q1 2026?

Shore Bancshares’ banking subsidiary remained well capitalized in Q1 2026. The Common Equity Tier 1 capital ratio was 12.18%, Total capital ratio 13.43%, and Tier 1 leverage ratio 9.58%, all comfortably above regulatory minimums and well‑capitalized thresholds.

What happened to Shore Bancshares (SHBI) credit quality in Q1 2026?

Credit quality showed some weakening. Nonaccrual loans increased to $65.0 million from $40.0 million at year-end 2025, and net charge-offs for the quarter reached $1.3 million. The allowance for credit losses stood at $58.5 million against $4.85 billion of loans.

How did Shore Bancshares (SHBI) net interest margin drivers change in Q1 2026?

Net interest income improved to $52.6 million from $45.9 million as interest income on loans rose and funding costs declined. Total interest expense fell to $25.8 million from $30.0 million, reflecting lower deposit and borrowing costs that supported margins.

What noninterest income did Shore Bancshares (SHBI) generate in Q1 2026?

Noninterest income totaled $7.2 million in Q1 2026, similar to $7.1 million a year earlier. In-scope revenue under Topic 606, including service charges, trust and investment fees, interchange income, and other fees, contributed $5.4 million of this amount.