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What changed in FIRST UNITED CORP/MD/'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of FIRST UNITED CORP/MD/'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+227 added−235 removedSource: 10-K (2026-03-10) vs 10-K (2025-03-20)

Top changes in FIRST UNITED CORP/MD/'s 2025 10-K

227 paragraphs added · 235 removed · 184 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

38 edited+2 added−7 removed95 unchanged
Biggest changeIn those instances in which we are unable to accommodate customers’ needs, we attempt to arrange for those services to be provided by other financial services providers with which we have a relationship. ​ 6 ​ Table of Contents ​ The following tables set forth deposit data for the Maryland and West Virginia Counties in which the Bank maintains offices as of June 30, 2024, the most recent date for which comparative information is available. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Offices ​ Deposits ​ Market ​ (in Market) (in thousands) Share Allegany County, Maryland: ​ ​ ​ ​ ​ ​ ​ First United Bank & Trust ​ 2 ​ $ 275,668 ​ 32.41% Manufacturers and Traders Trust Company ​ 5 ​ ​ 266,681 ​ 31.35% Truist Bank ​ 3 ​ ​ 205,293 ​ 24.13% Dollar Bank, Federal Savings Bank ​ 2 ​ ​ 68,508 ​ 8.05% Somerset Trust Company ​ 2 ​ ​ 34,560 ​ 4.06% Source: FDIC Deposit Market Share Report ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Frederick County, Maryland: ​ ​ ​ ​ ​ ​ ​ PNC Bank, National Association ​ 12 ​ $ 1,667,193 ​ 25.61% Truist Bank ​ 10 ​ ​ 1,130,320 ​ 17.36% Bank Of America, National Association ​ 4 ​ ​ 819,279 ​ 12.59% Manufacturers and Traders Trust Company ​ 6 ​ ​ 532,555 ​ 8.18% Sandy Spring Bank ​ 3 ​ ​ 509,958 ​ 7.83% Woodsboro Bank ​ 5 ​ ​ 418,066 ​ 6.42% Middletown Valley Bank ​ 3 ​ ​ 356,121 ​ 5.47% Capital One, National Association ​ 2 ​ ​ 328,168 ​ 5.04% ACNB Bank ​ 4 ​ ​ 280,402 ​ 4.31% First United Bank & Trust ​ 3 ​ ​ 197,817 ​ 3.04% Wells Fargo Bank, National Association ​ 1 ​ ​ 162,321 ​ 2.49% Fulton Bank, National Association ​ 1 ​ ​ 38,927 ​ 0.60% WesBanco Bank, Inc. ​ 1 ​ ​ 28,576 ​ 0.44% JP Morgan Chase Bank, National Association ​ 1 ​ ​ 21,461 ​ 0.33% Presidential Bank, FSB ​ 1 ​ ​ 16,312 ​ 0.25% Woodforest National Bank ​ 1 ​ ​ 2,866 ​ 0.04% Source: FDIC Deposit Market Share Report ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Garrett County, Maryland: ​ ​ ​ ​ ​ ​ ​ First United Bank & Trust ​ 5 ​ $ 480,344 ​ 61.65% Manufacturers and Traders Trust Company ​ 2 ​ ​ 121,677 ​ 15.62% Clear Mountain Bank ​ 1 ​ ​ 78,612 ​ 10.08% Truist Bank ​ 1 ​ ​ 65,683 ​ 8.43% Somerset Trust Company ​ 1 ​ ​ 26,180 ​ 3.36% Miners & Merchants Bank ​ 1 ​ ​ 6,667 ​ 0.86% Source: FDIC Deposit Market Share Report ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Washington County, Maryland: ​ ​ ​ ​ ​ ​ ​ Fulton Bank, National Association ​ 6 ​ ​ 611,999 ​ 18.68% Truist Bank ​ 5 ​ ​ 609,900 ​ 18.62% Manufacturers and Traders Trust Company ​ 9 ​ ​ 606,652 ​ 18.52% Middletown Valley Bank ​ 3 ​ ​ 531,858 ​ 16.25% PNC Bank, National Association ​ 3 ​ ​ 336,517 ​ 10.27% First United Bank & Trust ​ 4 ​ ​ 161,346 ​ 4.93% CNB Bank, Inc. ​ 4 ​ ​ 140,010 ​ 4.27% United Bank ​ 2 ​ ​ 129,102 ​ 3.94% Orrstown Bank ​ 1 ​ ​ 75,468 ​ 2.30% Bank of Charles Town ​ 1 ​ ​ 30,237 ​ 0.92% Farmers and Merchants Trust Company of Chambersburg ​ 1 ​ ​ 19,112 ​ 0.58% Ameriserv Financial Bank ​ 1 ​ ​ 17,579 ​ 0.54% Jefferson Security Bank ​ 1 ​ ​ 5,782 ​ 0.18% Source: FDIC Deposit Market Share Report ​ ​ ​ ​ ​ ​ ​ 7 ​ Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Berkeley County, West Virginia: ​ ​ ​ ​ ​ ​ ​ United Bank ​ 4 ​ $ 527,752 ​ 27.45% Truist Bank 3 ​ 385,855 20.07% City National Bank of West Virginia ​ 4 ​ ​ 245,889 ​ 12.79% Burke & Herbert Bank & Trust Company ​ 3 ​ ​ 191,606 ​ 9.97% First United Bank & Trust ​ 3 ​ ​ 158,572 ​ 8.25% Jefferson Security Bank ​ 2 ​ ​ 151,787 ​ 7.89% CNB Bank, Inc. ​ 3 ​ ​ 139,835 ​ 7.27% Bank of Charles Town ​ 2 ​ ​ 117,288 ​ 6.10% Woodforest National Bank ​ 1 ​ ​ 4,080 ​ 0.21% Source: FDIC Deposit Market Share Report ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mineral County, West Virginia: ​ ​ ​ ​ ​ ​ ​ First United Bank & Trust ​ 2 ​ $ 137,657 ​ 39.37% Manufacturers and Traders Trust Company ​ 2 ​ ​ 83,020 ​ 23.74% Truist Bank ​ 1 ​ ​ 68,750 ​ 19.66% The Grant County Bank ​ 1 ​ ​ 42,510 ​ 12.16% FNB Bank, Inc. ​ 1 ​ ​ 17,728 ​ 5.07% Source: FDIC Deposit Market Share Report ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Monongalia County, West Virginia: ​ ​ ​ ​ ​ ​ ​ MVB Bank, Inc. ​ 2 ​ $ 1,260,947 ​ 28.62% United Bank ​ 6 ​ ​ 1,141,970 ​ 25.92% The Huntington National Bank ​ 6 ​ ​ 645,035 ​ 14.64% Clear Mountain Bank ​ 3 ​ ​ 363,260 ​ 8.24% Truist Bank ​ 3 ​ ​ 316,718 ​ 7.19% PNC Bank, National Association ​ 2 ​ ​ 204,868 ​ 4.65% WesBanco Bank, Inc. ​ 3 ​ ​ 200,271 ​ 4.55% First United Bank & Trust ​ 3 ​ ​ 134,157 ​ 3.04% Citizens Bank of Morgantown, Inc. ​ 1 ​ ​ 41,666 ​ 0.95% First Exchange Bank ​ 2 ​ ​ 34,437 ​ 0.78% Burke & Herbert Bank & Trust Company ​ 1 ​ ​ 34,151 ​ 0.78% JP Morgan Chase Bank, National Association ​ 1 ​ ​ 25,012 ​ 0.57% City National Bank of West Virginia ​ 1 ​ ​ 3,336 ​ 0.07% Source: FDIC Deposit Market Share Report ​ ​ ​ ​ ​ ​ ​ ​ ​ For further information about competition in our market areas, see the Risk Factor entitled “ We operate in a competitive environment, and our inability to effectively compete could adversely and materially impact our financial condition and results of operations ” in Item 1A of Part I of this annual report.
Biggest changeIn those instances in which we are unable to accommodate customers’ needs, we attempt to arrange for those services to be provided by other financial services providers with which we have a relationship. ​ 6 ​ Table of Contents ​ The following tables set forth deposit data for the Maryland and West Virginia Counties in which the Bank maintains offices as of June 30, 2025, the most recent date for which comparative information is available. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Offices ​ Deposits ​ Market ​ ​ ​ ​ (in Market) ​ ​ ​ (in thousands) ​ ​ ​ Share Allegany County, Maryland: ​ ​ ​ ​ ​ ​ ​ First United Bank & Trust ​ 2 ​ $ 275,647 ​ 33.20% Manufacturers and Traders Trust Company ​ 5 ​ ​ 249,590 ​ 30.06% Truist Bank ​ 3 ​ ​ 203,848 ​ 24.55% Dollar Bank, Federal Savings Bank ​ 2 ​ ​ 62,282 ​ 7.50% Somerset Trust Company ​ 2 ​ ​ 38,847 ​ 4.69% Source: FDIC Deposit Market Share Report ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Frederick County, Maryland: ​ ​ ​ ​ ​ ​ ​ PNC Bank, National Association ​ 11 ​ $ 1,701,349 ​ 26.67% Truist Bank ​ 10 ​ ​ 1,032,491 ​ 16.18% Bank Of America, National Association ​ 4 ​ ​ 797,010 ​ 12.48% Manufacturers and Traders Trust Company ​ 6 ​ ​ 495,713 ​ 7.77% Atlantic Union Bank ​ 3 ​ ​ 426,561 ​ 6.69% Woodsboro Bank ​ 5 ​ ​ 424,941 ​ 6.66% Middletown Valley Bank ​ 4 ​ ​ 398,451 ​ 6.25% Capital One, National Association ​ 2 ​ ​ 308,789 ​ 4.84% ACNB Bank ​ 4 ​ ​ 253,267 ​ 3.97% First United Bank & Trust ​ 3 ​ ​ 217,757 ​ 3.41% Wells Fargo Bank, National Association ​ 1 ​ ​ 174,151 ​ 2.73% WesBanco Bank, Inc. ​ 1 ​ ​ 53,454 ​ 0.84% JP Morgan Chase Bank, National Association ​ 1 ​ ​ 37,516 ​ 0.59% Fulton Bank, National Association ​ 1 ​ ​ 36,972 ​ 0.58% Presidential Bank, FSB ​ 1 ​ ​ 17,629 ​ 0.28% Woodforest National Bank ​ 1 ​ ​ 3,596 ​ 0.06% Source: FDIC Deposit Market Share Report ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Garrett County, Maryland: ​ ​ ​ ​ ​ ​ ​ First United Bank & Trust ​ 5 ​ $ 536,545 ​ 64.60% Manufacturers and Traders Trust Company ​ 2 ​ ​ 115,481 ​ 13.90% Clear Mountain Bank ​ 1 ​ ​ 79,825 ​ 9.61% Truist Bank ​ 1 ​ ​ 65,189 ​ 7.85% Somerset Trust Company ​ 1 ​ ​ 26,270 ​ 3.16% Miners & Merchants Bank ​ 1 ​ ​ 7,298 ​ 0.88% Source: FDIC Deposit Market Share Report ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Washington County, Maryland: ​ ​ ​ ​ ​ ​ ​ Fulton Bank, National Association ​ 4 ​ $ 629,938 ​ 19.22% Manufacturers and Traders Trust Company ​ 9 ​ ​ 584,752 ​ 17.85% Truist Bank ​ 5 ​ ​ 547,188 ​ 16.70% Middletown Valley Bank ​ 3 ​ ​ 530,872 ​ 16.20% PNC Bank, National Association ​ 3 ​ ​ 358,910 ​ 10.96% CNB Bank, Inc. ​ 4 ​ ​ 169,572 ​ 5.18% First United Bank & Trust ​ 4 ​ ​ 162,309 ​ 4.95% United Bank ​ 2 ​ ​ 137,218 ​ 4.19% Orrstown Bank ​ 1 ​ ​ 73,219 ​ 2.24% Bank of Charles Town ​ 1 ​ ​ 28,353 ​ 0.87% Farmers and Merchants Trust Company of Chambersburg ​ 1 ​ ​ 25,581 ​ 0.78% Ameriserv Financial Bank ​ 1 ​ ​ 22,170 ​ 0.68% Jefferson Security Bank ​ 1 ​ ​ 5,891 ​ 0.18% Source: FDIC Deposit Market Share Report ​ ​ ​ ​ ​ ​ ​ 7 ​ Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Berkeley County, West Virginia: ​ ​ ​ ​ ​ ​ ​ United Bank ​ 4 ​ $ 591,186 ​ 29.08% Truist Bank ​ ​ ​ 3 ​ ​ ​ ​ 384,505 ​ ​ ​ 18.92% City National Bank of West Virginia ​ 4 ​ ​ 262,191 ​ 12.90% Burke & Herbert Bank & Trust Company ​ 3 ​ ​ 182,491 ​ 8.98% Jefferson Security Bank ​ 2 ​ ​ 167,286 ​ 8.22% First United Bank & Trust ​ 3 ​ ​ 166,206 ​ 8.18% CNB Bank, Inc. ​ 3 ​ ​ 147,482 ​ 7.26% Bank of Charles Town ​ 2 ​ ​ 126,368 ​ 6.22% Woodforest National Bank ​ 1 ​ ​ 4,810 ​ 0.24% Source: FDIC Deposit Market Share Report ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mineral County, West Virginia: ​ ​ ​ ​ ​ ​ ​ First United Bank & Trust ​ 2 ​ $ 140,090 ​ 38.60% Manufacturers and Traders Trust Company ​ 2 ​ ​ 84,345 ​ 23.24% Truist Bank ​ 1 ​ ​ 72,469 ​ 19.97% The Grant County Bank ​ 1 ​ ​ 47,380 ​ 13.06% FNB Bank, Inc. ​ 1 ​ ​ 18,622 ​ 5.13% Source: FDIC Deposit Market Share Report ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Monongalia County, West Virginia: ​ ​ ​ ​ ​ ​ ​ United Bank ​ 6 ​ $ 1,568,631 ​ 30.71% MVB Bank, Inc. ​ 2 ​ ​ 1,449,309 ​ 28.38% The Huntington National Bank ​ 6 ​ ​ 630,752 ​ 12.35% Clear Mountain Bank ​ 3 ​ ​ 386,978 ​ 7.58% Truist Bank ​ 3 ​ ​ 327,436 ​ 6.41% PNC Bank, National Association ​ 2 ​ ​ 233,452 ​ 4.57% WesBanco Bank, Inc. ​ 3 ​ ​ 232,051 ​ 4.54% First United Bank & Trust ​ 3 ​ ​ 125,005 ​ 2.45% Citizens Bank of Morgantown, Inc. ​ 1 ​ ​ 42,295 ​ 0.83% Burke & Herbert Bank & Trust Company ​ 1 ​ ​ 39,211 ​ 0.77% First Exchange Bank ​ 2 ​ ​ 37,326 ​ 0.73% JP Morgan Chase Bank, National Association ​ 1 ​ ​ 31,636 ​ 0.62% City National Bank of West Virginia ​ 1 ​ ​ 3,253 ​ 0.06% Source: FDIC Deposit Market Share Report ​ ​ ​ ​ ​ ​ ​ ​ ​ For further information about competition in our market areas, see the Risk Factor entitled “ We operate in a competitive environment, and our inability to effectively compete could adversely and materially impact our financial condition and results of operations ” in Item 1A of Part I of this annual report.
The USA Patriot Act mandates that financial service companies implement additional policies and procedures 13 ​ Table of Contents ​ and take heightened measures designed to address any or all of the following matters: customer identification programs, money laundering, terrorist financing, identifying and reporting suspicious activities and currency transactions, currency crimes, and cooperation between financial institutions and law enforcement authorities.
The USA Patriot Act mandates that financial service companies implement additional policies and procedures and take heightened measures designed to address any or all of the following matters: customer identification programs, 13 ​ Table of Contents ​ money laundering, terrorist financing, identifying and reporting suspicious activities and currency transactions, currency crimes, and cooperation between financial institutions and law enforcement authorities.
A bank will be (i) “well capitalized” if the institution has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, and a leverage ratio of 5.0% or greater, and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure, (ii) “adequately capitalized” if the institution has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 4.0% or greater, and a leverage ratio of 4.0% or greater and is not “well capitalized”, (iii) “undercapitalized” if the institution has a total risk-based capital ratio that is less than 8.0%, a Tier 1 risk-based capital ratio of less than 4.0% or a leverage ratio of less than 4.0%, (iv) “significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 3.0% or a leverage ratio of less than 3.0%, and (v) “critically 11 ​ Table of Contents ​ undercapitalized” if the institution’s tangible equity is equal to or less than 2.0% of average quarterly tangible assets.
A bank will be (i) “well capitalized” if the institution has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a leverage ratio of 5.0% or greater, a Common Equity Tier 1 (“CET1”) ratio of 6.5% or greater, and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure, (ii) “adequately capitalized” if the institution has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater, a CET1 ratio of 4.5% or greater, and is not “well capitalized”, (iii) “undercapitalized” if the institution has a total risk-based capital ratio that is less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less 11 ​ Table of Contents ​ than 4.0%, or a CET1 ratio of less than 4.5%, (iv) “significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a leverage ratio of less than 3.0%, or a CET1 ratio of less than 3.0%, and (v) “critically undercapitalized” if the institution’s tangible equity is equal to or less than 2.0% of average quarterly tangible assets.
In addition, the rule revised the treatment of certain acquisition, development, or construction exposures. As of December 31, 2024, we were in compliance with the applicable requirements. Additional information about our capital ratios is contained in “Consolidated Balance Sheet Review” section of Item 7 of Part II of this annual report under the heading “Capital Resources”.
In addition, the rule revised the treatment of certain acquisition, development, or construction exposures. As of December 31, 2025, we were in compliance with the applicable requirements. Additional information about our capital ratios is contained in “Consolidated Balance Sheet Review” section of Item 7 of Part II of this annual report under the heading “Capital Resources”.
Lenders must now provide specific written and oral disclosures concerning the protections of the MLA to active-duty members of the military and dependents of active-duty members of the military (“covered borrowers”).
Lenders must provide specific written and oral disclosures concerning the protections of the MLA to active-duty members of the military and dependents of active-duty members of the military (“covered borrowers”).
One test, referred to as the liquidity coverage ratio, is designed to ensure that the banking entity maintains an adequate level of unencumbered high-quality liquid assets equal to the entity’s expected net cash outflow for a 30-day time horizon (or, if greater, 25% of its expected 12 ​ Table of Contents ​ total cash outflow) under an acute liquidity stress scenario.
One test, referred to as the liquidity coverage ratio, is designed to ensure that the banking entity maintains an adequate level of unencumbered high-quality liquid assets equal to the entity’s expected net cash outflow for a 30-day time horizon (or, if greater, 25% of its expected total cash outflow) under an acute liquidity stress scenario.
Banking Products and Services The Bank operates 22 banking offices, one customer service center and 30 Automated Teller Machines (“ATMs”) in Allegany County, Frederick County, Garrett County, and Washington County in Maryland, and in Mineral County, Berkeley County and Monongalia County in West Virginia.
Banking Products and Services The Bank operates 23 banking offices, one customer service center and 30 Automated Teller Machines (“ATMs”) in Allegany County, Frederick County, Garrett County, and Washington County in Maryland, and in Mineral County, Berkeley County and Monongalia County in West Virginia.
As of December 31, 2024, the Bank was “well capitalized” based on the aforementioned ratios. Liquidity Requirements Historically, the regulation and monitoring of bank liquidity has been addressed as a supervisory matter, without required formulaic measures.
As of December 31, 2025, the Bank was “well capitalized” based on the aforementioned ratios. Liquidity Requirements Historically, the regulation and monitoring of bank liquidity has been addressed as a supervisory matter, without required formulaic measures.
In addition, the Bank owns 99.9% of the limited partnership interests in Liberty Mews Limited Partnership, a Maryland limited partnership formed for the purpose of acquiring, developing and operating low-income housing units in Garrett County, Maryland, and a 99.9% non-voting membership interest in MCC FUBT Fund, LLC, an Ohio limited liability company formed for the purpose of acquiring, developing and operating low-income housing units in Allegany County, Maryland.
In addition, the Bank owns 99.9% of the limited partnership interests in Liberty Mews Limited Partnership, a Maryland limited partnership formed for the purpose of acquiring, developing and operating low-income housing units in Garrett County, Maryland, and a 99.9% non-voting membership interest in MCC FUBT Fund, LLC, an Ohio limited liability company formed for the purpose of acquiring, developing and operating low-income housing units in Allegany County, Maryland and Mineral County, West Virginia.
Department of the Treasury (the “Treasury”) and other sovereign debt as a component of assets and increase the use of long-term debt as a funding source. Deposit Insurance The Bank is a member of the FDIC and pays an insurance premium to the FDIC based upon its assessable deposits on a quarterly basis.
Department of the Treasury (the “Treasury”) and other sovereign debt as a component of assets and increase the use of long-term debt as a funding source. 12 ​ Table of Contents ​ Deposit Insurance The Bank is a member of the FDIC and pays an insurance premium to the FDIC based upon its assessable deposits on a quarterly basis.
The Bank has two consumer finance company subsidiaries - OakFirst Loan Center, Inc., a West Virginia corporation, and OakFirst Loan Center, LLC, a Maryland limited liability company (together with OakFirst Loan Center, Inc., the “OakFirst Loan Centers”) - and two subsidiaries that it uses to hold real estate acquired through foreclosure or by deed in lieu of foreclosure - First OREO Trust, a Maryland statutory trust, and FUBT OREO I, LLC, a Maryland limited liability company.
The Bank has two consumer finance company subsidiaries - OakFirst Loan Center, Inc., a West Virginia corporation, and OakFirst Loan Center, LLC, a Maryland limited liability company (together with OakFirst Loan Center, Inc., the “OakFirst Loan Centers”) - and one subsidiary that it uses to hold real estate acquired through foreclosure or by deed in lieu of foreclosure - First OREO Trust, a Maryland statutory trust.
The Bank will be considered to be well managed so long as it achieves a CAMEL composite rating of at least “2” as a result of its most recent examination and at least a “satisfactory” management rating (if such rating is given).
The Bank will be considered to be well managed so 9 ​ Table of Contents ​ long as it achieves a CAMEL composite rating of at least “2” as a result of its most recent examination and at least a “satisfactory” management rating (if such rating is given).
The financial condition and cash flow of commercial borrowers is therefore carefully analyzed during the loan approval process and continues to be monitored throughout the 4 ​ Table of Contents ​ duration of the loan by obtaining business financial statements, personal financial statements and income tax returns.
The financial condition and cash flow of commercial borrowers is therefore carefully analyzed during the loan approval process and continues to be monitored throughout the duration of the loan by obtaining business financial statements, personal financial statements and income tax returns.
The frequency of this ongoing analysis depends upon the size and complexity of the credit and collateral that secures the loan. It is also the Bank’s general policy to obtain personal guarantees from the principals of the commercial loan borrowers.
The 4 ​ Table of Contents ​ frequency of this ongoing analysis depends upon the size and complexity of the credit and collateral that secures the loan. It is also the Bank’s general policy to obtain personal guarantees from the principals of the commercial loan borrowers.
The Federal Deposit Insurance Reform Act of 2005, which created the DIF, gave the FDIC greater latitude in setting the assessment rates for insured depository institutions which could be used to impose minimum assessments.
The Federal Deposit Insurance Reform Act of 2005, which created the Deposit Insurance Fund (“DIF”), gave the FDIC greater latitude in setting the assessment rates for insured depository institutions which could be used to impose minimum assessments.
If the Bank were to fail to meet either of these requirements, then the Corporation would be required to enter into an agreement with the FRB that would address the remediation of the 9 ​ Table of Contents ​ condition that led to the failure.
If the Bank were to fail to meet either of these requirements, then the Corporation would be required to enter into an agreement with the FRB that would address the remediation of the condition that led to the failure.
Trust and brokerage department revenues for these years may be found in the Consolidated Statements of Income under the heading “Other operating income”, which is contained in Item 8 of Part II of this annual report. COMPETITION The banking business, in all of its phases, is highly competitive.
Wealth management income, which includes trust department income and brokerage commissions, for these years may be found in the Consolidated Statements of Income under the heading “Other operating income”, which is contained in Item 8 of Part II of this annual report. COMPETITION The banking business, in all of its phases, is highly competitive.
The Bank is also subject to a variety of other laws and regulations with respect to the operation of its business, including, but not limited to, the TILA/RESPA Integrated Disclosure rule (“TRID”), Truth in Lending Act, the Real Estate Settlement Procedures Act, the Truth in Savings Act, the Equal Credit Opportunity Act, the Electronic Funds Transfer Act, the Fair Housing Act, the Home Mortgage Disclosure Act, the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, Expedited Funds Availability (Regulation CC), Reserve Requirements (Regulation D), Privacy of Consumer Information (Regulation P), Margin Stock Loans (Regulation U), the Right To Financial Privacy Act, the Flood Disaster Protection Act, the Homeowners Protection Act, the Servicemembers Civil Relief Act, the Telephone Consumer Protection Act, the CAN-SPAM Act, the Children’s Online Privacy Protection Act, Bank Secrecy Act/Anti-Money Laundering (“BSA/AML”) and Office of Foreign Assets Control (“OFAC”). 10 ​ Table of Contents ​ Capital Requirements We require capital to fund loans, satisfy our obligations under the Bank’s letters of credit, meet the deposit withdrawal demands of the Bank’s customers, and satisfy our other monetary obligations.
The Bank is also subject to a variety of other laws and regulations with respect to the operation of its business, including, but not limited to, the TILA/RESPA Integrated Disclosure rule (“TRID”), Truth in Lending Act, the Real Estate Settlement Procedures Act, the Truth in Savings Act, the Equal Credit Opportunity Act, the Electronic Funds Transfer Act, the Fair Housing Act, the Home Mortgage Disclosure Act, the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, Expedited Funds Availability (Regulation CC), Reserve Requirements (Regulation D), Privacy of Consumer Information (Regulation P), Margin Stock Loans (Regulation U), the Right To Financial Privacy Act, the Flood 10 ​ Table of Contents ​ Disaster Protection Act, the Homeowners Protection Act, the Servicemembers Civil Relief Act, the Telephone Consumer Protection Act, the CAN-SPAM Act, the Children’s Online Privacy Protection Act, Bank Secrecy Act/Anti-Money Laundering (“BSA/AML”) and Office of Foreign Assets Control (“OFAC”).
At December 31, 2024 and 2023, the total market value of assets under the supervision of the Bank’s wealth department was approximately $1.7 billion and $1.5 billion, respectively.
At December 31, 2025 and 2024, the total market value of assets under the supervision of the Bank’s wealth department was approximately $1.8 billion and $1.7 billion, respectively.
The rule imposes a 36% “Military Annual Percentage Rate” cap that includes costs associated with credit insurance premiums, fees for ancillary products, finance charges associated with the transactions, and application and participation charges.
The DOD’s rules impose a 36% “Military Annual Percentage Rate” cap that includes costs associated with credit insurance premiums, fees for ancillary products, finance charges associated with the transactions, and application and participation charges.
For so long as the Corporation remains a financial holding company, the Bank must also maintain a Satisfactory or better rating under the Community Reinvestment Act (the “CRA”).
For so long as the Corporation remains a financial holding company, the Bank must also maintain a Satisfactory or better rating under the CRA.
The Bank was exempt from this special assessment as its total uninsured deposits were below $5.0 billion. The FDIC is authorized to conduct examinations of and require reporting by FDIC-insured institutions.
The special estimate was based on estimated uninsured deposits at December 31, 2022 (excluding the first $5.0 billion). The Bank was exempt from this special assessment as its total uninsured deposits were below $5.0 billion. The FDIC is authorized to conduct examinations of and require reporting by FDIC-insured institutions.
At December 31, 2024, we had total assets of $2.0 billion, net loans of $1.5 billion and deposits of $1.6 billion. Shareholders’ equity at December 31, 2024 was $179.3 million.
At December 31, 2025, we had total assets of $2.1 billion, net loans of $1.5 billion and deposits of $1.7 billion. Shareholders’ equity at December 31, 2025 was $203.6 million.
General The Corporation is registered with the Federal Reserve as a financial holding company under the BHC Act and, as such, is subject to the supervision, examination and reporting requirements of the BHC Act and the regulations of the Federal Reserve.
General The Corporation is registered with the FRB as a financial holding company under the Bank Holding Company Act of 1956, as amended (the “BHC Act”) and, as such, is subject to the supervision, examination and reporting requirements of the BHC Act and the regulations of the FRB.
In June 2024, due to the increased estimate of losses, the FDIC announced that it projects that the special assessment will be collected for an additional two quarters beyond the initial eight-quarter collection period at a lower rate. The special estimate was based on estimated uninsured deposits at December 31, 2022 (excluding the first $5.0 billion).
In June 2024, due to the increased estimate of losses, the FDIC announced that it projects that the special assessment will be collected for an additional two quarters beyond the initial eight-quarter collection period at a lower rate.
Dodd-Frank Act The Dodd-Frank Act was enacted in July 2010 and significantly restructured the financial regulatory regime in the United States.
Dodd-Frank Act The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) was enacted in July 2010 and significantly restructured the financial regulatory regime in the United States.
EMPLOYEES At December 31, 2024, we employed 326 individuals, of whom 291 were full-time employees.
EMPLOYEES At December 31, 2025, we employed 343 individuals, of whom 315 were full-time employees.
Federal Securities Laws and NASDAQ Rules The Common Stock is registered with the SEC under Section 12(b) of the Exchange and shares of the Common Stock are listed on the NASDAQ Global Select Market.
Lenders may verify covered borrower status using a DOD database or information provided by credit bureaus. Federal Securities Laws and NASDAQ Rules The Common Stock is registered with the SEC under Section 12(b) of the Exchange Act and shares of the Common Stock are listed on the NASDAQ Global Select Market.
As a publicly-traded company whose common stock, par value $0.01 per share (the “Common Stock”), is registered under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and listed on The NASDAQ Global Select Market, the Corporation is also subject to regulation and supervision by the SEC and The NASDAQ Stock Market, LLC (“NASDAQ”). 8 ​ Table of Contents ​ The Bank is a Maryland trust company subject to the banking laws of Maryland and to regulation by the Maryland Department of Labor’s Office of Financial Regulation (the “Maryland OFR”), who is required by statute to make at least one examination in each calendar year (or at 18-month intervals if the Maryland OFR determines that an examination is unnecessary in a particular calendar year).
As a publicly-traded company whose common stock, par value $0.01 per share (the “Common Stock”), is registered under Section 12(b) of the Securities Exchange Act of 1934, 8 ​ Table of Contents ​ as amended (the “Exchange Act”), and listed on The NASDAQ Global Select Market, the Corporation is also subject to regulation and supervision by the SEC and The NASDAQ Stock Market, LLC (“NASDAQ”).
To the extent that deposits are not adequate to fund our capital requirements, we can rely on the funding sources identified below under the heading “Liquidity Management”.
Capital Requirements We require capital to fund loans, satisfy our obligations under the Bank’s letters of credit, meet the deposit withdrawal demands of the Bank’s customers, and satisfy our other monetary obligations. To the extent that deposits are not adequate to fund our capital requirements, we can rely on the funding sources identified below under the heading “Liquidity Management”.
Deposit Activities The Bank offers a full array of deposit products including checking, savings and money market accounts, regular and IRA certificates of deposit, and Health Savings accounts.
A complete discussion of the factors considered in determination of the ACL is included in Item 7 of Part II of this report. Deposit Activities The Bank offers a full array of deposit products including checking, savings and money market accounts, regular and IRA certificates of deposit, and Health Savings accounts.
Residential construction loans are usually granted based upon “as completed” appraisals and are secured by the property under construction. Site inspections are performed to determine pre-specified stages of completion before loan proceeds are disbursed. These loans typically have maturities of six to twelve months and may have a fixed or variable rate.
These lines of credit are at variable interest rates. The Bank also provides residential real estate construction loans to builders and individuals for single family dwellings. Residential construction loans are usually granted based upon “as completed” appraisals and are secured by the property under construction. Site inspections are performed to determine pre-specified stages of completion before loan proceeds are disbursed.
Permanent financing for individuals offered by the Bank includes fixed and variable rate loans with five, seven or ten-year adjustable-rate mortgages. A variety of other consumer loans are also offered to customers, including indirect and direct auto loans, student loans, and other secured and unsecured lines of credit and term loans.
These loans typically have maturities of six to twelve months and may have a fixed or variable rate. Permanent financing for individuals offered by the Bank includes fixed and variable rate loans with five, seven or ten-year adjustable-rate mortgages.
Wealth Management The Bank’s wealth department offers a full range of trust services, including personal trust, investment agency accounts, charitable trusts, retirement accounts including IRA roll-overs, 401(k) accounts and defined benefit plans, estate administration and estate planning.
Information about our income from and assets related to our banking business may be found in the Consolidated Statements of Financial Condition and the Consolidated Statements of Income and the related notes thereto included in Item 8 of Part II of this annual report. 5 ​ Table of Contents ​ Wealth Management The Bank’s wealth department offers a full range of trust services, including personal trust, investment agency accounts, charitable trusts, retirement accounts including IRA roll-overs, 401(k) accounts and defined benefit plans, estate administration and estate planning.
Residential mortgage loans exceeding an internal loan-to-value ratio require private mortgage insurance. Title insurance protecting the Bank’s lien priority, as well as fire and casualty insurance, is also required. During 2024, the Bank’s mortgage production was strong, as loans were booked in-house as well as eligible loans sold to the secondary market.
Residential mortgage loans exceeding an internal loan-to-value ratio require private mortgage insurance. Title insurance protecting the Bank’s lien priority, as well as fire and casualty insurance, is also required. Home equity lines of credit, included within the residential mortgage portfolio, are secured by the borrower’s home and can be drawn on at the discretion of the borrower.
The types of credit covered under the MLA were expanded to include virtually all consumer loan and credit card products (except for loans secured by residential real property and certain purchase-money motor vehicle/personal property secured transactions).
“Higher-priced” mortgages must have escrow accounts for taxes and insurance and similar recurring expenses. 14 ​ Table of Contents ​ Consumer Lending – Military Lending Act The Military Lending Act (the “MLA”) and the rules adopted by the Department of Defense (“DOD”) thereunder cover virtually all consumer loan and credit card products (except for loans secured by residential real property and certain purchase-money motor vehicle/personal property secured transactions).
An allowance for credit losses (“ACL”) is maintained to provide for losses over the life of the portfolio from our lending activities. A complete discussion of the factors considered in determination of the ACL is included in Item 7 of Part II of this report.
A variety of other consumer loans are also offered to customers, including indirect and direct auto loans, student loans, and other secured and unsecured lines of credit and term loans. An allowance for credit losses (“ACL”) is maintained to provide for losses over the life of the portfolio from our lending activities.
In addition, we offer our commercial customers packages which include Treasury Management, Cash Sweep and various checking opportunities. 5 ​ Table of Contents ​ Information about our income from and assets related to our banking business may be found in the Consolidated Statements of Financial Condition and the Consolidated Statements of Income and the related notes thereto included in Item 8 of Part II of this annual report.
In addition, we offer our commercial customers packages which include Treasury Management, Cash Sweep and various checking opportunities.
Removed
Home equity lines of credit, included within the residential mortgage portfolio, are secured by the borrower’s home and can be drawn on at the discretion of the borrower. These lines of credit are at variable interest rates. The Bank also provides residential real estate construction loans to builders and individuals for single family dwellings.
Added
The Bank is a Maryland trust company subject to the banking laws of Maryland and to regulation by the Maryland Department of Labor’s Office of Financial Regulation (the “Maryland OFR”), who is required by statute to make at least one examination in each calendar year (or at 18-month intervals if the Maryland OFR determines that an examination is unnecessary in a particular calendar year).
Removed
As of December 31, 2024, the Bank had $140.0 million available through unsecured lines of credit with correspondent banks, $36.6 million available through a secured line of credit with the Federal Reserve Discount Window, and approximately $213.6 million available through the Federal Home Loan Bank of Atlanta (“FHLB”).
Added
In December 2025, based upon the first six quarterly collections of the special assessment and anticipated collections for the seventh quarterly special assessment, the FDIC issued an interim final rule to amend the collection of the special assessment to reduce the eighth quarter special assessment and removed the special assessment for the two additional quarters was removed.
Removed
Following the 2010 enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), the federal banking regulators implemented the Basel III regulatory framework on bank capital adequacy, stress testing, and market liquidity risk (the “Basel III Capital Rules”).
Removed
The Basel III Capital Rules revised the prompt corrective action requirements by (i) introducing the Common Equity Tier 1 (“CET1”) ratio requirement at each level (other than critically undercapitalized), with the required CET1 ratio being 6.5% for well-capitalized status; (ii) increasing the minimum Tier 1 capital ratio requirement for each category (other than critically undercapitalized), with the minimum Tier 1 capital ratio for well-capitalized status being 8%; and (iii) eliminating the provision that permitted a bank with a composite supervisory rating of 1 but a leverage ratio of at least 3% to be deemed adequately capitalized.
Removed
“Higher-priced” mortgages must have escrow accounts for taxes and insurance and similar recurring expenses. 14 ​ Table of Contents ​ Consumer Lending – Military Lending Act The Military Lending Act (the “MLA”), which was initially implemented in 2007, was amended and its coverage significantly expanded in 2015.
Removed
The Department of Defense (the “DOD”) issued a final rule under the MLA that took effect on October 15, 2015, but financial institutions were not required to take action until October 3, 2016.
Removed
Lenders may verify covered borrower status using a DOD database or information provided by credit bureaus. We believe that we are in compliance with the revised rule.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

38 edited+8 added−0 removed144 unchanged
Biggest changeIn addition, our implementation of certain new technologies, such as those related to artificial intelligence, automation and algorithms, in our business processes may have unintended consequences due to their limitations or our failure to use them effectively. In addition, cloud technologies are also critical to the operation of our systems, and our reliance on cloud technologies is growing.
Biggest changeWe may not be able to effectively implement new technology driven products and services or be successful in marketing these products and services to our customers. 24 ​ Table of Contents ​ In addition, our implementation of certain new technologies, such as those related to artificial intelligence, automation and algorithms, in our business processes may have unintended consequences due to their limitations or our failure to use them effectively.
Acquiring another business would generally involve risks commonly associated with acquisitions, including: ​ ● increased capital needs; ● increased and new regulatory and compliance requirements; ● implementation or remediation of controls, procedures and policies with respect to the acquired business; ● diversion of management time and focus from operation of our then-existing business to acquisition-integration challenges; ● coordination of product, sales, marketing and program and systems management functions; ● transition of the acquired business’s users and customers onto our systems; ● retention of employees from the acquired business; ● integration of employees from the acquired business into our organization; 26 ​ Table of Contents ​ ● integration of the acquired business’s accounting, information management, human resources and other administrative systems and operations with ours; ● potential liability for activities of the acquired business prior to the acquisition, including violations of law, commercial disputes and tax and other known and unknown liabilities; ● potential increased litigation or other claims in connection with the acquired business, including claims brought by regulators, terminated employees, customers, former stockholders, vendors, or other third parties; and ● potential goodwill impairment. ​ Our failure to execute our acquisition strategy could adversely affect our business, results of operations, financial condition and future prospects risks of unknown or contingent liabilities. ​ New lines of business, products or services may subject us to additional risks. ​ From time to time, we implement new lines of business or offer new products and services within existing lines of business.
Acquiring another business would generally involve risks commonly associated with acquisitions, including: ​ ● increased capital needs; ● increased and new regulatory and compliance requirements; ● implementation or remediation of controls, procedures and policies with respect to the acquired business; ● diversion of management time and focus from operation of our then-existing business to acquisition-integration challenges; ● coordination of product, sales, marketing and program and systems management functions; ● transition of the acquired business’s users and customers onto our systems; ● retention of employees from the acquired business; ● integration of employees from the acquired business into our organization; ● integration of the acquired business’s accounting, information management, human resources and other administrative systems and operations with ours; ● potential liability for activities of the acquired business prior to the acquisition, including violations of law, commercial disputes and tax and other known and unknown liabilities; ● potential increased litigation or other claims in connection with the acquired business, including claims brought by regulators, terminated employees, customers, former stockholders, vendors, or other third parties; and ● potential goodwill impairment. ​ Our failure to execute our acquisition strategy could adversely affect our business, results of operations, financial condition and future prospects risks of unknown or contingent liabilities. ​ New lines of business, products or services may subject us to additional risks. ​ From time to time, we implement new lines of business or offer new products and services within existing lines of business.
Included in that total is $2.4 million of state net operating loss carryforwards (“NOLs”) associated with separate company tax filings of the Corporation, which we do not expect to use and, thus, we have established a $2.6 million valuation allowance.
Included in that total is $2.6 million of state net operating loss carryforwards (“NOLs”) associated with separate company tax filings of the Corporation, which we do not expect to use and, thus, we have established a $2.6 million valuation allowance.
At December 31, 2024, our commercial real estate concentrations were below the heightened risk management thresholds set forth in this guidance. ​ The Bank may experience loan losses in excess of its allowance for credit losses, which would reduce our earnings. ​ The risk of credit losses on loans varies with, among other things, general economic conditions, the type of loans being made, the creditworthiness of the borrowers over the term of the loans and, in the case of collateralized loans, the value and marketability of the collateral for the loans.
At December 31, 2025, our commercial real estate concentrations were below the heightened risk management thresholds set forth in this guidance. ​ The Bank may experience loan losses in excess of its allowance for credit losses, which would reduce our earnings. ​ The risk of credit losses on loans varies with, among other things, general economic conditions, the type of loans being made, the creditworthiness of the borrowers over the term of the loans and, in the case of collateralized loans, the value and marketability of the collateral for the loans.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. ​ In addition to the risk that occurrence of such events could adversely impact our ability to engage in routine funding transactions, they could also lead to losses or defaults by us or by other institutions, either of which could have a material adverse effect on our business, results of operations and financial condition. ​ Increases in FDIC insurance premiums may have a material adverse effect on our results of operations. ​ In general, we are unable to control the amount of premiums that are required to be paid for FDIC insurance.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. ​ 21 ​ Table of Contents ​ In addition to the risk that occurrence of such events could adversely impact our ability to engage in routine funding transactions, they could also lead to losses or defaults by us or by other institutions, either of which could have a material adverse effect on our business, results of operations and financial condition. ​ Increases in FDIC insurance premiums may have a material adverse effect on our results of operations. ​ In general, we are unable to control the amount of premiums that are required to be paid for FDIC insurance.
As has been the case in other major system events in the U.S., our systems and infrastructure may also be attacked, compromised, or damaged as a result of, or as the intended target of, any disruption, breach, or failure in the systems or infrastructure of any third party with whom we do business. ​ 25 ​ Table of Contents ​ We may be subject to claims and the costs of defensive actions, and such claims and costs could materially and adversely impact our financial condition and results of operations. ​ Our customers may sue us for losses due to alleged breaches of fiduciary duties, errors and omissions of employees, officers and agents, incomplete documentation, our failure to comply with applicable laws and regulations, or many other reasons.
As has been the case in other major system events in the U.S., our systems and infrastructure may also be attacked, compromised, or damaged as a result of, or as the intended target of, any disruption, breach, or failure in the systems or infrastructure of any third party with whom we do business. ​ We may be subject to claims and the costs of defensive actions, and such claims and costs could materially and adversely impact our financial condition and results of operations. ​ Our customers may sue us for losses due to alleged breaches of fiduciary duties, errors and omissions of employees, officers and agents, incomplete documentation, our failure to comply with applicable laws and regulations, or many other reasons.
While we strive to ensure that all of our marketing communications comply with the requirements set forth in the CAN-SPAM Act, any violations could result in the FTC seeking civil penalties against us. ​ Moreover, we are considered a “user” of consumer reports provided by consumer reporting agencies under the FCRA, as amended by the Fair and Accurate Credit Transactions Act.
While we strive to ensure that all of our marketing communications comply with the requirements set forth in the CAN-SPAM Act, any violations could result in the FTC seeking civil penalties against us. ​ Moreover, we are considered a “user” of consumer reports provided by consumer reporting agencies under the Fair Credit Reporting Act (“FCRA”), as amended by the Fair and Accurate Credit Transactions Act.
Reliance on inaccurate or misleading financial statements, credit reports or other financial information could have a material adverse impact on our business, financial condition and results of operations. ​ Our accounting estimates and risk management processes rely on analytical and forecasting models, the inadequacy of which could have a material adverse effect on our financial condition and/or results of operations. ​ The processes we use to estimate our ACL and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on our financial condition and results of operations, depends upon the use of analytical and forecasting models.
Reliance on inaccurate or misleading financial statements, credit 19 ​ Table of Contents ​ reports or other financial information could have a material adverse impact on our business, financial condition and results of operations. ​ Our accounting estimates and risk management processes rely on analytical and forecasting models, the inadequacy of which could have a material adverse effect on our financial condition and/or results of operations. ​ The processes we use to estimate our ACL and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on our financial condition and results of operations, depends upon the use of analytical and forecasting models.
Due to the intense competition for financial professionals, these key personnel would be difficult to replace, and an unexpected loss of their services could result in a disruption to the continuity of operations and a possible reduction in earnings. ​ We are a community banking organization and our ability to maintain our reputation is critical to the success of our business. ​ We are a community banking organization, and our reputation is one of the most valuable components of our business.
Due to the intense competition for financial professionals, these key personnel would be difficult to 26 ​ Table of Contents ​ replace, and an unexpected loss of their services could result in a disruption to the continuity of operations and a possible reduction in earnings. ​ We are a community banking organization and our ability to maintain our reputation is critical to the success of our business. ​ We are a community banking organization, and our reputation is one of the most valuable components of our business.
Factors 27 ​ Table of Contents ​ such as our financial results, the introduction of new products and services by us or our competitors, changes in the financial estimates by securities analysts, market conditions within the banking industry, the general state of the securities market, general economic condition, and investor speculation as to our future plans and strategies could have a significant impact on the market price and trading volume of the shares of Common Stock.
Factors such as our financial results, the introduction of new products and services by us or our competitors, changes in the financial estimates by securities analysts, market conditions within the banking industry, the general state of the securities market, general economic condition, and investor speculation as to our future plans and strategies could have a significant impact on the market price and trading volume of the shares of Common Stock.
We are unable to predict changes in market interest rates, which are affected by many factors beyond our control, including inflation, deflation, recession, unemployment, money supply, domestic and international events and changes in the United States and other financial markets. ​ We also attempt to manage risk from changes in market interest rates, in part, by controlling the mix of interest rate sensitive assets and interest rate sensitive liabilities.
We are unable to predict changes in market interest rates, which are affected by many factors beyond our control, including inflation, deflation, recession, unemployment, money supply, domestic and international events and changes in the United States and other financial markets. ​ 18 ​ Table of Contents ​ We also attempt to manage risk from changes in market interest rates, in part, by controlling the mix of interest rate sensitive assets and interest rate sensitive liabilities.
Banking regulations, designed primarily for the safety of depositors, may limit a financial institution’s growth and the return to its investors by restricting such activities as the payment of dividends, mergers with or acquisitions by other institutions, investments, loans and interest rates, interest rates paid on deposits, expansion of branch offices, and the offering of securities or trust services.
Banking regulations, designed primarily for the safety of depositors, may limit a financial institution’s growth and the return to its investors by restricting such activities as the payment of dividends, 22 ​ Table of Contents ​ mergers with or acquisitions by other institutions, investments, loans and interest rates, interest rates paid on deposits, expansion of branch offices, and the offering of securities or trust services.
If an ownership change were to occur, the limitations imposed by Section 382 of the Code could result in a portion of our net operating loss carryforwards expiring 20 ​ Table of Contents ​ unused, thereby impairing their value. Section 382’s provisions are complex, and we cannot predict any circumstances surrounding the future ownership of the Common Stock.
If an ownership change were to occur, the limitations imposed by Section 382 of the Code could result in a portion of our net operating loss carryforwards expiring unused, thereby impairing their value. Section 382’s provisions are complex, and we cannot predict any circumstances surrounding the future ownership of the Common Stock.
In addition, banks with a larger capitalization and financial intermediaries not subject to bank regulatory restrictions have larger lending limits and are thereby able to serve the needs of larger customers. 21 ​ Table of Contents ​ ​ In addition, changes to the banking laws over the last several years have facilitated interstate branching, merger and expanded activities by banks and holding companies.
In addition, banks with a larger capitalization and financial intermediaries not subject to bank regulatory restrictions have larger lending limits and are thereby able to serve the needs of larger customers. ​ In addition, changes to the banking laws over the last several years have facilitated interstate branching, merger and expanded activities by banks and holding companies.
These attacks may result in unauthorized individuals obtaining access to our confidential information or that of our clients or teammates, or otherwise accessing, compromising, damaging, or disrupting our systems or infrastructure. ​ We are continuously developing and enhancing our controls, processes, and practices designed to protect our systems, computers, software, data, and networks from attack, damage, or unauthorized access.
These attacks may result in unauthorized individuals obtaining access to our confidential information or that of our clients or teammates, or otherwise accessing, compromising, damaging, or disrupting our systems or infrastructure. ​ 25 ​ Table of Contents ​ We are continuously developing and enhancing our controls, processes, and practices designed to protect our systems, computers, software, data, and networks from attack, damage, or unauthorized access.
If we were to rely on sales proceeds from 16 ​ Table of Contents ​ the sale of investment securities within our portfolio in order to satisfy our obligations, we may be adversely impacted by our ability to transact and settle such sales. Sales of investment securities in an unrealized loss position would negatively affect our earnings and regulatory capital.
If we were to rely on sales proceeds from the sale of investment securities within our portfolio in order to satisfy our obligations, we may be adversely impacted by our ability to transact and settle such sales. Sales of investment securities in an unrealized loss position would negatively affect our earnings and regulatory capital.
These control systems are intended to provide reasonable assurance that material information relating to the Corporation is made known to our management and reported as required 23 ​ Table of Contents ​ by the Exchange Act, to provide reasonable assurance regarding the reliability and preparation of our financial statements, and to provide reasonable assurance that fraud and other unauthorized uses of our assets are detected and prevented.
These control systems are intended to provide reasonable assurance that material information relating to the Corporation is made known to our management and reported as required by the Exchange Act, to provide reasonable assurance regarding the reliability and preparation of our financial statements, and to provide reasonable assurance that fraud and other unauthorized uses of our assets are detected and prevented.
In addition, in order to monetize our held-to-maturity (“HTM”) securities, we expect to rely on pledging those securities for secured funding, and our liquidity may be impaired if we are unable to timely pledge those or any other securities due to lack of available funding, operational impediments or otherwise.
In addition, in order to monetize our held-to-maturity (“HTM”) securities, we 16 ​ Table of Contents ​ expect to rely on pledging those securities for secured funding, and our liquidity may be impaired if we are unable to timely pledge those or any other securities due to lack of available funding, operational impediments or otherwise.
This could have a material adverse effect on the Corporation’s provision for credit losses and the Corporation’s operating results and financial condition. ​ The Corporation is subject to lending risk, and the impacts of interest rate changes could adversely impact the Corporation. ​ There are inherent risks associated with the Corporation’s lending activities.
This could have a material adverse effect on the Corporation’s provision for credit losses and the Corporation’s operating results and financial condition. ​ 17 ​ Table of Contents ​ The Corporation is subject to lending risk, and the impacts of interest rate changes could adversely impact the Corporation. ​ There are inherent risks associated with the Corporation’s lending activities.
We measure expected credit losses on our investment portfolio through our CECL estimate. Increases to the provision for credit losses would have a negative impact on our results of operations and regulatory capital ratios. Additionally, an insufficient CECL provision may result in additional losses that would have an adverse impact on our results of operations.
We measure expected credit losses on our investment portfolio through our current expected credit loss (“CECL”) estimate. Increases to the provision for credit losses would have a negative impact on our results of operations and regulatory capital ratios. Additionally, an insufficient CECL provision may result in additional losses that would have an adverse impact on our results of operations.
If management’s assumptions and judgments 18 ​ Table of Contents ​ prove to be incorrect and the ACL is inadequate to absorb future losses, or if the bank regulatory authorities require us to increase the ACL as a part of its examination process, our earnings and capital could be significantly and adversely affected.
If management’s assumptions and judgments prove to be incorrect and the ACL is inadequate to absorb future losses, or if the bank regulatory authorities require us to increase the ACL as a part of its examination process, our earnings and capital could be significantly and adversely affected.
The GLBA includes both a “Privacy Rule”, which imposes obligations on financial institutions relating to the use or disclosure of non-public personal information, and a “Safeguards Rule”, which imposes obligations on financial institutions and, 22 ​ Table of Contents ​ indirectly, their service providers to implement and maintain physical, administrative and technological measures to protect the security of non-public personal financial information.
The GLBA includes both a “Privacy Rule”, which imposes obligations on financial institutions relating to the use or disclosure of non-public personal information, and a “Safeguards Rule”, which imposes obligations on financial institutions and, indirectly, their service providers to implement and maintain physical, administrative and technological measures to protect the security of non-public personal financial information.
Any of these factors could materially and adversely 15 ​ Table of Contents ​ affect our business, financial condition, operating results and prospects and could negatively impact the market price of the Corporation’s securities. If any of these risks materialize, the holders of the Corporation’s securities could lose all or part of their investments in the Corporation.
Any of these factors could materially and adversely affect our business, financial condition, operating results and prospects and could negatively impact the market price of the Corporation’s securities. If any of these risks materialize, the holders of the Corporation’s securities could lose all or part of their investments in the Corporation.
Such provisions will also render the removal of the Board of Directors and of management more difficult and, therefore, may serve to perpetuate current management. These provisions could potentially adversely affect the market prices of the Corporation’s securities. ​ ​ ITEM 1B. UNRESOLVED STAFF COMMENTS None. ​ 29 ​ Table of Contents ​
Such provisions will also render the removal of the Board of Directors and of management more difficult and, therefore, may serve to perpetuate current management. These provisions could potentially adversely affect the market prices of the Corporation’s securities. ​ ​ ITEM 1B. UNRESOLVED STAFF COMMENTS None. ​
There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business and/or new products and services we invest significant time and resources.
There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business and/or new products and services we 27 ​ Table of Contents ​ invest significant time and resources.
The Board could use this authority, along with its authority to authorize the issuance of securities of any class or series, to issue shares having terms favorable to management or to a person or persons affiliated with or otherwise friendly to management.
The Board could use this authority, along with its authority to authorize the issuance of securities of any class or series, to issue shares having terms favorable to management or to a person or persons affiliated with or otherwise 29 ​ Table of Contents ​ friendly to management.
In particular, the Telephone Consumer Protection Act imposes significant restrictions on the ability to make telephone calls or send text messages to mobile telephone numbers without the prior consent of the person being contacted.
In particular, the Telephone Consumer Protection Act imposes significant 23 ​ Table of Contents ​ restrictions on the ability to make telephone calls or send text messages to mobile telephone numbers without the prior consent of the person being contacted.
Also, the passage of time will affect the market values of our investment securities, in that the closer they are to maturing, the closer the market price should be to par value.
Also, the passage of time will affect the market values of our investment securities, in that the closer they are 20 ​ Table of Contents ​ to maturing, the closer the market price should be to par value.
In addition, to access our 24 ​ Table of Contents ​ products and services, clients may use devices and/or software that are beyond our control environment, which may provide additional avenues for attackers to gain access to confidential information.
In addition, to access our products and services, clients may use devices and/or software that are beyond our control environment, which may provide additional avenues for attackers to gain access to confidential information.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our financial condition and results of operations. ​ 19 ​ Table of Contents ​ Our investment securities are subject to market risk and credit risk that may have an adverse impact on our financial condition and results of operation. ​ At December 31, 2024, investment securities in our investment portfolio having a cost basis of $116.1 million and a market value of $94.5 million were classified as available-for-sale pursuant to FASB Accounting Standards Codification (“ASC”) Topic 320, Investments – Debt and Equity Securities , relating to accounting for investments.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our financial condition and results of operations. ​ Our investment securities are subject to market risk and credit risk that may have an adverse impact on our financial condition and results of operation. ​ At December 31, 2025, investment securities in our investment portfolio having a cost basis of $123.9 million and a market value of $107.1 million were classified as available-for-sale pursuant to FASB Accounting Standards Codification (“ASC”) Topic 320, Investments – Debt and Equity Securities , relating to accounting for investments.
Net interest income is the difference between interest income earned on loans, investments and other interest-earning assets and the interest expense incurred on deposits 17 ​ Table of Contents ​ and borrowed funds.
Net interest income is the difference between interest income earned on loans, investments and other interest-earning assets and the interest expense incurred on deposits and borrowed funds.
At December 31, 2024, we had recorded goodwill and other intangible assets of $11.8 million, representing approximately 6.6% of shareholders’ equity. ​ At December 31, 2024, our net deferred tax assets were valued at $10.0 million.
At December 31, 2025, we had recorded goodwill and other intangible assets of $11.4 million, representing approximately 5.6% of shareholders’ equity. ​ At December 31, 2025, our net deferred tax assets were valued at $8.7 million.
In addition to these specific restrictions, bank regulatory agencies have the ability to prohibit proposed dividends by a financial institution which would otherwise 28 ​ Table of Contents ​ be permitted under applicable regulations if the regulatory body determines that such distribution would constitute an unsafe or unsound practice.
In addition to these specific restrictions, bank regulatory agencies have the ability to prohibit proposed dividends by a financial institution which would otherwise be permitted under applicable regulations if the regulatory body determines that such distribution would constitute an unsafe or unsound practice. Banks that are considered “troubled institution” are prohibited by federal law from paying dividends altogether.
Banks that are considered “troubled institution” are prohibited by federal law from paying dividends altogether. Notwithstanding the foregoing, shareholders must understand that the declaration and payment of dividends and the amounts thereof are at the discretion of the Corporation’s Board of Directors.
Notwithstanding the foregoing, shareholders must understand that the declaration and payment of dividends and the amounts thereof are at the discretion of the Corporation’s Board of Directors.
Additional risks and uncertainties that we do not yet know of, or that we currently think are immaterial, may also impair our business operations. Investors and shareholders should also consider the other information contained in this annual report, including our financial statements and the related notes, before making investment decisions with respect to the Corporation’s securities.
Investors and shareholders should also consider the other information contained in this annual report, including our financial statements and the related notes, before making investment decisions with respect to the Corporation’s securities.
In addition, the Corporation may grant equity awards under its equity compensation plans from time to time in effect, including fully-vested shares of Common Stock. It is possible that if a significant percentage of such available shares were attempted to be sold within a short period of time, the market for the shares would be adversely affected.
It is possible that if a significant percentage of such available shares were attempted to be sold within a short period of time, the market for the shares would be adversely affected.
Increases in interest rates and/or weakening economic conditions could adversely impact the ability of borrowers to repay outstanding loans or the value of the collateral securing these loans. ​ A substantial portion of the Corporation’s loan portfolio is comprised of residential and commercial real estate loans.
Increases in interest rates and/or weakening economic conditions could adversely impact the ability of borrowers to repay outstanding loans or the value of the collateral securing these loans. ​ Our success depends, to a certain extent, upon local, national and global economic and political conditions, as well as governmental monetary policies.
Many of our competitors have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology driven products and services or be successful in marketing these products and services to our customers.
Many of our competitors have substantially greater resources to invest in technological improvements.
Added
Additional risks and uncertainties that we do not yet know of, or that we 15 ​ Table of Contents ​ currently think are immaterial, may also impair our business operations.
Added
Our financial performance generally, and in particular the ability of borrowers to pay interest on and repay principal of outstanding loans and the value of collateral securing the loans, as well as demand for loans and other products and services we offer, is highly dependent upon the business environment in the markets where we operate and the United States as a whole.
Added
A favorable business environment is generally characterized by, among other factors, economic growth, efficient capital markets, low inflation, low unemployment, high business and investor confidence, and strong business earnings.
Added
Unfavorable or uncertain economic and market conditions can be caused by a decline in economic growth both in the United States and internationally, declines in business activity or investor or business confidence, limitations on the availability of or increases to the cost of credit and capital, increases in inflation or interest rates, high unemployment, natural disasters, trade policies and tariffs, or a combination of these factors.
Added
Current economic conditions are being heavily impacted by recent inflationary conditions and higher interest rates, the effects of which may impact our profitability by negatively impacting our fixed costs and expenses. Economic and inflationary pressure on consumers and uncertainty regarding economic improvement could result in changes in consumer and business spending, borrowing, and savings habits.
Added
Such conditions could have a material adverse effect on the credit quality of our loans and our business, financial condition, and results of operations. ​ A substantial portion of the Corporation’s loan portfolio is comprised of residential and commercial real estate loans.
Added
In addition, cloud technologies are also critical to the operation of our systems, and our reliance on cloud technologies is growing.
Added
In addition, the Corporation may grant equity awards under its equity compensation plans from time to time in effect, including fully- 28 ​ Table of Contents ​ vested shares of Common Stock.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

12 edited+2 added−0 removed11 unchanged
Biggest changeWe engage in regular assessments of our infrastructure, software systems, and network architecture, using internal cybersecurity experts, penetration testers, and third-party specialists. We also maintain a third-party risk management program designed to identify, assess, and manage risks, including cybersecurity risks, associated with external service providers and our supply chain.
Biggest changeWe have established processes and systems designed to mitigate cyber risk, including regular and on-going education and training for employees, preparedness simulations and tabletop exercises, and recovery and resilience tests. We engage in regular assessments of our infrastructure, software systems, and network architecture, using internal cybersecurity experts, external penetration testers, and third-party specialists.
Our Cyber Security Initiative (“CSI”) committee led by our Information Security Officer is primarily responsible for this cybersecurity component and is a key member of the risk management organization. The Information Security Officer reports directly to the Managing Director of Operations and, as discussed below, regularly to the Risk and Compliance Committee of our board of directors.
Our Cyber Security Initiative (“CSI”) committee led by our Information Security Officer is primarily responsible for this cybersecurity component and is a key member of the risk management committee. The Information Security Officer reports directly to the Managing Director of Operations and, as discussed below, regularly to the Risk and Compliance Committee of our board of directors.
For further discussion of risks from cybersecurity threats, see the section captioned “A disruption, breach, or failure in the operational systems or infrastructure of our third-party vendors or other service providers, including as a result of cyber-attacks, could adversely affect our business” in Item 1A.
For further discussion of risks from cybersecurity threats, see the section captioned “A disruption, breach, or failure in the operational systems or infrastructure of our third-party vendors or other service providers, including as a result of cyber-attacks, could adversely affect our business” in Item 1A. Risk Factors.
ITEM 1C. Cybersecurity Risk Management Strategy Our risk management program is designed to identify, assess, and mitigate risks across various aspects of the Corporation, including financial, operational, reputational, and legal. Cybersecurity is a critical component of this program, given the increasing reliance on technology and potential of cyber threats.
ITEM 1C. C YBERSECURITY Risk Management Strategy Our risk management program is designed to identify, assess, and mitigate risks across various aspects of the Corporation, including financial, operational, reputational, and legal. Cybersecurity is a critical component of this program, given the increasing reliance on technology and potential of cyber threats.
In addition, we leverage certain industry and government associations, third-party benchmarking, audits, and threat intelligence feeds to facilitate and promote program effectiveness. Our Information Security Officer, along with key members of our risk team, regularly collaborate with peer banks, industry groups, and policymakers to discuss cybersecurity trends and issues and identify best practices.
In addition, we leverage certain industry and government associations, third-party benchmarking, audits, and threat intelligence feeds to facilitate and promote program effectiveness. Our Information Security Officer, along with key members of our risk management committee, regularly collaborate with peer banks, industry groups, and policymakers to discuss cybersecurity trends and issues and identify best practices.
We leverage internal and external auditors and independent external partners to periodically review our processes, systems, and controls, including with respect to our information security program, to assess their design and operating effectiveness and make recommendations to strengthen our risk management program.
We leverage internal and external auditors and independent external partners to periodically review our processes, systems, and controls, including our information security program, to assess their design and operating effectiveness and make recommendations to strengthen our risk management program.
Risk Factors. ​ 30 ​ Table of Contents ​ Governance Our Information Security Officer is accountable for managing our enterprise information security processes and procedures and delivering our information security program. The responsibilities of this department include cybersecurity risk assessment, incident response, vulnerability assessment, threat intelligence, identity access governance, third-party risk management, and business resilience.
Governance Our Information Security Officer and Director of Information Technology is accountable for managing our enterprise information security processes and procedures and delivering our information security program. The responsibilities of this department include cybersecurity risk assessment, incident response and business resilience, vulnerability assessment, threat intelligence, identity access governance, enterprise risk management, and third-party risk management.
The information security program is periodically reviewed by such personnel with the goal of addressing changing threats and conditions. We employe an in-depth, layered, defensive strategy that embraces a “trust by design” philosophy when designing new products, services, and technology. We leverage people, processes, and technology as part of our efforts to manage and maintain cybersecurity controls.
The 30 ​ Table of Contents ​ information security program is periodically reviewed by such personnel with the goal of addressing changing threats and conditions. We employ an in-depth, layered, defensive strategy that embraces a “never trust, always verify” philosophy when designing new products, services, and technology.
We also actively monitor our email gateways for malicious phishing email campaigns and monitor remote connections as a significant portion of our workforce has the option to work remotely. We have optimized our vulnerability management program that scans devices every four hours, and we have strict key performance metrics to ensure vulnerabilities are remediated quickly.
We have optimized our vulnerability management program that scans devices every four hours, and we have strict key performance metrics to ensure vulnerabilities are remediated quickly.
These committees are chaired by managers and experts within the Corporation and include the Chief Operating Officer, as well as his direct reports and other key departmental managers from throughout the entire company. These committees generally meet regularly to provide oversight of the risk management strategy, standards, policies, practices, controls, and mitigation to facilitate timely information and monitoring efforts.
These committees meet regularly to provide oversight of the risk management strategy, standards, policies, practices, controls, and mitigation to facilitate timely information and monitoring efforts.
We also employe a variety of preventative and detective tools designed to monitor, block, and provide alerts regarding suspicious activity, as well as to report on suspected advanced persistent threats. We have established processes and systems designed to mitigate cyber risk, including regular and on-going education and training for employees, preparedness simulations and tabletop exercises, and recovery and resilience tests.
We leverage people, processes, and technology as part of our efforts to manage and maintain cybersecurity controls. We also employe a variety of preventative and detective tools designed to monitor, block, and provide alerts regarding suspicious activity, as well as to report on suspected advanced persistent threats.
These committees provide oversight and governance of the technology program and the information security program. There are also three technology steering committees that plan and guide technology projects in alignment with the Corporation’s strategic plan.
These committees provide oversight and governance of the technology program and the information security program.
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We also maintain a third-party risk management program designed to identify, assess, and manage risks, including cybersecurity risks, associated with external service providers and our supply chain. We also actively monitor our email gateways for malicious phishing email campaigns and monitor remote connections as a significant portion of our workforce has the option to work remotely.
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There are also three technology steering committees that plan and guide technology projects in alignment with the Corporation’s strategic plan. 31 ​ Table of Contents ​ These committees are chaired by managers and experts within the Corporation and include the Chief Operating Officer, as well as his direct reports and other key departmental managers from throughout the entire company.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeTotal rent expense on the leased offices and properties was $0.4 million in 2024. ​ ITEM 3. LEGAL PROCEEDINGS None ​ ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 31 ​ Table of Contents ​ PART II
Biggest changeTotal rent expense on the leased offices and properties was $0.4 million in 2025. ​ ITEM 3. LEGAL PROCEEDINGS None ​ ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ PART II
ITEM 2. PROPERTIES The headquarters of the Corporation and the Bank occupies approximately 29,000 square feet at 19 South Second Street, Oakland, Maryland, and a 30,000 square feet operations center located at 12892 Garrett Highway, Oakland Maryland. These premises are owned by the Corporation. The Bank owns 19 of its banking offices and leases three.
ITEM 2. PROPERTIES The headquarters of the Corporation and the Bank occupies approximately 29,000 square feet at 19 South Second Street, Oakland, Maryland, and a 30,000 square feet operations center located at 12892 Garrett Highway, Oakland Maryland. These premises are owned by the Corporation. The Bank owns 20 of its banking offices and leases three.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAccordingly, there can be no assurance that dividends will be declared on the shares of common stock in any future fiscal quarter. The Corporation’s Board of Directors periodically evaluates the Corporation’s dividend policy, both internally and in consultation with the FRB.
Biggest changeAccordingly, there can be no assurance that dividends will be declared on the shares of common stock in any future fiscal quarter. 32 ​ Table of Contents ​ The Corporation’s Board of Directors periodically evaluates the Corporation’s dividend policy, both internally and in consultation with the FRB.
Issuer Repurchases Neither First United Corporation nor any of its affiliated purchasers (as defined in Rule 10b-18 promulgated under the Exchange Act) purchased any shares of Common Stock during the three-month period ended December 31, 2024. ​ ​ ​ ​ ITEM 6. [Reserved] ​
Issuer Repurchases Neither First United Corporation nor any of its affiliated purchasers (as defined in Rule 10b-18 promulgated under the Exchange Act) purchased any shares of Common Stock during the three-month period ended December 31, 2025. ​ ​ ​ ​ ITEM 6. [Reserved] ​
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Shares of the Corporation’s common stock are listed on the NASDAQ Global Select Market under the symbol “FUNC”. As of February 28, 2025, issued and outstanding shares of Common Stock were held by 1,272 shareholders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Shares of the Corporation’s common stock are listed on the NASDAQ Global Select Market under the symbol “FUNC”. As of February 27, 2026, issued and outstanding shares of Common Stock were held by 1,247 shareholders of record.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAllocation of the Allowance for Credit Losses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, (in thousands) 2024 % of Total ACL 2023 % of Total ACL Commercial real estate ​ $ 5,272 ​ 29% ​ $ 5,120 ​ 29% Acquisition and development ​ ​ 909 ​ 5% ​ ​ 940 ​ 5% Commercial and industrial ​ ​ 4,205 ​ 23% ​ ​ 3,717 ​ 21% Residential mortgage ​ ​ 7,010 ​ 39% ​ ​ 6,774 ​ 39% Consumer ​ ​ 774 ​ 4% ​ ​ 929 ​ 6% Total ​ $ 18,170 ​ 100% ​ $ 17,480 ​ 100% ​ Investment Securities The following table sets forth the composition of our investment securities portfolio by major category as of the indicated dates: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ 2024 ​ 2023 (in thousands) Amortized Cost Fair Value (FV) ​ FV As % of Total Amortized Cost Fair Value (FV) FV As % of Total Securities Available-for-Sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ $ 7,000 ​ $ 6,115 ​ 6% ​ $ 7,000 ​ $ 6,034 ​ 6% Residential mortgage-backed agencies ​ ​ 24,621 ​ ​ 20,196 ​ 21% ​ ​ 24,781 ​ ​ 20,563 ​ 21% Commercial mortgage-backed agencies ​ ​ 37,205 ​ ​ 28,634 ​ 30% ​ ​ 36,258 ​ ​ 28,417 ​ 29% Collateralized mortgage obligations ​ ​ 21,069 ​ ​ 17,726 ​ 19% ​ ​ 19,725 ​ ​ 16,356 ​ 17% Obligations of states and political subdivisions ​ ​ 6,533 ​ ​ 6,209 ​ 7% ​ ​ 10,486 ​ ​ 10,312 ​ 11% Corporate bonds ​ ​ 1,000 ​ ​ 896 ​ 1% ​ ​ 1,000 ​ ​ 778 ​ 1% Collateralized debt obligations ​ ​ 18,686 ​ ​ 14,718 ​ 16% ​ ​ 18,671 ​ ​ 14,709 ​ 15% Total available for sale ​ $ 116,114 ​ $ 94,494 ​ 100% ​ $ 117,921 ​ $ 97,169 ​ 100% Securities Held to Maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. treasuries ​ $ — ​ $ — ​ 0% ​ $ 37,462 ​ $ 37,219 ​ 20% U.S. government agencies ​ ​ 68,301 ​ ​ 57,109 ​ 39% ​ ​ 68,014 ​ ​ 57,029 ​ 31% Residential mortgage-backed agencies ​ ​ 32,171 ​ ​ 28,611 ​ 20% ​ ​ 29,588 ​ ​ 26,717 ​ 14% Commercial mortgage-backed agencies ​ ​ 21,134 ​ ​ 15,340 ​ 11% ​ ​ 21,413 ​ ​ 16,052 ​ 9% Collateralized mortgage obligations ​ ​ 49,439 ​ ​ 39,715 ​ 27% ​ ​ 53,261 ​ ​ 43,288 ​ 24% Obligations of states and political subdivisions ​ ​ 4,511 ​ ​ 3,985 ​ 3% ​ ​ 4,604 ​ ​ 4,110 ​ 2% Total held to maturity ​ $ 175,556 ​ $ 144,760 ​ 100% ​ $ 214,342 ​ $ 184,415 ​ 100% 49 ​ Table of Contents ​ ​ The total fair value of AFS securities was $94.5 million and the book value of HTM securities totaled $175.6 million at December 31, 2024, representing a decrease of $2.7 million and $38.8 million, respectively, since December 31, 2023.
Biggest changeAllocation of the Allowance for Credit Losses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, (in thousands) ​ ​ ​ Amount of Allowance Allocated ​ ​ ​ ​ Total Loans ​ ​ ​ Percent of Loans in Each Category to Total Loans ​ ​ ​ Ratio of Allowance Allocated to Loans in Each Category December 31, 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate ​ $ 4,644 ​ $ 570,808 ​ 37.5% ​ 0.81% Acquisition and development ​ ​ 1,278 ​ ​ 90,272 ​ 5.9% ​ 1.42% Commercial and industrial ​ ​ 4,473 ​ ​ 277,034 ​ 18.2% ​ 1.61% Residential mortgage ​ ​ 8,272 ​ ​ 536,912 ​ 35.3% ​ 1.54% Consumer ​ ​ 803 ​ ​ 46,678 ​ 3.1% ​ 1.72% Total ​ $ 19,470 ​ $ 1,521,704 ​ 100.0% ​ 1.28% December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate ​ $ 5272 ​ $ 526,364 ​ 35.5% ​ 1.00% Acquisition and development ​ ​ 909 ​ ​ 95,314 ​ 6.5% ​ 0.95% Commercial and industrial ​ ​ 4205 ​ ​ 287,534 ​ 19.4% ​ 1.46% Residential mortgage ​ ​ 7010 ​ ​ 518,815 ​ 35.0% ​ 1.35% Consumer ​ ​ 774 ​ ​ 52,766 ​ 3.6% ​ 1.47% Total ​ $ 18,170 ​ $ 1,480,793 ​ 100.0% ​ 1.23% ​ 51 ​ Table of Contents ​ Investment Securities The following table sets forth the composition of our investment securities portfolio by major category as of the indicated dates: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ 2025 ​ 2024 (in thousands) ​ ​ ​ Amortized Cost ​ ​ ​ Fair Value (FV) ​ FV As % of Total ​ ​ ​ Amortized Cost ​ ​ ​ Fair Value (FV) ​ ​ ​ FV As % of Total Securities Available-for-Sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ $ 2,000 ​ $ 1,404 ​ 1% ​ $ 7,000 ​ $ 6,115 ​ 6% Residential mortgage-backed agencies ​ ​ 25,891 ​ ​ 22,855 ​ 21% ​ ​ 24,621 ​ ​ 20,196 ​ 21% Commercial mortgage-backed agencies ​ ​ 37,805 ​ ​ 30,068 ​ 28% ​ ​ 37,205 ​ ​ 28,634 ​ 30% Collateralized mortgage obligations ​ ​ 29,795 ​ ​ 27,390 ​ 26% ​ ​ 21,069 ​ ​ 17,726 ​ 19% Obligations of states and political subdivisions ​ ​ 8,557 ​ ​ 8,525 ​ 8% ​ ​ 6,533 ​ ​ 6,209 ​ 7% Corporate bonds ​ ​ 1,000 ​ ​ 907 ​ 1% ​ ​ 1,000 ​ ​ 896 ​ 1% Collateralized debt obligations ​ ​ 18,802 ​ ​ 15,995 ​ 15% ​ ​ 18,686 ​ ​ 14,718 ​ 16% Total available for sale ​ $ 123,850 ​ $ 107,144 ​ 100% ​ $ 116,114 ​ $ 94,494 ​ 100% Securities Held to Maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ $ 68,595 ​ $ 60,874 ​ 41% ​ $ 68,301 ​ $ 57,109 ​ 39% Residential mortgage-backed agencies ​ ​ 32,084 ​ ​ 29,748 ​ 20% ​ ​ 32,171 ​ ​ 28,611 ​ 20% Commercial mortgage-backed agencies ​ ​ 20,947 ​ ​ 15,767 ​ 10% ​ ​ 21,134 ​ ​ 15,340 ​ 11% Collateralized mortgage obligations ​ ​ 45,447 ​ ​ 38,391 ​ 26% ​ ​ 49,439 ​ ​ 39,715 ​ 27% Obligations of states and political subdivisions ​ ​ 4,390 ​ ​ 4,109 ​ 3% ​ ​ 4,511 ​ ​ 3,985 ​ 3% Total held to maturity ​ $ 171,463 ​ $ 148,889 ​ 100% ​ $ 175,556 ​ $ 144,760 ​ 100% ​ The total fair value of AFS securities was $107.1 million and the book value of HTM securities totaled $171.5 million at December 31, 2025, representing an increase of $12.7 million and a decrease of $4.1 million, respectively, since December 31, 2024.
However, the determination of the ACL requires significant judgment, and estimates of expected credit losses in the loan portfolio can vary from the amounts actually observed.
However, the determination of the ACL requires significant judgment, and estimates of expected credit losses in the loan portfolio can vary from the amounts actually observed.
The ACL “base case” model is derived from various economic forecasts provided by widely recognized sources. Management evaluates the variability of market conditions by examining the peak and trough of economic cycles. These peaks and troughs are used to stress the base case model to develop a range of potential outcomes.
The ACL “base case” model is derived from various economic forecasts provided by widely recognized sources. Management evaluates the variability of market conditions by examining the peak and trough of economic cycles. These peaks and troughs are used to stress the base case model to develop a range of potential outcomes.
For a discussion with respect to reserve calculations regarding individually evaluated loans, refer to the “Nonrecurring Loans” section in Note 17, Fair Value of Financial Instruments. From time to time, we may modify certain loans to borrowers who are experiencing financial difficulty. In some cases, these modifications may result in new loans.
For a discussion with respect to reserve calculations regarding individually evaluated loans, refer to the “Individually evaluated loans” section in Note 17, Fair Value of Financial Instruments. From time to time, we may modify certain loans to borrowers who are experiencing financial difficulty. In some cases, these modifications may result in new loans.
Its principal operating subsidiary is the Bank, which consists of a community banking network of 22 branch offices located throughout its market areas. Our primary sources of revenue are interest income earned from our loan and investment securities portfolios and fees earned from financial services provided to customers.
Its principal operating subsidiary is the Bank, which consists of a community banking network of 23 branch offices located throughout its market areas. Our primary sources of revenue are interest income earned from our loan and investment securities portfolios and fees earned from financial services provided to customers.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion and analysis should be read in conjunction with the Consolidated Financial Statements and notes thereto for the years ended December 31, 2024 and 2023, which are included in Item 8 of Part II of this annual report.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion and analysis should be read in conjunction with the Consolidated Financial Statements and notes thereto for the years ended December 31, 2025 and 2024, which are included in Item 8 of Part II of this annual report.
We have concluded that no valuation allowance is deemed necessary for our remaining federal and state deferred tax assets at December 31, 2024, as it is more likely than not that they will be realized based on the expected reversal of deferred tax liabilities, the generation of future income sufficient to realize the deferred tax assets as they reverse, and the ability to implement tax planning strategies to prevent the expiration of any carry-forward periods. ​ 39 ​ Table of Contents ​ GAAP and Non-GAAP Measures The following tables sets forth certain selected financial data for the years ended December 31, 2024 and 2023 under GAAP (as reported) and non-GAAP.
We have concluded that no valuation allowance is deemed necessary for our remaining federal and state deferred tax assets at December 31, 2025, as it is more likely than not that they will be realized based on the expected reversal of deferred tax liabilities, the generation of future income sufficient to realize the deferred tax assets as they reverse, and the ability to implement tax planning strategies to prevent the expiration of any carry-forward periods. 40 ​ Table of Contents ​ GAAP and Non-GAAP Measures The following tables sets forth certain selected financial data for the years ended December 31, 2025 and 2024 under GAAP (as reported) and non-GAAP.
A positive gap generally indicates that rising interest rates during a given interval will increase net interest income, as more assets than liabilities will reprice. A negative gap position would benefit us during a period of declining interest rates. At December 31, 2024, we were asset sensitive.
A positive gap generally indicates that rising interest rates during a given interval will increase net interest income, as more assets than liabilities will reprice. A negative gap position would benefit us during a period of declining interest rates. At December 31, 2025, we were asset sensitive.
Management then determines the appropriate reserve through an evaluation of these various outcomes relative to current economic conditions and known risks in the portfolio. Management enhances its calculation with the use of Moody’s economic forecast data to provide additional support to substantiate its ACL.
Management then determines the appropriate reserve through an evaluation of these various outcomes relative to current economic conditions 48 ​ Table of Contents ​ and known risks in the portfolio. Management enhances its calculation with the use of Moody’s economic forecast data to provide additional support to substantiate its ACL.
During inflationary periods, monetary assets lose value in terms of purchasing power and monetary liabilities have corresponding purchasing power gains. The concept of purchasing power is not an adequate indicator of the impact of inflation on financial institutions because it does not incorporate changes in our earnings. ​
During inflationary periods, monetary assets lose value in terms of purchasing power and monetary liabilities have corresponding purchasing power gains. The concept of purchasing power is not an adequate indicator of the impact of inflation on financial institutions because it does not incorporate changes in our earnings. ​ 58 ​ Table of Contents ​
Management uses computer simulations to measure the effect on net interest income of various interest rate scenarios. Key assumptions used in the computer simulations include cash flows and maturities of interest rate sensitive assets and liabilities, changes in asset volumes and pricing, and management’s capital plans.
Management uses computer simulations to measure the effect on net interest income of various 57 ​ Table of Contents ​ interest rate scenarios. Key assumptions used in the computer simulations include cash flows and maturities of interest rate sensitive assets and liabilities, changes in asset volumes and pricing, and management’s capital plans.
In connection with our adoption of ASU 2016-13, we made changes to our loan portfolio segments to align with the methodology of CECL. Refer to Note 5, Loans and Related Allowance for Credit 46 ​ Table of Contents ​ Losses, for further discussion of these portfolio segments.
In connection with our adoption of ASU 2016-13, we made changes to our loan portfolio segments to align with the methodology of CECL. Refer to Note 5, Loans and Related Allowance for Credit Losses, for further discussion of these portfolio segments.
There was also a Maryland state interest expense carryforward of $3.9 million, for which a deferred tax asset of $0.3 million has been recorded.
There was also a Maryland state interest expense carryforward of $4.4 million, for which a deferred tax asset of $0.3 million has been recorded.
Management is not aware of any demands, commitments, events or uncertainties that are likely to materially affect our ability to meet our future capital requirements. In addition to operational requirements, the Bank and the Corporation are subject to risk-based capital regulations, which were adopted and are monitored by federal banking regulators.
Management is not aware of any demands, commitments, events or uncertainties that are likely to materially affect our ability to meet our future capital requirements. 55 ​ Table of Contents ​ In addition to operational requirements, the Bank is subject to risk-based capital regulations, which were adopted and are monitored by federal banking regulators.
The increase in the tax rate for the 2024 period was primarily related to changes in allocations of state income tax expense. ​ At December 31, 2024, the Corporation had Maryland Net Operating Losses (“NOLs”) of $36.3. million for which a deferred tax asset of $2.4 million has been recorded.
The increase in the tax rate for the 2025 period was primarily related to changes in allocations of state income tax expense. ​ At December 31, 2025, the Corporation had Maryland Net Operating Losses (“NOLs”) of $34.9 million for which a deferred tax asset of $2.3 million has been recorded.
Unlike traditional Gap modeling, NII modeling takes into account the different degree to which installments in the same repricing period will adjust to a change in interest rates. It also allows the use of different assumptions in a falling versus a rising rate environment.
Unlike traditional Gap modeling, NII modeling takes into account the different degree to which installments in the same repricing period will adjust to a change in interest rates. It also allows the use of different assumptions in a falling versus a rising rate environment. The period considered by the NII modeling is the next eight quarters.
During 2024 and 2023, we recognized, on a cash basis, $0.2 million and $0.3 million, respectively, of interest income on non-accrual loans that paid off.
During 2025 and 2024, we recognized, on a cash basis, $0.1 million and $0.2 million, respectively, of interest income on non-accrual loans that paid off.
The mix for each year is illustrated below. ​ ​ ​ ​ ​ ​ ​ Year End Percentage of Total Assets ​ 2024 2023 Cash and cash equivalents ​ 4% ​ 3% Net loans ​ 74% ​ 73% Investments ​ 14% ​ 16% ​ ​ The year-end total liability mix has remained stable during the two-year period as illustrated below. ​ ​ ​ ​ ​ ​ ​ ​ Year End Percentage of Total Liabilities ​ 2024 2023 Total deposits ​ 88% ​ 89% Total borrowings ​ 10% ​ 9% ​ Loan Portfolio The Bank is actively engaged in originating loans to customers primarily in Allegany County, Frederick County, Garrett County, and Washington County in Maryland, and in Berkeley County, Mineral County, and Monongalia County, in West Virginia; and the surrounding regions of Maryland, West Virginia, Virginia and Pennsylvania.
The mix for each year is illustrated below. ​ ​ ​ ​ ​ ​ ​ Year End Percentage of Total Assets ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Cash and cash equivalents ​ 6% ​ 4% Net loans ​ 72% ​ 74% Investments ​ 13% ​ 14% ​ ​ The year-end total liability mix has remained stable during the two-year period as illustrated below. ​ ​ ​ ​ ​ ​ ​ ​ Year End Percentage of Total Liabilities ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Total deposits ​ 92% ​ 88% Total borrowings ​ 6% ​ 10% ​ Loan Portfolio The Bank is actively engaged in originating loans to customers primarily in Allegany County, Frederick County, Garrett County, and Washington County in Maryland, and in Berkeley County, Mineral County, and Monongalia County, in West Virginia; and the surrounding regions of Maryland, West Virginia, Virginia and Pennsylvania.
Provision for Credit Losses The provision for credit losses was $2.9 million for the year ended December 31, 2024 and $1.7 million for the year ended December 31, 2023. Net charge-offs of $2.2 million were recorded for the year ended December 31, 2024 compared to net charge-offs of $0.9 million for 2023.
Provision for Credit Losses The provision for credit losses for loans was $2.3 million for the year ended December 31, 2025 and $2.9 million for the year ended December 31, 2024. Net charge-offs of $1.0 million were recorded for the year ended December 31, 2025 compared to net charge-offs of $2.2 million for 2024.
These Level 3 instruments are valued based on both observable and unobservable inputs derived from the best available data, some of which is internally developed, and considers risk premiums that a market participant would require. Approximately $79.8 million of the AFS portfolio was valued using Level 2 pricing and had net unrealized losses of $17.7 million at December 31, 2024.
These Level 3 instruments are valued based on both observable and unobservable inputs derived from the best available data, some of which is internally developed, and considers risk premiums that a market participant would require. Approximately $91.1 million of the AFS portfolio was valued using Level 2 pricing and had net unrealized losses of $13.9 million at December 31, 2025.
See the discussion under “Income Taxes” in Note 12 to the Consolidated Financial Statements presented elsewhere in this annual report for a detailed analysis of our deferred tax assets and liabilities. Our effective income tax rates as a percentage of income for the years ended December 31, 2024 and December 31, 2023 were 24.5% and 22.7%, respectively.
See the discussion under “Income Taxes” in Note 12 to the Consolidated Financial Statements presented elsewhere in this annual report for a detailed analysis of our deferred tax assets and liabilities. Our effective income tax rate as a percentage of income for the years ended December 31, 2025 and December 31, 2024 was 24.6% and 24.5%, respectively.
Net charge-offs of $2.2 million were recorded for the year ended December 31, 2024, compared to $0.9 million for 2023.
Net charge-offs of $1.0 million were recorded for the year ended December 31, 2025, compared to $2.2 million for 2024.
Management then determines the appropriate reserve through an evaluation of these various outcomes relative to current economic conditions and known risks in the portfolio. For the year ended December 31, 2024 the range of outcomes would produce a 9.0% reduction or a 72.2% increase in reserves based on the best-case and worst-case scenarios, respectively.
Management then determines the appropriate reserve through an evaluation of these various outcomes relative to current economic conditions and known risks in the portfolio. For the year ended December 31, 2025, the range of outcomes would produce a 10.54% reduction or a 48.15% increase in reserves based on the best-case and worst-case scenarios, respectively.
A loan that is considered a non-accrual or modified loan may be subject to the individually evaluated loan analysis if the commitment is $0.1 million or greater; otherwise, the modified loan remains in the appropriate segment in the ACL model and associated reserves are adjusted based on changes in the discounted cash flows resulting from the modification of the modified loan.
A loan that is considered a non-accrual or modified loan may be subject to the individually evaluated loan analysis if the commitment is $100,000 or greater; otherwise, the modified loan remains in the appropriate segment in the ACL model and associated reserves are adjusted based on changes in the discounted cash flows.
The remaining $14.7 million of the AFS securities represents the collateralized debt obligation (“CDO”) portfolio, which was valued using significant unobservable inputs, or Level 3 pricing. The $4.0 million in net unrealized losses associated with the CDO portfolio relates to nine pooled trust preferred securities.
The remaining $16.0 million of the AFS securities represents the collateralized debt obligation (“CDO”) portfolio, which was valued using significant unobservable inputs, or Level 3 pricing. The $2.8 52 ​ Table of Contents ​ million in net unrealized losses associated with the CDO portfolio relates to nine pooled trust preferred securities.
The ratio of the ACL to loans outstanding was 1.23% at December 31, 2024 and 1.24% at December 31, 2023. ​ The ratio of net charge-offs to average loans for the year ended December 31, 2024 was an annualized 0.16% compared to 0.07% for the year ended December 31, 2023.
The ratio of the ACL to loans outstanding was 1.28% at December 31, 2025 and 1.23% at December 31, 2024. ​ The ratio of net charge offs to average loans was 0.07% for the year ended December 31, 2025 and 0.16% for the year ended December 31, 2024.
For the years ended December 31, 2024 and 2023, net income was $20.6 million and $15.1 million, respectively, on a GAAP (generally accepted accounting principles) basis.
For the years ended December 31, 2025 and 2024, net income was $24.5 million and $20.6 million, respectively, on a generally accepted accounting principles (“GAAP”) basis.
Determination of an appropriate ACL is inherently complex and requires the use of significant and highly subjective estimates. The reasonableness of the ACL is reviewed quarterly by management. Management believes that it uses relevant information available to make determinations about the ACL and that it has established the existing allowance in accordance with GAAP.
The reasonableness of the ACL is reviewed quarterly by management. Management believes that it uses relevant information available to make determinations about the ACL and that it has established the existing allowance in accordance with GAAP.
Based on the simulation analysis performed at December 31, 2024 and 2023, management estimated the following changes in net interest income, assuming the indicated rate changes: ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) 2024 2023 +400 basis points ​ $ 5,722 ​ $ 4,464 +300 basis points ​ $ 5,300 ​ $ 3,353 +200 basis points ​ $ 4,253 ​ $ 2,255 +100 basis points ​ $ 2,391 ​ $ 1,155 -100 basis points ​ $ (2,851) ​ $ (1,280) -200 basis points ​ $ (5,424) ​ $ (3,102) -300 basis points ​ $ (8,080) ​ $ (5,249) -400 basis points ​ $ (11,151) ​ $ (8,086) ​ This estimate is based on assumptions that may be affected by unforeseeable changes in the general interest rate environment and any number of unforeseeable factors.
Based on the simulation analysis performed at December 31, 2025 and 2024, management estimated the following changes in net interest income, assuming the indicated rate changes: ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 +400 basis points ​ $ 5,866 ​ $ 5,722 +300 basis points ​ $ 5,578 ​ $ 5,300 +200 basis points ​ $ 4,511 ​ $ 4,253 +100 basis points ​ $ 2,557 ​ $ 2,391 -100 basis points ​ $ (3,192) ​ $ (2,851) -200 basis points ​ $ (6,365) ​ $ (5,424) -300 basis points ​ $ (9,569) ​ $ (8,080) -400 basis points ​ $ (13,657) ​ $ (11,151) ​ This estimate is based on assumptions that may be affected by unforeseeable changes in the general interest rate environment and any number of unforeseeable factors.
Management also applies interest rate risk, collateral value and debt service sensitivity analyses to the commercial real estate loan portfolio and obtains new appraisals on specific loans under defined parameters to assist in the determination of the periodic provision for credit losses.
Management also applies interest rate risk, collateral value and debt service sensitivity analyses to the commercial real estate loan portfolio and obtains new appraisals on specific loans under defined parameters to assist in the determination of the periodic provision for credit losses. 49 ​ Table of Contents ​ The following table presents a summary of the activity in the ACL by major loan category for the past two years.
The period considered by the NII modeling is the next eight quarters. 55 ​ Table of Contents ​ NPV / EVE modeling focuses on the change in the market value of equity. NPV / EVE is defined as the market value of assets less the market value of liabilities plus/minus the market value of any off-balance sheet positions.
NPV / EVE modeling focuses on the change in the market value of equity. NPV / EVE is defined as the market value of assets less the market value of liabilities plus/minus the market value of any off-balance sheet positions.
Summary of Loan Portfolio The following table presents the composition of our loan portfolio as of December 31 for the past two years: ​ ​ ​ ​ ​ ​ ​ (in millions) 2024 2023 Commercial real estate ​ $ 526.4 ​ $ 493.7 Acquisition and development ​ ​ 95.3 ​ ​ 77.1 Commercial and industrial ​ ​ 287.5 ​ ​ 274.6 Residential mortgage ​ ​ 518.8 ​ ​ 499.9 Consumer ​ ​ 52.8 ​ ​ 61.4 Total Loans ​ $ 1,480.8 ​ $ 1,406.7 42 ​ Table of Contents ​ Outstanding loans of $1.5 billion at December 31, 2024 reflected growth of $74.1 million in 2024.
Summary of Loan Portfolio The following table presents the composition of our loan portfolio as of December 31 for the past two years: ​ ​ ​ ​ ​ ​ ​ (in millions) ​ ​ ​ 2025 ​ ​ ​ 2024 Commercial real estate ​ $ 570.8 ​ $ 526.4 Acquisition and development ​ ​ 90.3 ​ ​ 95.3 Commercial and industrial ​ ​ 277.0 ​ ​ 287.5 Residential mortgage ​ ​ 536.9 ​ ​ 518.8 Consumer ​ ​ 46.7 ​ ​ 52.8 Total Loans ​ $ 1,521.7 ​ $ 1,480.8 43 ​ Table of Contents ​ Outstanding gross loans of $1.5 billion at December 31, 2025 reflected growth of $40.9 million in 2025.
The valuation allowance was $2.6 million and $2.8 million at December 31, 2024 and 2023, respectively.
The valuation allowance was $2.6 million at both December 31, 2025 and 2024.
These deposits are strictly rate driven but often provide the most cost-effective means of funding growth. ● One Way Buy CDARS/ICS funding – a form of brokered deposits that has become a viable supplement to brokered deposits obtained directly. ​ The following table presents sources of liquidity available to the Corporation as of December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ Total Availability ​ ​ Amount Used ​ ​ Net Availability Internal Sources ​ ​ ​ ​ ​ ​ ​ ​ ​ Excess cash ​ $ 62,251 ​ $ - ​ $ 62,251 Unpledged securities ​ ​ 39,865 ​ ​ - ​ ​ 39,865 External Sources ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal Reserve (discount window) ​ ​ 86,624 ​ ​ 50,000 ​ ​ 36,624 Correspondent unsecured lines of credit ​ ​ 140,000 ​ ​ - ​ ​ 140,000 FHLB ​ ​ 309,787 ​ ​ 96,214 ​ ​ 213,573 ​ ​ $ 638,527 ​ $ 146,214 ​ $ 492,313 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 54 ​ Table of Contents ​ We have adequate liquidity available to respond to current and anticipated liquidity demands and are not aware of any trends or demands, commitments, events or uncertainties that are likely to materially affect our ability to maintain liquidity at satisfactory levels.
These deposits are strictly rate driven but often provide the most cost-effective means of funding growth. ● One Way Buy CDARS/ICS funding – a form of brokered deposits that has become a viable supplement to brokered deposits obtained directly. ​ ​ 56 ​ Table of Contents ​ The following table presents sources of liquidity available to the Corporation as of December 31, 2025. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ Total Availability ​ ​ Amount Used ​ ​ Net Availability Internal Sources ​ ​ ​ ​ ​ ​ ​ ​ ​ Excess cash ​ $ 116,512 ​ $ - ​ $ 116,512 Unpledged securities ​ ​ 25,356 ​ ​ - ​ ​ 25,356 External Sources ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal Reserve (discount window) ​ ​ 83,897 ​ ​ - ​ ​ 83,897 Correspondent unsecured lines of credit ​ ​ 140,000 ​ ​ - ​ ​ 140,000 FHLB ​ ​ 335,473 ​ ​ 73,921 ​ ​ 261,552 ​ ​ $ 701,238 ​ $ 73,921 ​ $ 627,317 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ We have adequate liquidity available to respond to current and anticipated liquidity demands and are not aware of any trends or demands, commitments, events or uncertainties that are likely to materially affect our ability to maintain liquidity at satisfactory levels.
Analysis of Activity in the Allowance for Credit Losses ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, (in thousands) 2024 2023 Balance, January 1 ​ $ 17,480 ​ $ 14,636 Impact of CECL Adoption ​ ​ — ​ ​ 2,066 Charge-offs: ​ ​ ​ ​ ​ ​ Commercial real estate ​ ​ — ​ ​ (87) Commercial and industrial ​ ​ (1,610) ​ ​ (423) Residential mortgage ​ ​ (45) ​ ​ (55) Consumer ​ ​ (1,369) ​ ​ (874) Total charge-offs ​ ​ (3,024) ​ ​ (1,439) Recoveries: ​ ​ ​ ​ ​ ​ Commercial real estate ​ ​ 82 ​ ​ 7 Acquisition and development ​ ​ 52 ​ ​ 11 Commercial and industrial ​ ​ 212 ​ ​ 186 Residential mortgage ​ ​ 75 ​ ​ 73 Consumer ​ ​ 364 ​ ​ 240 Total recoveries ​ ​ 785 ​ ​ 517 Net credit losses ​ ​ (2,239) ​ ​ (922) Provision for credit losses ​ ​ 2,929 ​ ​ 1,700 Balance at end of period ​ $ 18,170 ​ $ 17,480 ​ ​ ​ ​ ​ ​ ​ Allowance for credit losses to total loans (as %) ​ ​ 1.23% ​ ​ 1.24% ​ ​ ​ ​ ​ ​ ​ Net (Charge-offs)/Recoveries as a % of Average Applicable Portfolio ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Commercial real estate ​ ​ 0.0% ​ ​ 0.0% Acquisition and development ​ ​ 0.1% ​ ​ 0.0% Commercial and industrial ​ ​ (0.5%) ​ ​ (0.1%) Residential mortgage ​ ​ 0.0% ​ ​ 0.0% Consumer ​ ​ (1.9%) ​ ​ (1.0%) ​ ​ 48 ​ Table of Contents ​ The following presents management’s allocation of the ACL by major loan category in comparison to that loan category’s percentage of total loans.
Analysis of Activity in the Allowance for Credit Losses ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, (in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Balance, January 1 ​ $ 18,170 ​ $ 17,480 Charge-offs: ​ ​ ​ ​ ​ ​ Acquisition and development ​ ​ (9) ​ ​ — Commercial and industrial ​ ​ (1,011) ​ ​ (1,610) Residential mortgage ​ ​ (15) ​ ​ (45) Consumer ​ ​ (715) ​ ​ (1,369) Total charge-offs ​ ​ (1,750) ​ ​ (3,024) Recoveries: ​ ​ ​ ​ ​ ​ Commercial real estate ​ ​ — ​ ​ 82 Acquisition and development ​ ​ 316 ​ ​ 52 Commercial and industrial ​ ​ 73 ​ ​ 212 Residential mortgage ​ ​ 41 ​ ​ 75 Consumer ​ ​ 275 ​ ​ 364 Total recoveries ​ ​ 705 ​ ​ 785 Net credit losses ​ ​ (1,045) ​ ​ (2,239) Provision for credit losses ​ ​ 2,345 ​ ​ 2,929 Balance at end of period ​ $ 19,470 ​ $ 18,170 ​ ​ ​ ​ ​ ​ ​ Allowance for credit losses to total loans (as %) ​ ​ 1.28% ​ ​ 1.23% ​ ​ ​ ​ ​ ​ ​ Net (Charge-offs)/Recoveries as a % of Average Applicable Portfolio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Commercial real estate ​ ​ 0.0% ​ ​ 0.0% Acquisition and development ​ ​ 0.3% ​ ​ 0.1% Commercial and industrial ​ ​ (0.3%) ​ ​ (0.5%) Residential mortgage ​ ​ 0.0% ​ ​ 0.0% Consumer ​ ​ (0.9%) ​ ​ (1.9%) ​ ​ 50 ​ Table of Contents ​ The following presents management’s allocation of the ACL by major loan category in comparison to that loan category’s percentage of total loans.
The ACL was $18.2 million at December 31, 2024 compared to $17.5 million at December 31, 2023. The provision for credit losses was $2.9 million for the year ended December 31, 2024 compared to $1.7 million for the year ended December 31, 2023.
The ACL was $19.5 million at December 31, 2025 compared to $18.2 million at December 31, 2024. The provision for credit losses on loans was $2.3 million for the year ended December 31, 2025 compared to $2.9 million for the year ended December 31, 2024.
The following table sets forth the contractual or estimated maturities of the components of our investment securities portfolio as of December 31, 2024 and the weighted average yields on a tax-equivalent basis.
There have been no changes to the ratings or payment status of the CDO portfolio in 2025. The following table sets forth the contractual or estimated maturities of the components of our investment securities portfolio as of December 31, 2025 and the weighted average yields on a tax-equivalent basis.
Net income for the year ended December 31, 2024 was inclusive of $0.4 million, net of tax, in increased expenses related to branch closures that occurred on February 29, 2024 and adjusted net income was $21.0 million on a non-GAAP basis.
Net income for the year ended December 31, 2024 was inclusive of a $0.4 million increase in expenses, net of tax, related to announced branch closures and adjusted net income was $21.0 million on a non-GAAP basis. ​ The provision for credit losses on loans was $2.3 million for the year ended December 31, 2025 and $2.9 million for the year ended December 31, 2024.
This is a non-GAAP disclosure, and it is not materially different than the corresponding GAAP disclosure. ​ The table below summarizes net interest income for 2024 and 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ GAAP ​ Non-GAAP - FTE (in thousands) 2024 2023 2024 2023 Interest income ​ $ 91,993 ​ $ 81,156 ​ $ 92,222 ​ $ 81,783 Interest expense ​ ​ 32,015 ​ ​ 24,286 ​ ​ 32,015 ​ ​ 24,286 Net interest income ​ $ 59,978 ​ $ 56,870 ​ $ 60,207 ​ $ 57,497 Net interest margin % ​ ​ 3.36% ​ ​ 3.22% ​ ​ 3.38% ​ ​ 3.26% ​ Net interest income, on a non-GAAP, FTE basis, increased by $2.7 million (4.7%) during the year ended December 31, 2024 when compared to the year ended December 31, 2023, driven by a $10.4 million (12.8%) increase in interest income, which was partially offset by an increase in interest expense of $7.7 million (31.8%).
This is a non-GAAP disclosure, and it is not materially different than the corresponding GAAP disclosure. ​ 35 ​ Table of Contents ​ The table below summarizes net interest income for 2025 and 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ GAAP ​ Non-GAAP - FTE (in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2025 ​ ​ ​ 2024 Interest income ​ $ 100,848 ​ $ 91,993 ​ $ 101,066 ​ $ 92,222 Interest expense ​ ​ 32,735 ​ ​ 32,015 ​ ​ 32,735 ​ ​ 32,015 Net interest income ​ $ 68,113 ​ $ 59,978 ​ $ 68,331 ​ $ 60,207 Net interest margin % ​ ​ 3.66% ​ ​ 3.36% ​ ​ 3.67% ​ ​ 3.38% ​ Net interest income, on a non-GAAP, FTE basis, increased by $8.1 million (13.5%) during the year ended December 31, 2025 when compared to the year ended December 31, 2024, driven by a $8.8 million (9.6%) increase in interest income, which was partially offset by an increase in interest expense of $0.7 million (2.2%).
Deposits The following table sets forth the deposit balances by major category for December 31, 2024 and 2023: Deposit Balances ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 (in thousands) Actual Balance Percent Actual Balance Percent Non-interest-bearing demand deposits ​ $ 426,737 ​ ​ 27% ​ $ 427,670 ​ ​ 28% Interest-bearing deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Demand ​ ​ 386,803 ​ ​ 25% ​ ​ 350,860 ​ ​ 22% Money market- retail ​ ​ 447,149 ​ ​ 28% ​ ​ 385,649 ​ ​ 25% Money market- brokered ​ ​ 1 ​ ​ 0% ​ ​ — ​ ​ 0% Savings deposits ​ ​ 170,972 ​ ​ 11% ​ ​ 191,265 ​ ​ 12% Time deposits - retail ​ ​ 143,167 ​ ​ 9% ​ ​ 165,533 ​ ​ 11% Time deposits - brokered ​ ​ — ​ ​ 0% ​ ​ 30,000 ​ ​ 2% Total Deposits ​ $ 1,574,829 ​ ​ 100% ​ $ 1,550,977 ​ ​ 100% ​ Total deposits at December 31, 2024 increased by $23.9 million when compared to December 31, 2023.
Deposits The following table sets forth the deposit balances by major category for December 31, 2025 and 2024: Deposit Balances ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 2024 (in thousands) ​ ​ ​ Actual Balance ​ ​ ​ Percent ​ ​ ​ Actual Balance ​ ​ ​ Percent Non-interest-bearing demand deposits ​ $ 453,036 ​ ​ 26% ​ $ 426,737 ​ ​ 27% Interest-bearing deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Demand ​ ​ 392,823 ​ ​ 23% ​ ​ 386,803 ​ ​ 25% Money market- retail ​ ​ 529,870 ​ ​ 30% ​ ​ 447,149 ​ ​ 28% Money market- brokered ​ ​ 1 ​ ​ 0% ​ ​ 1 ​ ​ 0% Savings deposits ​ ​ 158,461 ​ ​ 9% ​ ​ 170,972 ​ ​ 11% Time deposits - retail ​ ​ 150,958 ​ ​ 9% ​ ​ 143,167 ​ ​ 9% Time deposits - brokered ​ ​ 50,000 ​ ​ 3% ​ ​ — ​ ​ — Total Deposits ​ $ 1,735,149 ​ ​ 100% ​ $ 1,574,829 ​ ​ 100% ​ 53 ​ Table of Contents ​ Total deposits at December 31, 2025 increased by $160.3 million when compared to December 31, 2024.
Management intends to hold the portfolio relatively stable in 2025 by reinvesting cashflows back into the portfolio to enhance the overall yield of the portfolio.
New investment purchases in the amount of $24.6 million were made during 2025 to enhance the overall yield of the portfolio. Management intends to hold the portfolio relatively stable in 2026 by reinvesting cashflows back into the portfolio to enhance the overall yield of the portfolio.
Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured. 44 ​ Table of Contents ​ The following sets forth the amounts of non-accrual, past-due and modified loans for the past two years: Risk Elements of Loan Portfolio ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, (in thousands) 2024 2023 Non-accrual loans: ​ ​ ​ ​ ​ ​ Commercial real estate ​ $ 656 ​ $ 826 Acquisition and development ​ ​ 82 ​ ​ 113 Commercial and industrial ​ ​ 1,838 ​ ​ — Residential mortgage ​ ​ 2,181 ​ ​ 2,988 Consumer ​ ​ 174 ​ ​ 29 Total non-accrual loans ​ $ 4,931 ​ $ 3,956 Accruing Loans Past Due 90 days or more: ​ ​ ​ ​ ​ ​ Commercial real estate ​ ​ 317 ​ ​ — Residential mortgage ​ $ 573 ​ $ 459 Consumer ​ ​ 28 ​ ​ 84 Total accruing loans past due 90 days or more ​ $ 918 ​ $ 543 Total non-accrual and past due 90 days or more ​ $ 5,849 ​ $ 4,499 Other repossessed assets ​ ​ 2,802 ​ ​ 55 Other real estate owned ​ ​ 3,062 ​ ​ 4,493 Total Non-performing assets ​ $ 11,713 ​ $ 9,047 Modified Loans: ​ ​ ​ ​ ​ ​ Performing ​ $ 1,006 ​ $ — Total modified loans ​ $ 1,006 ​ $ — Individually evaluated loans without a valuation allowance ​ $ 4,432 ​ $ 2,963 Total individually evaluated loans ​ $ 4,432 ​ $ 2,963 ​ ​ ​ ​ ​ ​ ​ Non-accrual loans to total loans (as %) ​ ​ 0.33% ​ ​ 0.28% Non-performing loans to total loans (as %) ​ ​ 0.39% ​ ​ 0.32% Non-performing assets to total assets (as %) ​ ​ 0.59% ​ ​ 0.47% Allowance for credit losses to non-accrual loans (as %) ​ ​ 368.49% ​ ​ 441.86% Allowance for credit losses to non-performing assets (as %) ​ ​ 155.13% ​ ​ 193.21% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 45 ​ Table of Contents ​ The following table sets forth the percent applicable by portfolio for non-accrual loans for the past two years: Non-Accrual Loans as a % of Applicable Portfolio ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Commercial real estate ​ ​ 0.1% ​ ​ 0.2% Acquisition and development ​ ​ 0.1% ​ ​ 0.1% Commercial and industrial ​ ​ 0.6% ​ ​ 0.0% Residential mortgage ​ ​ 0.4% ​ ​ 0.6% Consumer ​ ​ 0.3% ​ ​ 0.0% ​ We would have recognized $0.8 million and $0.4 million in interest income for the years ended December 31, 2024 and 2023, respectively, had our non-accrual loans been current and performing in accordance with their terms.
Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured. 45 ​ Table of Contents ​ The following sets forth the amounts of non-accrual, past-due and modified loans for the past two years: Risk Elements of Loan Portfolio ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, (in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Non-accrual loans: ​ ​ ​ ​ ​ ​ Commercial real estate ​ $ 695 ​ $ 656 Acquisition and development ​ ​ — ​ ​ 82 Commercial and industrial ​ ​ 1,068 ​ ​ 1,838 Residential mortgage ​ ​ 2,394 ​ ​ 2,181 Consumer ​ ​ 35 ​ ​ 174 Total non-accrual loans ​ $ 4,192 ​ $ 4,931 Accruing Loans Past Due 90 days or more: ​ ​ ​ ​ ​ ​ Commercial real estate ​ $ — ​ $ 317 Residential mortgage ​ ​ 432 ​ ​ 573 Consumer ​ ​ 45 ​ ​ 28 Total accruing loans past due 90 days or more ​ $ 477 ​ $ 918 Total non-accrual and past due 90 days or more ​ $ 4,669 ​ $ 5,849 Other repossessed assets ​ ​ 2,802 ​ ​ 2,802 Other real estate owned ​ ​ 1,083 ​ ​ 3,062 Total non-performing assets ​ $ 8,554 ​ $ 11,713 ​ ​ ​ ​ ​ ​ ​ Non-accrual loans to total loans (as %) ​ ​ 0.28% ​ ​ 0.33% Non-performing loans to total loans (as %) ​ ​ 0.31% ​ ​ 0.39% Non-performing assets to total assets (as %) ​ ​ 0.41% ​ ​ 0.59% Allowance for credit losses to non-accrual loans (as %) ​ ​ 464.46% ​ ​ 368.49% Allowance for credit losses to non-performing assets (as %) ​ ​ 227.61% ​ ​ 155.13% ​ ​ ​ ​ ​ ​ ​ Modified Loans: ​ ​ ​ ​ ​ ​ Performing ​ $ 246 ​ $ 1,006 Total modified loans ​ $ 246 ​ $ 1,006 Individually evaluated loans without a valuation allowance ​ $ 3,522 ​ $ 4,432 Individually evaluated loans with a valuation allowance ​ ​ 16,164 ​ ​ — Total individually evaluated loans ​ $ 19,686 ​ $ 4,432 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 46 ​ Table of Contents ​ Accruing loans past due 30 days or more was 0.32% at both December 31, 2025 and 2024.
The following non-GAAP financial measures exclude losses on the sale of AFS securities in 2023 and accelerated depreciation and lease termination expenses related to the branch closures that occurred on February 29, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended ​ ​ ​ December 31, ​ ​ 2024 2023 Per Share Data ​ ​ ​ ​ ​ ​ ​ Basic net income per common share - as reported ​ $ 3.15 ​ $ 2.25 ​ Basic net income per common share - non-GAAP ​ ​ 3.21 ​ ​ 2.81 ​ Diluted net income per common share - as reported ​ $ 3.15 ​ $ 2.25 ​ Diluted net income per common share - non-GAAP ​ ​ 3.21 ​ ​ 2.81 ​ ​ ​ ​ ​ ​ ​ ​ ​ Significant Ratios: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on Average Assets - as reported ​ ​ 1.06 % ​ 0.77 % Loss on sale of AFS securities, net of income tax effect ​ ​ — ​ ​ 0.17 ​ Accelerated depreciation and lease termination expenses, net of income tax effect ​ ​ 0.02 ​ ​ 0.02 ​ Adjusted Return on Average Assets (non-GAAP) ​ ​ 1.08 % ​ 0.96 % ​ ​ ​ ​ ​ ​ ​ ​ Return on Average Equity - as reported ​ ​ 12.16 % ​ 9.65 % Loss on sale of AFS securities, net of income tax effect ​ ​ — ​ ​ 2.09 ​ Accelerated depreciation and lease termination expenses, net of income tax effect ​ ​ 0.26 ​ ​ 0.31 ​ Adjusted Return on Average Equity (non-GAAP) ​ ​ 12.42 % ​ 12.05 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 40 ​ Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended (in thousands, except for per share amount) ​ 2024 2023 Net income - as reported ​ $ 20,569 ​ $ 15,060 Adjustments: ​ ​ ​ ​ ​ ​ Loss on sale of securities ​ ​ — ​ ​ 4,214 Accelerated depreciation and lease termination expenses ​ ​ 562 ​ ​ 623 Income tax effect of adjustment ​ ​ (137) ​ ​ (1,097) Adjusted net income (non-GAAP) ​ $ 20,994 ​ $ 18,800 ​ ​ ​ ​ ​ ​ ​ Basic and diluted earnings per share - as reported ​ $ 3.15 ​ $ 2.25 Adjustments: ​ ​ ​ ​ ​ ​ Loss on sale of securities ​ ​ — ​ ​ 0.63 Accelerated depreciation and lease termination expenses ​ ​ 0.08 ​ ​ 0.09 Income tax effect of adjustment ​ ​ (0.02) ​ ​ (0.16) Adjusted basic and diluted earnings per share (non-GAAP) ​ $ 3.21 ​ $ 2.81 ​ CONSOLIDATED BALANCE SHEET REVIEW Overview Total assets at December 31, 2024 were $2.0 billion, representing a $67.2 million increase since December 31, 2023.
The following non-GAAP financial measures exclude net gains on the sale of investment securities, losses on disposal of fixed assets and a write-down of OREO in 2025 and accelerated depreciation and lease termination expenses related to the branch closures in 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended ​ ​ ​ December 31, ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Per Share Data ​ ​ ​ ​ ​ ​ ​ Basic net income per share - as reported ​ $ 3.78 ​ $ 3.15 ​ Basic net income per share - non-GAAP ​ ​ 3.98 ​ ​ 3.21 ​ Diluted net income per share - as reported ​ $ 3.77 ​ $ 3.15 ​ Diluted net income per share - non-GAAP ​ ​ 3.97 ​ ​ 3.21 ​ ​ ​ ​ ​ ​ ​ ​ ​ Significant Ratios: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on Average Assets - as reported ​ ​ 1.21 % ​ 1.06 % Loss on write-down of OREO property ​ ​ 0.08 ​ ​ — ​ Loss on disposal of fixed assets ​ ​ 0.02 ​ ​ — ​ Net gains on sale of investment securities ​ ​ (0.01) ​ ​ — ​ Accelerated depreciation and lease termination expenses ​ ​ — ​ ​ 0.03 ​ Income tax effect of adjustments ​ ​ (0.02) ​ ​ (0.01) ​ Adjusted Return on Average Assets (non-GAAP) ​ ​ 1.28 % ​ 1.08 % ​ ​ ​ ​ ​ ​ ​ ​ Return on Average Equity - as reported ​ ​ 12.70 % ​ 12.16 % Loss on write-down of OREO property ​ ​ 0.85 ​ ​ — ​ Loss on disposal of fixed assets ​ ​ 0.12 ​ ​ — ​ Net gains on sale of investment securities ​ ​ (0.05) ​ ​ — ​ Accelerated depreciation and lease termination expenses ​ ​ — ​ ​ 0.34 ​ Income tax effect of adjustments ​ ​ (0.23) ​ ​ (0.08) ​ Adjusted Return on Average Equity (non-GAAP) ​ ​ 13.39 % ​ 12.42 % ​ 41 ​ Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended (in thousands, except for per share amount) ​ 2025 ​ ​ ​ 2024 Net income - as reported ​ $ 24,515 ​ $ 20,569 Adjustments: ​ ​ ​ ​ ​ ​ Loss on write-down of OREO property ​ ​ 1,635 ​ ​ — Loss on disposal of fixed assets ​ ​ 228 ​ ​ — Net gains on sale of investment securities ​ ​ (97) ​ ​ — Accelerated depreciation and lease termination expenses ​ ​ — ​ ​ 562 Income tax effect of adjustments ​ ​ (435) ​ ​ (137) Adjusted net income (non-GAAP) ​ $ 25,846 ​ $ 20,994 ​ ​ ​ ​ ​ ​ ​ Diluted earnings per share - as reported ​ $ 3.77 ​ $ 3.15 Adjustments: ​ ​ ​ ​ ​ ​ Loss on write-down of OREO property ​ ​ 0.25 ​ ​ — Loss on disposal of fixed assets ​ ​ 0.03 ​ ​ — Net gains on sale of investment securities ​ ​ (0.01) ​ ​ — Accelerated depreciation and lease termination expenses ​ ​ — ​ ​ 0.08 Income tax effect of adjustments ​ ​ (0.07) ​ ​ (0.02) Diluted earnings per share (non-GAAP) ​ $ 3.97 ​ $ 3.21 ​ CONSOLIDATED BALANCE SHEET REVIEW Overview Total assets at December 31, 2025 were $2.1 billion, representing a $114.4 million increase since December 31, 2024.
Detailed information about these capital regulations and their requirements is set forth in the “Supervision and Regulation” section of Item 1 of Part I of this annual report under the heading “Capital Requirements”.
Detailed information about these capital regulations and their requirements is set forth in the “Supervision and Regulation” section of Item 1 of Part I of this annual report under the heading “Capital Requirements”. At December 31, 2025, the Bank’s total risk-based capital ratio was 15.19%, which was well above the regulatory minimum of 8%.
Loan commitments and letters of credit totaled $251.3 million and $16.5 million, respectively, at December 31, 2024. Management does not believe that any of the foregoing arrangements have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Management does not believe that any of the foregoing arrangements have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. We are not a party to any other off-balance sheet arrangements.
Adoption of New Accounting Standards and Effects of New Accounting Pronouncements Note 1 to the Consolidated Financial Statements discusses new accounting pronouncements that, when adopted, could affect our future consolidated financial statements.
Capital The Bank’s capital ratios are strong, and the Bank is considered to be well-capitalized by applicable regulatory measures. Adoption of New Accounting Standards and Effects of New Accounting Pronouncements Note 1 to the Consolidated Financial Statements discusses new accounting pronouncements that, when adopted, could affect our future consolidated financial statements.
Liquidity Sources As of December 31, 2024, the Corporation had approximately $140.0 million in unsecured lines of credit with its correspondent banks, $36.6 million available through a secured line of credit with the Federal Reserve Discount Window, and approximately $213.6 million of secured borrowings with the FHLB.
Liquidity Sources As of December 31, 2025, we had approximately $140.0 million in unsecured lines of credit with our correspondent banks, $83.9 million available through a secured line of credit with the Federal Reserve Discount Window, and approximately $261.6 million of secured borrowings with the FHLB. Additionally, we have access to the brokered money market and certificates of deposit markets.
See Note 9 to the Consolidated Financial Statements 52 ​ Table of Contents ​ presented elsewhere in this annual report for further details about our borrowings and additional borrowing capacity, which is incorporated herein by reference.
See Note 9 to the Consolidated Financial Statements presented elsewhere in this annual report for further details about our borrowings and additional borrowing capacity, which is incorporated herein by reference. Off-Balance Sheet Arrangements In the normal course of business, to meet the financing needs of its customers, the Bank is a party to financial instruments with off-balance sheet risk.
Capital Resources We require capital to fund loans, satisfy our obligations under the Bank’s letters of credit, meet the deposit withdraw demands of the Bank’s customers, and satisfy our other monetary obligations. To the extent that deposits are not adequate to fund our capital requirements, we can rely on the funding sources identified below under the heading “Liquidity Management”.
To the extent that deposits are not adequate to fund our capital requirements, we can rely on the funding sources identified below under the heading “Liquidity Management”.
The ACL is measured and recorded upon the initial recognition of a financial asset. The ACL is reduced by charge-offs, net of recoveries of previous losses, and is increased by a provision or decreased by a recovery for credit losses, which is recorded as a current period operating expense.
The ACL is reduced by charge-offs, net of recoveries of previous losses, and is increased by a provision or decreased by a recovery for credit losses, which is recorded as a current period operating expense. 34 ​ Table of Contents ​ Determination of an appropriate ACL is inherently complex and requires the use of significant and highly subjective estimates.
We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments. We generally require collateral or other security to support the financial instruments with credit risk. The amount of collateral or other security is determined based on management’s credit evaluation of the counterparty. We evaluate each customer’s creditworthiness on a case-by-case basis.
We generally require collateral or other security to support the financial instruments with credit risk. The amount of collateral or other security is determined based on management’s credit evaluation of the counterparty. We evaluate each customer’s creditworthiness on a case-by-case basis. Loan commitments and letters of credit totaled $270.0 million and $16.4 million, respectively, at December 31, 2025.
The net interest margin, on an FTE basis, increased to 3.38% for the year ended December 31, 2024 from 3.26% for the year ended December 31, 2023. ​ Comparing the year ended December 31, 2024 with the year ended December 31, 2023, interest income increased by $10.4 million driven by an increase of $12.2 million in interest and fees on loans.
The net interest margin, on an FTE basis, increased to 3.67% for the year ended December 31, 2025 from 3.38% for the year ended December 31, 2024. ​ Comparing the year ended December 31, 2025 with the year ended December 31, 2024, interest income increased by $8.8 million driven by an increase of $8.6 million on interest and fees on loans, as average loan balances increased by $68.8 million and the overall yield increased by 31 basis points in correlation with upward repricing of adjustable-rate loans.
(3) Net interest margin is calculated as net interest income divided by average earning assets. (4) The average yields on investments are based on amortized cost. The following table sets forth an analysis of volume and rate changes in interest income and interest expense of our average interest-earning assets and average interest-bearing liabilities for 2024 and 2023.
The following table sets forth an analysis of volume and rate changes in interest income and interest expense of our average interest-earning assets and average interest-bearing liabilities for 2025 and 2024.
Interest expense on short- term borrowings increased by $1.3 million due to a $10.5 million increase in average balances and a 222-basis point increase in rate due to utilization of the BTFP in 2024. ​ 35 ​ Table of Contents ​ As shown below, the composition of total interest income between 2024 and 2023 remained relatively stable. ​ ​ ​ ​ ​ ​ ​ ​ % of Total Interest Income ​ 2024 2023 Interest and fees on loans ​ 89% ​ 86% Interest on investment securities ​ 8% ​ 10% Other ​ 3% ​ 4% ​ The following table sets forth the average balances, net interest income and expense, and average yields and rates for our interest-earning assets and interest-bearing liabilities for 2024 and 2023: Distribution of Assets, Liabilities and Shareholders’ Equity Interest Rates and Interest Differential – Tax Equivalent Basis ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31 ​ ​ 2024 ​ 2023 ​ (in thousands) Average Balance Interest Average Yield/ Rate Average Balance Interest Average Yield/ Rate Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ $ 1,427,351 ​ $ 81,819 ​ 5.73 % $ 1,340,118 ​ $ 69,631 ​ 5.20 % Investment Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ ​ 285,661 ​ ​ 6,760 ​ 2.37 % ​ 335,888 ​ ​ 7,173 ​ 2.14 % Non taxable ​ ​ 7,538 ​ ​ 375 ​ 4.97 % ​ 18,471 ​ ​ 1,279 ​ 6.92 % Total ​ ​ 293,199 ​ ​ 7,135 ​ 2.43 % ​ 354,359 ​ ​ 8,452 ​ 2.39 % Federal funds sold ​ ​ 55,117 ​ ​ 2,874 ​ 5.21 % ​ 65,131 ​ ​ 3,409 ​ 5.23 % Interest-bearing deposits with other banks ​ ​ 2,009 ​ ​ 91 ​ 4.53 % ​ 2,585 ​ ​ 93 ​ 3.60 % Other interest earning assets ​ ​ 4,565 ​ ​ 303 ​ 6.64 % ​ 4,048 ​ ​ 198 ​ 4.89 % Total earning assets ​ ​ 1,782,241 ​ ​ 92,222 ​ 5.17 % ​ 1,766,241 ​ ​ 81,783 ​ 4.63 % Allowance for credit losses ​ ​ (18,064) ​ ​ ​ ​ ​ ​ ​ (16,561) ​ ​ ​ ​ ​ ​ Non-earning assets ​ ​ 182,548 ​ ​ ​ ​ ​ ​ ​ 199,474 ​ ​ ​ ​ ​ ​ Total Assets ​ $ 1,946,725 ​ ​ ​ ​ ​ ​ $ 1,949,154 ​ ​ ​ ​ ​ ​ Liabilities and Shareholders’ Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing demand deposits ​ $ 368,725 ​ $ 6,288 ​ 1.71 % $ 362,070 ​ $ 4,814 ​ 1.33 % Interest-bearing money markets- retail ​ ​ 413,353 ​ ​ 14,287 ​ 3.46 % ​ 333,274 ​ ​ 8,672 ​ 2.60 % Interest-bearing money markets- brokered ​ ​ 55 ​ ​ 3 ​ 5.45 % ​ — ​ ​ — ​ 0.00 % Savings deposits ​ ​ 180,393 ​ ​ 183 ​ 0.10 % ​ 219,516 ​ ​ 240 ​ 0.11 % Time deposits - Retail ​ ​ 147,193 ​ ​ 4,226 ​ 2.87 % ​ 141,921 ​ ​ 2,872 ​ 2.02 % Time deposits - Brokered ​ ​ 15,697 ​ ​ 841 ​ 5.36 % ​ 49,209 ​ ​ 2,600 ​ 5.28 % Short-term borrowings ​ ​ 58,444 ​ ​ 1,477 ​ 2.53 % ​ 47,968 ​ ​ 147 ​ 0.31 % Long-term borrowings ​ ​ 92,213 ​ ​ 4,710 ​ 5.11 % ​ 94,271 ​ ​ 4,941 ​ 5.24 % Total interest-bearing liabilities ​ ​ 1,276,073 ​ ​ 32,015 ​ 2.51 % ​ 1,248,229 ​ ​ 24,286 ​ 1.95 % Non-interest-bearing deposits ​ ​ 468,137 ​ ​ ​ ​ ​ ​ ​ 512,496 ​ ​ ​ ​ ​ ​ Other liabilities ​ ​ 33,326 ​ ​ ​ ​ ​ ​ ​ 32,320 ​ ​ ​ ​ ​ ​ Shareholders’ Equity ​ ​ 169,189 ​ ​ ​ ​ ​ ​ ​ 156,109 ​ ​ ​ ​ ​ ​ Total Liabilities and Shareholders’ Equity ​ $ 1,946,725 ​ ​ ​ ​ ​ ​ $ 1,949,154 ​ ​ ​ ​ ​ ​ Net interest income and spread ​ ​ ​ ​ $ 60,207 ​ 2.66 % ​ ​ ​ $ 57,497 ​ 2.68 % Net interest margin ​ ​ ​ ​ ​ ​ ​ 3.38 % ​ ​ ​ ​ ​ ​ 3.26 % Notes: (1) The above table reflects the average rates earned or paid stated on an FTE basis assuming a tax rate of 21% for 2024 and 2023.
Long-term borrowing costs increased by $0.4 million as a result of an increase of $21.6 million in FHLB average balances due to borrowings obtained in the third quarter of 2024 and subsequent repayment of a $25.0 million advance at its maturity in September 2025, partially offset by a decrease in rate paid of 60 basis points. ​ As shown below, the composition of total interest income between 2025 and 2024 remained relatively stable. ​ ​ ​ ​ ​ ​ ​ ​ % of Total Interest Income ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Interest and fees on loans ​ 90% ​ 89% Interest on investment securities ​ 7% ​ 8% Other ​ 3% ​ 3% ​ 36 ​ Table of Contents ​ The following table sets forth the average balances, net interest income and expense, and average yields and rates for our interest-earning assets and interest-bearing liabilities for 2025 and 2024: Distribution of Assets, Liabilities and Shareholders’ Equity Interest Rates and Interest Differential – Tax Equivalent Basis ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31 ​ ​ 2025 ​ 2024 ​ (in thousands) ​ ​ ​ Average Balance ​ ​ ​ Interest ​ ​ ​ Average Yield/ Rate ​ ​ ​ Average Balance ​ ​ ​ Interest ​ ​ ​ Average Yield/ Rate ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ $ 1,496,125 ​ $ 90,374 ​ 6.04 % $ 1,427,351 ​ $ 81,819 ​ 5.73 % Investment Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ ​ 284,659 ​ ​ 7,210 ​ 2.53 % ​ 285,661 ​ ​ 6,760 ​ 2.37 % Non taxable ​ ​ 7,246 ​ ​ 390 ​ 5.38 % ​ 7,538 ​ ​ 375 ​ 4.97 % Total ​ ​ 291,905 ​ ​ 7,600 ​ 2.60 % ​ 293,199 ​ ​ 7,135 ​ 2.43 % Federal funds sold ​ ​ 62,744 ​ ​ 2,623 ​ 4.18 % ​ 55,117 ​ ​ 2,874 ​ 5.21 % Interest-bearing deposits with other banks ​ ​ 6,152 ​ ​ 89 ​ 1.45 % ​ 2,009 ​ ​ 91 ​ 4.53 % Other interest earning assets ​ ​ 5,467 ​ ​ 380 ​ 6.95 % ​ 4,565 ​ ​ 303 ​ 6.64 % Total earning assets ​ ​ 1,862,393 ​ ​ 101,066 ​ 5.43 % ​ 1,782,241 ​ ​ 92,222 ​ 5.17 % Allowance for credit losses ​ ​ (18,963) ​ ​ ​ ​ ​ ​ ​ (18,064) ​ ​ ​ ​ ​ ​ Non-earning assets ​ ​ 178,572 ​ ​ ​ ​ ​ ​ ​ 182,548 ​ ​ ​ ​ ​ ​ Total Assets ​ $ 2,022,002 ​ ​ ​ ​ ​ ​ $ 1,946,725 ​ ​ ​ ​ ​ ​ Liabilities and Shareholders’ Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing demand deposits ​ $ 370,516 ​ $ 6,355 ​ 1.72 % $ 368,725 ​ $ 6,288 ​ 1.71 % Interest-bearing money markets- retail ​ ​ 484,238 ​ ​ 14,694 ​ 3.03 % ​ 413,353 ​ ​ 14,287 ​ 3.46 % Interest-bearing money markets- brokered ​ ​ 281 ​ ​ 7 ​ 2.49 % ​ 55 ​ ​ 3 ​ 5.45 % Savings deposits ​ ​ 165,625 ​ ​ 172 ​ 0.10 % ​ 180,393 ​ ​ 183 ​ 0.10 % Time deposits - Retail ​ ​ 148,214 ​ ​ 4,299 ​ 2.90 % ​ 147,193 ​ ​ 4,226 ​ 2.87 % Time deposits - Brokered ​ ​ 46,558 ​ ​ 1,997 ​ 4.29 % ​ 15,697 ​ ​ 841 ​ 5.36 % Total deposits ​ ​ 1,215,432 ​ ​ 27,524 ​ 2.26 % ​ 1,125,416 ​ ​ 25,828 ​ 2.29 % Short-term borrowings ​ ​ 20,810 ​ ​ 75 ​ 0.36 % ​ 58,444 ​ ​ 1,477 ​ 2.53 % Long-term borrowings ​ ​ 113,806 ​ ​ 5,136 ​ 4.51 % ​ 92,213 ​ ​ 4,710 ​ 5.11 % Total interest-bearing liabilities ​ ​ 1,350,048 ​ ​ 32,735 ​ 2.42 % ​ 1,276,073 ​ ​ 32,015 ​ 2.51 % Non-interest-bearing deposits ​ ​ 447,553 ​ ​ ​ ​ ​ ​ ​ 468,137 ​ ​ ​ ​ ​ ​ Other liabilities ​ ​ 31,400 ​ ​ ​ ​ ​ ​ ​ 33,326 ​ ​ ​ ​ ​ ​ Shareholders’ Equity ​ ​ 193,001 ​ ​ ​ ​ ​ ​ ​ 169,189 ​ ​ ​ ​ ​ ​ Total Liabilities and Shareholders’ Equity ​ $ 2,022,002 ​ ​ ​ ​ ​ ​ $ 1,946,725 ​ ​ ​ ​ ​ ​ Net interest income and spread ​ ​ ​ ​ $ 68,331 ​ 3.01 % ​ ​ ​ $ 60,207 ​ 2.66 % Net interest margin ​ ​ ​ ​ ​ ​ ​ 3.67 % ​ ​ ​ ​ ​ ​ 3.38 % Notes: (1) The above table reflects the average rates earned or paid stated on an FTE basis assuming a tax rate of 21% for 2025 and 2024.
Our CECL methodology introduced a modified discounted cash flow methodology based on expected cash flow changes in the future. ​ 37 ​ Table of Contents ​ Other Operating Income The following table shows the major components of other operating income for the past two years, exclusive of net gains, and the percentage changes during these years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) 2024 2023 % Change Service charges on deposit accounts ​ $ 2,220 ​ $ 2,198 ​ 1.00% Other service charges ​ ​ 887 ​ ​ 929 ​ (4.52)% Trust department income ​ ​ 9,094 ​ ​ 8,282 ​ 9.80% Debit card income ​ ​ 4,065 ​ ​ 4,101 ​ (0.88)% Bank owned life insurance ​ ​ 1,345 ​ ​ 1,261 ​ 6.66% Brokerage commissions ​ ​ 1,449 ​ ​ 1,160 ​ 24.91% Other income ​ ​ 351 ​ ​ 400 ​ (12.25)% Total other operating income ​ $ 19,411 ​ $ 18,331 ​ 5.89% ​ Other operating income, exclusive of gains, increased by $1.1 million for the year ended December 31, 2024 when compared to the same period of 2023.
The ACL reflects a level commensurate with the risk inherent in our loan portfolio. ​ ​ ​ 38 ​ Table of Contents ​ Other Operating Income The following table shows the major components of other operating income for the past two years, exclusive of net gains, and the percentage changes during these years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ % Change Service charges on deposit accounts ​ $ 2,255 ​ $ 2,220 ​ 1.58% Other service charges ​ ​ 845 ​ ​ 887 ​ (4.74)% Trust department income ​ ​ 9,824 ​ ​ 9,094 ​ 8.03% Debit card income ​ ​ 4,057 ​ ​ 4,065 ​ (0.20)% Bank owned life insurance ​ ​ 1,408 ​ ​ 1,345 ​ 4.68% Brokerage commissions ​ ​ 1,445 ​ ​ 1,449 ​ (0.28)% Other income ​ ​ 332 ​ ​ 351 ​ (5.41)% Total other operating income ​ $ 20,166 ​ $ 19,411 ​ 3.89% ​ Other operating income, exclusive of gains, increased by $0.8 million for the year ended December 31, 2025 when compared to the same period of 2024.
Commercial amortization and payoffs were approximately $114.1 million through December 31, 2024 due primarily to pay-offs of short-term commercial loans as well as normal amortizations of the commercial loan portfolio. ​ New residential mortgage loan production for year ended December 31, 2024 was approximately $73.5 million, with most of this production comprised of in-house loans.
Commercial amortization and payoffs were approximately $170.5 million for the year ended December 31, 2025. ​ New residential mortgage loan production for year ended December 31, 2025 was approximately $76.7 million, with most of this production comprised of in-house loans. The pipeline of in-house, portfolio loans at December 31, 2025 was $4.5 million.
The Bank will use funding sources where the interest cost is relatively insensitive to market changes in the short run (periods of one year or less) to satisfy operating cash needs. The remaining normal funding will come from interest-sensitive liabilities, either deposits or borrowed funds.
That is, the Bank will manage its liquidity to minimize the need to make unplanned sales of assets or to borrow funds under emergency conditions. The Bank will use funding sources where the interest cost is relatively insensitive to market changes in the short run (periods of one year or less) to satisfy operating cash needs.
Our exposure to credit loss in the event of nonperformance by the other party to these financial instruments is represented by the contractual amount of the instruments. The credit risks inherent in loan commitments and letters of credit are essentially the same as those involved in extending loans to customers, and these arrangements are subject to our normal credit policies.
The credit risks inherent in loan commitments and letters of credit are essentially the same as those involved in extending loans to customers, and these arrangements are subject to our normal credit policies. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments.
Service charge and debit card income was stable when comparing 2024 to 2023. ​ Other operating expenses decreased by $0.6 million when compared to the year ended December 31, 2023.
Net gains, service charge income and debit card income were stable when comparing the year ended December 31, 2025 to the same period of 2024. ​ 33 ​ Table of Contents ​ Other operating expenses increased by $3.8 million when compared to the year ended December 31, 2024.
The Bank has worked closely with customers as these retail CDs mature to transition them to other deposit and wealth management products offered by the Bank. ​ The following table summarizes the percentage of deposits that are insured by deposit insurance or otherwise fully collateralized by securities compared to uninsured deposits as of December 31, 2024 and December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 (in thousands) ​ ​ Balance ​ Percent ​ ​ Balance ​ Percent Insured deposits ​ $ 1,192,182 ​ 76% ​ $ 1,212,934 ​ 78% Uninsured but collateralized deposits ​ ​ 77,369 ​ 5% ​ ​ 116,723 ​ 8% Uninsured and uncollateralized deposits ​ ​ 305,278 ​ 19% ​ ​ 221,320 ​ 14% ​ ​ $ 1,574,829 ​ 100% ​ $ 1,550,977 ​ 100% ​ The following table summarizes the percentage of deposit balances from retail customers compared to business customers as of December 31, 2024 and December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 (in thousands) ​ ​ Balance ​ Percent ​ ​ Balance ​ Percent Retail deposits ​ $ 798,664 ​ 51% ​ $ 820,954 ​ 53% Business deposits ​ ​ 776,165 ​ 49% ​ ​ 730,023 ​ 47% ​ ​ $ 1,574,829 ​ 100% ​ $ 1,550,977 ​ 100% 51 ​ Table of Contents ​ ​ Borrowed Funds The following shows the composition of our borrowings at December 31: ​ ​ ​ ​ ​ ​ ​ (in thousands) 2024 2023 Overnight borrowings at Federal Reserve Discount Window ​ $ 50,000 ​ $ — Securities sold under agreements to repurchase ​ $ 15,409 ​ $ 45,418 Total short-term borrowings ​ $ 65,409 ​ $ 45,418 ​ ​ ​ ​ ​ ​ ​ Long-term FHLB advances ​ $ 90,000 ​ $ 80,000 Junior subordinated debentures ​ $ 30,929 ​ $ 30,929 Total long-term borrowings ​ $ 120,929 ​ $ 110,929 ​ ​ ​ ​ ​ ​ ​ Total borrowings ​ $ 186,338 ​ $ 156,347 ​ ​ ​ ​ ​ ​ ​ Average balance (from Table 1) ​ $ 150,657 ​ $ 142,239 ​ The following is a summary of short-term borrowings at December 31 with original maturities of less than one year: ​ ​ ​ ​ ​ ​ ​ (in thousands) 2024 2023 Overnight borrowings, weighted average interest rate of 4.50% at December 31, 2024 ​ $ 50,000 ​ $ — Securities sold under agreements to repurchase: ​ ​ ​ ​ ​ ​ Outstanding at end of year ​ $ 15,409 ​ $ 45,418 Weighted average interest rate at year end ​ ​ 0.24% ​ ​ 0.27% Maximum amount outstanding as of any month end ​ $ 44,415 ​ $ 59,777 Average amount outstanding ​ ​ 29,085 ​ ​ 50,498 Approximate weighted average rate during the year ​ ​ 0.26% ​ ​ 0.24% ​ Short-term borrowings increased by $20.0 million when compared to December 31, 2023 due to an increase of $50.0 million in overnight borrowings from the Federal Reserve, offset by a shift of approximately $22.0 million in overnight investment sweep balances into FDIC insured accounts due to management’s strategy to release pledging of investment securities for municipalities to provide additional liquidity.
We repaid a $25.0 million brokered time deposit at its maturity in January 2026. ​ The following table summarizes the percentage of deposits that are insured by deposit insurance or otherwise fully collateralized by securities compared to uninsured deposits as of December 31, 2025 and December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 (in thousands) ​ ​ Balance ​ Percent ​ ​ Balance ​ Percent Insured deposits ​ $ 1,341,185 ​ 77% ​ $ 1,255,893 ​ 80% Uninsured but collateralized deposits ​ ​ 101,925 ​ 6% ​ ​ 77,369 ​ 5% Uninsured and uncollateralized deposits ​ ​ 292,039 ​ 17% ​ ​ 241,567 ​ 15% ​ ​ $ 1,735,149 ​ 100% ​ $ 1,574,829 ​ 100% ​ The following table summarizes the percentage of deposit balances from retail customers compared to business customers as of December 31, 2025 and December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 (in thousands) ​ ​ Balance ​ Percent ​ ​ Balance ​ Percent Retail deposits ​ $ 807,443 ​ 47% ​ $ 798,664 ​ 51% Business deposits ​ ​ 927,706 ​ 53% ​ ​ 776,165 ​ 49% ​ ​ $ 1,735,149 ​ 100% ​ $ 1,574,829 ​ 100% ​ Borrowed Funds The following shows the composition of our borrowings at December 31: ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Overnight borrowings at Federal Reserve Discount Window ​ $ — ​ $ 50,000 Securities sold under agreements to repurchase ​ ​ 17,661 ​ ​ 15,409 Total short-term borrowings ​ $ 17,661 ​ $ 65,409 ​ ​ ​ ​ ​ ​ ​ Long-term FHLB advances ​ $ 65,000 ​ $ 90,000 Junior subordinated debentures ​ ​ 30,929 ​ ​ 30,929 Total long-term borrowings ​ $ 95,929 ​ $ 120,929 ​ ​ ​ ​ ​ ​ ​ Total borrowings ​ $ 113,590 ​ $ 186,338 ​ ​ ​ ​ ​ ​ ​ Average balance (from Table 1) ​ $ 134,616 ​ $ 150,657 ​ 54 ​ Table of Contents ​ The following is a summary of short-term borrowings at December 31 with original maturities of less than one year: ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Overnight borrowings, weighted average interest rate of 4.50% at December 31, 2024 ​ $ — ​ $ 50,000 Securities sold under agreements to repurchase: ​ ​ ​ ​ ​ ​ Outstanding at end of year ​ $ 17,661 ​ $ 15,409 Weighted average interest rate at year end ​ ​ 0.22% ​ ​ 0.24% Maximum amount outstanding as of any month end ​ $ 26,756 ​ $ 44,415 Average amount outstanding ​ ​ 19,565 ​ ​ 29,085 Approximate weighted average rate during the year ​ ​ 0.22% ​ ​ 0.26% ​ Short-term borrowings decreased by $47.7 million as a result of the purchase of $50.0 million brokered time deposits to repay the overnight borrowings, which was partially offset by increases in the overnight investment sweep product.
Interest expense on deposits increased by $6.6 million while the average deposit balances increased by $19.4 million, driven by increases in average balances of $6.7 million in interest-bearing demand deposits, $5.3 million in retail time deposits, and $80.1 million in money market balances, partially offset by decreases in savings balances of $39.1 million and brokered time deposits of $33.5 million.
Interest expense increased by $0.7 million as a result of a $1.7 million increase in interest on deposits, as the average deposit balances increased by $90.0 million, driven by a $70.9 million increase in retail money market average balances and $30.9 million increase in average brokered time deposits, partially offset by decreases in average savings balances of $14.8 million.
The below table shows details of loans modified to borrowers experiencing financial difficulty at December 31, 2024: ​ ​ ​ ​ ​ ​ December 31, 2024 (in thousands) Term Extension Percentage of Total Loan Type Weighted Average Term and Principal Payment Extension December 31, 2024 ​ ​ ​ ​ Owner-occupied commercial real estate $ 884 0.38% 12 months Commercial and industrial ​ 122 0.04% 60 months Total $ 1,006 ​ ​ ​ All loans presented in the table above were performing in accordance with their modified terms at December 31, 2024 Allowance for Credit Losses Effective January 1, 2023, we adopted the accounting guidance in FASB’s Accounting Standards Update (“ASU”) No. 2016-13 , Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , universally referred to as CECL.
The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below: ​ ​ ​ ​ ​ (in thousands) Term Extension Percentage of Total Loan Type Weighted Average Term and Principal Payment Extension December 31, 2025 ​ ​ ​ ​ Commercial and industrial $ 246 0.09% 18 months Total $ 246 ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ ​ ​ ​ Owner-occupied commercial real estate $ 884 0.38% 12 months Commercial and industrial ​ 122 0.04% 60 months Total $ 1,006 ​ ​ ​ All loans presented in the table above were performing in accordance with their modified terms at December 31, 2025 and 2024.
Wealth management income, which includes trust department revenue and brokerage commissions, increased by $1.1 million due to improving market conditions, increased annuity sales and growth in new and existing customer relationships.
This increase was attributable to a $0.7 million increase in wealth management income, driven by improving market conditions, increased annuity sales, and growth in new and existing customer relationships.
Non-GAAP interest income on an FTE basis for the years ended December 31, 2024 and 2023 were $229 and $627, respectively. (2) The average balances of non-accrual loans for the years ended December 31, 2024 and 2023, which were reported in the average loan balances for these years, were $8,471 and $3,171, respectively.
Non-GAAP interest income on an FTE basis for the years ended December 31, 2025 and 2024 were $218 and $229, respectively. (2) Average balances are presented on a daily average basis.
Gains on sales of residential mortgages were $0.4 million for the years ending December 31, 2024 and 2023. ​ The following table shows the components of net gains for the year ended December 31, 2024 and net losses for the year ended December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) 2024 2023 Net gains/(losses): ​ ​ ​ ​ ​ ​ Available-for-sale securities: ​ ​ ​ ​ ​ ​ Realized losses from sales and calls ​ ​ — ​ ​ (4,214) Gains on sale of loans held for sale ​ ​ 414 ​ ​ 381 Loss on disposal of fixed assets ​ ​ — ​ ​ (29) Net gains/(losses) ​ $ 414 ​ $ (3,862) ​ ​ ​ 38 ​ Table of Contents ​ Other Operating Expense The following table compares the major components of other operating expense for 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) 2024 2023 % Change Salaries and employee benefits ​ $ 28,029 ​ $ 27,520 ​ 1.85% FDIC premiums ​ ​ 1,070 ​ ​ 992 ​ 7.86% Equipment ​ ​ 2,675 ​ ​ 3,157 ​ (15.27)% Occupancy ​ ​ 2,878 ​ ​ 3,441 ​ (16.36)% Data processing ​ ​ 5,761 ​ ​ 5,384 ​ 7.00% Marketing ​ ​ 674 ​ ​ 833 ​ (19.09)% Professional services ​ ​ 1,948 ​ ​ 2,133 ​ (8.67)% Contract labor ​ ​ 597 ​ ​ 616 ​ (3.08)% Line rentals ​ ​ 408 ​ ​ 466 ​ (12.45)% Total OREO expenses/(income), net ​ ​ 271 ​ ​ (89) ​ 404.49% Investor relations ​ ​ 293 ​ ​ 345 ​ (15.07)% Contributions ​ ​ 234 ​ ​ 229 ​ 2.18% Other expenses ​ ​ 4,802 ​ ​ 5,216 ​ (7.94)% Total other operating expense ​ $ 49,640 ​ $ 50,243 ​ (1.20)% ​ Other operating expenses decreased by $0.6 million for the year ended December 31, 2024 when compared to 2023.
The increase was primarily a result of an increase of $0.7 million in wealth management income due to increased market values of assets under management, increased annuity sales and growth in new and existing customer relationships. ​ Net gains of $0.4 million were reported for the years ended December 31, 2025 and 2024, as a $0.1 million increase in gains from the sales of residential mortgages and a $0.1 million increase in net gains on sales of investment securities was offset by a $0.2 million loss on the disposal of fixed assets. ​ The following table shows the components of net gains for the years ended December 31, 2025 and 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Net gains: ​ ​ ​ ​ ​ ​ Available-for-sale securities: ​ ​ ​ ​ ​ ​ Realized gains from sales and calls ​ $ 203 ​ $ — Realized losses from sales and calls ​ ​ (106) ​ ​ — Gains on sale of loans held for sale ​ ​ 533 ​ ​ 414 Losses on disposal of fixed assets ​ ​ (228) ​ ​ — Net gains ​ $ 402 ​ $ 414 ​ ​ ​ 39 ​ Table of Contents ​ Other Operating Expense The following table compares the major components of other operating expense for 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ % Change Salaries and employee benefits ​ $ 29,347 ​ $ 28,029 ​ 4.70% FDIC premiums ​ ​ 1,051 ​ ​ 1,070 ​ (1.78)% Equipment ​ ​ 2,217 ​ ​ 2,675 ​ (17.12)% Occupancy ​ ​ 2,860 ​ ​ 2,878 ​ (0.63)% Data processing ​ ​ 6,243 ​ ​ 5,761 ​ 8.37% Marketing ​ ​ 904 ​ ​ 674 ​ 34.12% Professional services ​ ​ 2,449 ​ ​ 1,948 ​ 25.72% Contract labor ​ ​ 634 ​ ​ 597 ​ 6.20% Line rentals ​ ​ 380 ​ ​ 408 ​ (6.86)% Total OREO expenses, net ​ ​ 2,235 ​ ​ 271 ​ 724.72% Investor relations ​ ​ 306 ​ ​ 293 ​ 4.44% Contributions ​ ​ 344 ​ ​ 234 ​ 47.01% Other expenses ​ ​ 4,435 ​ ​ 4,802 ​ (7.64)% Total other operating expense ​ $ 53,405 ​ $ 49,640 ​ 7.58% ​ For the year ended December 31, 2025, non-interest expense increased by $3.8 million when compared to the year ended December 31, 2024.
Interest expense on short-term borrowings increased by $1.3 million due to the Bank’s utilization of the BTFP program in 2024. The increased interest expense resulted in an overall increase of 56 basis points on the cost of interest-bearing liabilities.
The overall rate paid on deposits decreased by 3 basis points. Interest expense on short-term borrowings decreased by $1.4 million due to the Bank’s utilization of the BTFP program in 2024 and subsequent repayment of the balances due under that program late in the third quarter of 2024.
Loan modifications to borrowers may be in the form of a principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, a term extension, or a combination thereof, among other things.
Loan modifications to borrowers may be in the form of a principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, a term extension, or a combination thereof, among other things. ​ 47 ​ Table of Contents ​ The below table presents the amortized cost basis of loans that were both experiencing financial difficulty and modified during the years ended December 31, 2025 and 2024, by class and by type of modification.
The Bank has worked closely with customers as these retail CDs mature to transition them to other deposit and wealth management products offered by the Bank. ​ 33 ​ Table of Contents ​ Estimates and Critical Accounting Policies This discussion and analysis of our financial condition and results of operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.
We repaid a $25.0 million brokered time deposit at its maturity in January 2026. ​ Estimates and Critical Accounting Policies This discussion and analysis of our financial condition and results of operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.
The Bank continues to liquidate collateral on both loan relationships. ​ Management believes that the ACL at December 31, 2024 is adequate to provide for losses over the life of the loan portfolio.
Our special assets team continues to actively collect on charged-off loans, resulting in overall low net charge-off ratios. ​ Management believes that the ACL at December 31, 2025 is adequate to provide for losses over the life of the loan portfolio.
The ratio of the ACL to loans outstanding was 1.23% at December 31, 2024 compared to 1.24% at December 31, 2023. ​ Other operating income, including net gains/(losses) on sales of mortgage loans and sales of investment securities, increased by approximately $5.4 million when compared to 2023.
Higher cash levels at December 31, 2025 should allow us to repay outstanding debt and brokered deposits at their maturities. ​ Other operating income, including net gains on sales of mortgage loans, sales of investment securities and disposal of fixed assets, increased by approximately $0.7 million when compared to 2024.
The measurement is based upon the projection of funds sold or purchased position, along with ratios and trends developed to measure dependence on purchased funds and core growth. Monthly reviews by management and quarterly reviews by the Asset and Liability Committee under prescribed policies and procedures are designed to ensure that we will maintain adequate levels of available funds.
Monthly reviews by management and quarterly reviews by the Asset and Liability Committee under prescribed policies and procedures are designed to ensure that we will maintain adequate levels of available funds. It is our policy to manage our affairs so that liquidity needs are fully satisfied through normal Bank operations.
At December 31, 2024, the most recent notification from the regulators categorizes the Bank as “well capitalized” under the regulatory framework for prompt corrective action.
The total risk-based capital ratios of the Bank at December 31, 2024 was 14.59%. At December 31, 2025, the most recent notification from the regulators categorizes the Bank as “well capitalized” under the regulatory framework for prompt corrective action. See Note 3 to the Consolidated Financial Statements presented elsewhere in this annual report for additional information regarding regulatory capital ratios.
Net charge-offs of $2.2 million were recorded for the year ended December 31, 2024 and $0.9 million for the year ended December 31, 2023.
The provision expense recorded in 2025 was primarily related to charge-offs recorded in our commercial and industrial portfolio and growth in our loan portfolio. Net charge-offs of $1.0 million and $2.2 million were recorded for the years ended December 31, 2025 and 2024, respectively.
The remainder was used to fund loan growth in the fourth quarter of 2024. ​ ​ ​ 41 ​ Table of Contents ​ As indicated below, the total interest-earning asset mix remained relatively constant at December 31, 2024 as compared to December 31, 2023.
Long-term borrowings decreased by $25.0 million due to the repayment of a matured $25.0 million FHLB borrowing in September 2025. ​ ​ ​ 42 ​ Table of Contents ​ As indicated below, the total interest-earning asset mix remained relatively constant at December 31, 2025 when compared to December 31, 2024.
We are not a party to any other off-balance sheet arrangements. See Note 16 to the Consolidated Financial Statements presented elsewhere in this annual report for additional information on these arrangements.
See Note 16 to the Consolidated Financial Statements presented elsewhere in this annual report for additional information on these arrangements. Capital Resources We require capital to fund loans, satisfy our obligations under the Bank’s letters of credit, meet the deposit withdraw demands of the Bank’s customers, and satisfy our other monetary obligations.
Investment Security Maturities, Yields, and Fair Values at December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) 1 Year To 5 Years 5 Years To 10 Years Over 10 Years Total Fair Value Securities Available-for-Sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ $ 4,802 ​ $ — ​ $ 1,313 ​ $ 6,115 Residential mortgage-backed agencies ​ ​ — ​ ​ 18,222 ​ ​ 1,974 ​ ​ 20,196 Commercial mortgage-backed agencies ​ ​ 22,868 ​ ​ 5,766 ​ ​ — ​ ​ 28,634 Collateralized mortgage obligations ​ ​ 1,182 ​ ​ 13,096 ​ ​ 3,448 ​ ​ 17,726 Obligations of states and political subdivisions ​ ​ 250 ​ ​ 2,320 ​ ​ 3,639 ​ ​ 6,209 Corporate bonds ​ ​ — ​ ​ 896 ​ ​ — ​ ​ 896 Collateralized debt obligations ​ ​ — ​ ​ — ​ ​ 14,718 ​ ​ 14,718 Total available for sale ​ $ 29,102 ​ $ 40,300 ​ $ 25,092 ​ $ 94,494 Percentage of total ​ ​ 30.80% ​ ​ 42.65% ​ ​ 26.55% ​ ​ 100.00% Weighted average yield ​ ​ 2.53% ​ ​ 2.22% ​ ​ 11.06% ​ ​ 4.66% Held to Maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ $ 11,990 ​ $ 32,556 ​ $ 12,563 ​ $ 57,109 Residential mortgage-backed agencies ​ ​ 1,550 ​ ​ 5,968 ​ ​ 21,093 ​ ​ 28,611 Commercial mortgage-backed agencies ​ ​ 6,985 ​ ​ 8,355 ​ ​ — ​ ​ 15,340 Collateralized mortgage obligations ​ ​ 1,882 ​ ​ 17,487 ​ ​ 20,346 ​ ​ 39,715 Obligations of states and political subdivisions ​ ​ — ​ ​ 1,806 ​ ​ 2,179 ​ ​ 3,985 Total held to maturity ​ $ 22,407 ​ $ 66,172 ​ $ 56,181 ​ $ 144,760 Percentage of total ​ ​ 15.48% ​ ​ 45.71% ​ ​ 38.81% ​ ​ 100.00% Weighted average yield ​ ​ 2.35% ​ ​ 2.26% ​ ​ 3.22% ​ ​ 2.65% ​ 50 ​ Table of Contents ​ The weighted average yield was calculated using historical cost balances and does not give effect to changes in fair value.
Investment Security Maturities, Yields, and Fair Values at December 31, 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ 1 Year To 5 Years ​ ​ ​ 5 Years To 10 Years ​ ​ ​ Over 10 Years ​ ​ ​ Total Fair Value Securities Available-for-Sale: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ $ — ​ $ — ​ $ 1,404 ​ $ 1,404 Residential mortgage-backed agencies ​ ​ — ​ ​ — ​ ​ 22,855 ​ ​ 22,855 Commercial mortgage-backed agencies ​ ​ — ​ ​ — ​ ​ 30,068 ​ ​ 30,068 Collateralized mortgage obligations ​ ​ — ​ ​ — ​ ​ 27,390 ​ ​ 27,390 Obligations of states and political subdivisions ​ ​ 250 ​ ​ 4,418 ​ ​ 3,857 ​ ​ 8,525 Corporate bonds ​ ​ — ​ ​ 907 ​ ​ — ​ ​ 907 Collateralized debt obligations ​ ​ — ​ ​ 9,426 ​ ​ 6,569 ​ ​ 15,995 Total available for sale ​ $ 250 ​ $ 14,751 ​ $ 92,143 ​ $ 107,144 Percentage of total ​ ​ 0.23% ​ ​ 13.77% ​ ​ 86.00% ​ ​ 100.00% Weighted average yield ​ ​ 3.62% ​ ​ 13.74% ​ ​ 3.22% ​ ​ 4.67% Held to Maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agencies ​ $ 16,640 ​ $ 38,402 ​ $ 5,832 ​ $ 60,874 Residential mortgage-backed agencies ​ ​ — ​ ​ 1,220 ​ ​ 28,528 ​ ​ 29,748 Commercial mortgage-backed agencies ​ ​ — ​ ​ 7,360 ​ ​ 8,407 ​ ​ 15,767 Collateralized mortgage obligations ​ ​ — ​ ​ — ​ ​ 38,391 ​ ​ 38,391 Obligations of states and political subdivisions ​ ​ — ​ ​ 1,745 ​ ​ 2,364 ​ ​ 4,109 Total held to maturity ​ $ 16,640 ​ $ 48,727 ​ $ 83,522 ​ $ 148,889 Percentage of total ​ ​ 11.17% ​ ​ 32.73% ​ ​ 56.10% ​ ​ 100.00% Weighted average yield ​ ​ 2.53% ​ ​ 2.60% ​ ​ 2.94% ​ ​ 2.78% ​ The weighted average yield was calculated using historical cost balances and does not give effect to changes in fair value.
The factors that determine the institution’s liquidity are: ● Reliability and stability of core deposits; ● Cash flow structure and pledging status of investments; and ● Potential for unexpected loan demand. We actively manage our liquidity position through meetings of a sub-committee of executive management, which looks forward 12 months at 30-day intervals.
Liquidity Management Liquidity is a financial institution’s capability to meet customer demands for deposit withdrawals while funding all credit-worthy loans. The factors that determine the institution’s liquidity are: ● Reliability and stability of core deposits; ● Cash flow structure and pledging status of investments; and ● Potential for unexpected loan demand.
Net income for the year ended December 31, 2023 was 32 ​ Table of Contents ​ inclusive of a $3.3 million loss, net of tax, on the sale of securities and $0.5 million, net of tax, in increased expenses related to announced branch closures and adjusted net income was $18.8 million on a non-GAAP basis. ​ The provision for credit losses was $2.9 million for the year ended December 31, 2024 and $1.7 million for the year ended December 31, 2023.
Net income for the year ended December 31, 2025 was inclusive of a $1.3 million write-down, net of tax, on other real estate owned (“OREO”) property, a $0.2 million loss, net of tax, on disposal of fixed assets, and a $0.1 million gain, net of tax, on sale of available-for-sale (“AFS”) investment securities and adjusted net income was $25.8 million on a non-GAAP basis.
Since December 31, 2023, commercial real estate loans increased by $32.7 million, acquisition and development loans increased by $18.2 million, commercial and industrial loans increased by $12.9 million, residential mortgage loans increased by $18.9 million, and consumer loans decreased by $8.6 million. ​ Net interest income, on a non-GAAP, fully-taxable equivalent (“FTE”) basis, increased by $2.7 million in 2024 when compared to 2023.
The ratio of the ACL to loans outstanding was 1.28% at December 31, 2025 compared to 1.23% at December 31, 2024. ​ Net interest income, on a non-GAAP, fully-taxable equivalent (“FTE”) basis, increased by $8.1 million in 2025 when compared to 2024. Interest income increased by $8.8 million, which was partially offset by a $0.7 million increase in interest expense.
The residential mortgage production level declined in the fourth quarter of 2024 due to the increasing interest rates and seasonality of this line of business. ​ The following table presents loans in our commercial real estate portfolio by industry type at December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) Non-owner-occupied ​ Owner-occupied ​ Multi-family ​ Total Accommodations and food services $ 71,234 ​ $ 5,537 ​ $ - ​ $ 76,771 Administration and support, waste management, and remediation services ​ - ​ ​ 1,413 ​ ​ - ​ ​ 1,413 Agriculture, forestry, fishing and hunting ​ - ​ ​ 2,028 ​ ​ - ​ ​ 2,028 Arts, entertainment and recreation ​ - ​ ​ 4,428 ​ ​ - ​ ​ 4,428 Construction ​ 2,036 ​ ​ 5,733 ​ ​ - ​ ​ 7,769 Educational services ​ - ​ ​ 873 ​ ​ - ​ ​ 873 Finance and insurance ​ - ​ ​ 107 ​ ​ - ​ ​ 107 Health care and social assistance ​ 6,465 ​ ​ 12,683 ​ ​ - ​ ​ 19,148 Manufacturing ​ - ​ ​ 12,906 ​ ​ - ​ ​ 12,906 Other services (except public services) ​ 2,207 ​ ​ 16,882 ​ ​ 308 ​ ​ 19,397 Professional, scientific and technical services ​ - ​ ​ 2,091 ​ ​ - ​ ​ 2,091 Public administration ​ 1,438 ​ ​ 960 ​ ​ - ​ ​ 2,398 Commercial rental properties ​ 4,000 ​ ​ 3,335 ​ ​ 400 ​ ​ 7,735 Residential rental properties ​ 178,864 ​ ​ 86,758 ​ ​ - ​ ​ 265,622 Student rental properties ​ 1,977 ​ ​ 531 ​ ​ 17,633 ​ ​ 20,141 Mixed use rental properties ​ 190 ​ ​ 127 ​ ​ 28,120 ​ ​ 28,437 Storage units ​ 27,843 ​ ​ - ​ ​ - ​ ​ 27,843 Real estate rental and leasing- other ​ - ​ ​ - ​ ​ 2,632 ​ ​ 2,632 Retail trade ​ 5 ​ ​ 3,071 ​ ​ - ​ ​ 3,076 Transportation and warehousing ​ - ​ ​ 459 ​ ​ - ​ ​ 459 Wholesale trade ​ - ​ ​ 21,090 ​ ​ - ​ ​ 21,090 Total $ 296,259 ​ $ 181,012 ​ $ 49,093 ​ $ 526,364 ​ Our loan portfolio does not consist of any loans secured by office buildings located in major metropolitan areas or that are over four stories or any retail properties rented to major big box retail tenants. ​ 43 ​ Table of Contents ​ The following table sets forth the maturities, based upon contractual dates, for selected loan categories as of December 31, 2024: Maturities of Loan Portfolio at December 31, 2024 Fixed Rate Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) Maturing Within One Year Maturing After One Year But Within Five Years Maturing After Five Years Within Fifteen Years ​ Maturing After Fifteen Years Total Commercial real estate ​ $ 83,475 ​ $ 299,673 ​ $ 31,067 ​ $ 944 ​ $ 415,159 Acquisition and development ​ ​ 37,568 ​ ​ 12,962 ​ ​ 46 ​ ​ — ​ ​ 50,576 Commercial and industrial ​ ​ 17,056 ​ ​ 128,262 ​ ​ 29,433 ​ ​ — ​ ​ 174,751 Residential mortgage ​ ​ 4,880 ​ ​ 30,907 ​ ​ 26,913 ​ ​ 101,965 ​ ​ 164,665 Consumer ​ ​ 1,127 ​ ​ 30,999 ​ ​ 9,872 ​ ​ 1,576 ​ ​ 43,574 Total Loans ​ $ 144,106 ​ $ 502,803 ​ $ 97,331 ​ $ 104,485 ​ $ 848,725 ​ Variable Rate Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ Maturing Within One Year Maturing After One Year But Within Five Years Maturing After Five Years Within Fifteen Years ​ Maturing After Fifteen Years Total Commercial real estate ​ $ 8,933 ​ $ 34,035 ​ $ 37,270 ​ $ 30,967 ​ $ 111,205 Acquisition and development ​ ​ 10,765 ​ ​ 20,276 ​ ​ 6,737 ​ ​ 6,960 ​ ​ 44,738 Commercial and industrial ​ ​ 66,194 ​ ​ 32,653 ​ ​ 13,149 ​ ​ 787 ​ ​ 112,783 Residential mortgage ​ ​ 1,696 ​ ​ 1,603 ​ ​ 22,014 ​ ​ 328,837 ​ ​ 354,150 Consumer ​ ​ 3,833 ​ ​ 2 ​ ​ 606 ​ ​ 4,751 ​ ​ 9,192 Total Loans ​ $ 91,421 ​ $ 88,569 ​ $ 79,776 ​ $ 372,302 ​ $ 632,068 ​ Management monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a required payment is past due.
Unfunded commitments related to residential construction loans totaled $14.5 million at December 31, 2025. ​ The following table presents loans in our commercial real estate portfolio by industry type at December 31, 2025. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) Non-owner-occupied ​ Owner-occupied ​ Multi-family ​ Total Accommodations and food services $ 68,125 ​ $ 5,277 ​ $ - ​ $ 73,402 Administration and support, waste management, and remediation services ​ - ​ ​ 1,421 ​ ​ - ​ ​ 1,421 Agriculture, forestry, fishing and hunting ​ - ​ ​ 3,133 ​ ​ - ​ ​ 3,133 Arts, entertainment and recreation ​ - ​ ​ 4,169 ​ ​ - ​ ​ 4,169 Construction ​ 1,971 ​ ​ 6,056 ​ ​ - ​ ​ 8,027 Educational services ​ - ​ ​ 784 ​ ​ - ​ ​ 784 Finance and insurance ​ 8,530 ​ ​ 104 ​ ​ - ​ ​ 8,634 Health care and social assistance ​ 11,522 ​ ​ 21,694 ​ ​ - ​ ​ 33,216 Manufacturing ​ - ​ ​ 14,017 ​ ​ - ​ ​ 14,017 Mining, Quarrying, and Oil & Gas Extraction ​ - ​ ​ 378 ​ ​ ​ ​ ​ 378 Other services (except public services) ​ - ​ ​ 19,787 ​ ​ 296 ​ ​ 20,083 Professional, scientific and technical services ​ - ​ ​ 1,528 ​ ​ - ​ ​ 1,528 Public administration ​ 1,343 ​ ​ 584 ​ ​ - ​ ​ 1,927 Commercial rental properties ​ 184,653 ​ ​ 79,963 ​ ​ - ​ ​ 264,616 Residential rental properties ​ 182 ​ ​ 112 ​ ​ 23,297 ​ ​ 23,591 Student rental properties ​ - ​ ​ - ​ ​ 2,270 ​ ​ 2,270 Mixed use rental properties ​ 2,401 ​ ​ 765 ​ ​ 19,244 ​ ​ 22,410 Storage units ​ 45,305 ​ ​ - ​ ​ - ​ ​ 45,305 Real estate rental and leasing- other ​ 10,582 ​ ​ 5,015 ​ ​ - ​ ​ 15,597 Retail trade ​ 69 ​ ​ 2,698 ​ ​ - ​ ​ 2,767 Transportation and warehousing ​ - ​ ​ 431 ​ ​ - ​ ​ 431 Wholesale trade ​ - ​ ​ 23,102 ​ ​ - ​ ​ 23,102 Total $ 334,683 ​ $ 191,018 ​ $ 45,107 ​ $ 570,808 ​ Our loan portfolio does not consist of any loans secured by office buildings located in major metropolitan areas or that are over four stories or any retail properties rented to major big box retail tenants. ​ 44 ​ Table of Contents ​ The following table sets forth the maturities, based upon contractual dates, for selected loan categories as of December 31, 2025: Maturities of Loan Portfolio at December 31, 2025 Fixed Rate Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ Maturing Within One Year ​ ​ ​ Maturing After One Year But Within Five Years ​ ​ ​ Maturing After Five Years Within Fifteen Years ​ Maturing After Fifteen Years ​ ​ ​ Total Commercial real estate ​ $ 78,941 ​ $ 333,296 ​ $ 23,585 ​ $ — ​ $ 435,822 Acquisition and development ​ ​ 32,216 ​ ​ 19,538 ​ ​ 1 ​ ​ — ​ ​ 51,755 Commercial and industrial ​ ​ 30,054 ​ ​ 101,585 ​ ​ 31,381 ​ ​ — ​ ​ 163,020 Residential mortgage ​ ​ 11,618 ​ ​ 26,502 ​ ​ 23,958 ​ ​ 95,955 ​ ​ 158,033 Consumer ​ ​ 2,075 ​ ​ 26,943 ​ ​ 7,232 ​ ​ 1,093 ​ ​ 37,343 Total Loans ​ $ 154,904 ​ $ 507,864 ​ $ 86,157 ​ $ 97,048 ​ $ 845,973 ​ Variable Rate Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ Maturing Within One Year ​ ​ ​ Maturing After One Year But Within Five Years ​ ​ ​ Maturing After Five Years Within Fifteen Years ​ Maturing After Fifteen Years ​ ​ ​ Total Commercial real estate ​ $ 18,870 ​ $ 47,046 ​ $ 33,131 ​ $ 35,939 ​ $ 134,986 Acquisition and development ​ ​ 19,719 ​ ​ 6,295 ​ ​ 6,651 ​ ​ 5,852 ​ ​ 38,517 Commercial and industrial ​ ​ 61,335 ​ ​ 41,646 ​ ​ 10,112 ​ ​ 921 ​ ​ 114,014 Residential mortgage ​ ​ 2,029 ​ ​ 2,852 ​ ​ 22,334 ​ ​ 351,664 ​ ​ 378,879 Consumer ​ ​ 4,017 ​ ​ — ​ ​ 813 ​ ​ 4,505 ​ ​ 9,335 Total Loans ​ $ 105,970 ​ $ 97,839 ​ $ 73,041 ​ $ 398,881 ​ $ 675,731 ​ Management monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a required payment is past due.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, the Corporation is not required to provide the information contemplated by this item. See Item 7 of Part II of this report under the heading “Market Risk and Interest Sensitivity” for a discussion of the Corporation’s primary market risk. ​ 56 ​ Table of Contents ​
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, the Corporation is not required to provide the information contemplated by this item. See Item 7 of Part II of this report under the heading “Market Risk and Interest Sensitivity” for a discussion of the Corporation’s primary market risk. ​ 59 ​ Table of Contents ​

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