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What changed in LINKBANCORP, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of LINKBANCORP, Inc.'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.

+245 added−250 removedSource: 10-K (2026-03-12) vs 10-K (2025-03-31)

Top changes in LINKBANCORP, Inc.'s 2025 10-K

245 paragraphs added · 250 removed · 187 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

64 edited+12 added−14 removed146 unchanged
Biggest changeCurrent Market Area We currently conduct our business principally through eight customer solutions centers located in Dauphin, Chester, Cumberland, Lancaster, Northumberland, and Schuylkill Counties, and loan production offices located in Chester and York Counties, in Pennsylvania, eight solutions centers in Wicomico, Charles, Anne Arundel, and Worcester counties in Maryland, four solutions centers and a loan production office in Sussex county in Delaware, three solutions centers in Camden and Burlington counties in New Jersey, three solutions centers in Spotsylvania and Fairfax counties in Virginia, and one solutions center in the city of Fredericksburg, Virginia.
Biggest changeDuring the year ended December 31, 2025, the Company achieved the following accomplishments: • Total deposits grew from $2.36 billion at December 31, 2024 to $2.55 billion at December 31, 2025, resulting in a growth rate of 8.23%; • Total loans held for investment grew 13.34% from $2.26 billion at December 31, 2024 to $2.56 billion at December 31, 2025; and • Maintained strong credit quality, with total nonperforming assets at 0.79% of total assets at December 31, 2025 Current Market Area We currently conduct our business principally through eight customer solutions centers located in Dauphin, Chester, Cumberland, Lancaster, Northumberland, and Schuylkill Counties, and loan production offices located in Chester and York Counties, in Pennsylvania, eight solutions centers in Wicomico, Charles, Anne Arundel, and Worcester counties in Maryland, four solutions centers and a loan production office in Sussex county in Delaware, three solutions centers in Spotsylvania and Fairfax counties in Virginia, and one solutions center in the city of Fredericksburg, Virginia.
The operations of the Bank also are subject to the: 14 ▪ Truth In Savings Act, which requires banks to provide consumers with disclosures about terms and cost of deposit accounts and imposes requirements for deposit account advertisements; ▪ Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; ▪ Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers' rights and liabilities arising from the use of automated teller machines and other electronic banking services; ▪ Check Clearing for the 21st Century Act (also known as "Check 21"), which gives "substitute checks," such as digital check images and copies made from that image, the same legal standing as the original paper check; ▪ USA PATRIOT Act, which requires banks operating to, among other things, establish broadened anti-money laundering compliance programs, due diligence policies and controls to ensure the detection and reporting of money laundering.
The operations of the Bank also are subject to the: ▪ Truth In Savings Act, which requires banks to provide consumers with disclosures about terms and cost of deposit accounts and imposes requirements for deposit account advertisements; ▪ Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; 14 ▪ Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers' rights and liabilities arising from the use of automated teller machines and other electronic banking services; ▪ Check Clearing for the 21st Century Act (also known as "Check 21"), which gives "substitute checks," such as digital check images and copies made from that image, the same legal standing as the original paper check; ▪ USA PATRIOT Act, which requires banks operating to, among other things, establish broadened anti-money laundering compliance programs, due diligence policies and controls to ensure the detection and reporting of money laundering.
In addition, extensions of credit in excess of certain limits must be approved by the Bank’s Board. Extensions of credit to executive officers are subject to additional limits based on the type of extension involved. Standards for Safety and Soundness Federal law requires each federal banking agency to prescribe certain standards for all insured depository institutions.
In addition, extensions of credit in excess of certain limits must be 12 approved by the Bank’s Board. Extensions of credit to executive officers are subject to additional limits based on the type of extension involved. Standards for Safety and Soundness Federal law requires each federal banking agency to prescribe certain standards for all insured depository institutions.
The FDIC has primary federal enforcement responsibility over non-member state banks and has authority to bring actions against the institution and all institution-affiliated 13 parties, including shareholders, and any attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful actions likely to have an adverse effect on the bank.
The FDIC has primary federal enforcement responsibility over non-member state banks and has authority to bring actions against the institution and all institution-affiliated parties, including shareholders, and any attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful actions likely to have an adverse effect on the bank.
The Bank of Delmarva and Virginia Partners Bank merged with and into LINKBANK with LINKBANK as the surviving bank (the "Bank Mergers"). In connection with the announcement of the Partners Merger in the first quarter of 2023, LINKBANCORP completed a private placement of $10.0 million with certain directors of LINKBANCORP as well as other accredited investors.
The Bank of Delmarva and Virginia Partners Bank merged with and into LINKBANK with LINKBANK as the surviving bank. In connection with the announcement of the Partners Merger in the first quarter of 2023, LINKBANCORP completed a private placement of $10.0 million with certain directors of LINKBANCORP as well as other accredited investors.
In addition, federal regulations prohibit a state-chartered bank from lending to any of its affiliates that are engaged in activities that are not permissible for bank holding companies and from purchasing the securities of any affiliate, other than a 12 subsidiary.
In addition, federal regulations prohibit a state-chartered bank from lending to any of its affiliates that are engaged in activities that are not permissible for bank holding companies and from purchasing the securities of any affiliate, other than a subsidiary.
Lending Activities Our principal lending activity has been the origination of commercial real estate loans, commercial business loans, and to a lesser extent, commercial real estate construction and land development loans, residential real estate loans, home equity loans, consumer 5 loans and agriculture loans.
Lending Activities Our principal lending activity has been the origination of commercial real estate loans and commercial business loans, and to a lesser extent, commercial real estate construction and land development loans, residential real estate loans, home equity loans, consumer loans and agriculture loans.
Assessments for most insured depository institutions are now based on financial measures and supervisory ratings derived from statistical modeling estimating the probability of failure within three years. The assessment range (inclusive of possible adjustments) is for institutions of the Bank’s size 2.5 basis points to 32 basis points as of December 31, 2024.
Assessments for most insured depository institutions are now based on financial measures and supervisory ratings derived from statistical modeling estimating the probability of failure within three years. The assessment range (inclusive of possible adjustments) is for institutions of the Bank’s size 2.5 basis points to 32 basis points as of December 31, 2025.
At December 31, 2024, the Company had a portfolio of investment securities available for sale which is reported at fair value and a portfolio of held to maturity investment securities that were carried at amortized cost. Source of Funds Generally, deposits are the Company’s primary source of funds for use in lending and investment activities.
At December 31, 2025, the Company had a portfolio of investment securities available for sale which is reported at fair value and a portfolio of held to maturity investment securities that were carried at amortized cost. Source of Funds Generally, deposits are the Company’s primary source of funds for use in lending and investment activities.
Management utilizes brokered deposits as a supplement to core deposit funding from time to time and does not consider brokered deposits to be a primary source of funding. 9 The following table sets forth the distribution of total deposits for the Bank by account type as of December 31, 2024.
Management utilizes brokered deposits as a supplement to core deposit funding from time to time and does not consider brokered deposits to be a primary source of funding. 9 The following table sets forth the distribution of total deposits for the Bank by account type as of December 31, 2025.
As a member of the FHLB of Pittsburgh, the Bank is required to acquire and hold shares of capital stock in the FHLB. As of December 31, 2024, the Bank was in compliance with this requirement. The Bank is able to borrow from the FHLB of Pittsburgh, which provides an additional source of liquidity for the Bank.
As a member of the FHLB of Pittsburgh, the Bank is required to acquire and hold shares of capital stock in the FHLB. As of December 31, 2025, the Bank was in compliance with this requirement. The Bank is able to borrow from the FHLB of Pittsburgh, which provides an additional source of liquidity for the Bank.
At December 31, 2024, the Bank met the criteria for being considered “well capitalized.” Enforcement The PADOBS maintains enforcement authority over the Bank, including the power to issue cease and desist orders and civil money penalties and to remove directors, officers or employees.
At December 31, 2025, the Bank met the criteria for being considered “well capitalized.” Enforcement The PADOBS maintains enforcement authority over the Bank, including the power to issue cease and desist orders and civil money penalties and to remove directors, officers or employees.
The Bank has eight solutions centers in Chester, Cumberland, Dauphin, Lancaster, Northumberland and Schuylkill counties in Pennsylvania, and loan production offices in Chester and York Counties in Pennsylvania, eight solutions centers in Wicomico, Charles, Anne Arundel, and Worcester counties in Maryland, four solutions centers and a loan production office in Sussex county in Delaware, three solutions centers in Camden and Burlington counties in New Jersey, three solutions centers in Spotsylvania and Fairfax counties in Virginia, and one solutions center in the city of Fredericksburg, Virginia.
The Bank has eight solutions centers in Chester, Cumberland, Dauphin, Lancaster, Northumberland and Schuylkill counties in Pennsylvania, and loan production offices in Chester and York Counties in Pennsylvania, eight solutions centers in Wicomico, Charles, Anne Arundel, and Worcester counties in Maryland, four solutions centers and a loan production office in Sussex county in Delaware, three solutions centers in Spotsylvania and Fairfax counties in Virginia, and one solutions center in the city of Fredericksburg, Virginia.
This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. As of December 31, 2024, the allowance for credit losses was 1.17% of total loans. Investments The Company’s board of directors is responsible for approving and overseeing the investment policy.
This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. As of December 31, 2025, the allowance for credit losses was 1.24% of total loans. Investments The Company’s board of directors is responsible for approving and overseeing the investment policy.
At December 31, 2024, the Company had no concentrations of loans in any one industry exceeding 10% of its total loan portfolio.
At December 31, 2025, the Company had no concentrations of loans in any one industry exceeding 10% of its total loan portfolio.
In addition, commercial business loans often result in larger outstanding balances to single borrowers, or related groups of borrowers, and also generally require substantially greater evaluation and oversight efforts. Construction and Land Development Lending . At December 31, 2024, $152.6 million, or 6.8% of our total loan portfolio, consisted of construction and land loans.
In addition, commercial business loans often result in larger outstanding balances to single borrowers, or related groups of borrowers, and also generally require substantially greater evaluation and oversight efforts. Construction and Land Development Lending . At December 31, 2025, $172.9 million, or 6.8% of our total loan portfolio, consisted of construction and land loans.
Construction, land and land development loans represented 55.97% of total risk based capital. Management has implemented and continues to maintain heightened risk management procedures and prudent underwriting criteria with respect to its commercial real estate portfolio.
Construction, land and land development loans represented 53.8% of total risk based capital. Management has implemented and continues to maintain heightened risk management procedures and prudent underwriting criteria with respect to its commercial real estate portfolio.
Of these, $108.8 million were for commercial development and land loans and $43.8 million were for residential development. We offer both fixed-rate and adjustable-rate construction and land loans, although most of these loans have fixed interest rates. The maximum loan-to-value of these loans is generally 80% of the lesser of the appraised value or the purchase price of the property.
Of these, $147.8 million were for commercial development and land loans and $25.1 million were for residential development. We offer both fixed-rate and adjustable-rate construction and land loans, although most of these loans have variable interest rates. The maximum loan-to-value of these loans is generally 80% of the lesser of the appraised value or the purchase price of the property.
For example, as of June 30, 2024 (the most recent date for which data is available), data provided by the FDIC Deposit Market Share Report indicated that within the Company's current physical locations, there were 112 different FDIC-insured institutions operating a total of 1,307 offices.
For example, as of June 30, 2025 (the most recent date for which data is available), data provided by the FDIC Deposit Market Share Report indicated that within the Company's current physical locations, there were 96 different FDIC-insured institutions operating a total of 1,102 offices.
At December 31, 2024, we had $76.7 million of home equity loans reported within residential real estate loans, representing 3.4% of our total loan portfolio. Home equity loans consists of either revolving lines of credit, term, or second mortgage loans secured by one-to-four family residential real estate.
At December 31, 2025, we had $87.1 million of home equity loans reported within residential real estate loans, representing 3.4% of our total loan portfolio. Home equity loans consists of either revolving lines of credit, term, or second mortgage loans secured by one-to-four family residential real estate.
The address of the site is www.sec.gov. 4 Strategy and Recent Growth Our core strategy is to further our mission of “positively impacting lives” through community banking by building strong relationships that bring value to our customers, employees, the communities we serve and our shareholders.
Strategy and Recent Growth Our core strategy is to further our mission of “positively impacting lives” through community banking by building strong relationships that bring value to our customers, employees, the communities we serve and our shareholders.
The SEC maintains an Internet web site that contains reports, proxy statements, and other information about issuers, like us, who file electronically with the SEC.
The SEC maintains an Internet web site that contains reports, proxy statements, and other information about issuers, like us, who file electronically with the SEC. The address of the site is www.sec.gov.
At December 31, 2024, our consumer loan portfolio totaled $17.1 million, or 0.8% of our total loan portfolio, and $6.8 million of our consumer loans were unsecured (excluding overdraft accounts).
At December 31, 2025, our consumer loan portfolio totaled $17.1 million, or 0.7% of our total loan portfolio, and $3.8 million of our consumer loans were unsecured (excluding overdraft accounts).
As of December 31, 2024, the Company had 298 full-time and 29 part time employees. 10 REGULATION AND SUPERVISION LINKBANCORP, is a bank holding company within the meaning of the Bank Holding Company Act of 1956, as amended (the “BHC Act”).
As of December 31, 2025, the Company had 296 full-time and 23 part-time employees. 10 REGULATION AND SUPERVISION LINKBANCORP, is a bank holding company within the meaning of the Bank Holding Company Act of 1956, as amended (the “BHC Act”).
As of December 31, 2024, we had $1.32 billion in commercial real estate and multi-family loans, representing 58.4% of total loans. Our commercial real estate and multi-family loans generally have amortization terms of 15 to 25 years and have adjustable interest rates.
As of December 31, 2025, we had $1.56 billion in commercial real estate and multi-family loans, representing 61.1% of total loans. Our commercial real estate and multi-family loans generally have amortization terms of 15 to 25 years and have adjustable interest rates.
As of December 31, 2024, we had $245.8 million in commercial business loans, representing 10.9% of total loans. Our business strategy is to increase our originations of commercial business loans.
As of December 31, 2025, we had $275.8 million in commercial business loans, representing 10.8% of total loans. Our business strategy is to increase our originations of commercial business loans.
The notes are redeemable at the option of the Company, in whole or in part, subject to any required regulatory approvals after five years, or April 15, 2027. Competition Commercial banking in our locations is extremely competitive.
The notes have a term of ten years, with a maturity date of April 15, 2032. The notes are redeemable at the option of the Company, in whole or in part, subject to any required regulatory approvals after five years, or April 15, 2027. Competition Commercial banking in our locations is extremely competitive.
Cybersecurity Banking organizations are required to notify their primary federal regulator as soon as possible, and no later than 36 hours after, the banking organization determines that a "computer-security incident" rising to the level of a "notification incident" has occurred.
The Bank received a “satisfactory” rating in its most recent federal examination. Cybersecurity Banking organizations are required to notify their primary federal regulator as soon as possible, and no later than 36 hours after, the banking organization determines that a "computer-security incident" rising to the level of a "notification incident" has occurred.
In addition, the Federal Deposit Insurance Act provides that an insured depository institution may not make any capital distribution if, after making such distribution, the institution would fail to meet any applicable regulatory capital requirement.
Dividends may not reduce surplus without the prior consent of the PADOBS. In addition, the Federal Deposit Insurance Act provides that an insured depository institution may not make any capital distribution if, after making such distribution, the institution would fail to meet any applicable regulatory capital requirement.
The Company, like many community banks, has a concentration in commercial real estate loans, and the Company has experienced growth in its commercial real estate portfolio in recent years, including through the Partners Merger. At December 31, 2024, non-owner-occupied commercial real estate loans (including construction, land and land development loans, and multifamily) represented 365.65% of total risk based capital.
Like many community banks, the Company has a concentration in commercial real estate loans and has experienced significant growth in the portfolio in recent years, including growth resulting from the Partners Merger. At December 31, 2025, non-owner-occupied commercial real estate loans (including construction, land and land development loans, and multifamily) represented 369.85% of total risk based capital.
A company loses emerging growth company status on the earlier of: (i) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.235 billion or more; (ii) the last day of the fiscal year of the issuer following the fifth 16 anniversary of the date of the first sale of common equity securities of the company pursuant to an effective registration statement under the Securities Act of 1933; (iii) the date on which such company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which such company is deemed to be a “large accelerated filer” under Securities and Exchange Commission regulations (generally, at least $700 million of voting and non- voting equity held by non-affiliates).
A company loses emerging growth company status on the earlier of: (i) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.235 billion or more; (ii) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the company pursuant to an effective registration statement under the Securities Act of 1933; (iii) the date on which such company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which such company is deemed to be a “large accelerated filer” under Securities and Exchange Commission regulations (generally, at least $700 million of voting and non- voting equity held by non-affiliates). 16 Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act of 2002 is intended to improve corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws.
In addition to the loan types discussed above, the Company also originates agricultural loans and municipal loans. At December 31, 2024, our agricultural loan portfolio totaled $67.7 million or 3.0% of our total loan portfolio and municipal loans totaled 7 $3.9 million or 0.2% of our total loan portfolio.
In addition to the loan types discussed above, the Company also originates agricultural loans and municipal loans. At December 31, 2025, our agricultural loan portfolio totaled $61.6 million or 2.4% of our total loan portfolio and municipal loans totaled 7 $2.8 million or 0.1% of our total loan portfolio.
Of this amount, $20.1 million was acquired in the Gratz Merger and bear interest at a fixed interest rate of 5.0% per year for five years and then float at an index tied to the Secured Overnight Finance Rate ("SOFR"). The notes have a term of ten years, with a maturity date of October 1, 2030.
At December 31, 2025, the Company had subordinated notes outstanding with a carrying value of $62.3 million. Of this amount, $20.0 million was acquired in the Gratz Merger and bear interest at a fixed interest rate of 5.0% per year for five years and then float at an index tied to the Secured Overnight Finance Rate ("SOFR").
The Company does not engage in any investment hedging activities or trading activities, nor does it purchase any high-risk mortgage derivative products, corporate junk bonds, and certain types of structured notes.
The Company also is required to maintain an investment in FHLB stock, which investment is based primarily on the level of the Company’s FHLB borrowings. The Company does not engage in any investment hedging activities or trading activities, nor does it purchase any high-risk mortgage derivative products, corporate junk bonds, and certain types of structured notes.
One-to-four family Residential Real Estate Lending. At December 31, 2024, we had $373.5 million in residential real estate loans, representing 16.6% of total loans.
One-to-four family Residential Real Estate Lending. At December 31, 2025, we had $377.1 million in residential real estate loans, representing 14.8% of total loans.
At December 31, 2024, our core deposits (which includes all deposits except for time deposit accounts greater than $250,000, brokered deposits, and the deposits currently classified as held for sale) totaled $2.09 billion or 88.62% of our total deposits. At December 31, 2024, we had $103.6 million in brokered deposits, all maturing in the first half of 2025.
At December 31, 2025, our core deposits (which includes all deposits except for time deposit accounts greater than $250,000 and brokered deposits) totaled $2.31 billion or 90.4% of our total deposits. At December 31, 2025, we had $35.0 million in brokered deposits, all maturing in the first quarter of 2026.
Each of these individuals have extensive experience in the approval of commercial loans. The SLC has authority to approve loans beginning over $7.5 million up to and including $15 million.
The SLC requires a quorum of the Chief Executive Officer, Holding Company President, Bank President, Chief Credit Officer, Senior Credit Officers, and Market Chief Executive Officers. Each of these individuals have extensive experience in the approval of commercial loans. The SLC has authority to approve loans beginning over $7.5 million up to and including $15 million.
Our reciprocal CDARS and ICS deposits totaled $221.4 million at December 31, 2024.
Our reciprocal CDARS and ICS deposits totaled $290.0 million at December 31, 2025.
Capital Distributions The Pennsylvania Banking Code states, in part, that dividends may be declared and paid only out of accumulated net earnings and may not be declared or paid unless surplus is at least equal to capital. Dividends may not reduce surplus without the prior consent of the PADOBS.
As of December 31, 2025, the Bank was in compliance with the loans-to-one borrower limitations. Capital Distributions The Pennsylvania Banking Code states, in part, that dividends may be declared and paid only out of accumulated net earnings and may not be declared or paid unless surplus is at least equal to capital.
At December 31, 2024, our commercial real estate loans were 47.67% non-owner occupied, 36.25% owner-occupied, and 16.08% multifamily. We consider a number of factors in originating commercial real estate and multi-family loans.
At December 31, 2025, our commercial real estate loans were 49.3% non-owner occupied, 35.0% owner-occupied, and 15.7% multifamily. We consider a number of factors in originating commercial real estate and multi-family loans.
Such institutions that meet the community bank leverage ratio and certain other qualifying criteria will automatically be deemed to be well-capitalized. Eligible institutions may opt into and out of the community bank ratio 11 framework on their quarterly call report. The Bank did not elect to follow the community bank leverage ratio as of December 31, 2024.
Such institutions that meet the community bank leverage ratio and certain other qualifying criteria will automatically be deemed to be well-capitalized. Eligible institutions may opt into and out of the community bank ratio framework on their quarterly call report. In November 2025, the federal banking agencies issued a proposed rule to lower the 11 community bank leverage ratio to 8%.
LINKBANCORP common stock is traded on the Nasdaq Capital Market under the trading symbol “LNKB” and is subject to Nasdaq's rules for listed companies. LINKBANK, a Pennsylvania-chartered, non-Federal Reserve member bank, is subject to regulation and supervision by the Pennsylvania Department of Banking and Securities ("PADOBS") and the FDIC. LINKBANCORP is the Bank’s sole shareholder.
LINKBANK, a Pennsylvania-chartered, non-Federal Reserve member bank, is subject to regulation and supervision by the Pennsylvania Department of Banking and Securities ("PADOBS") and the FDIC. LINKBANCORP is the Bank’s sole shareholder.
The remaining subordinated notes of $20.0 million bear interest at a fixed interest rate of 4.5% per year for five years and then float at an index tied to the Secured Overnight Finance Rate ("SOFR"). The notes have a term of ten years, with a maturity date of April 15, 2032.
The second tranche has a face value of $18.05 million and bear interest at a fixed rate of 6.0% per year for 18 additional months. The remaining subordinated notes of $20.0 million bear interest at a fixed interest rate of 4.5% per year for five years and then float at an index tied to the Secured Overnight Finance Rate ("SOFR").
Our commercial customers are primarily small- and medium-sized businesses. Approximately 36% of the loan portfolio earns interest at a fixed rate and the remaining approximately 64% of the loan portfolio earns interest at a rate that varies or adjusts based on an underlying index at December 31, 2024.
Approximately 36.8% of the loan portfolio earns interest at a fixed rate and the remaining approximately 63.2% of the loan portfolio earns interest at a rate that varies or adjusts based on an underlying index at December 31, 2025.
An additional amount may be loaned, equal to 10% of unimpaired capital and surplus, if the loan is secured by readily marketable collateral, which generally does not include real estate. As of December 31, 2024, the Bank was in compliance with the loans-to-one borrower limitations.
Loans-to-One Borrower Generally, a Pennsylvania-chartered commercial bank may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of capital. An additional amount may be loaned, equal to 10% of unimpaired capital and surplus, if the loan is secured by readily marketable collateral, which generally does not include real estate.
As of December 31, 2024, the Company had total consolidated assets of approximately $2.88 billion, total loans of approximately $2.26 billion, total deposits of approximately $2.36 billion and total consolidated shareholders’ equity of approximately $280.2 million.
As of December 31, 2025, the Company had total consolidated assets of approximately $3.07 billion, total loans of approximately $2.56 billion, total deposits of approximately $2.55 billion and total consolidated shareholders’ equity of approximately $306.4 million.
On May 9, 2024, the Bank entered into a purchase and assumption agreement (the “Agreement”) with American Heritage Federal Credit Union (“AHFCU”) pursuant to which AHFCU will purchase certain assets and assume certain liabilities (the “Transaction”) of the New Jersey operations of the Bank, including all three branch locations (including two branch leases).
On March 31, 2025, the Bank completed the sale of the New Jersey operations of the Bank pursuant to a purchase and assumption agreement (the "Agreement") with American Heritage Federal Credit Union ("AHFCU") pursuant to which AHFCU purchased certain assets and assumed certain liabilities, including all three branch locations.
We believe that this approach gives our Bank greater flexibility to better serve our markets and increases responsiveness to the needs of local customers.
Our regions are based on geographic markets, which allows each region to retain flexibility and local leadership in the unique communities we serve. We believe that this approach gives our Bank greater flexibility to better serve our markets and increases responsiveness to the needs of local customers.
Our legal lending limit was $42.4 million at December 31, 2024. In addition, we have established an in-house target that is less than the legal limits on loans to one borrower. Our in-house target was $25.0 million at December 31, 2024.
Our legal lending limit was $47.5 million at December 31, 2025. In addition, we have established an in-house limit that is less than the legal limits on loans to one borrower. Our in-house limit was $30.0 million at December 31, 2025. At December 31, 2025, our largest credit relationship totaled $29.9 million, comprised of three separate facilities.
Consequently, bank holding companies such as the Company with less than $3.0 billion of consolidated assets are not subject to the consolidated holding company capital requirements unless otherwise directed by the Federal Reserve. 15 Source of Strength The Federal Reserve has issued regulations requiring that all bank holding companies serve as a source of strength to their subsidiary depository institutions by providing financial, managerial and other support in times of an institution’s distress.
Source of Strength The Federal Reserve has issued regulations requiring that all bank holding companies serve as a source of strength to their subsidiary depository institutions by providing financial, managerial and other support in times of an institution’s distress. 15 Dividends and Stock Repurchases The Federal Reserve has issued a policy statement regarding the payment of dividends by holding companies.
In general, regulatory enforcement actions occur with respect to situations involving unsafe or unsound practices or conditions, violations of law or regulation or breaches of fiduciary duty. Federal and Pennsylvania laws also establish criminal penalties for certain violations. Federal Insurance of Deposit Accounts The maximum amount of deposit insurance for banks, savings institutions and credit unions is $250,000 per depositor.
Federal and Pennsylvania laws also establish criminal penalties for certain violations. 13 Federal Insurance of Deposit Accounts The maximum amount of deposit insurance for banks, savings institutions and credit unions is $250,000 per depositor.
The failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions by the FDIC, as well as other federal regulatory agencies and the Department of Justice. On October 24, 2023, the FDIC and the other federal bank regulatory agencies issued a final rule to strengthen and modernize the federal CRA regulations.
The failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions by the FDIC, as well as other federal regulatory agencies and the Department of Justice. The Community Reinvestment Act requires all institutions insured by the FDIC to publicly disclose their rating.
The Bank has established the Senior Loan Committee (SLC) to be able to more efficiently service our commercial customers, prudently manage credit risks, and effectively insure that credit policies are followed. The SLC requires a quorum of the Chief Executive Officer, Holding Company President, Bank President, Chief Credit Officer, Senior Credit Officers, and Market Chief Executive Officers.
Our lending activities follow written, nondiscriminatory underwriting standards and loan origination procedures established by our board of directors and management. The Bank has established the Senior Loan Committee (SLC) to be able to more efficiently service our commercial customers, prudently manage credit risks, and effectively insure that credit policies are followed.
We will continue to consider other strategic locations in the markets we serve to further our objective to become the bank of choice in those markets. We occasionally make loans secured by properties located outside of our primary lending market, usually to borrowers with whom we have an existing relationship and who have a presence within our primary market.
We occasionally make loans secured by properties located outside of our primary lending market, usually to borrowers with whom we have an existing relationship and who have a presence within our primary market. While we manage our banking operations as separate regions, we operate in only one segment.
The first tranche has a face value of $4.5 million and bear interest at a fixed rate of 6.875% per year for four years. The second tranche has a face value of $18.05 million and bear interest at a fixed rate of 6.0% per year for 18 additional months.
Subordinated notes with carrying value of $22.3 million were assumed in the Partners Merger within two tranches of debt issuances. The first tranche has a face value of $4.5 million and bear interest at a fixed rate of 6.875% per year for four years.
LINKBANCORP’s principal executive offices are located at 1250 Camp Hill Bypass, Suite 202, Camp Hill, PA 17011, its phone number is 855-569-2265 and its website is ir.linkbancorp.com.
LINKBANCORP’s principal executive offices are located at 1250 Camp Hill Bypass, Suite 202, Camp Hill, PA 17011, its phone number is 855-569-2265 and its website is ir.linkbancorp.com. 4 The Company is subject to the disclosure and regulatory requirements of the Exchange Act and, in accordance with the Exchange Act, it files annual, quarterly, and current reports, proxy statements, and other information with the SEC.
Such advances may be made pursuant to several different credit programs, each of which has its own interest rate and range of maturities. As of December 31, 2024 we had $50.0 million in outstanding FHLB advances, of which $10 million matured in January 2025 and $40 million matures in February 2026.
We obtain advances from the FHLB upon the security of our capital stock in the FHLB and certain of our loans. Such advances may be made pursuant to several different credit programs, each of which has its own interest rate and range of maturities.
The notes are redeemable at the option of the Company, in whole or in part, subject to any required regulatory approvals after five years or October 1, 2025. Subordinated notes with carrying value of $21.9 million were assumed in the Partners Merger within two tranches of debt issuances.
The notes have a term of ten years, with a maturity date of October 1, 2030. The notes have been redeemable at the option of the Company, in whole or in part, subject to any required regulatory approvals since October 1, 2025.
We strive to identify potential problem loans early in an effort to aggressively seek resolution of these situations before the loans create a loss, record any necessary charge-offs promptly and maintain adequate allowance for credit losses levels. 8 Although we maintain a cautious credit outlook due to continued uncertainty in the economic environment, we believe the Bank is very well positioned for the months ahead given a strong credit loss reserve, application of prudent underwriting standards and a diverse loan portfolio, which does not include a significant concentration of loans in office, restaurants, lodging or other industries that are perceived to be at higher risk in the current economic environment.
We strive to identify potential problem loans early in an 8 effort to aggressively seek resolution of these situations before the loans create a loss, record any necessary charge-offs promptly and maintain adequate allowance for credit losses levels. Allowance for Credit Losses.
The Bank classifies its loan portfolio based on the collateral securing the loan, consistent with the reporting requirements of the Call Report filed with the FDIC. The Bank is predominantly oriented towards commercial customers, with approximately 79.28% of the portfolio in various types of commercial loans and 20.72% in residential real estate, consumer, and other loans at December 31, 2024.
The Bank is predominantly oriented towards commercial customers, 5 with approximately 81.17% of the portfolio in various types of commercial loans and 18.83% in residential real estate, consumer, and other loans at December 31, 2025. Our commercial customers are primarily small- and medium-sized businesses.
The following table sets forth the composition of the Bank’s loan portfolio by type of loan held for investment as of December 31, 2024: (In Thousands) December 31, 2024 Percent Agriculture loans $ 67,741 3.00 % Construction loans 152,619 6.77 Commercial & industrial loans 245,833 10.90 Commercial real estate loans Multifamily 211,778 9.39 Owner occupied 477,742 21.19 Non-owner occupied 628,237 27.86 Residential real estate loans First liens 373,469 16.56 Second liens and lines of credit 76,713 3.40 Consumer and other loans 17,086 0.76 Municipal loans 3,886 0.17 2,255,104 100 % Deferred costs 645 Allowance for credit losses (26,435 ) Total $ 2,229,314 Commercial Real Estate Lending .
The following table sets forth the composition of the Bank’s loan portfolio by type of loan held for investment as of December 31, 2025: (In Thousands) December 31, 2025 Percent Agriculture loans $ 61,611 2.41 % Construction loans 172,917 6.76 % Commercial & industrial 275,824 10.79 % Commercial real estate loans Multifamily 244,554 9.57 % Owner occupied 545,837 21.35 % Non-owner occupied 771,537 30.18 % Residential real estate loans First liens 377,108 14.75 % Second liens 87,051 3.41 % Consumer and other loans 17,062 0.67 % Municipal loans 2,767 0.11 % 2,556,268 100 % Deferred fees 461 Allowance for loan losses (31,674 ) Total $ 2,525,055 Commercial Real Estate Lending .
At December 31, 2024, the Bank exceeded all regulatory capital requirements and was considered to be well-capitalized based on FDIC guidelines. Loans-to-One Borrower Generally, a Pennsylvania-chartered commercial bank may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of capital.
That proposed rule was not effective as of December 31, 2025. The Bank did not elect to follow the community bank leverage ratio as of December 31, 2025. At December 31, 2025, the Bank exceeded all regulatory capital requirements and was considered to be well-capitalized based on FDIC guidelines.
At December 31, 2024, we had remaining available capacity with FHLB, subject to certain collateral restrictions, of approximately $723.8 million. At December 31, 2024, the Company had subordinated notes outstanding with a carrying value of $62.0 million.
As of December 31, 2025 we had $115.0 million in outstanding FHLB advances, of which $40.0 million matured in February 2026 and $75 million as part of our interest rate swap transaction. At December 31, 2025, we had remaining available capacity with FHLB, subject to certain collateral restrictions, of approximately $682.9 million.
At December 31, 2024, our largest credit relationship totaled $24.1 million, comprised of four separate facilities, most of which are secured by real estate. Each of these loans was performing in accordance with its terms at December 31, 2024. Our lending activities follow written, nondiscriminatory underwriting standards and loan origination procedures established by our board of directors and management.
Of the three facilities, the majority consists of a $27.5 million line of credit with no balance at December 31, 2025, secured by UCC liens. The remaining loans in the relationship are secured by real estate. Each of these loans was performing in accordance with its terms at December 31, 2025.
Removed
Under the Agreement, AHFCU will acquire substantially all of the loans, three branch locations (along with associated personal property and fixtures) and will assume substantially all of the deposits. The Federal Deposit Insurance Corporation ("FDIC") and the National Credit Union Administration ("NCUA") have approved the Transaction which remains subject to customary closing conditions.
Added
Under the Agreement, AHFCU acquired $105.0 million in loans, $2.1 million in fixed assets, and $87.1 million in deposits. The total deposit premium paid by AHFCU was 7% or $6.2 million.
Removed
The Bank anticipates the Transaction will be completed on March 31, 2025. LINKBANCORP has no material operations and conducts no business on its own other than owning the Bank. In December 2023, the GNB Investment Corp. subsidiary was dissolved.
Added
With respect to acquired loans, AHFCU paid an amount equal to the principal balances plus any accrued unpaid interest and late charges on the loans measured as of the closing date. Unamortized loan discounts of $6.7 million were taken into income which was included within the gain on sale.
Removed
The Company is subject to the disclosure and regulatory requirements of the Exchange Act and, in accordance with the Exchange Act, it files annual, quarterly, and current reports, proxy statements, and other information with the SEC.
Added
Core deposit intangibles of $1.3 million were written off and included within the gain on sale. AHFCU paid book value for fixed assets, real estate, and other assets located at the owned branches.
Removed
During the year ended December 31, 2024, the Company achieved the following accomplishments: • Total deposits grew from $2.20 billion at December 31, 2023 to $2.36 billion at December 31, 2024, resulting in a growth rate of 7.36%; • Total loans held for investment grew 5.99% from $2.13 billion at December 31, 2023 to $2.26 billion at December 31, 2024; • Maintained strong credit quality, with total nonperforming assets at 0.60% of total assets at December 31, 2024; and • Net interest margin for the year ended December 31, 2024 was 3.88% compared to 3.09% for the year ended December 31, 2023.
Added
On December 18, 2025, the Company and Burke & Herbert Financial Services Corp., a Virginia corporation ("BHRB"), entered into an Agreement and Plan of Merger (the "Merger Agreement"). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, the Company will merge with and into BHRB, with BHRB as the surviving corporation (the "Merger").
Removed
The Company’s management team has significant experience in successfully executing bank growth strategies, including through bank mergers and acquisitions. Accordingly, as opportunities arise, we will consider growth through acquisition including whole institutions, branches or additional lines of business that are aligned with our strategy and mission, as demonstrated by our merger with Partners completed on November 30, 2023.
Added
The Merger Agreement further provides that immediately following the Merger, the Bank will merge with and into Burke & Herbert Bank & Trust Company, a Virginia chartered bank and a wholly-owned Subsidiary of BHRB ("B&H Bank"), with B&H Bank as the surviving bank.
Removed
While we manage our banking operations as separate regions, we operate in only one segment. Our regions are based on geographic markets, which allows each region to retain flexibility and local leadership in the unique communities we serve.
Added
Shareholders of the Company will receive 0.1350 of a BHRB share of common stock for each share of common stock of the Company that they own. The Merger Agreement was unanimously approved by the board of directors of each of the Company and BHRB.
Removed
The Company also is required to maintain an investment in FHLB stock, which investment is based primarily on the level of the Company’s FHLB borrowings. Additionally, the Company is required to maintain an investment in Federal Reserve Bank of Philadelphia stock equal to six percent of its capital and surplus.
Added
LINKBANCORP has no material operations and conducts no business on its own other than owning the Bank. LINKBANCORP common stock is traded on the Nasdaq Capital Market under the trading symbol “LNKB” and is subject to Nasdaq's rules for listed companies.
Removed
December 31, 2024 (In Thousands) Amount % Demand, noninterest-bearing $ 658,646 27.89 % Demand, interest-bearing 525,173 22.25 Money market and savings 540,030 22.88 Time deposits, $250 and over 164,901 6.99 Time deposits, other 368,217 15.60 Brokered time deposits 103,615 4.39 Total Deposits $ 2,360,582 100.00 % The above table does not include deposits that are held for sale related to the New Jersey branch sale.
Added
The Bank classifies its loan portfolio based on the collateral securing the loan, consistent with the reporting requirements of the Call Report filed with the FDIC.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

25 edited+11 added−6 removed199 unchanged
Biggest changeAs an FDIC-insured institution, the Bank is required to pay quarterly deposit insurance premium assessments to the FDIC. The FDIC issued a final rule in October 2022 to increase initial base deposit insurance assessment rates by 2 basis points beginning in the first quarterly assessment period of 2023.
Biggest changeAs an FDIC-insured institution, the Bank is required to pay quarterly deposit insurance premium assessments to the FDIC. The assessment range (inclusive of possible adjustments) is for institutions of the Bank's size 2.5 basis points to 32 basis points as of December 31, 2025.
The Company’s non-performing assets adversely affect net income in various ways: 20 • the Company records interest income only on the cash basis or cost-recovery method for nonaccrual loans and it does not record interest income for other real estate owned; • the Company must provide for estimated credit losses through a current period charge to the provision for credit losses; • noninterest expense increases when the Company writes down the value of properties in its other real estate owned portfolio to reflect changing market values; • there are legal fees associated with the resolution of problem assets, as well as carrying costs, such as taxes, insurance, and maintenance fees; and • the resolution of non-performing assets requires the active involvement of management, which can distract them from more profitable activity.
The Company’s non-performing assets adversely affect net income in various ways: • the Company records interest income only on the cash basis or cost-recovery method for nonaccrual loans and it does not record interest income for other real estate owned; • the Company must provide for estimated credit losses through a current period charge to the provision for credit losses; • noninterest expense increases when the Company writes down the value of properties in its other real estate owned portfolio to reflect changing market values; • there are legal fees associated with the resolution of problem assets, as well as carrying costs, such as taxes, insurance, and maintenance fees; and 20 • the resolution of non-performing assets requires the active involvement of management, which can distract them from more profitable activity.
If the Company is the owner or former owner of a contaminated site, the Company may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. These costs and claims could adversely affect the Company’s business, results of operations, financial condition, and the value of its securities.
If the Company is the owner or former owner of a contaminated site, the Company may be subject to common law claims 19 by third parties based on damages and costs resulting from environmental contamination emanating from the property. These costs and claims could adversely affect the Company’s business, results of operations, financial condition, and the value of its securities.
The Federal Reserve raised interest rates by 100 basis points through July 2023 to combat rising inflation, and reduced rates by 100 basis points beginning in September 2024. High inflation, if sustained, could have an adverse effect on our business.
The Federal Reserve raised interest rates by 100 basis points through July 2023 to combat rising inflation, and reduced rates by 125 basis points beginning in September 2024. High inflation, if sustained, could have an adverse effect on our business.
If the Company is required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, the Company’s earnings and capital 18 could be adversely affected.
If the Company is required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, the Company’s earnings and capital could be adversely affected.
Market conditions may impact the competitive landscape for deposits in the banking industry. The high interest rate environment and future actions the Federal Reserve may take may impact pricing and demand for deposits in the banking industry.
Market conditions may impact the competitive landscape for deposits in the banking industry. The interest rate environment and future actions the Federal Reserve may take may impact pricing and demand for deposits in the banking industry.
The extent and timing of the new Administration’s policy changes and their impact on the policies of the Federal Reserve, as well as the Company’s business and financial results, are uncertain at this time. The Company may be subject to more stringent capital requirements in the future.
The extent and timing of the current Administration’s policy changes and their impact on the policies of the Federal Reserve, as well as the Company’s business and financial results, are uncertain at this time. The Company may be subject to more stringent capital requirements in the future.
The monetary policies of the Federal Reserve may be affected by certain policy initiatives of the new Administration, which has announced tariffs on certain U.S. trading partners (and has indicated additional tariffs and retaliatory tariffs against U.S. trading partners may be announced in the future) and has implemented stricter immigration policies.
The monetary policies of the Federal Reserve may be affected by certain policy initiatives of the current Administration, which has announced tariffs on certain U.S. trading partners (and has indicated additional tariffs and retaliatory tariffs against U.S. trading partners may be announced in the future) and has implemented stricter immigration policies.
At December 31, 2024, no loan 19 participations were delinquent 60 days or more. If the Bank underwriting of these participation loans is not sufficient, non-performing loans may increase, and earnings may decrease. The Company may be exposed to risk of environmental liabilities with respect to properties to which it takes title.
At December 31, 2025, no loan participations were delinquent 60 days or more. If the Bank underwriting of these participation loans is not sufficient, non-performing loans may increase, and earnings may decrease. The Company may be exposed to risk of environmental liabilities with respect to properties to which it takes title.
The Company’s inability to identify, recruit, and retain talented personnel could limit its growth and could materially adversely affect its business, results of operations, financial condition, and the value of its securities. 21 Changes in economic conditions, in particular an economic slowdown in Pennsylvania, Maryland, Delaware, Northern Virginia, and Southern New Jersey could materially and negatively affect the Company’s business.
The Company’s inability to identify, recruit, and retain talented personnel could limit its growth and could materially adversely affect its business, results of operations, financial condition, and the value of its securities. 21 Changes in economic conditions, in particular an economic slowdown in Pennsylvania, Maryland, Delaware, and Northern Virginia could materially and negatively affect the Company’s business.
However, the Company generally imposes an internal limit that is more conservative than the legal maximum. The Bank’s lending limit may be less than the limit for some of its competitors and may affect its ability to seek relationships with larger businesses in its market area.
However, the Company generally imposes an internal limit that is lower than the legal maximum. The Bank’s lending limit may be less than the limit for some of its competitors and may affect its ability to seek relationships with larger businesses in its market area.
As of December 31, 2024, a majority of our loan portfolio was secured by real estate and other assets located in the local market.
As of December 31, 2025, a majority of our loan portfolio was secured by real estate and other assets located in the local market.
The national economy continues to experience elevated levels of inflation, but not at levels seen in 2022 and 2023. As of December 31, 2024, the year over year consumer price index (“CPI”) increase was 2.9%, primarily driven by increases in food prices.
The national economy continues to experience elevated levels of inflation, but not at levels seen in 2022 and 2023. As of December 31, 2025, the year over year consumer price index (“CPI”) increase was 2.7%, primarily driven by increases in food prices.
The Company primarily serves individuals, businesses and municipalities located in Chester, Cumberland, Dauphin, Lancaster, Northumberland, Schuylkill, and York Counties in Pennsylvania, Wicomico, Charles, Anne Arundel, and Worcester counties in Maryland, Sussex county in Delaware, Camden and Burlington counties in New Jersey, Spotsylvania and Fairfax counties in Virginia, and the city of Fredericksburg, Virginia (the "local market").
The Company primarily serves individuals, businesses and municipalities located in Chester, Cumberland, Dauphin, Lancaster, Northumberland, Schuylkill, and York Counties in Pennsylvania, Wicomico, Charles, Anne Arundel, and Worcester counties in Maryland, Sussex county in Delaware, Spotsylvania and Fairfax counties in Virginia, and the city of Fredericksburg, Virginia (the "local market").
During 2023, in response to accelerated inflation, the Federal Reserve continued to implement monetary tightening policies, resulting in increased interest rates. By the end of 2024, following several interest rate cuts, the Federal Reserve has signaled that interest rates may remain elevated.
During 2023, in response to accelerated inflation, the Federal Reserve continued to implement monetary tightening policies, resulting in increased interest rates. By the end of 2025, following several interest rate cuts, the Federal Reserve has signaled that interest rates may remain stable.
Repayment of commercial business loans is often dependent on the cash flows of the borrower, which may be unpredictable, and the collateral securing these loans may fluctuate in value. At December 31, 2024, $245.8 million, or 10.90% of our total loan portfolio, consisted of commercial business loans.
Repayment of commercial business loans is often dependent on the cash flows of the borrower, which may be unpredictable, and the collateral securing these loans may fluctuate in value. At December 31, 2025, $275.8 million, or 10.79% of our total loan portfolio, consisted of commercial business loans.
Non-owner-occupied commercial real estate loans represent 365.7% of our risk-based capital at December 31, 2024 and the outstanding balance of our commercial real estate loan portfolio has increased by greater than 50% during the 36 months preceding December 31, 2024.
Non-owner-occupied commercial real estate loans represent 369.85% of our risk-based capital at December 31, 2025 and the outstanding balance of our commercial real estate loan portfolio has increased by greater than 50% during the 36 months preceding December 31, 2025.
The deterioration of one or a few of these loans could cause a significant increase in nonperforming loans, which could result in a net loss of earnings, an increase in the provision for credit losses and an increase in loan charge-offs, all of which could have a material adverse effect on the Company’s financial condition and results of operations.
The deterioration of one or a few of these loans could cause a significant increase in nonperforming loans, which could result in a net loss of earnings, an increase in the provision for credit losses and an increase in loan charge-offs, all of which could have a material adverse effect on the Company’s financial condition and results of operations. 18 Commercial real estate loans may increase the Company’s exposure to credit risk.
Under these rules, the Bank is required to satisfy additional, more stringent, capital adequacy standards than it has in the past. If the Company’s consolidated assets were to exceed $3.0 billion or larger, the Company would be subject to consolidated holding company capital requirements similar to those applicable to the Bank.
Under these rules, the Bank is required to satisfy additional, more stringent, capital adequacy standards than it has in the past. Now that the Company’s consolidated assets exceed $3.0 billion, the Company will be subject to consolidated holding company capital requirements similar to those applicable to the Bank.
Construction loan participations for which the Bank was not the lead lender totaled $4.7 million, or 3.1% of our construction loan portfolio. The Bank underwrites each commercial real estate loan, commercial business loan and commercial construction loan that it participates in and establishes the loan classification and loan provision using the same criteria it uses for loans the Bank originates.
Construction loan participations for which the Bank was not the lead lender totaled $513 thousand, or 0.30% of our construction loan portfolio. The Bank underwrites each commercial real estate loan, commercial business loan and commercial construction loan that it participates in and establishes the loan classification and loan provision using the same criteria it uses for loans the Bank originates.
Additional risks and uncertainties that management is not aware of or focused on or that management currently deems immaterial may also impair our business operations. This report is qualified in its entirety by these risk factors. Risks Related to Our Business The Company may be unable to effectively manage its rapid growth.
Additional risks and uncertainties that management is not aware of or focused on or that management currently deems immaterial may also impair our business operations. This report is qualified in its entirety by these risk factors.
At December 31, 2024, non-performing assets, which consist of non-performing loans and other real estate owned, were $17.2 million, or 0.60% of total assets.
At December 31, 2025, non-performing assets, which consist of non-performing loans and other real estate owned, were $24.4 million, or 0.79% of total assets.
At December 31, 2024, commercial real estate loan participations for which the Bank was not the lead lender totaled $74.8 million, or 5.7% of our commercial real estate loan portfolio. Commercial business loan participations for which the Bank was not the lead lender totaled $14.1 million, or 5.7% of our commercial business loan portfolio.
At December 31, 2025, commercial real estate loan participations for which the Bank was not the lead lender totaled $69.9 million, or 4.48% of our commercial real estate loan portfolio. Commercial business loan participations for which the Bank was not the lead lender totaled $12.3 million, or 4.46% of our commercial business loan portfolio.
Commercial real estate loans may increase the Company’s exposure to credit risk. At December 31, 2024, the Company’s commercial real estate loans totaled $1.32 billion, or 58.4%, of our total loan portfolio.
At December 31, 2025, the Company’s commercial real estate loans totaled $1.56 billion, or 61.10%, of our total loan portfolio.
The occurrence of any of these risks could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows. A significant portion of the Company’s loan portfolio is secured by real estate, and events that negatively impact the real estate market could hurt its business.
These restrictions may prevent the Company from pursuing attractive business opportunities that may arise prior to the completion of the Merger. A significant portion of the Company’s loan portfolio is secured by real estate, and events that negatively impact the real estate market could hurt its business.
Removed
The Company's business strategy anticipates the rapid expansion of its business to pursue existing and potential market opportunities. On November 30, 2023, the Company completed the acquisition of Partners Bancorp which more than doubled the size of the Company. This high pace of growth places significant demands on the Company’s management and operational resources.
Added
Risks Related to Our Business Regulatory approvals for the Merger may not be received, may take longer than expected, or may impose conditions that are not presently anticipated or that could have an adverse effect on the continuing corporation following the Merger.
Removed
In order to manage such growth effectively, the Company must implement effective operational systems, procedures and internal controls. Failure to implement these systems, procedures and controls on a timely basis could materially and adversely affect the Company’s results of operation or financial condition.
Added
Before the Merger with BHRB may be completed, various approvals, consents and non-objections must be obtained from regulatory authorities. In determining whether to grant these approvals, such regulatory authorities consider a variety of factors, including the regulatory standing of each party.
Removed
Further, the Company’s continued expansion of its business may include entering new lines of business or introducing new products and services. We cannot assure you that the Company will be successful in such expansion efforts and any failure could materially and adversely affect the Company’s results of operation or financial condition.
Added
These approvals could be delayed or not obtained at all, including due to any or all of the following: an adverse development in either party’s regulatory standing, considerations related to the continuing corporation exceeding $10 billion in total assets, or any other factors considered by regulators when granting such approvals; governmental, political or community group inquiries, investigations or opposition; or changes in legislation or the political environment generally.
Removed
The merger with Partners Bancorp and any future acquisitions could disrupt the Company’s business and adversely affect our results of operations, financial condition and cash flows. On November 30, 2023, the Company completed the acquisition of Partners Bancorp.
Added
Even if the approvals are granted, they may impose terms and conditions, limitations, obligations or costs, or place restrictions on the conduct of the continuing corporation’s business or require changes to the terms of the transactions contemplated by the Merger Agreement.
Removed
The Company may choose to expand in the future by making additional acquisitions, including other financial institutions, branches or fee- based businesses, that could be material to its business, results of operations, financial condition and cash flows.
Added
There can be no assurance that regulators will not impose any such conditions, limitations, obligations or restrictions or that such conditions, limitations, obligations or restrictions will not have the effect of delaying the completion of any of the transactions contemplated by the Merger Agreement, imposing additional material costs on or materially limiting the revenues of the continuing corporation following the Merger or otherwise reduce the anticipated benefits of the Merger.
Removed
Acquisitions, including the merger with Partners Bancorp, involve many risks, including the following: • an acquisition may negatively affect the Company’s results of operations, financial condition or cash flows because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and disputes by third parties, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition; • the Company may encounter difficulties or unforeseen expenditures in integrating the operations of any company that it acquires, particularly if key personnel of the acquired company decide not to work for us; • an acquisition may disrupt our ongoing business, divert resources, increase our expenses and distract our management; • an acquisition, and in particular the Partners Merger, will involve the entry into geographic or business markets in which the Company has little or no prior experience or where competitors have stronger market positions; • if the Company incurs debt to fund such acquisition, such debt may subject us to material restrictions on our ability to conduct our business as well as financial maintenance covenants; and • the Company issued a significant amount of equity securities in connection with the Partners Merger, such that existing shareholders will be diluted and earnings per share may decrease.
Added
In addition, there can be no assurance that any such conditions, limitations, obligations or restrictions will not result in the delay or abandonment of the Merger.
Added
Additionally, the completion of the Merger is conditioned on the absence of certain orders, injunctions or decrees by any court or governmental entity of competent jurisdiction that would prohibit or make illegal the completion of the Merger. The Company will be subject to business uncertainties and contractual restrictions while the Merger is pending.
Added
Uncertainty about the effect of the Merger on employees and customers may have an adverse effect on the Company. These uncertainties may impair the Company’s ability to attract, retain and motivate key personnel until the Merger is completed, and could cause customers and others that deal with the Company to seek to change existing business relationships with the Company.
Added
In addition, subject to certain exceptions, the Company has agreed to operate its business in the ordinary course in all material respects and to refrain from taking certain actions that may adversely affect its ability to consummate the transactions contemplated by the Merger Agreement on a timely basis without the consent of BHRB.
Added
We have recently experienced losses due to purported fraud related to a single commercial credit (the "Commercial Relationship") with total exposure of $5.0 million, requiring a full impairment, with an after-tax effect of $4.0 million during the fourth quarter of 2025.
Added
The determination of this reserve resulted from concerns with the Commercial Relationship raised during the fourth quarter of 2025, leading to the identification of purported fraudulent activity in January 2026.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

1 edited+0 added−0 removed22 unchanged
Biggest changeDuring the first quarter of 2025, the Company hired an Information Security Manager who is a CISSP-certified cybersecurity professional with over 20 years of experience in information technology, security engineering, 32 and risk management. The Information Security Manager has also been added to the Information Security Committee mentioned above.
Biggest changeDuring the first quarter of 2025, the Company hired an Information Security Manager 32 who is a CISSP-certified cybersecurity professional with over 20 years of experience in information technology, security engineering, and risk management. The Information Security Manager is a member of the Information Security Committee mentioned above.

Item 2. Properties

Properties — owned and leased real estate

6 edited+0 added−0 removed2 unchanged
Biggest changeSalisbury Boulevard Salisbury, MD 21801 Owned Pecan Square Solutions Center 1206 Nanticoke Road Salisbury, MD 21801 Owned 26th Street Ocean City Solutions Center 201 B 26th Street, Ocean City, MD 21842 Leased New Jersey Locations: Cherry Hill Solutions Center 2099 Route 70 East, Cherry Hill, NJ 08003 Leased Evesham Solutions Center 145 North Maple Avenue, Marlton, NJ 08053 Owned 34 Moorestown Client Solutions Center 227 West Camden Avenue, Moorestown, NJ 08057 Leased Virginia Locations: Reston Solutions Center 1821 Michael Faraday Drive, Suite 101, Reston, VA 20190 Leased Salem Church Solutions Center 4210 Plank Road, Fredericksburg, VA 22407 Leased Spotsylvania Solution Center 7415 Laughlin Boulevard, Spotsylvania, VA 22553 Leased William Street Solutions Center 410 William Street, Fredericksburg, VA 22401 50% Owned / 50% Leased 35
Biggest changeSalisbury Boulevard Owned Salisbury, MD 21801 Pecan Square Solutions Center 1206 Nanticoke Road Owned Salisbury, MD 21801 26th Street Ocean City Solutions Center 201 B 26th Street, Leased 34 Ocean City, MD 21842 Virginia Locations: Reston Solutions Center 1821 Michael Faraday Drive, Suite 101, Leased Reston, VA 20190 Salem Church Solutions Center 4210 Plank Road, Leased Fredericksburg, VA 22407 Spotsylvania Solution Center 7415 Laughlin Boulevard, Leased Spotsylvania, VA 22553 William Street Solutions Center 410 William Street, Leased Fredericksburg, VA 22401 35
Church Street, Suite 350 West Chester, PA 19380 Leased West Chester Solutions Center 1436 Pottstown Pike West Chester, PA 19380 Leased York Loan Production Office 155 North George Street, Suite 201 York, PA 17401 Leased Delaware Locations: Dagsboro Solutions Center 28280 Clayton Street Dagsboro, DE 19939 Owned Laurel Solutions Center 200 E.
Church Street, Suite 350 Leased West Chester, PA 19380 West Chester Solutions Center 1436 Pottstown Pike Leased West Chester, PA 19380 York Loan Production Office 155 North George Street, Suite 201 Leased York, PA 17401 Delaware Locations: Dagsboro Solutions Center 28280 Clayton Street Owned Dagsboro, DE 19939 Laurel Solutions Center 200 E.
Salisbury, MD 21801 Owned East Salisbury Solutions Center 241 Beaglin Park Drive Salisbury, MD 21804 Owned Eastern Shore Drive Solutions Center 921 Eastern Shore Drive Salisbury, MD 21804 Owned La Plata Solutions Center 115 East Charles Street, La Plata, MD 20646 Land Leased; Building Owned North Salisbury Solutions Center 2727 N.
Owned Salisbury, MD 21801 East Salisbury Solutions Center 241 Beaglin Park Drive Owned Salisbury, MD 21804 Eastern Shore Drive Solutions Center 921 Eastern Shore Drive Owned Salisbury, MD 21804 La Plata Solutions Center 115 East Charles Street, Land Leased; La Plata, MD 20646 Building Owned North Salisbury Solutions Center 2727 N.
Market Street Laurel, DE 19956 Owned Rehoboth Solutions Center 18572 Coastal Highway, Rehoboth Beach, DE 19971 Leased Rehoboth Loan Production Office 19264 Miller Road, Unit A, Rehoboth Beach, DE 19971 Leased Seaford Solutions Center 910 Norman Eskridge Highway, Seaford, DE 19973 Leased Maryland Locations: Annapolis Solutions Center (opened February 2025) 900 Bestgate Road, Suite 104, Annapolis, MD 21401 Leased Delmar Solutions Center 9550 Ocean Highway Delmar, MD 21875 Owned Delmarva Regional Headquarters 2245 Northwood Dr.
Market Street Owned Laurel, DE 19956 Rehoboth Solutions Center 18572 Coastal Highway, Leased Rehoboth Beach, DE 19971 Rehoboth Loan Production Office 19264 Miller Road, Unit A, Leased Rehoboth Beach, DE 19971 Seaford Solutions Center 910 Norman Eskridge Highway, Leased Seaford, DE 19973 Maryland Locations: Annapolis Solutions Center 900 Bestgate Road, Suite 104, Leased Annapolis, MD 21401 Delmar Solutions Center 9550 Ocean Highway Owned Delmar, MD 21875 Delmarva Regional Headquarters 2245 Northwood Dr.
We own or lease other premises for use as Solutions Centers and loan production offices in Dauphin, Chester, Cumberland, Lancaster, Northumberland, Schuylkill, and York Counties within Pennsylvania, Wicomico, Charles, Anne Arundel, and Worcester Counties in Maryland, Sussex County in Delaware, Camden and Burlington Counties in New Jersey, Spotsylvania County, Virginia, and the city of Fredericksburg, Virginia.
We own or lease other premises for use as Solutions Centers and loan production offices in Dauphin, Chester, Cumberland, Lancaster, Northumberland, Schuylkill, and York Counties within Pennsylvania, Wicomico, Charles, Anne Arundel, and Worcester Counties in Maryland, Sussex County in Delaware, Spotsylvania County, Virginia, and the city of Fredericksburg, Virginia.
The following table sets forth the locations of Bank facilities as of December 31, 2024. 33 Description Address Owned / Leased Pennsylvania Locations: Camp Hill Headquarters 1250 Camp Hill Bypass, Suite 202 Camp Hill, PA 17011 Leased Camp Hill Solutions Center 3045 Market Street Camp Hill, PA 17011 Leased Gratz Solutions Center 32 West Market Street Gratz, PA 17030 Owned Harrisburg Solutions Center 2057 EG Drive Harrisburg, PA 17110 Leased Herndon Solutions Center 4231 State Route 147 Herndon, PA 17830 Owned Lancaster Solutions Center 2010 Fruitville Pike Lancaster, PA 17601 Leased Pottsville Solutions Center 2221 West Market Street Pottsville, PA 17901 Owned Valley View Solutions Center 1625 West Main Street Valley View, PA 17983 Owned West Chester Loan Production Office 535 N.
The following table sets forth the locations of Bank facilities as of December 31, 2025. 33 Description Address Owned / Leased Pennsylvania Locations: Camp Hill Headquarters 1250 Camp Hill Bypass, Suite 202 Leased Camp Hill, PA 17011 Camp Hill Solutions Center 3045 Market Street Leased Camp Hill, PA 17011 Gratz Solutions Center 32 West Market Street Owned Gratz, PA 17030 Hanover Loan Production Office 118 Carlisle St Leased Hanover, PA 17331 Harrisburg Solutions Center 2057 EG Drive Leased Harrisburg, PA 17110 Herndon Solutions Center 4231 State Route 147 Owned Herndon, PA 17830 Lancaster Solutions Center 2010 Fruitville Pike Leased Lancaster, PA 17601 Pottsville Solutions Center 2221 West Market Street Leased Pottsville, PA 17901 Valley View Solutions Center 1625 West Main Street Owned Valley View, PA 17983 West Chester Loan Production Office 535 N.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings . At December 31, 2024, the Company is not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business, which involve amounts in the aggregate believed by management to be immaterial to the financial condition and operating results of the Company. Item 4. Mine Safety Disclosures .
Biggest changeItem 3. Legal Proceedings . At December 31, 2025, the Company is not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business, which involve amounts in the aggregate believed by management to be immaterial to the financial condition and operating results of the Company. Item 4. Mine Safety Disclosures .

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe Company anticipates that it will continue to pay cash dividends on a quarterly basis in an amount equal to or greater than $0.30 per share per year.
Biggest changeThe Company anticipates that it will continue to pay cash dividends on a quarterly basis in an amount equal to $0.30 per share per year.
The merger agreement with GNBF provides that, for three years following the effective time of the Gratz Merger (September 2021), the Company will pay a quarterly cash dividend in an amount equal to or greater than $0.30 per share per year, provided sufficient funds are legally available therefore and that the Company and the Bank remain “well-capitalized” in accordance with applicable regulatory guidelines.
The merger agreement with GNBF provided that, for three years following the effective time of the Gratz Merger (September 2021), the Company will pay a quarterly cash dividend in an amount equal to or greater than $0.30 per share per year, provided sufficient funds are legally available therefore and that the Company and the Bank remain “well-capitalized” in accordance with applicable regulatory guidelines.
The payment and amount of any dividend payments will be subject to statutory and regulatory limitations, and will depend upon a number of factors, including the following: regulatory capital requirements; our financial condition and results of operations; our other uses of funds for the long-term value of shareholders; tax considerations; and general economic conditions.
The payment and amount of any dividend payments will be subject to statutory, contractual, and regulatory limitations, and will depend upon a number of factors, including the following: regulatory capital requirements; our financial condition and results of operations; our other uses of funds for the long-term value of shareholders; tax considerations; and general economic conditions.
The Company declared and paid cash dividends equal to $0.30 per share of common stock for the years ended December 31, 2024 and 2023, respectively.
The Company declared and paid cash dividends equal to $0.30 per share of common stock for the years ended December 31, 2025 and 2024, respectively.
During the quarter ended December 31, 2024, the Company repurchased no shares of its common stock.
During the quarter ended December 31, 2025, the Company repurchased no shares of its common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . Market Information The common stock of LINKBANCORP, Inc. is traded under the symbol "LNKB" on the Nasdaq Capital Market. As of the close of business on March 24, 2025, there were approximately 820 shareholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . Market Information The common stock of LINKBANCORP, Inc. is traded under the symbol "LNKB" on the Nasdaq Capital Market. As of the close of business on March 9, 2026, there were approximately 774 shareholders of record.

Item 7. Management's Discussion & Analysis

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

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Biggest change(In Thousands) Provision Expense (Benefit) Net (Charge-Offs) Recoveries Average Loans Ratio of Annualized Net (Charge-Offs) Recoveries to Average Loans 2024 Agriculture and farmland loans $ (1 ) $ — $ 66,156 — % Construction loans (70 ) 4 183,336 0.00 Commercial & industrial loans 1,216 (63 ) 239,797 (0.03 ) Commercial real estate loans Multifamily 320 2 199,993 0.00 Owner occupied (933 ) (28 ) 494,221 (0.01 ) Non-owner occupied 1,315 (43 ) 609,536 (0.01 ) Residential real estate loans First liens (1,405 ) 22 403,828 0.01 Second liens and lines of credit 77 5 72,613 0.01 Consumer and other loans 154 (173 ) 16,677 (1.04 ) Municipal loans (31 ) — 4,461 — Total $ 642 $ (274 ) $ 2,290,618 (0.01 )% 2023 Agriculture and farmland loans $ (77 ) $ — $ 53,708 — % Construction loans 133 — 66,230 — Commercial & industrial loans 1,970 (199 ) 118,923 (0.17 ) Commercial real estate loans Multifamily 566 — 117,786 — Owner occupied 3,361 — 170,825 — Non-owner occupied (475 ) — 296,944 — Residential real estate loans First liens 3,018 54 193,648 0.03 Second liens and lines of credit 589 61 33,895 0.18 Consumer and other loans 69 — 11,352 — Municipal loans 73 — 4,365 — Total $ 9,227 $ (84 ) $ 1,067,676 (0.01 )% Total deposits grew by $161.8 million or 7.4%, from $2.20 billion at December 31, 2023 to $2.36 billion at December 31, 2024.
Biggest change(In Thousands) Provision Expense (Benefit) Net (Charge-Offs) Recoveries Average Loans Ratio of Annualized Net (Charge-Offs) Recoveries to Average Loans 2025 Agriculture loans $ 13 $ — $ 63,660 — % Construction loans 1,219 1 148,636 0.00 Commercial & industrial 5,263 (369 ) 268,555 (0.14 ) Commercial real estate loans Multifamily 66 — 225,334 - Owner occupied 1,035 3 505,021 0.00 Non-owner occupied (217 ) (2,053 ) 691,114 (0.30 ) Residential real estate loans First liens 97 94 377,258 0.02 Second liens 103 1 82,194 0.00 Consumer and other loans 29 (25 ) 17,768 (0.14 ) Municipal loans (21 ) — 3,019 — Total $ 7,587 $ (2,348 ) $ 2,382,559 (0.10 )% 2024 Agriculture loans $ (1 ) $ — $ 66,156 — % Construction loans (70 ) 4 183,336 0.00 Commercial & industrial 1,216 (63 ) 239,797 (0.03 ) Commercial real estate loans Multifamily 320 2 199,993 0.00 Owner occupied (933 ) (28 ) 494,221 (0.01 ) Non-owner occupied 1,315 (43 ) 609,536 (0.01 ) Residential real estate loans First liens (1,405 ) 22 403,828 0.01 Second liens 77 5 72,613 0.01 Consumer and other loans 154 (173 ) 16,677 (1.04 ) Municipal loans (31 ) — 4,461 — Total $ 642 $ (274 ) $ 2,290,618 (0.01 )% 45 Non-owner occupied CRE net charge-offs in the table above include the $2.0 million charge-off on PCD loan taken in 2025.
Subordinated debt with a carrying value of $20.1 million was assumed as part of the Gratz Merger. These notes bear interest at a fixed interest rate of 5.0% per year for five years or until October 1, 2025 and then float at an index tied to SOFR.
Subordinated debt with a carrying value of $20.0 million was assumed as part of the Gratz Merger. These notes bear interest at a fixed interest rate of 5.0% per year for five years or until October 1, 2025 and then float at an index tied to SOFR.
The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a restructured loan will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancelable by the 51 Company.
The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a restructured loan will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancelable by the Company.
The notes have a term of ten years, with a maturity date of October 1, 2030. The notes are redeemable at the option of the Company, in whole or in part, subject to any required regulatory approvals after five years. 46 Additionally, on April 8, 2022, the Company issued subordinated debt with a carrying value of $20.0 million.
The notes have a term of ten years, with a maturity date of October 1, 2030. The notes are redeemable at the option of the Company, in whole or in part, subject to any required regulatory approvals after five years. Additionally, on April 8, 2022, the Company issued subordinated debt with a carrying value of $20.0 million.
All of these factors may be susceptible to significant change. Changes in the FOMC's median forecasted year over year U.S. civilian unemployment rate, the year over year change in U.S. GDP, and S&P/Case-Shiller U.S. National Home Price Index ("HPI") could have a material impact on the model's estimation of the allowance.
All of these factors may be susceptible to significant change. 51 Changes in the FOMC's median forecasted year over year U.S. civilian unemployment rate, the year over year change in U.S. GDP, and S&P/Case-Shiller U.S. National Home Price Index ("HPI") could have a material impact on the model's estimation of the allowance.
Our attempts to maintain adequate liquidity, and liquidity management is both a daily and long-term function of the Company’s business management. We manage our liquidity in accordance with a board of 50 directors-approved asset liability policy, which is administered by the Company’s asset-liability committee (“ALCO”).
Our attempts to maintain adequate liquidity, and liquidity management is both a daily and long-term function of the Company’s business management. We manage our liquidity in accordance with a board of directors-approved asset liability policy, which is administered by the Company’s asset-liability committee (“ALCO”).
As part of the transaction, the Company will receive an 45 offset to the interest incurred on either a mix of one-month FHLB advances or brokered certificates of deposit at a rate equal to one-month SOFR.
As part of the transaction, the Company will receive an offset to the interest incurred on either a mix of one-month FHLB advances or brokered certificates of deposit at a rate equal to one-month SOFR.
The evaluation reflects analyses of individual borrowers and historical loss experience, and changes in net loan balances, supplemented as necessary by credit judgment that considers observable trends, conditions, and other relevant environmental and economic factors. Refer to Note 5 of the Notes to the Consolidated Financial Statements for additional details on the provision for credit losses.
The evaluation reflects analyses of individual borrowers and historical loss experience, and changes in net loan balances, supplemented as necessary by credit judgment that considers observable trends, conditions, and other relevant environmental and economic factors. Refer to Note 4 of the Notes to the Consolidated Financial Statements for additional details on the provision for credit losses.
Yields on earning assets are shown on a fully taxable-equivalent basis assuming a tax rate of 21%. 47 For the Year Ended December 31, 2024 2023 (Dollars in thousands) Avg Bal Interest (2) Yield/Rate Avg Bal Interest (2) Yield/Rate Int. Earn.
Yields on earning assets are shown on a fully taxable-equivalent basis assuming a tax rate of 21%. 47 For the Year Ended December 31, 2025 2024 (Dollars in thousands) Avg Bal Interest (2) Yield/Rate Avg Bal Interest (2) Yield/Rate Int. Earn.
As of December 31, 2024 and 2023, the Bank met the capital requirements to be considered “well capitalized.” See Note 16 within the Notes to the Consolidated Financial Statements for more information regarding our capital resources.
As of December 31, 2025 and 2024, the Bank met the capital requirements to be considered “well capitalized.” See Note 16 within the Notes to the Consolidated Financial Statements for more information regarding our capital resources.
Year Ended December 31, 2024 vs. 2023 Increase (Decrease) Due To: (Dollars in thousands) Rate Volume Net Interest Income: Int. Earn.
Year Ended December 31, 2025 vs. 2024 Increase (Decrease) Due To: (Dollars in thousands) Rate Volume Net Interest Income: Int. Earn.
For disclosures of the Company’s contractual obligations related to certificates of deposits, please see Note 9 within the Notes to the Consolidated Financial Statements.
For disclosures of the Company’s contractual obligations related to certificates of deposits, please see Note 8 within the Notes to the Consolidated Financial Statements.
In 2023 as a result of the completion of the Partners Merger, we entered the counties of Wicomico, Charles, Anne Arundel, and Worcester counties in Maryland, Sussex county in Delaware, Camden and Burlington counties in New Jersey, Spotsylvania and Fairfax counties in Virginia, and the city of Fredericksburg, Virginia. Our operations and lending are influenced by local economic conditions.
In 2023 as a result of the completion of the Partners Merger, we entered the counties of Wicomico, Charles, Anne Arundel, and Worcester counties in Maryland, Sussex county in Delaware, Spotsylvania and Fairfax counties in Virginia, and the city of Fredericksburg, Virginia. Our operations and lending are influenced by local economic conditions.
Our brokered time deposits balance as of December 31, 2024 and 2023 each included a $75 million brokered deposit with a one-month maturity, however, as part of our interest rate swap transaction, the Company has committed to maintain either one-month advances from the FHLB or brokered deposits with a duration of one month through May of 2028.
Our brokered time deposits balance at December 31, 2024 included a $75.0 million brokered deposit with a one-month maturity, however, as part of our interest rate swap transaction, the Company has committed to maintain either one-month advances from the FHLB or brokered deposits with a duration of one month through May of 2028.
Off-Balance Sheet Arrangements and Contractual Obligations See Note 17 within the Notes to the Consolidated Financial Statements beginning for more information regarding the Company’s off-balance sheet arrangements. For disclosures of the Company’s future obligations under operating leases, please see Note 7 within the Notes to the Consolidated Financial Statements.
Off-Balance Sheet Arrangements and Contractual Obligations See Note 16 within the Notes to the Consolidated Financial Statements beginning for more information regarding the Company’s off-balance sheet arrangements. For disclosures of the Company’s future obligations under operating leases, please see Note 6 within the Notes to the Consolidated Financial Statements.
The income tax expense recognized for the year ended December 31, 2024 was the direct result of our net income adjusted for tax free income and non-deductible merger related expenses. We recognized income tax expense for the year ended December 31, 2024 at an effective tax rate of 22.0% which is greater than our statutory tax rate of 21%.
The income tax expense recognized for the year ended December 31, 2025 was the direct result of our net income adjusted for tax free income and non-deductible merger related expenses. We recognized income tax expense for the year ended December 31, 2025 at an effective tax rate of 21.3% which is greater than our statutory tax rate of 21%.
Also see Note 5 - Allowance for Credit Losses in the accompanying notes to the consolidated financial statements included in this report.
Also see Note 4 - Allowance for Credit Losses in the accompanying notes to the consolidated financial statements included elsewhere in this report.
This increase was partially offset by dividends of $11.1 million and an increase in accumulated other comprehensive loss of $1.3 million.
This increase was partially offset by dividends of $11.2 million and an increase in accumulated other comprehensive loss of $2.2 million.
Income Tax Expense/Benefit: Income tax expense for the year ended December 31, 2024 totaled $7.4 million compared to an income tax benefit of $3.4 million for 2023 primarily as a result of an increase in income before income tax expense.
Income Tax Expense/Benefit: Income tax expense for the year ended December 31, 2025 totaled $9.1 million compared to an income tax expense of $7.4 million for 2024 primarily as a result of an increase in income before income tax expense.
GDP growth, and 25% decrease in the HPI would increase the model's total calculated allowance by approximately $3.5 million, or 13.4%, to $30.0 million as of December 31, 2024, assuming qualitative adjustments are kept at current levels.
GDP growth, and 25% increase in the HPI would decrease the model's total calculated allowance by approximately $4.2 million, or 13.2%, to $27.5 million as of December 31, 2025, assuming qualitative adjustments are kept at current levels.
As of December 31, 2024, the total uninsured deposits includes $44.2 million of municipal deposits that exceed the FDIC insurance limits. These municipal deposits are fully secured with pledged securities from our available for sale securities portfolio.
As of December 31, 2025, the total uninsured deposits includes $56.9 million of municipal deposits that exceed the FDIC insurance limits. These municipal deposits are fully secured with pledged securities from our available for sale securities portfolio.
Normal amortization of net discounts on acquired interest bearing liabilities recorded as part of purchase accounting adjustments through the Partners Merger contributed $2.2 million to the increase in interest expense during the year ended December 31, 2024.
Amortization of net discounts on acquired interest bearing liabilities recorded as part of purchase accounting adjustments through the Partners Merger contributed $522 thousand to interest expense during the year ended December 31, 2025 compared to amortization of $2.2 million for the year ended December 31, 2024.
Non-interest Income: Non-interest income increased by $7.8 million to $8.9 million for the year ended December 31, 2024, from $1.1 million for the year ended December 31, 2023.
Non-interest Income: Non-interest income increased by $13.1 million to $21.9 million for the year ended December 31, 2025, from $8.9 million for the year ended December 31, 2024.
Non-owner occupied commercial real estate increased $76.8 million primarily due to loans originated in 2024 contributing to the year end balance of $77.3 million, and loans converted from construction to permanent status of $26.0 million. 41 The following table presents the contractual maturity distribution of our loan portfolio at December 31, 2024.
Non-owner occupied commercial real estate increased $143.3 million primarily due to loans originated in 2025 contributing to the year end balance of $771.5 million, and loans converted from construction to permanent status of $2.7 million. 41 The following table presents the contractual maturity distribution of our loan portfolio at December 31, 2025.
The balance of subordinated debt was $62.0 million and $61.4 million at December 31, 2024 and 2023, respectively. Total shareholders’ equity increased by $14.4 million, or 5.43%, from $265.8 million at December 31, 2023, to $280.2 million at December 31, 2024. The increase was primarily attributable to net income of $26.2 million for the year ended December 31, 2024.
The balance of subordinated debt was $62.3 million and $62.0 million at December 31, 2025 and 2024, respectively. Total shareholders’ equity increased by $26.2 million, or 9.4%, from $280.2 million at December 31, 2024, to $306.4 million at December 31, 2025. The increase was primarily attributable to net income of $33.5 million for the year ended December 31, 2025.
GDP growth, and 25% increase in the HPI would decrease the model's total calculated allowance by approximately $3.2 million, or 12.2%, to $23.2 million as of December 31, 2024, assuming qualitative adjustments are kept at current levels.
GDP growth, and 25% decrease in the HPI would increase the model's total calculated allowance by approximately $6.3 million, or 19.9%, to $38.0 million as of December 31, 2025, assuming qualitative adjustments are kept at current levels.
Multifamily loans increased by $35.0 million, primarily due to loans originated in 2024 contributing to the year end balance of $34.7 million, and loans converted from construction to permanent status of $9.6 million.
Multifamily loans increased by $32.8 million, primarily due to loans originated in 2025 contributing to the year end balance of $244.6 million, and loans converted from construction to permanent status of $7.0 million.
The increase in net income for the year ended December 31, 2024 as compared to the prior year was primarily the result of an increase in interest and dividend income of $93.5 million and an increase in noninterest income of $7.8 million.
The increase in net income for the year ended December 31, 2025 as compared to the prior year was primarily the result of an increase in noninterest income of $13.1 million and an increase in interest and dividend income of $5.9 million.
At December 31, 2024, the Company had remaining available capacity with the FHLB, subject to certain collateral restrictions, of approximately $723.8 million. There were $10.0 million in short-term FHLB advances outstanding at December 31, 2024, which matured in the first quarter of 2025.
At December 31, 2025, the Company had remaining available capacity with the FHLB, subject to certain collateral restrictions, of approximately $682.9 million. There were $115.0 million in FHLB advances outstanding at December 31, 2025, which matured in the first quarter of 2026.
As a result of the Partners Merger, the Company now has nexus in states with applicable state corporate income taxes which is adding to the effective tax rate and resulting in a rate greater than our statutory federal tax rate of 21%.
As a result of the Partners Merger, the Company has nexus in states with applicable state corporate income taxes which is adding to the effective tax rate and resulting in a rate greater than our statutory federal tax rate of 21%. This is as compared to an effective tax rate of 22.0% for the year ended December 31, 2024.
The growth in the average balance of interest earning assets was due primarily to the increase in the average balance of loans which increased $1.22 billion to $2.29 billion for the year ended December 31, 2024 as compared to 2023 as a result of growth in the commercial loan portfolio primarily due to the completion of the Partners Merger.
The growth in the average balance of interest earning assets was due primarily to the increase in the average balance of loans which increased $102.0 million to $2.39 billion for the year ended December 31, 2025 as compared to 2024 as a result of growth in the commercial loan portfolio.
The majority of the loan growth in net loans resulted from a $114.5 million, or 9.51% increase in commercial real estate loans, from $1.20 billion at December 31, 2023 to $1.32 billion at December 31, 2024.
The majority of the loan growth in net loans resulted from a $244.2 million, or 18.5% increase in commercial real estate loans, from $1.32 billion at December 31, 2024 to $1.56 billion at December 31, 2025.
The growth in the average balance of interest earning assets which increased $1.32 billion to $2.57 billion for the year ended December 31, 2024 compared to $1.25 billion for the year ended December 31, 2023 contributed $70.6 million in growth of interest income.
The growth in the average balance of interest earning assets which increased $165.6 million to $2.74 billion for the year ended December 31, 2025 compared to $2.57 billion for the year ended December 31, 2024 contributed $9.4 million in growth of interest income.
Comparison of Results of Operations for the Years Ended December 31, 2024 and 2023 General: Net income was $26.2 million for the year ended December 31, 2024, or $0.71 per diluted share, an increase of $38.2 million compared to a net loss of $12.0 million, or ($0.67) per diluted share, for the year ended December 31, 2023.
Comparison of Results of Operations for the Years Ended December 31, 2025 and 2024 General: Net income was $33.5 million for the year ended December 31, 2025, or $0.90 per diluted share, an increase of $7.3 million compared to net income of $26.2 million, or $0.71 per diluted share, for the year ended December 31, 2024.
(In Thousands) Liquidity Source Capacity Outstanding Available Federal Home Loan Bank $ 773,832 $ 50,000 $ 723,832 Federal Reserve Bank Discount Window 24,070 — 24,070 Correspondent Banks 77,000 — 77,000 Total $ 874,902 $ 50,000 $ 824,902 Consistent with the Company’s goals to operate as a sound and profitable financial institution, the Company actively seeks to maintain the Bank's status as a well-capitalized institution in accordance with regulatory standards.
(In Thousands) Liquidity Source Capacity Outstanding Available Federal Home Loan Bank $ 797,897 $ 115,000 $ 682,897 Federal Reserve Bank Discount Window 23,116 — 23,116 Correspondent Banks 77,000 — 77,000 Total $ 898,013 $ 115,000 $ 783,013 Consistent with the Company’s goals to operate as a sound and profitable financial institution, the Company actively seeks to maintain the Bank's status as a well-capitalized institution in accordance with regulatory standards.
(4) Includes the balances of loans held for sale (5) Includes the balances of deposits held for sale (6) Includes the effect of the interest rate swap, which reduced interest expense by $1.42 million during the year. 48 Rate/Volume Analysis The following table reflects the sensitivity of the Company’s interest income and interest expense to changes in volume and in yields on interest-earning assets and costs of interest-bearing liabilities during the years indicated.
(4) Includes the effect of the interest rate swap, which reduced interest expense by $734 thousand and $1.42 million for the years ended December 31, 2025 and 2024, respectively. 48 Rate/Volume Analysis The following table reflects the sensitivity of the Company’s interest income and interest expense to changes in volume and in yields on interest-earning assets and costs of interest-bearing liabilities during the years indicated.
The increase in deposits was due to the increase in demand deposits both interest-bearing and non-interest bearing, due to the Company's focus on opening commercial deposit accounts, both interest-bearing and noninterest-bearing. The brokered time deposits mature in the first quarter of 2025.
The increase in deposits was due to the increase in interest bearing demand deposits, due to the Company's focus on opening commercial deposit accounts. The brokered time deposits at December 31, 2025 will all mature in the first quarter of 2026.
In the first quarter of 2024, the Company replaced some of its existing overnight borrowings at a lower cost, $40.0 million term advance with a fixed interest rate of 4.827%, maturing in February 2026. As part of the Partners Merger, the Company assumed one-half undivided interest in 410 William Street, Fredericksburg, Virginia.
In the first quarter of 2024, the Company replaced some of its existing overnight borrowings at a lower cost, $40.0 million term advance with a fixed interest rate of 4.827%, maturing in February 2026. Subordinated debt with a carrying value of $22.3 million was assumed as part of the Partners Merger.
Interest Income: Interest income increased to $158.7 million for the year ended December 31, 2024, compared with $65.2 million for the year ended December 31, 2023 primarily due to an increase in interest income on loans as a result of the growth in average loans as well as the increase in average yields earned on all categories of interest earning assets.
Interest Income: Interest income increased to $164.6 million for the year ended December 31, 2025, compared with $158.7 million for the year ended December 31, 2024 primarily due to an increase in interest income on loans as a result of the growth in average loans.
The Company’s primary sources of funds are deposits, principal repayments of securities and outstanding loans, and funds provided from operations. In addition, the Company invests excess funds in short-term interest-earnings assets such as overnight deposits or U.S. agency securities, which provide liquidity to meet lending requirements.
In addition, the Company invests excess funds in short-term interest-earnings assets such as overnight deposits or U.S. agency securities, which provide liquidity to meet lending requirements.
The FHLB advances outstanding at December 31, 2024 matured in January 2025. At December 31, 2024 and 2023, long-term borrowings consisted of $40.0 million and $0, respectively in long-term FHLB advances.
The FHLB advances outstanding at December 31, 2025 mature in the first quarter of 2026. At both December 31, 2025 and 2024, long-term borrowings consisted of $40.0 million in long-term FHLB advances.
Normal amortization of net loan discounts recorded as part of purchase accounting adjustments to acquired loans contributed $14.7 million to interest income during the year ended December 31, 2024.
Amortization of net loan discounts as part of purchase accounting adjustments to acquired loans primarily from the Partners Merger contributed $11.1 million to the increase in interest income during the year ended December 31, 2025 compared to $14.7 million for 2024.
This increase can be attributed to an increase in interest income resulting from a higher average balance in interest-earning assets and an increase in the average yield on interest earning assets as compared to the year ended December 31, 2023.
This increase can be attributed to an increase in interest income resulting from a higher average balance in interest-earning assets as compared to the year ended December 31, 2024. This increase was partially offset by an increase in interest expense resulting from an increase in the average balance of interest bearing liabilities.
There were $40.0 million in long-term FHLB advances outstanding at December 31, 2024, scheduled to mature in February 2026. In addition to our available borrowing capacity at the FHLB, the Company has bank-level lines of credit with multiple financial institutions and a line at the Federal Reserve Bank Discount Window that provides additional liquidity at December 31, 2024.
In addition to our available borrowing capacity at the FHLB, the Company has bank-level lines of credit with multiple financial institutions and a line at the Federal Reserve Bank Discount Window that provides additional liquidity at December 31, 2025. The following table shows the Company’s available borrowing capacity at December 31, 2025.
We believe, however, based on past experience that a significant portion of such deposits will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered. While deposits are the Company’s primary source of funds, when needed the Company is also able to generate cash through borrowings from the FHLB.
We believe, however, based on past experience that a significant portion of such deposits will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.
(In Thousands) Amount of Allowance Allocated Percent of Loans in Each Category to Total Loans Total Loans Ratio of Allowance Allocated to Loans in Each Category December 31, 2024 Agriculture loans $ 11 3.00 % $ 67,741 0.02 % Construction loans 893 6.77 % 152,619 0.59 % Commercial & industrial loans 4,093 10.90 % 245,833 1.66 % Commercial real estate loans Multifamily 1,805 9.39 % 211,778 0.85 % Owner occupied 5,611 21.19 % 477,742 1.17 % Non-owner occupied 9,345 27.86 % 628,237 1.49 % Residential real estate loans First liens 3,395 16.56 % 373,469 0.91 % Second liens and lines of credit 1,154 3.40 % 76,713 1.50 % Consumer and other loans 80 0.76 % 17,086 0.47 % Municipal loans 48 0.17 % 3,886 1.24 % Total $ 26,435 100.00 % $ 2,255,104 1.17 % December 31, 2023 Agriculture loans $ 12 3.10 % $ 65,861 0.02 % Construction loans 959 7.60 % 161,825 0.59 % Commercial & industrial loans 2,940 10.92 % 232,412 1.26 % Commercial real estate loans Multifamily 1,483 8.31 % 176,843 0.84 % Owner occupied 6,572 22.32 % 474,964 1.38 % Non-owner occupied 5,773 25.91 % 551,481 1.05 % Residential real estate loans First liens 4,778 17.67 % 376,092 1.27 % Second liens and lines of credit 1,072 3.13 % 66,648 1.61 % Consumer and other loans 99 0.79 % 16,740 0.59 % Municipal loans 79 0.25 % 5,244 1.51 % Total $ 23,767 100.00 % $ 2,128,110 1.12 % The allowance for credit losses increased $2.7 million from $23.8 million at December 31, 2023 to $26.4 million at December 31, 2024.
(In Thousands) Amount of Allowance Allocated Percent of Loans in Each Category to Total Loans Total Loans Ratio of Allowance Allocated to Loans in Each Category December 31, 2025 Agriculture loans $ 24 2.41 % $ 61,611 0.04 % Construction loans 2,113 6.76 % 172,917 1.22 % Commercial & industrial 8,987 10.79 % 275,824 3.26 % Commercial real estate loans Multifamily 1,871 9.57 % 244,554 0.77 % Owner occupied 6,649 21.35 % 545,837 1.22 % Non-owner occupied 7,075 30.18 % 771,537 0.92 % Residential real estate loans First liens 3,586 14.75 % 377,108 0.95 % Second liens 1,258 3.41 % 87,051 1.45 % Consumer and other loans 84 0.67 % 17,062 0.49 % Municipal loans 27 0.11 % 2,767 0.98 % Total 31,674 100.00 % $ 2,556,268 1.24 % December 31, 2024 Agriculture loans $ 11 3.00 % $ 67,741 0.02 % Construction loans 893 6.77 % 152,619 0.59 % Commercial & industrial 4,093 10.90 % 245,833 1.66 % Commercial real estate loans Multifamily 1,805 9.39 % 211,778 0.85 % Owner occupied 5,611 21.18 % 477,742 1.17 % Non-owner occupied 9,345 27.86 % 628,237 1.49 % Residential real estate loans First liens 3,395 16.56 % 373,469 0.91 % Second liens 1,154 3.40 % 76,713 1.50 % Consumer and other loans 80 0.76 % 17,086 0.47 % Municipal loans 48 0.17 % 3,886 1.24 % Total $ 26,435 100.00 % $ 2,255,104 1.17 % The allowance for credit losses increased $5.2 million from $26.4 million at December 31, 2024 to $31.7 million at December 31, 2025.
December 31, 2024 December 31, 2023 (In Thousands) Average Balance Average Rate Paid Average Balance Average Rate Paid Demand, noninterest-bearing $ 653,966 0.00 % $ 245,703 0.00 % Demand, interest-bearing 476,686 2.17 % 269,615 2.11 % Money market and savings 579,232 2.24 % 278,418 2.53 % Time deposits, other 617,894 4.48 % 301,101 3.29 % Total Deposits $ 2,327,778 2.19 % $ 1,094,837 2.07 % The Company has deposits that exceed the FDIC insurance limit of $250,000 of $807.5 million and $713.4 million at December 31, 2024 and 2023, respectively.
December 31, 2025 December 31, 2024 (In Thousands) Average Balance Average Rate Paid Average Balance Average Rate Paid Demand, noninterest-bearing $ 640,536 — % $ 653,966 — % Demand, interest-bearing 582,618 2.30 % 476,686 2.17 % Money market and savings 595,229 2.29 % 579,232 2.24 % Time deposits, other 596,161 4.21 % 617,894 4.48 % Total Deposits $ 2,414,544 2.16 % $ 2,327,778 2.19 % The Company has estimated deposits that exceed the FDIC insurance limit of $250,000 of $954.9 million and $807.5 million at December 31, 2025 and 2024, respectively.
Non-interest Expenses: Non-interest expenses increased $29.1 million or 63.4%, from $45.8 million for the year ended December 31, 2023, to $74.9 million for the year ended December 31, 2024.
Non-interest Expenses: Non-interest expenses increased $529 thousand or 0.70%, from $74.9 million for the year ended December 31, 2024, to $75.4 million for the year ended December 31, 2025.
The increase in total assets was primarily attributable to the increases in loans receivable of 6.0%, from $2.13 billion at December 31, 2023 to $2.26 billion at December 31, 2024 and cash and cash equivalents which increased $85.9 million, from $80.2 million at December 31, 2023 to $166.1 million at December 31, 2024.
The increase in total assets was primarily attributable to the increases in loans receivable of 13.3%, from $2.26 billion at December 31, 2024 to $2.56 billion at December 31, 2025 and available-for-sale investment securities which increased $117.0 million, from $145.6 million at December 31, 2024 to $262.6 million at December 31, 2025.
The increase in interest expense was primarily due to the increase in the average balance of interest-bearing liabilities, which increased $883.8 million to $1.82 billion for the year ended December 31, 2024 compared to $939.6 million for the year ended December 31, 2023 as a result of the increase in the average balance of our deposits and borrowings due to the completion of the Partners Merger.
The increase in interest expense was primarily due to the increase in the average balance of interest-bearing liabilities, which increased $138.5 million to $1.96 billion for the year ended December 31, 2025 compared to $1.82 billion for the year ended December 31, 2024.
The balance of loan delinquencies increased $6.5 million at December 31, 2024 when compared to December 31, 2023, and as a percentage of total loans, delinquencies increased from 0.35% at December 31, 2023 to 0.61% at December 31, 2024. Total nonperforming loans increased $9.9 million when comparing December 31, 2024 to December 31, 2023.
The Company experienced increases in both overall loan delinquencies and non-performing loans when comparing December 31, 2025 to December 31, 2024. The balance of loan delinquencies increased $8.8 million at December 31, 2025 when compared to December 31, 2024, and as a percentage of total loans, delinquencies increased from 0.61% at December 31, 2024 to 0.89% at December 31, 2025.
The table below presents the daily average balances by deposit type and weighted average rates paid thereon for the years ended December 31, 2024 and 2023.
The $35.0 million in brokered deposits outstanding at December 31, 2025 mature in the first quarter of 2026. The table below presents the daily average balances by deposit type and weighted average rates paid thereon for the years ended December 31, 2025 and 2024.
December 31, 2024 Non-Accrual Loans (In Thousands) Total Loans Amount Percent of Loans in Category Agriculture loans $ 67,741 $ — — Construction loans 152,619 9 0.01 % Commercial & industrial loans 245,833 132 0.05 % Commercial real estate loans Multifamily 211,778 — — Owner occupied 477,742 9,752 2.04 % Non-owner occupied 628,237 4,329 0.69 % Residential real estate loans First liens 373,469 1,975 0.53 % Second liens and lines of credit 76,713 482 0.63 % Consumer and other loans 17,086 — — Municipal loans 3,886 — — Total $ 2,255,104 $ 16,679 0.74 % Allowance for credit losses $ 26,435 Ratio of allowance for credit losses to total loans 1.17 % Ratio of non-accrual loans to total loans 0.74 % Ratio of allowance for credit losses to non-accrual loans 158.49 % December 31, 2023 Non-Accrual Loans Total Loans Amount Percent of Loans in Category Agriculture loans $ 65,861 $ — — Construction loans 161,825 191 0.12 % Commercial & industrial loans 232,412 61 0.03 % Commercial real estate loans Multifamily 176,843 — — Owner occupied 474,964 2,548 0.54 % Non-owner occupied 551,481 1,229 0.22 % Residential real estate loans First liens 376,092 2,707 0.72 % Second liens and lines of credit 66,648 294 0.44 % Consumer and other loans 16,740 7 0.04 % Municipal loans 5,244 — — Total $ 2,128,110 $ 7,037 0.33 % Allowance for credit losses $ 23,767 Ratio of allowance for credit losses to total loans 1.12 % Ratio of non-accrual loans to total loans 0.33 % Ratio of allowance for credit losses to non-accrual loans 337.74 % 43 The table below provides an allocation of the allowance for credit losses by loan category at December 31, 2024 and 2023.
December 31, 2025 Non-Accrual Loans (In Thousands) Total Loans Amount Percent of Loans in Category Agriculture loans $ 61,611 $ 818 1.33 % Construction loans 172,917 497 0.29 % Commercial & industrial 275,824 5,983 2.17 % Commercial real estate loans Multifamily 244,554 502 0.21 % Owner occupied 545,837 5,632 1.03 % Non-owner occupied 771,537 330 0.04 % Residential real estate loans First liens 377,108 9,920 2.63 % Second liens 87,051 461 0.53 % Consumer and other loans 17,062 — — Municipal loans 2,767 — — Total $ 2,556,268 $ 24,143 0.94 % Allowance for credit losses on loans $ 31,674 Ratio of allowance for loan losses to total loans 1.24 % Ratio of non-accrual loans to total loans 0.94 % Ratio of allowance for loan losses to non-accrual loans 131.19 % December 31, 2024 Non-Accrual Loans (In Thousands) Total Loans Amount Percent of Loans in Category Agriculture loans $ 67,741 $ — — Construction loans 152,619 9 0.01 % Commercial & industrial 245,833 132 0.05 % Commercial real estate loans Multifamily 211,778 — — Owner occupied 477,742 9,752 2.04 % Non-owner occupied 628,237 4,329 0.69 % Residential real estate loans First liens 373,469 1,975 0.53 % Second liens 76,713 482 0.63 % Consumer and other loans 17,086 — — Municipal loans 3,886 — — Total $ 2,255,104 $ 16,679 0.74 % Allowance for credit losses on loans $ 26,435 Ratio of allowance for loan losses to total loans 1.17 % Ratio of non-accrual loans to total loans 0.74 % Ratio of allowance for loan losses to non-accrual loans 158.49 % 43 The table below provides an allocation of the allowance for credit losses by loan category at December 31, 2025 and 2024. .
At December 31, 2024, the scheduled maturities of time deposits that meet or exceed the FDIC insurance limit or otherwise uninsured were as follows: (In Thousands) December 31, 2024 Due within 3 months or less $ 38,059 Due after 3 months and within 6 months 61,288 Due after 6 months and within 12 months 47,456 Due after 12 months 9,986 $ 156,789 At both December 31, 2024 and 2023, short-term borrowings were $10.0 million, in short-term FHLB advances.
At December 31, 2025, the scheduled maturities of time deposits that meet or exceed the FDIC insurance limit or otherwise uninsured were as follows: (In Thousands) December 31, 2025 Due within 3 months or less $ 82,498 Due after 3 months and within 6 months 73,878 Due after 6 months and within 12 months 45,777 Due after 12 months 7,952 $ 210,105 46 At December 31, 2025 and 2024, FHLB borrowings were $115.0 million and $10.0 million, respectively.
As a percentage of total loans non-performing loans increased from 33 basis points at December 31, 2023 to 76 basis points at December 31, 2024. The loans that were individually assessed required a specific reserve of $4.9 million at December 31, 2024, compared to $133 thousand December 31, 2023.
The loans that were individually assessed required a specific reserve of $6.4 million at December 31, 2025, compared to $4.9 million at December 31, 2024.
These gains were partially offset by an increase in interest expense of $32.3 million and an increase in noninterest expense of $29.1 million.
These gains were partially offset by an increase in the provision for credit losses of $7.9 million and an increase in interest expense of $1.5 million.
Cash $ 111,790 $ 4,890 4.37 % $ 55,501 $ 1,966 3.54 % Securities Taxable (1) 128,140 6,206 4.84 % 84,860 3,260 3.84 % Tax-Exempt 43,134 1,839 4.26 % 38,591 1,495 3.87 % Total Securities 171,274 8,045 4.70 % 123,451 4,755 3.85 % Total Cash Equiv. and Investments 283,064 12,935 4.57 % 178,952 6,721 3.76 % Total Loans (3)(4) 2,290,618 146,175 6.38 % 1,071,864 58,791 5.48 % Total Interest-Earning Assets 2,573,682 159,110 6.18 % 1,250,816 65,512 5.24 % Other Assets 205,568 106,267 Total Assets $ 2,779,250 $ 1,357,083 Interest bearing demand (5) $ 476,686 $ 10,344 2.17 % $ 269,615 $ 5,684 2.11 % Money market demand (5) 579,232 12,981 2.24 % 278,418 7,053 2.53 % Time deposits (5) 617,894 27,708 4.48 % 301,101 9,901 3.29 % Total Borrowings (6) 149,572 7,797 5.21 % 90,468 3,849 4.25 % Total Interest-Bearing Liabilities 1,823,384 58,830 3.23 % 939,602 26,487 2.82 % Non Int Bearing Deposits (5) 653,966 245,703 Total Cost of Funds $ 2,477,350 $ 58,830 2.37 % $ 1,185,305 $ 26,487 2.23 % Other Liabilities 29,515 19,850 Total Liabilities $ 2,506,865 $ 1,205,155 Shareholders' Equity $ 272,385 $ 151,928 Total Liabilities & Shareholders' Equity $ 2,779,250 $ 1,357,083 Net Interest Income/Spread (FTE) 100,280 2.95 % 39,025 2.42 % Tax-Equivalent Basis Adjustment (386 ) (314 ) Net Interest Income $ 99,894 $ 38,711 Net Interest Margin 3.88 % 3.09 % (1) Taxable income on securities includes income from available for sale securities and income from certificates of deposits with other banks.
Cash $ 126,531 $ 4,633 3.66 % $ 111,790 $ 4,890 4.37 % Securities Taxable (1) 176,647 8,608 4.87 % 128,140 6,206 4.84 % Tax-Exempt 43,468 1,768 4.07 % 43,134 1,839 4.26 % Total Securities 220,115 10,376 4.71 % 171,274 8,045 4.70 % Total Cash Equiv. and Investments 346,646 15,009 4.33 % 283,064 12,935 4.57 % Total Loans (3) 2,392,590 149,951 6.27 % 2,290,618 146,175 6.38 % Total Interest-Earning Assets 2,739,236 164,960 6.02 % 2,573,682 159,110 6.18 % Other Assets 192,063 205,568 Total Assets $ 2,931,299 $ 2,779,250 Interest bearing demand $ 582,618 $ 13,396 2.30 % $ 476,686 $ 10,344 2.17 % Money market demand 595,229 13,619 2.29 % 579,232 12,981 2.24 % Time deposits 596,161 25,100 4.21 % 617,894 27,708 4.48 % Total Borrowings (4) 187,859 8,184 4.36 % 149,572 7,797 5.21 % Total Interest-Bearing Liabilities 1,961,867 60,299 3.07 % 1,823,384 58,830 3.23 % Non Int Bearing Deposits 640,536 653,966 Total Cost of Funds $ 2,602,403 $ 60,299 2.32 % $ 2,477,350 $ 58,830 2.37 % Other Liabilities 31,938 29,515 Total Liabilities $ 2,634,341 $ 2,506,865 Shareholders' Equity $ 296,958 $ 272,385 Total Liabilities & Shareholders' Equity $ 2,931,299 $ 2,779,250 Net Interest Income/Spread (FTE) 104,661 2.95 % 100,280 2.95 % Tax-Equivalent Basis Adjustment (371 ) (386 ) Net Interest Income $ 104,290 $ 99,894 Net Interest Margin 3.81 % 3.88 % (1) Taxable income on securities includes income from available for sale securities and income from certificates of deposits with other banks.
This Management’s Discussion and Analysis is presented in the following sections: • Pending Sale of New Jersey Solutions Centers • Completion of Partners Merger • Overview and Strategy • Recent Market Conditions • Comparison of Financial Condition at December 31, 2024 and 2023 • Comparison of Operating Results for the Years Ended December 31, 2024 and 2023 • Liquidity, Commitments, and Capital Resources • Off-Balance Sheet Arrangements • Critical Accounting Estimates • Recently Issued Accounting Standards Pending Sale of New Jersey Solutions Centers On May 9, 2024, the Bank entered into a purchase and assumption agreement (the “Agreement”) with American Heritage Federal Credit Union (“AHFCU”) pursuant to which AHFCU will purchase certain assets and assume certain liabilities (the “Transaction” or "New Jersey Branch Sale") of the New Jersey operations of the Bank, including all three branch locations (including two branch leases).
This Management’s Discussion and Analysis is presented in the following sections: • Burke & Herbert Merger • Sale of New Jersey Solutions Centers • Overview and Strategy • Recent Market Conditions • Comparison of Financial Condition at December 31, 2025 and 2024 • Comparison of Operating Results for the Years Ended December 31, 2025 and 2024 • Liquidity, Commitments, and Capital Resources • Off-Balance Sheet Arrangements • Critical Accounting Estimates • Recently Issued Accounting Standards Burke & Herbert Merger On December 18, 2025, the Company and Burke & Herbert Financial Services Corp., a Virginia corporation ("BHRB"), entered into an Agreement and Plan of Merger (the "Merger Agreement").
Changes in the deposit types are presented in the table below: (in thousands) December 31, 2024 December 31, 2023 Change % Demand, noninterest-bearing $ 658,646 $ 624,780 $ 33,866 5.4 % Demand, interest-bearing 525,173 425,551 99,622 23.4 Money market and savings 540,030 554,204 (14,174 ) (2.6 ) Time deposits, $250,000 and over 164,901 128,334 36,567 28.5 Time deposits, other 368,217 346,519 21,698 6.3 Brokered time deposits 103,615 119,411 (15,796 ) (13.2 ) Total deposits $ 2,360,582 $ 2,198,799 $ 161,783 7.4 % The above table does not include deposits that are held for sale related to the New Jersey Branch Sale.
Changes in the deposit types are presented in the table below: (in thousands) December 31, 2025 December 31, 2024 Change % Demand, noninterest-bearing $ 603,728 $ 658,646 $ (54,918 ) (8.3 )% Demand, interest-bearing 658,523 525,173 133,350 25.4 Money market and savings 617,534 540,030 77,504 14.4 Time deposits, $250,000 and over 210,105 164,901 45,204 27.4 Time deposits, other 429,862 368,217 61,645 16.7 Brokered deposits 35,000 103,615 (68,615 ) (66.2 ) Total deposits $ 2,554,752 $ 2,360,582 $ 194,170 8.2 % The above table does not include deposits that were held for sale related to the New Jersey Branch Sale at December 31, 2024.
The table below does not include loans that are held for sale related to the New Jersey Branch Sale. Also see Note 5 - Allowance for Credit Losses in the accompanying notes to the consolidated financial statements included elsewhere in this report.
Additional information related to the provision for credit losses and net (charge-offs) recoveries is presented in the table below. Also see Note 5 - Allowance for Credit Losses in the accompanying notes to the consolidated financial statements included in this report.
Management utilizes brokered deposits as a supplement to core deposit funding from time to time and does not consider brokered deposits to be a primary source of funding.
Management utilizes brokered deposits as a supplement to core deposit funding from time to time and does not consider brokered deposits to be a primary source of funding. New accounts opened during 2025 also explained the growth in money market and savings accounts, contributing $103.4 million to the overall balance growth of $77.5 million.
The following table summarizes the maturity distribution schedule with corresponding weighted-average yields of securities available for sale and held-to-maturity as of December 31, 2024, at carrying value. Weighted average yields have been computed on a fully taxable-equivalent basis using a tax rate of 21%. Mortgage-backed securities are included in maturity categories based on their contractual maturity date.
Weighted average yields have been computed on a fully taxable-equivalent basis using a tax rate of 21%. Mortgage-backed securities are included in maturity categories based on their 40 contractual maturity date. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.
The increase was primarily due to: Primary Cash Inflows • Net increase in deposits of $153.4 million; • Proceeds from long-term borrowings of $40.0 million; • Cash from operating activities of $25.4 million; • Net cash from investment securities (calls, maturities, and principal repayments) of $28.5 million; and • Proceeds from sales of available for sale investment securities of $1.7 million.
Primary Cash Inflows • Net increase in deposits of $186.9 million; • Proceeds from the New Jersey Branch Sale of $26.2 million; • Cash from operating activities of $25.3 million; • Net cash from investment securities (calls, maturities, and principal repayments) of $31.8 million; and • Net change in short-term borrowings of $65.0 million.
Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. The table below excludes certain investment securities that have no scheduled maturity date.
The table below excludes certain investment securities that have no scheduled maturity date.
Certificates of deposit due within one year of December 31, 2024 totaled $582.0 million, or 91.4% of our certificates of deposit, and 24.7% of total deposits. Of these certificates of deposits, $103.6 million are brokered deposits, of which $75 million relate to our interest rate swap.
Certificates of deposit due within one year of December 31, 2025 totaled $630.8 million, or 93.5% of our certificates of deposit, and 24.7% of total deposits. Of these certificates of deposits, $35.0 million are brokered deposits which will mature in the first quarter of 2026.
Primary Cash Outflows • Net increase in loans receivable of $91.4 million; • Purchase of investment securities available for sale of $57.3 million; and • Payment of dividends of $11.1 million. Securities available-for-sale increased by $30.1 million, or 26.1%, to $145.6 million at December 31, 2024 from $115.5 million at December 31, 2023 due to purchases of $57.3 million.
The decrease was primarily due to: Primary Cash Outflows • Net increase in cash funding of loans receivable of $298.1 million; • Purchase of investment securities available for sale of $137.6 million; and • Payment of dividends of $11.2 million.
With respect to the acquired loans, AHFCU will pay an amount equal to the principal balances plus any accrued but unpaid interest and late charges on the loans measured as of the closing date. AHFCU will pay book value for fixed assets, real estate and any other assets located at the owned branch.
With respect to acquired loans, AHFCU paid an amount equal to the principal balances plus any accrued but unpaid interest and late charges on the loans measured as of the closing date. The loans sold had related unamortized loan discounts of $6.7 million which were taken into income concurrent with the sale.
The increase was primarily due to: (1) an increase in salaries and employee benefits of $20.4 million related to an increase in the number of employees due to the completion of the Partners Merger; (2) an increase of $4.1 million of amortization of intangible assets as a result of intangibles acquired from the Partners Merger; and (3) an increase of $3.4 million in equipment and data processing costs.
The increase was primarily due to: (1) an increase in salaries and employee benefits of $2.1 million related to an increase in incentive compensation accruals; and (2) an increase of $615 thousand in equipment and data processing.
Net loans receivable increased during the year ended December 31, 2024 as shown in the table below: (dollars in thousands) December 31, 2024 December 31, 2023 Change % Agriculture loans $ 67,741 $ 65,861 $ 1,880 2.85 % Construction loans 152,619 161,825 (9,206 ) (5.69 ) Commercial loans 245,833 232,412 13,421 5.77 Commercial real estate loans Multifamily 211,778 176,843 34,935 19.75 Owner occupied 477,742 474,964 2,778 0.58 Non-owner occupied 628,237 551,481 76,756 13.92 Residential real estate loans First liens 373,469 376,092 (2,623 ) (0.70 ) Second liens and lines of credit 76,713 66,648 10,065 15.10 Consumer and other loans 17,086 16,740 346 2.07 Municipal loans 3,886 5,244 (1,358 ) (25.90 ) Total Loans 2,255,104 2,128,110 126,994 5.97 Deferred costs 645 174 471 270.69 Allowance for credit losses (26,435 ) (23,767 ) (2,668 ) 11.23 Total $ 2,229,314 $ 2,104,517 124,797 5.93 % The above table does not include loans that are held for sale related to the New Jersey Branch Sale.
Net loans receivable increased during the year ended December 31, 2025 as shown in the table below: (dollars in thousands) December 31, 2025 December 31, 2024 Change % Agriculture loans $ 61,611 $ 67,741 $ (6,130 ) (9.05 )% Construction loans 172,917 152,619 20,298 13.30 Commercial loans 275,824 245,833 29,991 12.20 Commercial real estate loans Multifamily 244,554 211,778 32,776 15.48 Owner occupied 545,837 477,742 68,095 14.25 Non-owner occupied 771,537 628,237 143,300 22.81 Residential real estate loans First liens 377,108 373,469 3,639 0.97 Second liens and lines of credit 87,051 76,713 10,338 13.48 Consumer and other loans 17,062 17,086 (24 ) (0.14 ) Municipal loans 2,767 3,886 (1,119 ) (28.80 ) Total Loans 2,556,268 2,255,104 301,164 13.35 Deferred costs 461 645 (184 ) (28.53 ) Allowance for credit losses (31,674 ) (26,435 ) 5,239 19.82 Total $ 2,525,055 $ 2,229,314 295,741 13.27 % The above table does not include loans that were held for sale related to the New Jersey Branch Sale at December 31, 2024.
Also contributing to increased interest expense on borrowings was a 96 basis points increase in the average interest rate paid on borrowings, from 4.25% for the year ended December 31, 2023 to 5.21% for the year ended December 31, 2024.
The increase in interest expense was partially offset by a decrease in the interest rate paid on interest earning liabilities. The average rate paid on interest-bearing liabilities decreased 16 basis points on an annualized basis from 3.23% for the year ended December 31, 2024 to 3.07% for the year ended December 31, 2025.
The securities available-for-sale portfolio had a net unrealized loss of $7.5 million at December 31, 2024 compared with a net unrealized loss of $4.9 million at December 31, 2023. Partially offsetting the increase in securities available-for-sale were proceeds from principal repayments, sales, calls, and maturities of $25.2 million.
Partially offsetting the increase in securities available-for-sale were proceeds from principal repayments, calls, and maturities of $25.7 million. The following table summarizes the maturity distribution schedule with corresponding weighted-average yields of securities available for sale and held-to-maturity as of December 31, 2025, at carrying value.
Provision for credit losses-loans was $642 thousand for the year ended December 31, 2024, of which $332 thousand was shifted from the Allowance for credit losses on unfunded commitments.
The provision for credit losses was $8.2 million for the year ended December 31, 2025, which is inclusive of a provision of $7.6 million for loans, a provision of $650 thousand for unfunded commitments, and a provision reversal of $68 thousand on the allowance for credit losses for held-to-maturity securities.
Overall the average yield of interest earning assets increased 94 basis points on an annualized basis to 6.18% for the year ended December 31, 2024 as compared to 2023 due primarily to a larger concentration of interest earning assets in loans along with a higher average yield on interest earning cash, securities, and loans.
Overall, the average yield of interest earning assets decreased 16 basis points on an annualized basis to 6.02% for the year ended December 31, 2025 as compared to 2024. Interest Expense: Interest expense increased by $1.5 million or 2.50% to $60.3 million for the year ended December 31, 2025, compared to $58.8 million for the year ended December 31, 2024.
Asset quality remained strong at December 31, 2024 with non-performing assets, which is defined as non-accrual loans, loans delinquent greater than 90 days and still accruing interest, and other real estate owned, was $17.2 million or 0.76% of total gross loans.
The growth in the allowance was partially offset by a $2.0 million charge-off due to the sale of a PCD loan (see table below). 44 Resolution of PCD Loan: (dollars in thousands) Original principal outstanding at acquisition $ 3,948 PCD specific reserve established (2,289 ) Net book value of PCD loan 1,659 Cash received upon payoff of PCD loan 1,930 Net reduction of PCD reserve at loan sale (271 ) Net reversal of PCD specific reserve $ (2,018 ) Asset quality remained strong at December 31, 2025 with non-performing assets, which is defined as non-accrual loans, loans delinquent greater than 90 days and still accruing interest, and other real estate owned, was $24.4 million or 0.95% of total gross loans.
To the extent that actual results differ from management estimates, additional provisions for credit losses may be required that would adversely impact earnings in future periods. Business Combinations: The Company accounts for acquisitions under the acquisition method of accounting. Assets acquired and liabilities assumed in a business combination are recorded at their estimated fair value on their purchase date.
To the extent that actual results differ from management estimates, additional provisions for credit losses may be required that would adversely impact earnings in future periods. Item 7A. Quantitative and Qualitative Disclosures About Market Risk . Not required for smaller reporting companies.
The increase in average balances of interest earning assets and interest bearing liabilities was a result of the completion of the Partners Merger. The net interest margin increased 79 basis points to 3.88% for the year ended December 31, 2024 from 3.09% for the year ended December 31, 2023.
The net interest margin decreased seven basis points to 3.81% for the year ended December 31, 2025 from 3.88% for the year ended December 31, 2024.
The average yield of loans increased 90 basis points from 5.48% for the year ended December 31, 2023 to 6.38% for the year ended December 31, 2024 which contributed $20.6 million to the increase in interest income.
This growth was partially offset by a decrease in the average yield on loans which decreased 11 basis points on an annualized basis from 6.38% for the year ended December 31, 2024 to 6.27% for the year ended December 31, 2025.
Interest expense on time deposits increased $17.8 million, primarily due to the increase in the average balance of time deposits, which increased $316.8 million to $617.9 million for the year ended December 31, 2024 compared to $301.1 million for the year ended December 31, 2023, as a result of the Partners Merger. 49 The increase in interest expense on time deposits was also impacted by an increase in average interest rate paid, which increased 119 basis points from 3.29% for the year ended December 31, 2023 to 4.48% for the year ended December 31, 2024.
The increase in the average balance of interest-bearing liabilities was primarily due to the increase in the average balance of interest-bearing deposits which increased $100.2 million, or 6.0% from $1.7 billion for the year ended December 31, 2024 to $1.8 billion for the year ended December 31, 2025.
This is as compared to an income tax benefit for the year ended December 31, 2023 as a result of our net loss, which resulted in an effective tax rate of 21.9%. Liquidity, Commitments, and Capital Resources The Company’s liquidity, represented by cash and due from banks, is a product of our operating, investing and financing activities.
Liquidity, Commitments, and Capital Resources The Company’s liquidity, represented by cash and due from banks, is a product of our operating, investing and financing activities. The Company’s primary sources of funds are deposits, principal repayments of securities and outstanding loans, and funds provided from operations.
The calendar year 2024 presented several headwinds to the U.S. economy which included a dynamic market interest rate environment, the continuation of the war in Ukraine and the Israeli/Hamas war in Gaza, uncertain inflation rates, and the election of a new presidential administration.
The calendar year 2025 presented both challenges and opportunities for the U.S. economy, with a continued dynamic market interest rate environment, ongoing geopolitical tensions, and evolving inflationary trends. Key factors influencing the market included the continuation of the war in Ukraine, the geopolitical instability in Gaza, and fluctuating global energy prices.

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