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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________

FORM 10-Q


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

For the Quarterly Period Ended March 31, 2026


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

For the transition period from ____________ to ____________

Commission File Number: 000-22345

SHORE BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

Maryland

52-1974638

(State or Other Jurisdiction of Incorporation or Organization)

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

18 E. Dover Street, Easton, Maryland

21601

(Address of Principal Executive Offices)

(Zip Code)

(410) 763-7800

Registrant’s Telephone Number, Including Area Code

Not applicable

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

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

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common stock, $0.01 par value per share

SHBI

The NASDAQ Global Select Market

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

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

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

Large accelerated filer

Accelerated filer

☑

Non-accelerated filer

Smaller reporting company

Emerging growth company

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

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

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

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TABLE OF CONTENTS

Page

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

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

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

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

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

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

Notes to Consolidated Financial Statements (unaudited)

Item 2.

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

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

PART II – OTHER INFORMATION

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

SHORE BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS


($ in thousands, except per share data)	March 31, 2026		December 31, 2025
ASSETS	(Unaudited)
Cash and due from banks	$	44,054	$	50,164
Interest-bearing deposits with other banks	296,768		305,402
Cash and cash equivalents	340,822		355,566
Investment securities:
Available for sale, at fair value (amortized cost of $271,276 and $226,677 at March 31, 2026 and December 31, 2025, respectively)	264,026		220,358
Held to maturity, net of allowance for credit losses of $81 and $99 (fair value of $356,390 and $378,116 at March 31, 2026 and December 31, 2025, respectively)	393,615		414,827
Equity securities, at fair value	6,195		6,186
Restricted securities, at cost	18,003		17,989
Loans held for sale, at fair value	24,034		32,540
Loans held for investment	4,848,030		4,900,302
Less: allowance for credit losses	(58,481)		(58,836)
Loans, net	4,789,549		4,841,466

Premises and equipment, net	80,137		80,168
Goodwill	63,266		63,266
Other intangible assets, net	27,742		29,722
Right-of-use assets	10,102		10,523
Cash surrender value on life insurance	106,684		105,839
Accrued interest receivable	20,676		18,551
Deferred income taxes	29,752		29,825
Other assets	31,460		31,992
TOTAL ASSETS	$	6,206,063	$	6,258,818

LIABILITIES
Deposits:
Noninterest-bearing	$	1,567,425	$	1,587,953
Interest-bearing checking	812,847		852,585
Money market and savings	1,795,619		1,814,928
Time deposits	1,274,766		1,267,487
Brokered deposits	10,963		10,911
Total deposits	5,461,620		5,533,864


Guaranteed preferred beneficial interest in junior subordinated debentures (“TRUPS”), net	30,247		30,168
Subordinated debt, net	58,782		58,893
Total borrowings	89,029		89,061
Lease liabilities	10,608		11,027
Other liabilities	42,092		34,993
TOTAL LIABILITIES	5,603,349		5,668,945
COMMITMENTS AND CONTINGENCIES (Note 13)
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value per share; shares authorized 50,000,000; shares issued and outstanding 33,451,063 and 33,413,503 at March 31, 2026 and December 31, 2025, respectively	335		334
Additional paid-in capital	361,013		360,554
Retained earnings	246,636		233,578
Accumulated other comprehensive loss	(5,270)		(4,593)
TOTAL STOCKHOLDERS’ EQUITY	602,714		589,873
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	6,206,063	$	6,258,818

See accompanying notes to unaudited consolidated financial statements.

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SHORE BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)


	Three Months Ended March 31,
($ in thousands, except per share data)	2026		2025
INTEREST INCOME
Interest on loans	$	70,814	$	67,516
Interest and dividends on taxable investment securities	5,114		5,001
Interest and dividends on tax-exempt investment securities	6		6

Interest on deposits with other banks	2,458		3,409
Total interest income	78,392		75,932

INTEREST EXPENSE
Interest on deposits	24,264		28,070
Interest on short-term borrowings	—		598
Interest on long-term borrowings	1,573		1,366
Total interest expense	25,837		30,034

NET INTEREST INCOME	52,555		45,898
Provision for credit losses	85		1,028
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	52,470		44,870

NONINTEREST INCOME
Service charges on deposit accounts	1,596		1,514
Trust and investment fee income	1,137		823
Mortgage banking revenue	1,450		1,240
Interchange credits	1,698		1,577

Other noninterest income	1,363		1,980
Total noninterest income	7,244		7,134

NONINTEREST EXPENSE
Salaries and employee benefits	19,639		16,440
Occupancy expense	2,567		2,538
Furniture and equipment expense	855		853
Software and data processing	5,140		4,691
Amortization of other intangible assets	1,980		2,278
Legal and professional fees	1,605		1,613
FDIC insurance premium expense	995		1,091
Marketing and advertising	311		254
Fraud losses	111		105

Other noninterest expense	3,853		3,884
Total noninterest expense	37,056		33,747

Income before income taxes	22,658		18,257
Income tax expense	5,570		4,493
NET INCOME	$	17,088	$	13,764

Basic net income per common share	$	0.51	$	0.41
Diluted net income per common share	$	0.51	$	0.41
Dividends paid per common share	$	0.12	$	0.12

See accompanying notes to unaudited consolidated financial statements.

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SHORE BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)


	Three Months Ended March 31,
($ in thousands)	2026		2025
Net income	$	17,088	$	13,764

Other comprehensive income (loss):
Investment securities:
Unrealized holding (losses) gains on available for sale securities	(931)		1,667
Tax effect	254		(455)
Total other comprehensive (loss) income	(677)		1,212
Comprehensive income	$	16,411	$	14,976

See accompanying notes to unaudited consolidated financial statements.

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SHORE BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)


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

See accompanying notes to unaudited consolidated financial statements.

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SHORE BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) – Continued


($ in thousands)	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
Balances, December 31, 2024	$	333	$	358,112	$	190,166	$	(7,545)	$	541,066
Net income	—		—		13,764		—		13,764
Other comprehensive income	—		—		—		1,212		1,212

Stock-based compensation	—		460		—		—		460
Cash dividends at $0.12 per common share	—		—		(4,032)		—		(4,032)
Balances, March 31, 2025	$	333	$	358,572	$	199,898	$	(6,333)	$	552,470

See accompanying notes to unaudited consolidated financial statements.

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SHORE BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Three Months Ended March 31,
($ in thousands)	2026		2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	17,088	$	13,764
Adjustments to reconcile net income to net cash provided by operating activities:
Net accretion of acquisition accounting estimates	(4,263)		(3,153)
Provision for credit losses	85		1,028
Depreciation and amortization	3,578		4,077
Net amortization of securities	(69)		36
Amortization of debt issuance costs	72		30
Gain on mortgage loans held for sale	(1,549)		(966)
Loss (gain) on other mortgage loan activity	238		(284)
Proceeds from sale of mortgage loans held for sale	50,845		33,739
Originations of loans held for sale	(41,379)		(29,362)
Stock-based compensation expense	913		511
Deferred income tax expense (benefit)	327		(26)

Loss (gain) on sales and valuation adjustments of repossessed assets	127		94
Loss on valuation adjustments on mortgage servicing rights	159		330
Loss on disposal of fixed assets	—		27
Loss (gain) on disposal of premises held for sale	—		61

Loss (gain) on sales and valuation adjustments on other real estate owned	44		—
Fair value adjustment on equity securities	39		(87)
Bank-owned life insurance income	(33)		(529)
Net changes in:
Accrued interest receivable	(2,125)		(985)
Other assets	587		740
Accrued interest payable	932		(39)
Other liabilities	5,957		777
Net cash provided by operating activities	31,573		19,783

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and principal payments of available for sale securities	5,518		3,701

Proceeds from maturities and principal payments of held to maturity securities	21,108		11,388

Purchases of available for sale securities	(49,926)		(31,865)


Purchases of equity securities	(48)		(44)
Purchase of restricted securities	(14)		(158)
Net change in loans	55,093		(2,256)
Purchases of premises and equipment	(1,087)		(1,024)

Proceeds from sales of repossessed assets	82		1,234

Purchases of bank owned life insurance	(316)		(90)
Proceeds from disposal of premises held for sale	—		843

Net cash provided (used in) by investing activities	$	30,410	$	(18,271)

See accompanying notes to unaudited consolidated financial statements.

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SHORE BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) – Continued


	Three Months Ended March 31,
($ in thousands)	2026		2025

CASH FLOWS FROM FINANCING ACTIVITIES:
Net changes in:
Noninterest-bearing deposits	$	(20,528)	$	2,202
Interest-bearing deposits	(51,716)		(70,527)




Shares withheld as tax payments associated with settlement of restricted stock units	(543)		—
Common stock dividends paid	(4,030)		(4,032)
Issuance of common stock	90		—
Net cash used in financing activities	(76,727)		(72,357)
Net decrease in cash and cash equivalents	(14,744)		(70,845)
Cash and cash equivalents at beginning of period	355,566		459,851
Cash and cash equivalents at end of period	$	340,822	$	389,006

Supplemental cash flow information:
Interest paid	$	24,754	$	29,477

Recognition of lease liabilities arising from right-of-use assets	—		915
Transfers from loans to repossessed assets	674		569

Unrealized (losses) gains on available for sale securities	(931)		1,667

See accompanying notes to unaudited consolidated financial statements.

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Shore Bancshares, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 – Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

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

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

Nature of Operations

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

Use of Estimates

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

Recent Accounting Pronouncements

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

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Note 2 – Investment Securities

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


($ in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available for sale securities(1):
March 31, 2026
U.S. Treasury and government agency securities	$	22,092	$	—	$	1,728	$	20,364
Mortgage-backed securities	236,638		195		6,157		230,676
Other debt securities(2)	12,546		440		—		12,986
Total	$	271,276	$	635	$	7,885	$	264,026

December 31, 2025
U.S. Treasury and government agency securities	$	22,303	$	2	$	1,689	$	20,616
Mortgage-backed securities	200,105		331		5,409		195,027
Other debt securities(2)	4,269		446		—		4,715
Total	$	226,677	$	779	$	7,098	$	220,358

____________________________________

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

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


($ in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Allowance for Credit Losses
Held to maturity securities:
March 31, 2026
U.S. Treasury and government agency securities	$	92,514	$	—	$	4,503	$	88,011	$	—
Mortgage-backed securities	294,223		123		32,526		261,820		—
Other debt securities(1)	6,959		19		419		6,559		81
Total	$	393,696	$	142	$	37,448	$	356,390	$	81

December 31, 2025
U.S. Treasury and government agency securities	$	104,836	$	2	$	4,513	$	100,325	$	—
Mortgage-backed securities	303,129		255		32,167		271,217		—
Other debt securities(1)	6,961		33		420		6,574		99
Total	$	414,926	$	290	$	37,100	$	378,116	$	99

____________________________________

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

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

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


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

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

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


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

Total	$	127,535	$	1,173	$	81,122	$	6,712	$	208,657	$	7,885


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

Total	$	102,954	$	531	$	65,683	$	6,567	$	168,637	$	7,098

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

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

Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell these securities before recovery of their amortized cost bases, which may be at maturity for debt securities, the Company considers the unrealized losses to be temporary. There were 134 AFS and 167 HTM securities in an unrealized loss position at March 31, 2026. There were 122 AFS and 169 HTM securities in an unrealized loss position at December 31, 2025. Net unrealized losses with respect to the AFS securities totaled $7.3 million and $6.3 million as of March 31, 2026 and December 31, 2025, respectively.

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


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

The maturity dates for debt securities are determined using contractual maturity dates. Actual maturities may differ from amounts presented because certain issuers have the right to call or prepay obligations without prepayment penalties.

The Company has securities that have been pledged as collateral for obligations to federal, state and local government agencies, and other purposes as required or permitted by law, or sold under agreements to repurchase. At March 31, 2026, the aggregate carrying value of AFS and HTM pledged securities was $71.9 million and $220.6 million, respectively. The comparable amounts for December 31, 2025 were $69.4 million and $218.6 million, respectively.

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


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

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

Note 3 – Loans and Allowance for Credit Losses

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

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


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

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

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

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


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

Interest income	$	655	$	295	$	950


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

Interest income	$	285	$	363	$	648


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

Table of Contents


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

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

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

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

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

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

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

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

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

Table of Contents

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


	Term Loans by Origination Year												Revolving loans		Revolving converted to term loans		Total
($ in thousands)	Prior		2022		2023		2024		2025		2026
March 31, 2026
Commercial real estate
Pass	$	1,263,079	$	522,428	$	218,721	$	150,567	$	262,491	$	19,074	$	19,093	$	150	$	2,455,603
Special mention	28,222		50,924		341		272		—		—		—		—		79,759
Substandard	26,233		16,287		19,723		1,239		621		—		350		—		64,453
Total	$	1,317,534	$	589,639	$	238,785	$	152,078	$	263,112	$	19,074	$	19,443	$	150	$	2,599,815
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Residential real estate
Pass	$	484,287	$	272,211	$	199,154	$	157,905	$	123,083	$	25,120	$	136,107	$	40	$	1,397,907
Special mention	16,841		191		504		—		—		—		65		—		17,601
Substandard	7,965		715		316		—		110		—		1,119		—		10,225
Total	$	509,093	$	273,117	$	199,974	$	157,905	$	123,193	$	25,120	$	137,291	$	40	$	1,425,733
Gross charge-offs	$	(138)	$	—	$	—	$	—	$	—	$	—	$	(4)	$	—	$	(142)

Construction
Pass	$	32,869	$	6,929	$	27,791	$	90,705	$	151,703	$	17,237	$	14,252	$	946	$	342,432
Special mentions	—		—		—		—		—		—		—		—		—
Substandard	161		—		—		—		242		—		—		—		403
Total	$	33,030	$	6,929	$	27,791	$	90,705	$	151,945	$	17,237	$	14,252	$	946	$	342,835
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial
Pass	$	48,218	$	17,998	$	14,055	$	26,743	$	34,088	$	5,557	$	65,685	$	1,419	$	213,763
Special mention	22		89		95		70		52		—		83		—		411
Substandard	920		661		484		577		18		290		3,709		—		6,659
Total	$	49,160	$	18,748	$	14,634	$	27,390	$	34,158	$	5,847	$	69,477	$	1,419	$	220,833
Gross charge-offs	$	(2)	$	(37)	$	(149)	$	—	$	—	$	—	$	(15)	$	—	$	(203)

Consumer
Pass	$	49,914	$	83,717	$	35,458	$	27,786	$	44,744	$	11,598	$	727	$	—	$	253,944
Special mention	—		—		—		—		—		—		—		—		—
Substandard	8		60		407		—		59		—		—		—		534
Total	$	49,922	$	83,777	$	35,865	$	27,786	$	44,803	$	11,598	$	727	$	—	$	254,478
Gross charge-offs	$	(437)	$	(362)	$	—	$	(17)	$	(15)	$	—	$	—	$	—	$	(831)

Total
Pass	$	1,878,367	$	903,283	$	495,179	$	453,706	$	616,109	$	78,586	$	235,864	$	2,555	$	4,663,649
Special mention	45,085		51,204		940		342		52		—		148		—		97,771
Substandard	35,287		17,723		20,930		1,816		1,050		290		5,178		—		82,274
Total loans by risk category	$	1,958,739	$	972,210	$	517,049	$	455,864	$	617,211	$	78,876	$	241,190	$	2,555	$	4,843,694

Total gross charge-offs	$	(577)	$	(399)	$	(149)	$	(17)	$	(15)	$	—	$	(19)	$	—	$	(1,176)

Table of Contents

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


	Term Loans by Origination Year												Revolving Loans		Revolving Converted to Term Loans		Total
($ in thousands)	Prior		2022		2023		2024		2025		2026
March 31, 2026
Credit cards
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	4,273	$	—	$	4,273
Nonperforming	—		—		—		—		—		—		63		—		63
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	4,336	$	—	$	4,336
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	(80)	$	—	$	(80)

Total loans evaluated by performing status	$	—	$	—	$	—	$	—	$	—	$	—	$	4,336	$	—	$	4,336

Total gross charge-offs	$	(577)	$	(399)	$	(149)	$	(17)	$	(15)	$	—	$	(99)	$	—	$	(1,256)

Total recorded investment	$	1,958,739	$	972,210	$	517,049	$	455,864	$	617,211	$	78,876	$	245,526	$	2,555	$	4,848,030

Table of Contents

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


	Term Loans by Origination Year												Revolving Loans		Revolving Converted to Term Loans		Total
($ in thousands)	Prior		2021		2022		2023		2024		2025
December 31, 2025
Commercial real estate
Pass	$	939,986	$	364,719	$	556,924	$	242,170	$	139,929	$	265,405	$	14,703	$	27,136	$	2,550,972
Special mention	15,105		2,884		34,014		344		—		—		—		—		52,347
Substandard	20,056		16,806		2,840		—		283		—		692		—		40,677
Total	$	975,147	$	384,409	$	593,778	$	242,514	$	140,212	$	265,405	$	15,395	$	27,136	$	2,643,996
Gross charge-offs	$	(109)	$	(2,640)	$	—	$	—	$	—	$	—	$	—	$	—	$	(2,749)

Residential real estate
Pass	$	317,764	$	182,198	$	275,869	$	215,397	$	147,517	$	114,300	$	131,075	$	695	$	1,384,815
Special mention	3,719		14,777		—		504		—		—		65		—		19,065
Substandard	6,990		2,012		267		330		—		112		1,373		—		11,084
Total	$	328,473	$	198,987	$	276,136	$	216,231	$	147,517	$	114,412	$	132,513	$	695	$	1,414,964
Gross charge-offs	$	(5)	$	—	$	—	$	—	$	—	$	—	$	(45)	$	—	$	(50)

Construction
Pass	$	27,094	$	7,238	$	7,047	$	28,868	$	108,885	$	151,738	$	13,070	$	632	$	344,572
Special mentions	—		—		—		—		—		—		—		—		—
Substandard	88		—		—		—		—		243		—		—		331
Total	$	27,182	$	7,238	$	7,047	$	28,868	$	108,885	$	151,981	$	13,070	$	632	$	344,903
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial
Pass	$	23,379	$	25,518	$	19,739	$	14,925	$	29,307	$	35,202	$	70,493	$	1,870	$	220,433
Special mention	104		27		107		105		76		54		845		—		1,318
Substandard	424		1,055		758		527		—		—		1,318		173		4,255
Total	$	23,907	$	26,600	$	20,604	$	15,557	$	29,383	$	35,256	$	72,656	$	2,043	$	226,006
Gross charge-offs	$	(71)	$	—	$	—	$	(329)	$	—	$	—	$	(381)	$	(31)	$	(812)

Consumer
Pass	$	7,954	$	45,750	$	88,990	$	39,576	$	31,597	$	49,634	$	769	$	—	$	264,270
Special mention	—		—		671		—		—		—		—		—		671
Substandard	1		29		396		445		41		59		—		—		971
Total	$	7,955	$	45,779	$	90,057	$	40,021	$	31,638	$	49,693	$	769	$	—	$	265,912
Gross charge-offs	$	(451)	$	(99)	$	(1,595)	$	(646)	$	(324)	$	—	$	(18)	$	—	$	(3,133)

Total
Pass	$	1,316,177	$	625,423	$	948,569	$	540,936	$	457,235	$	616,279	$	230,110	$	30,333	$	4,765,062
Special mention	18,928		17,688		34,792		953		76		54		910		—		73,401
Substandard	27,559		19,902		4,261		1,302		324		414		3,383		173		57,318
Total loans by risk category	$	1,362,664	$	663,013	$	987,622	$	543,191	$	457,635	$	616,747	$	234,403	$	30,506	$	4,895,781

Total gross charge-offs	$	(636)	$	(2,739)	$	(1,595)	$	(975)	$	(324)	$	—	$	(444)	$	(31)	$	(6,744)

Table of Contents

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


	Term Loans by Origination Year												Revolving Loans		Revolving Converted to Term Loans		Total
($ in thousands)	Prior		2021		2022		2023		2024		2025
December 31, 2025
Credit cards
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	4,473	$	—	$	4,473
Nonperforming	—		—		—		—		—		—		48		—		48
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	4,521	$	—	$	4,521
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	(535)	$	—	$	(535)

Total loans evaluated by performing status	$	—	$	—	$	—	$	—	$	—	$	—	$	4,521	$	—	$	4,521

Total gross charge-offs	$	(636)	$	(2,739)	$	(1,595)	$	(975)	$	(324)	$	—	$	(979)	$	(31)	$	(7,279)

Total recorded investment	$	1,362,664	$	663,013	$	987,622	$	543,191	$	457,635	$	616,747	$	238,924	$	30,506	$	4,900,302

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


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


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

Table of Contents

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


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


($ in thousands)	Beginning Balance		Charge-offs		Recoveries		Provisions		Ending Balance
Three Months Ended March 31, 2025
Commercial real estate	$	22,846	$	—	$	78	$	(936)	$	21,988
Residential real estate	21,776		—		1		616		22,393
Construction	2,854		—		1		987		3,842
Commercial	3,138		(2)		6		(287)		2,855
Consumer	6,889		(482)		86		81		6,574
Credit cards	407		(242)		—		225		390
Total	$	57,910	$	(726)	$	172	$	686	$	58,042

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


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


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

____________________________________

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

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

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Loan Modifications to Borrowers Experiencing Financial Difficulty

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

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

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

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

Foreclosure Proceedings

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

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

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

Mortgage Servicing Rights (“MSRs”)

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

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


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

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

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Note 4 – Goodwill and Other Intangible Assets

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


	March 31, 2026
($ in thousands)	Goodwill		Core Deposit Intangible
Gross carrying amount	$	63,266	$	59,151


Accumulated amortization	—		(31,409)
Net carrying amount	$	63,266	$	27,742


	December 31, 2025
($ in thousands)	Goodwill		Core Deposit Intangible
Gross carrying amount	$	63,266	$	59,151


Accumulated amortization	—		(29,429)
Net carrying amount	$	63,266	$	29,722

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

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


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

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Note 5 – Leases

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

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

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


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


	Three Months Ended March 31,
($ in thousands)		2026		2025
Operating lease cost		$	512	$	492

Total lease cost		$	512	$	492

Cash paid for amounts included in the measurement of lease liabilities		$	509	$	467

The following table presents a maturity analysis of operating lease liabilities and a reconciliation of the undiscounted cash flows to total operating lease liabilities at March 31, 2026.


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

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

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Note 6 – Deposits

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


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

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


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

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

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Note 7 – Borrowings

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


($ in thousands)	March 31, 2026		December 31, 2025		Issue Date	Stated Maturity Date	Earliest Call Date	Interest Rate


Subordinated Debentures due November 2035	60,000		60,000		2025	2035	2030	6.25% through November 2030, 3-month SOFR + 2.88% thereafter
Total subordinated debentures	60,000		60,000

Severn Capital Trust I	20,619		20,619		2004	2035		3-month SOFR + 2.26%
Tri-County Capital Trust I	7,217		7,217		2004	2034		3-month SOFR + 2.86%
Tri-County Capital Trust II	5,155		5,155		2005	2035		3-month SOFR + 1.96%
Total trust preferred securities	32,991		32,991
Less: net discount and unamortized issuance costs	(3,962)		(3,930)
Total long-term debt	$	89,029	$	89,061

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

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

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

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Note 8 – Derivatives

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

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

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

March 31, 2026

SHORE BANCSHARES INC 10-Q