v3.26.1
Loans and Allowance for Credit Losses
 6 Months Ended
Jun. 30, 2026
Receivables [Abstract]  
Loans and Allowance for Credit Losses Loans and Allowance for Credit Losses
The measurement of expected credit losses under the current expected credit loss methodology promulgated by ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, 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 June 30, 2026 and December 31, 2025.
($ in thousands)June 30, 2026% of Total LoansDecember 31, 2025% of Total Loans
Commercial real estate$2,603,014 53.37 %$2,643,996 53.95 %
Residential real estate1,470,401 30.15 1,414,964 28.88 
Construction337,779 6.92 344,903 7.04 
Commercial220,712 4.52 226,006 4.61 
Consumer241,751 4.96 265,912 5.43 
Credit cards4,092 0.08 4,521 0.09 
Total loans4,877,749 100.00 %4,900,302 100.00 %
Less: allowance for credit losses(58,737)(58,836)
Total loans, net$4,819,012 $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 $3.1 million at both June 30, 2026 and December 31, 2025. At June 30, 2026 and December 31, 2025, loans included $1.34 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 presented net of the related aggregate discounts, which totaled $70.0 million and $78.2 million at June 30, 2026 and December 31, 2025, respectively.
The following tables provide information on the amortized cost basis of nonaccrual loans by loan class as of June 30, 2026 and December 31, 2025.
($ in thousands)Nonaccrual With No Allowance For Credit LossesNonaccrual With An Allowance For Credit LossesTotal Nonaccrual Loans
June 30, 2026
Nonaccrual loans:
Commercial real estate$50,428 $667 $51,095 
Residential real estate9,032 1,542 10,574 
Construction154 — 154 
Commercial 203 2,286 2,489 
Consumer450 38 488 
Credit cards— 18 18 
Total$60,267 $4,551 $64,818 
Interest income $966 $80 $1,046 
($ in thousands)Nonaccrual With No Allowance For Credit LossesNonaccrual With An Allowance For Credit LossesTotal Nonaccrual Loans
December 31, 2025
Nonaccrual loans:
Commercial real estate$6,135 $19,498 $25,633 
Residential real estate9,594 544 10,138 
Construction88 — 88 
Commercial2,297 784 3,081 
Consumer898 74 972 
Credit cards— 48 48 
Total$19,012 $20,948 $39,960 
Interest income$285 $363 $648 
($ in thousands)Nonaccrual Delinquent LoansNonaccrual Current LoansTotal Nonaccrual Loans
June 30, 2026
Nonaccrual loans:
Commercial real estate$3,437 $47,658 $51,095 
Residential real estate5,740 4,834 10,574 
Construction154 — 154 
Commercial17 2,472 2,489 
Consumer88 400 488 
Credit cards— 18 18 
Total$9,436 $55,382 $64,818 
($ in thousands)Nonaccrual Delinquent LoansNonaccrual Current LoansTotal Nonaccrual Loans
December 31, 2025
Nonaccrual loans:
Commercial real estate$2,809 $22,824 $25,633 
Residential real estate3,808 6,330 10,138 
Construction88 — 88 
Commercial196 2,885 3,081 
Consumer491 481 972 
Credit cards32 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 June 30, 2026, there were two 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 1 to 10.
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.
The following table provides information on loan risk ratings as of June 30, 2026 and gross charge-offs during the six months ended June 30, 2026.
Term Loans by Origination YearRevolving
loans		Revolving
Converted to
Term Loans		Total
($ in thousands)Prior to 202220222023202420252026
June 30, 2026
Commercial real estate
Pass$1,227,989 $511,763 $193,215 $153,536 $258,137 $121,339 $17,791 $150 $2,483,920 
Special mention17,063 33,701 2,977 — — — — — 53,741 
Substandard26,182 17,822 19,536 1,070 608 — 135 — 65,353 
Total$1,271,234 $563,286 $215,728 $154,606 $258,745 $121,339 $17,926 $150 $2,603,014 
Gross charge-offs$(64)$— $— $— $— $— $— $— $(64)
Residential real estate
Pass$456,836 $274,381 $194,586 $163,825 $144,243 $60,452 $145,231 $40 $1,439,594 
Special mention17,407 189 — — — — 1,498 — 19,094 
Substandard8,051 1,535 308 512 — — 1,307 — 11,713 
Total$482,294 $276,105 $194,894 $164,337 $144,243 $60,452 $148,036 $40 $1,470,401 
Gross charge-offs$(139)$— $— $— $— $— $(4)$— $(143)
Construction
Pass$31,094 $6,767 $15,864 $72,192 $146,213 $47,513 $17,271 $469 $337,383 
Substandard155 — — — 241 — — — 396 
Total$31,249 $6,767 $15,864 $72,192 $146,454 $47,513 $17,271 $469 $337,779 
Gross charge-offs$— $— $— $— $— $— $— $— $— 
Commercial
Pass$44,280 $15,652 $13,274 $23,950 $32,384 $25,246 $57,574 $1,913 $214,273 
Special mention4 — — — — — 118 — 122 
Substandard832 546 428 528 17 280 3,686 — 6,317 
Total$45,116 $16,198 $13,702 $24,478 $32,401 $25,526 $61,378 $1,913 $220,712 
Gross charge-offs$(2)$(37)$(149)$— $— $— $(15)$— $(203)
Consumer
Pass$45,221 $78,112 $32,361 $24,531 $39,041 $21,260 $737 $— $241,263 
Substandard3 52 377 — 56 — — — 488 
Total$45,224 $78,164 $32,738 $24,531 $39,097 $21,260 $737 $— $241,751 
Gross charge-offs$(542)$(380)$(12)$(43)$(19)$— $(2)$— $(998)
Total
Pass$1,805,420 $886,675 $449,300 $438,034 $620,018 $275,810 $238,604 $2,572 $4,716,433 
Special mention34,474 33,890 2,977 — — — 1,616 — 72,957 
Substandard35,223 19,955 20,649 2,110 922 280 5,128 — 84,267 
Total loans by risk category$1,875,117 $940,520 $472,926 $440,144 $620,940 $276,090 $245,348 $2,572 $4,873,657 
Total gross charge-offs$(747)$(417)$(161)$(43)$(19)$— $(21)$— $(1,408)
The following table presents the amortized cost of credit card loans based on performing status and gross charge-offs during the six months ended June 30, 2026. Nonperforming loans consisted of nonaccrual loans and loans past due 90 days or more and still accruing.
Term Loans by Origination YearRevolving LoansRevolving Converted to Term LoansTotal
($ in thousands)Prior to 202220222023202420252026
June 30, 2026
Credit cards
Performing$— $— $— $— $— $— $4,074 $— $4,074 
Nonperforming— — — — — — 18 — 18 
Total$— $— $— $— $— $— $4,092 $— $4,092 
Gross charge-offs$— $— $— $— $— $— $(115)$— $(115)
Total loans evaluated by performing status$— $— $— $— $— $— $4,092 $— $4,092 
Total gross charge-offs$(747)$(417)$(161)$(43)$(19)$— $(136)$— $(1,523)
Total recorded investment$1,875,117 $940,520 $472,926 $440,144 $620,940 $276,090 $249,440 $2,572 $4,877,749 
The following table provides information on loan risk ratings as of December 31, 2025 and gross charge-offs during the year ended December 31, 2025.
Term Loans by Origination YearRevolving
Loans		Revolving
Converted to
Term Loans		Total
($ in thousands)Prior20212022202320242025
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 mention15,105 2,884 34,014 344 — — — — 52,347 
Substandard20,056 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 mention3,719 14,777 — 504 — — 65 — 19,065 
Substandard6,990 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 
Substandard88 — — — — 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 mention104 27 107 105 76 54 845 — 1,318 
Substandard424 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 
Substandard1 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 mention18,928 17,688 34,792 953 76 54 910 — 73,401 
Substandard27,559 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)$(6,744)
The following table presents the amortized cost of credit card loans based on performing status and gross charge-offs during the year ended December 31, 2025. Nonperforming loans consisted of nonaccrual loans and loans past due 90 days or more and still accruing.
Term Loans by Origination YearRevolving
Loans		Revolving
Converted to
Term Loans		Total
($ in thousands)Prior20212022202320242025
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 $4,900,302 
The following tables provide information on the aging of the Company’s loan portfolio as of June 30, 2026 and December 31, 2025.
($ in thousands)30‑59 Days Past Due60‑89 Days Past Due90 Days Past Due and Still Accruing30-89 Days Past Due and Not Accruing90 Days Past Due and Not AccruingTotal Past DueCurrent Accrual LoansCurrent Nonaccrual LoansTotal
June 30, 2026
Commercial real estate$605 $334 $— $1,964 $1,473 $4,376 $2,550,980 $47,658 $2,603,014 
Residential real estate4,271 470 — 1,456 4,284 10,481 1,455,086 4,834 1,470,401 
Construction— — — 34 120 154 337,625 — 337,779 
Commercial337 24 — 17 — 378 217,862 2,472 220,712 
Consumer366 97 — 10 78 551 240,800 400 241,751 
Credit cards51 — 20 — — 71 4,003 18 4,092 
Total$5,630 $925 $20 $3,481 $5,955 $16,011 $4,806,356 $55,382 $4,877,749 
Percent of total loans0.12 %0.02 %0.00 %0.07 %0.12 %0.33 %98.53 %1.14 %100.00 %
($ in thousands)30‑59 days Past Due60‑89 Days Past Due90 Days Past Due and Still Accruing30-89 Days Past Due and Not Accruing90 Days Past Due and Not AccruingTotal Past DueCurrent Accrual LoansCurrent Nonaccrual LoansTotal
December 31, 2025
Commercial real estate$1,684 $— $— $68 $2,741 $4,493 $2,616,679 $22,824 $2,643,996 
Residential real estate1,663 397 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 
Consumer390 690 — 43 448 1,571 263,860 481 265,912 
Credit cards14 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 $4,900,302 
Percent of total loans0.08 %0.02 %0.01 %0.03 %0.12 %0.26 %99.08 %0.66 %100.00 %
The following tables provide a summary of the activity in the ACL allocated by loan class for the three and six months ended June 30, 2026 and 2025. Allocation of a portion of the allowance to one loan class does not preclude its availability to absorb losses from other loan classes.
($ in thousands)Beginning BalanceGross Charge-offsRecoveriesProvisions (Reversal of Provisions)Ending Balance
Three Months Ended June 30, 2026
Commercial real estate$21,672 $(64)$— $(828)$20,780 
Residential real estate22,993 (1)8 531 23,531 
Construction4,806 — 1 1,346 6,153 
Commercial3,497 — 22 (142)3,377 
Consumer5,415 (167)93 (513)4,828 
Credit cards98 (35)20 (15)68 
Total(1)
$58,481 $(267)$144 $379 $58,737 
($ in thousands)Beginning BalanceGross Charge-offsRecoveriesProvisions (Reversal of Provisions)Ending
Balance
Three Months Ended June 30, 2025
Commercial real estate$21,988 $— $— $(1,809)$20,179 
Residential real estate22,394 — 2 807 23,203 
Construction3,842 — — 1,963 5,805 
Commercial2,854 — 81 (65)2,870 
Consumer6,574 (598)55 157 6,188 
Credit cards390 (189)— 37 238 
Total(1)
$58,042 $(787)$138 $1,090 $58,483 
($ in thousands)Beginning
Balance		Gross Charge-offsRecoveriesProvisions (Reversal of Provisions)Ending
Balance
Six Months Ended June 30, 2026
Commercial real estate$21,387 $(64)$— $(543)$20,780 
Residential real estate22,510 (143)31 1,133 23,531 
Construction5,968 — 1 184 6,153 
Commercial3,005 (203)49 526 3,377 
Consumer5,767 (998)449 (390)4,828 
Credit cards199 (115)23 (39)68 
Total(1)
$58,836 $(1,523)$553 $871 $58,737 

($ in thousands)Beginning BalanceGross Charge-offsRecoveriesProvisions (Reversal of Provisions)Ending
Balance
Six Months Ended June 30, 2025
Commercial real estate$22,846 $— $78 $(2,745)$20,179 
Residential real estate21,776 — 3 1,424 23,203 
Construction2,854 — 1 2,950 5,805 
Commercial3,138 (2)87 (353)2,870 
Consumer6,889 (1,080)141 238 6,188 
Credit cards407 (431)— 262 238 
Total(1)
$57,910 $(1,513)$310 $1,776 $58,483 
____________________________________
(1)Excludes amounts pertaining to unfunded commitments.
The following tables present the amortized cost basis of collateral-dependent loans by loan portfolio segment as of June 30, 2026 and December 31, 2025.
June 30, 2026
($ in thousands)Real Estate CollateralOther CollateralTotal
Commercial real estate$65,352 $— $65,352 
Residential real estate11,713 — 11,713 
Construction396 — 396 
Commercial(1)
— 6,316 6,316 
Consumer(2)
— 487 487 
Total$77,461 $6,803 $84,264 
December 31, 2025
($ in thousands)Real Estate CollateralOther CollateralTotal
Commercial real estate$40,676 $— $40,676 
Residential real estate11,084 — 11,084 
Construction332 — 332 
Commercial(1)
— 4,164 4,164 
Consumer(2)
— 971 971 
Total$52,092 $5,135 $57,227 
____________________________________
(1)Commercial loans are primarily secured by underlying business assets of the borrower.
(2)Consumer loans are primarily secured by automobiles and boats of the borrower.
Loan Modifications to Borrowers Experiencing Financial Difficulty
Loan modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, forbearance, term extensions and other combinations of actions intended to minimize economic loss and avoid foreclosure or repossession of collateral.
During the three and six months ended June 30, 2026, no loan modifications were made to borrowers experiencing financial difficulty.
The following table presents details of portfolio loans that were modified during the three and six months ended June 30, 2025, by loan category.
($ in thousands)Quantity of Loans ModifiedPrincipal ForgivenessPayment DelayTerm ExtensionInterest Rate ReductionPayment Delay and Term ExtensionTerm Extension and Interest Rate ReductionTotal% of Total Portfolio Segment
Commercial real estate6$— $— $1,351 $5,242 $— $— $6,593 0.25 %
Commercial3— — 72 116 — — 188 0.08 
Total9$— $— $1,423 $5,358 $— $— $6,781 0.14 
As of June 30, 2026, of the loans with borrowers experiencing financial difficulty that were modified during the preceding 12 months, $140 thousand and zero 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 and six months ended June 30, 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 $64 thousand and $124 thousand of consumer mortgage loans collateralized by residential real estate property that were in the process of foreclosure as of June 30, 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 June 30, 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 zero and $2.4 million as of June 30, 2026, respectively, 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 and six months ended June 30, 2026 and 2025, respectively. The Company recognized net servicing income of $122 thousand and $168 thousand during the three months ended June 30, 2026 and 2025, respectively, and net servicing income of $261 thousand and $103 thousand for the six months ended June 30, 2026 and 2025, respectively. At June 30, 2026, the Company was servicing $324.2 million in loans for the Federal National Mortgage Association and $98.7 million in loans for Federal Home Loan Mortgage Corporation.
The following table presents activity in MSRs for the three and six months ended June 30, 2026 and 2025.
Three Months Ended June 30,Six Months Ended June 30,
($ in thousands)2026202520262025
Beginning balance$4,983 $5,535 $5,142 $5,874 
Net additions— 15 — 58 
Amortization expense(163)(154)(322)(206)
Other— — — (330)
Ending balance$4,820 $5,396 $4,820 $5,396 
The fair value of MSRs was determined using discount rates ranging from 9.0% to 9.0% at June 30, 2026 and 9.0% to 10.0% at December 31, 2025. The valuation on MSRs was not material at June 30, 2026 and December 31, 2025.
Depending on the stratification of the specific mortgage servicing right, prepayment speeds ranged from 5.72% to 8.00% and 5.84% to 8.48% for the three months ended June 30, 2026 and 2025, respectively, and 5.72% to 8.60% and 5.69% to 8.22% for the six months ended June 30, 2026 and 2025, respectively.
The associated weighted-average default rates were 0.21% and 0.14% for the three months ended June 30, 2026 and 2025, respectively, and 0.21% and 0.14% for the six months ended June 30, 2026 and 2025, respectively.