SHORE BANCSHARES INC

Previous wording

The Company’s net income for the second quarter of 2026 was $18.9 million, or $0.56 per diluted common share, compared to $17.1 million, or $0.51 per diluted common share, for the first quarter of 2026. The Company had net income of $15.5 million, or $0.46 per diluted common share, for the second quarter of 2025.

Current wording

The Company’s net income for the third quarter of 2026 was $16.8 million, or $0.50 per diluted common share, compared to net income of $18.9 million, or $0.56 per diluted common share, for the second quarter of 2026. The Company had net income of $14.3 million, or $0.43 per diluted common share, for the third quarter of 2025.

Previous wording

•Return on Average Assets (“ROAA”) – The Company reported ROAA of 1.24% for the second quarter of 2026, compared to 1.12% for the first quarter of 2026 and 1.03% for the second quarter of 2025. Adjusted ROAA – non-U.S. generally accepted accounting principles (“GAAP”)(1)was 1.34% for the second quarter of 2026, compared to 1.22% for the first quarter of 2026 and 1.15% for the second quarter of 2025.

Current wording

•Return on Average Assets (“ROAA”) – The Company reported ROAA of 1.08% for the third quarter of 2026, compared to 1.24% for the second quarter of 2026 and 0.95% for the third quarter of 2025. Adjusted ROAA – non-GAAP(1)was 1.16% for the third quarter of 2026, compared to 1.34% for the second quarter of 2026 and 1.05% for the third quarter of 2025.

Previous wording

•Net Interest Margin (“NIM”)– Net interest income (“NII”) for the second quarter of 2026 increased $364 thousand to $52.9 million compared to the first quarter of 2026. NIM increased 6 basis points (“bps”) to 3.70% during the second quarter of 2026 compared to the first quarter of 2026. NIM excluding accretion(1) increased for the comparable periods from 3.35% to 3.45%. Excluding accretion interest, loan yields decreased 1 bp and funding costs decreased 8 bps for the comparable periods. Net interest income increased due to additional interest income from loan payoffs coupled with a lower cost of deposits. Loan payoffs resulted in accelerated accretion and interest income recovery on nonaccrual loans.

Current wording

•Net Interest Margin (“NIM”)– Net interest income for the third quarter of 2026 increased $2.2 million to $55.1 million compared to the second quarter of 2026. NIM increased 8 basis points (“bps”) to 3.78% for the third quarter of 2026 compared to the second quarter of 2026. NIM excluding accretion(1) increased for the comparable periods from 3.45% to 3.50%. Excluding accretion interest, loan yields increased 4 bps and funding costs decreased 2 bps for the comparable periods. Net interest income increased due to elevated accretion income from loan payoffs, partially offset by a slightly higher interest expense driven by municipal deposits.

Previous wording

•Capital Management –Book value per share increased to $18.44 at June 30, 2026 from $18.02 at March 31, 2026 and $16.94 at June 30, 2025. During the quarter ended June 30, 2026, the Company announced a $30 million share repurchase program and repurchased 40,093 shares of its outstanding common stock for approximately $891 thousand. During the second quarter of 2026, the Company declared a dividend of $0.14 per share, which represents a $0.02, or 16.7%, increase from the dividend paid in the prior quarter.

Current wording

•Capital Management –Book value per share increased to $18.59 at September 30, 2026 from $18.44 at June 30, 2026 and $17.27 at September 30, 2025. During the quarter ended September 30, 2026, the Company declared a dividend of $0.14 per share andrepurchased 148,006 shares of its outstanding common stock for approximately $3.4 million.

Previous wording

•Asset Quality–Nonperforming assets were 1.09% of total assets at June 30, 2026, a decrease from 1.10% at March 31, 2026 and anincrease from 0.33% at June 30, 2025. Classified assets were 1.41% of total assets at June 30, 2026, an increase when compared to 1.38% at March 31, 2026 and 0.37% at June 30, 2025. The allowance for credit losses was $58.7 million at June 30, 2026, compared to $58.5 million at March 31, 2026 and at June 30, 2025. The ACL as a percentage of loans decreased to 1.20% at June 30, 2026 compared to 1.21% at March 31, 2026 and at June 30, 2025.

Current wording

•Asset Quality– Nonperforming assets were 1.27% of total assets at September 30, 2026, an increase from 1.09% at June 30, 2026 and anincrease from 0.45% at September 30, 2025. Classified assets were 1.61% of total assets at September 30, 2026, anincrease when compared to 1.41% at June 30, 2026 and 0.83% at September 30, 2025. The ACL was $59.6 million at both September 30, 2026 and September 30, 2025, and $58.7 million at June 30, 2026. The ACL as a percentage of loans increased to 1.21% at September 30, 2026 compared to 1.20% at June 30, 2026 and decreased compared to 1.22%at September 30, 2025.

Previous wording

•Operating Leverage– The efficiency ratio for the second quarter of 2026 was 57.76%, compared to 61.97% for the first quarter of 2026 and 60.83% for the second quarter of 2025. The adjusted efficiency ratio – non-GAAP(1), which excludes amortization of intangibles, was 54.49% for the second quarter of 2026, compared to 58.57% for the first quarter of 2026 and 56.73% for the second quarter of 2025. Management anticipates ongoing expense management of professional services and technology investments will result in continued improvements in operating leverage over time.

Current wording

•Operating Leverage– The efficiency ratio for the third quarter of 2026 was 56.15%, compared to 57.76% in the second quarter of 2026 and 61.00% for the third quarter of 2025. The adjusted efficiency ratio–non-GAAP(1), which excludes amortization of intangibles, was 53.30% for the third quarter of 2026, compared to 54.49% for the second quarter of 2026 and 57.30% for the third quarter of 2025. Management anticipates ongoing expense management of professional services and technology investments will result in continued improvements in operating leverage over time.

Previous wording

The Company reported net income for the three months ended June 30, 2026 of $18.9 million, or $0.56 per diluted common share, compared to $15.5 million, or $0.46 per diluted common share, for the three months ended June 30, 2025.

Current wording

The Company reported net income for the three months ended September 30, 2026 of $16.8 million, or $0.50 per diluted common share, compared to $14.3 million, or $0.43 per diluted common share, for the three months ended September 30, 2025.

Previous wording

Taxable-equivalent NII is NII adjusted for the tax-favored status of income from certain loans and investments. As shown in the table below, taxable-equivalent NII increased $5.8 million to $53.0 million for the second quarter of 2026, compared to $47.2 million for the second quarter of 2025. The increase in net interest income was primarily due to a decrease in interest expense on deposits of $4.4 million, an increase in interest on loans of $849 thousand and a decrease in interest expense on short-term borrowings of $589 thousand. These favorable changes were partially offset by an increase in interest expense on long-term borrowings of $177 thousand. The decrease in interest expense on deposits is reflective of rate reductions during 2026.

Current wording

Taxable-equivalent NII is NII adjusted for the tax-favored status of income from certain loans and investments. As shown in the table below, taxable-equivalent NII increased $6.7 million to $55.2 million for the third quarter of 2026, compared to $48.5 million for the third quarter of 2025. The increase in net interest income was primarily due to a decrease in interest expense on deposits of $3.1 million, an increase in interest on loans of $2.0 million and a decrease in interest expense on short-term borrowings of $640 thousand. These favorable changes were partially offset by an increase in interest expense on long-term borrowings of $166 thousand.

Previous wording

(3) Interest income on loans includes accreted loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations. There were $3.8 million and $4.2 million of accretion interest on loans for the three months ended June 30, 2026 and 2025, respectively.

Current wording

(3) Interest income on loans includes accreted loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations. There were $4.1 million and $3.3 million of accretion interest on loans for the three months ended September 30, 2026 and 2025, respectively.

Previous wording

(4) Interest expense on deposits and borrowings includes amortization of deposit discounts and amortization of borrowing fair value adjustments. There were zero and $435 thousand of amortization of deposit discounts and $79 thousand and $232 thousand of amortization of borrowing fair value adjustments for the three months ended June 30, 2026 and 2025, respectively. All deposit discounts have been fully amortized as of December 31, 2025.

Current wording

(4) Interest expense on deposits and borrowings includes amortization of deposit discounts and amortization of borrowing fair value adjustments. There were zero and $280 thousand of amortization of deposit discounts and $79 thousand and $232 thousand of amortization of borrowing fair value adjustments for the three months ended September 30, 2026 and 2025, respectively. All deposit discounts have been fully amortized as of December 31, 2025.

Previous wording

The Company’s NIMincreased to 3.70% for thethree months ended June 30, 2026, from 3.34% for thethree months ended June 30, 2025. Comparing thethree months ended June 30, 2026 to thethree months ended June 30, 2025, the Company’s interest-earning asset yields were flat at 5.42%, while the cost of funds repriced at a faster pace, which resulted in a decrease of 36 bps, to 1.81%from 2.17%, for the same periods.

Current wording

The Company’s NIMincreased to 3.78% for thethree months ended September 30, 2026, from 3.41% for thethree months ended September 30, 2025. Comparing thethree months ended September 30, 2026 to thethree months ended September 30, 2025, the Company’s interest-earning asset yields increased to 5.47% from 5.41% three months ended September 30, 2025. The cost of funds repriced at a faster pace, which resulted in a decrease of 29 bps, to 1.80%from 2.09%, for the same periods.

Previous wording

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

Current wording

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

Previous wording

Total noninterest income for the three months ended June 30, 2026 was $8.8 million, a decrease of $576 thousand, or 6.1%, from $9.4 million for the three months ended June 30, 2025. The decrease was primarily due to a decrease in mortgage banking revenue of $825 thousand and other noninterest income, partially offset by increases in service charges on deposit accounts, trust and investment fee income and interchange credits.

Current wording

Total noninterest income for the three months ended September 30, 2026 was $7.7 million, a decrease of $263 thousand, or 3.3%, from $7.9 million for the three months ended September 30, 2025. The decrease was primarily due to a decrease in other noninterest income of $595 thousand and mortgage banking revenue of $122 thousand, partially offset by increases in trust and investment fee income of $217 thousand.

Previous wording

Total noninterest expense was $35.7 million for the three months ended June 30, 2026, an increase of $1.3 million, or 3.7%, when compared to $34.4 million for the three months ended June 30, 2025. The increase was primarily due to higher salaries and employee benefits expense of $720 thousand and higher software and data processing costs of $516 thousand, partially offset by the decrease in the amortization of other intangible assets of $297 thousand.

Current wording

Total noninterest expense was $35.3 million for the three months ended September 30, 2026, an increase of $884 thousand, or 2.6%, when compared to $34.4 million for the three months ended September 30, 2025. The increase was primarily due to higher software and data processing costs of $646 thousand, partially offset by the decrease in the amortization of other intangible assets of $298 thousand.

Previous wording

The Company reported income tax expense of $6.3 million and $5.1 million for the three months ended June 30, 2026 and 2025, respectively. The effective tax rate was 25.09% and 24.84% for the three months ended June 30, 2026 and 2025, respectively.

Current wording

The Company reported income tax expense of $5.5 million and $4.6 million for the three months ended September 30, 2026 and 2025, respectively. The effective tax rate was 24.70% and 24.42% for the three months ended September 30, 2026 and 2025, respectively.

Previous wording

The Company reported net income for the six months ended June 30, 2026 of $36.0 million, or $1.07 diluted earnings per common share, compared to $29.3 million, or $0.88 diluted earnings per common share, for the six months ended June 30, 2025.

Current wording

The Company reported net income for the nine months ended September 30, 2026 of $52.7 million, or $1.58 diluted earnings per common share, compared to $43.6 million, or $1.31 diluted earnings per common share, for the nine months ended September 30, 2025.

Previous wording

As shown in the table below, taxable-equivalent NII increased $12.4 million to $105.6 million for the six months ended June 30, 2026, compared to $93.2 million for the six months ended June 30, 2025. The increase in net interest income was primarily due to an increase in total interest income of $3.4 million, or 2.2%, which included an increase in interest on loans of $4.1 million, or 3.0%, a decrease in interest on deposits with other banks of $939 thousand, or 18.8%, and an increase in interest income on taxable investments of $169 thousand. The increase in interest on loans was primarily due to the increase in the average balance of loans of $70.6 million, or 1.5%. The decrease in total interest expense was primarily due to a decrease in interest on deposits of $8.2 million and lower short-term borrowings of $1.2 million. These were partially offset by the increase in interest expense on long-term borrowings of $384 thousand as a result of lower FHLB borrowings and subordinated debt-related expenses that were classified as short-term borrowings in 2025.

Current wording

As shown in the table below, taxable-equivalent NII increased $19.1 million to $160.9 million for the nine months ended September 30, 2026, compared to $141.7 million for the nine months ended September 30, 2025. The increase in net interest income was primarily due to an increase in total interest income of $6.5 million, or 2.8%, which included an increase in interest on loans of $6.1 million, or 2.9%, an increase in interest income on taxable investments of $668 thousand, and a decrease in interest on deposits with other banks of $303 thousand, or 4.9%. The increase in interest on loans was primarily due to the increase in yields of 9 bps. The decrease in total interest expense was primarily due to a decrease in interest on deposits of $11.4 million and lower interest on short-term borrowings of $1.8 million. These were partially offset by the increase in interest expense on long-term borrowings of $550 thousand as a result of lower FHLB borrowings and subordinated debt-related expenses that were classified as short-term borrowings in 2025.

Previous wording

The following table presents the distribution of the average consolidated balance sheets, interest income, interest expense and annualized yields earned and rates paid for the six months ended June 30, 2026 and 2025.

Current wording

The following table presents the distribution of the average consolidated balance sheets, interest income, interest expense and annualized yields earned and rates paid for the nine months ended September 30, 2026 and 2025.

Previous wording

(3) Interest income on loans includes accreted loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations. There were $8.1 million and $8.0 million of accretion interest on loans for the six months ended June 30, 2026 and 2025, respectively.

Current wording

(3) Interest income on loans includes accreted loan fees, net of costs and accretion of discounts on acquired loans, which are included in the yield calculations. There were $12.2 million and $11.3 million of accretion interest on loans for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

(4) Interest expense on deposits and borrowings includes amortization of deposit discounts and amortization of borrowing fair value adjustments. There were zero and $769 thousand of amortization of deposit discounts and $159 thousand and $463 thousand of amortization of borrowing fair value adjustments for the six months ended June 30, 2026 and 2025, respectively. All deposit discounts have been fully amortized as of December 31, 2025.

Current wording

(4) Interest expense on deposits and borrowings includes amortization of deposit discounts and amortization of borrowing fair value adjustments. There were zero and $1.0 million of amortization of deposit discounts and $238 thousand and $695 thousand of amortization of borrowing fair value adjustments for the nine months ended September 30, 2026 and 2025, respectively. All deposit discounts have been fully amortized as of December 31, 2025.

Previous wording

The Company’s NIM increased from 3.28% for the six months ended June 30, 2025 to 3.67% for the six months ended June 30, 2026. Margins were higher due to a $64.8 million increase in interest-earning asset balances and a 6 bp increase in interest-earning asset yields. These positive movements were coupled with a lower cost of interest-bearing deposits. The increase in the average balances of interest-bearing deposits of $4.6 million was offset by a 44 basis point decrease in the associated rates paid, as well as a $49.2 million decrease in the average balance of FHLB advances and a 99 basis point decrease in the associated rates paid. Net accretion income impacted net interest margin by 27 basis points and 24 basis points for the six months ended June 30, 2026 and 2025, respectively, which resulted in NIM excluding accretion of 3.40% and 3.04% for the same periods.

Current wording

The Company’s NIM increased from 3.32% for the nine months ended September 30, 2025 to 3.71% for the nine months ended September 30, 2026. Margins were higher due to a $99.1 million increase in interest-earning asset balances and a 6 bp increase in interest-earning asset yields. These positive movements were coupled with a lower cost of interest-bearing deposits. The increase in the average balances of interest-bearing deposits of $31.7 million was offset by a 43 bp decrease in the associated rates paid, as well as a $50.3 million decrease in the average balance of FHLB advances and a 103 bp decrease in the associated rates paid. Net accretion income impacted net interest margin by 28 bps and 22 bps for the nine months ended September 30, 2026 and 2025, respectively, which resulted in NIM excluding accretion of 3.43% and 3.10% for the same periods.

Previous wording

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

Current wording

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

Previous wording

Total noninterest income for the six months ended June 30, 2026 decreased $466 thousand, or 2.8%, when compared to the same period in 2025. The decrease was primarily due to an $833 thousand decrease in other noninterest income and a $615 thousand decrease in mortgage banking revenue, partially offset by a $475 thousand increase in trust and investment fee income and a $293 thousand increase in interchange credits.

Current wording

Total noninterest income for the nine months ended September 30, 2026 decreased $729 thousand, or 3.0%, when compared to the same period in 2025. The decrease was primarily due to a $1.4 million decrease in other noninterest income and a $737 thousand decrease in mortgage banking revenue, partially offset by a $692 thousand increase in trust and investment fee income and a $398 thousand increase in interchange credits.

Previous wording

Total noninterest expense for the six months ended June 30, 2026 increased $4.6 million, or 6.7%, when compared to the same period in 2025. Noninterest expense line items increased primarily due to higher salaries and employee benefit expenses of $3.9 million and a $1.0 million increase in software and data processing expense. These increases were partially offset by lower amortization of intangible assetsof $595 thousand during the six months ended June 30, 2026.

Current wording

Total noninterest expense for the nine months ended September 30, 2026 increased $5.5 million, or 5.3%, when compared to the same period in 2025. Noninterest expense line items increased primarily due to higher salaries and employee benefit expenses of $3.8 million, a $1.6 million increase in software and data processing expense and a$250 thousand increase in furniture and equipment expense. These increases were partially offset by lower amortization of intangible assetsof $893 thousand during the nine months ended September 30, 2026. Software expenses are expected to decline from the prior quarters, reflecting cost savings achieved through the renegotiation of a significant vendor contract and continued systems consolidation efforts.

Previous wording

The Company reported income tax expense of $11.9 million and $9.6 million for the six months ended June 30, 2026 and 2025, respectively. The effective tax rate was 24.85% and 24.73% for the six months ended June 30, 2026 and 2025, respectively.

Current wording

The Company reported income tax expense of $17.4 million and $14.3 million for the nine months ended September 30, 2026 and 2025, respectively. The effective tax rate was 24.80% and 24.63% for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Total assets were $6.15 billion at June 30, 2026, a decrease of $107.4 million, or 1.7%, when compared to $6.26 billion at December 31, 2025. The decrease was primarily due to a decrease in our loan portfolio of $22.6 million and a decrease in cash and cash equivalents of $97.9 million, which were partially offset by an increase in our investment securities portfolio of $18.4 million. The ratio of the ACL as a percentage of loans was 1.20% and 1.20% at June 30, 2026 and December 31, 2025, respectively.

Current wording

Total assets were $6.45 billion at September 30, 2026, an increase of $195.5 million, or 3.1%, when compared to $6.26 billion at December 31, 2025. The increase was primarily due to an increase in our investment securities portfolio of $101.7 million and an increase in cash and cash equivalents of $99.5 million, which were partially offset by a decrease in loans held for sale of $17.7 million. The ratio of the ACL as a percentage of loans was 1.21% and 1.20% at September 30, 2026 and December 31, 2025, respectively.

Previous wording

Cash and cash equivalents totaled $257.7 million at June 30, 2026, compared to $355.6 million at December 31, 2025. Total cash and cash equivalents fluctuate due to transactions in process and other liquidity demands. Management believes liquidity needs are satisfied by the current balance of cash and cash equivalents, readily available access to traditional and wholesale funding sources, and the portions of the investment and loan portfolios that mature within one year. The decrease in cash and cash equivalents was primarily driven by seasonal run-off of municipal deposits.

Current wording

Cash and cash equivalents totaled $455.1 million at September 30, 2026, compared to $355.6 million at December 31, 2025. Total cash and cash equivalents fluctuate due to transactions in process and other liquidity demands. Management believes liquidity needs are satisfied by the current balance of cash and cash equivalents, readily available access to traditional and wholesale funding sources, and the portions of the investment and loan portfolios that mature within one year. The increase in cash and cash equivalents was primarily driven by seasonal surge in municipal deposits.

Previous wording

The investment portfolio includes debt and equity securities. Debt securities are classified as either available for sale (“AFS”) or held to maturity (“HTM”). AFS investment securities are stated at estimated fair value based on market prices. They represent securities which may be sold as part of the asset/liability management strategy or in response to changing interest rates. Net unrealized holding gains and losses on these securities are reported net of related income taxes as accumulated other comprehensive income (“AOCI”) (loss), a separate component of stockholders’ equity. Investment securities in the HTM category are stated at cost adjusted for amortization of premiums and accretion of discounts and the ACL. We have the intent and ability to hold such securities until maturity. At June 30, 2026, 43.97% of the portfolio of debt securities was classified as AFS and 56.03% was classified as HTM, compared to 34.69% and 65.31%, respectively, at December 31, 2025. See Note 2 – “Investment Securities” in the “Notes to Consolidated Financial Statements” included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details on the composition of the investment portfolio.

Current wording

The investment portfolio includes debt and equity securities. Debt securities are classified as either available for sale (“AFS”) or held to maturity (“HTM”). AFS investment securities are stated at estimated fair value based on market prices. They represent securities which may be sold as part of the asset/liability management strategy or in response to changing interest rates. Net unrealized holding gains and losses on these securities are reported net of related income taxes as accumulated other comprehensive income (“AOCI”) (loss), a separate component of stockholders’ equity. Investment securities in the HTM category are stated at cost adjusted for amortization of premiums and accretion of discounts and the ACL. We have the intent and ability to hold such securities until maturity. At September 30, 2026, 51.67% of the portfolio of debt securities was classified as AFS and 48.33% was classified as HTM, compared to 34.69% and 65.31%, respectively, at December 31, 2025. See Note 2 – “Investment Securities” in the “Notes to Consolidated Financial Statements” included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details on the composition of the investment portfolio.

Previous wording

Investment securities, including restricted stock and equity securities, totaled $677.8 million at June 30, 2026, an increase of $18.4 million, or 2.80%, compared to $659.4 million at December 31, 2025. At June 30, 2026, AFS securities, carried at fair value, totaled $287.4 million, compared to $220.4 million at December 31, 2025. At June 30, 2026, AFS securities consisted of 85.95% mortgage-backed securities, 7.05% U.S. government agency securities and 7.00% corporate bonds, compared to 88.50%, 9.36% and 2.14%, respectively, at December 31, 2025. At June 30, 2026, the gross unrealized losses on AFS securities were all related to changes in interest rates and were $9.1 million, or less than 1% of total assets and 2% of total stockholders’ equity. At June 30, 2026, the AOCI loss was $6.1 million, compared to $4.6 million at December 31, 2025.

Current wording

Investment securities, including equity securities and restricted securities, totaled $761.1 million at September 30, 2026, an increase of $101.7 million, or 15.42%, compared to $659.4 million at December 31, 2025. At September 30, 2026, AFS securities, carried at fair value, totaled $380.8 million, compared to $220.4 million at December 31, 2025. At September 30, 2026, AFS securities consisted of 84.99% mortgage-backed securities, 5.19% U.S. government agency securities and 9.82% corporate bonds, compared to 88.50%, 9.36% and 2.14%, respectively, at December 31, 2025. At September 30, 2026, the gross unrealized losses on AFS securities were all related to changes in interest rates and were $15.7 million, or less than 1% of total assets and 3% of total stockholders’ equity. At September 30, 2026, the AOCI loss was $11.1 million, compared to $4.6 million at December 31, 2025.

Previous wording

At June 30, 2026, HTM securities, carried at amortized cost net of allowance, totaled $366.2 million, compared to $414.8 million at December 31, 2025. At June 30, 2026, HTM securities consisted of 77.69% mortgage-backed securities, 20.41% U.S. government agency securities and 1.90% other debt securities, compared to 73.06%, 25.26% and 1.68%, respectively, at December 31, 2025.

Current wording

At September 30, 2026, HTM securities, carried at amortized cost net of allowance, totaled $356.2 million, compared to $414.8 million at December 31, 2025. At September 30, 2026, HTM securities consisted of 77.53% mortgage-backed securities, 20.94% U.S. government agency securities and 1.53% other debt securities, compared to 73.06%, 25.26% and 1.68%, respectively, at December 31, 2025.

Previous wording

At June 30, 2026 and December 31, 2025, 83.22% and 86.82%, respectively, of the Bank’s carrying value of its investment portfolio consisted of securities issued or guaranteed by U.S. government agencies or government-sponsored agencies.

Current wording

At September 30, 2026 and December 31, 2025, 83.47% and 86.82%, respectively, of the Bank’s carrying value of its available for sale and held to maturities securities consisted of securities issued or guaranteed by U.S. government agencies or government-sponsored agencies.

Previous wording

The Company originates residential mortgage loans for sale on the secondary market, which are recorded at fair value. At June 30, 2026 and December 31, 2025, the fair value of loans held for sale amounted to $30.8 million and $32.5 million, respectively. The Bank makes certain representations to purchasers in the sale of mortgage loans related to loan ownership, loan compliance and legality, and accurate documentation. If a loan is found to be out of compliance with any of the representations subsequent to the date of purchase, the Bank may be required to repurchase the loan or indemnify the purchaser. During the three months ended June 30, 2026 and 2025 and six months ended June 30, 2026, the Bank repurchased no loans. During the six months ended June 30, 2025, the Bank repurchased one loan with an aggregate value of $415 thousand.

Current wording

The Company originates residential mortgage loans for sale on the secondary market, which are recorded at fair value. At September 30, 2026 and December 31, 2025, the fair value of loans held for sale amounted to $14.9 million and $32.5 million, respectively. The Bank makes certain representations to purchasers in the sale of mortgage loans related to loan ownership, loan compliance and legality, and accurate documentation. If a loan is found to be out of compliance with any of the representations subsequent to the date of purchase, the Bank may be required to repurchase the loan or indemnify the purchaser. During the three and nine months ended September 30, 2026, the Bank repurchased no loans. During the three and nine months ended September 30, 2025, the Bank repurchased one loan with an aggregate value of $523 thousand and two loans with an aggregate value of $938 thousand, respectively.

Previous wording

The Company’s loan portfolio has a CRE loan concentration, which is generally defined as a combination of certain construction and CRE loans. The federal banking regulators have issued guidance for those institutions which are deemed to have concentrations in CRE lending. Pursuant to the supervisory criteria contained in the guidance for identifying institutions with a potential CRE concentration risk, institutions which have (1) total reported loans for construction, land development, and other land acquisitions which represent 100% or more of an institution’s total risk-based capital; or (2) total non-owner occupied CRE loans representing 300% or more of the institution’s total risk-based capital and the institution’s non-owner occupied CRE loan portfolio (including construction) has increased 50% or more during the prior 36 months are identified as having potential CRE concentration risk. Institutions which are deemed to have concentrations in CRE lending are expected to employ heightened levels of risk management with respect to their CRE portfolios and may be required to hold higher levels of capital. Non-owner occupied CRE loans, excluding land and construction loans, totaled $1.87 billion at June 30, 2026 and $1.84 billion at December 31, 2025, and as a percentage of the Bank’s Tier 1 Capital plus ACL were 326.63% and 342.55%, respectively.

Current wording

The Company’s loan portfolio has a CRE loan concentration, which is generally defined as a combination of certain construction and CRE loans. The federal banking regulators have issued guidance for those institutions that are deemed to have concentrations in CRE lending. Pursuant to the supervisory criteria contained in the guidance for identifying institutions with a potential CRE concentration risk, institutions which have (1) total reported loans for construction, land development, and other land acquisitions which represent 100% or more of an institution’s total risk-based capital; or (2) total non-owner occupied CRE loans representing 300% or more of the institution’s total risk-based capital and the institution’s non-owner occupied CRE loan portfolio (including construction) has increased 50% or more during the prior 36 months are identified as having potential CRE concentration risk. Institutions that are deemed to have concentrations in CRE lending are expected to employ heightened levels of risk management with respect to their CRE portfolios and may be required to hold higher levels of capital. Non-owner occupied CRE loans, excluding land and construction loans, totaled $1.84 billion at both

Previous wording

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

Current wording

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

Previous wording

(1)Other non-owner occupied CRE loans include commercial – improved loans of $161.3 million, self storage loans of $66.7 million, farm real estate loans of $45.8 million, restaurant loans of $41.8 million and other loans of $42.5 million.

Current wording

(1)Other non-owner occupied CRE loans include commercial – improved loans of $168.7 million, self storage loans of $65.4 million, farm real estate loans of $47.7 million, restaurant loans of $41.2 million and other loans of $41.6 million.

Previous wording

(3)Excludes loans held for sale of$30.8 million.

Current wording

(3)Excludes loans held for sale of$14.9 million.

Previous wording

(1)Other owner occupied CRE loans include church loans of $51.7 million, fire/EMS building loans of $37.6 million, auto service center of $34.0 million and other loans of $52.5 million.

Current wording

(1)Other owner occupied CRE loans include church loans of $51.3 million, fire/EMS building loans of $37.3 million, auto service center of $34.0 million and other loans of $51.0 million.

Previous wording

(2)Excludes loans held for sale of $30.8 million.

Current wording

(2)Excludes loans held for sale of $14.9 million.

Previous wording

The Bank’s office CRE loan portfolio, which includes owner occupied and non-owner occupied CRE loans, was $475.9 million, or 9.8% of total loans of $4.88 billion at June 30, 2026. The Bank’s office CRE loan portfolio included $107.9 million, or 22.7% of total office CRE loans, with medical tenants, and $68.9 million, or 14.5% of total office CRE loans, with government or government contractor tenants. At June 30, 2026, there were 463 loans in the office CRE loan portfolio, with an average and median loan size of $1.0 million and $389 thousand, respectively. Loan-to-value (“LTV”) estimates are less than or equal to 50% for $166.2 million, or 34.9% of the office CRE loan portfolio, and greater than 80% for $13.1 million, or 2.8% of the office CRE loan portfolio at June 30, 2026. LTV collateral values are based on the most recent appraisal, which varies from the initial loan boarding to interim credit reviews. LTV estimates for the office CRE loan portfolio as of June 30, 2026 are summarized in the table below and LTV collateral values are based on the most recent appraisal, which may vary from the appraised value at loan origination.

Current wording

CRE loans, with medical tenants, and $66.9 million, or 15.0% of total office CRE loans, with government or government contractor tenants. At September 30, 2026, there were 449 loans in the office CRE loan portfolio, with an average and median loan size of $1.0 million and $399 thousand, respectively. Loan-to-value (“LTV”) estimates are less than or equal to 50% for $148.6 million, or 33.3% of the office CRE loan portfolio, and greater than 80% for $14.8 million, or 3.3% of the office CRE loan portfolio at September 30, 2026. LTV collateral values are based on the most recent appraisal, which varies from the initial loan boarding to interim credit reviews. LTV estimates for the office CRE loan portfolio as of September 30, 2026 are summarized in the table below and LTV collateral values are based on the most recent appraisal, which may vary from the appraised value at loan origination.

Previous wording

There were 16 office CRE loans with balances greater than $5.0 million, totaling $147.8 million at June 30, 2026, compared to 17 loans totaling $166.1 million at December 31, 2025. The decrease in this portfolio segment was the result of normal amortization. Of the office CRE portfolio balance, 80.8% of the loans were secured by properties in rural or suburban areas with limited exposure to metropolitan cities and 97.0% were secured by properties with five stories or less at June 30, 2026. Of the office CRE loans, $33.7 million will mature and $10.0 million will reprice prior to December 31, 2026. Of the office CRE loans, $17.6 million were classified as special mention or substandard at June 30, 2026. There were no charge-offs within the office CRE portfolio during the three and six months ended June 30, 2026.

Current wording

There were 14 office CRE loans with balances greater than $5.0 million, totaling $136.1 million at September 30, 2026, compared to 17 loans totaling $166.1 million at December 31, 2025. The decrease in this portfolio segment was the result of normal amortization and a $10.8 million transfer toother real estate owned (“OREO”). Of the office CRE portfolio balance, 80.3% of the loans were secured by properties in rural or suburban areas with limited exposure to metropolitan cities and 97.1% were secured by properties with five stories or less at September 30, 2026. Of the office CRE loans, $14.5 million will mature and $4.5 million will reprice prior to December 31, 2026. Of the office CRE loans, $8.2 million were classified as special mention or substandard at September 30, 2026. There were no charge-offs within the office CRE portfolio during the three and nine months ended September 30, 2026. During the third quarter of 2026, the Company foreclosed on an office property located in Virginia with a carrying value of$10.8 million. The property had previously been reported as a nonperforming asset in prior periods and was transferred to OREO during the quarter.