mrbk-20260331

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


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

For the quarterly period ended March 31, 2026


☐			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: 000-55983

(Exact name of registrant as specified in its charter)


Pennsylvania			83-1561918
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

9 Old Lincoln Highway, Malvern, Pennsylvania 19355

(Address of principal executive offices) (Zip Code)

(484) 568-5000

(Registrant’s telephone number, including area code)


Title of class	Trading Symbol	Name of exchange on which registered
Common Stock, $1 par value	MRBK	The NASDAQ Stock 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 period 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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth 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. ☐

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of May 7, 2026 there were 11,890,278 outstanding shares of the issuer’s common stock, par value $1.00 per share.

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TABLE OF CONTENTS


PART I FINANCIAL INFORMATION

Item 1 Financial Statements (Unaudited)			3

Consolidated Balance Sheets – March 31, 2026 and December 31, 2025			3

Consolidated Statements of Income – Three Months Ended March 31, 2026 and 2025			4

Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2026 and 2025			5

Consolidated Statements of Stockholders’ Equity – Three Months Ended March 31, 2026 and 2025			6

Consolidated Statements of Cash Flows – Three Months Ended March 31, 2026 and 2025			7

Notes to Consolidated Financial Statements (Unaudited)			8

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations			33

Item 3 Quantitative and Qualitative Disclosures about Market Risk			45

Item 4 Controls and Procedures			46

PART II OTHER INFORMATION

Item 1 Legal Proceedings			46

Item 1A Risk Factors			46

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds			46

Item 3 Defaults Upon Senior Securities			46

Item 4 Mine Safety Disclosures			46

Item 5 Other Information			46

Item 6 Exhibits			47

Signatures			48

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Glossary of Acronyms, Abbreviations, and Terms

The acronyms, abbreviations, and terms listed below are used in various sections of this report. As used throughout this report, the terms "Meridian", “we”, “our”, or “us” refer to Meridian Corporation and its consolidated subsidiaries, unless the context otherwise requires.


Acronym			Description
ACBB			Atlantic Central Bankers Bank
ACH			Automated clearing house
ACL			Allowance for credit losses
AFS			Available-for-sale
AI			Artificial intelligence
ALCO			Asset/Liability Committee
ALM			Asset / liability management
AOCI			Accumulated other comprehensive income
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
ATM			At the Market common stock offering
BHC Act			Bank Holding Company Act of 1956
BOLI			Bank owned life insurance
BSA-AML			Bank Secrecy Act - Anti-Money Laundering
BTFP			Federal Reserve Bank Term Funding Program
CBCA			Change in Bank Control Act
CBLR			Community Bank Leverage Ratio
CDARS			Certificate of Deposit Account Registry Service
CECL			Current expected credit losses
CET1			Common equity tier 1
CFPB			Consumer Financial Protection Bureau
CMO			Collateralized mortgage obligation
CODM			Chief Operating Decision Maker
CRE			Commercial real estate
DIF			FDIC’s deposit insurance fund
ECOA			Equal Credit Opportunity Act
ESOP			Employee Stock Ownership Plan
FASB			Financial Accounting Standards Board
FDIA			Federal Deposit Insurance Act
FDIC			Federal Deposit Insurance Corporation
FED			Federal Reserve System
FFIEC			Federal Financial Institutions Examination Council
FHA			Federal Housing Authority
FHFA			Federal Housing Finance Agency
FHLB			Federal Home Loan Bank of Pittsburgh
FHLMC			Federal Home Loan Mortgage Corporation or Freddie Mac
FICO			Financing Corporation
FNMA			Federal National Mortgage Association or Fannie Mae
FRB			Federal Reserve Bank of Philadelphia
FTE			Fully taxable equivalent
GAAP			U.S. generally accepted accounting principles
GLB Act			Gramm-Leach-Bliley Act
GNMA			Government National Mortgage Association or Ginnie Mae
GSE			Government-sponsored entities
HTM			Held-to-maturity

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ICBA			Independent Community Bankers of America
JOBS Act			Jumpstart Our Business Startups Act of 2012
LBP			Look-back period
LEP			Loss emergence period

LIBOR			London Inter-bank Offering Rate
LIHTC			Low-income-housing tax credit
MBS			Mortgage-backed securities
MSLP			Main Street Lending Programs
MSR			Mortgage servicing rights
NSFR			Net stable funding ratio
OFAC			Office of Foreign Assets Control
OREO			Other real estate owned
PCAOB			Public Company Accounting Oversight Board
PCD			Purchased credit deteriorated
PD			Probability of default
PDBS			Pennsylvania Department of Banking and Securities

ROU			Right-of-use
SBA			Small Business Administration
SEC			Securities and Exchange Commission
SERP			Supplemental Executive Retirement Plan
SNC			Shared national credit
SOFR			Secure Overnight Financing Rate
TILA			Truth in Lending Act
TDR			Troubled debt restructuring
USDA			U.S. Department of Agriculture
VA			U.S. Department of Veteran’s Affairs

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MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(dollars in thousands, except share data)	March 31, 2026		December 31, 2025
Assets:
Cash and due from banks	$	12,458	$	10,358
Interest-bearing deposits at other banks	15,811		25,420

Cash and cash equivalents	28,269		35,778
Securities available-for-sale, at fair value (amortized cost of $202,419 and $199,127, respectively)	196,012		193,457
Securities held-to-maturity, at amortized cost (fair value of $29,914 and $30,152, respectively)	32,494		32,544
Equity investments	2,137		2,166
Mortgage loans held for sale	38,960		33,762
Loans and other finance receivables, net of fees and costs	2,181,575		2,170,600
Allowance for credit losses	(21,252)		(21,573)
Loans and other finance receivables, net of the allowance for credit losses	2,160,323		2,149,027
Restricted investment in bank stock	7,699		7,811
Bank premises and equipment, net	12,298		12,402
Bank owned life insurance	30,959		30,687
Accrued interest receivable	11,015		10,724
OREO and other repossessed assets	6,009		5,997
Deferred income taxes	4,548		4,215
Servicing assets	3,694		3,932

Goodwill	899		899
Intangible assets	2,512		2,563
Other assets	38,753		36,031
Total assets	$	2,576,581	$	2,561,995

Liabilities:
Deposits:
Non-interest bearing	$	243,458	$	245,377
Interest bearing	1,926,502		1,912,751
Total deposits	2,169,960		2,158,128
Borrowings	120,838		117,338

Subordinated debentures	49,675		49,853
Accrued interest payable	6,620		6,531
Other liabilities	29,263		30,429
Total liabilities	2,376,356		2,362,279

Stockholders’ equity:
Common stock, $1 par value: 25,000,000 shares authorized; 13,882,361 and 13,829,645 shares issued, respectively, and 11,879,178 and 11,826,462 shares outstanding, respectively	13,882		13,830
Surplus	90,885		90,352
Treasury stock, 2,003,183 shares, at cost	(26,079)		(26,079)
Unearned common stock held by ESOP	(1,232)		(1,232)
Retained earnings	128,472		128,124
Accumulated other comprehensive loss	(5,703)		(5,279)
Total stockholders’ equity	200,225		199,716
Total liabilities and stockholders’ equity	$	2,576,581	$	2,561,995

See accompanying notes to the unaudited consolidated financial statements.

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MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three months ended March 31,
(dollars in thousands, except per share data)	2026		2025
Interest income:
Loans and other finance receivables, including fees	$	38,144	$	36,549
Securities - taxable	1,847		1,693
Securities - tax-exempt	323		313
Cash and cash equivalents	398		613
Total interest income	40,712		39,168
Interest expense:
Deposits	15,223		16,868
Borrowings and subordinated debentures	2,287		2,524
Total interest expense	17,510		19,392
Net interest income	23,202		19,776
Provision for credit losses	7,493		5,212
Net interest income after provision for credit losses	15,709		14,564
Non-interest income:
Mortgage banking income	4,528		3,393
Wealth management income	1,729		1,535
SBA loan income	150		748
Earnings on investment in life insurance	272		222
Net loss on sale of MSRs	(159)		(52)
Net change in the fair value of derivative instruments	(51)		149
Net change in the fair value of loans held-for-sale	(380)		102
Net change in the fair value of loans held-for-investment	(39)		170
Net gain on hedging activity	18		21


Other	969		1,036
Total non-interest income	7,037		7,324
Non-interest expense:
Salaries and employee benefits	12,386		11,385
Occupancy and equipment	1,183		1,338
Professional fees	974		763
Data processing and software	1,973		1,479
Advertising and promotion	692		779
Pennsylvania bank shares tax	258		269
Other	2,692		2,730
Total non-interest expense	20,158		18,743
Income before income taxes	2,588		3,145
Income tax expense	582		746
Net income	$	2,006	$	2,399
Basic earnings per common share	$	0.17	$	0.21
Diluted earnings per common share	$	0.17	$	0.21
Basic weighted average shares outstanding	11,811		11,205
Diluted weighted average shares outstanding	12,153		11,446

See accompanying notes to the unaudited consolidated financial statements.

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MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three months ended March 31,
(dollars in thousands)	2026		2025
Net income:	$	2,006	$	2,399

Net change in unrealized (losses) gains on investment securities available for sale:
Change in fair value of investment securities, net of tax of $(166) and $202, respectively	(570)		699

Reclassification adjustment for investment securities transferred to held-to-maturity, net of tax effect of $7 and $7, respectively	24		22
Unrealized investment (losses) gains, net of tax effect of $(159) and $210, respectively	$	(546)	$	721
Net change in unrealized gains (losses) on interest rate swaps used in cash flow hedges, net of tax effect of $(36) and $(192), respectively	122		(192)



Total other comprehensive (loss) income	$	(424)	$	529
Total comprehensive income	$	1,582	$	2,928

See accompanying notes to the unaudited consolidated financial statements.

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MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


(dollars in thousands, except per share data)	Common Stock		Surplus		Treasury Stock		Unearned ESOP		Retained Earnings		AOCI		Total
Three Months Ended March 31, 2026
Balance at January 1, 2026	$	13,830	$	90,352	$	(26,079)	$	(1,232)	$	128,124	$	(5,279)	$	199,716
Net income	—		—		—		—		2,006		—		2,006
Other comprehensive loss	—		—		—		—		—		(424)		(424)
Dividends declared ($0.140 per share)	—		—		—		—		(1,658)		—		(1,658)


Common stock issued through share-based awards and exercises	52		565		—		—		—		—		617

Stock based compensation (benefit)	—		(32)		—		—		—		—		(32)
Balance at March 31, 2026	$	13,882	$	90,885	$	(26,079)	$	(1,232)	$	128,472	$	(5,703)	$	200,225


(dollars in thousands, except per share data)	Common Stock		Surplus		Treasury Stock		Unearned ESOP		Retained Earnings		AOCI		Total
Three Months Ended March 31, 2025
Balance at January 1, 2025	$	13,243	$	81,545	$	(26,079)	$	(1,006)	$	111,961	$	(8,142)	$	171,522

Net income	—		—		—		—		2,399		—		2,399
Other comprehensive income	—		—		—		—		—		529		529
Dividends declared ($0.125 per share)	—		—		—		—		(1,408)		—		(1,408)

Common stock issued through share-based awards and exercises	45		363		—		—		—		—		408
Stock based compensation expense	—		118		—		—		—		—		118
Balance at March 31, 2025	$	13,288	$	82,026	$	(26,079)	$	(1,006)	$	112,952	$	(7,613)	$	173,568

See accompanying notes to the unaudited consolidated financial statements.

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MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(dollars in thousands)	2026		2025
Net income	$	2,006	$	2,399
Adjustments to reconcile net income to net cash provided by operating activities:

Net amortization of investment premiums and discounts and change in fair value of equity securities	91		1,069
Depreciation and amortization (accretion), net	25		6
Provision for credit losses	7,493		5,212
Amortization of issuance costs on subordinated debt	32		31
Stock based compensation	(32)		118
Net change in fair value of derivative instruments	51		(149)
Net change in fair value of loans held for sale	380		(102)
Net change in fair value of loans held for investment	39		(170)
Amortization and net impairment of servicing rights	79		274
Net loss on sale of MSRs	159		52

SBA loan income	(150)		(748)
Proceeds from sale of loans	167,141		148,087
Loans originated for sale	(168,191)		(140,455)
Mortgage banking income	(4,528)		(3,393)
Increase in accrued interest receivable	(291)		(387)

Increase (decrease) in other assets	(47)		4,317
Earnings from investment in bank owned life insurance	(272)		(222)
Increase in deferred income tax	(207)		(646)
Increase in accrued interest payable	89		544
(Decrease) increase in other liabilities	(1,004)		2,280
Net cash provided by operating activities	2,863		18,117

Cash flows from investing activities:
Activity in available-for-sale securities:
Maturities, repayments and calls	5,153		3,198

Purchases	(8,270)		(14,274)
Activity in held-to-maturity securities:
Maturities, repayments and calls	—		999



Proceeds from sale of loans held for investment	6,698		12,138
Net redemptions (purchases) of restricted investments in bank stocks	112		(616)
Net increase in loans	(27,919)		(53,020)
Purchases of premises and equipment	(227)		(259)


Net cash used in investing activities	(24,453)		(51,834)





Cash flows from financing activities:
Net increase in deposits	11,832		123,374

Increase in short-term borrowings	3,500		6,184
Increase in long-term debt	—		8,935

Repayment of subordinated debt	(210)		(13)



Dividends paid	(1,658)		(1,408)
Stock based awards and exercises	617		408



Net cash provided by financing activities	14,081		137,480

Net change in cash and cash equivalents	(7,509)		103,763
Cash and cash equivalents at beginning of period	35,778		27,462
Cash and cash equivalents at end of period	$	28,269	$	131,225

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	17,421	$	18,848
Income taxes:

State	299		—
Total Income taxes	299		—



Net loans sold, not settled	2,955		(1,834)

See accompanying notes to the unaudited consolidated financial statements.

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MERIDIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Summary of Significant Accounting Policies

Basis of Presentation

The Corporation’s unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial position and the results of operations for the interim periods presented have been included.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Amounts subject to significant estimates are items such as the allowance for credit losses, lending related commitments and the related unfunded commitment reserve, the fair value of financial instruments, other-than-temporary impairments of investment securities, and the valuations of goodwill, intangible assets, and servicing assets.

These unaudited consolidated financial statements should be read in conjunction with the Corporation’s filings with the SEC (including our Annual Report on Form 10-K for the year ended December 31, 2025), subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K that update or provide information in addition to the information included in Form 10-K and Form 10-Q filings, if any.

Certain prior period amounts have been reclassified to conform with current period presentation. Reclassifications had no effect on net income or stockholders’ equity. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results for the year ending December 31, 2026 or for any other period.

Recent Accounting Pronouncements

Pronouncements Adopted as of March 31, 2026:

The following pronouncements were adopted in 2026, but did not have a material impact on our consolidated financial statements.

FASB ASU 2024-04, "Debt with Conversion and Other Options (Subtopic 470-20)"

The amendments in the ASU clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The amendments in the ASU are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The adoption of this guidance did not have a material impact on the Corporation's consolidated financial statements.

Pronouncements Not Yet Effective as of March 31, 2026:

FASB ASU No. 2023-06, "Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative".

This ASU amends the disclosure or presentation requirements related to various subtopics in the ASC. The amendments are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC's existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC's regulations. For entities subject to the SEC's existing disclosure requirements the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules. For all other entities, the amendments will be effective two years later. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective for any entity.

FASB ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)"

This amendment requires enhanced disaggregation of certain expense categories within the income statement to provide more detailed information about the nature and function of expenses. The objective is to improve the transparency and usefulness of financial statements for users by offering greater insight into the components of operating expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2026. These changes may be applied prospectively or retroactively. Early adoption is permitted. The Corporation is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures.

FASB ASU 2025-01, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date"

This amendment addresses questions that were raised regarding the effective date of ASU 2024-03 for public business entities with non-calendar year ends. The amendment clarifies that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Corporation is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures.

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FASB ASU 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40).”

This update modernizes internal-use software guidance to apply regardless of the method used to develop software. The amendment will be effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The Corporation is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures.

FASB ASU 2025-07, “Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) – Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract”

This update refines the scope of Topic 815 to clarify which contracts are subject to derivative accounting and clarifies guidance under Topic 606 for share-based noncash consideration from a customer in revenue contracts. The amendments in this update are effective for annual reporting periods beginning after December 15, 2026. The Corporation is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures.

FASB ASU 2025-08, “Financial Instruments - Credit Losses (Topic 326): Purchased Loans”.

This ASU changes the accounting for certain acquired loans by requiring entities to apply a “gross-up” approach at acquisition for purchased seasoned loans, recognizing an allowance for credit losses as part of the acquisition accounting rather than through a post-acquisition provision. The amendments are to be applied prospectively to loans acquired on or after the initial application date. The ASU will be effective for the annual reporting period beginning after December 15, 2026. Early adoption is permitted. The Corporation is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures.

FASB ASU 2025-11, “Interim Reporting (Topic 270) Narrow-Scope Improvements.”

This ASU clarifies when Topic 270 applies and enhances usability by (among other changes) specifying the form/content of interim financial statements, providing a comprehensive list of required interim disclosures, and introducing a disclosure principle for material events since the last annual period-without intending to significantly expand or reduce interim disclosure requirements. The amendments in this update are effective for the annual reporting period beginning after December 15, 2027. The Corporation is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures.

FASB ASU 2025-12, “Codification Improvements.”

This ASU is part of the FASB's standing "evergreen" project and makes a broad set of technical corrections, clarifications, and other minor improvements across many Topics to make the Codification easier to understand and apply. The amendments in this update are effective for the annual reporting period beginning after December 15, 2026, and interim periods within that fiscal year. The Corporation is currently evaluating the impact of such amendments to the consolidated financial statements and related disclosures.

(2) Earnings per Common Share

Basic earnings per common share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average common shares outstanding during the period reduced by unearned ESOP Plan shares and treasury shares. Diluted earnings per common share takes into account the potential dilution computed pursuant to the treasury stock method that could occur if stock options were exercised and converted into common stock, and if restricted stock awards were vested. The effects of stock options are excluded from the computation of diluted earnings per share in periods in which the effect would be anti-dilutive.


	Three months ended March 31,
(dollars in thousands, except per share data)	2026		2025
Numerator for earnings per share:
Net income available to common stockholders	$	2,006	$	2,399

Denominators for earnings per share:
Weighted average shares outstanding	11,915		11,336
Average unearned ESOP shares	(104)		(131)
Basic weighted averages shares outstanding	11,811		11,205
Dilutive effects of assumed exercises of stock options	342		241

Diluted weighted averages shares outstanding	12,153		11,446

Basic earnings per share	$	0.17	$	0.21
Diluted earnings per share	$	0.17	$	0.21
Antidilutive shares excluded from computation of average dilutive earnings per share	78		364

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(3) Securities

The following tables present the amortized cost, allowance for credit losses, and fair value of securities at the dates indicated:


	March 31, 2026
(dollars in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Allowance for credit losses		Fair value		# of Securities in unrealized loss position
Securities available-for-sale:
U.S. asset backed securities	$	25,486	$	34	$	(159)	$	—	$	25,361	14
U.S. government agency MBS	22,045		100		(329)		—		21,816		9
U.S. government agency CMO	70,862		232		(1,852)		—		69,242		46
State and municipal securities	43,092		98		(3,554)		—		39,636		32
U.S. Treasuries	17,039		—		(846)		—		16,193		16
Non-U.S. government agency CMO	7,894		18		(225)		—		7,687		8
Corporate bonds	16,001		325		(249)		—		16,077		10
Total securities available-for-sale	$	202,419	$	807	$	(7,214)	$	—	$	196,012	135

	Amortized cost		Gross unrecognized gains		Gross unrecognized losses		Allowance for credit losses		Fair value		# of Securities in unrecognized loss position

Securities held to maturity:
State and municipal securities	$	32,494	$	6	$	(2,586)	$	—	$	29,914	19
Total securities held-to-maturity	$	32,494	$	6	$	(2,586)	$	—	$	29,914	19


	December 31, 2025
(dollars in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Allowance for credit losses		Fair value		# of Securities in unrealized loss position
Securities available-for-sale:
U.S. asset backed securities	$	26,385	$	51	$	(219)	$	—	$	26,217	13
U.S. government agency MBS	22,396		223		(268)		—		22,351		6
U.S. government agency CMO	67,216		441		(1,526)		—		66,131		38
State and municipal securities	43,282		151		(3,401)		—		40,032		31
U.S. Treasuries	17,039		—		(833)		—		16,206		16
Non-U.S. government agency CMO	8,786		27		(207)		—		8,606		9
Corporate bonds	14,023		266		(375)		—		13,914		11
Total securities available-for-sale	$	199,127	$	1,159	$	(6,829)	$	—	$	193,457	124

(dollars in thousands)	Amortized cost		Gross unrecognized gains		Gross unrecognized losses		Allowance for credit losses		Fair value		# of Securities in unrecognized loss position
Securities held to maturity:
State and municipal securities	$	32,544	$	22	$	(2,414)	$	—	$	30,152	19
Total securities held-to-maturity	$	32,544	$	22	$	(2,414)	$	—	$	30,152	19

Although the Corporation’s investment portfolio overall is in a net unrealized loss position at March 31, 2026, the temporary impairment in the above noted securities is primarily the result of changes in market interest rates subsequent to purchase and it is more likely than not that the Corporation will not be required to sell these securities prior to recovery to satisfy liquidity needs, and therefore, no securities warranted an ACL.

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The following table shows the Corporation’s investment gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position at the dates indicated:


	March 31, 2026
	Less than 12 Months				12 Months or more				Total
(dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Securities available-for-sale:
U.S. asset backed securities	$	8,816	$	(36)	$	9,496	$	(123)	$	18,312	$	(159)
U.S. government agency MBS	9,739		(111)		2,518		(218)		12,257		(329)
U.S. government agency CMO	34,459		(501)		15,914		(1,351)		50,373		(1,852)
State and municipal securities	1,193		(3)		34,874		(3,551)		36,067		(3,554)
U.S. Treasuries	—		—		16,193		(846)		16,193		(846)
Non-U.S. government agency CMO	589		(3)		4,411		(222)		5,000		(225)
Corporate bonds	2,989		(11)		3,962		(238)		6,951		(249)
Total securities available-for-sale	$	57,785	$	(665)	$	87,368	$	(6,549)	$	145,153	$	(7,214)

	Less than 12 Months				12 Months or more				Total
(dollars in thousands)	Fair value		Unrecognized losses		Fair value		Unrecognized losses		Fair value		Unrecognized losses
Securities held-to-maturity:
State and municipal securities	$	2,084	$	(42)	$	25,607	$	(2,544)	$	27,691	$	(2,586)
Total securities held-to-maturity	$	2,084	$	(42)	$	25,607	$	(2,544)	$	27,691	$	(2,586)


	December 31, 2025
	Less than 12 Months				12 Months or more				Total
(dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Securities available-for-sale:
U.S. asset backed securities	$	6,504	$	(39)	$	11,285	$	(180)	$	17,789	$	(219)
U.S. government agency MBS	3,881		(38)		3,945		(230)		7,826		(268)
U.S. government agency CMO	20,511		(178)		17,074		(1,348)		37,585		(1,526)
State and municipal securities	—		—		35,212		(3,401)		35,212		(3,401)
U.S. Treasuries	—		—		16,206		(833)		16,206		(833)
Non-U.S. government agency CMO	456		—		5,235		(207)		5,691		(207)
Corporate bonds	1,476		(26)		4,879		(349)		6,355		(375)
Total securities available-for-sale	$	32,828	$	(281)	$	93,836	$	(6,548)	$	126,664	$	(6,829)

	Less than 12 Months				12 Months or more				Total
(dollars in thousands)	Fair value		Unrecognized losses		Fair value		Unrecognized losses		Fair value		Unrecognized losses
Securities held-to-maturity:
State and municipal securities	$	2,087	$	(69)	$	25,842	$	(2,345)	$	27,929	$	(2,414)
Total securities held-to-maturity	$	2,087	$	(69)	$	25,842	$	(2,345)	$	27,929	$	(2,414)

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As of March 31, 2026, substantially all of the Corporation’s available-for-sale investment securities were mortgage-backed securities or collateral mortgage obligations which were issued or guaranteed by U.S. government-sponsored entities and agencies. As of March 31, 2026 and December 31, 2025, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’ equity.

The amortized cost and carrying value of securities are shown below by contractual maturities at the dates indicated. Actual maturities may differ from contractual maturities as issuers may have the right to call or repay obligations with or without call or prepayment penalties.


	March 31, 2026
	Available-for-sale				Held-to-maturity
(dollars in thousands)	Amortized cost		Fair value		Amortized cost		Fair value
Due in one year or less	$	—	$	—	$	—	$	—
Due after one year through five years	101,618		97,267		32,305		29,725
Due after five years through ten years	—		—		—		—
Due after ten years	—		—		189		189
Subtotal	101,618		97,267		32,494		29,914
Mortgage-related securities	100,801		98,745		—		—
Total	$	202,419	$	196,012	$	32,494	$	29,914

There were no sales of investment securities available for sale for the three months ended March 31, 2026, or March 31, 2025.

ACL on Securities AFS and HTM

We use credit ratings quarterly and the most recent financial information of securities' issuers annually to help evaluate the credit quality of our securities AFS and HTM portfolios on a quarterly basis. The securities portfolio consists primarily of U.S. government treasuries and U.S. government agency asset backed securities which have no probability of default. The remaining portfolio consists of highly rated municipal bonds, non-agency CMO, and corporate bonds that have a low probability of default.

For the three months ended March 31, 2026 and 2025, we had no significant ACL or provision expense and no charge-offs or recoveries on AFS or HTM securities.

Pledged Securities

As of March 31, 2026 and December 31, 2025, securities having a carrying value of $72.9 million and $69.5 million, respectively, were specifically pledged as collateral for public funds, the FRB discount window program, FHLB borrowings and other purposes. The FHLB has a blanket lien on non-pledged, mortgage-related loans and securities as part of the Corporation’s borrowing agreement

(4) Loans and Other Finance Receivables

The following table presents loans and other finance receivables detailed by category at the dates indicated:


(dollars in thousands)	March 31, 2026		December 31, 2025
Real estate loans:
Commercial mortgage	$	870,544	$	879,440
Home equity lines and loans	109,795		107,002
Residential mortgage	235,067		236,135
Construction	343,376		330,543
Total real estate loans	1,558,782		1,553,120
Commercial, industrial & other finance receivables	444,395		428,981
Small business loans	134,468		139,765
Consumer	303		329
Leases, net	40,837		45,489
Loans and other finance receivables	$	2,178,785	$	2,167,684





Balances included in loans and other finance receivables
Residential mortgage real estate loans accounted under fair value option, at fair value	$	14,090	$	14,396
Residential mortgage real estate loans accounted under fair value option, at amortized cost	15,925		16,169
Unearned lease income included in leases, net	(4,702)		(4,980)
Unamortized net deferred loan origination costs, not included in loans above	2,790		2,916

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Fair Value Option for Residential Mortgage Real Estate Loans

Residential mortgage real estate loans that were originated by the Corporation and intended for sale in the secondary market to permanent investors, but were either repurchased or unsalable due to defect, and that the Corporation has the ability and intent to hold for the foreseeable future or until maturity or payoff are carried at fair value pursuant to the Corporation's election of the fair value option for these loans. The remaining loans, net of fees and costs are stated at their outstanding unpaid principal balances, net of deferred fees or costs, since the original intent for these loans was to hold them until payoff or maturity.

Past Due and Nonaccrual Loans

The following tables present an aging of the Corporation’s loans at the dates indicated:


	March 31, 2026
(dollars in thousands)	30-59 days past due		60-89 days past due		Total past due		Current		Total accruing		Nonaccrual		Total loans and other finance receivables		% Delinquent
Commercial mortgage	$	7,270	$	13	$	7,283	$	856,513	$	863,796	$	6,748	$	870,544	1.61	%
Home equity lines and loans	332		—		332		107,240		107,572		2,223		109,795		2.33
Residential mortgage (1)	1,890		189		2,079		223,638		225,717		9,350		235,067		4.86
Construction	—		—		—		335,688		335,688		7,688		343,376		2.24
Commercial, industrial & other finance receivables	1,100		—		1,100		436,116		437,216		7,179		444,395		1.86
Small business loans (2)	2,269		—		2,269		108,288		110,557		23,911		134,468		19.47
Consumer	—		—		—		303		303		—		303		—
Leases, net	409		353		762		38,515		39,277		1,560		40,837		5.69	%
Total	$	13,270	$	555	$	13,825	$	2,106,301	$	2,120,126	$	58,659	$	2,178,785	3.33	%

(1) Includes $14.1 million of loans at fair value of which $13.2 million are current, $352 thousand are 30-89 days past due and $497 thousand are nonaccrual.

(2) Includes $12.9 million of loans within nonaccrual category that are guaranteed by the SBA.


	December 31, 2025
(dollars in thousands)	30-59 days past due		60-89 days past due		Total past due		Current		Total accruing		Nonaccrual		Total loans and other finance receivables		% Delinquent
Commercial mortgage	$	1,059	$	328	$	1,387	$	875,581	$	876,968	$	2,472	$	879,440	0.44	%
Home equity lines and loans	513		—		513		104,466		104,979		2,023		107,002		2.37
Residential mortgage (1)	1,843		621		2,464		223,286		225,750		10,385		236,135		5.44
Construction	—		—		—		323,893		323,893		6,650		330,543		2.01
Commercial, industrial & other finance receivables	1,099		—		1,099		421,112		422,211		6,770		428,981		1.83
Small business loans (2)	739		—		739		114,245		114,984		24,781		139,765		18.26
Consumer	—		—		—		329		329		—		329		—
Leases, net	699		249		948		42,562		43,510		1,979		45,489		6.43
Total	$	5,952	$	1,198	$	7,150	$	2,105,474	$	2,112,624	$	55,060	$	2,167,684	2.87	%

(1) Includes $14.4 million of loans at fair value of which $13.3 million are current, $604 thousand are 30-89 days past due and $510 thousand are nonaccrual.

(2) Includes $13.2 million of loans within nonaccrual category that are guaranteed by the SBA.

There were no loans or other finance receivables in the tables above as of March 31, 2026 or December 31, 2025, that were 90+days past due and still accruing interest.

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Foreclosed and Repossessed Assets

At March 31, 2026 and December 31, 2025, there were six and 11 consumer mortgage loans, respectively, secured by residential real estate properties (included in loans, net of fees and costs on the Consolidated Balance Sheets) totaling $1.6 million and $3.1 million, respectively, for which formal foreclosure proceedings were in process.

Risks and Uncertainties

We have no particular credit concentration. Our commercial loans have been proactively managed in an effort to achieve a balanced portfolio with no unusual exposure to one industry. Additionally, most of our lending activity occurs within our primary market areas which are concentrated in southeastern Pennsylvania, Delaware, and Maryland as well as other contiguous markets and represents a geographic concentration. Additionally, our loan portfolio is concentrated in commercial loans. Commercial loans are generally viewed as having more inherent risk of default than residential real estate loans or other consumer loans. Also, the commercial loan balance per borrower is typically larger than that for residential real estate loans and consumer loans, implying higher potential losses on an individual loan basis.

Past Due and Nonaccrual Status

The following table presents the amortized costs basis of loans on nonaccrual status, net of fees and costs as of March 31, 2026 and December 31, 2025. As of these dates there were no loans 90 days or more past due and still accruing.


	March 31, 2026						December 31, 2025
(dollars in thousands)	Nonaccrual without ACL		Nonaccrual with ACL		Total nonaccrual		Nonaccrual without ACL		Nonaccrual with ACL		Total nonaccrual
Commercial mortgage	$	6,748	$	—	$	6,748	$	2,472	$	—	$	2,472
Home equity lines and loans	2,025		198		2,223		2,023		—		2,023
Residential mortgage	7,490		1,860		9,350		9,020		1,365		10,385
Construction	3,669		4,019		7,688		1,889		4,761		6,650

Commercial, industrial & other finance receivables	6,080		1,099		7,179		6,770		—		6,770
Small business loans (1)	19,678		4,233		23,911		18,050		6,731		24,781
Leases, net	—		1,560		1,560		—		1,979		1,979
Total	$	45,690	$	12,969	$	58,659	$	40,224	$	14,836	$	55,060

(1) Included in non-performing small business loans as of March 31, 2026 and December 31, 2025, are $12.9 million and $13.2 million in SBA guarantees.

Collateral-dependent Loans

The following table presents the amortized cost basis of non-accruing collateral-dependent loans and other finance receivables by class as of March 31, 2026 and December 31, 2025 under the current expected credit loss model:


	March 31, 2026						December 31, 2025
(dollars in thousands)	Real estate		Equipment and other		Total		Real estate		Equipment and other		Total
Commercial mortgage	$	6,748	$	—	$	6,748	$	2,472	$	—	$	2,472
Home equity lines and loans	2,223		—		2,223		2,023		—		2,023
Residential mortgage	9,350		—		9,350		10,385		—		10,385
Construction	7,688		—		7,688		6,650		—		6,650
Commercial, industrial & other finance receivables	849		6,330		7,179		1,372		5,398		6,770
Small business loans	19,874		4,037		23,911		19,287		5,494		24,781

Total	$	46,732	$	10,367	$	57,099	$	42,189	$	10,892	$	53,081

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(5) Allowance for Credit Losses

The ACL is maintained at a level considered adequate to provide for estimated expected credit losses within the loan portfolio over the contractual life of an instrument that considers our historical loss experience, current conditions and forecasts of future economic conditions as of the balance sheet date. Management’s periodic evaluation of the adequacy of the ACL is based on known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is subjective as it requires material estimates that may be susceptible to significant revisions as more information becomes available.

Roll-Forward of ACL by Portfolio Segment

The following tables provide the activity of our allowance for credit losses for the three months ended March 31, 2026 and March 31, 2025 under the CECL model in accordance with ASC 326:


	Three Months Ended March 31, 2026
(dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (recovery of provision) for credit losses		Ending balance
Commercial mortgage	$	3,676	$	(3,867)	$	—	$	3,740	$	3,549
Home equity lines and loans	1,162		—		1		109		1,272
Residential mortgage	926		—		—		137		1,063
Construction	2,067		—		—		163		2,230
Commercial, industrial & other finance receivables	2,982		(1,005)		60		2,032		4,069
Small business loans	9,321		(2,549)		62		894		7,728
Consumer	—		—		1		(1)		—
Leases	1,439		(745)		283		364		1,341
Total	$	21,573	$	(8,166)	$	407	$	7,438	$	21,252


	Three Months Ended March 31, 2025
(dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (recovery of provision) for credit losses		Ending balance
Commercial mortgage	$	3,469	$	—	$	—	$	(87)	$	3,382
Home equity lines and loans	1,147		—		2		16		1,165
Residential mortgage	1,021		—		—		6		1,027
Construction	923		(738)		—		1,456		1,641
Commercial, industrial & other finance receivables	3,098		(1,430)		17		1,080		2,765
Small business loans	6,304		(277)		29		2,555		8,611
Consumer	—		—		1		(1)		—
Leases	2,476		(553)		126		187		2,236
Total	$	18,438	$	(2,998)	$	175	$	5,212	$	20,827

Reconciliation of Provision for Credit Losses

The following table provides a reconciliation of the provision for credit losses on the consolidated statements of income between the funded and unfunded components at the dates indicated:


	Three Months Ended March 31,
(dollars in thousands)	2026		2025
Provision for credit losses - funded loans	$	7,438	$	5,212
Provision for credit losses - unfunded loans	55		—
Total provision for credit losses	$	7,493	$	5,212

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Allowance Allocated by Portfolio Segment

The following tables detail the allocation of the ACL and the carrying value for loans and other finance receivables by portfolio segment based on the methodology used to evaluate the loans and other finance receivables at the dates indicated:


	March 31, 2026
	Allowance for credit losses						Carrying value of loans and leases
(dollars in thousands)	Individually evaluated		Collectively evaluated		Total		Individually evaluated		Collectively evaluated		Total
Commercial mortgage	$	—	$	3,549	$	3,549	$	6,748	$	863,796	$	870,544
Home equity lines and loans	57		1,215		1,272		2,223		107,572		109,795
Residential mortgage (1)	177		886		1,063		8,853		212,124		220,977
Construction	307		1,923		2,230		7,688		335,688		343,376
Commercial, industrial & other finance receivables	977		3,092		4,069		7,179		437,216		444,395
Small business loans	1,308		6,420		7,728		23,911		110,557		134,468
Consumer	—		—		—		—		303		303
Leases, net	—		1,341		1,341		—		40,837		40,837
Total (2)	$	2,826	$	18,426	$	21,252	$	56,602	$	2,108,093	$	2,164,695

(1) Excludes $14.1 million of loans at fair value.

(2) Excludes deferred fees.


	December 31, 2025
	Allowance for credit losses						Carrying value of loans and leases
(dollars in thousands)	Individually evaluated		Collectively evaluated		Total		Individually evaluated		Collectively evaluated		Total
Commercial mortgage	$	—	$	3,676	$	3,676	$	2,472	$	876,968	$	879,440
Home equity lines and loans	—		1,162		1,162		2,023		104,979		107,002
Residential mortgage (1)	122		804		926		9,875		211,864		221,739
Construction	331		1,736		2,067		6,650		323,893		330,543
Commercial, industrial & other finance receivables	—		2,982		2,982		6,770		422,211		428,981
Small business loans	2,986		6,335		9,321		24,781		114,984		139,765
Consumer	—		—		—		—		329		329
Leases, net	—		1,439		1,439		—		45,489		45,489
Total (2)	$	3,439	$	18,134	$	21,573	$	52,571	$	2,100,717	$	2,153,288

(1) Excludes $14.4 million of loans at fair value.

(2) Excludes deferred fees.

Credit Quality Indicators

As part of the process of determining the ACL to the different segments of the loan and lease portfolio, Management considers certain credit quality indicators. For the commercial mortgage, construction and commercial and industrial loan segments, periodic reviews of the individual loans are performed by Management. The results of these reviews are reflected in the risk grade assigned to each loan. These internally assigned grades are as follows:

•Pass – Considered to be satisfactory with no indications of deterioration.

•Special mention – Loans classified as special mention have a potential weakness that deserves Management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

•Substandard – Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

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•Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loan balances classified as doubtful have been reduced by partial charge-offs and are carried at their net realizable values.

The following tables detail the carrying value of loans and other finance receivables by portfolio segment based on year of origination and the credit quality indicators used to determine the allowance for credit losses at the dates indicated:


	March 31, 2026												Revolving Loans Converted to Term Loans		Revolving Loans		Total
	Term Loans and Other Finance Receivables
(dollars in thousands)	2026		2025		2024		2023		2022		Prior
Commercial mortgage
Pass/Watch	$	15,213	$	110,152	$	127,157	$	99,056	$	160,664	$	324,893	$	—	$	—	$	837,135
Special Mention	—		—		—		10,782		1,458		2,990		—		—		15,230
Substandard	—		5,022		1,339		1,008		4,163		6,647		—		—		18,179

Total	$	15,213	$	115,174	$	128,496	$	110,846	$	166,285	$	334,530	$	—	$	—	$	870,544
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	(3,867)	$	—	$	—	$	—	$	(3,867)

Construction
Pass/Watch	$	17,502	$	135,491	$	104,605	$	19,908	$	3,246	$	11,538	$	—	$	32,634	$	324,924
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	239		1,430		211		1,185		10,887		1,864		—		2,636		18,452

Total	$	17,741	$	136,921	$	104,816	$	21,093	$	14,133	$	13,402	$	—	$	35,270	$	343,376
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial, industrial & other finance receivables
Pass/Watch	$	34,672	$	68,269	$	62,471	$	13,928	$	16,796	$	30,030	$	—	$	189,752	$	415,918
Special Mention	—		—		—		—		128		3,775		—		8,444		12,347
Substandard	—		350		—		850		—		6,286		—		8,644		16,130

Total	$	34,672	$	68,619	$	62,471	$	14,778	$	16,924	$	40,091	$	—	$	206,840	$	444,395
Year-to-date gross charge-offs	$	—	$	(766)	$	(90)	$	—	$	—	$	(125)	$	—	$	(24)	$	(1,005)

Small business loans
Pass/Watch	$	10,286	$	22,537	$	15,396	$	13,879	$	15,730	$	17,698	$	—	$	8,840	$	104,366
Special Mention	—		513		109		1,861		—		170		—		449		3,102
Substandard	—		3,238		1,537		4,814		1,015		12,974		—		3,422		27,000

Total	$	10,286	$	26,288	$	17,042	$	20,554	$	16,745	$	30,842	$	—	$	12,711	$	134,468
Year-to-date gross charge-offs	$	—	$	(605)	$	(994)	$	(168)	$	(171)	$	(181)	$	—	$	(430)	$	(2,549)

Total by risk rating
Pass/Watch	$	77,673	$	336,449	$	309,629	$	146,771	$	196,436	$	384,159	$	—	$	231,226	$	1,682,343
Special Mention	—		513		109		12,643		1,586		6,935		—		8,893		30,679
Substandard	239		10,040		3,087		7,857		16,065		27,771		—		14,702		79,761

Total	$	77,912	$	347,002	$	312,825	$	167,271	$	214,087	$	418,865	$	—	$	254,821	$	1,792,783
Total year-to-date gross charge-offs	$	—	$	(1,371)	$	(1,084)	$	(168)	$	(4,038)	$	(306)	$	—	$	(454)	$	(7,421)

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	December 31, 2025												Revolving Loans Converted to Term Loans		Revolving Loans		Total
	Term Loans and Other Finance Receivables
(dollars in thousands)	2025		2024		2023		2022		2021		Prior
Commercial mortgage
Pass/Watch	$	116,630	$	116,852	$	102,516	$	162,329	$	127,627	$	227,348	$	—	$	—	$	853,302
Special Mention	—		—		4,487		1,474		—		4,159		—		—		10,120
Substandard	—		—		1,029		8,074		—		6,915		—		—		16,018

Total	$	116,630	$	116,852	$	108,032	$	171,877	$	127,627	$	238,422	$	—	$	—	$	879,440
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Construction
Pass/Watch	$	117,778	$	118,733	$	19,858	$	9,212	$	3,373	$	8,263	$	—	$	29,906	$	307,123
Special Mention	—		—		6,245		—		—		—		—		—		6,245
Substandard	1,430		211		1,185		9,096		1,826		492		—		2,935		17,175

Total	$	119,208	$	118,944	$	27,288	$	18,308	$	5,199	$	8,755	$	—	$	32,841	$	330,543
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	(738)	$	(738)

Commercial, industrial & other finance receivables
Pass/Watch	$	84,183	$	62,904	$	16,119	$	17,270	$	9,224	$	21,836	$	—	$	193,356	$	404,892
Special Mention	—		—		—		145		3,857		—		—		4,608		8,610
Substandard	—		—		850		—		523		5,360		—		8,746		15,479

Total	$	84,183	$	62,904	$	16,969	$	17,415	$	13,604	$	27,196	$	—	$	206,710	$	428,981
Year-to-date gross charge-offs	$	(739)	$	(1,487)	$	(160)	$	(23)	$	(1,089)	$	—	$	—	$	(1,290)	$	(4,788)

Small business loans
Pass/Watch	$	29,760	$	17,403	$	17,955	$	16,903	$	9,448	$	8,935	$	—	$	10,713	$	111,117
Special Mention	—		477		134		—		—		—		—		140		751
Substandard	2,567		2,127		3,893		874		10,523		4,002		—		3,911		27,897

Total	$	32,327	$	20,007	$	21,982	$	17,777	$	19,971	$	12,937	$	—	$	14,764	$	139,765
Year-to-date gross charge-offs	$	(1,211)	$	(433)	$	(550)	$	(233)	$	(692)	$	(1,057)	$	—	$	(813)	$	(4,989)

Total by risk rating
Pass/Watch	$	348,351	$	315,892	$	156,448	$	205,714	$	149,672	$	266,382	$	—	$	233,975	$	1,676,434
Special Mention	—		477		10,866		1,619		3,857		4,159		—		4,748		25,726
Substandard	3,997		2,338		6,957		18,044		12,872		16,769		—		15,592		76,569

Total	$	352,348	$	318,707	$	174,271	$	225,377	$	166,401	$	287,310	$	—	$	254,315	$	1,778,729
Total year-to-date gross charge-offs	$	(1,950)	$	(1,920)	$	(710)	$	(256)	$	(1,781)	$	(1,057)	$	—	$	(2,841)	$	(10,515)

The Corporation had no loans with a risk rating of Doubtful included within recorded investment in loans and leases held for investment at March 31, 2026 and December 31, 2025.

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In addition to credit quality indicators as shown in the above tables, allowance allocations for home equity lines and loans, residential mortgages, consumer loans and leases are also applied based on their year of origination and performance status at the dates indicated:


	March 31, 2026												Revolving Loans		Total
	Term Loans and Other Finance Receivables
(dollars in thousands)	2026		2025		2024		2023		2022		Prior
Home equity lines and loans
Performing	$	—	$	1,094	$	654	$	194	$	473	$	3,119	$	102,038	$	107,572
Nonperforming	—		—		—		—		—		433		1,790		2,223
Total	$	—	$	1,094	$	654	$	194	$	473	$	3,552	$	103,828	$	109,795
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Residential mortgage (1)
Performing	$	3,725	$	25,616	$	7,663	$	24,072	$	122,514	$	28,144	$	390	$	212,124
Nonperforming	—		—		722		669		2,272		5,190		—		8,853
Total	$	3,725	$	25,616	$	8,385	$	24,741	$	124,786	$	33,334	$	390	$	220,977
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer
Performing	$	—	$	—	$	—	$	20	$	9	$	186	$	88	$	303
Nonperforming	—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	20	$	9	$	186	$	88	$	303
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Leases, net
Performing	$	3,400	$	5,792	$	379	$	8,595	$	16,253	$	4,910	$	—	$	39,329
Nonperforming	—		—		—		561		819		128		—		1,508
Total	$	3,400	$	5,792	$	379	$	9,156	$	17,072	$	5,038	$	—	$	40,837
Year-to-date gross charge-offs	$	—	$	(94)	$	—	$	(154)	$	(238)	$	(259)	$	—	$	(745)

Total by Payment Performance
Performing	$	7,125	$	32,502	$	8,696	$	32,881	$	139,249	$	36,359	$	102,516	$	359,328
Nonperforming	—		—		722		1,230		3,091		5,751		1,790		12,584
Total	$	7,125	$	32,502	$	9,418	$	34,111	$	142,340	$	42,110	$	104,306	$	371,912
Total year-to-date gross charge-offs	$	—	$	(94)	$	—	$	(154)	$	(238)	$	(259)	$	—	$	(745)

(1) Excludes $14.1 million of loans at fair value.

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	December 31, 2025												Revolving Loans		Total
	Term Loans and Other Finance Receivables
(dollars in thousands)	2025		2024		2023		2022		2021		Prior
Home equity lines and loans
Performing	$	1,103	$	658	$	196	$	534	$	207	$	3,102	$	99,179	$	104,979
Nonperforming	—		—		—		—		91		342		1,590		2,023
Total	$	1,103	$	658	$	196	$	534	$	298	$	3,444	$	100,769	$	107,002
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Residential mortgage (1)
Performing	$	25,957	$	8,080	$	26,278	$	122,566	$	15,775	$	13,208	$	—	$	211,864
Nonperforming	—		437		672		3,398		737		4,631		—		9,875
Total	$	25,957	$	8,517	$	26,950	$	125,964	$	16,512	$	17,839	$	—	$	221,739
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer
Performing	$	—	$	5	$	22	$	12	$	—	$	220	$	70	$	329
Nonperforming	—		—		—		—		—		—		—		—
Total	$	—	$	5	$	22	$	12	$	—	$	220	$	70	$	329
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	(11)	$	(11)

Leases, net
Performing	$	6,232	$	482	$	10,149	$	19,369	$	6,561	$	717	$	—	$	43,510
Nonperforming	—		—		518		1,099		342		20		—		1,979
Total	$	6,232	$	482	$	10,667	$	20,468	$	6,903	$	737	$	—	$	45,489
Year-to-date gross charge-offs	$	—	$	—	$	(90)	$	(1,472)	$	(756)	$	(40)	$	—	$	(2,358)

Total by Payment Performance
Performing	$	33,292	$	9,225	$	36,645	$	142,481	$	22,543	$	17,247	$	99,249	$	360,682
Nonperforming	—		437		1,190		4,497		1,170		4,993		1,590		13,877
Total	$	33,292	$	9,662	$	37,835	$	146,978	$	23,713	$	22,240	$	100,839	$	374,559
Total year-to-date gross charge-offs	$	—	$	—	$	(90)	$	(1,472)	$	(756)	$	(40)	$	(11)	$	(2,369)

(1) Excludes $14.4 million of fair value loans.

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Modifications to Borrowers Experiencing Financial Difficulty

An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the ACL on loans and leases, a change to the allowance for credit losses is generally not recorded upon modification. However, when principal forgiveness is provided, the amortized cost basis of the asset is written off against the ACL on loans and leases. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.

The following presents, by class, information regarding accruing and nonaccrual modifications to borrowers experiencing financial difficulty during the three months ended March 31, 2026 and 2025.


	Three Months Ended March 31, 2026							Three Months Ended March 31, 2025
(dollars in thousands)	Number	Amortized Cost Basis		% of Total Class of Financing Receivable		Related Reserve		Number	Amortized Cost Basis		% of Total Class of Financing Receivable		Related Reserve
Accruing Modifications to Borrowers Experiencing Financial Difficulty:
Commercial mortgage	3	$	4,245	0.5	%	$	—	1	$	959	0.1	%	$	—


Construction	4	14,265		4.2	%	83		3	2,869		1.0	%	—
Commercial, industrial & other finance receivables	—	—		—	%	—		1	1,095		0.3	%	—
Small business loans	2	1,094		0.8	%	234		3	1,948		1.2	%	—


Total	9	$	19,604			$	317	8	$	6,871			$	—
Nonaccrual Modifications to Borrowers Experiencing Financial Difficulty:
Commercial mortgage	1	$	2,943	0.3	%	$	—	—	$	—	—	%	$	—

Residential mortgage	1	225		0.1	%	—		—	—		—	%	—
Construction	1	1,383		0.4	%	115		1	2,907		1.0	%	—

Small business loans	—	—		—	%	—		1	565		0.4	%	434

Leases	9	242		0.6	%	6		—	—		—	%	—
Total	12	$	4,793			$	121	2	$	3,472			$	434

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The following presents, by class, information regarding accruing and nonaccrual modifications to borrowers experiencing financial difficulty during the three months ended March 31, 2026 and 2025.


	Three Months Ended March 31, 2026		Three Months Ended March 31, 2025
	Number	Financial Effect	Number	Financial Effect
Accruing Modifications to Borrowers Experiencing Financial Difficulty:
Commercial mortgage	3	Extend maturity date	1	Extend maturity/payment


Construction	4	Extend maturity date	3	Extend maturity date
Commercial, industrial & other finance receivables	—		1	Extend maturity date
Small business loans	2	Extend maturity date	3	Extend maturity date


Total	9		8
Nonaccrual Modifications to Borrowers Experiencing Financial Difficulty:
Commercial mortgage	1	Interest only payments	—

Residential mortgage	1	Extend maturity date	—
Construction	1	Extend maturity date	1	Extend maturity date

Small business loans	—		1	Extend maturity date

Leases	9	Extend maturity date	—
Total	12		2

There were 21 and 10 modifications granted to borrowers experiencing financial difficulty during the three months ended March 31, 2026 and March 31, 2025, respectively. There were no loans that had payment defaults during the three months ended March 31, 2026, and 2025, respectively. There were $634 thousand in commitments to lend additional funds to the borrowers experiencing financial difficulty that had modifications during the three months ended March 31, 2026 and $882 thousand in commitments to lend additional funds to such borrowers during the three months ended March 31, 2025.

The increase period over period in assistance provided to borrowers experiencing financial difficulty was seen in leases, construction and commercial mortgage loans. The primary factor for the financial difficulty generally comes from higher interest rates or higher rates for longer periods.

The following presents, by class of loans, the amortized cost and performance status of accruing and nonaccrual modified loans to borrowers experiencing financial difficulty that have been modified in the last 12 months as of March 31, 2026 and 2025.


	March 31, 2026
	Current		30-59 days past due		60-89 days past due		90+ days past due and still accruing		Nonaccrual loans and leases		Total
(dollars in thousands)
Commercial mortgage	$	4,245	$	—	$	—	$	—	$	4,330	$	8,574

Residential mortgage	529		—		—		—		597		1,126
Construction	14,265		—		—		—		1,383		15,648

Small business loans	1,402		—		—		—		3,601		5,003

Leases	—		—		—		—		242		242
Total	$	20,441	$	—	$	—	$	—	$	11,003	$	31,444

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	March 31, 2025
	Current		30-59 days past due		60-89 days past due		90+ days past due and still accruing		Nonaccrual loans and leases		Total
(dollars in thousands)
Commercial mortgage	$	1,388	$	—	$	959	$	—	$	—	$	2,347

Residential mortgage	—		—		—		—		545		545
Construction	2,869		—		—		—		4,763		7,632
Commercial, industrial & other finance receivables	1,897		—		—		—		2,772		4,669
Small business loans	2,505		—		—		—		2,328		4,833


Total	$	8,659	$	—	$	959	$	—	$	10,408	$	20,026

(6) Short-Term Borrowings and Long-Term Debt

The Corporation’s short-term borrowings generally consist of federal funds purchased and short-term borrowings extended under agreements with the FHLB or other correspondent banks. The Corporation has four unsecured borrowing facilities with correspondent banks for up to $56 million in total. Federal funds purchased generally represent one-day borrowings. The Corporation had $0 and $0 in Federal funds purchased at March 31, 2026 and December 31, 2025, respectively. The Corporation also has a facility with the Federal Reserve Bank discount window of $4.3 million. This facility is fully secured by investment securities and pledged loans. There were no borrowings under this at March 31, 2026 and December 31, 2025. The Corporation has a revolving line of credit with ACBB of $5 million that is used to fund operating activities of the Corporation and had an outstanding balance of $0 at March 31, 2026.

The following table presents short-term borrowings at the dates indicated:


(dollars in thousands)	Maturity date	Interest rate	March 31, 2026		December 31, 2025
FHLB Open Repo Plus Weekly	6/15/2026	3.97%	$	94,999	$	89,999
FHLB Mid-term Repo Fixed	7/14/2026	4.57%	15,245		15,245
ACBB Holding Company Revolving LOC	7/24/2026	7.00%	—		1,500


Total Short-Term Borrowings			$	110,244	$	106,744

The following table presents long-term borrowings at the dates indicated:


(dollars in thousands)	Maturity date	Interest rate	March 31, 2026		December 31, 2025
FHLB Mid-term Repo Fixed	5/20/2027	4.70%	$	10,594	$	10,594

Total Long-Term Borrowings			$	10,594	$	10,594

The FHLB has also issued $170.1 million of letters of credit to the Corporation for the benefit of the Corporation’s public deposit funds and loan customers. These letters of credit expire throughout the remainder of 2026.

The Corporation has a maximum borrowing capacity with the FHLB of $732.0 million as of March 31, 2026 and $751.5 million as of December 31, 2025. All advances and letters of credit from the FHLB are secured by a blanket lien on non-pledged, mortgage-related loans and securities as part of the Corporation’s borrowing agreement with the FHLB.

(7) Servicing Assets

The Corporation sells certain residential mortgage loans and the guaranteed portion of certain SBA loans to third parties and retains servicing rights and receives servicing fees. All such transfers are accounted for as sales. When the Corporation sells a residential mortgage loan, it does not retain any portion of that loan and its continuing involvement in such transfers is limited to certain servicing responsibilities. While the Corporation may retain a portion of certain sold SBA loans, its continuing involvement in the portion of the loan that was sold is limited to certain servicing responsibilities. When the contractual servicing fees on loans sold with servicing retained are expected to be more than adequate compensation to a servicer for performing the servicing, a capitalized servicing asset is recognized.

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Residential Mortgage Loans

The related MSR asset is amortized over the period of the estimated future net servicing life of the underlying assets. MSRs are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the MSR.

The Corporation serviced $10.2 million and $10.3 million of residential mortgage loans as of March 31, 2026 and December 31, 2025, respectively. During the three months ended March 31, 2026, the Corporation recognized servicing fee income of $2 thousand compared to $48 thousand during the three months ended March 31, 2025.

Changes in the MSR balance are summarized as follows:


	Three months ended March 31,
(dollars in thousands)	2026		2025
Balance at beginning of the period	$	86	$	1,124
Servicing rights capitalized	3		—
Amortization of servicing rights	(5)		(45)


Balance at end of the period	$	84	$	1,079

The decrease in MSR balance in the table above from March 31, 2025 to March 31, 2026 was the result of the Corporation's sale of residential mortgage loan servicing rights during the second quarter of 2025. During the second quarter of 2025 the Corporation sold approximately $979 thousand of residential mortgage loan servicing rights associated with $110.2 million of serviced loans.

The Corporation uses assumptions and estimates in determining the fair value of MSRs. These assumptions include prepayment speeds and discount rates. The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge. At March 31, 2026, the key assumptions used to determine the fair value of the Corporation’s MSRs included a lifetime constant prepayment rate equal to 8.53% and a discount rate equal to 9.50%. At December 31, 2025, the key assumptions used to determine the fair value of the Corporation’s MSRs included a lifetime constant prepayment rate equal to 9.60% and a discount rate equal to 9.50%. As interest rates increased and the number of mortgage refinancings have declined, model inputs have been adjusted to align the MSRs fair value with market conditions.

The sensitivity of the current fair value of the residential mortgage servicing rights to immediate 10% and 20% adverse changes in key economic assumptions are included in the following table.


(dollars in thousands)	March 31, 2026			December 31, 2025
Fair value of residential mortgage servicing rights	$	119		$	114

Weighted average life (months)	46			43

Prepayment speed	8.53		%	9.60		%
Impact on fair value:
10% adverse change	$	(5)		$	(5)
20% adverse change	(10)			(10)

Discount rate	9.50		%	9.50		%
Impact on fair value:
10% adverse change	$	(5)		$	(4)
20% adverse change	(9)			(9)

The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change.

SBA Loans

SBA loan servicing assets are amortized over the period of the estimated future net servicing life of the underlying assets. SBA loan servicing assets are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the SBA loan

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servicing asset. The Corporation serviced $296.0 million and $305.3 million of SBA loans, as of March 31, 2026 and December 31, 2025, respectively.

Changes in the SBA loan servicing asset balance are summarized as follows:


	Three months ended March 31,
(dollars in thousands)	2026		2025
Balance at beginning of the period	$	3,846	$	3,258
Servicing rights capitalized	126		228
Amortization of servicing rights	(346)		(310)
Change in valuation allowance	(16)		29
Balance at end of the period	$	3,610	$	3,205

Activity in the valuation allowance for SBA loan servicing assets was as follows:


	Three months ended March 31,
(dollars in thousands)	2026		2025
Valuation allowance, beginning of period	$	(39)	$	(74)
Impairment	(15)		—
Recovery	—		29
Valuation allowance, end of period	$	(54)	$	(45)

The Corporation uses assumptions and estimates in determining the fair value of SBA loan servicing rights. These assumptions include prepayment speeds, discount rates, and other assumptions. The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge. At March 31, 2026, the key assumptions used to determine the fair value of the Corporation’s SBA loan servicing rights included a lifetime constant prepayment rate equal to 17.78% and a discount rate equal to 12.00%. At December 31, 2025, the key assumptions used to determine the fair value of the Corporation’s SBA loan servicing rights included a lifetime constant prepayment rate equal to 17.10% and a discount rate equal to 12.91%.

The sensitivity of the current fair value of the SBA loan servicing rights to immediate 10% and 20% adverse changes in key economic assumptions are included in the following table.


(dollars in thousands)	March 31, 2026			December 31, 2025
Fair value of SBA loan servicing rights	$	4,398		$	4,522

Weighted average life (years)	3.3			3.3

Prepayment speed	17.78		%	17.10		%
Impact on fair value:
10% adverse change	$	(206)		$	(207)
20% adverse change	(394)			(397)

Discount rate	12.00		%	12.91		%
Impact on fair value:
10% adverse change	$	(97)		$	(101)
20% adverse change	(190)			(197)

The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the SBA servicing rights is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change.

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(8) Fair Value Measurements and Disclosures

The Corporation uses fair value measurements to record fair value adjustments to certain assets and liabilities. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Corporation’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation techniques or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions.

In accordance with this guidance, the Corporation groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 – Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation.

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis.

Securities

The fair value of securities available-for-sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. The fair value of certain other securities available-for-sale (carried at fair value) are based on quoted prices obtained from dealers or brokers in active over-the-counter markets (Level 1).

Mortgage Loans Held for Sale

The fair value of loans held for sale is based on secondary market prices.

Mortgage Loans Held for Investment

The fair value of mortgage loans held for investment is based on the price secondary markets are currently offering for similar loans using observable market data.

Derivative Financial Instruments

The fair values of forward commitments and interest rate swaps are based on market pricing and therefore are considered Level 2. Derivatives classified as Level 3 consist of interest rate lock commitments related to mortgage loan commitments. The determination of fair value includes assumptions related to the likelihood that a commitment will ultimately result in a closed loan, which is a significant unobservable assumption. A significant increase or decrease in the external market price would result in a significantly higher or lower fair value measurement.

The following table presents the fair value of financial assets measured at fair value on a recurring basis by level within the fair value hierarchy at the dates indicated:


	March 31, 2026
(dollars in thousands)	Total		Level 1		Level 2		Level 3
Assets
Securities available for sale:
U.S. asset backed securities	$	25,361	$	—	$	25,361	$	—
U.S. government agency MBS	21,816		—		21,816		—

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	March 31, 2026
(dollars in thousands)	Total		Level 1		Level 2		Level 3
U.S. government agency CMO	69,242		—		69,242		—
State and municipal securities	39,636		—		39,636		—
U.S. Treasuries	16,193		16,193		—		—
Non-U.S. government agency CMO	7,687		—		7,687
Corporate bonds	16,077		—		16,077		—
Equity investments	2,137		—		2,137		—
Mortgage loans held for sale	38,960		—		38,960		—
Mortgage loans held for investment	14,090		—		14,090		—
Interest rate lock commitments	355		—		—		355
Forward commitments	130		—		130		—
Customer derivatives - interest rate swaps	1,728		—		1,728		—
Fair Value Hedge	13		—		13		—

Total	$	253,425	$	16,193	$	236,877	$	355

Liabilities
Interest rate lock commitments	$	169	$	—	$	—	$	169
Forward commitments	13		—		13		—
Customer derivatives - interest rate swaps	1,745		—		1,745		—
Customer derivatives - Risk Participation Agreements	22		—		22		—
Interest rate swaps	123		—		123		—
Total	$	2,072	$	—	$	1,903	$	169


	December 31, 2025
(dollars in thousands)	Total		Level 1		Level 2		Level 3
Assets
Securities available for sale:
U.S. asset backed securities	$	26,217	$	—	$	26,217	$	—
U.S. government agency MBS	22,351		—		22,351		—
U.S. government agency CMO	66,131		—		66,131		—
State and municipal securities	40,032		—		40,032		—
U.S. Treasuries	16,206		16,206		—		—
Non-U.S. government agency CMO	8,606		—		8,606		—
Corporate bonds	13,914		—		13,914		—
Equity investments	2,166		—		2,166		—
Mortgage loans held for sale	33,762		—		33,762		—
Mortgage loans held for investment	14,396		—		14,396		—
Interest rate lock commitments	402		—		—		402

Customer derivatives - interest rate swaps	1,909		—		1,909		—
Fair Value Hedge	21		—		21		—

Total	$	246,112	$	16,206	$	229,504	$	402

Liabilities
Interest rate lock commitments	$	13	$	—	$	—	$	13
Forward commitments	32		—		32		—
Customer derivatives - interest rate swaps	1,929		—		1,929		—
Customer derivatives - Risk Participation Agreements	23		—		23		—
Interest rate swaps	281		—		281		—
Total	$	2,278	$	—	$	2,265	$	13

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The following table presents assets measured at fair value on a nonrecurring basis at the dates indicated:


(dollars in thousands)	March 31, 2026		December 31, 2025
Mortgage servicing rights	$	84	$	86
SBA loan servicing rights	3,610		3,846
OREO and other repossessed assets	6,009		5,997
Individually evaluated loans (1)
Commercial and industrial	122		—
Construction	3,713		4,430
Small business loans	2,925		3,745
Total	$	16,463	$	18,103

(1) Individually evaluated loans are those in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral.

The following table details the valuation techniques for Level 3 assets.

(dollars in thousands)

March 31, 2026

Financial Instrument

Fair Value

Valuation Technique

Unobservable Input

Range of Inputs

Weighted Average

OREO and other repossessed assets

6,009

Appraisal of collateral

Costs to sell

6% - 13% discount

10%

Individually evaluated loans

6,759

Appraisal of collateral

Costs to sell

10%-85% discount

28%

(dollars in thousands)

December 31, 2025

Financial Instrument

Fair Value

Valuation Technique

Unobservable Input

Range of Inputs

Weighted Average

OREO and other repossessed assets

5,997

Appraisal of collateral

Costs to sell

6% - 13% discount

10%

Individually evaluated loans

8,175

Appraisal of collateral

Costs to sell

2%-48% discount

24%

Below is management’s estimate of the fair value of all financial instruments, whether carried at cost or fair value on the Corporation’s balance sheet. The following information should not be interpreted as an estimate of the fair value of the entire Corporation since a fair value calculation is only provided for a limited portion of the Corporation’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Corporation’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair value of the Corporation’s financial instruments:

Cash and Cash Equivalents

The carrying amounts reported in the balance sheet for cash and short-term instruments approximate those assets’ fair values.

Loans Receivable

The fair value of loans receivable is estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair value below is reflective of an exit price.

Servicing Assets

The Corporation estimates the fair value of mortgage servicing rights and SBA loan servicing rights using discounted cash flow models that calculate the present value of estimated future net servicing income. The model uses readily available prepayment speed assumptions for the interest rates of the portfolios serviced. These servicing rights are classified within Level 3 in the fair value hierarchy based upon management’s assessment of the inputs. The Corporation reviews the servicing rights portfolios on a quarterly basis for impairment.

Other Real Estate Owned

Other real estate owned (“OREO”) consists of loan collateral which has been repossessed through foreclosure or other measures. Initially, foreclosed assets are recorded at the fair value of the collateral less estimated selling costs. Subsequent to foreclosure, valuations are updated periodically and the assets may be marked down further, reflecting a new cost basis. The fair value of OREO was estimated using Level 3 inputs based on appraisals, letters of intent or agreement of sale received from third parties.

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Repossessed Assets

Repossessed assets represents non-real estate assets that the Corporation has acquired by taking possession of the asset that collateralized a loan or lease. The Corporation reports repossessed assets at the fair value less cost to sell, adjusted periodically based on a current appraisal provided by a third party based on their assumptions and quoted market prices for similar assets, when available. Write-downs and any gain or loss upon the sale of repossessed assets is recorded in other noninterest income. The fair value of repossessed assets was estimated using Level 3 inputs based on appraisals, letters of intent or agreement of sale received from third parties.

Individually Evaluated Loans

Individually evaluated loans are those in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third party appraisals of the properties, or discounted cash flows based upon the expected proceeds. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. Individually evaluated loans are evaluated on a quarterly basis for additional impairment and adjusted in accordance with the ACL policy.

Accrued Interest Receivable and Payable

The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value.

Deposit Liabilities

The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Short-Term Borrowings

The carrying amounts of short-term borrowings approximate their fair values.

Long-Term Debt

Fair values of FHLB advances and the acquisition purchase note payable are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity. These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party.

Subordinated Debt

Fair values of junior subordinated debt are estimated using discounted cash flow analysis, based on market rates currently offered on such debt with similar credit risk characteristics, terms and remaining maturity.

Off-Balance Sheet Financial Instruments

Off-balance sheet instruments are primarily comprised of loan commitments, which are generally priced at market at the time of funding. Fees on commitments to extend credit and stand-by letters of credit are deemed to be immaterial and these instruments are expected to be settled at face value or expire unused. It is impractical to assign any fair value to these instruments and as a result they are not included in the table below. Fair values assigned to the notional value of interest rate lock commitments and forward sale contracts are based on market quotes.

Derivative Financial Instruments

The fair value of forward commitments and interest rate swaps is based on market pricing and therefore are considered Level 2. Derivatives classified as Level 3 consist of interest rate lock commitments related to mortgage loan commitments. The determination of fair value includes assumptions related to the likelihood that a commitment will ultimately result in a closed loan, which is a significant unobservable assumption. A significant increase or decrease in the external market price would result in a significantly higher or lower fair value measurement.

The following table presents the estimated fair values of the Corporation’s financial instruments at the dates indicated:


	Fair Value Hierarchy Level	March 31, 2026				December 31, 2025
(dollars in thousands)		Carrying amount		Fair value		Carrying amount		Fair value
Financial assets:
Cash and cash equivalents	Level 1	$	28,269	$	28,269	$	35,778	$	35,778
Mortgage loans held for sale	Level 2	38,960		38,960		33,762		33,762
Loans and other finance receivables, net of ACL	Level 3	2,146,233		2,116,050		2,134,630		2,108,242

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Mortgage loans held for investment	Level 2	14,090		14,090		14,396		14,396





Financial liabilities:
Deposits	Level 2	$	2,169,960	$	2,182,600	$	2,158,128	$	2,179,800
Borrowings	Level 2	120,838		121,000		117,338		117,700
Subordinated debentures	Level 2	49,675		49,569		49,853		49,597

The following table includes a rollforward of interest rate lock commitments for which the Corporation utilized Level 3 inputs to determine fair value on a recurring basis for the periods indicated.


	Three months ended March 31,
(dollars in thousands)	2026		2025
Balance at beginning of the period	$	402	$	216
Change in value	(47)		148
Balance at end of the period	$	355	$	364

The following table details the valuation techniques for Level 3 interest rate lock commitments.

(dollars in thousands)

Fair Value

Valuation Technique

Significant Unobservable Input

Range of Inputs

Weighted Average

March 31, 2026

355

Market comparable pricing

Pull through

1 - 99%

85.52%

December 31, 2025

402

Market comparable pricing

Pull through

1 - 99%

85.31%

(9) Derivative Financial Instruments

Risk Management Objective of Using Derivatives

The Corporation is exposed to certain risk arising from both its business operations and economic conditions. The Corporation principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Corporation manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Corporation enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Corporation’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Corporation’s known or expected cash receipts and its known or expected cash payments principally related to the Corporation’s loan portfolio.

Interest Rate Swaps

The Corporation uses interest rate swap agreements to modify interest rate characteristics from variable to fixed or fixed to variable in order to reduce the impact of interest rate changes on future net interest income. The Corporation’s credit exposure on interest rate swaps includes changes in fair value and any collateral that is held by a third party.

In June 2023 the Corporation entered into three interest rate swaps classified as cash flow hedges with notional amounts of $25 million each, to hedge the interest payments paid on short term borrowings. Under the terms of the three swap agreements, the Corporation pays average fixed rates of 4.070%, 4.027% and 4.117%, and receives variable rates in return indexed to SOFR. The swaps mature between May, June, and December 2026. The Corporation performed an assessment of the hedge for effectiveness at the inception of the hedge and performs an assessment on a recurring basis and determined that the derivative currently is and is expected to be highly effective in offsetting changes in cash flows of the hedged item. For the three months ended March 31, 2026, and 2025, approximately $122 thousand and $192 thousand, net of tax, is recorded in total comprehensive income as an unrealized gain and an unrealized loss, respectively. These amounts could differ from amounts actually recognized due to changes in interest rates, hedge de-designations and the addition of other hedges subsequent to March 31, 2026. At March 31, 2026 and December 31, 2025, the combined notional amount of the interest rate swaps was $75 million and $75 million, respectively, and the fair value was a liability of $123 thousand and $281 thousand, respectively.

In August 2024 the Corporation entered into an interest rate swap classified as a fair value hedge with a notional amount of $40 million, to hedge the interest payments received on a pool of residential mortgage loans held in portfolio. Under the terms of the swap agreement, the Corporation pays an average fixed rate of 3.60% and receives a variable rate in return indexed to SOFR. The swap matures August 2027. The Corporation performed an assessment of the hedge for effectiveness at the inception of the hedge and performs an assessment on a recurring basis and determined that the derivative currently is and is expected to be highly effective in offsetting changes in fair value of the hedged item. For the three months ended March 31, 2026, approximately $8 thousand, net of tax, is recorded as a fair values adjustment. These amounts could differ from amounts actually recognized due to changes in interest rates, hedge de-designations and the addition of other hedges subsequent to March 31, 2026.

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Mortgage Banking Derivatives

In connection with its mortgage banking activities, the Corporation enters into commitments to originate certain fixed rate residential mortgage loans for customers, also referred to as interest rate locks. In addition, the Corporation may enter into forward commitments for the future sales or purchases of mortgage-backed securities to or from third-party counterparties to hedge the effect of changes in interest rates on the values of both the interest rate locks and mortgage loans held for sale. Forward sales commitments may also be in the form of commitments to sell individual mortgage loans or interest rate locks at a fixed price at a future date. The amount necessary to settle each interest rate lock is based on the price that secondary market investors would pay for loans with similar characteristics, including interest rate and term, as of the date fair value is measured. Interest rate lock commitments and forward commitments are recorded within other assets/liabilities on the consolidated balance sheets, with changes in fair values during the period recorded within net change in the fair value of derivative instruments on the consolidated statements of income.

Customer Derivatives

Derivatives not designated as hedges are not speculative and result from a service the Corporation provides to certain customers to swap a fixed rate product for a variable rate product, or vice versa. The Corporation executes interest rate derivatives with commercial banking customers to facilitate their respective risk management strategies. Those interest rate derivatives are simultaneously hedged by offsetting derivatives that the Corporation executes with a third party, such that the Corporation minimizes its net interest rate risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.

The following table presents a summary of notional amounts and fair values of derivative financial instruments at the dates indicated:


		March 31, 2026				December 31, 2025
(dollars in thousands)	Balance Sheet Line Item	Notional Amount		Asset (Liability) Fair Value		Notional Amount		Asset (Liability) Fair Value
Interest Rate Lock Commitments
Positive fair values	Other assets	$	60,047	$	355	$	40,370	$	402
Negative fair values	Other liabilities	27,761		(169)		2,735		(13)
Total		$	87,808	$	186	$	43,105	$	389

Forward Commitments
Positive fair values	Other assets	$	13,000	$	130	$	—	$	—
Negative fair values	Other liabilities	4,500		(13)		8,000		(32)
Total		$	17,500	$	117	$	8,000	$	(32)

Customer Derivatives - Interest Rate Swaps
Positive fair values	Other assets	$	53,413	$	1,728	$	53,954	$	1,909
Negative fair values	Other liabilities	53,413		(1,745)		53,954		(1,929)
Total		$	106,826	$	(17)	$	107,908	$	(20)

Customer Derivatives - Risk Participation Agreements
Positive fair values	Other assets	$	—	$	—	$	—	$	—
Negative fair values	Other liabilities	29,434		(22)		24,166		(23)
Total		$	29,434	$	(22)	$	24,166	$	(23)

Fair Value Hedge
Positive fair values	Other assets	$	40,000	$	13	$	40,000	$	21
Negative fair values	Other liabilities	—		—		—		—
Total		$	40,000	$	13	$	40,000	$	21

Interest Rate Swaps
Positive fair values	Other assets	$	—	$	—	$	—	$	—
Negative fair values	Other liabilities	75,000		(123)		75,000		(281)
Total		$	75,000	$	(123)	$	75,000	$	(281)

Total derivative financial instruments		$	356,568	$	154	$	298,179	$	54

Interest rate lock commitments are considered Level 3 in the fair value hierarchy, while the forward commitments and interest rate swaps are considered Level 2 in the fair value hierarchy.

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The following table presents a summary of the net change in the fair value of derivative instruments:


	Three months ended March 31,
(dollars in thousands)	2026		2025
Interest Rate Lock Commitments	$	(203)	$	102
Forward Commitments	149		(30)
Customer Derivatives - Interest Rate Swaps	3		(33)
Customer Derivatives - Risk Participation Agreements	1		80

Net change in the fair value of derivative instruments	$	(50)	$	119

Net realized gains on derivative hedging activities were $18 thousand for the three months ended March 31, 2026, and net realized gains of $21 thousand for the three months ended March 31, 2025, and are included in non-interest income in the consolidated statements of income.

(10) Segments

ASC Topic 280 – Segment Reporting identifies operating segments as components of an enterprise which are evaluated regularly by the Corporation’s Chief Operating Decision Maker, our Chief Executive Officer, in deciding how to allocate resources and assess performance. The Corporation has applied the aggregation criterion set forth in this codification to the results of its operations.

Our Banking segment (“Bank”) consists of commercial and retail banking. The Banking segment generates interest income from its lending and investing activities and is dependent on the gathering of lower cost deposits from its branch network or borrowed funds from other sources for funding its loans, resulting in the generation of net interest income. The Banking segment also derives revenues from other sources including gains on the sale of SBA loans, sales of available for sale investment securities, service charges on deposit accounts, cash sweep fees, overdraft fees, BOLI income, title insurance fees, and other less significant non-interest income. Interest expense, provisions for credit losses, and payroll provide the significant expenses in the banking operation.

Meridian Wealth (“Wealth”), a registered investment advisor and wholly-owned subsidiary of the Bank, provides a comprehensive array of wealth management services and products and the trusted guidance to help its clients and our banking customers prepare for the future. Segment income before income taxes is used to assess the performance of the wealth segment by monitoring the generation of wealth management income as the wealth segment generates non-interest income through advisory fees. The cost of marketing, business development, and payroll provide the significant expenses in wealth.

Meridian’s mortgage banking segment (“Mortgage”) consists of 7 loan production offices throughout suburban Philadelphia and Maryland. Segment income before income taxes is used to assess the performance of the mortgage banking segment by monitoring the gains received on loan sales. The Mortgage segment originates 1 – 4 family residential mortgages and sells nearly all of its production to third party investors. The unit generates net interest income on the loans it originates and holds temporarily, then earns fee income (primarily gain on sales) at the time of the sale. The unit also recognizes income from document preparation fees, changes in portfolio pipeline fair values and related net hedging gains (losses). The cost of loans sales and payroll provide the significant expenses in mortgage banking.

The table below summarizes income and expenses, directly attributable to each business line, which have been included in the statement of operations. Total assets for each segment is also provided.


	Segment Information
	Three Months Ended March 31, 2026								Three Months Ended March 31, 2025
(dollars in thousands)	Bank		Wealth		Mortgage		Total		Bank		Wealth		Mortgage		Total
Interest income	$	40,374	$	—	$	338	$	40,712	$	38,835	$	—	$	333	$	39,168
Interest expense	17,302		(60)		268		17,510		19,129		(9)		272		19,392
Net interest income	23,072		60		70		23,202		19,706		9		61		19,776
Provision for credit losses	7,493		—		—		7,493		5,212		—		—		5,212
Net interest income after provision	15,579		60		70		15,709		14,494		9		61		14,564

Non-interest Income:
Mortgage banking income	45		—		4,483		4,528		18		—		3,375		3,393
Wealth management income	—		1,729		—		1,729		—		1,535		—		1,535
SBA loan income	150		—		—		150		748		—		—		748
Loss on sale of MSRs	—		—		(159)		(159)		(52)		—		—		(52)
Net change in fair values	26		—		(496)		(470)		77		—		344		421
Net gain on hedging activity	—		—		18		18		—		—		21		21
Other	1,177		—		64		1,241		1,121		—		137		1,258

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Non-interest income	1,398		1,729		3,910		7,037		1,912		1,535		3,877		7,324

Non-interest expense:
Salaries and employee benefits	7,534		682		4,170		12,386		7,049		560		3,776		11,385
Occupancy and equipment	919		18		246		1,183		795		7		536		1,338
Professional fees	814		50		110		974		677		11		75		763
Data processing and software	1,553		46		374		1,973		1,065		43		371		1,479
Advertising and promotion	495		78		119		692		591		93		95		779
Pennsylvania bank shares tax	254		4		—		258		264		5		—		269
Other	2,388		100		204		2,692		2,317		99		314		2,730
Non-interest expense	13,957		978		5,223		20,158		12,758		818		5,167		18,743
Income before income taxes	$	3,020	$	811	$	(1,243)	$	2,588	$	3,648	$	726	$	(1,229)	$	3,145

Total Assets	$	2,496,596	$	13,243	$	66,742	$	2,576,581	$	2,483,477	$	11,243	$	34,168	$	2,528,888

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis in conjunction with the unaudited consolidated interim financial statements and related notes contained in Part I, Item 1 of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2025 included in Meridian Corporation’s Annual Report on Form 10-K filed with the SEC.

Forward-Looking Statements

Meridian Corporation may from time to time make written or oral “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Meridian Corporation’s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. Statements preceded by, followed by, or that include the words “may,” “could,” “should,” “pro forma,” “looking forward,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Meridian Corporation’s control). Numerous competitive, economic, regulatory, legal and technological factors, risks and uncertainties that could cause actual results to differ materially include, without limitation: credit losses and the credit risk of our commercial and consumer loan products; changes in the level of charge-offs and changes in estimates of the adequacy of the allowance for credit losses, or ACL, including the timing of third-party appraisals and loan valuations from lead financial institutions in which we are a loan participant; cyber-security concerns; rapid technological developments and changes, including the development and use of artificial intelligence in business processes, services, and products; increased competitive pressures; changes in spreads on interest-earning assets and interest-bearing liabilities; changes in general economic conditions and conditions within the securities markets; escalating tariff and other trade policies and the resulting impacts on market volatility and global trade; the impact of uncertain or changing political conditions or any current or future federal government shutdown and uncertainty regarding the federal government's debt limit; geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism and military conflicts, including the ongoing conflict in the Middle East, which could impact economic conditions in the United States; unanticipated changes in our liquidity position; unanticipated changes in regulatory and governmental policies impacting interest rates and financial markets; legislation affecting the financial services industry as a whole, and Meridian Corporation, in particular; changes in accounting policies, practices or guidance; developments affecting the industry and the soundness of financial institutions and further disruption to the economy and U.S. banking system; among others, could cause Meridian Corporation’s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements.

Meridian Corporation cautions that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management’s current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Meridian Corporation’s filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2025 and subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Meridian Corporation does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Meridian Corporation or by or on behalf of Meridian Bank.

Critical Accounting Policies and Estimates

Our critical accounting policies are described in detail in the "Critical Accounting Policies" section within Item 7 of our 2025 Annual Form 10-K. The SEC defines "critical accounting policies" as those that require application of management's most difficult, subjective or

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complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in future periods. Management considers the measurement of the allowance for credit losses to be a critical accounting policy.

Executive Overview

The following items highlight the Corporation’s changes in its financial condition as of March 31, 2026 compared to December 31, 2025 and the results of operations for the three months ended March 31, 2026 compared to the same period in 2025. More detailed information related to these highlights can be found in the sections that follow.

Changes in Financial Condition - March 31, 2026 Compared to December 31, 2025

•Total assets increased $14.6 million, or 0.6%, to $2.6 billion as of March 31, 2026.

•Portfolio loans increased $11.1 million, or 0.5%, to $2.2 billion as of March 31, 2026.

•Mortgage loans held for sale increased $5.2 million, or 15.4%, to $39.0 million as of March 31, 2026.

•Total deposits increased $11.8 million or 0.5% to $2.2 billion as of March 31, 2026.

•The Corporation earned net income of $2.0 million during the three months ended March 31, 2026 and returned $1.7 million of capital to Meridian shareholders during the three months ended March 31, 2026 through a $0.14 dividend per share in the first quarter of the year.

Three Month Results of Operations - March 31, 2026 Compared to March 31, 2025

•Net income was $2.0 million, or $0.17 per diluted share, down $393 thousand, or 16.4%, driven by a higher provision for credit losses, lower non-interest income, and higher non-interest expense, offset somewhat by improved net interest income.

•The return on average assets and return on average equity were 0.32% and 4.02%, respectively, for the first quarter 2026, compared to 0.40% and 5.57%, respectively, for the first quarter 2025.

•Net interest income increased $3.4 million, or 17.3%, to $23.2 million and the net interest margin increased to 3.82% from 3.46%, due to the impact of deposit and borrowing cost declines as well as the increase in average noninterest-bearing deposits over the period.

•The overall provision for credit losses increased $2.3 million when comparing the first quarter 2026 to the first quarter 2025. The increase of $4.9 million in net charge-offs over this period was the driver for the increase in provision for credit losses, and was led by a $3.9 million charge-off taken during the first quarter 2026 on a loan purchase participation from another financial institution.

•Non-interest income decreased $287 thousand, or 3.9%, to $7.0 million driven by a $598 thousand decline in SBA loan income, a decrease of $685 thousand in fair value adjustments related to the mortgage banking segment. These declines in non-interest income were partially offset by a $1.1 million increase in mortgage banking income.

•Non-interest expense increased $1.4 million, or 7.5%, to $20.2 million due to a $1.0 million increase in salaries and employee benefits, and an increase of $494 thousand in data processing and software expense.

Key Performance Ratios

The following table presents key financial performance ratios for the periods indicated:


	Three months ended March 31,
	2026			2025
Return on average assets, annualized	0.32		%	0.40		%
Return on average equity, annualized	4.02		%	5.57		%
Net interest margin (tax effected yield)	3.82		%	3.46		%
Basic earnings per share	$	0.17		$	0.21
Diluted earnings per share	$	0.17		$	0.21

The following table presents certain key period-end balances and ratios at the dates indicated:


(dollars in thousands, except per share amounts)	March 31, 2026			December 31, 2025
Book value per common share	$	16.86		$	16.89
Tangible book value per common share (1)	$	16.57		$	16.59
Allowance as a percentage of loans and other finance receivables (excluding loans at fair value)	0.98		%	1.00		%

Tier I capital to risk weighted assets	8.63		%	8.68		%
Tangible common equity to tangible assets ratio (1)	7.65		%	7.67		%
Loans and other finance receivables, net of fees and costs	$	2,181,575		$	2,170,600

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Total assets	$	2,576,581	$	2,561,995
Total stockholders’ equity	$	200,225	$	199,716

(1) Non-GAAP financial measure. See “Non-GAAP Financial Measures” below for Non-GAAP to GAAP reconciliation.

Components of Net Income

Net income is comprised of five major elements:

•Net Interest Income, or the difference between the interest income earned on loans, leases, other finance receivables, and investments and the interest expense paid on deposits and borrowed funds;

•Provision For Credit Losses, or the amount added to the Allowance to provide for current expected credit losses on portfolio loans and other finance receivables;

•Non-interest Income, which is made up primarily of mortgage banking income, wealth management income, SBA loan sale income, fair value adjustments, gains and losses from the sale of loans, gains and losses from the sale of investment securities available for sale and other fees from loan and deposit services;

•Non-interest Expense, which consists primarily of salaries and employee benefits, occupancy, professional fees, advertising & promotion, data processing and software expense, loan expenses, and other operating expenses; and

•Income Taxes, which include state and federal jurisdictions.

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NET INTEREST INCOME

Net interest income is an integral source of the Corporation’s revenue. The tables below present a summary for the three months ended March 31, 2026 and 2025, of the Corporation’s average balances and yields earned on its interest-earning assets and the rates paid on its interest-bearing liabilities. The net interest margin is the net interest income as a percentage of average interest-earning assets. The net interest spread is the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities. The difference between the net interest margin and the net interest spread is the result of net free funding sources such as non-interest bearing deposits and stockholders’ equity.

Analyses of Interest Rates and Interest Differential

The table below present the major asset and liability categories on an average daily balance basis for the periods presented, along with interest income, interest expense and key rates and yields on a tax equivalent basis.


	For the Three Months Ended March 31,
(dollars in thousands)	2026						2025
	Average Balance		Interest Income/ Expense		Yields/ Rates		Average Balance		Interest Income/ Expense		Yields/ Rates
Assets:
Cash and cash equivalents	$	42,349	$	398	3.81	%	$	56,170	$	613	4.43	%

Investment securities - taxable	175,297		1,847		4.27		159,051		1,693		4.32
Investment securities - tax exempt (1)	55,292		396		2.90		54,723		387		2.87
Loans held for sale	23,783		338		5.76		20,604		333		6.55
Loans held for investment	2,175,938		37,806		7.05		2,039,676		36,218		7.20
Total loans	2,199,721		38,144		7.03		2,060,280		36,551		7.19
Total interest-earning assets	2,472,659		40,785		6.69	%	2,330,224		39,244		6.83	%
Noninterest earning assets	101,609						90,347
Total assets	$	2,574,268					$	2,420,571
Liabilities and stockholders' equity:
Interest-bearing demand deposits	$	149,192	$	1,040	2.83	%	$	150,980	$	1,229	3.30	%
Money market and savings deposits	1,025,036		7,070		2.80		919,731		7,808		3.44
Time deposits	747,406		7,113		3.86		721,336		7,831		4.40
Total interest - bearing deposits	1,921,634		15,223		3.21		1,792,047		16,868		3.82
Borrowings	112,028		1,293		4.68		123,677		1,469		4.82
Subordinated debentures	49,722		994		8.11		49,749		1,055		8.60
Total interest-bearing liabilities	2,083,384		17,510		3.41		1,965,473		19,392		4.00
Noninterest-bearing deposits	250,203						244,161
Other noninterest-bearing liabilities	38,104						36,203
Total liabilities	2,371,691						2,245,837
Total stockholders' equity	202,577						174,734
Total stockholders' equity and liabilities	$	2,574,268					$	2,420,571
Net interest income and spread (1)			$	23,275	3.28				$	19,852	2.83
Net interest margin (1)					3.82	%					3.46	%

(1)Yields and net interest income are reflected on a tax-equivalent basis.

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Rate / Volume Analysis

The rate/volume analysis table below analyzes dollar changes in the components of interest income and interest expense as they relate to the change in balances (volume) and the change in interest rates (rate) of tax-equivalent net interest income for the three months ended March 31, 2026 as compared to the same period in 2025, allocated by rate and volume. Changes in interest income and/or expense attributable to both rate and volume have been allocated proportionately based on the relationship of the absolute dollar amount of the change in each category.


	Three Months Ended March 31,
	2026 Compared to 2025
(dollars in thousands)	Rate		Volume		Total
Interest income:
Cash and cash equivalents	$	(78)	$	(137)	$	(215)

Investment securities - taxable	(17)		171		154
Investment securities - tax exempt (1)	5		4		9
Loans held for sale	(43)		48		5
Loans held for investment	(792)		2,380		1,588
Total loans	(835)		2,428		1,593
Total interest income	$	(925)	$	2,466	$	1,541
Interest expense:
Interest-bearing demand deposits	$	(175)	$	(14)	$	(189)
Money market and savings deposits	(1,568)		830		(738)
Time deposits	(993)		275		(718)
Total interest - bearing deposits	(2,736)		1,091		(1,645)
Borrowings	(41)		(135)		(176)
Subordinated debentures	(60)		(1)		(61)
Total interest expense	$	(2,837)	$	955	$	(1,882)
Interest differential	$	1,912	$	1,511	$	3,423

(1)Yields and net interest income are reflected on a tax-equivalent basis.

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

For the three months ended March 31, 2026 as compared to the same period in 2025, tax-equivalent interest income increased $1.5 million as favorable volume changes contributed $2.5 million to interest income, partially offset by rate changes that had a $925 thousand unfavorable impact on interest income. The loans held for investment average balances increased $136.3 million, leading to a favorable volume impact on interest income of $2.4 million, while the increase in loans held for sale average balances of $3.2 million had a favorable impact on interest income of $48 thousand. Growth in the loans held for investment portfolio was led by average balance increases in construction loans ($82.9 million), commercial mortgage loans ($40.3 million), commercial and industrial loans ($27.6 million), and home equity lines and loans ($15.6 million). The change in rates led to decreased yields on loans held for sale (down 79 basis points) and loans held for investment (down 15 basis points) that unfavorably impact interest income by $835 thousand, overall.

On the funding side, overall interest expense decreased $1.9 million, largely driven by a continuation in the decline of the cost of deposits and borrowings driven by the Fed's rates cuts over the last year. The cost of deposits were down across the board, leading to a $1.6 million decrease to interest expense. The cost of interest-bearing demand deposits, money market and savings accounts and time deposits decreased 47 basis points, 64 basis points and 54 basis points, respectively. These deposit cost declines were partially offset by overall volume increases as the average balances on money market and savings accounts increased $105.3 million, and the average balances on time increased $26.1 million.

The cost of borrowings decreased by 14 basis points, while the cost of subordinated debentures decreased 49 basis points as the interest rate on the $40 million in floating rate 2019 Debentures was lower in the current quarter, contributing a $60 thousand decrease to interest expense. Borrowing balances decreased $11.6 million on average.

Overall, the $3.4 million increase in net interest income over this period was primarily driven by rate changes and secondarily through volume changes.

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PROVISION FOR CREDIT LOSSES

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

The total provision for credit losses increased $2.3 million on a net basis for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The provision on funded loans increased $2.2 million over the three month comparable period in 2025 driven largely by an increase of $3.9 million in commercial mortgage charge-offs from a loan participated to us by another financial institution that became non-performing as of March 31, 2026. There was a $55 thousand provision on unfunded loan commitments for the three months ended March 31, 2026, while for the three months March 31, 2025 there was no provision on unfunded loan commitments.

NON-INTEREST INCOME

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

The following table presents the components of non-interest income for the periods indicated:


	Three Months Ended
(dollars in thousands)	March 31, 2026		March 31, 2025		$ Change		% Change
Mortgage banking income	$	4,528	$	3,393	$	1,135	33.5	%
Wealth management income	1,729		1,535		194		12.6	%
SBA loan income	150		748		(598)		(79.9)	%
Earnings on investment in life insurance	272		222		50		22.5	%
Net loss on sale of MSRs	(159)		(52)		(107)		205.8	%
Net change in the fair value of derivative instruments	(51)		149		(200)		(134.2)	%
Net change in the fair value of loans held-for-sale	(380)		102		(482)		(472.5)	%
Net change in the fair value of loans held-for-investment	(39)		170		(209)		(122.9)	%
Net gain on hedging activity	18		21		(3)		(14.3)	%

Other	969		1,036		(67)		(6.5)	%
Total non-interest income	$	7,037	$	7,324	$	(287)	(3.9)	%

Mortgage banking income increased $1.1 million over the comparable quarterly period as the volume of loans sold increased by $18.4 million, with a 28 basis point increase in the sales margin. Despite this 33.5% increase in mortgage banking income, total non-interest income decreased $287 thousand largely due to negative fair value adjustments, a decrease in SBA loan income, and an increase in net loss recorded on the sale of MSRs.

SBA loan income also decreased $598 thousand over this period due to a decline in the volume of SBA loans sold. The value of SBA loans sold for the quarter-ended March 31, 2026 was $5.4 million, or 44.8%, lower than the quarter-ended March 31, 2025, while the gross margin on sale was 8.5% for the quarter-ended March 31, 2026 compared to 8.7% for the quarter-ended March 31, 2025, down slightly.

NON-INTEREST EXPENSE

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

The following table presents the components of non-interest expense for the periods indicated:


	Three Months Ended
(dollars in thousands)	March 31, 2026		March 31, 2025		$ Change		% Change
Salaries and employee benefits	$	12,386	$	11,385	$	1,001	8.8	%
Occupancy and equipment	1,183		1,338		(155)		(11.6)	%
Professional fees	974		763		211		27.7	%
Data processing and software	1,973		1,479		494		33.4	%
Advertising and promotion	692		779		(87)		(11.2)	%
Pennsylvania bank shares tax	258		269		(11)		(4.1)	%
Other	2,692		2,730		(38)		(1.4)	%
Total non-interest expense	$	20,158	$	18,743	$	1,415	7.5	%

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Total non-interest expense increased $1.4 million, or 7.5%, primarily as the result of an increase in salaries and employee benefits and data processing and software expense, partially offset by a decline in occupancy and equipment expense. Salaries and employee benefits increased $1.0 million due largely to overall employee merit, benefit, and tax related increases for existing employees, as well as an increase of six full-time equivalent employees, combined with an increase in mortgage segment related commissions and other benefits. Data processing and software expenses increased $494 thousand, reflecting greater customer transaction activity and Meridian's ongoing commitment to technology investments. Professional fees increased $211 thousand, largely related to loan work out expenses. Meanwhile, there was a decline of $155 thousand in occupancy and equipment expense largely due to a prior year early termination of office lease space.

INCOME TAX EXPENSE

Income tax expense for the three months ended March 31, 2026 was $582 thousand, as compared to $746 thousand for the same period in 2025. Our effective tax rate was 22.5% for the three months ended March 31, 2026, compared to 23.7% for the same period in 2025. While income tax expense decreased primarily due to the decrease in income before income taxes, the effective tax rate decreased slightly due to the impact of tax expense recognized in the prior-quarter related to the surrender of certain bank owned life insurance policies.

BALANCE SHEET ANALYSIS

As of March 31, 2026, total assets were $2.6 billion which increased $14.6 million, or 0.6%, from December 31, 2025. This increase in assets over the prior period was due primarily to loan portfolio growth, as detailed in the following table:


(dollars in thousands)	March 31, 2026		December 31, 2025		$ Change		% Change
Mortgage loans held for sale	$	38,960	$	33,762	$	5,198	15.4	%
Real estate loans:
Commercial mortgage	870,544		879,440		(8,896)		(1.0)
Home equity lines and loans	109,795		107,002		2,793		2.6
Residential mortgage	235,067		236,135		(1,068)		(0.5)
Construction	343,376		330,543		12,833		3.9
Total real estate loans	1,558,782		1,553,120		5,662		0.4

Commercial, industrial & other finance receivables	444,395		428,981		15,414		3.6
Small business loans	134,468		139,765		(5,297)		(3.8)
Consumer	303		329		(26)		(7.9)
Leases, net	40,837		45,489		(4,652)		(10.2)
Loans and other finance receivables	$	2,178,785	$	2,167,684	$	11,101	0.5
Total loans and other finance receivables	$	2,217,745	$	2,201,446	$	16,299	0.7	%

Total loans and other finance receivables increased $11.1 million, to $2.2 billion as of March 31, 2026, from $2.2 billion as of December 31, 2025. Overall portfolio loan growth was 0.5% since December 31, 2025, or 2.0% on an annualized basis for 2026. Construction loans increased $12.8 million, or 3.9%, and commercial and industrial loans increased $15.4 million, or 3.6%. While commercial real estate loans decreased $8.9 million, or 1.0%, and SBA loans decreased $5.3 million, or 3.8% due to loan sales described above.

As of March 31, 2026, included within the commercial real estate loans total of $870.5 million was $290.3 million of owner-occupied commercial loans, as well as $104.2 million of multi-family loans. Nearly all of the multi-family real estate loans are on properties located in Philadelphia and surrounding counties we service.

The following table presents the major categories of deposits at the dates indicated:


(Dollars in thousands)	March 31, 2026		December 31, 2025		$ Change		% Change
Noninterest-bearing deposits	$	243,458	$	245,377	$	(1,919)	(0.8)	%
Interest-bearing deposits:
Interest-bearing demand deposits	157,151		157,360		(209)		(0.1)	%
Money market and savings deposits	1,013,533		1,023,290		(9,757)		(1.0)	%
Time deposits	755,818		732,101		23,717		3.2	%

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(Dollars in thousands)	March 31, 2026		December 31, 2025		$ Change		% Change
Noninterest-bearing deposits	$	243,458	$	245,377	$	(1,919)	(0.8)	%
Total interest-bearing deposits	$	1,926,502	$	1,912,751	$	13,751	0.7	%
Total deposits	$	2,169,960	$	2,158,128	$	11,832	0.5	%

Total deposits increased $11.8 million, or 0.5%, since December 31, 2025. Total interest-bearing deposits increased $13.8 million during the period, whereas noninterest-bearing deposits decreased $1.9 million. Time deposits increased $23.7 million, or 3.2%, largely due to customer preference for the higher interest rates offered by these products.

The majority of Meridian's deposit base is comprised of business deposits, 51%, with consumer deposits amounting to 15% at March 31, 2026. Municipal deposits at 11% and brokered deposits at 23% provide growth funding. Historically, business deposits lag loan fundings. A typical business relationship maintains operating accounts, investment accounts or sweep accounts and business owners may also have personal savings or wealth accounts. Deposit balances in business accounts have a tendency to be higher on average than consumer accounts. At March 31, 2026, 64% of business accounts and 89% of consumer accounts were fully insured by the FDIC. The municipal deposits are 100% collateralized and brokered deposits are 100% FDIC insured. The level of uninsured deposits for the entire deposit base was 20% at March 31, 2026.

Capital

Consolidated stockholders’ equity of the Corporation was $200.2 million, or 7.8% of total assets as of March 31, 2026, as compared to $199.7 million, or 7.8% of total assets as of December 31, 2025. On April 23, 2026, the Board of Directors declared a quarterly cash dividend of $0.14 per common share payable May 11, 2026 to shareholders of record as of May 4, 2026.

On February 20, 2025 the Corporation entered into an Equity Distribution Agreement (or Sales Agreement) relating to shares of our common stock. During 2025 the Corporation sold a total of 488,478 shares of common stock and raised approximately $7.5 million in net proceeds. We expect to use the net proceeds for general corporate purposes, which includes working capital and the funding of organic growth at Meridian Bank, as described in our prospectus filed with the SEC on February 20, 2025 pursuant to Rule 424(b)(5) under the Securities Act. There were no shares of the Corporation's common stock sold during the three months ended March 31, 2026, or 2025, respectively.

Under the Community Bank Leverage Ratio framework, a community banking organization that is less than $10 billion in total consolidated assets, and has limited amounts of certain assets and off-balance sheet exposures, and a CBLR greater than 9% can elect to report a single regulatory capital ratio. The Corporation has elected to be measured under this framework for Bank capital adequacy and had ratios of 9.58% and 9.50% at March 31, 2026 and December 31, 2025, respectively. The Corporation is exempt from CBLR.

The following table presents the Bank’s capital ratios and the minimum capital requirements to be considered “well capitalized” by regulators at the periods indicated:


	Bank			Well-capitalized minimum
		March 31, 2026				December 31, 2025
Tier 1 leverage ratio		9.58	%	9.50	%		5.00	%
Common tier 1 risk-based capital ratio		10.52	%	10.66	%		6.50	%
Tier 1 risk-based capital ratio		10.52	%	10.66	%		8.00	%
Total risk-based capital ratio		11.51	%	11.65	%		10.00	%

In December 2018, the Federal Reserve announced that a banking organization that experiences a reduction in retained earnings due to the CECL adoption as of the beginning of the fiscal year in which CECL is adopted may elect to phase in the regulatory capital impact of adopting CECL. Transitional amounts are calculated for the following items: retained earnings, temporary difference deferred tax assets and credit loss allowances eligible for inclusion in regulatory capital. When calculating regulatory capital ratios, 25% of the transitional amounts are phased in during the first year. An additional 25% of the transitional amounts are phased in over each of the next two years and at the beginning of the fourth year, the day-one effects of CECL are completely reflected in regulatory capital. As of March 31, 2026, Meridian has phased in 100% of the day-one effects of CECL.

Asset Quality Summary

The ratio of non-performing assets to total assets was 2.51% as of March 31, 2026, compared to 2.38% reported as of December 31, 2025. Total non-performing loans of $58.7 million as of March 31, 2026, increased $3.6 million from $55.1 million as of December 31, 2025. Included in non-performing loans at March 31, 2026 is $12.9 million of SBA loan guarantees, while non-performing loans at December 31, 2025 included $13.2 million of SBA loan guarantees. The overall increase was primarily the result of risk rating downgrades leading to non-performing loan classification mainly in the commercial mortgage and construction portfolios, partially offset by a $870 thousand decline in non-performing SBA loans due to charge-offs. The increase in commercial mortgage non-performing

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came largely from a purchased participation loan that is secured by a first lien on the leasehold interests of Class A office property with multiple buildings and tenants where an April 2026 appraisal, representative of conditions existing as of March 31, 2026, showed a significantly lower value than the original appraisal at the time of our participation. As of March 31, 2026 there were specific reserves of $2.8 million against non-performing loans, a decrease from $3.4 million as of December 31, 2025.

Meridian realized net charge-offs of 0.35% of total average loans for the three months ending March 31, 2026, which had increased from 0.14% reported for the same period in 2025. Net charge-offs for the quarter ended March 31, 2026 were $7.8 million, compared to net charge-offs of $2.8 million for the quarter ended March 31, 2025. Net charge-offs for the current quarter comprised of $8.2 million in total charge-offs, of which $3.9 million related to a commercial mortgage purchased participation and $2.5 million related to SBA. There were $407 thousand in recoveries during the period, largely related to leases.

The ratio of allowance for credit losses to total loans and other finance receivables, excluding loans at fair value (a non-GAAP measure, see reconciliation in the Appendix), was 0.98% as of March 31, 2026 compared to 1.00% as of December 31, 2025. Despite net charge-offs having increased as noted above, the level of provision for credit losses in the first quarter helped to maintain the allowance coverage level.

The Corporation believes it is proactive with its loan review process that utilizes the engagement of an independent outside loan review firm, which helps identify developing credit issues. For example, the Corporation procures additional collateral (preferably outside the current loan structure) whenever possible and frequent contact with the borrower. The Corporation believes that timely identification of credit issues and appropriate actions early in the process serve to mitigate overall risk of loss.

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Nonperforming Assets and Related Ratios

The following table presents nonperforming assets and related ratios for the periods indicated:


(dollars in thousands)	March 31, 2026			December 31, 2025
Non-performing assets:
Nonaccrual loans:
Real estate loans:
Commercial mortgage	$	6,748		$	2,472
Home equity lines and loans	2,223			2,023
Residential mortgage	9,350			10,385
Construction	7,688			6,650
Total real estate loans	26,009			21,530
Commercial and industrial & other finance receivables	7,179			6,770
Small business loans (1)	23,911			24,781
Leases	1,560			1,979
Total nonaccrual loans	58,659			55,060

Other real estate owned	3,592			3,592
Repossessed assets	2,417			2,405
Total non-performing assets	$	64,668		$	61,057

Asset quality ratios:
Non-performing assets to total assets	2.51		%	2.38		%
Non-performing loans to:

Total loans and other finance receivables	2.69		%	2.54		%
Total loans and other finance receivables (excluding loans at fair value) (2)	2.71		%	2.55		%

Allowance for credit losses to:

Total loans and other finance receivables	0.97		%	0.99		%
Total loans and other finance receivables (excluding loans at fair value) (2)	0.98		%	1.00		%
Non-performing loans	36.23		%	39.18		%

Total loans and leases	$	2,220,535		$	2,204,362
Total loans and other finance receivables	2,181,575			2,170,600
Total loans and other finance receivables (excluding loans at fair value)	2,167,485			2,156,204
Allowance for credit losses	21,252			21,573

(1) Included in non-performing small business loans as of March 31, 2026 and December 31, 2025, respectively, are $12.9 million and $13.2 million in SBA guarantees.

(2) The allowance for credit losses to total loans and other finance receivables (excluding loans at fair value) ratio is a non-GAAP financial measure. See “Non-GAAP Financial Measures” for a reconciliation of this measure to its most comparable GAAP measure.

Liquidity

Management maintains liquidity to meet depositors’ needs for funds, to satisfy or fund loan commitments, and for other operating purposes. Meridian’s foundation for liquidity is a stable and loyal customer deposit base, cash and cash equivalents, and a marketable investment portfolio that provides periodic cash flow through regular maturities and amortization or that can be used as collateral to secure funding. In addition, as part of its liquidity management, Meridian maintains a portion of commercial loan assets that are comprised of SNCs, which have a national market and can be sold in a timely manner. Meridian’s available liquidity, which totaled $348.0 million at March 31, 2026, compared to $346.3 million at December 31, 2025, includes investments, SNCs, Federal funds sold, mortgages held-for-sale and cash and cash equivalents, less the amount of securities required to be pledged for certain liabilities. Meridian also anticipates scheduled payments and prepayments on its loan and mortgage-backed securities portfolios.

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In addition, Meridian maintains borrowing arrangements with various correspondent banks, the FHLB and the FRB to meet short-term liquidity needs and has access to approximately $744.9 million in liquidity from these sources. Through its relationship at the Federal Reserve, Meridian had available credit of approximately $4.3 million at March 31, 2026. At March 31, 2026, Meridian had $0 in borrowings from the Federal Reserve. As a member of the FHLB, Meridian is eligible to borrow up to a specific credit limit, which is determined by the amount of our residential mortgages, commercial mortgages and other loans that have been pledged as collateral. As of March 31, 2026, Meridian’s maximum borrowing capacity with the FHLB was $732.0 million. At March 31, 2026, Meridian had borrowed $120.8 million and the FHLB had issued letters of credit, on Meridian’s behalf, totaling $170.1 million against its available credit lines. At March 31, 2026, Meridian also had available $56.0 million of unsecured federal funds lines of credit with other financial institutions as well as $304.1 million of available short or long term wholesale funding arrangements through the CDARS/ICS one-way buy program and conventional brokered CDs. Management believes that Meridian has adequate resources to meet its short-term and long-term funding requirements.

Discussion of Segments

As of March 31, 2026, the Corporation has three principal segments as defined by FASB ASC 280, “Segment Reporting.” The segments are Banking, Mortgage Banking and Wealth Management (see Note 10 in the accompanying Notes to Unaudited Consolidated Financial Statements).

The Banking Segment recorded income before tax of $3.0 million for the three months ended March 31, 2026, as compared to income before tax of $3.6 million for the same period in 2025. The Banking Segment provided 116.7% of the Corporation’s pre-tax profit for the three months ended March 31, 2026, as compared to 116.0% for the same period in 2025.

The Wealth Management Segment recorded income before tax of $811 thousand for the three months ended March 31, 2026, as compared to income before tax of $726 thousand for the same period in 2025.

The Mortgage Banking Segment recorded a loss before tax of $1.2 million for the three months ended March 31, 2026, as compared to a loss before tax of $1.2 million for the same period in 2025. Mortgage Banking income and expenses related to loan originations and sales increased over the comparable periods due to higher loan origination and sales volume.

Off Balance Sheet Risk

The Corporation is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit, and loan repurchase commitments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the loan agreement. Total commitments to extend credit at March 31, 2026 were $656.1 million as compared to $641.9 million at December 31, 2025.

Standby letters of credit are conditional commitments issued by the Corporation to a customer for a third party. Such standby letters of credit are issued to support private borrowing arrangements. The credit risk involved in issuing standby letters of credit is similar to that involved in granting loan facilities to customers. The Corporation’s obligation under standby letters of credit at March 31, 2026 amounted to $10.3 million as compared to $9.4 million at December 31, 2025.

Estimated fair values of the Corporation’s off-balance sheet instruments are based on fees and rates currently charged to enter into similar loan agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. Since fees and rates charged for off-balance sheet items are at market levels when set, there is no material difference between the stated amount and the estimated fair value of off-balance sheet instruments.

In certain circumstances the Corporation may be required to repurchase residential mortgage loans from investors under the terms of loan sale agreements. Generally, these circumstances include the breach of representations and warranties made to investors regarding borrower default or early payment, as well as a violation of the applicable federal, state, or local lending laws. The Corporation agrees to repurchase loans if the representations and warranties made with respect to such loans are breached. Based on the obligations described above, the Corporation repurchased no loans for the three months ended March 31, 2026, and March 31, 2025, respectively.

Non-GAAP Financial Measures

Meridian believes that non-GAAP measures are meaningful because they reflect adjustments commonly made by management, investors, regulators and analysts to evaluate performance trends and the adequacy of common equity. This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for performance and financial condition measures determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of Meridian’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Our management used the measure of the tangible common equity ratio to assess our capital strength. We believe that this non-GAAP financial measure is useful to investors because, by removing the impact of our goodwill and other intangible assets, it allows investors to more easily assess our capital adequacy. This non-GAAP financial measure should not be considered a substitute for any regulatory capital ratios and may not be comparable to other similarly titled measures used by other companies.

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The table below provides the non-GAAP reconciliation for our tangible common equity ratio and tangible book value per common share:


(dollars in thousands, except share data)	March 31, 2026			December 31, 2025
Total stockholders' equity (GAAP)	$	200,225		$	199,716
Less: Goodwill and intangible assets	(3,411)			(3,462)
Tangible common equity (non-GAAP)	196,814			196,254

Total assets (GAAP)	2,576,581			2,561,995
Less: Goodwill and intangible assets	(3,411)			(3,462)
Tangible assets (non-GAAP)	$	2,573,170		$	2,558,533

Stockholders' equity to total assets (GAAP)	7.77		%	7.80		%
Tangible common equity to tangible assets (non-GAAP)	7.65		%	7.67		%

Shares outstanding	11,879			11,826

Book value per share (GAAP)	$	16.86		$	16.89
Tangible book value per share (non-GAAP)	$	16.57		$	16.59

The following is a reconciliation of the allowance for credit losses to total loans held for investment ratio at March 31, 2026 and December 31, 2025. This is considered a non-GAAP measure as the calculation excludes the impact of loans held for investment that are fair valued as these loan types are not included in the allowance for credit losses calculation.


(dollars in thousands)	March 31, 2026			December 31, 2025
Allowance for credit losses (GAAP)	$	21,252		$	21,573

Loans and other finance receivables (GAAP)	2,181,575			2,170,600

Less: Loans at fair value	(14,090)			(14,396)
Loans and other finance receivables, excluding loans at fair value (non-GAAP)	$	2,167,485		$	2,156,204

Allowance for credit losses to loans and other finance receivables (GAAP)	0.97		%	0.99		%
Allowance for credit losses to loans and other finance receivables, excluding loans at fair value (non-GAAP)	0.98		%	1.00		%

The following is a reconciliation of non-performing loans, excluding the guaranteed portion of SBA loans that are classified as non-performing loans, to total loans and leases at March 31, 2026 and December 31, 2025. This is considered a non-GAAP measure as the calculation excludes the impact of SBA guarantees from non-performing loans.


(dollars in thousands)	March 31, 2026			December 31, 2025
Non-performing loans (GAAP)	$	58,659		$	55,060
Less: Guaranteed portion of SBA loans classified as non-performing	(12,906)			(13,177)
Non-performing loans, excluding guaranteed portion of SBA loans (non-GAAP)	$	45,753		$	41,883

Total loans and leases	$	2,220,535		$	2,204,362

Non-performing loans (excluding guaranteed portion of SBA loans) to total loans and leases	2.06		%	1.90		%

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Simulations of Net Interest Income

We use a simulation model on a quarterly basis to measure and evaluate potential changes in our net interest income resulting from various hypothetical interest rate scenarios. Our model incorporates various assumptions that management believes to be reasonable, but which may have a significant impact on results such as:

•the timing of changes in interest rates;

•shifts or rotations in the yield curve;

•repricing characteristics for market rate sensitive instruments on the balance sheet;

•differing sensitivities of financial instruments due to differing underlying rate indices;

•varying timing of loan prepayments for different interest rate scenarios;

•the effect of interest rate floors, periodic loan caps and lifetime loan caps; and

•overall growth rates and product mix of interest-earning assets and interest-bearing liabilities.

Because of the limitations inherent in any approach used to measure interest rate risk, simulated results are not intended to be used as a forecast of the actual effect of a change in market interest rates on our results, but rather as a means to better plan and execute appropriate ALM strategies.

Potential increase (decrease) to our net interest income between a flat interest rate scenario and hypothetical rising and declining interest rate scenarios, measured over a one-year period as of the dates indicated, are presented in the following table which assuming rate shifts occur upward and downward on the yield curve in even increments over the first twelve months (ramp) followed by rates held constant thereafter.


	March 31,
Changes in Market Interest Rates	2026		2025
+300 basis points over next 12 months	1.39	%	2.10	%
+200 basis points over next 12 months	1.00	%	1.61	%
+100 basis points over next 12 months	0.53	%	0.94	%
No Change
-100 basis points over next 12 months	(1.18)	%	(1.12)	%
-200 basis points over next 12 months	(1.89)	%	(2.05)	%
-300 basis points over next 12 months	(2.50)	%	(1.89)	%

The above interest rate simulation suggests as of March 31, 2026 that the Corporation’s balance sheet is fairly neutrally positioned over the next 12 months. The simulated exposure to a change in interest rates is manageable and well within policy guidelines. The results continue to drive our funding strategy of increasing relationship-based accounts (core deposits) and utilizing term deposits to fund short to medium duration assets.

Simulation of economic value of equity

To quantify the amount of capital required to absorb potential losses in value of our interest-earning assets and interest-bearing liabilities resulting from adverse market movements, we calculate economic value of equity on a quarterly basis. We define economic value of equity as the net present value of our balance sheet’s cash flow, and we calculate economic value of equity by discounting anticipated principal and interest cash flows under the prevailing and hypothetical interest rate environments. Potential changes to our economic value of equity between a flat rate scenario and hypothetical rising and declining rate scenarios are presented in the following table. The projections assume shifts upward and downward in the yield curve of 100, 200 and 300 basis points occurring immediately.


	March 31,
Changes in Market Interest Rates	2026		2025
+300 basis points	7	%	10	%
+200 basis points	6	%	9	%
+100 basis points	4	%	5	%
No Change
-100 basis points	(7)	%	(9)	%
-200 basis points	(18)	%	(22)	%
-300 basis points	(35)	%	(43)	%

This economic value of equity profile at March 31, 2026 suggests that an instantaneous decrease in rates would have a negative impact on value of the Banks' balance sheet. While an instantaneous shift in interest rates is used in this analysis to provide an estimate of

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exposure, we believe that a gradual shift in interest rates would have a much more modest impact. Since economic value of equity measures the discounted present value of cash flows over the estimated lives of instruments, the change in economic value of equity does not directly correlate to the degree that earnings would be impacted over a shorter time horizon.

The results of our net interest income and economic value of equity simulation analysis are purely hypothetical, and a variety of factors might cause actual results to differ substantially from what is depicted. For example, if the timing and magnitude of interest rate changes differ from that projected, our net interest income might vary significantly. Non-parallel yield curve shifts or changes in interest rate spreads would also cause net interest income to be different from that projected. An increasing interest rate environment could reduce projected net interest income if deposits and other short-term interest-bearing liabilities reprice faster than expected or faster than our interest-earning assets. Actual results could differ from those projected if interest-earning assets and interest-bearing liabilities grow faster or slower than estimated, or otherwise change its mix of products. Actual results could also differ from those projected if actual repayment speeds in the loan portfolio are substantially different than those assumed in the simulation model. Furthermore, the results do not take into account the impact of changes in loan prepayment rates on loan discount accretion. If loan prepayment rates were to increase, any remaining loan discounts would be recognized into interest income. This would result in a current period offset to declining net interest income caused by higher rate loans prepaying. Finally, these simulation results do not contemplate all the actions that management may undertake in response to changes in interest rates, such as changes to loan, investment, deposit, funding or other strategies.

Management has and continues to employ strategies to mitigate risk in the Net Interest Income and Economic Value simulations.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a- 15(e) and 15d- 15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, the Corporation’s CEO and CFO have concluded that the Corporation’s disclosure controls and procedures were effective as of March 31, 2026 to ensure that the information required to be disclosed by the Corporation in the reports that the Corporation files or submits under the Exchange Act is recorded, processed, summarized, and reported completely and accurately within the time periods specified in SEC rules and forms.

Changes in Internal Control Over Financial Reporting

There was no change in the Corporation’s internal control over financial reporting identified during the quarter ended March 31, 2026 that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

PART II–OTHER INFORMATION

Item 1. Legal Proceedings.

None

Item 1A. Risk Factors.

None

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3. Defaults upon Senior Securities.

None

Item 4. Mine Safety Disclosures.

Not applicable

Item 5. Other Information.

None

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Item 6. Exhibits.

EXHIBIT INDEX


Exhibit Number						Description
3.1						Amended Articles of Incorporation of Registrant, filed as Exhibit 3.1 to Form 10-Q on August 16, 2021 and incorporated herein by reference.
3.2						Bylaws of Registrant, filed as Exhibit 3.2 to Form 8-K on August 24, 2018 and incorporated herein by reference.
31.1						Rule 13a-14(a)/ 15d-14(a) Certification of the Principal Executive Officer, filed herewith.
31.2						Rule 13a-14(a)/ 15d-14(a) Certification of the Principal Financial Officer, filed herewith.
32						Section 1350 Certifications, filed herewith.
101.INS						XBRL Instance Document – The instance document does not appear in the interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document
Exhibit 104						Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date:	May 11, 2026	Meridian Corporation

		By:	/s/ Christopher J. Annas
			Christopher J. Annas President and Chief Executive Officer (Principal Executive Officer)

		By:	/s/ Denise Lindsay
			Denise Lindsay Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)