Subsequent Event

9 Months Ended

Sep. 30, 2013

Note 13 – Subsequent Event

After the third quarter and nine-month financial results for the Company were reported in its press release dated October 28, 2013, it was determined that the accounting and presentation in the financial statements for the losses recognized in connection with the execution of agreements by the Company’s wholly owned subsidiary, The Talbot Bank of Easton (the “Bank”), to sell loans and other real estate owned (the “Asset Sale”) required modification. The transaction originally was reported in noninterest income as a $19.8 million loss on the Asset Sale. The revised accounting and presentation in this Form 10-Q reflect loan charge-offs of $19.6 million on loans associated with the Asset Sale and a subsequent provision for credit losses of $19.6 million. The write-downs of $182 thousand on other real estate owned associated with the Asset Sale are reflected in noninterest expense. Net loss for the three and nine months ended September 30, 2013 was not impacted by the modification. See additional details on the Asset Sale in the following Management’s Discussion and Analysis of Financial Condition and Results of Operations.