10-Q

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 June 30, 2024

Or

☐ 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 August 6, 2024 there were 11,190,875 outstanding shares of the issuer’s common stock, par value $1.00 per share.

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION
Item 1 Financial Statements (Unaudited)	3
Consolidated Balance Sheets – June 30, 2024 and December 31, 2023	3
Consolidated Statements of Income – Three and Six Months Ended June 30, 2024 and 2023	4
Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2024 and 2023	5
Consolidated Statements of Stockholders’ Equity – Three and Six Months Ended June 30, 2024 and 2023	6
Consolidated Statements of Cash Flows – Six Months Ended June 30, 2024 and 2023	7
Notes to Consolidated Financial Statements (Unaudited)	8
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3 Quantitative and Qualitative Disclosures about Market Risk	45
Item 4 Controls and Procedures	47
PART II OTHER INFORMATION
Item 1 Legal Proceedings	47
Item 1A Risk Factors	47
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3 Defaults Upon Senior Securities	47
Item 4 Mine Safety Disclosures	47
Item 5 Other Information	47
Item 6 Exhibits	48
Signatures	49

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
ACH	Automated clearing house
ACL	Allowance for credit losses
AFS	Available-for-sale
ALCO	Asset/Liability Committee
ALLL	Allowance for loan and lease losses
ALM	Asset / liability management
AOCI	Accumulated other comprehensive income
ASC	Accounting Standards Codification
ASU	Accounting Standards Update
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
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
FDIC	Federal Deposit Insurance Corporation
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
ICBA	Independent Community Bankers of America
JOBS Act	Jumpstart Our Business Startups Act of 2012
LBP	Look-back period
LEP	Loss emergence period
LGD	Loss given default

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
OFAC	Office of Foreign Assets Control
OREO	Other real estate owned
PCAOB	Public Company Accounting Oversight Board
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

MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(dollars in thousands, except share data)	June 30, 2024		December 31, 2023
Assets:
Cash and due from banks	$	8,457	$	10,067
Interest-bearing deposits at other banks	15,601		46,630
Cash and cash equivalents	24,058		56,697
Securities available-for-sale, at fair value (amortized cost of $169,751 and $156,492, respectively)	159,141		146,019
Securities held-to-maturity, at amortized cost (fair value of $31,695 and $32,730, respectively)	35,089		35,781
Equity investments	2,088		2,121
Mortgage loans held for sale	54,278		24,816
Loans and other finance receivables, net of fees and costs	1,988,535		1,895,806
Allowance for credit losses	(21,703)		(22,107)
Loans and other finance receivables, net of the allowance for credit losses	1,966,832		1,873,699
Restricted investment in bank stock	10,044		8,072
Bank premises and equipment, net	13,114		13,557
Bank owned life insurance	29,267		28,844
Accrued interest receivable	9,973		9,325
Other real estate owned	1,862		1,703
Deferred income taxes	3,950		4,201
Servicing assets	11,341		11,748
Goodwill	899		899
Intangible assets	2,869		2,971
Other assets	26,779		25,740
Total assets	$	2,351,584	$	2,246,193
Liabilities:
Deposits:
Non-interest bearing	$	224,040	$	239,289
Interest bearing	1,691,396		1,584,173
Total deposits	1,915,436		1,823,462
Borrowings	187,260		174,896
Subordinated debentures	49,897		49,836
Accrued interest payable	7,709		10,324
Other liabilities	28,900		29,653
Total liabilities	2,189,202		2,088,171
Stockholders’ equity:
Common stock, $1 par value per share. 25,000,000 shares authorized; 13,194,058 and 13,186,198 shares issued and 11,190,875 and 11,183,015 shares outstanding, respectively	13,194		13,186
Surplus	80,639		80,325
Treasury stock, 2,003,183 shares, at cost	(26,079)		(26,079)
Unearned common stock held by employee stock ownership plan	(1,204)		(1,204)
Retained earnings	104,420		101,216
Accumulated other comprehensive loss	(8,588)		(9,422)
Total stockholders’ equity	162,382		158,022
Total liabilities and stockholders’ equity	$	2,351,584	$	2,246,193

See accompanying notes to the unaudited consolidated financial statements.

3

MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands, except per share data)	2024		2023		2024		2023
Interest income:
Loans and other finance receivables, including fees	$	36,486	$	32,215	$	71,825	$	61,632
Securities - taxable	1,324		992		2,575		1,951
Securities - tax-exempt	324		351		649		705
Cash and cash equivalents	331		278		631		495
Total interest income	38,465		33,836		75,680		64,783
Interest expense:
Deposits	18,991		14,023		36,383		25,470
Borrowings and subordinated debentures	2,628		2,715		5,842		4,538
Total interest expense	21,619		16,738		42,225		30,008
Net interest income	16,846		17,098		33,455		34,775
Provision for credit losses	2,680		705		5,546		2,104
Net interest income after provision for credit losses	14,166		16,393		27,909		32,671
Non-interest income:
Mortgage banking income	5,420		5,050		9,054		8,322
Wealth management income	1,444		1,235		2,761		2,431
SBA loan income	785		1,767		1,771		2,480
Earnings on investment in life insurance	215		193		422		385
Net change in the fair value of derivative instruments	203		183		278		114
Net change in the fair value of loans held-for-sale	(29)		(199)		(31)		(200)
Net change in the fair value of loans held-for-investment	(24)		(219)		(199)		(102)
Net loss on hedging activity	(63)		(1)		(82)		(1)
Net loss on sale of investment securities available-for-sale	—		(54)		—		(54)
Other	1,293		1,169		3,254		2,387
Total non-interest income	9,244		9,124		17,228		15,762
Non-interest expense:
Salaries and employee benefits	11,437		12,152		22,010		23,213
Occupancy and equipment	1,230		1,140		2,463		2,384
Professional fees	1,029		1,004		2,527		1,827
Data processing and software	1,506		1,681		3,038		3,113
Advertising and promotion	989		1,091		1,737		1,952
Pennsylvania bank shares tax	274		245		548		490
Other	2,553		2,302		4,869		4,425
Total non-interest expense	19,018		19,615		37,192		37,404
Income before income taxes	4,392		5,902		7,945		11,029
Income tax expense	1,066		1,257		1,943		2,363
Net income	$	3,326	$	4,645	$	6,002	$	8,666
Basic earnings per common share	$	0.30	$	0.42	$	0.54	$	0.78
Diluted earnings per common share	$	0.30	$	0.41	$	0.54	$	0.75
Basic weighted average shares outstanding	11,096		11,062		11,092		11,167
Diluted weighted average shares outstanding	11,150		11,304		11,178		11,494

See accompanying notes to the unaudited consolidated financial statements.

4

MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Net income:	$	3,326	$	4,645	$	6,002	$	8,666
Net change in unrealized gains (losses) on investment securities available for sale:
Change in fair value of investment securities, net of tax of $53 and $(371), $(31) and $83 respectively	206		(1,356)		(106)		292
Reclassification adjustment for net losses realized in net income, net of tax effect of $0, $11, $0, and 11, respectively,	—		43		—		43
Reclassification adjustment for investment securities transferred to held-to-maturity, net of tax effect of $7 and $6, $14 and $12 respectively	22		23		44		45
Unrealized investment gains (losses), net of tax effect of $60 and $(353),$(17) and $107 respectively	$	228	$	(1,290)	$	(62)	$	380
Net change in unrealized gains on interest rate swaps used in cash flow hedges, net of tax effect of $43 , $97, $260 and $97, respectively	133		338		896		338
Total other comprehensive income (loss)	$	361	$	(952)	$	834	$	718
Total comprehensive income	$	3,687	$	3,693	$	6,836	$	9,384

See accompanying notes to the unaudited consolidated financial statements.

5

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 June 30, 2024
Balance at April 1, 2024	$	13,189	$	80,487	$	(26,079)	$	(1,204)	$	102,492	$	(8,949)	$	159,936
Net income	—		—		—		—		3,326		—		3,326
Other comprehensive income	—		—		—		—		—		361		361
Dividends declared ($0.125 per share)	—		—		—		—		(1,398)		—		(1,398)
Common stock issued through share-based awards and exercises	5		41		—		—		—		—		46
Stock based compensation expense	—		111		—		—		—		—		111
Balance at June 30, 2024	$	13,194	$	80,639	$	(26,079)	$	(1,204)	$	104,420	$	(8,588)	$	162,382

	Common Stock		Surplus		Treasury Stock		Unearned ESOP		Retained Earnings		AOCI		Total
Six Months Ended June 30, 2024
Balance at January 1, 2024	$	13,186	$	80,325	$	(26,079)	$	(1,204)	$	101,216	$	(9,422)	$	158,022
Net income	—		—		—		—		6,002		—		6,002
Other comprehensive income	—		—		—		—		—		834		834
Dividends declared ($0.250 per share)	—		—		—		—		(2,798)		—		(2,798)
Common stock issued through share-based awards and exercises	8		61		—		—		—		—		69
Stock based compensation expense	—		253		—		—		—		—		253
Balance at June 30, 2024	$	13,194	$	80,639	$	(26,079)	$	(1,204)	$	104,420	$	(8,588)	$	162,382

(dollars in thousands, except per share data)	Common Stock		Surplus		Treasury Stock		Unearned ESOP		Retained Earnings		AOCI		Total
Three Months Ended June 30, 2023
Balance at April 1, 2023	$	13,180	$	79,473	$	(24,512)	$	(1,403)	$	96,180	$	(9,869)	$	153,049
Net income	—		—		—		—		4,645		—		4,645
Other comprehensive loss	—		—		—		—		—		(952)		(952)
Dividends declared ($0.125 per share)	—		—		—		—		(1,391)		—		(1,391)
Net purchase of treasury stock through publicly announced plans (127,849 shares)	—		—		(1,567)		—		—		—		(1,567)
Common stock issued through share-based awards and exercises	1		20		—		—		—		—		21
Stock based compensation expense	—		157		—		—		—		—		157
Balance at June 30, 2023	$	13,181	$	79,650	$	(26,079)	$	(1,403)	$	99,434	$	(10,821)	$	153,962

	Common Stock		Surplus		Treasury Stock		Unearned ESOP		Retained Earnings		AOCI		Total
Six Months Ended June 30, 2023
Balance at January 1, 2023	$	13,156	$	79,072	$	(21,821)	$	(1,403)	$	95,815	$	(11,539)	$	153,280
Adjustment to initially apply ASU No. 2016-13 for CECL, net of tax	—		—		—		—		(2,228)		—		(2,228)
Net income	—		—		—		—		8,666		—		8,666
Other comprehensive income	—		—		—		—		—		718		718
Dividends declared ($0.250 per share)	—		—		—		—		(2,819)		—		(2,819)
Net purchase of treasury stock through publicly announced plans (312,447 shares)	—		—		(4,258)		—		—		—		(4,258)
Common stock issued through share-based awards and exercises	25		144		—		—		—		—		169
Stock based compensation expense	—		434		—		—		—		—		434
Balance at June 30, 2023	$	13,181	$	79,650	$	(26,079)	$	(1,403)	$	99,434	$	(10,821)	$	153,962

See accompanying notes to the unaudited consolidated financial statements.

6

MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six months ended June 30,
(dollars in thousands)	2024		2023
Net income	$	6,002	$	8,666
Adjustments to reconcile net income to net cash used in operating activities:
Loss on sale of investment securities	—		54
Net amortization of investment premiums and discounts and change in fair value of equity securities	1,009		498
Depreciation and amortization (accretion), net	1,808		145
Provision for credit losses	5,546		2,104
Amortization of issuance costs on subordinated debt	61		56
Stock based compensation	253		434
Net change in fair value of derivative instruments	(278)		(114)
Net change in fair value of loans held for sale	31		200
Net change in fair value of loans held for investment	199		102
Amortization and net impairment of servicing rights	369		180
SBA loan income	(1,771)		(2,480)
Proceeds from sale of loans	341,743		306,003
Loans originated for sale	(362,144)		(316,437)
Mortgage banking income	(9,054)		(8,322)
Increase in accrued interest receivable	(648)		(288)
Increase in other assets	(703)		(3,354)
Earnings from investment in bank owned life insurance	(422)		(385)
Decrease (increase) in deferred income tax	35		(100)
(Decrease) increase in accrued interest payable	(2,615)		3,223
Decrease in other liabilities	(336)		(1,730)
Net cash used in operating activities	$	(20,915)	$	(11,545)
Cash flows from investing activities:
Activity in available-for-sale securities:
Maturities, repayments and calls	6,989		4,590
Sales	—		13,514
Purchases	(21,087)		(11,571)
Activity in held-to-maturity securities:
Maturities, repayments and calls	555		865
Increase in restricted stock	(1,972)		(2,226)
Net increase in loans	(95,854)		(120,124)
Purchases of premises and equipment	(1,964)		(601)
Net cash used in investing activities	$	(113,333)	$	(115,553)
Cash flows from financing activities:
Net increase in deposits	91,974		70,126
Increase in short-term borrowings	1,770		69,122
Increase in long-term debt	10,594		3,432
Repayment of subordinated debt	—		(54)
Net purchase of treasury stock	—		(4,259)
Dividends paid	(2,798)		(2,819)
Share based awards and exercises	69		25
Net cash provided by financing activities	$	101,609	$	135,573
Net change in cash and cash equivalents	(32,639)		8,475
Cash and cash equivalents at beginning of period	56,697		38,391
Cash and cash equivalents at end of period	$	24,058	$	46,866
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	44,840	$	26,785
Income taxes	707		308
Supplemental disclosure of cash flow information:
Transfers from loans held for sale to loans held for investment	—		351
Net loans sold, not settled	—		9,205

See accompanying notes to the unaudited consolidated financial statements.

7

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, 2023), 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 and six months ended June 30, 2024 are not necessarily indicative of the results for the year ending December 31, 2024 or for any other period.

Pronouncements Adopted in 2024

The following pronouncements were adopted in 2024, but did not have a material impact on our consolidated financial statements.

•FASB ASU 2020-06, “Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”

•FASB ASU 2023-02, "Investments Equity Method and Joint Ventures (Topic 323) Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method"

Pronouncements Not Yet Effective as of June 30, 2024:

FASB ASU 2023-07, “Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures”

The amendments in this update improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments in this update also do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Corporation is currently evaluating the impact on its disclosures.

FASB ASU 2023-09, “Income Taxes (Topic 740) Improvements to Income Tax Disclosures”

The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in this update are effective for fiscal years beginning after December 15, 2024 and are to be applied on a prospective basis. Early adoption is permitted.The Corporation is currently evaluating the impact on its disclosures.

FASB ASU 2024-01 Stock Compensation - Scope Application of Profits Interest and Similar Awards

The amendments in this update improve the understandability of paragraph 718-10-15-3 apply to all entities that enter into share-based payments transactions. The amendments in this update are effective for fiscal years beginning after December 15, 2024 and are to be applied on a prospective basis. The Corporation is currently evaluating the impact on its disclosures.

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 FASB ASC. The amendments in this ASU 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 and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, 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

8

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.

(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 June 30,				Six months ended June 30,
(dollars in thousands, except per share data)	2024		2023		2024		2023
Numerator for earnings per share:
Net income available to common stockholders	$	3,326	$	4,645	$	6,002	$	8,666
Denominators for earnings per share:
Weighted average shares outstanding	11,247		11,240		11,246		11,348
Average unearned ESOP shares	(151)		(178)		(154)		(181)
Basic weighted averages shares outstanding	11,096		11,062		11,092		11,167
Dilutive effects of assumed exercises of stock options	54		72		86		165
Dilutive effects of SERP shares	—		170		—		162
Diluted weighted averages shares outstanding	11,150		11,304		11,178		11,494
Basic earnings per share	$	0.30	$	0.42	$	0.54	$	0.78
Diluted earnings per share	$	0.30	$	0.41	$	0.54	$	0.75
Antidilutive shares excluded from computation of average dilutive earnings per share	587		512		587		507

(3)    Securities

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

	June 30, 2024
(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	$	19,839	$	58	$	(132)	$	—	$	19,765	10
U.S. government agency MBS	22,200		174		(472)		—		21,902		13
U.S. government agency CMO	28,851		—		(2,264)		—		26,587		34
State and municipal securities	41,224		—		(4,298)		—		36,926		32
U.S. Treasuries	32,984		—		(2,513)		—		30,471		25
Non-U.S. government agency CMO	15,663		81		(487)		—		15,257		12
Corporate bonds	8,990		82		(839)		—		8,233		13
Total securities available-for-sale	$	169,751	$	395	$	(11,005)	$	—	$	159,141	139
	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	$	35,089	$	9	$	(3,403)	$	—	$	31,695	21
Total securities held-to-maturity	$	35,089	$	9	$	(3,403)	$	—	$	31,695	21

9

	December 31, 2023
	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	$	17,012	$	25	$	(213)	$	—	$	16,824	11
U.S. government agency MBS	22,750		364		(480)		—		22,634		14
U.S. government agency CMO	21,850		—		(2,277)		—		19,573		30
State and municipal securities	40,093		—		(3,877)		—		36,216		31
U.S. Treasuries	32,982		—		(2,560)		—		30,422		25
Non-U.S. government agency CMO	13,605		102		(552)		—		13,155		9
Corporate bonds	8,200		—		(1,005)		—		7,195		13
Total securities available-for-sale	$	156,492	$	491	$	(10,964)	$	—	$	146,019	133
	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	$	35,781	$	52	$	(3,103)	$	—	$	32,730	21
Total securities held-to-maturity	$	35,781	$	52	$	(3,103)	$	—	$	32,730	21

Although the Corporation’s investment portfolio overall is in a net unrealized loss position at June 30, 2024, 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.

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:

	June 30, 2024
	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	$	7,348	$	(31)	$	4,019	$	(101)	$	11,367	$	(132)
U.S. government agency MBS	3,577		(90)		8,156		(382)		11,733		(472)
U.S. government agency CMO	7,771		(50)		18,816		(2,214)		26,587		(2,264)
State and municipal securities	1,491		(5)		35,435		(4,293)		36,926		(4,298)
U.S. Treasuries	—		—		30,471		(2,513)		30,471		(2,513)
Non-U.S. government agency CMO	5,402		(22)		5,566		(465)		10,968		(487)
Corporate bonds	—		—		7,362		(839)		7,362		(839)
Total securities available-for-sale	$	25,589	$	(198)	$	109,825	$	(10,807)	$	135,414	$	(11,005)
	Less than 12 Months				12 Months or more				Total
	Fair value		Unrecognized losses		Fair value		Unrecognized losses		Fair value		Unrecognized losses
Securities held-to-maturity:
State and municipal securities	$	1,047	$	(21)	$	29,339	$	(3,382)	$	30,386	$	(3,403)
Total securities held-to-maturity	$	1,047	$	(21)	$	29,339	$	(3,383)	$	30,386	$	(3,403)

10

	December 31, 2023
	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	$	4,981	$	(25)	$	6,195	$	(188)	$	11,176	$	(213)
U.S. government agency MBS	4,864		(35)		8,170		(445)		13,034		(480)
U.S. government agency CMO	2,687		(36)		16,886		(2,241)		19,573		(2,277)
State and municipal securities	—		—		36,216		(3,877)		36,216		(3,877)
U.S. Treasuries	—		—		30,422		(2,560)		30,422		(2,560)
Non-U.S. government agency CMO	1,127		(4)		6,065		(548)		7,192		(552)
Corporate bonds	907		(93)		6,288		(912)		7,195		(1,005)
Total securities available-for-sale	$	14,566	$	(193)	$	110,242	$	(10,771)	$	124,808	$	(10,964)
	Less than 12 Months				12 Months or more				Total
	Fair value		Unrecognized losses		Fair value		Unrecognized losses		Fair value		Unrecognized losses
Securities held-to-maturity:
State and municipal securities	$	1,021	$	(6)	$	29,404	$	(3,097)	$	30,425	$	(3,103)
Total securities held-to-maturity	$	1,021	$	(6)	$	29,404	$	(3,097)	$	30,425	$	(3,103)

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.

	June 30, 2024
	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	32,984		30,471		3,225		3,200
Due after five years through ten years	18,451		17,131		5,775		4,835
Due after ten years	51,602		47,793		26,089		23,660
Subtotal	103,037		95,395		35,089		31,695
Mortgage-related securities	66,714		63,746		—		—
Total	$	169,751	$	159,141	$	35,089	$	31,695

There were no sales of investment securities available for sale for the three and six month ended June 30, 2024. Proceeds from sales of investments for the three and six months ended June 30, 2023 was $13.5 million with $54 thousand in gross losses recognized.

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 and six months ended June 30, 2024 and 2023, we had no significant ACL or provision expense and no charge-offs or recoveries on AFS or HTM securities.

Pledged Securities

As of June 30, 2024 and December 31, 2023, securities having a carrying value of $54.3 million and $60.1 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 with the FHLB.

11

(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)	June 30, 2024		December 31, 2023
Real estate loans:
Commercial mortgage	$	775,298	$	737,863
Home equity lines and loans	83,828		76,287
Residential mortgage	259,469		260,604
Construction	262,624		246,440
Total real estate loans	1,381,219		1,321,194
Commercial and industrial	352,471		302,891
Small business loans	151,458		142,342
Consumer	369		389
Leases, net	97,624		121,632
Total loans and other finance receivables	$	1,983,141	$	1,888,448
Balances included in loans and other finance receivables, net of fees and costs:
Residential mortgage real estate loans accounted under fair value option, at fair value	$	12,900	$	13,726
Residential mortgage real estate loans accounted under fair value option, at amortized cost	15,609		16,198
Unearned lease income included in leases, net	(13,404)		(19,210)
Unamortized net deferred loan origination costs	$	5,394	$	7,358

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.

Nonaccrual and Past Due Loans

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

	June 30, 2024
(dollars in thousands)	30-89 days past due		Current		Total accruing loans and leases		Nonaccrual loans and leases		Total loans portfolio and leases		% Delinquent
Commercial mortgage	$	864	$	774,434	$	775,298	$	—	$	775,298	0.11	%
Home equity lines and loans	136		82,523		82,659		1,169		83,828		1.56
Residential mortgage (1)	3,468		251,233		254,701		4,768		259,469		3.17
Construction	4,945		255,895		260,840		1,784		262,624		2.56
Commercial and industrial	—		339,124		339,124		13,347		352,471		3.79
Small business loans	—		137,185		137,185		14,273		151,458		9.42
Consumer	—		369		369		—		369		—
Leases, net	1,359		93,965		95,324		2,300		97,624		3.75	%
Total	$	10,772	$	1,934,728	$	1,945,500	$	37,641	$	1,983,141	2.44	%

(1) Includes $12.9 million of loans at fair value of which $12.4 million are current, $0 are 30-89 days past due and $451 thousand are nonaccrual.

12

	December 31, 2023
(dollars in thousands)	30-89 days past due		Current		Total accruing loans and leases		Nonaccrual loans and leases		Total loans portfolio and leases		% Delinquent
Commercial mortgage	$	571	$	737,292	$	737,863	$	—	$	737,863	0.08	%
Home equity lines and loans	566		74,684		75,250		1,037		76,287		2.10
Residential mortgage (1)	1,103		254,965		256,068		4,536		260,604		2.16
Construction	—		245,234		245,234		1,206		246,440		0.49
Commercial and industrial	—		287,478		287,478		15,413		302,891		5.09
Small business loans	1,499		131,403		132,902		9,440		142,342		7.69
Consumer	—		389		389		—		389		—
Leases, net	2,197		117,304		119,501		2,131		121,632		3.56	%
Total	$	5,936	$	1,848,749	$	1,854,685	$	33,763	$	1,888,448	2.10	%

(1) Includes $13.7 million of loans at fair value of which $12.9 million are current, $0 are 30-89 days past due and $786 thousand are nonaccrual.

There were no loans in the tables above as of June 30, 2024 or December 31, 2023 that were 90+days past due and still accruing interest.

Subsequent Event

On July 17, 2024 Meridian repurchased, at a discount of $575 thousand, the remaining balance of a commercial loan participation to another bank. The impact of this loan repurchase increased the balance of non-performing loans by $2.1 million and also increased the ACL by approximately the amount of the discount. In addition to the value created by the discount, this transaction will streamline collection and workout efforts.

Foreclosed and Repossessed Assets

At June 30, 2024 and December 31, 2023, there were 4 consumer mortgage loans secured by residential real estate properties (included in loans, net of fees and costs on the Consolidated Balance Sheets) totaling $1.3 million and $937 thousand, 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 tables presents the amortized costs basis of loans and leases on nonaccrual status and loans 90 days or more past due and still accruing, net of fees and costs as of June 30, 2024 and December 31, 2023. As of this date here were no loans 90 days or more past due and still accruing.

	June 30, 2024						December 31, 2023
(dollars in thousands)	Nonaccrual without ACL		Nonaccrual with ACL		Total nonaccrual		Nonaccrual without ACL		Nonaccrual with ACL		Total nonaccrual
Commercial mortgage	$	—	$	—	$	—	$	—	$	—	$	—
Home equity lines and loans	1,169		—		1,169		1,037		—		1,037
Residential mortgage	4,487		281		4,768		4,536		—		4,536
Construction	1,784		—		1,784		1,206		—		1,206
Commercial and industrial	433		12,914		13,347		3,343		12,070		15,413
Small business loans	3,821		10,452		14,273		3,607		5,833		9,440
Leases, net	2,300		—		2,300		2,131		—		2,131
Total	$	13,994	$	23,647	$	37,641	$	15,860	$	17,903	$	33,763

13

Collateral-dependent Loans

The following tables presents the amortized cost basis of non-accruing collateral-dependent loans by class or loans as of June 30, 2024 and December 31, 2023 under the current expected credit loss model:

	June 30, 2024						December 31, 2023
(dollars in thousands)	Real estate		Equipment and other		Total		Real estate		Equipment and other		Total
Commercial mortgage	$	—	$	—	$	—	$	—	$	—	$	—
Home equity lines and loans	1,169		—		1,169		1,037		—		1,037
Residential mortgage	4,768		—		4,768		4,536		—		4,536
Construction	1,784		—		1,784		1,206		—		1,206
Commercial and industrial	1,598		11,749		13,347		1,890		13,523		15,413
Small business loans	11,250		3,023		14,273		6,320		3,120		9,440
Leases, net	—		2,300		2,300		—		2,131		2,131
Total	$	20,569	$	17,072	$	37,641	$	14,989	$	18,774	$	33,763

(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 and six months ended June 30, 2024 and June 30, 2023 under the CECL model in accordance with ASC 326 (as adopted on January 1, 2023):

	Three Months Ended June 30, 2024
(dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (recovery of provision) for credit losses		Ending balance
Commercial mortgage	$	4,179	$	—	$	—	$	(503)	$	3,676
Home equity lines and loans	958		(86)		26		216		1,114
Residential mortgage	1,177		—		—		(118)		1,059
Construction	583		—		—		8		591
Commercial and industrial	5,083		(1,620)		—		1,348		4,811
Small business loans	7,805		(1,392)		64		1,021		7,498
Consumer	1		—		1		(2)		—
Leases, net	3,385		(1,254)		147		676		2,954
Total	$	23,171	$	(4,352)	$	238	$	2,646	$	21,703

	Six Months Ended June 30, 2024
(dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (recovery of provision) for credit losses		Ending balance
Commercial mortgage	$	4,375	$	—	$	—	$	(699)	$	3,676
Home equity lines and loans	998		(86)		27		175		1,114
Residential mortgage	1,020		—		—		39		1,059
Construction	485		—		—		106		591
Commercial and industrial	4,518		(1,828)		2		2,119		4,811
Small business loans	7,005		(1,479)		67		1,905		7,498
Consumer	—		(1)		2		(1)		—
Leases, net	3,706		(3,402)		273		2,377		2,954
Total	$	22,107	$	(6,796)	$	371	$	6,021	$	21,703

14

	Three Months Ended June 30, 2023
(dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (recovery of provision) for credit losses		Ending balance
Commercial mortgage	$	3,475	$	—	$	—	$	(226)	$	3,249
Home equity lines and loans	615		(54)		1		228		790
Residential mortgage	868		—		—		179		1,047
Construction	1,119		—		—		175		1,294
Commercial and industrial	2,733		—		17		(509)		2,241
Small business loans	6,316		(326)		—		878		6,868
Consumer	—		—		1		(1)		—
Leases, net	5,316		(775)		149		63		4,753
Total	$	20,442	$	(1,155)	$	168	$	787	$	20,242

	Six Months Ended June 30, 2023
(dollars in thousands)	Beginning Balance		Adjustment to initially apply ASU No. 2016-13 for CECL		Charge-offs		Recoveries		Provision (Reversal)		Ending balance
Commercial mortgage	$	4,095	$	(526)	$	—	$	—	$	(320)	$	3,249
Home equity lines and loans	188		439		(87)		3		247		790
Residential mortgage	948		17		—		—		82		1,047
Construction	3,075		(1,763)		—		—		(18)		1,294
Commercial and industrial	4,012		(1,023)		—		56		(804)		2,241
Small business loans	4,909		1,110		(326)		—		1,175		6,868
Consumer	3		(3)		—		2		(2)		—
Leases, net	1,598		3,345		(2,239)		152		1,897		4,753
Total	$	18,828	$	1,596	$	(2,652)	$	213	$	2,257	$	20,242

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 June 30,				Six Months Ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Provision for credit losses - funded	$	2,646	$	787	$	6,021	$	2,257
Provision (recovery) for credit losses - unfunded	34		(82)		(475)		(153)
Total provision for credit losses	$	2,680	$	705	$	5,546	$	2,104

15

Allowance Allocated by Portfolio Segment

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

	June 30, 2024
	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	$	—	$	775,298	$	775,298
Home equity lines and loans	—		1,114		1,114		1,169		82,659		83,828
Residential mortgage	2		1,057		1,059		4,317		242,252		246,569
Construction	—		591		591		1,784		260,840		262,624
Commercial and industrial	3,422		1,389		4,811		13,347		339,124		352,471
Small business loans	3,729		3,769		7,498		14,273		137,185		151,458
Consumer	—		—		—		—		369		369
Leases, net	—		2,954		2,954		2,300		95,324		97,624
Total (1)	$	7,153	$	14,550	$	21,703	$	37,190	$	1,933,051	$	1,970,241

(1) Excludes deferred fees and loans carried at fair value.

	December 31, 2023
	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	$	—	$	4,375	$	4,375	$	—	$	737,863	$	737,863
Home equity lines and loans	—		998		998		1,037		75,250		76,287
Residential mortgage	—		1,020		1,020		3,750		243,128		246,878
Construction	—		485		485		1,206		245,234		246,440
Commercial and industrial	3,691		827		4,518		15,413		287,478		302,891
Small business loans	2,805		4,200		7,005		9,440		132,902		142,342
Consumer	—		—		—		—		389		389
Leases, net	—		3,706		3,706		2,131		119,501		121,632
Total (1)	$	6,496	$	15,611	$	22,107	$	32,977	$	1,841,745	$	1,874,722

(1) Excludes deferred fees and loans carried at fair value.

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 – Loans 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.

•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.

16

The following tables detail the carrying value of loans and leases by portfolio segment based on the credit quality indicators used to

determine the allowance for credit losses at the dates indicated:

	June 30, 2024												Revolving Loans Converted to Term Loans		Revolving Loans		Total
	Term Loans
(dollars in thousands)	2024		2023		2022		2021		2020		Prior
Commercial mortgage
Pass/Watch	$	52,276	$	107,159	$	160,661	$	154,167	$	90,830	$	188,101	$	511	$	737	$	754,442
Special Mention	—		—		4,432		—		4,856		8,248		667		—		18,203
Substandard	—		200		—		—		—		2,453		—		—		2,653
Total	$	52,276	$	107,359	$	165,093	$	154,167	$	95,686	$	198,802	$	1,178	$	737	$	775,298
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Construction
Pass/Watch	$	42,396	$	77,671	$	58,161	$	14,347	$	24,890	$	8,649	$	123	$	29,184	$	255,421
Special Mention	—		—		—		1,352		631		—		—		3,435		5,418
Substandard	—		—		—		67		—		1,718		—		—		1,785
Total	$	42,396	$	77,671	$	58,161	$	15,766	$	25,521	$	10,367	$	123	$	32,619	$	262,624
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial
Pass/Watch	$	61,487	$	24,256	$	21,417	$	22,502	$	9,555	$	27,767	$	—	$	149,245	$	316,229
Special Mention	—		—		2,683		—		—		1,351		—		5,739		9,773
Substandard	—		—		3,940		2,331		—		5,552		—		14,646		26,469
Total	$	61,487	$	24,256	$	28,040	$	24,833	$	9,555	$	34,670	$	—	$	169,630	$	352,471
Year-to-date gross charge-offs	$	—	$	(500)	$	—	$	—	$	—	$	(1,324)	$	—	$	(4)	$	(1,828)
Small business loans
Pass/Watch	$	17,700	$	28,812	$	27,700	$	32,174	$	9,893	$	7,132	$	—	$	13,432	$	136,843
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		409		2,224		6,500		3,890		—		—		1,592		14,615
Total	$	17,700	$	29,221	$	29,924	$	38,674	$	13,783	$	7,132	$	—	$	15,024	$	151,458
Year-to-date gross charge-offs	$	—	$	—	$	(772)	$	(140)	$	(75)	$	—	$	—	$	(492)	$	(1,479)
Total by risk rating
Pass/Watch	$	173,859	$	237,898	$	267,939	$	223,190	$	135,168	$	231,649	$	634	$	192,598	$	1,462,935
Special Mention	—		—		7,115		1,352		5,487		9,599		667		9,174		33,394
Substandard	—		609		6,164		8,898		3,890		9,723		—		16,238		45,522
Total	$	173,859	$	238,507	$	281,218	$	233,440	$	144,545	$	250,971	$	1,301	$	218,010	$	1,541,851
Total year-to-date gross charge-offs	$	—	$	(500)	$	(772)	$	(140)	$	(75)	$	(1,324)	$	—	$	(496)	$	(3,307)

17

	December 31, 2023												Revolving Loans Converted to Term Loans		Revolving Loans		Total
	Term Loans
(dollars in thousands)	2023		2022		2021		2020		2019		Prior
Commercial mortgage
Pass/Watch	$	106,341	$	160,302	$	158,647	$	97,535	$	56,382	$	133,349	$	511	$	423	$	713,490
Special Mention	—		—		—		4,425		4,341		9,975		667		—		19,408
Substandard	200		—		571		—		1,635		2,233		—		326		4,965
Total	$	106,541	$	160,302	$	159,218	$	101,960	$	62,358	$	145,557	$	1,178	$	749	$	737,863
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Construction
Pass/Watch	$	67,776	$	88,737	$	21,793	$	27,336	$	2,307	$	2,093	$	123	$	25,976	$	236,141
Special Mention	—		—		1,329		—		511		4,329		—		2,924		9,093
Substandard	—		—		—		—		—		1,206		—		—		1,206
Total	$	67,776	$	88,737	$	23,122	$	27,336	$	2,818	$	7,628	$	123	$	28,900	$	246,440
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial
Pass/Watch	$	26,314	$	38,748	$	24,523	$	8,449	$	4,148	$	33,726	$	—	$	131,304	$	267,212
Special Mention	500		9		—		—		—		1,361		—		6,440		8,310
Substandard	—		—		2,906		—		300		9,469		—		14,694		27,369
Total	$	26,814	$	38,757	$	27,429	$	8,449	$	4,448	$	44,556	$	—	$	152,438	$	302,891
Year-to-date gross charge-offs	$	(209)	$	(55)	$	—	$	(2)	$	—	$	—	$	—	$	—	$	(266)
Small business loans
Pass/Watch	$	35,764	$	26,621	$	37,278	$	11,687	$	6,672	$	920	$	—	$	12,507	$	131,449
Special Mention	—		—		—		909		—		—		—		314		1,223
Substandard	49		1,523		5,090		2,122		—		—		—		886		9,670
Total	$	35,813	$	28,144	$	42,368	$	14,718	$	6,672	$	920	$	—	$	13,707	$	142,342
Year-to-date gross charge-offs	$	—	$	—	$	—	$	(11)	$	(912)	$	—	$	—	$	(565)	$	(1,488)
Total by risk rating
Pass/Watch	$	236,195	$	314,408	$	242,241	$	145,007	$	69,509	$	170,088	$	634	$	170,210	$	1,348,292
Special Mention	500		9		1,329		5,334		4,852		15,665		667		9,678		38,034
Substandard	249		1,523		8,567		2,122		1,935		12,908		—		15,906		43,210
Total	$	236,944	$	315,940	$	252,137	$	152,463	$	76,296	$	198,661	$	1,301	$	195,794	$	1,429,536
Total year-to-date gross charge-offs	$	(209)	$	(55)	$	—	$	(13)	$	(912)	$	—	$	—	$	(565)	$	(1,754)

The Corporation had no loans with a risk rating of Doubtful included within recorded investment in loans and leases held for investment at June 30, 2024 and December 31, 2023.

18

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

	June 30, 2024												Revolving Loans		Total
	Term Loans
(dollars in thousands)	2024		2023		2022		2021		2020		Prior
Home equity lines and loans
Performing	$	455	$	338	$	779	$	214	$	341	$	3,610	$	76,442	$	82,179
Nonperforming	—						91						1,558		1,649
Total	$	455	$	338	$	779	$	305	$	341	$	3,610	$	78,000	$	83,828
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	(86)	$	(86)
Residential mortgage (1)
Performing	$	10,314	$	47,907	$	146,295	$	20,352	$	6,404	$	10,979	$	—	$	242,251
Nonperforming	—		—		2,177		—		870		1,271		—		4,318
Total	$	10,314	$	47,907	$	148,472	$	20,352	$	7,274	$	12,250	$	—	$	246,569
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer
Performing	$	—	$	53	$	27	$	—	$	—	$	253	$	36	$	369
Nonperforming	—		—		—		—		—		—		—		—
Total	$	—	$	53	$	27	$	—	$	—	$	253	$	36	$	369
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	(1)	$	(1)
Leases, net
Performing	$	240	$	19,152	$	45,406	$	23,510	$	7,024	$	—	$	—	$	95,332
Nonperforming	—		471		929		736		156		—		—		2,292
Total	$	240	$	19,623	$	46,335	$	24,246	$	7,180	$	—	$	—	$	97,624
Year-to-date gross charge-offs	$	—	$	(434)	$	(2,414)	$	(436)	$	(118)	$	—	$	—	$	(3,402)
Total by Payment Performance
Performing	$	11,009	$	67,450	$	192,507	$	44,076	$	13,769	$	14,842	$	76,478	$	420,131
Nonperforming	—		471		3,106		827		1,026		1,271		1,558		8,259
Total	$	11,009	$	67,921	$	195,613	$	44,903	$	14,795	$	16,113	$	78,036	$	428,390
Total year-to-date gross charge-offs	$	—	$	(434)	$	(2,414)	$	(436)	$	(118)	$	—	$	(87)	$	(3,489)
(1) Excludes $12.9 million of loans at fair value.

19

	December 31, 2023												Revolving Loans		Total
	Term Loans
(dollars in thousands)	2023		2022		2021		2020		2019		Prior
Home equity lines and loans
Performing	$	343	$	795	$	314	$	352	$	2,191	$	2,295	$	68,600	$	74,890
Nonperforming	—		—		—		—		—		—		1,397		1,397
Total	$	343	$	795	$	314	$	352	$	2,191	$	2,295	$	69,997	$	76,287
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	(33)	$	—	$	(54)	$	(87)
Residential mortgage (1)
Performing	$	48,576	$	154,219	$	22,237	$	6,260	$	456	$	11,380	$	—	$	243,128
Nonperforming	—		1,350		—		1,043		—		1,357		—		3,750
Total	$	48,576	$	155,569	$	22,237	$	7,303	$	456	$	12,737	$	—	$	246,878
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer
Performing	$	39	$	35	$	—	$	—	$	32	$	234	$	49	$	389
Nonperforming	—		—		—		—		—		—		—		—
Total	$	39	$	35	$	—	$	—	$	32	$	234	$	49	$	389
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	(2)	$	(2)
Leases, net
Performing	$	23,054	$	55,940	$	30,876	$	9,718	$	—	$	—	$	—	$	119,588
Nonperforming	263		1,194		368		219		—		—		—		2,044
Total	$	23,317	$	57,134	$	31,244	$	9,937	$	—	$	—	$	—	$	121,632
Year-to-date gross charge-offs	$	(128)	$	(2,165)	$	(1,450)	$	(290)	$	—	$	—	$	—	$	(4,033)
Total by Payment Performance
Performing	$	72,012	$	210,989	$	53,427	$	16,330	$	2,679	$	13,909	$	68,649	$	437,995
Nonperforming	263		2,544		368		1,262		—		1,357		1,397		7,191
Total	$	72,275	$	213,533	$	53,795	$	17,592	$	2,679	$	15,266	$	70,046	$	445,186
Total year-to-date gross charge-offs	$	(128)	$	(2,165)	$	(1,450)	$	(290)	$	(33)	$	—	$	(56)	$	(4,122)

(1) Excludes $13.7 million of fair value loans.

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 of loans, information regarding accruing and nonaccrual modified loans to borrowers experiencing financial difficulty during the three and six months ended June 30, 2024 and 2023.

20

	Three Months Ended June 30, 2024							Three Months Ended June 30, 2023
	Number of Loans	Amortized Cost Basis		% of Total Class of Financing Receivable		Related Reserve		Number of Loans	Amortized Cost Basis		% of Total Class of Financing Receivable		Related Reserve
(dollars in thousands)
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty:
Commercial & industrial	3	$	1,402	0.4	%	$	—	1	$	3,233	1.0	%	$	—
Total	3	$	1,402			$	—	1	$	3,233			$	—
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans	1	$	1,195	0.8	%	$	15	—	$	—	—	%	$	—
Commercial & industrial	4	1,605		0.5	%	—		1	1,406		0.5	%	422
Total	5	$	2,800			$	15	1	$	1,406			$	422

	Six Months Ended June 30, 2024							Six Months Ended June 30, 2023
	Number of Loans	Amortized Cost Basis		% of Total Class of Financing Receivable		Related Reserve		Number of Loans	Amortized Cost Basis		% of Total Class of Financing Receivable		Related Reserve
(dollars in thousands)
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans	3	$	719	0.5	%	$	—	—	$	—	—	%	$	—
Commercial & industrial	5	2,592		0.7	%	—		1	3,233		1.0	%	—
Total	8	$	3,311			$	—	1	$	3,233			$	—
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans	6	$	4,029	2.7	%	$	1,024	—	$	—	—	%	$	—
Commercial & industrial	4	1,605		0.5	%	—		1	1,406		0.5	%	422
Total	10	$	5,634			$	1,024	1	$	1,406			$	422

The following presents, by class of loans, information regarding accruing and nonaccrual modified loans to borrowers experiencing financial difficulty during the three and six months ended June 30, 2024 and 2023.

	Three Months Ended June 30, 2024		Three Months Ended June 30, 2023
	Number of Loans	Financial Effect	Number of Loans	Financial Effect
(dollars in thousands)
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty:
Commercial & industrial	3	Extend maturity date and payment concession	1	Extend maturity
Total	3		1
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans	1	Extend maturity date and allow additional lender funding	—
Commercial & industrial	4	Extend maturity date	1	Extend term and allow additional lender funding
Total	5		1

	Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
	Number of Loans	Financial Effect	Number of Loans	Financial Effect
(dollars in thousands)
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans	3	Extend maturity date	—
Commercial & industrial	5	Extend maturity date and allow additional lender funding	1	Extend maturity
Total	8		1
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans	6	Extend maturity date	—
Commercial & industrial	4	Extend maturity date and allow additional lender funding	1	Extend term and allow additional lender funding
Total	10		1

21

There were 8 and 2 modifications granted to borrowers experiencing financial difficulty for the three months ended June 30, 2024 and June 30, 2023, respectively. There were 11 and 2 modifications granted to borrowers experiencing financial difficulty for the six months ended June 30, 2024 and June 30, 2023, respectively. The increase in assistance provided to small business loan customers experiencing financial difficulty is largely due to the elevated interest rate environment we continue to experience as the majority of our small business loans carry a variable interest rate. In accordance with the SBA's SOP 50-57-3 covering loan servicing, we work with such customers to help determine whether temporary payment relief would help to improve their cash flows in the near future.

There was one loan that had a payment default during the three and six months ended June 30, 2024 and zero during the three and six months ended June 30, 2023, that were modified in the 12 months before default to borrowers experiencing financial difficulty. There were no commitments to lend additional funds to the borrowers experiencing financial difficulty that had modifications during the three and six months ended June 30, 2024 and June 30, 2023.

(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 $947 thousand and $0 in Federal funds purchased at June 30, 2024 and December 31, 2023. The Corporation also has a facility with the Federal Reserve Bank discount window of $11.1 million. This facility is fully secured by investment securities and pledged loans. There were no borrowings under this at June 30, 2024 and December 31, 2023. The Corporation's facility with the Federal Reserve’s BTFP in the amount of $33 million expired in March 2024.

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

(dollars in thousands)	Maturity date	Interest rate	June 30, 2024		December 31, 2023
FHLB Open Repo Plus Weekly	06/16/2025	5.67%	$	95,080	$	104,792
FRB BTFP Advances	03/29/2024	4.76%	—		33,000
Fed Funds Overnight Borrowing	7/01/2024	6.50%	947		—
ACBB Holding Company Revolving LOC	6/25/2025	8.75%	4,000		—
FHLB Mid-term Repo Fixed	9/30/2024	4.60%	3,432		3,432
FHLB Mid-term Repo Fixed	10/25/2024	5.03%	8,097		—
FHLB Mid-term Repo Fixed	7/31/2024	5.68%	15,625		—
FHLB Mid-term Repo Fixed	1/27/2025	4.85%	8,000		—
FHLB Mid-term Repo Fixed	2/24/2025	5.35%	7,813		—
Total Short-Term Borrowings			$	142,994	$	141,224

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

(dollars in thousands)	Maturity date	Interest rate	June 30, 2024		December 31, 2023
FHLB Mid-term Repo Fixed	12/22/2025	4.23%	$	8,935	$	8,935
FHLB Mid-term Repo Fixed	5/20/2027	4.70%	10,594		—
FHLB Mid-term Repo Fixed	10/14/2025	5.16%	9,492		9,492
FHLB Mid-term Repo Fixed	7/14/2026	4.57%	15,245		15,245
Total Long-Term Borrowings			$	44,266	$	33,672

The FHLB has also issued $157.2 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 2024.

The Corporation has a maximum borrowing capacity with the FHLB of $666.6 million as of June 30, 2024 and $626.8 million as of December 31, 2023. 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.

22

(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.

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 $917.0 million and $945.2 million of residential mortgage loans as of June 30, 2024 and December 31, 2023, respectively. During the three and six months ended June 30, 2024, the Corporation recognized servicing fee income of $578 thousand and $1.2 million, respectively, compared to $618 thousand and $1.3 million, respectively, during the three and six months ended June 30, 2023.

Changes in the MSR balance are summarized as follows:

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Balance at beginning of the period	$	8,314	$	9,573	$	8,622	$	9,942
Servicing rights capitalized	22		—		32		—
Amortization of servicing rights	(310)		(335)		(628)		(706)
Change in valuation allowance - recovery	—		—		—		2
Balance at end of the period	$	8,026	$	9,238	$	8,026	$	9,238

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 June 30, 2024, the key assumptions used to determine the fair value of the Corporation’s MSRs included a lifetime constant prepayment rate equal to 8.04% and a discount rate equal to 9.50%. At December 31, 2023, the key assumptions used to determine the fair value of the Corporation’s MSRs included a lifetime constant prepayment rate equal to 8.57% and a discount rate equal to 9.50%. Due in part to market volatility as interest rates increased, the prepayment speed assumption has decreased from December 31, 2023 to June 30, 2024.

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)	June 30, 2024			December 31, 2023
Fair value of residential mortgage servicing rights	$	10,939		$	11,221
Weighted average life (months)	40			28
Prepayment speed	8.04		%	8.57		%
Impact on fair value:
10% adverse change	$	(486)		$	(506)
20% adverse change	(934)			(973)
Discount rate	9.50		%	9.50		%
Impact on fair value:
10% adverse change	$	(560)		$	(415)
20% adverse change	(1,063)			(799)

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 articular 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.

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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 servicing asset. The Corporation serviced $243.1 million and $225.8 million of SBA loans, as of June 30, 2024 and December 31, 2023, respectively.

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

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Balance at beginning of the period	$	3,259	$	2,552	$	3,127	$	2,404
Servicing rights capitalized	256		512		453		726
Amortization of servicing rights	(219)		(252)		(460)		(447)
Change in valuation allowance	19		143		195		272
Balance at end of the period	$	3,315	$	2,955	$	3,315	$	2,955

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

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Valuation allowance, beginning of period	$	(92)	$	(235)	$	(268)	$	(364)
Impairment	—		—		—		—
Recovery	19		143		195		272
Valuation allowance, end of period	$	(73)	$	(92)	$	(73)	$	(92)

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 June 30, 2024, 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 16.47% and a discount rate equal to 13.05%. At December 31, 2023, 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 14.70% and a discount rate equal to 14.66%.

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)	June 30, 2024			December 31, 2023
Fair value of SBA loan servicing rights	$	3,644		$	3,376
Weighted average life (years)	3.2			3.5
Prepayment speed	16.47		%	14.70		%
Impact on fair value:
10% adverse change	$	(158)		$	(125)
20% adverse change	(144)			(241)
Discount rate	13.05		%	14.66		%
Impact on fair value:
10% adverse change	$	(81)		$	(74)
20% adverse change	(159)			(145)

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

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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.

(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.

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.

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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:

	June 30, 2024
(dollars in thousands)	Total		Level 1		Level 2		Level 3
Assets
Securities available for sale:
U.S. asset backed securities	$	19,765	$	—	$	19,765	$	—
U.S. government agency MBS	21,902		—		21,902		—
U.S. government agency CMO	26,587		—		26,587		—
State and municipal securities	36,926		—		36,926		—
U.S. Treasuries	30,471		30,471		—		—
Non-U.S. government agency CMO	15,257		—		15,257
Corporate bonds	8,233		—		8,233		—
Equity investments	2,088		—		2,088		—
Mortgage loans held for sale	54,278		—		54,278		—
Mortgage loans held for investment	12,900		—		12,900		—
Interest rate lock commitments	451		—		—		451
Forward commitments	16		—		16		—
Customer derivatives - interest rate swaps	3,658		—		3,658		—
Interest rate swaps	613		—		613		—
Total	$	233,145	$	30,471	$	202,223	$	451
Liabilities
Interest rate lock commitments	$	52	$	—	$	—	$	52
Forward commitments	14		—		14		—
Customer derivatives - interest rate swaps	3,649		—		3,649		—
Risk Participation Agreements	4		—		4		—
Total	$	3,719	$	—	$	3,667	$	52

	December 31, 2023
(dollars in thousands)	Total		Level 1		Level 2		Level 3
Assets
Securities available for sale:
U.S. asset backed securities	$	16,824	$	—	$	16,824	$	—
U.S. government agency MBS	22,634		—		22,634		—
U.S. government agency CMO	19,573		—		19,573		—
State and municipal securities	36,216		—		36,216		—
U.S. Treasuries	30,422		30,422		—		—
Non-U.S. government agency CMO	13,155		—		13,155		—
Corporate bonds	7,195		—		7,195		—
Equity investments	2,121		—		2,121		—
Mortgage loans held for sale	24,816		—		24,816		—
Mortgage loans held for investment	13,726		—		13,726		—
Interest rate lock commitments	214		—		—		214
Customer derivatives - interest rate swaps	3,528		—		3,528		—
Total	$	190,424	$	30,422	$	159,788	$	214

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Liabilities
Interest rate lock commitments	$	17	$	—	$	—	$	17
Forward commitments	41		—		41		—
Customer derivatives - interest rate swaps	3,544		—		3,544		—
Risk Participation Agreements	11		—		11		—
Total	$	3,613	$	—	$	3,596	$	17

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

(dollars in thousands)	June 30, 2024		December 31, 2023
Mortgage servicing rights	$	8,026	$	8,621
SBA loan servicing rights	3,315		3,127
Individually evaluated loans (1)
Commercial and industrial	9,942		9,818
Small business loans	6,348		3,134
Total	$	27,631	$	24,700

(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 increase in individually evaluated commercial and industrial loans noted above was due to reassessing how we evaluate the impairment on a loan relationship to now be based on the fair value of collateral.

The following table details the valuation techniques for Level 3 individually evaluated loans.

(dollars in thousands)	Fair Value		Valuation Technique	Significant Unobservable Input	Range of Inputs
June 30, 2024	$	16,290	Appraisal of collateral	Management adjustments on appraisals for property type and recent activity	2%-33% discount
December 31, 2023	12,952		Appraisal of collateral	Management adjustments on appraisals for property type and recent activity	2%-33% discount

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.

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 Allowance policy.

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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	June 30, 2024				December 31, 2023
(dollars in thousands)		Carrying amount		Fair value		Carrying amount		Fair value
Financial assets:
Cash and cash equivalents	Level 1	$	24,058	$	24,058	$	56,697	$	56,697
Mortgage loans held for sale	Level 2	54,278		54,278		24,816		24,816
Loans receivable, net of the allowance for credit losses	Level 3	1,975,635		1,905,722		1,882,080		1,832,558
Mortgage loans held for investment	Level 2	12,900		12,900		13,726		13,726
Financial liabilities:
Deposits	Level 2	$	1,915,436	$	1,912,200	$	1,823,462	$	1,834,700
Borrowings	Level 2	187,260		196,300		174,896		176,400
Subordinated debentures	Level 2	49,897		48,732		49,836		50,223

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 June 30,				Six months ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Balance at beginning of the period	$	288	$	139	$	214	$	87
Increase in value	163		122		237		174
Balance at end of the period	$	451	$	261	$	451	$	261

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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
June 30, 2024	$	451	Market comparable pricing	Pull through	1 - 99%	83.31%
December 31, 2023	214		Market comparable pricing	Pull through	1 - 99%	79.48

(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 received 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 and six months ended June 30, 2024, approximately $133 thousand and $896 thousand respectively, net of tax, is recorded in total comprehensive income as unrealized gains. For the three and six months ended June 30, 2023, approximately $338 thousand respectively, net of tax, is recorded in total comprehensive income as unrealized gains. 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 June 30, 2024. At June 30, 2024 and December 31, 2023, the combined notional amount of the interest rate swaps was $75 million and $75 million, respectively, and the fair value was an asset of $613 thousand and a liability of $539 thousand, respectively.

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.

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

		June 30, 2024				December 31, 2023
(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	$	70,244	$	451	$	33,735	$	214
Negative fair values	Other liabilities	17,061		(52)		5,399		(17)
Total		$	87,305	$	399	$	39,134	$	197
Forward Commitments
Positive fair values	Other assets	$	3,750	$	16	$	—	$	—
Negative fair values	Other liabilities	4,750		(14)		4,250		(41)
Total		$	8,500	$	2	$	4,250	$	(41)
Customer Derivatives - Interest Rate Swaps
Positive fair values	Other assets	$	49,633	$	3,658	$	50,593	$	3,528
Negative fair values	Other liabilities	49,633		(3,649)		50,593		(3,544)
Total		$	99,266	$	9	$	101,186	$	(17)
Customer Derivatives - Risk Participation Agreements
Positive fair values	Other assets	$	—	$	—	$	—	$	—
Negative fair values	Other liabilities	7,020		(4)		7,082		(11)
Total		$	7,020	$	(4)	$	7,082	$	(11)
Interest Rate Swaps
Positive fair values	Other assets	$	75,000	$	613	$	—	$	—
Negative fair values	Other liabilities	—		—		75,000		(539)
Total		$	75,000	$	613	$	75,000	$	(539)
Total derivative financial instruments		$	277,091	$	1,019	$	226,652	$	(410)

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.

The following table presents a summary of the fair value gains and (losses) on derivative financial instruments:

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Interest Rate Lock Commitments	$	195	$	146	$	202	$	109
Forward Commitments	2		13		43		13
Customer Derivatives - Interest Rate Swaps	5		14		26		(14)
Customer Derivatives - Risk Participation Agreements	1		9		7		5
Interest Rate Swaps	176		435		1,152		435
Net fair value gains (losses) on derivative financial instruments	$	379	$	617	$	1,430	$	548

Net realized losses on derivative hedging activities were $63 thousand and $82 thousand for the three and six months ended June 30, 2024, respectively, and $1 thousand for the three and six months ended June 30, 2023, respectively, and are included in non-interest income in the consolidated statements of income.

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(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 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.

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. The unit generates non-interest income through advisory fees.

Meridian’s mortgage banking segment (“Mortgage”) consists of 8 loan production offices throughout suburban Philadelphia and Maryland. 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 net hedging gains (losses), if any.

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 June 30, 2024								Three Months Ended June 30, 2023
(Dollars in thousands)	Bank		Wealth		Mortgage		Total		Bank		Wealth		Mortgage		Total
Net interest income	$	16,784	$	36	$	26	$	16,846	$	17,102	$	(29)	$	25	$	17,098
Provision for credit losses	2,680		—		—		2,680		705		—		—		705
Net interest income after provision	14,104		36		26		14,166		16,397		(29)		25		16,393
Non-interest Income
Mortgage banking income	67		—		5,353		5,420		81		—		4,969		5,050
Wealth management income	—		1,444		—		1,444		—		1,235		—		1,235
SBA loan income	785		—		—		785		1,767		—		—		1,767
Net change in fair values	6		—		144		150		23		—		(258)		(235)
Net loss on hedging activity	—		—		(63)		(63)		—		—		(1)		(1)
Other	815		—		693		1,508		637		—		671		1,308
Non-interest income	1,673		1,444		6,127		9,244		2,508		1,235		5,381		9,124
Non-interest expense	12,606		804		5,608		19,018		12,325		889		6,401		19,615
Income (loss) before income taxes	$	3,171	$	676	$	545	$	4,392	$	6,580	$	317	$	(995)	$	5,902
Total Assets	$	2,248,950	$	10,347	$	92,287	$	2,351,584	$	2,143,278	$	8,485	$	55,114	$	2,206,877

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	Segment Information
	Six Months Ended June 30, 2024								Six Months Ended June 30, 2023
(Dollars in thousands)	Bank		Wealth		Mortgage		Total		Bank		Wealth		Mortgage		Total
Net interest income	$	33,376	$	30	$	49	$	33,455	$	34,721	$	3	$	51	$	34,775
Provision for credit losses	5,546		—		—		5,546		2,104		—		—		2,104
Net interest income after provision	27,830		30		49		27,909		32,617		3		51		32,671
Non-interest Income
Mortgage banking income	155		—		8,899		9,054		139		—		8,183		8,322
Wealth management income	1		2,760		—		2,761		—		2,431		—		2,431
SBA loan income	1,771		—		—		1,771		2,480		—		—		2,480
Net change in fair values	34		—		14		48		(8)		—		(180)		(188)
Net loss on hedging activity	—		—		(82)		(82)		—		—		(1)		(1)
Other	1,589		—		2,087		3,676		1,327		—		1,391		2,718
Non-interest income	3,550		2,760		10,918		17,228		3,938		2,431		9,393		15,762
Non-interest expense	24,669		1,636		10,887		37,192		23,024		1,877		12,503		37,404
Income (loss) before income taxes	$	6,711	$	1,154	$	80	$	7,945	$	13,531	$	557	$	(3,059)	$	11,029
Total Assets	$	2,248,950	$	10,347	$	92,287	$	2,351,584	$	2,143,278	$	8,485	$	55,114	$	2,206,877

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 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, 2023 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; cyber-security concerns; rapid technological developments and changes; 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; 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, 2023 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 2023 Annual Form 10-K. The SEC defines "critical accounting policies" as those that require application of management's most difficult, subjective or 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. See Note 1, "Summary of Significant Accounting Policies" for additional information on the adoption of ASC 326, which changes the methodology under which management calculates its reserve for loans and leases, now referred to as the

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allowance for credit losses. 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 June 30, 2024 compared to December 31, 2023 and the results of operations for the three and six months ended June 30, 2024 compared to the same period in 2023. More detailed information related to these highlights can be found in the sections that follow.

Changes in Financial Condition - June 30, 2024 Compared to December 31, 2023

•Total assets increased $105.4 million, or 4.7%, to $2.4 billion as of June 30, 2024.

•Portfolio loans increased $94.7 million, or 5.0%, to $2.0 billion as of June 30, 2024.

•Mortgage loans held for sale increased $29.5 million, or 118.7%, to $54.3 million as of June 30, 2024.

•Total deposits increased $92.0 million or 5.0% to $1.9 billion as of June 30, 2024.

•Non-interest bearing deposits decreased $15.2 million, or 6.4%, to $224.0 million as of June 30, 2024.

•The Corporation returned $2.8 million of capital to Meridian shareholders during the six months ended June 30, 2024 through a $0.125 dividend per quarter.

Three Month Results of Operations - June 30, 2024 Compared to the Same Period in 2023

•Net income was $3.3 million, or $0.30 per diluted share, down $1.3 million, or 28.4%, driven by an increase in interest expense and the provision for credit losses, partially offset by increases in interest income.

•The return on average assets and return on average equity were 0.58% and 8.25%, respectively, for the second quarter 2024, compared to 0.86% and 12.08%, respectively, for the second quarter 2023.

•Net interest margin decreased to 3.06% from 3.33% due to the impact of deposit and borrowing costs outpacing the repricing of interest earnings assets, mainly loans.

•The overall provision for credit losses increased $2.0 million when comparing the second quarter 2024 to the second quarter 2023. The provision increase was largely due to provisioning for loan growth and increased non-performing loans.

•Non-interest income increased $120 thousand, or 1.3%, to $9.2 million driven by a $370 thousand increase in mortgage banking income, $209 thousand of an increase in wealth management fee income, and an increase of $124 thousand in other income, partially offset by a $982 thousand decrease in SBA loan income.

•Non-interest expense decreased $597 thousand, or 3.0%, to $19.0 million due to a $715 thousand decrease in salaries and employee benefits, along with a $102 thousand decrease in advertising expense, and a $175 thousand decrease in data processing and software expense, partially offset by an increase of $251 thousand in other non-interest expense.

Six Month Results of Operations - June 30, 2024 Compared to the Same Period in 2023

•Net income was $6.0 million, or $0.54 per diluted share, down $2.7 million, or 30.7%, driven by an increase in interest expense and the provision for credit losses, partially offset by increases in interest income and non-interest income.

•The return on average assets and return on average equity were 0.53% and 7.50%, respectively, for the six months ended June 30, 2024, compared to 0.82% and 11.37%, respectively, for the six months ended June 30, 2023

•Net interest margin decreased to 3.08% from 3.46% due to the impact of deposit and borrowing costs outpacing the repricing of interest earnings assets, mainly loans.

•The overall provision for credit losses increased $3.4 million when comparing the six months ended June 30, 2024 to June 30, 2023. The provision increase was largely due to provisioning for loan growth and higher level of non-performing loans.

•Non-interest income increased $1.5 million, or 9.3%, to $17.2 million driven by a $732 thousand increase in mortgage banking income, a $330 thousand of an increase in wealth management fee income, and increase of $883 thousand in other income, partially offset by a $709 thousand decrease in SBA loan income.

•Non-interest expense decreased $212 thousand, or 0.6%, to $37.2 million due to a decrease of $1.2 million in salaries and employee benefits and a $215 thousand decrease in advertising expense, partially offset by an increase of $444 thousand in other expenses and an increase of $700 thousand in professional fees.

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Key Performance Ratios

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

	Three months ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
Return on average assets, annualized	0.58		%	0.86		%	0.53		%	0.82		%
Return on average equity, annualized	8.25		%	12.08		%	7.50		%	11.37		%
Net interest margin (tax effected yield)	3.06		%	3.33		%	3.08		%	3.46		%
Basic earnings per share	$	0.30		$	0.42		$	0.54		$	0.78
Diluted earnings per share	$	0.30		$	0.41		$	0.54		$	0.75

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

(dollars in thousands, except per share amounts)	June 30, 2024			December 31, 2023
Book value per common share	$	14.51		$	14.13
Tangible book value per common share (1)	$	14.17		$	13.78
Allowance as a percentage of loans and leases held for investment	1.09		%	1.17		%
Allowance as a percentage of loans and leases held for investment (excl. loans at fair value) (1)	1.10		%	1.17		%
Tier I capital to risk weighted assets	7.62		%	7.90		%
Tangible common equity to tangible assets ratio (1)	6.76		%	6.87		%
Loans and other finance receivables, net of fees and costs	$	1,988,535		$	1,895,806
Total assets	$	2,351,584		$	2,246,193
Total stockholders’ equity	$	162,382		$	158,022

(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 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 leases;

•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, information technology, 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 table below present a summary for the three and six months ended June 30, 2024 and 2023, 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 June 30,
(dollars in thousands)	2024						2023
	Average Balance		Interest Income/ Expense		Yields/ Rates		Average Balance		Interest Income/ Expense		Yields/ Rates
Assets:
Cash and cash equivalents	$	24,423	$	330	5.43	%	$	21,425	$	275	5.15	%
Federal funds sold	84		1		4.79		222		3		5.42
Investment securities - taxable	133,214		1,324		4.00		114,993		992		3.46
Investment securities - tax exempt (1)	56,821		403		2.85		59,143		426		2.89
Loans held for sale	34,895		572		6.59		27,121		407		6.02
Loans held for investment (1)	1,972,740		35,916		7.32		1,847,736		31,810		6.91
Total loans	2,007,635		36,488		7.31		1,874,857		32,217		6.89
Total interest-earning assets	2,222,177		38,546		6.98	%	2,070,640		33,913		6.57	%
Noninterest earning assets	97,118						95,935
Total assets	$	2,319,295					$	2,166,575
Liabilities and stockholders' equity:
Interest-bearing demand deposits	$	132,987	$	1,279	3.87	%	$	203,605	$	1,840	3.62	%
Money market and savings deposits	785,351		8,265		4.23		651,816		5,371		3.31
Time deposits	772,576		9,447		4.92		653,348		6,812		4.18
Total interest - bearing deposits	1,690,914		18,991		4.52		1,508,769		14,023		3.73
Borrowings	150,925		1,851		4.93		163,177		2,129		5.23
Subordinated debentures	49,877		777		6.27		40,329		586		5.83
Total interest-bearing liabilities	1,891,716		21,619		4.60		1,712,275		16,738		3.92
Noninterest-bearing deposits	229,040						266,675
Other noninterest-bearing liabilities	36,420						33,442
Total liabilities	2,157,176						2,012,392
Total stockholders' equity	162,119						154,183
Total stockholders' equity and liabilities	$	2,319,295					$	2,166,575
Net interest income and spread (1)			$	16,927	2.38				$	17,175	2.65
Net interest margin (1)					3.06	%					3.33	%

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

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	For the Six Months Ended June 30,
(dollars in thousands)	2024						2023
	Average Balance		Interest Income/ Expense		Yields/ Rates		Average Balance		Interest Income/ Expense		Yields/ Rates
Assets:
Cash and cash equivalents	$	23,204	$	629	5.45	%	$	20,376	$	490	4.85	%
Federal funds sold	79		2		5.09		213		5		4.73
Investment securities - taxable	131,437		2,575		3.94		114,687		1,951		3.43
Investment securities - tax exempt (1)	57,309		808		2.84		60,981		856		2.83
Loans held for sale	27,209		894		6.61		21,294		624		2.93
Loans held for investment (1)	1,958,463		70,935		7.28		1,815,707		61,012		6.78
Total loans	1,985,672		71,829		7.27		1,837,001		61,636		6.77
Total interest-earning assets	2,197,701		75,843		6.94	%	2,033,258		64,938		6.44	%
Noninterest earning assets	96,476						94,566
Total assets	$	2,294,177					$	2,127,824
Liabilities and stockholders' equity:
Interest-bearing demand deposits	$	136,106	$	2,646	3.91	%	$	217,768	$	3,695	3.42	%
Money market and savings deposits	779,237		16,120		4.16		650,371		9,848		3.05
Time deposits	725,248		17,617		4.88		618,137		11,927		3.89
Total interest - bearing deposits	1,640,591		36,383		4.46		1,486,276		25,470		3.46
Borrowings	173,917		4,285		4.95		131,790		3,365		5.15
Subordinated debentures	49,862		1,556		6.28		40,333		1,173		5.86
Total interest-bearing liabilities	1,864,370		42,224		4.55		1,658,399		30,008		3.65
Noninterest-bearing deposits	231,147						281,275
Other noninterest-bearing liabilities	37,690						34,451
Total liabilities	2,133,207						1,974,125
Total stockholders' equity	160,970						153,699
Total stockholders' equity and liabilities	$	2,294,177					$	2,127,824
Net interest income and spread (1)			$	33,619	2.39				$	34,930	2.79
Net interest margin (1)					3.08	%					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 and six months ended June 30, 2024 as compared to the same periods in 2023, 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 June 30,						Six Months Ended June 30,
	2024 Compared to 2023
(dollars in thousands)	Rate		Volume		Total		Rate		Volume		Total
Interest income:
Cash and cash equivalents	$	15	$	40	$	55	$	66	$	73	$	139
Federal funds sold	—		(2)		(2)		—		(3)		(3)
Investment securities - taxable	163		169		332		318		306		624
Investment securities - tax exempt (1)	(6)		(17)		(23)		4		(52)		(48)
Loans held for sale	40		125		165		82		188		270
Loans held for investment (1)	1,887		2,219		4,106		4,938		4,985		9,923
Total loans	1,927		2,344		4,271		5,020		5,173		10,193
Total interest income	$	2,099	$	2,534	$	4,633	$	5,408	$	5,497	$	10,905
Interest expense:
Interest-bearing demand deposits	$	112	$	(673)	$	(561)	$	482	$	(1,531)	$	(1,049)
Money market and savings deposits	1,664		1,230		2,894		4,070		2,202		6,272
Time deposits	1,282		1,353		2,635		3,409		2,281		5,690
Total interest - bearing deposits	3,058		1,910		4,968		7,961		2,952		10,913
Borrowings	(123)		(155)		(278)		(122)		1,042		920
Subordinated debentures	45		146		191		90		293		383
Total interest expense	$	2,980	$	1,901	$	4,881	$	7,929	$	4,287	$	12,216
Interest differential	$	(881)	$	633	$	(248)	$	(2,521)	$	1,210	$	(1,311)

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

Three Months Ended June 30, 2024 Compared to the Same Period in 2023

For the three months ended June 30, 2024 as compared to the same period in 2023, tax-equivalent interest income increased $4.6 million as favorable rate and volume changes contributed $2.1 million, and $2.5 million, respectively, to interest income. The favorable change in rates led to increased yields on loans held for sale (up 57 basis points) and loans held for investment (up 41 basis points) that favorably impact interest income by $1.9 million, overall. The loans held for investment average balances increased $125.0 million, leading to a favorable volume impact on interest income of $2.2 million, while the increase in loans held for sale average balances of $7.8 million had an small but favorable impact to interest income of $125 thousand. Growth in the loans held for investment portfolio was led by average balance increases in commercial real estate ($142.0 million), commercial loans ($20.5 million), residential real estate ($17.4 million), and home equity loans ($16.7 million).

On the funding side, overall interest expense increased $4.9 million, largely driven by the continuing impact that the Fed's rate hikes in prior periods have had on the cost of deposits and borrowings. The cost of deposits were up across the board, leading to a $5.0 million increase to interest expense. The cost of interest-bearing demand deposits, money market and savings accounts and time deposits increased 25 basis points, 92 basis points and 74 basis points, respectively, while the cost of borrowings decreased by 30 basis points. Money market/savings accounts were the largest drivers of the interest expense increase due to volume as average balances on such accounts increased $133.5 million, while time deposit average balances increased $119.2 million, and the average balances on interest-bearing demand deposits decreased $70.6 million, while borrowings decreased $12.3 million on average.

Overall, the $248 thousand decrease in net interest income over this period was driven by rate changes as the cost of interest bearing liabilities outpaced the increase in the yield on interest earning assets.

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Six Months Ended June 30, 2024 Compared to the Same Period in 2023

For the six months ended June 30, 2024 as compared to the same period in 2023, tax-equivalent interest income increased $10.9 million as favorable rate and volume changes contributed $5.4 million, and $5.5 million, respectively, to interest income. The favorable change in rates led to increased yields on loans held for sale (up 368 basis points) and loans held for investment (up 50 basis points) that favorably impact interest income by $5.0 million, overall. The loans held for investment average balances increased $142.8 million, leading to a favorable volume impact on interest income of $5.0 million, while the increase in loans held for sale average balances of $82 thousand had an small but favorable impact to interest income of $188 thousand. Growth in the loans held for investment portfolio was led by average balance increases in commercial real estate ($160.3 million), residential real estate ($23.5 million), home equity loans ($16.0 million), and commercial loans ($14.6 million).

On the funding side, overall interest expense increased $12.2 million, largely driven by the continuing impact that the Fed's rate hikes have had on the cost of deposits and borrowings. The cost of deposits were up across the board, leading to a $10.9 million increase to interest expense. The cost of interest-bearing demand deposits, money market and savings accounts and time deposits increased 49 basis points, 111 basis points and 99 basis points, respectively, while the cost of borrowings decreased by 20 basis points. Money market/savings accounts were the largest drivers of the interest expense increase due to volume as average balances on such accounts increased $128.9 million, while time deposit average balances increased $107.1 million, and the average balances on interest-bearing demand deposits decreased $81.7 million, while borrowings increased $42.1 million on average.

Overall, the $1.3 million decrease in net interest income over this period was driven by rate changes as the cost of interest bearing liabilities outpaced the increase in the yield on interest earning assets.

.

PROVISION FOR CREDIT LOSSES

Three and Six Months Ended June 30, 2024 Compared to the Same Periods in 2023

The overall provision for credit losses increased $2.0 million on a net basis for the three months ended June 30, 2024. The provision on funded loans increased $1.9 million over the three month comparable period in 2023 driven by provisioning for loan growth and non-performing loans, as well as an increase in specific reserves, mainly on small business loans and existing non-accrual loans. The provision on unfunded loan commitments increased over this period due to an increase in the baseline loss rate for certain portfolios.

The overall provision for credit losses increased $3.4 million on a net basis for the six months ended June 30, 2024. The provision on funded loans increased $3.9 million over the six month comparable period in 2023 driven by an increase in specific reserves, mainly on small business loans and existing non-accrual loans, combined with provisioning for loan growth and charge-offs.

Asset Quality Summary

The ratio of non-performing assets to total assets was 1.68% as of June 30, 2024, up from 1.58% reported as of December 31, 2023. Total non-performing loans of $37.6 million as of June 30, 2024, increased $4 million from $33.8 million as December 31, 2023. The changes were the result of risk rating downgrades of several SBA loans and small ticket equipment leases, partially offset by charge-offs as of June 30, 2024.

Meridian realized net charge-offs of 0.20% of total average loans for the three months ending June 30, 2024, which was up from 0.05% reported for the same period in 2023. Net charge-offs for the quarter ended June 30, 2024 were $4.1 million, compared to net charge-offs of $1.0 million for the quarter ended June 30, 2023. Net charge-offs for the current quarter comprised of $4.4 million in charge-offs, with $238 thousand in recoveries. Net charge-offs for the quarter ended June 30, 2024 were nearly an even split between commercial loans, SBA loans, and small ticket equipment leases.

The ratio of allowance for credit losses to total loans held for investment, excluding loans at fair value (a non-GAAP measure, see reconciliation in the Appendix), was 1.10% as of June 30, 2024 and 1.17% as of December 31, 2023. As of June 30, 2024 there were specific reserves of $7.2 million against non-performing loans, an increase from $6.5 million as of December 31, 2023. The increase over this period was due to an increase in specific reserves on SBA loan relationships, partially offset by a decrease in specific reserves for commercial loans.

The drop in ACL coverage ratio noted above since December 31, 2023 was the direct result of continued charge-offs and specific reserves on individually evaluated loans. But despite the decrease in the ACL coverage ratio, in the ACL on collectively evaluated loans management continues to provide for loan growth in various portfolio segments, as well as providing for growth in certain qualitative factors in riskier portfolio segments, partially offset by the impacts of improvements in certain macro-economic model indicators.

The Corporation continues to be diligent in its credit underwriting process and proactive with its loan review process, including the engagement of the services of an independent outside loan review firm, which helps identify developing credit issues. Proactive steps that are taken include the procurement of 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)	June 30, 2024			December 31, 2023
Non-performing assets:
Nonaccrual loans:
Real estate loans:
Commercial mortgage	$	—		$	—
Home equity lines and loans	1,169			1,037
Residential mortgage	4,768			4,536
Construction	1,784			1,206
Total real estate loans	7,721			6,779
Commercial and industrial	13,347			15,413
Small business loans	14,273			9,440
Leases	2,300			2,131
Total nonaccrual loans	37,641			33,763
Other real estate owned	1,862			1,703
Total non-performing assets	$	39,503		$	35,466
Asset quality ratios:
Non-performing assets to total assets	1.68		%	1.58		%
Non-performing loans to:
Total loans and leases	1.84		%	1.76		%
Total loans held-for-investment	1.89		%	1.78		%
Total loans held-for-investment (excluding loans at fair value) (1)	1.91		%	1.79		%
Allowance for credit losses to:
Total loans and leases	1.06		%	1.15		%
Total loans held-for-investment	1.09		%	1.17		%
Total loans held-for-investment (excluding loans at fair value) (1)	1.10		%	1.17		%
Non-performing loans	57.66		%	65.48		%
Total loans and leases	$	2,042,813		$	1,920,622
Total loans and leases held-for-investment	1,988,535			1,895,806
Total loans and leases held-for-investment (excluding loans at fair value)	1,975,635			1,882,080
Allowance for credit losses	21,703			22,107

(1) The allowance for credit losses to total loans held-for-investment (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.

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NON-INTEREST INCOME

Three Months Ended June 30, 2024 Compared to the Same Period in 2023

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

	Three Months Ended
(Dollars in thousands)	June 30, 2024		June 30, 2023		$ Change		% Change
Mortgage banking income	$	5,420	$	5,050	$	370	7.3	%
Wealth management income	1,444		1,235		209		16.9	%
SBA loan income	785		1,767		(982)		(55.6)	%
Earnings on investment in life insurance	215		193		22		11.4	%
Net change in the fair value of derivative instruments	203		183		20		10.9	%
Net change in the fair value of loans held-for-sale	(29)		(199)		170		(85.4)	%
Net change in the fair value of loans held-for-investment	(24)		(219)		195		(89.0)	%
Net loss on hedging activity	(63)		(1)		(62)		6200.0	%
Net loss on sale of investment securities available-for-sale	—		(54)		54		(100.0)	%
Other	1,293		1,169		124		10.6	%
Total non-interest income	$	9,244	$	9,124	$	120	1.3	%

Total non-interest income increased $120 thousand due largely to improved income from our mortgage segment, despite the continued impact of the higher rate environment and a lack of housing inventory. Mortgage loan originations increased $34.0 million to $220.5 million when comparing the quarter ended June 30, 2024 to the quarter ended June 30, 2023. SBA loan income decreased $982 thousand over this period as the value of SBA loans sold for the quarter-ended June 30, 2024 was $15.7 million, or 56.4%, lower than the quarter-ended June 30, 2023, while the gross margin on sale was 8.8% for the quarter-ended June 30, 2024 compared to 7.0% for the quarter-ended June 30, 2023.

The net change in the fair value of loans held-for-investment improved to a loss of $24 thousand for the quarter ended June 30, 2024, compared to a loss of $219 thousand for the comparable prior year quarter, due to the impact of the changing interest rate environment and the impact this has had on loans in portfolio that are held at fair value. Other non-interest income increased due to an increase in FHLB stock income, increases in broker fees and other mortgage segment related income, partially offset by a decline in swap fee income as no new swaps were entered into in the current quarter.

Six Months Ended June 30, 2024 Compared to the Same Period in 2023

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

	Six Months Ended
(Dollars in thousands)	June 30, 2024		June 30, 2023		$ Change		% Change
Mortgage banking income	$	9,054	$	8,322	$	732	8.8	%
Wealth management income	2,761		2,431		330		13.6	%
SBA loan income	1,771		2,480		(709)		(28.6)	%
Earnings on investment in life insurance	422		385		37		9.6	%
Net change in the fair value of derivative instruments	278		114		164		143.9	%
Net change in the fair value of loans held-for-sale	(31)		(200)		169		(84.5)	%
Net change in the fair value of loans held-for-investment	(199)		(102)		(97)		95.1	%
Net (loss) gain on hedging activity	(82)		(1)		(81)		8100.0	%
Net loss on sale of investment securities available-for-sale	—		(54)		54		(100.0)	%
Other	3,254		2,387		867		36.3	%
Total non-interest income	$	17,228	$	15,762	$	1,466	9.3	%

Total non-interest income increased $1.5 million due largely to improved income from our mortgage segment, despite the continued impact of the higher rate environment and a lack of housing inventory. Mortgage loan originations increased $50.0 million to $360.2 million when comparing the six months ended June 30, 2024 to the six months ended June 30, 2023. SBA loan income decreased $709 thousand over this period as the value of SBA loans sold for the six months ended June 30, 2024 was $11.1 million, or 28.6%,

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lower than for the six months June 30, 2023, while the gross margin on sale was 8.4% for the six months ended June 30, 2024 compared to 7.2% for the six months ended June 30, 2023.

The net changes in the fair value of derivative instruments and loans held-for-sale loans increased by $164 thousand and $169 thousand, respectively, period over period due due to the increase in volume and the impact of the changing interest rate environment. Other non-interest income in several areas increased including FHLB stock income, broker fees and other mortgage segment related income, as well as business credit card fee income, and other account related fees such as wire transfer fees and ATM fees.

NON-INTEREST EXPENSE

Three Months Ended June 30, 2024 Compared to the Same Period in 2023

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

	Three Months Ended
(Dollars in thousands)	June 30, 2024		June 30, 2023		$ Change		% Change
Salaries and employee benefits	$	11,437	$	12,152	$	(715)	(5.9)	%
Occupancy and equipment	1,230		1,140		90		7.9	%
Professional fees	1,029		1,004		25		2.5	%
Data processing and software	1,506		1,681		(175)		(10.4)	%
Advertising and promotion	989		1,091		(102)		(9.3)	%
Pennsylvania bank shares tax	274		245		29		11.8	%
Other	2,553		2,302		251		10.9	%
Total non-interest expense	$	19,018	$	19,615	$	(597)	(3.0)	%

Total non-interest expense decreased $597 thousand, or 3.0%, largely attributable to a decrease in salaries and employee benefits, advertising, and data processing and software expense, partially offset by an increase in other non-interest expense. Salaries and employee benefits decreased $715 thousand due largely to the ongoing impacts from cost reduction efforts in the mortgage segment, as well due to lower stock based compensation expense over this period. Data processing and software expense decreased $175 thousand related to a change in mortgage customer volume.

Other non-interest expense increased $251 thousand due largely to an increase in FDIC insurance expense, which reflected the new 2 basis point increase in assessment, and an increase in certain commercial and consumer related loan expenses due to portfolio growth, and employee related training and recruitment fees as we continue to search for high performing individuals to join the Meridian team.

Six Months Ended June 30, 2024 Compared to the Same Period in 2023

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

	Six Months Ended
(Dollars in thousands)	June 30, 2024		June 30, 2023		$ Change		% Change
Salaries and employee benefits	$	22,010	$	23,213	$	(1,203)	(5.2)	%
Occupancy and equipment	2,463		2,384		79		3.3	%
Professional fees	2,527		1,827		700		38.3	%
Data processing and software	3,038		3,113		(75)		(2.4)	%
Advertising and promotion	1,737		1,952		(215)		(11.0)	%
Pennsylvania bank shares tax	548		490		58		11.8	%
Other	4,869		4,425		444		10.0	%
Total non-interest expense	$	37,192	$	37,404	$	(212)	(0.6)	%

Total non-interest expense decreased $212 thousand, or 0.6%, largely attributable to a decrease in salaries and employee benefits and advertising expense, partially offset an increase in professional fees, and other non-interest expense. Salaries and employee benefits decreased $1.2 million due largely to the above noted cost reduction efforts in the mortgage segment over the last few quarters, combined with lower stock based compensation expense. Professional fees increased $700 thousand over this period due to an increase in loan and lease workout expenses and OREO expense, as well as an increase in audit related costs. Other non-interest expense increased $444 thousand due largely to an increase in FDIC insurance expense, which reflected the new 2 basis point increase in assessment, and an increase in certain commercial and consumer related loan expenses due to portfolio growth.

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INCOME TAX EXPENSE

Income tax expense for the three and six months ended June 30, 2024 was $1.1 million, and $1.9 million, respectively, as compared to $1.3 million, and $2.4 million, respectively, for the same periods in 2023. Our effective tax rates were 24.3% and 24.5%, respectively, for the three and six months ended June 30, 2024, compared to 21.3% and 21.4% for the same periods in 2023. While income tax expense decreased primarily due to the decrease in income before income taxes, the effective tax rate increased due to the impact of additional nondeductible expense, partially offset by an increase in tax-free bank owned life insurance income.

BALANCE SHEET ANALYSIS

As of June 30, 2024, total assets were $2.4 billion which increased $105.4 million, or 4.7%, from December 31, 2023. This increase in assets over the prior period was due primarily to loan portfolio growth, as detailed in the following table:

(Dollars in thousands)	June 30, 2024		December 31, 2023		$ Change		% Change
Mortgage loans held for sale	$	54,278	$	24,816	$	29,462	118.7	%
Real estate loans:
Commercial mortgage	775,298		737,863		37,435		5.1
Home equity lines and loans	83,828		76,287		7,541		9.9
Residential mortgage	259,469		260,604		(1,135)		(0.4)
Construction	262,624		246,440		16,184		6.6
Total real estate loans	1,381,219		1,321,194		60,025		4.5
Commercial and industrial	352,471		302,891		49,580		16.4
Small business loans	151,458		142,342		9,116		6.4
Consumer	369		389		(20)		(5.1)
Leases, net	97,624		121,632		(24,008)		(19.7)
Total portfolio loans and leases	$	1,983,141	$	1,888,448	$	94,693	5.0
Total loans and leases	$	2,037,419	$	1,913,264	$	124,155	6.5	%

Portfolio loans increased $94.7 million, to $2.0 billion as of June 30, 2024, from $1.9 billion as of December 31, 2023. Overall portfolio loan growth was 5.0% since December 31, 2023, or 10.0% on an annualized basis for 2024. Commercial real estate loans increased $37.4 million, or 5.1%, commercial and industrial loans increased $49.6 million, or 16.4%, and construction loans increased $16.2 million, or 6.6%.

As of June 30, 2024, included within the commercial real estate loans total of $775.3 million was $244.0 million of owner-occupied commercial loans, as well as $117.5 million of multi-family loans. Nearly all (98%) 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)	June 30, 2024		December 31, 2023		$ Change		% Change
Noninterest-bearing deposits	$	224,040	$	239,289	$	(15,249)	(6.4)	%
Interest-bearing deposits:
Interest-bearing demand deposits	130,062		150,898		(20,836)		(13.8)	%
Money market and savings deposits	787,479		747,803		39,676		5.3	%
Time deposits	773,855		685,472		88,383		12.9	%
Total interest-bearing deposits	$	1,691,396	$	1,584,173	$	107,223	6.8	%
Total deposits	$	1,915,436	$	1,823,462	$	91,974	5.0	%

Total deposits increased $92.0 million, or 5.0%, since December 31, 2023. Noninterest-bearing deposits and interest-bearing accounts decreased $15.2 million, and $20.8 million, respectively, during the period. This decline was largely due to customer preference for money market deposits which carry higher interest rates than demand deposits. Time deposits grew $88.4 million, or 12.9%, from retail and wholesale efforts as customers prefer the higher term interest rates.

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The majority of Meridian's deposit base is comprised of business deposits (52%), with consumer deposits amounting to 13% at June 30, 2024. Municipal deposits (11%) and brokered deposits (24%) 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 June 30, 2024, 63% 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 June 30, 2024.

Capital

Consolidated stockholders’ equity of the Corporation was $162.4 million, or 6.9% of total assets as of June 30, 2024, as compared to $158.0 million, or 7.0% of total assets as of December 31, 2023. On July 25, 2024, the Board of Directors declared a quarterly cash dividend of $0.125 per common share payable August 19, 2024 to shareholders of record as of August 12, 2024.

The June 30, 2024 tangible common equity to tangible assets ratio (a non-GAAP measure) was 8.85% for the Bank, compared to 8.94% at December 31, 2023. Tangible book value per share (a non-GAAP measure) was $14.17 as of June 30, 2024, compared with $13.78 as of December 31, 2023. A reconciliation of these non-GAAP measures is below.

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

	Bank				Well-capitalized minimum
	June 30, 2024		December 31, 2023
Tier 1 leverage ratio	9.33	%	9.46	%	5.00	%
Common tier 1 risk-based capital ratio	9.84	%	10.10	%	6.50	%
Tier 1 risk-based capital ratio	9.84	%	10.10	%	8.00	%
Total risk-based capital ratio	10.84	%	11.17	%	10.00	%

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 9.33% and 9.46% at June 30, 2024 and December 31, 2023, respectively. The Corporation is exempt from CBLR.

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.

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, Meridian maintains borrowing arrangements with various correspondent banks, the FHLB and the Federal Reserve Bank of Philadelphia to meet short-term liquidity needs and has access to approximately $824.8 million in liquidity from these sources. Through its relationship at the Federal Reserve, Meridian had available credit of approximately $11.1 million at June 30, 2024. As a member of the FHLB, we are 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 June 30, 2024, Meridian’s maximum borrowing capacity with the FHLB was $666.6 million. At June 30, 2024, Meridian had borrowed $182.3 million and the FHLB had issued letters of credit, on Meridian’s behalf, totaling $157.2 million against its available credit lines. At June 30, 2024, Meridian also had available $56.0 million of unsecured federal funds lines of credit with other financial institutions as well as $149.6 million of available short or long term funding through the CDARS program and $348.9 million of available short or long term funding through brokered CD arrangements. Management believes that Meridian has adequate resources to meet its short-term and long-term funding requirements.

Discussion of Segments

As of June 30, 2024, 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).

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The Banking Segment recorded income before tax of $3.2 million and $6.7 million for the three and six months ended June 30, 2024, as compared to income before tax of $6.6 million and $13.5 million for the same periods in 2023. The Banking Segment provided 72.2% and 84.5% of the Corporation’s pre-tax profit for the three and six months ended June 30, 2024, as compared to 111.5% and 122.7% for the same periods in 2023.

The Wealth Management Segment recorded income before tax of $676 thousand and $1.2 million for the three and six months ended June 30, 2024, as compared to income before tax of $317 thousand and $557 thousand for the same periods in 2023. The increase in income in this segment was the result of an increase in assets under management and improved market conditions over the period.

The Mortgage Banking Segment recorded income before tax of $545 thousand and $80 thousand for the three and six months ended June 30, 2024, as compared to losses before tax of $1.0 million and $3.1 million for the same periods in 2023. Mortgage Banking income and expenses related to loan originations and sales increased 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 June 30, 2024 were $542.8 million as compared to $517.7 million at December 31, 2023.

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 June 30, 2024 amounted to $11.3 million as compared to $10.9 million at December 31, 2023.

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 3 loans totaling $589 thousand for the three and six months ended June 30, 2024, while we did not repurchase any loans for the three and six months ended June 30, 2023.

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.

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)	June 30, 2024			December 31, 2023
Total stockholders' equity (GAAP)	$	162,382		$	158,022
Less: Goodwill and intangible assets	(3,768)			(3,870)
Tangible common equity (non-GAAP)	158,614			154,152
Total assets (GAAP)	2,351,584			2,246,193
Less: Goodwill and intangible assets	(3,768)			(3,870)
Tangible assets (non-GAAP)	$	2,347,816		$	2,242,323
Stockholders' equity to total assets (GAAP)	6.91		%	7.04		%

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(dollars in thousands, except share data)	June 30, 2024			December 31, 2023
Tangible common equity to tangible assets (non-GAAP)	6.76		%	6.87		%
Shares outstanding	11,191			11,183
Book value per share (GAAP)	$	14.51		$	14.13
Tangible book value per share (non-GAAP)	$	14.17		$	13.78

The following is a reconciliation of the allowance for credit losses to total loans held for investment ratio at June 30, 2024. 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)	June 30, 2024			December 31, 2023
Allowance for credit losses (GAAP)	$	21,703		$	22,107
Loans and other finance receivables, net of fees and costs (GAAP)	1,988,535			1,895,806
Less: Loans fair valued	(12,900)			(13,726)
Loans and other finance receivables, net of fees and costs, excluding loans at fair value (non-GAAP)	$	1,975,635		$	1,882,080
Allowance for credit losses, net of fees and costs (GAAP)	1.09		%	1.17		%
Allowance for credit losses, net of fees and costs, excluding loans at fair value (non-GAAP)	1.10		%	1.17		%

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;

•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.

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	June 30,
Changes in Market Interest Rates	2024		2023
+300 basis points over next 12 months	(0.49)	%	(1.92)	%
+200 basis points over next 12 months	(0.07)	%	(1.14)	%
+100 basis points over next 12 months	0.14	%	(0.44)	%
No Change
-100 basis points over next 12 months	(1.30)	%	(1.14)	%
-200 basis points over next 12 months	(2.16)	%	(2.29)	%
-300 basis points over next 12 months	(2.90)	%	(3.21)	%

The above interest rate simulation suggests that the Corporation’s balance sheet is asset sensitive as of June 30, 2024. In its current position, the table indicates that net interest income will fluctuate between 0.14% and (1.30)% in an up or down 100 basis point environment 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.

	June 30,
Changes in Market Interest Rates	2024		2023
+300 basis points	(7)	%	1	%
+200 basis points	(3)	%	3	%
+100 basis points	(1)	%	3	%
No Change
-100 basis points	(2)	%	(7)	%
-200 basis points	(8)	%	(20)	%
-300 basis points	(20)	%	(41)	%

This economic value of equity profile at June 30, 2024 suggests that we would experience a slightly negative effect from an increase or decrease of 100 basis points in rates, and the impact would worsen as rates continued to move downward. While an instantaneous shift in interest rates is used in this analysis to provide an estimate of 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.

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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 June 30, 2024 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 June 30, 2024 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.

There have been no material changes in the risk factors faced by the Corporation from those disclosed in the Corporation’s Annual

Report on Form 10-K for the year ended December 31, 2023.

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
2.1	Plan of Merger and Reorganization dated April 26, 2018 by and between Registrant, Bank and Meridian Interim Bank, filed as Exhibit 2.1 to Form 8-K on August 24, 2018 and incorporated herein by reference.
3.1	Amended Articles of Incorporation of Registrant, filed herewith.
3.2	Bylaws of Registrant, filed as Exhibit 3.2 to Form 8-K on August 24, 2018 and incorporated herein by reference.
4.2	Indenture, dated as of December 18, 2019, between Meridian Corporation, as Issuer, and U.S. Bank National Association, as Trustee, incorporated by reference to Exhibit 4.1 of the Registrant's Form 8-K filed with the SEC on December 18, 2019.
4.3	Form of 5.375% Subordinated Note due 2029 (included as Exhibit A-1 and Exhibit A-2 to the Indenture incorporated by reference as Exhibit 4.2 hereto), filed with the SEC on December 18, 2019.
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

48

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:	August 9, 2024	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)

49

EX-31.1

Exhibit 31.1

RULE 13a -14(a) CERTIFICATION
OF THE PRINCIPAL EXECUTIVE OFFICER

I, Christopher J. Annas, certify that:

1.           I have reviewed this Quarterly Report on Form 10-Q of Meridian Corporation;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)          Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)          Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5.           The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)        Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:   August 9, 2024	/s/ Christopher J. Annas
	Christopher J. Annas
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

RULE 13a-14(a) CERTIFICATION
OF THE PRINCIPAL FINANCIAL OFFICER

I, Denise Lindsay, certify that:

1.           I have reviewed this Quarterly Report on Form 10-Q of Meridian Corporation;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)          Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)          Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5.           The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)          All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)          Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:   August 9, 2024	/s/ Denise Lindsay
	Denise Lindsay
	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Meridian Corporation on Form 10-Q for the period ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

2.  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Meridian Corporation.

	/s/ Christopher J. Annas
	Christopher J. Annas
	President and Chief Executive Officer
	(Principal Executive Officer)
	/s/ Denise Lindsay
	Denise Lindsay
	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)
Date:    August 9, 2024

XML

Cover - shares	6 Months Ended
	Jun. 30, 2024	Aug. 06, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2024
Document Transition Report	false
Entity File Number	000-55983
Entity Registrant Name	Meridian Corp
Entity Incorporation, State or Country Code	PA
Entity Tax Identification Number	83-1561918
Entity Address, Address Line One	9 Old Lincoln Highway
Entity Address, City or Town	Malvern
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19355
City Area Code	484
Local Phone Number	568-5000
Title of 12(b) Security	Common Stock, $1 par value
Trading Symbol	MRBK
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		11,190,875
Entity Central Index Key	0001750735
Amendment Flag	false
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Assets:
Cash and due from banks	$ 8,457	$ 10,067
Interest-bearing deposits at other banks	15,601	46,630
Cash and cash equivalents	24,058	56,697
Securities available-for-sale, at fair value (amortized cost of $169,751 and $156,492, respectively)	159,141	146,019
Securities held-to-maturity, at amortized cost (fair value of $31,695 and $32,730, respectively)	35,089	35,781
Equity investments	2,088	2,121
Mortgage loans held for sale	54,278	24,816
Loans and other finance receivables, net of fees and costs	1,988,535	1,895,806
Allowance for credit losses	(21,703)	(22,107)
Loans and other finance receivables, net of the allowance for credit losses	1,966,832	1,873,699
Restricted investment in bank stock	10,044	8,072
Bank premises and equipment, net	13,114	13,557
Bank owned life insurance	29,267	28,844
Accrued interest receivable	9,973	9,325
Other real estate owned	1,862	1,703
Deferred income taxes	3,950	4,201
Servicing assets	11,341	11,748
Goodwill	899	899
Intangible assets	2,869	2,971
Other assets	26,779	25,740
Total assets	2,351,584	2,246,193
Deposits:
Non-interest bearing	224,040	239,289
Interest bearing	1,691,396	1,584,173
Total deposits	1,915,436	1,823,462
Borrowings	187,260	174,896
Subordinated debentures	49,897	49,836
Accrued interest payable	7,709	10,324
Other liabilities	28,900	29,653
Total liabilities	2,189,202	2,088,171
Stockholders’ equity:
Common stock, $1 par value per share. $25,000,000 shares authorized; 13,194,058 and $13,186,198 shares issued and 11,190,875 and 11,183,015 shares outstanding, respectively	13,194	13,186
Surplus	80,639	80,325
Treasury stock, 2,003,183 shares, at cost	(26,079)	(26,079)
Unearned common stock held by employee stock ownership plan	(1,204)	(1,204)
Retained earnings	104,420	101,216
Accumulated other comprehensive loss	(8,588)	(9,422)
Total stockholders’ equity	162,382	158,022
Total liabilities and stockholders’ equity	$ 2,351,584	$ 2,246,193

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Amortized cost	$ 169,751	$ 156,492
Securities, held-to-maturity, fair value	$ 31,695	$ 32,730
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, authorized (in shares)	25,000,000	25,000,000
Common stock, issued (in shares)	13,194,058	13,186,198
Common stock, outstanding (in shares)	11,190,875	11,183,015
Treasury stock held (in shares)	2,003,183	2,003,183

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Interest income:
Loans and other finance receivables, including fees	$ 36,486	$ 32,215	$ 71,825	$ 61,632
Securities - taxable	1,324	992	2,575	1,951
Securities - tax-exempt	324	351	649	705
Cash and cash equivalents	331	278	631	495
Total interest income	38,465	33,836	75,680	64,783
Interest expense:
Deposits	18,991	14,023	36,383	25,470
Borrowings and subordinated debentures	2,628	2,715	5,842	4,538
Total interest expense	21,619	16,738	42,225	30,008
Net interest income	16,846	17,098	33,455	34,775
Provision (recovery of provision) for credit losses	2,680	705	5,546	2,104
Net interest income after provision for credit losses	14,166	16,393	27,909	32,671
Non-interest income:
Mortgage banking income	$ 5,420	$ 5,050	$ 9,054	$ 8,322
Type of Revenue, Extensible List	Investment Advice [Member]	Investment Advice [Member]	Investment Advice [Member]	Investment Advice [Member]
Wealth management income	$ 1,444	$ 1,235	$ 2,761	$ 2,431
SBA loan income	785	1,767	1,771	2,480
Earnings on investment in life insurance	215	193	422	385
Net change in the fair value of derivative instruments	203	183	278	114
Net change in the fair value of loans held-for-sale	(29)	(199)	(31)	(200)
Net change in the fair value of loans held-for-investment	(24)	(219)	(199)	(102)
Net loss on hedging activity	(63)	(1)	(82)	(1)
Net loss on sale of investment securities available-for-sale	0	(54)	0	(54)
Other	1,293	1,169	3,254	2,387
Total non-interest income	9,244	9,124	17,228	15,762
Non-interest expense:
Salaries and employee benefits	11,437	12,152	22,010	23,213
Occupancy and equipment	1,230	1,140	2,463	2,384
Professional fees	1,029	1,004	2,527	1,827
Data processing and software	1,506	1,681	3,038	3,113
Advertising and promotion	989	1,091	1,737	1,952
Pennsylvania bank shares tax	274	245	548	490
Other	2,553	2,302	4,869	4,425
Total non-interest expense	19,018	19,615	37,192	37,404
Income before income taxes	4,392	5,902	7,945	11,029
Income tax expense	1,066	1,257	1,943	2,363
Net income	$ 3,326	$ 4,645	$ 6,002	$ 8,666
Basic earnings per common share (in USD per share)	$ 0.30	$ 0.42	$ 0.54	$ 0.78
Diluted earnings per common share (in USD per share)	$ 0.30	$ 0.41	$ 0.54	$ 0.75
Basic weighted average shares outstanding (in shares)	11,096	11,062	11,092	11,167
Diluted weighted average shares outstanding (in shares)	11,150	11,304	11,178	11,494

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Statement of Comprehensive Income [Abstract]
Net income:	$ 3,326	$ 4,645	$ 6,002	$ 8,666
Net change in unrealized gains (losses) on investment securities available for sale:
Change in fair value of investment securities, net of tax of $53 and $(371), $(31) and $83 respectively	206	(1,356)	(106)	292
Reclassification adjustment for net losses realized in net income, net of tax effect of $0, $11, $0, and 11, respectively,	0	43	0	43
Reclassification adjustment for investment securities transferred to held-to-maturity, net of tax effect of $7 and $6, $14 and $12 respectively	22	23	44	45
Unrealized investment gains (losses), net of tax effect of $60 and $(353),$(17) and $107 respectively	228	(1,290)	(62)	380
Net change in unrealized gains on interest rate swaps used in cash flow hedges, net of tax effect of $43 , $97, $260 and $97, respectively	133	338	896	338
Total other comprehensive income (loss)	361	(952)	834	718
Total comprehensive income	$ 3,687	$ 3,693	$ 6,836	$ 9,384

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Statement of Comprehensive Income [Abstract]
Tax expense (benefit) on unrealized gains arising during the period	$ 53	$ (371)	$ (31)	$ 83
Tax expense (benefit) on reclassification adjustment for net gains on sales realized in net income	0	(11)	0	(11)
Tax expense (benefit) on reclassification adjustment for transfer to held-to-maturity	7	6	14	12
Tax expense (benefit) on unrealized investment gains (losses)	60	(353)	(17)	107
Tax expense (benefit) on unrealized gains (losses) on interest rate swaps used in cash flow hedges	$ 43	$ 97	$ 260	$ 97

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Adjustment to initially apply ASU No. 2016-13 for CECL, net of tax	Common Stock	Surplus	Treasury Stock	Unearned ESOP	Retained Earnings	Retained Earnings Adjustment to initially apply ASU No. 2016-13 for CECL, net of tax	AOCI
Balance beginning of the period at Dec. 31, 2022	$ 153,280	$ (2,228)	$ 13,156	$ 79,072	$ (21,821)	$ (1,403)	$ 95,815	$ (2,228)	$ (11,539)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	8,666						8,666
Other comprehensive income (loss)	718								718
Dividends declared	(2,819)						(2,819)
Net purchase of treasury stock through publicly announced plans	(4,258)				(4,258)
Common stock issued through share-based awards and exercises	169		25	144
Stock based compensation expense	434			434
Balance ending of the period at Jun. 30, 2023	153,962		13,181	79,650	(26,079)	(1,403)	99,434		(10,821)
Balance beginning of the period at Mar. 31, 2023	153,049		13,180	79,473	(24,512)	(1,403)	96,180		(9,869)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	4,645						4,645
Other comprehensive income (loss)	(952)								(952)
Dividends declared	(1,391)						(1,391)
Net purchase of treasury stock through publicly announced plans	(1,567)				(1,567)
Common stock issued through share-based awards and exercises	21		1	20
Stock based compensation expense	157			157
Balance ending of the period at Jun. 30, 2023	153,962		13,181	79,650	(26,079)	(1,403)	99,434		(10,821)
Balance beginning of the period at Dec. 31, 2023	158,022		13,186	80,325	(26,079)	(1,204)	101,216		(9,422)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	6,002						6,002
Other comprehensive income (loss)	834								834
Dividends declared	(2,798)						(2,798)
Common stock issued through share-based awards and exercises	69		8	61
Stock based compensation expense	253			253
Balance ending of the period at Jun. 30, 2024	162,382		13,194	80,639	(26,079)	(1,204)	104,420		(8,588)
Balance beginning of the period at Mar. 31, 2024	159,936		13,189	80,487	(26,079)	(1,204)	102,492		(8,949)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	3,326						3,326
Other comprehensive income (loss)	361								361
Dividends declared	(1,398)						(1,398)
Common stock issued through share-based awards and exercises	46		5	41
Stock based compensation expense	111			111
Balance ending of the period at Jun. 30, 2024	$ 162,382		$ 13,194	$ 80,639	$ (26,079)	$ (1,204)	$ 104,420		$ (8,588)

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Statement of Stockholders' Equity [Abstract]
Dividends declared (in dollars per share)	$ 0.125	$ 0.125	$ 0.250	$ 0.250
Treasury stock (in shares)		127,849		312,447

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Statement of Cash Flows [Abstract]
Net income	$ 6,002	$ 8,666
Adjustments to reconcile net income to net cash used in operating activities:
Loss on sale of investment securities	0	54
Net amortization of investment premiums and discounts and change in fair value of equity securities	1,009	498
Depreciation and amortization (accretion), net	1,808	145
Provision for credit losses	5,546	2,104
Amortization of issuance costs on subordinated debt	61	56
Stock based compensation	253	434
Net change in fair value of derivative instruments	(278)	(114)
Net change in fair value of loans held for sale	31	200
Net change in fair value of loans held for investment	199	102
Amortization and net impairment of servicing rights	369	180
SBA loan income	(1,771)	(2,480)
Proceeds from sale of loans	341,743	306,003
Loans originated for sale	(362,144)	(316,437)
Mortgage banking income	(9,054)	(8,322)
Increase in accrued interest receivable	(648)	(288)
Increase in other assets	(703)	(3,354)
Earnings from investment in bank owned life insurance	(422)	(385)
Decrease (increase) in deferred income tax	35	(100)
(Decrease) increase in accrued interest payable	(2,615)	3,223
Decrease in other liabilities	(336)	(1,730)
Net cash used in operating activities	(20,915)	(11,545)
Activity in available-for-sale securities:
Maturities, repayments and calls	6,989	4,590
Sales	0	13,514
Purchases	(21,087)	(11,571)
Activity in held-to-maturity securities:
Maturities, repayments and calls	555	865
Increase in restricted stock	(1,972)	(2,226)
Net increase in loans	(95,854)	(120,124)
Purchases of premises and equipment	(1,964)	(601)
Net cash used in investing activities	(113,333)	(115,553)
Cash flows from financing activities:
Net increase in deposits	91,974	70,126
Increase in short-term borrowings	1,770	69,122
Increase in long-term debt	10,594	3,432
Repayment of subordinated debt	0	(54)
Net purchase of treasury stock	0	(4,259)
Dividends paid	(2,798)	(2,819)
Share based awards and exercises	69	25
Net cash provided by financing activities	101,609	135,573
Net change in cash and cash equivalents	(32,639)	8,475
Cash and cash equivalents at beginning of period	56,697	38,391
Cash and cash equivalents at end of period	24,058	46,866
Cash paid during the period for:
Interest	44,840	26,785
Income taxes	707	308
Transfers from loans held for sale to loans held for investment	0	351
Net loans sold, not settled	$ 0	$ 9,205

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Significant Accounting Policies

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, 2023), 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 and six months ended June 30, 2024 are not necessarily indicative of the results for the year ending December 31, 2024 or for any other period.

Pronouncements Adopted in 2024

The following pronouncements were adopted in 2024, but did not have a material impact on our consolidated financial statements.

•FASB ASU 2020-06, “Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”

•FASB ASU 2023-02, "Investments Equity Method and Joint Ventures (Topic 323) Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method"

Pronouncements Not Yet Effective as of June 30, 2024:

FASB ASU 2023-07, “Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures”

The amendments in this update improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments in this update also do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Corporation is currently evaluating the impact on its disclosures.

FASB ASU 2023-09, “Income Taxes (Topic 740) Improvements to Income Tax Disclosures”

The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in this update are effective for fiscal years beginning after December 15, 2024 and are to be applied on a prospective basis. Early adoption is permitted.The Corporation is currently evaluating the impact on its disclosures.

FASB ASU 2024-01 Stock Compensation - Scope Application of Profits Interest and Similar Awards

The amendments in this update improve the understandability of paragraph 718-10-15-3 apply to all entities that enter into share-based payments transactions. The amendments in this update are effective for fiscal years beginning after December 15, 2024 and are to be applied on a prospective basis. The Corporation is currently evaluating the impact on its disclosures.

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 FASB ASC. The amendments in this ASU 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 and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, 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.

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Earnings per Common Share

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Earnings per Common Share

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 June 30,				Six months ended June 30,
(dollars in thousands, except per share data)	2024		2023		2024		2023
Numerator for earnings per share:
Net income available to common stockholders	$	3,326	$	4,645	$	6,002	$	8,666
Denominators for earnings per share:
Weighted average shares outstanding	11,247		11,240		11,246		11,348
Average unearned ESOP shares	(151)		(178)		(154)		(181)
Basic weighted averages shares outstanding	11,096		11,062		11,092		11,167
Dilutive effects of assumed exercises of stock options	54		72		86		165
Dilutive effects of SERP shares	—		170		—		162
Diluted weighted averages shares outstanding	11,150		11,304		11,178		11,494
Basic earnings per share	$	0.30	$	0.42	$	0.54	$	0.78
Diluted earnings per share	$	0.30	$	0.41	$	0.54	$	0.75
Antidilutive shares excluded from computation of average dilutive earnings per share	587		512		587		507

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Securities

6 Months Ended

Jun. 30, 2024

Investments, Debt and Equity Securities [Abstract]

Securities

Securities

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

	June 30, 2024
(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	$	19,839	$	58	$	(132)	$	—	$	19,765	10
U.S. government agency MBS	22,200		174		(472)		—		21,902		13
U.S. government agency CMO	28,851		—		(2,264)		—		26,587		34
State and municipal securities	41,224		—		(4,298)		—		36,926		32
U.S. Treasuries	32,984		—		(2,513)		—		30,471		25
Non-U.S. government agency CMO	15,663		81		(487)		—		15,257		12
Corporate bonds	8,990		82		(839)		—		8,233		13
Total securities available-for-sale	$	169,751	$	395	$	(11,005)	$	—	$	159,141	139
	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	$	35,089	$	9	$	(3,403)	$	—	$	31,695	21
Total securities held-to-maturity	$	35,089	$	9	$	(3,403)	$	—	$	31,695	21

	December 31, 2023
	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	$	17,012	$	25	$	(213)	$	—	$	16,824	11
U.S. government agency MBS	22,750		364		(480)		—		22,634		14
U.S. government agency CMO	21,850		—		(2,277)		—		19,573		30
State and municipal securities	40,093		—		(3,877)		—		36,216		31
U.S. Treasuries	32,982		—		(2,560)		—		30,422		25
Non-U.S. government agency CMO	13,605		102		(552)		—		13,155		9
Corporate bonds	8,200		—		(1,005)		—		7,195		13
Total securities available-for-sale	$	156,492	$	491	$	(10,964)	$	—	$	146,019	133
	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	$	35,781	$	52	$	(3,103)	$	—	$	32,730	21
Total securities held-to-maturity	$	35,781	$	52	$	(3,103)	$	—	$	32,730	21

Although the Corporation’s investment portfolio overall is in a net unrealized loss position at June 30, 2024, 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.

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:

	June 30, 2024
	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	$	7,348	$	(31)	$	4,019	$	(101)	$	11,367	$	(132)
U.S. government agency MBS	3,577		(90)		8,156		(382)		11,733		(472)
U.S. government agency CMO	7,771		(50)		18,816		(2,214)		26,587		(2,264)
State and municipal securities	1,491		(5)		35,435		(4,293)		36,926		(4,298)
U.S. Treasuries	—		—		30,471		(2,513)		30,471		(2,513)
Non-U.S. government agency CMO	5,402		(22)		5,566		(465)		10,968		(487)
Corporate bonds	—		—		7,362		(839)		7,362		(839)
Total securities available-for-sale	$	25,589	$	(198)	$	109,825	$	(10,807)	$	135,414	$	(11,005)
	Less than 12 Months				12 Months or more				Total
	Fair value		Unrecognized losses		Fair value		Unrecognized losses		Fair value		Unrecognized losses
Securities held-to-maturity:
State and municipal securities	$	1,047	$	(21)	$	29,339	$	(3,382)	$	30,386	$	(3,403)
Total securities held-to-maturity	$	1,047	$	(21)	$	29,339	$	(3,383)	$	30,386	$	(3,403)

	December 31, 2023
	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	$	4,981	$	(25)	$	6,195	$	(188)	$	11,176	$	(213)
U.S. government agency MBS	4,864		(35)		8,170		(445)		13,034		(480)
U.S. government agency CMO	2,687		(36)		16,886		(2,241)		19,573		(2,277)
State and municipal securities	—		—		36,216		(3,877)		36,216		(3,877)
U.S. Treasuries	—		—		30,422		(2,560)		30,422		(2,560)
Non-U.S. government agency CMO	1,127		(4)		6,065		(548)		7,192		(552)
Corporate bonds	907		(93)		6,288		(912)		7,195		(1,005)
Total securities available-for-sale	$	14,566	$	(193)	$	110,242	$	(10,771)	$	124,808	$	(10,964)
	Less than 12 Months				12 Months or more				Total
	Fair value		Unrecognized losses		Fair value		Unrecognized losses		Fair value		Unrecognized losses
Securities held-to-maturity:
State and municipal securities	$	1,021	$	(6)	$	29,404	$	(3,097)	$	30,425	$	(3,103)
Total securities held-to-maturity	$	1,021	$	(6)	$	29,404	$	(3,097)	$	30,425	$	(3,103)

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.

	June 30, 2024
	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	32,984		30,471		3,225		3,200
Due after five years through ten years	18,451		17,131		5,775		4,835
Due after ten years	51,602		47,793		26,089		23,660
Subtotal	103,037		95,395		35,089		31,695
Mortgage-related securities	66,714		63,746		—		—
Total	$	169,751	$	159,141	$	35,089	$	31,695

There were no sales of investment securities available for sale for the three and six month ended June 30, 2024. Proceeds from sales of investments for the three and six months ended June 30, 2023 was $13.5 million with $54 thousand in gross losses recognized.

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 and six months ended June 30, 2024 and 2023, we had no significant ACL or provision expense and no charge-offs or recoveries on AFS or HTM securities.

Pledged Securities

As of June 30, 2024 and December 31, 2023, securities having a carrying value of $54.3 million and $60.1 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 with the FHLB.

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Loans and Other Finance Receivables

6 Months Ended

Jun. 30, 2024

Receivables [Abstract]

Loans and Other Finance Receivables

Loans and Other Finance Receivables

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

(dollars in thousands)	June 30, 2024		December 31, 2023
Real estate loans:
Commercial mortgage	$	775,298	$	737,863
Home equity lines and loans	83,828		76,287
Residential mortgage	259,469		260,604
Construction	262,624		246,440
Total real estate loans	1,381,219		1,321,194
Commercial and industrial	352,471		302,891
Small business loans	151,458		142,342
Consumer	369		389
Leases, net	97,624		121,632
Total loans and other finance receivables	$	1,983,141	$	1,888,448
Balances included in loans and other finance receivables, net of fees and costs:
Residential mortgage real estate loans accounted under fair value option, at fair value	$	12,900	$	13,726
Residential mortgage real estate loans accounted under fair value option, at amortized cost	15,609		16,198
Unearned lease income included in leases, net	(13,404)		(19,210)
Unamortized net deferred loan origination costs	$	5,394	$	7,358

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.

Nonaccrual and Past Due Loans

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

	June 30, 2024
(dollars in thousands)	30-89 days past due		Current		Total accruing loans and leases		Nonaccrual loans and leases		Total loans portfolio and leases		% Delinquent
Commercial mortgage	$	864	$	774,434	$	775,298	$	—	$	775,298	0.11	%
Home equity lines and loans	136		82,523		82,659		1,169		83,828		1.56
Residential mortgage (1)	3,468		251,233		254,701		4,768		259,469		3.17
Construction	4,945		255,895		260,840		1,784		262,624		2.56
Commercial and industrial	—		339,124		339,124		13,347		352,471		3.79
Small business loans	—		137,185		137,185		14,273		151,458		9.42
Consumer	—		369		369		—		369		—
Leases, net	1,359		93,965		95,324		2,300		97,624		3.75	%
Total	$	10,772	$	1,934,728	$	1,945,500	$	37,641	$	1,983,141	2.44	%

(1) Includes $12.9 million of loans at fair value of which $12.4 million are current, $0 are 30-89 days past due and $451 thousand are nonaccrual.

	December 31, 2023
(dollars in thousands)	30-89 days past due		Current		Total accruing loans and leases		Nonaccrual loans and leases		Total loans portfolio and leases		% Delinquent
Commercial mortgage	$	571	$	737,292	$	737,863	$	—	$	737,863	0.08	%
Home equity lines and loans	566		74,684		75,250		1,037		76,287		2.10
Residential mortgage (1)	1,103		254,965		256,068		4,536		260,604		2.16
Construction	—		245,234		245,234		1,206		246,440		0.49
Commercial and industrial	—		287,478		287,478		15,413		302,891		5.09
Small business loans	1,499		131,403		132,902		9,440		142,342		7.69
Consumer	—		389		389		—		389		—
Leases, net	2,197		117,304		119,501		2,131		121,632		3.56	%
Total	$	5,936	$	1,848,749	$	1,854,685	$	33,763	$	1,888,448	2.10	%

(1) Includes $13.7 million of loans at fair value of which $12.9 million are current, $0 are 30-89 days past due and $786 thousand are nonaccrual.

There were no loans in the tables above as of June 30, 2024 or December 31, 2023 that were 90+days past due and still accruing interest.

Subsequent Event

On July 17, 2024 Meridian repurchased, at a discount of $575 thousand, the remaining balance of a commercial loan participation to another bank. The impact of this loan repurchase increased the balance of non-performing loans by $2.1 million and also increased the ACL by approximately the amount of the discount. In addition to the value created by the discount, this transaction will streamline collection and workout efforts.

Foreclosed and Repossessed Assets

At June 30, 2024 and December 31, 2023, there were 4 consumer mortgage loans secured by residential real estate properties (included in loans, net of fees and costs on the Consolidated Balance Sheets) totaling $1.3 million and $937 thousand, 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 tables presents the amortized costs basis of loans and leases on nonaccrual status and loans 90 days or more past due and still accruing, net of fees and costs as of June 30, 2024 and December 31, 2023. As of this date here were no loans 90 days or more past due and still accruing.

	June 30, 2024						December 31, 2023
(dollars in thousands)	Nonaccrual without ACL		Nonaccrual with ACL		Total nonaccrual		Nonaccrual without ACL		Nonaccrual with ACL		Total nonaccrual
Commercial mortgage	$	—	$	—	$	—	$	—	$	—	$	—
Home equity lines and loans	1,169		—		1,169		1,037		—		1,037
Residential mortgage	4,487		281		4,768		4,536		—		4,536
Construction	1,784		—		1,784		1,206		—		1,206
Commercial and industrial	433		12,914		13,347		3,343		12,070		15,413
Small business loans	3,821		10,452		14,273		3,607		5,833		9,440
Leases, net	2,300		—		2,300		2,131		—		2,131
Total	$	13,994	$	23,647	$	37,641	$	15,860	$	17,903	$	33,763

Collateral-dependent Loans

The following tables presents the amortized cost basis of non-accruing collateral-dependent loans by class or loans as of June 30, 2024 and December 31, 2023 under the current expected credit loss model:

	June 30, 2024						December 31, 2023
(dollars in thousands)	Real estate		Equipment and other		Total		Real estate		Equipment and other		Total
Commercial mortgage	$	—	$	—	$	—	$	—	$	—	$	—
Home equity lines and loans	1,169		—		1,169		1,037		—		1,037
Residential mortgage	4,768		—		4,768		4,536		—		4,536
Construction	1,784		—		1,784		1,206		—		1,206
Commercial and industrial	1,598		11,749		13,347		1,890		13,523		15,413
Small business loans	11,250		3,023		14,273		6,320		3,120		9,440
Leases, net	—		2,300		2,300		—		2,131		2,131
Total	$	20,569	$	17,072	$	37,641	$	14,989	$	18,774	$	33,763

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Allowance for Credit Losses

6 Months Ended

Jun. 30, 2024

Financing Receivable, Allowance for Credit Loss, Writeoff, after Recovery [Abstract]

Allowance for Credit Losses

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 and six months ended June 30, 2024 and June 30, 2023 under the CECL model in accordance with ASC 326 (as adopted on January 1, 2023):

	Three Months Ended June 30, 2024
(dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (recovery of provision) for credit losses		Ending balance
Commercial mortgage	$	4,179	$	—	$	—	$	(503)	$	3,676
Home equity lines and loans	958		(86)		26		216		1,114
Residential mortgage	1,177		—		—		(118)		1,059
Construction	583		—		—		8		591
Commercial and industrial	5,083		(1,620)		—		1,348		4,811
Small business loans	7,805		(1,392)		64		1,021		7,498
Consumer	1		—		1		(2)		—
Leases, net	3,385		(1,254)		147		676		2,954
Total	$	23,171	$	(4,352)	$	238	$	2,646	$	21,703

	Six Months Ended June 30, 2024
(dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (recovery of provision) for credit losses		Ending balance
Commercial mortgage	$	4,375	$	—	$	—	$	(699)	$	3,676
Home equity lines and loans	998		(86)		27		175		1,114
Residential mortgage	1,020		—		—		39		1,059
Construction	485		—		—		106		591
Commercial and industrial	4,518		(1,828)		2		2,119		4,811
Small business loans	7,005		(1,479)		67		1,905		7,498
Consumer	—		(1)		2		(1)		—
Leases, net	3,706		(3,402)		273		2,377		2,954
Total	$	22,107	$	(6,796)	$	371	$	6,021	$	21,703

	Three Months Ended June 30, 2023
(dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (recovery of provision) for credit losses		Ending balance
Commercial mortgage	$	3,475	$	—	$	—	$	(226)	$	3,249
Home equity lines and loans	615		(54)		1		228		790
Residential mortgage	868		—		—		179		1,047
Construction	1,119		—		—		175		1,294
Commercial and industrial	2,733		—		17		(509)		2,241
Small business loans	6,316		(326)		—		878		6,868
Consumer	—		—		1		(1)		—
Leases, net	5,316		(775)		149		63		4,753
Total	$	20,442	$	(1,155)	$	168	$	787	$	20,242

	Six Months Ended June 30, 2023
(dollars in thousands)	Beginning Balance		Adjustment to initially apply ASU No. 2016-13 for CECL		Charge-offs		Recoveries		Provision (Reversal)		Ending balance
Commercial mortgage	$	4,095	$	(526)	$	—	$	—	$	(320)	$	3,249
Home equity lines and loans	188		439		(87)		3		247		790
Residential mortgage	948		17		—		—		82		1,047
Construction	3,075		(1,763)		—		—		(18)		1,294
Commercial and industrial	4,012		(1,023)		—		56		(804)		2,241
Small business loans	4,909		1,110		(326)		—		1,175		6,868
Consumer	3		(3)		—		2		(2)		—
Leases, net	1,598		3,345		(2,239)		152		1,897		4,753
Total	$	18,828	$	1,596	$	(2,652)	$	213	$	2,257	$	20,242

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 June 30,				Six Months Ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Provision for credit losses - funded	$	2,646	$	787	$	6,021	$	2,257
Provision (recovery) for credit losses - unfunded	34		(82)		(475)		(153)
Total provision for credit losses	$	2,680	$	705	$	5,546	$	2,104

Allowance Allocated by Portfolio Segment

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

	June 30, 2024
	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	$	—	$	775,298	$	775,298
Home equity lines and loans	—		1,114		1,114		1,169		82,659		83,828
Residential mortgage	2		1,057		1,059		4,317		242,252		246,569
Construction	—		591		591		1,784		260,840		262,624
Commercial and industrial	3,422		1,389		4,811		13,347		339,124		352,471
Small business loans	3,729		3,769		7,498		14,273		137,185		151,458
Consumer	—		—		—		—		369		369
Leases, net	—		2,954		2,954		2,300		95,324		97,624
Total (1)	$	7,153	$	14,550	$	21,703	$	37,190	$	1,933,051	$	1,970,241

(1) Excludes deferred fees and loans carried at fair value.

	December 31, 2023
	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	$	—	$	4,375	$	4,375	$	—	$	737,863	$	737,863
Home equity lines and loans	—		998		998		1,037		75,250		76,287
Residential mortgage	—		1,020		1,020		3,750		243,128		246,878
Construction	—		485		485		1,206		245,234		246,440
Commercial and industrial	3,691		827		4,518		15,413		287,478		302,891
Small business loans	2,805		4,200		7,005		9,440		132,902		142,342
Consumer	—		—		—		—		389		389
Leases, net	—		3,706		3,706		2,131		119,501		121,632
Total (1)	$	6,496	$	15,611	$	22,107	$	32,977	$	1,841,745	$	1,874,722

(1) Excludes deferred fees and loans carried at fair value.

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 – Loans 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.

•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 leases by portfolio segment based on the credit quality indicators used to

determine the allowance for credit losses at the dates indicated:

	June 30, 2024												Revolving Loans Converted to Term Loans		Revolving Loans		Total
	Term Loans
(dollars in thousands)	2024		2023		2022		2021		2020		Prior
Commercial mortgage
Pass/Watch	$	52,276	$	107,159	$	160,661	$	154,167	$	90,830	$	188,101	$	511	$	737	$	754,442
Special Mention	—		—		4,432		—		4,856		8,248		667		—		18,203
Substandard	—		200		—		—		—		2,453		—		—		2,653
Total	$	52,276	$	107,359	$	165,093	$	154,167	$	95,686	$	198,802	$	1,178	$	737	$	775,298
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Construction
Pass/Watch	$	42,396	$	77,671	$	58,161	$	14,347	$	24,890	$	8,649	$	123	$	29,184	$	255,421
Special Mention	—		—		—		1,352		631		—		—		3,435		5,418
Substandard	—		—		—		67		—		1,718		—		—		1,785
Total	$	42,396	$	77,671	$	58,161	$	15,766	$	25,521	$	10,367	$	123	$	32,619	$	262,624
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial
Pass/Watch	$	61,487	$	24,256	$	21,417	$	22,502	$	9,555	$	27,767	$	—	$	149,245	$	316,229
Special Mention	—		—		2,683		—		—		1,351		—		5,739		9,773
Substandard	—		—		3,940		2,331		—		5,552		—		14,646		26,469
Total	$	61,487	$	24,256	$	28,040	$	24,833	$	9,555	$	34,670	$	—	$	169,630	$	352,471
Year-to-date gross charge-offs	$	—	$	(500)	$	—	$	—	$	—	$	(1,324)	$	—	$	(4)	$	(1,828)
Small business loans
Pass/Watch	$	17,700	$	28,812	$	27,700	$	32,174	$	9,893	$	7,132	$	—	$	13,432	$	136,843
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		409		2,224		6,500		3,890		—		—		1,592		14,615
Total	$	17,700	$	29,221	$	29,924	$	38,674	$	13,783	$	7,132	$	—	$	15,024	$	151,458
Year-to-date gross charge-offs	$	—	$	—	$	(772)	$	(140)	$	(75)	$	—	$	—	$	(492)	$	(1,479)
Total by risk rating
Pass/Watch	$	173,859	$	237,898	$	267,939	$	223,190	$	135,168	$	231,649	$	634	$	192,598	$	1,462,935
Special Mention	—		—		7,115		1,352		5,487		9,599		667		9,174		33,394
Substandard	—		609		6,164		8,898		3,890		9,723		—		16,238		45,522
Total	$	173,859	$	238,507	$	281,218	$	233,440	$	144,545	$	250,971	$	1,301	$	218,010	$	1,541,851
Total year-to-date gross charge-offs	$	—	$	(500)	$	(772)	$	(140)	$	(75)	$	(1,324)	$	—	$	(496)	$	(3,307)

	December 31, 2023												Revolving Loans Converted to Term Loans		Revolving Loans		Total
	Term Loans
(dollars in thousands)	2023		2022		2021		2020		2019		Prior
Commercial mortgage
Pass/Watch	$	106,341	$	160,302	$	158,647	$	97,535	$	56,382	$	133,349	$	511	$	423	$	713,490
Special Mention	—		—		—		4,425		4,341		9,975		667		—		19,408
Substandard	200		—		571		—		1,635		2,233		—		326		4,965
Total	$	106,541	$	160,302	$	159,218	$	101,960	$	62,358	$	145,557	$	1,178	$	749	$	737,863
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Construction
Pass/Watch	$	67,776	$	88,737	$	21,793	$	27,336	$	2,307	$	2,093	$	123	$	25,976	$	236,141
Special Mention	—		—		1,329		—		511		4,329		—		2,924		9,093
Substandard	—		—		—		—		—		1,206		—		—		1,206
Total	$	67,776	$	88,737	$	23,122	$	27,336	$	2,818	$	7,628	$	123	$	28,900	$	246,440
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial
Pass/Watch	$	26,314	$	38,748	$	24,523	$	8,449	$	4,148	$	33,726	$	—	$	131,304	$	267,212
Special Mention	500		9		—		—		—		1,361		—		6,440		8,310
Substandard	—		—		2,906		—		300		9,469		—		14,694		27,369
Total	$	26,814	$	38,757	$	27,429	$	8,449	$	4,448	$	44,556	$	—	$	152,438	$	302,891
Year-to-date gross charge-offs	$	(209)	$	(55)	$	—	$	(2)	$	—	$	—	$	—	$	—	$	(266)
Small business loans
Pass/Watch	$	35,764	$	26,621	$	37,278	$	11,687	$	6,672	$	920	$	—	$	12,507	$	131,449
Special Mention	—		—		—		909		—		—		—		314		1,223
Substandard	49		1,523		5,090		2,122		—		—		—		886		9,670
Total	$	35,813	$	28,144	$	42,368	$	14,718	$	6,672	$	920	$	—	$	13,707	$	142,342
Year-to-date gross charge-offs	$	—	$	—	$	—	$	(11)	$	(912)	$	—	$	—	$	(565)	$	(1,488)
Total by risk rating
Pass/Watch	$	236,195	$	314,408	$	242,241	$	145,007	$	69,509	$	170,088	$	634	$	170,210	$	1,348,292
Special Mention	500		9		1,329		5,334		4,852		15,665		667		9,678		38,034
Substandard	249		1,523		8,567		2,122		1,935		12,908		—		15,906		43,210
Total	$	236,944	$	315,940	$	252,137	$	152,463	$	76,296	$	198,661	$	1,301	$	195,794	$	1,429,536
Total year-to-date gross charge-offs	$	(209)	$	(55)	$	—	$	(13)	$	(912)	$	—	$	—	$	(565)	$	(1,754)

The Corporation had no loans with a risk rating of Doubtful included within recorded investment in loans and leases held for investment at June 30, 2024 and December 31, 2023.

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

	June 30, 2024												Revolving Loans		Total
	Term Loans
(dollars in thousands)	2024		2023		2022		2021		2020		Prior
Home equity lines and loans
Performing	$	455	$	338	$	779	$	214	$	341	$	3,610	$	76,442	$	82,179
Nonperforming	—						91						1,558		1,649
Total	$	455	$	338	$	779	$	305	$	341	$	3,610	$	78,000	$	83,828
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	(86)	$	(86)
Residential mortgage (1)
Performing	$	10,314	$	47,907	$	146,295	$	20,352	$	6,404	$	10,979	$	—	$	242,251
Nonperforming	—		—		2,177		—		870		1,271		—		4,318
Total	$	10,314	$	47,907	$	148,472	$	20,352	$	7,274	$	12,250	$	—	$	246,569
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer
Performing	$	—	$	53	$	27	$	—	$	—	$	253	$	36	$	369
Nonperforming	—		—		—		—		—		—		—		—
Total	$	—	$	53	$	27	$	—	$	—	$	253	$	36	$	369
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	(1)	$	(1)
Leases, net
Performing	$	240	$	19,152	$	45,406	$	23,510	$	7,024	$	—	$	—	$	95,332
Nonperforming	—		471		929		736		156		—		—		2,292
Total	$	240	$	19,623	$	46,335	$	24,246	$	7,180	$	—	$	—	$	97,624
Year-to-date gross charge-offs	$	—	$	(434)	$	(2,414)	$	(436)	$	(118)	$	—	$	—	$	(3,402)
Total by Payment Performance
Performing	$	11,009	$	67,450	$	192,507	$	44,076	$	13,769	$	14,842	$	76,478	$	420,131
Nonperforming	—		471		3,106		827		1,026		1,271		1,558		8,259
Total	$	11,009	$	67,921	$	195,613	$	44,903	$	14,795	$	16,113	$	78,036	$	428,390
Total year-to-date gross charge-offs	$	—	$	(434)	$	(2,414)	$	(436)	$	(118)	$	—	$	(87)	$	(3,489)
(1) Excludes $12.9 million of loans at fair value.

	December 31, 2023												Revolving Loans		Total
	Term Loans
(dollars in thousands)	2023		2022		2021		2020		2019		Prior
Home equity lines and loans
Performing	$	343	$	795	$	314	$	352	$	2,191	$	2,295	$	68,600	$	74,890
Nonperforming	—		—		—		—		—		—		1,397		1,397
Total	$	343	$	795	$	314	$	352	$	2,191	$	2,295	$	69,997	$	76,287
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	(33)	$	—	$	(54)	$	(87)
Residential mortgage (1)
Performing	$	48,576	$	154,219	$	22,237	$	6,260	$	456	$	11,380	$	—	$	243,128
Nonperforming	—		1,350		—		1,043		—		1,357		—		3,750
Total	$	48,576	$	155,569	$	22,237	$	7,303	$	456	$	12,737	$	—	$	246,878
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer
Performing	$	39	$	35	$	—	$	—	$	32	$	234	$	49	$	389
Nonperforming	—		—		—		—		—		—		—		—
Total	$	39	$	35	$	—	$	—	$	32	$	234	$	49	$	389
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	(2)	$	(2)
Leases, net
Performing	$	23,054	$	55,940	$	30,876	$	9,718	$	—	$	—	$	—	$	119,588
Nonperforming	263		1,194		368		219		—		—		—		2,044
Total	$	23,317	$	57,134	$	31,244	$	9,937	$	—	$	—	$	—	$	121,632
Year-to-date gross charge-offs	$	(128)	$	(2,165)	$	(1,450)	$	(290)	$	—	$	—	$	—	$	(4,033)
Total by Payment Performance
Performing	$	72,012	$	210,989	$	53,427	$	16,330	$	2,679	$	13,909	$	68,649	$	437,995
Nonperforming	263		2,544		368		1,262		—		1,357		1,397		7,191
Total	$	72,275	$	213,533	$	53,795	$	17,592	$	2,679	$	15,266	$	70,046	$	445,186
Total year-to-date gross charge-offs	$	(128)	$	(2,165)	$	(1,450)	$	(290)	$	(33)	$	—	$	(56)	$	(4,122)

(1) Excludes $13.7 million of fair value loans.

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 of loans, information regarding accruing and nonaccrual modified loans to borrowers experiencing financial difficulty during the three and six months ended June 30, 2024 and 2023.

	Three Months Ended June 30, 2024							Three Months Ended June 30, 2023
	Number of Loans	Amortized Cost Basis		% of Total Class of Financing Receivable		Related Reserve		Number of Loans	Amortized Cost Basis		% of Total Class of Financing Receivable		Related Reserve
(dollars in thousands)
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty:
Commercial & industrial	3	$	1,402	0.4	%	$	—	1	$	3,233	1.0	%	$	—
Total	3	$	1,402			$	—	1	$	3,233			$	—
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans	1	$	1,195	0.8	%	$	15	—	$	—	—	%	$	—
Commercial & industrial	4	1,605		0.5	%	—		1	1,406		0.5	%	422
Total	5	$	2,800			$	15	1	$	1,406			$	422

	Six Months Ended June 30, 2024							Six Months Ended June 30, 2023
	Number of Loans	Amortized Cost Basis		% of Total Class of Financing Receivable		Related Reserve		Number of Loans	Amortized Cost Basis		% of Total Class of Financing Receivable		Related Reserve
(dollars in thousands)
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans	3	$	719	0.5	%	$	—	—	$	—	—	%	$	—
Commercial & industrial	5	2,592		0.7	%	—		1	3,233		1.0	%	—
Total	8	$	3,311			$	—	1	$	3,233			$	—
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans	6	$	4,029	2.7	%	$	1,024	—	$	—	—	%	$	—
Commercial & industrial	4	1,605		0.5	%	—		1	1,406		0.5	%	422
Total	10	$	5,634			$	1,024	1	$	1,406			$	422

The following presents, by class of loans, information regarding accruing and nonaccrual modified loans to borrowers experiencing financial difficulty during the three and six months ended June 30, 2024 and 2023.

	Three Months Ended June 30, 2024		Three Months Ended June 30, 2023
	Number of Loans	Financial Effect	Number of Loans	Financial Effect
(dollars in thousands)
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty:
Commercial & industrial	3	Extend maturity date and payment concession	1	Extend maturity
Total	3		1
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans	1	Extend maturity date and allow additional lender funding	—
Commercial & industrial	4	Extend maturity date	1	Extend term and allow additional lender funding
Total	5		1

	Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
	Number of Loans	Financial Effect	Number of Loans	Financial Effect
(dollars in thousands)
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans	3	Extend maturity date	—
Commercial & industrial	5	Extend maturity date and allow additional lender funding	1	Extend maturity
Total	8		1
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans	6	Extend maturity date	—
Commercial & industrial	4	Extend maturity date and allow additional lender funding	1	Extend term and allow additional lender funding
Total	10		1

There were 8 and 2 modifications granted to borrowers experiencing financial difficulty for the three months ended June 30, 2024 and June 30, 2023, respectively. There were 11 and 2 modifications granted to borrowers experiencing financial difficulty for the six months ended June 30, 2024 and June 30, 2023, respectively. The increase in assistance provided to small business loan customers experiencing financial difficulty is largely due to the elevated interest rate environment we continue to experience as the majority of our small business loans carry a variable interest rate. In accordance with the SBA's SOP 50-57-3 covering loan servicing, we work with such customers to help determine whether temporary payment relief would help to improve their cash flows in the near future.

There was one loan that had a payment default during the three and six months ended June 30, 2024 and zero during the three and six months ended June 30, 2023, that were modified in the 12 months before default to borrowers experiencing financial difficulty. There were no commitments to lend additional funds to the borrowers experiencing financial difficulty that had modifications during the three and six months ended June 30, 2024 and June 30, 2023.

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Short-Term Borrowings and Long -Term Debt

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Short-Term Borrowings and Long-Term Debt

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 $947 thousand and $0 in Federal funds purchased at June 30, 2024 and December 31, 2023. The Corporation also has a facility with the Federal Reserve Bank discount window of $11.1 million. This facility is fully secured by investment securities and pledged loans. There were no borrowings under this at June 30, 2024 and December 31, 2023. The Corporation's facility with the Federal Reserve’s BTFP in the amount of $33 million expired in March 2024.

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

(dollars in thousands)	Maturity date	Interest rate	June 30, 2024		December 31, 2023
FHLB Open Repo Plus Weekly	06/16/2025	5.67%	$	95,080	$	104,792
FRB BTFP Advances	03/29/2024	4.76%	—		33,000
Fed Funds Overnight Borrowing	7/01/2024	6.50%	947		—
ACBB Holding Company Revolving LOC	6/25/2025	8.75%	4,000		—
FHLB Mid-term Repo Fixed	9/30/2024	4.60%	3,432		3,432
FHLB Mid-term Repo Fixed	10/25/2024	5.03%	8,097		—
FHLB Mid-term Repo Fixed	7/31/2024	5.68%	15,625		—
FHLB Mid-term Repo Fixed	1/27/2025	4.85%	8,000		—
FHLB Mid-term Repo Fixed	2/24/2025	5.35%	7,813		—
Total Short-Term Borrowings			$	142,994	$	141,224

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

(dollars in thousands)	Maturity date	Interest rate	June 30, 2024		December 31, 2023
FHLB Mid-term Repo Fixed	12/22/2025	4.23%	$	8,935	$	8,935
FHLB Mid-term Repo Fixed	5/20/2027	4.70%	10,594		—
FHLB Mid-term Repo Fixed	10/14/2025	5.16%	9,492		9,492
FHLB Mid-term Repo Fixed	7/14/2026	4.57%	15,245		15,245
Total Long-Term Borrowings			$	44,266	$	33,672

The FHLB has also issued $157.2 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 2024.

The Corporation has a maximum borrowing capacity with the FHLB of $666.6 million as of June 30, 2024 and $626.8 million as of December 31, 2023. 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.

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Servicing Assets

6 Months Ended

Jun. 30, 2024

Transfers and Servicing [Abstract]

Servicing Assets

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.

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 $917.0 million and $945.2 million of residential mortgage loans as of June 30, 2024 and December 31, 2023, respectively. During the three and six months ended June 30, 2024, the Corporation recognized servicing fee income of $578 thousand and $1.2 million, respectively, compared to $618 thousand and $1.3 million, respectively, during the three and six months ended June 30, 2023.

Changes in the MSR balance are summarized as follows:

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Balance at beginning of the period	$	8,314	$	9,573	$	8,622	$	9,942
Servicing rights capitalized	22		—		32		—
Amortization of servicing rights	(310)		(335)		(628)		(706)
Change in valuation allowance - recovery	—		—		—		2
Balance at end of the period	$	8,026	$	9,238	$	8,026	$	9,238

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 June 30, 2024, the key assumptions used to determine the fair value of the Corporation’s MSRs included a lifetime constant prepayment rate equal to 8.04% and a discount rate equal to 9.50%. At December 31, 2023, the key assumptions used to determine the fair value of the Corporation’s MSRs included a lifetime constant prepayment rate equal to 8.57% and a discount rate equal to 9.50%. Due in part to market volatility as interest rates increased, the prepayment speed assumption has decreased from December 31, 2023 to June 30, 2024.

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)	June 30, 2024			December 31, 2023
Fair value of residential mortgage servicing rights	$	10,939		$	11,221
Weighted average life (months)	40			28
Prepayment speed	8.04		%	8.57		%
Impact on fair value:
10% adverse change	$	(486)		$	(506)
20% adverse change	(934)			(973)
Discount rate	9.50		%	9.50		%
Impact on fair value:
10% adverse change	$	(560)		$	(415)
20% adverse change	(1,063)			(799)

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 articular 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 servicing asset. The Corporation serviced $243.1 million and $225.8 million of SBA loans, as of June 30, 2024 and December 31, 2023, respectively.

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

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Balance at beginning of the period	$	3,259	$	2,552	$	3,127	$	2,404
Servicing rights capitalized	256		512		453		726
Amortization of servicing rights	(219)		(252)		(460)		(447)
Change in valuation allowance	19		143		195		272
Balance at end of the period	$	3,315	$	2,955	$	3,315	$	2,955

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

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Valuation allowance, beginning of period	$	(92)	$	(235)	$	(268)	$	(364)
Impairment	—		—		—		—
Recovery	19		143		195		272
Valuation allowance, end of period	$	(73)	$	(92)	$	(73)	$	(92)

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 June 30, 2024, 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 16.47% and a discount rate equal to 13.05%. At December 31, 2023, 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 14.70% and a discount rate equal to 14.66%.

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)	June 30, 2024			December 31, 2023
Fair value of SBA loan servicing rights	$	3,644		$	3,376
Weighted average life (years)	3.2			3.5
Prepayment speed	16.47		%	14.70		%
Impact on fair value:
10% adverse change	$	(158)		$	(125)
20% adverse change	(144)			(241)
Discount rate	13.05		%	14.66		%
Impact on fair value:
10% adverse change	$	(81)		$	(74)
20% adverse change	(159)			(145)

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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Fair Value Measurements and Disclosures

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements and Disclosures

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.

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:

	June 30, 2024
(dollars in thousands)	Total		Level 1		Level 2		Level 3
Assets
Securities available for sale:
U.S. asset backed securities	$	19,765	$	—	$	19,765	$	—
U.S. government agency MBS	21,902		—		21,902		—
U.S. government agency CMO	26,587		—		26,587		—
State and municipal securities	36,926		—		36,926		—
U.S. Treasuries	30,471		30,471		—		—
Non-U.S. government agency CMO	15,257		—		15,257
Corporate bonds	8,233		—		8,233		—
Equity investments	2,088		—		2,088		—
Mortgage loans held for sale	54,278		—		54,278		—
Mortgage loans held for investment	12,900		—		12,900		—
Interest rate lock commitments	451		—		—		451
Forward commitments	16		—		16		—
Customer derivatives - interest rate swaps	3,658		—		3,658		—
Interest rate swaps	613		—		613		—
Total	$	233,145	$	30,471	$	202,223	$	451
Liabilities
Interest rate lock commitments	$	52	$	—	$	—	$	52
Forward commitments	14		—		14		—
Customer derivatives - interest rate swaps	3,649		—		3,649		—
Risk Participation Agreements	4		—		4		—
Total	$	3,719	$	—	$	3,667	$	52

	December 31, 2023
(dollars in thousands)	Total		Level 1		Level 2		Level 3
Assets
Securities available for sale:
U.S. asset backed securities	$	16,824	$	—	$	16,824	$	—
U.S. government agency MBS	22,634		—		22,634		—
U.S. government agency CMO	19,573		—		19,573		—
State and municipal securities	36,216		—		36,216		—
U.S. Treasuries	30,422		30,422		—		—
Non-U.S. government agency CMO	13,155		—		13,155		—
Corporate bonds	7,195		—		7,195		—
Equity investments	2,121		—		2,121		—
Mortgage loans held for sale	24,816		—		24,816		—
Mortgage loans held for investment	13,726		—		13,726		—
Interest rate lock commitments	214		—		—		214
Customer derivatives - interest rate swaps	3,528		—		3,528		—
Total	$	190,424	$	30,422	$	159,788	$	214

Liabilities
Interest rate lock commitments	$	17	$	—	$	—	$	17
Forward commitments	41		—		41		—
Customer derivatives - interest rate swaps	3,544		—		3,544		—
Risk Participation Agreements	11		—		11		—
Total	$	3,613	$	—	$	3,596	$	17

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

(dollars in thousands)	June 30, 2024		December 31, 2023
Mortgage servicing rights	$	8,026	$	8,621
SBA loan servicing rights	3,315		3,127
Individually evaluated loans (1)
Commercial and industrial	9,942		9,818
Small business loans	6,348		3,134
Total	$	27,631	$	24,700

(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 increase in individually evaluated commercial and industrial loans noted above was due to reassessing how we evaluate the impairment on a loan relationship to now be based on the fair value of collateral.

The following table details the valuation techniques for Level 3 individually evaluated loans.

(dollars in thousands)	Fair Value		Valuation Technique	Significant Unobservable Input	Range of Inputs
June 30, 2024	$	16,290	Appraisal of collateral	Management adjustments on appraisals for property type and recent activity	2%-33% discount
December 31, 2023	12,952		Appraisal of collateral	Management adjustments on appraisals for property type and recent activity	2%-33% discount

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.

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 Allowance 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	June 30, 2024				December 31, 2023
(dollars in thousands)		Carrying amount		Fair value		Carrying amount		Fair value
Financial assets:
Cash and cash equivalents	Level 1	$	24,058	$	24,058	$	56,697	$	56,697
Mortgage loans held for sale	Level 2	54,278		54,278		24,816		24,816
Loans receivable, net of the allowance for credit losses	Level 3	1,975,635		1,905,722		1,882,080		1,832,558
Mortgage loans held for investment	Level 2	12,900		12,900		13,726		13,726
Financial liabilities:
Deposits	Level 2	$	1,915,436	$	1,912,200	$	1,823,462	$	1,834,700
Borrowings	Level 2	187,260		196,300		174,896		176,400
Subordinated debentures	Level 2	49,897		48,732		49,836		50,223

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 June 30,				Six months ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Balance at beginning of the period	$	288	$	139	$	214	$	87
Increase in value	163		122		237		174
Balance at end of the period	$	451	$	261	$	451	$	261

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
June 30, 2024	$	451	Market comparable pricing	Pull through	1 - 99%	83.31%
December 31, 2023	214		Market comparable pricing	Pull through	1 - 99%	79.48

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

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 received 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 and six months ended June 30, 2024, approximately $133 thousand and $896 thousand respectively, net of tax, is recorded in total comprehensive income as unrealized gains. For the three and six months ended June 30, 2023, approximately $338 thousand respectively, net of tax, is recorded in total comprehensive income as unrealized gains. 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 June 30, 2024. At June 30, 2024 and December 31, 2023, the combined notional amount of the interest rate swaps was $75 million and $75 million, respectively, and the fair value was an asset of $613 thousand and a liability of $539 thousand, respectively.

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:

		June 30, 2024				December 31, 2023
(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	$	70,244	$	451	$	33,735	$	214
Negative fair values	Other liabilities	17,061		(52)		5,399		(17)
Total		$	87,305	$	399	$	39,134	$	197
Forward Commitments
Positive fair values	Other assets	$	3,750	$	16	$	—	$	—
Negative fair values	Other liabilities	4,750		(14)		4,250		(41)
Total		$	8,500	$	2	$	4,250	$	(41)
Customer Derivatives - Interest Rate Swaps
Positive fair values	Other assets	$	49,633	$	3,658	$	50,593	$	3,528
Negative fair values	Other liabilities	49,633		(3,649)		50,593		(3,544)
Total		$	99,266	$	9	$	101,186	$	(17)
Customer Derivatives - Risk Participation Agreements
Positive fair values	Other assets	$	—	$	—	$	—	$	—
Negative fair values	Other liabilities	7,020		(4)		7,082		(11)
Total		$	7,020	$	(4)	$	7,082	$	(11)
Interest Rate Swaps
Positive fair values	Other assets	$	75,000	$	613	$	—	$	—
Negative fair values	Other liabilities	—		—		75,000		(539)
Total		$	75,000	$	613	$	75,000	$	(539)
Total derivative financial instruments		$	277,091	$	1,019	$	226,652	$	(410)

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.

The following table presents a summary of the fair value gains and (losses) on derivative financial instruments:

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Interest Rate Lock Commitments	$	195	$	146	$	202	$	109
Forward Commitments	2		13		43		13
Customer Derivatives - Interest Rate Swaps	5		14		26		(14)
Customer Derivatives - Risk Participation Agreements	1		9		7		5
Interest Rate Swaps	176		435		1,152		435
Net fair value gains (losses) on derivative financial instruments	$	379	$	617	$	1,430	$	548

Net realized losses on derivative hedging activities were $63 thousand and $82 thousand for the three and six months ended June 30, 2024, respectively, and $1 thousand for the three and six months ended June 30, 2023, respectively, and are included in non-interest income in the consolidated statements of income.

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Segments

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

Segments

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 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.

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. The unit generates non-interest income through advisory fees.

Meridian’s mortgage banking segment (“Mortgage”) consists of 8 loan production offices throughout suburban Philadelphia and Maryland. 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 net hedging gains (losses), if any.

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 June 30, 2024								Three Months Ended June 30, 2023
(Dollars in thousands)	Bank		Wealth		Mortgage		Total		Bank		Wealth		Mortgage		Total
Net interest income	$	16,784	$	36	$	26	$	16,846	$	17,102	$	(29)	$	25	$	17,098
Provision for credit losses	2,680		—		—		2,680		705		—		—		705
Net interest income after provision	14,104		36		26		14,166		16,397		(29)		25		16,393
Non-interest Income
Mortgage banking income	67		—		5,353		5,420		81		—		4,969		5,050
Wealth management income	—		1,444		—		1,444		—		1,235		—		1,235
SBA loan income	785		—		—		785		1,767		—		—		1,767
Net change in fair values	6		—		144		150		23		—		(258)		(235)
Net loss on hedging activity	—		—		(63)		(63)		—		—		(1)		(1)
Other	815		—		693		1,508		637		—		671		1,308
Non-interest income	1,673		1,444		6,127		9,244		2,508		1,235		5,381		9,124
Non-interest expense	12,606		804		5,608		19,018		12,325		889		6,401		19,615
Income (loss) before income taxes	$	3,171	$	676	$	545	$	4,392	$	6,580	$	317	$	(995)	$	5,902
Total Assets	$	2,248,950	$	10,347	$	92,287	$	2,351,584	$	2,143,278	$	8,485	$	55,114	$	2,206,877

	Segment Information
	Six Months Ended June 30, 2024								Six Months Ended June 30, 2023
(Dollars in thousands)	Bank		Wealth		Mortgage		Total		Bank		Wealth		Mortgage		Total
Net interest income	$	33,376	$	30	$	49	$	33,455	$	34,721	$	3	$	51	$	34,775
Provision for credit losses	5,546		—		—		5,546		2,104		—		—		2,104
Net interest income after provision	27,830		30		49		27,909		32,617		3		51		32,671
Non-interest Income
Mortgage banking income	155		—		8,899		9,054		139		—		8,183		8,322
Wealth management income	1		2,760		—		2,761		—		2,431		—		2,431
SBA loan income	1,771		—		—		1,771		2,480		—		—		2,480
Net change in fair values	34		—		14		48		(8)		—		(180)		(188)
Net loss on hedging activity	—		—		(82)		(82)		—		—		(1)		(1)
Other	1,589		—		2,087		3,676		1,327		—		1,391		2,718
Non-interest income	3,550		2,760		10,918		17,228		3,938		2,431		9,393		15,762
Non-interest expense	24,669		1,636		10,887		37,192		23,024		1,877		12,503		37,404
Income (loss) before income taxes	$	6,711	$	1,154	$	80	$	7,945	$	13,531	$	557	$	(3,059)	$	11,029
Total Assets	$	2,248,950	$	10,347	$	92,287	$	2,351,584	$	2,143,278	$	8,485	$	55,114	$	2,206,877

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

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, 2023), 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 and six months ended June 30, 2024 are not necessarily indicative of the results for the year ending December 31, 2024 or for any other period.

Pronouncements Adopted in 2024 and Pronouncements Not Yet Effective as of June 30, 2024

Pronouncements Adopted in 2024

The following pronouncements were adopted in 2024, but did not have a material impact on our consolidated financial statements.

•FASB ASU 2020-06, “Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”

•FASB ASU 2023-02, "Investments Equity Method and Joint Ventures (Topic 323) Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method"

Pronouncements Not Yet Effective as of June 30, 2024:

FASB ASU 2023-07, “Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures”

The amendments in this update improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments in this update also do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Corporation is currently evaluating the impact on its disclosures.

FASB ASU 2023-09, “Income Taxes (Topic 740) Improvements to Income Tax Disclosures”

The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in this update are effective for fiscal years beginning after December 15, 2024 and are to be applied on a prospective basis. Early adoption is permitted.The Corporation is currently evaluating the impact on its disclosures.

FASB ASU 2024-01 Stock Compensation - Scope Application of Profits Interest and Similar Awards

The amendments in this update improve the understandability of paragraph 718-10-15-3 apply to all entities that enter into share-based payments transactions. The amendments in this update are effective for fiscal years beginning after December 15, 2024 and are to be applied on a prospective basis. The Corporation is currently evaluating the impact on its disclosures.

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 FASB ASC. The amendments in this ASU 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 and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, 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.

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Earnings per Common Share (Tables)

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Schedule of basic and diluted earnings per common share

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands, except per share data)	2024		2023		2024		2023
Numerator for earnings per share:
Net income available to common stockholders	$	3,326	$	4,645	$	6,002	$	8,666
Denominators for earnings per share:
Weighted average shares outstanding	11,247		11,240		11,246		11,348
Average unearned ESOP shares	(151)		(178)		(154)		(181)
Basic weighted averages shares outstanding	11,096		11,062		11,092		11,167
Dilutive effects of assumed exercises of stock options	54		72		86		165
Dilutive effects of SERP shares	—		170		—		162
Diluted weighted averages shares outstanding	11,150		11,304		11,178		11,494
Basic earnings per share	$	0.30	$	0.42	$	0.54	$	0.78
Diluted earnings per share	$	0.30	$	0.41	$	0.54	$	0.75
Antidilutive shares excluded from computation of average dilutive earnings per share	587		512		587		507

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Securities (Tables)

6 Months Ended

Jun. 30, 2024

Investments, Debt and Equity Securities [Abstract]

Schedule of amortized cost and fair value of securities

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

	June 30, 2024
(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	$	19,839	$	58	$	(132)	$	—	$	19,765	10
U.S. government agency MBS	22,200		174		(472)		—		21,902		13
U.S. government agency CMO	28,851		—		(2,264)		—		26,587		34
State and municipal securities	41,224		—		(4,298)		—		36,926		32
U.S. Treasuries	32,984		—		(2,513)		—		30,471		25
Non-U.S. government agency CMO	15,663		81		(487)		—		15,257		12
Corporate bonds	8,990		82		(839)		—		8,233		13
Total securities available-for-sale	$	169,751	$	395	$	(11,005)	$	—	$	159,141	139
	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	$	35,089	$	9	$	(3,403)	$	—	$	31,695	21
Total securities held-to-maturity	$	35,089	$	9	$	(3,403)	$	—	$	31,695	21

	December 31, 2023
	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	$	17,012	$	25	$	(213)	$	—	$	16,824	11
U.S. government agency MBS	22,750		364		(480)		—		22,634		14
U.S. government agency CMO	21,850		—		(2,277)		—		19,573		30
State and municipal securities	40,093		—		(3,877)		—		36,216		31
U.S. Treasuries	32,982		—		(2,560)		—		30,422		25
Non-U.S. government agency CMO	13,605		102		(552)		—		13,155		9
Corporate bonds	8,200		—		(1,005)		—		7,195		13
Total securities available-for-sale	$	156,492	$	491	$	(10,964)	$	—	$	146,019	133
	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	$	35,781	$	52	$	(3,103)	$	—	$	32,730	21
Total securities held-to-maturity	$	35,781	$	52	$	(3,103)	$	—	$	32,730	21

Schedule of investment gross unrealized loss in continuous unrealized loss position

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:

	June 30, 2024
	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	$	7,348	$	(31)	$	4,019	$	(101)	$	11,367	$	(132)
U.S. government agency MBS	3,577		(90)		8,156		(382)		11,733		(472)
U.S. government agency CMO	7,771		(50)		18,816		(2,214)		26,587		(2,264)
State and municipal securities	1,491		(5)		35,435		(4,293)		36,926		(4,298)
U.S. Treasuries	—		—		30,471		(2,513)		30,471		(2,513)
Non-U.S. government agency CMO	5,402		(22)		5,566		(465)		10,968		(487)
Corporate bonds	—		—		7,362		(839)		7,362		(839)
Total securities available-for-sale	$	25,589	$	(198)	$	109,825	$	(10,807)	$	135,414	$	(11,005)
	Less than 12 Months				12 Months or more				Total
	Fair value		Unrecognized losses		Fair value		Unrecognized losses		Fair value		Unrecognized losses
Securities held-to-maturity:
State and municipal securities	$	1,047	$	(21)	$	29,339	$	(3,382)	$	30,386	$	(3,403)
Total securities held-to-maturity	$	1,047	$	(21)	$	29,339	$	(3,383)	$	30,386	$	(3,403)

	December 31, 2023
	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	$	4,981	$	(25)	$	6,195	$	(188)	$	11,176	$	(213)
U.S. government agency MBS	4,864		(35)		8,170		(445)		13,034		(480)
U.S. government agency CMO	2,687		(36)		16,886		(2,241)		19,573		(2,277)
State and municipal securities	—		—		36,216		(3,877)		36,216		(3,877)
U.S. Treasuries	—		—		30,422		(2,560)		30,422		(2,560)
Non-U.S. government agency CMO	1,127		(4)		6,065		(548)		7,192		(552)
Corporate bonds	907		(93)		6,288		(912)		7,195		(1,005)
Total securities available-for-sale	$	14,566	$	(193)	$	110,242	$	(10,771)	$	124,808	$	(10,964)
	Less than 12 Months				12 Months or more				Total
	Fair value		Unrecognized losses		Fair value		Unrecognized losses		Fair value		Unrecognized losses
Securities held-to-maturity:
State and municipal securities	$	1,021	$	(6)	$	29,404	$	(3,097)	$	30,425	$	(3,103)
Total securities held-to-maturity	$	1,021	$	(6)	$	29,404	$	(3,097)	$	30,425	$	(3,103)

Schedule of amortized cost and carrying value of held-to-maturity securities and available-for-sale securities by contractual maturity

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.

	June 30, 2024
	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	32,984		30,471		3,225		3,200
Due after five years through ten years	18,451		17,131		5,775		4,835
Due after ten years	51,602		47,793		26,089		23,660
Subtotal	103,037		95,395		35,089		31,695
Mortgage-related securities	66,714		63,746		—		—
Total	$	169,751	$	159,141	$	35,089	$	31,695

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Loans and Other Finance Receivables (Tables)

6 Months Ended

Jun. 30, 2024

Receivables [Abstract]

Summary of loans and leases outstanding

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

(dollars in thousands)	June 30, 2024		December 31, 2023
Real estate loans:
Commercial mortgage	$	775,298	$	737,863
Home equity lines and loans	83,828		76,287
Residential mortgage	259,469		260,604
Construction	262,624		246,440
Total real estate loans	1,381,219		1,321,194
Commercial and industrial	352,471		302,891
Small business loans	151,458		142,342
Consumer	369		389
Leases, net	97,624		121,632
Total loans and other finance receivables	$	1,983,141	$	1,888,448
Balances included in loans and other finance receivables, net of fees and costs:
Residential mortgage real estate loans accounted under fair value option, at fair value	$	12,900	$	13,726
Residential mortgage real estate loans accounted under fair value option, at amortized cost	15,609		16,198
Unearned lease income included in leases, net	(13,404)		(19,210)
Unamortized net deferred loan origination costs	$	5,394	$	7,358

Schedule of age analysis of past due loans and leases

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

	June 30, 2024
(dollars in thousands)	30-89 days past due		Current		Total accruing loans and leases		Nonaccrual loans and leases		Total loans portfolio and leases		% Delinquent
Commercial mortgage	$	864	$	774,434	$	775,298	$	—	$	775,298	0.11	%
Home equity lines and loans	136		82,523		82,659		1,169		83,828		1.56
Residential mortgage (1)	3,468		251,233		254,701		4,768		259,469		3.17
Construction	4,945		255,895		260,840		1,784		262,624		2.56
Commercial and industrial	—		339,124		339,124		13,347		352,471		3.79
Small business loans	—		137,185		137,185		14,273		151,458		9.42
Consumer	—		369		369		—		369		—
Leases, net	1,359		93,965		95,324		2,300		97,624		3.75	%
Total	$	10,772	$	1,934,728	$	1,945,500	$	37,641	$	1,983,141	2.44	%

(1) Includes $12.9 million of loans at fair value of which $12.4 million are current, $0 are 30-89 days past due and $451 thousand are nonaccrual.

	December 31, 2023
(dollars in thousands)	30-89 days past due		Current		Total accruing loans and leases		Nonaccrual loans and leases		Total loans portfolio and leases		% Delinquent
Commercial mortgage	$	571	$	737,292	$	737,863	$	—	$	737,863	0.08	%
Home equity lines and loans	566		74,684		75,250		1,037		76,287		2.10
Residential mortgage (1)	1,103		254,965		256,068		4,536		260,604		2.16
Construction	—		245,234		245,234		1,206		246,440		0.49
Commercial and industrial	—		287,478		287,478		15,413		302,891		5.09
Small business loans	1,499		131,403		132,902		9,440		142,342		7.69
Consumer	—		389		389		—		389		—
Leases, net	2,197		117,304		119,501		2,131		121,632		3.56	%
Total	$	5,936	$	1,848,749	$	1,854,685	$	33,763	$	1,888,448	2.10	%

(1) Includes $13.7 million of loans at fair value of which $12.9 million are current, $0 are 30-89 days past due and $786 thousand are nonaccrual.

Schedule of financing receivables, nonaccrual

The following tables presents the amortized costs basis of loans and leases on nonaccrual status and loans 90 days or more past due and still accruing, net of fees and costs as of June 30, 2024 and December 31, 2023. As of this date here were no loans 90 days or more past due and still accruing.

	June 30, 2024						December 31, 2023
(dollars in thousands)	Nonaccrual without ACL		Nonaccrual with ACL		Total nonaccrual		Nonaccrual without ACL		Nonaccrual with ACL		Total nonaccrual
Commercial mortgage	$	—	$	—	$	—	$	—	$	—	$	—
Home equity lines and loans	1,169		—		1,169		1,037		—		1,037
Residential mortgage	4,487		281		4,768		4,536		—		4,536
Construction	1,784		—		1,784		1,206		—		1,206
Commercial and industrial	433		12,914		13,347		3,343		12,070		15,413
Small business loans	3,821		10,452		14,273		3,607		5,833		9,440
Leases, net	2,300		—		2,300		2,131		—		2,131
Total	$	13,994	$	23,647	$	37,641	$	15,860	$	17,903	$	33,763

Schedule of non-accruing collateral dependent loans by class or loans

The following tables presents the amortized cost basis of non-accruing collateral-dependent loans by class or loans as of June 30, 2024 and December 31, 2023 under the current expected credit loss model:

	June 30, 2024						December 31, 2023
(dollars in thousands)	Real estate		Equipment and other		Total		Real estate		Equipment and other		Total
Commercial mortgage	$	—	$	—	$	—	$	—	$	—	$	—
Home equity lines and loans	1,169		—		1,169		1,037		—		1,037
Residential mortgage	4,768		—		4,768		4,536		—		4,536
Construction	1,784		—		1,784		1,206		—		1,206
Commercial and industrial	1,598		11,749		13,347		1,890		13,523		15,413
Small business loans	11,250		3,023		14,273		6,320		3,120		9,440
Leases, net	—		2,300		2,300		—		2,131		2,131
Total	$	20,569	$	17,072	$	37,641	$	14,989	$	18,774	$	33,763

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Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2024

Financing Receivable, Allowance for Credit Loss, Writeoff, after Recovery [Abstract]

Schedule of allocation of the allowance for loan and lease losses

The following tables provide the activity of our allowance for credit losses for the three and six months ended June 30, 2024 and June 30, 2023 under the CECL model in accordance with ASC 326 (as adopted on January 1, 2023):

	Three Months Ended June 30, 2024
(dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (recovery of provision) for credit losses		Ending balance
Commercial mortgage	$	4,179	$	—	$	—	$	(503)	$	3,676
Home equity lines and loans	958		(86)		26		216		1,114
Residential mortgage	1,177		—		—		(118)		1,059
Construction	583		—		—		8		591
Commercial and industrial	5,083		(1,620)		—		1,348		4,811
Small business loans	7,805		(1,392)		64		1,021		7,498
Consumer	1		—		1		(2)		—
Leases, net	3,385		(1,254)		147		676		2,954
Total	$	23,171	$	(4,352)	$	238	$	2,646	$	21,703

	Six Months Ended June 30, 2024
(dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (recovery of provision) for credit losses		Ending balance
Commercial mortgage	$	4,375	$	—	$	—	$	(699)	$	3,676
Home equity lines and loans	998		(86)		27		175		1,114
Residential mortgage	1,020		—		—		39		1,059
Construction	485		—		—		106		591
Commercial and industrial	4,518		(1,828)		2		2,119		4,811
Small business loans	7,005		(1,479)		67		1,905		7,498
Consumer	—		(1)		2		(1)		—
Leases, net	3,706		(3,402)		273		2,377		2,954
Total	$	22,107	$	(6,796)	$	371	$	6,021	$	21,703

	Three Months Ended June 30, 2023
(dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (recovery of provision) for credit losses		Ending balance
Commercial mortgage	$	3,475	$	—	$	—	$	(226)	$	3,249
Home equity lines and loans	615		(54)		1		228		790
Residential mortgage	868		—		—		179		1,047
Construction	1,119		—		—		175		1,294
Commercial and industrial	2,733		—		17		(509)		2,241
Small business loans	6,316		(326)		—		878		6,868
Consumer	—		—		1		(1)		—
Leases, net	5,316		(775)		149		63		4,753
Total	$	20,442	$	(1,155)	$	168	$	787	$	20,242

	Six Months Ended June 30, 2023
(dollars in thousands)	Beginning Balance		Adjustment to initially apply ASU No. 2016-13 for CECL		Charge-offs		Recoveries		Provision (Reversal)		Ending balance
Commercial mortgage	$	4,095	$	(526)	$	—	$	—	$	(320)	$	3,249
Home equity lines and loans	188		439		(87)		3		247		790
Residential mortgage	948		17		—		—		82		1,047
Construction	3,075		(1,763)		—		—		(18)		1,294
Commercial and industrial	4,012		(1,023)		—		56		(804)		2,241
Small business loans	4,909		1,110		(326)		—		1,175		6,868
Consumer	3		(3)		—		2		(2)		—
Leases, net	1,598		3,345		(2,239)		152		1,897		4,753
Total	$	18,828	$	1,596	$	(2,652)	$	213	$	2,257	$	20,242

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 June 30,				Six Months Ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Provision for credit losses - funded	$	2,646	$	787	$	6,021	$	2,257
Provision (recovery) for credit losses - unfunded	34		(82)		(475)		(153)
Total provision for credit losses	$	2,680	$	705	$	5,546	$	2,104

Allowance allocated by portfolio segment

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

	June 30, 2024
	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	$	—	$	775,298	$	775,298
Home equity lines and loans	—		1,114		1,114		1,169		82,659		83,828
Residential mortgage	2		1,057		1,059		4,317		242,252		246,569
Construction	—		591		591		1,784		260,840		262,624
Commercial and industrial	3,422		1,389		4,811		13,347		339,124		352,471
Small business loans	3,729		3,769		7,498		14,273		137,185		151,458
Consumer	—		—		—		—		369		369
Leases, net	—		2,954		2,954		2,300		95,324		97,624
Total (1)	$	7,153	$	14,550	$	21,703	$	37,190	$	1,933,051	$	1,970,241

(1) Excludes deferred fees and loans carried at fair value.

	December 31, 2023
	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	$	—	$	4,375	$	4,375	$	—	$	737,863	$	737,863
Home equity lines and loans	—		998		998		1,037		75,250		76,287
Residential mortgage	—		1,020		1,020		3,750		243,128		246,878
Construction	—		485		485		1,206		245,234		246,440
Commercial and industrial	3,691		827		4,518		15,413		287,478		302,891
Small business loans	2,805		4,200		7,005		9,440		132,902		142,342
Consumer	—		—		—		—		389		389
Leases, net	—		3,706		3,706		2,131		119,501		121,632
Total (1)	$	6,496	$	15,611	$	22,107	$	32,977	$	1,841,745	$	1,874,722

(1) Excludes deferred fees and loans carried at fair value.

Schedule of carrying value of loans and leases by portfolio segment based on the credit quality indicators

The following tables detail the carrying value of loans and leases by portfolio segment based on the credit quality indicators used to

determine the allowance for credit losses at the dates indicated:

	June 30, 2024												Revolving Loans Converted to Term Loans		Revolving Loans		Total
	Term Loans
(dollars in thousands)	2024		2023		2022		2021		2020		Prior
Commercial mortgage
Pass/Watch	$	52,276	$	107,159	$	160,661	$	154,167	$	90,830	$	188,101	$	511	$	737	$	754,442
Special Mention	—		—		4,432		—		4,856		8,248		667		—		18,203
Substandard	—		200		—		—		—		2,453		—		—		2,653
Total	$	52,276	$	107,359	$	165,093	$	154,167	$	95,686	$	198,802	$	1,178	$	737	$	775,298
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Construction
Pass/Watch	$	42,396	$	77,671	$	58,161	$	14,347	$	24,890	$	8,649	$	123	$	29,184	$	255,421
Special Mention	—		—		—		1,352		631		—		—		3,435		5,418
Substandard	—		—		—		67		—		1,718		—		—		1,785
Total	$	42,396	$	77,671	$	58,161	$	15,766	$	25,521	$	10,367	$	123	$	32,619	$	262,624
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial
Pass/Watch	$	61,487	$	24,256	$	21,417	$	22,502	$	9,555	$	27,767	$	—	$	149,245	$	316,229
Special Mention	—		—		2,683		—		—		1,351		—		5,739		9,773
Substandard	—		—		3,940		2,331		—		5,552		—		14,646		26,469
Total	$	61,487	$	24,256	$	28,040	$	24,833	$	9,555	$	34,670	$	—	$	169,630	$	352,471
Year-to-date gross charge-offs	$	—	$	(500)	$	—	$	—	$	—	$	(1,324)	$	—	$	(4)	$	(1,828)
Small business loans
Pass/Watch	$	17,700	$	28,812	$	27,700	$	32,174	$	9,893	$	7,132	$	—	$	13,432	$	136,843
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		409		2,224		6,500		3,890		—		—		1,592		14,615
Total	$	17,700	$	29,221	$	29,924	$	38,674	$	13,783	$	7,132	$	—	$	15,024	$	151,458
Year-to-date gross charge-offs	$	—	$	—	$	(772)	$	(140)	$	(75)	$	—	$	—	$	(492)	$	(1,479)
Total by risk rating
Pass/Watch	$	173,859	$	237,898	$	267,939	$	223,190	$	135,168	$	231,649	$	634	$	192,598	$	1,462,935
Special Mention	—		—		7,115		1,352		5,487		9,599		667		9,174		33,394
Substandard	—		609		6,164		8,898		3,890		9,723		—		16,238		45,522
Total	$	173,859	$	238,507	$	281,218	$	233,440	$	144,545	$	250,971	$	1,301	$	218,010	$	1,541,851
Total year-to-date gross charge-offs	$	—	$	(500)	$	(772)	$	(140)	$	(75)	$	(1,324)	$	—	$	(496)	$	(3,307)

	December 31, 2023												Revolving Loans Converted to Term Loans		Revolving Loans		Total
	Term Loans
(dollars in thousands)	2023		2022		2021		2020		2019		Prior
Commercial mortgage
Pass/Watch	$	106,341	$	160,302	$	158,647	$	97,535	$	56,382	$	133,349	$	511	$	423	$	713,490
Special Mention	—		—		—		4,425		4,341		9,975		667		—		19,408
Substandard	200		—		571		—		1,635		2,233		—		326		4,965
Total	$	106,541	$	160,302	$	159,218	$	101,960	$	62,358	$	145,557	$	1,178	$	749	$	737,863
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Construction
Pass/Watch	$	67,776	$	88,737	$	21,793	$	27,336	$	2,307	$	2,093	$	123	$	25,976	$	236,141
Special Mention	—		—		1,329		—		511		4,329		—		2,924		9,093
Substandard	—		—		—		—		—		1,206		—		—		1,206
Total	$	67,776	$	88,737	$	23,122	$	27,336	$	2,818	$	7,628	$	123	$	28,900	$	246,440
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial
Pass/Watch	$	26,314	$	38,748	$	24,523	$	8,449	$	4,148	$	33,726	$	—	$	131,304	$	267,212
Special Mention	500		9		—		—		—		1,361		—		6,440		8,310
Substandard	—		—		2,906		—		300		9,469		—		14,694		27,369
Total	$	26,814	$	38,757	$	27,429	$	8,449	$	4,448	$	44,556	$	—	$	152,438	$	302,891
Year-to-date gross charge-offs	$	(209)	$	(55)	$	—	$	(2)	$	—	$	—	$	—	$	—	$	(266)
Small business loans
Pass/Watch	$	35,764	$	26,621	$	37,278	$	11,687	$	6,672	$	920	$	—	$	12,507	$	131,449
Special Mention	—		—		—		909		—		—		—		314		1,223
Substandard	49		1,523		5,090		2,122		—		—		—		886		9,670
Total	$	35,813	$	28,144	$	42,368	$	14,718	$	6,672	$	920	$	—	$	13,707	$	142,342
Year-to-date gross charge-offs	$	—	$	—	$	—	$	(11)	$	(912)	$	—	$	—	$	(565)	$	(1,488)
Total by risk rating
Pass/Watch	$	236,195	$	314,408	$	242,241	$	145,007	$	69,509	$	170,088	$	634	$	170,210	$	1,348,292
Special Mention	500		9		1,329		5,334		4,852		15,665		667		9,678		38,034
Substandard	249		1,523		8,567		2,122		1,935		12,908		—		15,906		43,210
Total	$	236,944	$	315,940	$	252,137	$	152,463	$	76,296	$	198,661	$	1,301	$	195,794	$	1,429,536
Total year-to-date gross charge-offs	$	(209)	$	(55)	$	—	$	(13)	$	(912)	$	—	$	—	$	(565)	$	(1,754)

The Corporation had no loans with a risk rating of Doubtful included within recorded investment in loans and leases held for investment at June 30, 2024 and December 31, 2023.

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

	June 30, 2024												Revolving Loans		Total
	Term Loans
(dollars in thousands)	2024		2023		2022		2021		2020		Prior
Home equity lines and loans
Performing	$	455	$	338	$	779	$	214	$	341	$	3,610	$	76,442	$	82,179
Nonperforming	—						91						1,558		1,649
Total	$	455	$	338	$	779	$	305	$	341	$	3,610	$	78,000	$	83,828
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	(86)	$	(86)
Residential mortgage (1)
Performing	$	10,314	$	47,907	$	146,295	$	20,352	$	6,404	$	10,979	$	—	$	242,251
Nonperforming	—		—		2,177		—		870		1,271		—		4,318
Total	$	10,314	$	47,907	$	148,472	$	20,352	$	7,274	$	12,250	$	—	$	246,569
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer
Performing	$	—	$	53	$	27	$	—	$	—	$	253	$	36	$	369
Nonperforming	—		—		—		—		—		—		—		—
Total	$	—	$	53	$	27	$	—	$	—	$	253	$	36	$	369
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	(1)	$	(1)
Leases, net
Performing	$	240	$	19,152	$	45,406	$	23,510	$	7,024	$	—	$	—	$	95,332
Nonperforming	—		471		929		736		156		—		—		2,292
Total	$	240	$	19,623	$	46,335	$	24,246	$	7,180	$	—	$	—	$	97,624
Year-to-date gross charge-offs	$	—	$	(434)	$	(2,414)	$	(436)	$	(118)	$	—	$	—	$	(3,402)
Total by Payment Performance
Performing	$	11,009	$	67,450	$	192,507	$	44,076	$	13,769	$	14,842	$	76,478	$	420,131
Nonperforming	—		471		3,106		827		1,026		1,271		1,558		8,259
Total	$	11,009	$	67,921	$	195,613	$	44,903	$	14,795	$	16,113	$	78,036	$	428,390
Total year-to-date gross charge-offs	$	—	$	(434)	$	(2,414)	$	(436)	$	(118)	$	—	$	(87)	$	(3,489)
(1) Excludes $12.9 million of loans at fair value.

	December 31, 2023												Revolving Loans		Total
	Term Loans
(dollars in thousands)	2023		2022		2021		2020		2019		Prior
Home equity lines and loans
Performing	$	343	$	795	$	314	$	352	$	2,191	$	2,295	$	68,600	$	74,890
Nonperforming	—		—		—		—		—		—		1,397		1,397
Total	$	343	$	795	$	314	$	352	$	2,191	$	2,295	$	69,997	$	76,287
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	(33)	$	—	$	(54)	$	(87)
Residential mortgage (1)
Performing	$	48,576	$	154,219	$	22,237	$	6,260	$	456	$	11,380	$	—	$	243,128
Nonperforming	—		1,350		—		1,043		—		1,357		—		3,750
Total	$	48,576	$	155,569	$	22,237	$	7,303	$	456	$	12,737	$	—	$	246,878
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer
Performing	$	39	$	35	$	—	$	—	$	32	$	234	$	49	$	389
Nonperforming	—		—		—		—		—		—		—		—
Total	$	39	$	35	$	—	$	—	$	32	$	234	$	49	$	389
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	(2)	$	(2)
Leases, net
Performing	$	23,054	$	55,940	$	30,876	$	9,718	$	—	$	—	$	—	$	119,588
Nonperforming	263		1,194		368		219		—		—		—		2,044
Total	$	23,317	$	57,134	$	31,244	$	9,937	$	—	$	—	$	—	$	121,632
Year-to-date gross charge-offs	$	(128)	$	(2,165)	$	(1,450)	$	(290)	$	—	$	—	$	—	$	(4,033)
Total by Payment Performance
Performing	$	72,012	$	210,989	$	53,427	$	16,330	$	2,679	$	13,909	$	68,649	$	437,995
Nonperforming	263		2,544		368		1,262		—		1,357		1,397		7,191
Total	$	72,275	$	213,533	$	53,795	$	17,592	$	2,679	$	15,266	$	70,046	$	445,186
Total year-to-date gross charge-offs	$	(128)	$	(2,165)	$	(1,450)	$	(290)	$	(33)	$	—	$	(56)	$	(4,122)

(1) Excludes $13.7 million of fair value loans.

Financing receivable, modified

The following presents, by class of loans, information regarding accruing and nonaccrual modified loans to borrowers experiencing financial difficulty during the three and six months ended June 30, 2024 and 2023.

	Three Months Ended June 30, 2024							Three Months Ended June 30, 2023
	Number of Loans	Amortized Cost Basis		% of Total Class of Financing Receivable		Related Reserve		Number of Loans	Amortized Cost Basis		% of Total Class of Financing Receivable		Related Reserve
(dollars in thousands)
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty:
Commercial & industrial	3	$	1,402	0.4	%	$	—	1	$	3,233	1.0	%	$	—
Total	3	$	1,402			$	—	1	$	3,233			$	—
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans	1	$	1,195	0.8	%	$	15	—	$	—	—	%	$	—
Commercial & industrial	4	1,605		0.5	%	—		1	1,406		0.5	%	422
Total	5	$	2,800			$	15	1	$	1,406			$	422

	Six Months Ended June 30, 2024							Six Months Ended June 30, 2023
	Number of Loans	Amortized Cost Basis		% of Total Class of Financing Receivable		Related Reserve		Number of Loans	Amortized Cost Basis		% of Total Class of Financing Receivable		Related Reserve
(dollars in thousands)
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans	3	$	719	0.5	%	$	—	—	$	—	—	%	$	—
Commercial & industrial	5	2,592		0.7	%	—		1	3,233		1.0	%	—
Total	8	$	3,311			$	—	1	$	3,233			$	—
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans	6	$	4,029	2.7	%	$	1,024	—	$	—	—	%	$	—
Commercial & industrial	4	1,605		0.5	%	—		1	1,406		0.5	%	422
Total	10	$	5,634			$	1,024	1	$	1,406			$	422

The following presents, by class of loans, information regarding accruing and nonaccrual modified loans to borrowers experiencing financial difficulty during the three and six months ended June 30, 2024 and 2023.

	Three Months Ended June 30, 2024		Three Months Ended June 30, 2023
	Number of Loans	Financial Effect	Number of Loans	Financial Effect
(dollars in thousands)
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty:
Commercial & industrial	3	Extend maturity date and payment concession	1	Extend maturity
Total	3		1
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans	1	Extend maturity date and allow additional lender funding	—
Commercial & industrial	4	Extend maturity date	1	Extend term and allow additional lender funding
Total	5		1

	Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
	Number of Loans	Financial Effect	Number of Loans	Financial Effect
(dollars in thousands)
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans	3	Extend maturity date	—
Commercial & industrial	5	Extend maturity date and allow additional lender funding	1	Extend maturity
Total	8		1
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans	6	Extend maturity date	—
Commercial & industrial	4	Extend maturity date and allow additional lender funding	1	Extend term and allow additional lender funding
Total	10		1

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

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Schedule of short term borrowings

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

(dollars in thousands)	Maturity date	Interest rate	June 30, 2024		December 31, 2023
FHLB Open Repo Plus Weekly	06/16/2025	5.67%	$	95,080	$	104,792
FRB BTFP Advances	03/29/2024	4.76%	—		33,000
Fed Funds Overnight Borrowing	7/01/2024	6.50%	947		—
ACBB Holding Company Revolving LOC	6/25/2025	8.75%	4,000		—
FHLB Mid-term Repo Fixed	9/30/2024	4.60%	3,432		3,432
FHLB Mid-term Repo Fixed	10/25/2024	5.03%	8,097		—
FHLB Mid-term Repo Fixed	7/31/2024	5.68%	15,625		—
FHLB Mid-term Repo Fixed	1/27/2025	4.85%	8,000		—
FHLB Mid-term Repo Fixed	2/24/2025	5.35%	7,813		—
Total Short-Term Borrowings			$	142,994	$	141,224

Schedule of long term debt

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

(dollars in thousands)	Maturity date	Interest rate	June 30, 2024		December 31, 2023
FHLB Mid-term Repo Fixed	12/22/2025	4.23%	$	8,935	$	8,935
FHLB Mid-term Repo Fixed	5/20/2027	4.70%	10,594		—
FHLB Mid-term Repo Fixed	10/14/2025	5.16%	9,492		9,492
FHLB Mid-term Repo Fixed	7/14/2026	4.57%	15,245		15,245
Total Long-Term Borrowings			$	44,266	$	33,672

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Servicing Assets (Tables)

6 Months Ended

Jun. 30, 2024

Mortgage Servicing Rights

Servicing Assets at Fair Value [Line Items]

Schedule of servicing assets

Changes in the MSR balance are summarized as follows:

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Balance at beginning of the period	$	8,314	$	9,573	$	8,622	$	9,942
Servicing rights capitalized	22		—		32		—
Amortization of servicing rights	(310)		(335)		(628)		(706)
Change in valuation allowance - recovery	—		—		—		2
Balance at end of the period	$	8,026	$	9,238	$	8,026	$	9,238

Schedule of sensitivity of fair value of servicing assets

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)	June 30, 2024			December 31, 2023
Fair value of residential mortgage servicing rights	$	10,939		$	11,221
Weighted average life (months)	40			28
Prepayment speed	8.04		%	8.57		%
Impact on fair value:
10% adverse change	$	(486)		$	(506)
20% adverse change	(934)			(973)
Discount rate	9.50		%	9.50		%
Impact on fair value:
10% adverse change	$	(560)		$	(415)
20% adverse change	(1,063)			(799)

SBA Loan Servicing Rights

Servicing Assets at Fair Value [Line Items]

Schedule of servicing assets

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

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Balance at beginning of the period	$	3,259	$	2,552	$	3,127	$	2,404
Servicing rights capitalized	256		512		453		726
Amortization of servicing rights	(219)		(252)		(460)		(447)
Change in valuation allowance	19		143		195		272
Balance at end of the period	$	3,315	$	2,955	$	3,315	$	2,955

Schedule of valuation allowance for servicing assets

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

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Valuation allowance, beginning of period	$	(92)	$	(235)	$	(268)	$	(364)
Impairment	—		—		—		—
Recovery	19		143		195		272
Valuation allowance, end of period	$	(73)	$	(92)	$	(73)	$	(92)

Schedule of sensitivity of fair value of servicing assets

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)	June 30, 2024			December 31, 2023
Fair value of SBA loan servicing rights	$	3,644		$	3,376
Weighted average life (years)	3.2			3.5
Prepayment speed	16.47		%	14.70		%
Impact on fair value:
10% adverse change	$	(158)		$	(125)
20% adverse change	(144)			(241)
Discount rate	13.05		%	14.66		%
Impact on fair value:
10% adverse change	$	(81)		$	(74)
20% adverse change	(159)			(145)

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Fair Value Measurements and Disclosures (Tables)

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

Schedule of financial assets measured at fair value on a recurring basis

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:

	June 30, 2024
(dollars in thousands)	Total		Level 1		Level 2		Level 3
Assets
Securities available for sale:
U.S. asset backed securities	$	19,765	$	—	$	19,765	$	—
U.S. government agency MBS	21,902		—		21,902		—
U.S. government agency CMO	26,587		—		26,587		—
State and municipal securities	36,926		—		36,926		—
U.S. Treasuries	30,471		30,471		—		—
Non-U.S. government agency CMO	15,257		—		15,257
Corporate bonds	8,233		—		8,233		—
Equity investments	2,088		—		2,088		—
Mortgage loans held for sale	54,278		—		54,278		—
Mortgage loans held for investment	12,900		—		12,900		—
Interest rate lock commitments	451		—		—		451
Forward commitments	16		—		16		—
Customer derivatives - interest rate swaps	3,658		—		3,658		—
Interest rate swaps	613		—		613		—
Total	$	233,145	$	30,471	$	202,223	$	451
Liabilities
Interest rate lock commitments	$	52	$	—	$	—	$	52
Forward commitments	14		—		14		—
Customer derivatives - interest rate swaps	3,649		—		3,649		—
Risk Participation Agreements	4		—		4		—
Total	$	3,719	$	—	$	3,667	$	52

	December 31, 2023
(dollars in thousands)	Total		Level 1		Level 2		Level 3
Assets
Securities available for sale:
U.S. asset backed securities	$	16,824	$	—	$	16,824	$	—
U.S. government agency MBS	22,634		—		22,634		—
U.S. government agency CMO	19,573		—		19,573		—
State and municipal securities	36,216		—		36,216		—
U.S. Treasuries	30,422		30,422		—		—
Non-U.S. government agency CMO	13,155		—		13,155		—
Corporate bonds	7,195		—		7,195		—
Equity investments	2,121		—		2,121		—
Mortgage loans held for sale	24,816		—		24,816		—
Mortgage loans held for investment	13,726		—		13,726		—
Interest rate lock commitments	214		—		—		214
Customer derivatives - interest rate swaps	3,528		—		3,528		—
Total	$	190,424	$	30,422	$	159,788	$	214

Liabilities
Interest rate lock commitments	$	17	$	—	$	—	$	17
Forward commitments	41		—		41		—
Customer derivatives - interest rate swaps	3,544		—		3,544		—
Risk Participation Agreements	11		—		11		—
Total	$	3,613	$	—	$	3,596	$	17

Schedule of financial assets measured at fair value on non-recurring basis

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

(dollars in thousands)	June 30, 2024		December 31, 2023
Mortgage servicing rights	$	8,026	$	8,621
SBA loan servicing rights	3,315		3,127
Individually evaluated loans (1)
Commercial and industrial	9,942		9,818
Small business loans	6,348		3,134
Total	$	27,631	$	24,700

(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 increase in individually evaluated commercial and industrial loans noted above was due to reassessing how we evaluate the impairment on a loan relationship to now be based on the fair value of collateral.

Schedule of measurement inputs

The following table details the valuation techniques for Level 3 individually evaluated loans.

(dollars in thousands)	Fair Value		Valuation Technique	Significant Unobservable Input	Range of Inputs
June 30, 2024	$	16,290	Appraisal of collateral	Management adjustments on appraisals for property type and recent activity	2%-33% discount
December 31, 2023	12,952		Appraisal of collateral	Management adjustments on appraisals for property type and recent activity	2%-33% discount

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
June 30, 2024	$	451	Market comparable pricing	Pull through	1 - 99%	83.31%
December 31, 2023	214		Market comparable pricing	Pull through	1 - 99%	79.48

Schedule of estimated fair values of financial instruments

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

	Fair Value Hierarchy Level	June 30, 2024				December 31, 2023
(dollars in thousands)		Carrying amount		Fair value		Carrying amount		Fair value
Financial assets:
Cash and cash equivalents	Level 1	$	24,058	$	24,058	$	56,697	$	56,697
Mortgage loans held for sale	Level 2	54,278		54,278		24,816		24,816
Loans receivable, net of the allowance for credit losses	Level 3	1,975,635		1,905,722		1,882,080		1,832,558
Mortgage loans held for investment	Level 2	12,900		12,900		13,726		13,726
Financial liabilities:
Deposits	Level 2	$	1,915,436	$	1,912,200	$	1,823,462	$	1,834,700
Borrowings	Level 2	187,260		196,300		174,896		176,400
Subordinated debentures	Level 2	49,897		48,732		49,836		50,223

Schedule of level 3 inputs reconciliation

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 June 30,				Six months ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Balance at beginning of the period	$	288	$	139	$	214	$	87
Increase in value	163		122		237		174
Balance at end of the period	$	451	$	261	$	451	$	261

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of the notional amounts and fair values of derivative financial instruments

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

		June 30, 2024				December 31, 2023
(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	$	70,244	$	451	$	33,735	$	214
Negative fair values	Other liabilities	17,061		(52)		5,399		(17)
Total		$	87,305	$	399	$	39,134	$	197
Forward Commitments
Positive fair values	Other assets	$	3,750	$	16	$	—	$	—
Negative fair values	Other liabilities	4,750		(14)		4,250		(41)
Total		$	8,500	$	2	$	4,250	$	(41)
Customer Derivatives - Interest Rate Swaps
Positive fair values	Other assets	$	49,633	$	3,658	$	50,593	$	3,528
Negative fair values	Other liabilities	49,633		(3,649)		50,593		(3,544)
Total		$	99,266	$	9	$	101,186	$	(17)
Customer Derivatives - Risk Participation Agreements
Positive fair values	Other assets	$	—	$	—	$	—	$	—
Negative fair values	Other liabilities	7,020		(4)		7,082		(11)
Total		$	7,020	$	(4)	$	7,082	$	(11)
Interest Rate Swaps
Positive fair values	Other assets	$	75,000	$	613	$	—	$	—
Negative fair values	Other liabilities	—		—		75,000		(539)
Total		$	75,000	$	613	$	75,000	$	(539)
Total derivative financial instruments		$	277,091	$	1,019	$	226,652	$	(410)

Summary of the fair value gains and losses on derivative financial instruments

The following table presents a summary of the fair value gains and (losses) on derivative financial instruments:

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2024		2023		2024		2023
Interest Rate Lock Commitments	$	195	$	146	$	202	$	109
Forward Commitments	2		13		43		13
Customer Derivatives - Interest Rate Swaps	5		14		26		(14)
Customer Derivatives - Risk Participation Agreements	1		9		7		5
Interest Rate Swaps	176		435		1,152		435
Net fair value gains (losses) on derivative financial instruments	$	379	$	617	$	1,430	$	548

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Segments (Tables)

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

Schedule of business segment financial information

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 June 30, 2024								Three Months Ended June 30, 2023
(Dollars in thousands)	Bank		Wealth		Mortgage		Total		Bank		Wealth		Mortgage		Total
Net interest income	$	16,784	$	36	$	26	$	16,846	$	17,102	$	(29)	$	25	$	17,098
Provision for credit losses	2,680		—		—		2,680		705		—		—		705
Net interest income after provision	14,104		36		26		14,166		16,397		(29)		25		16,393
Non-interest Income
Mortgage banking income	67		—		5,353		5,420		81		—		4,969		5,050
Wealth management income	—		1,444		—		1,444		—		1,235		—		1,235
SBA loan income	785		—		—		785		1,767		—		—		1,767
Net change in fair values	6		—		144		150		23		—		(258)		(235)
Net loss on hedging activity	—		—		(63)		(63)		—		—		(1)		(1)
Other	815		—		693		1,508		637		—		671		1,308
Non-interest income	1,673		1,444		6,127		9,244		2,508		1,235		5,381		9,124
Non-interest expense	12,606		804		5,608		19,018		12,325		889		6,401		19,615
Income (loss) before income taxes	$	3,171	$	676	$	545	$	4,392	$	6,580	$	317	$	(995)	$	5,902
Total Assets	$	2,248,950	$	10,347	$	92,287	$	2,351,584	$	2,143,278	$	8,485	$	55,114	$	2,206,877

	Segment Information
	Six Months Ended June 30, 2024								Six Months Ended June 30, 2023
(Dollars in thousands)	Bank		Wealth		Mortgage		Total		Bank		Wealth		Mortgage		Total
Net interest income	$	33,376	$	30	$	49	$	33,455	$	34,721	$	3	$	51	$	34,775
Provision for credit losses	5,546		—		—		5,546		2,104		—		—		2,104
Net interest income after provision	27,830		30		49		27,909		32,617		3		51		32,671
Non-interest Income
Mortgage banking income	155		—		8,899		9,054		139		—		8,183		8,322
Wealth management income	1		2,760		—		2,761		—		2,431		—		2,431
SBA loan income	1,771		—		—		1,771		2,480		—		—		2,480
Net change in fair values	34		—		14		48		(8)		—		(180)		(188)
Net loss on hedging activity	—		—		(82)		(82)		—		—		(1)		(1)
Other	1,589		—		2,087		3,676		1,327		—		1,391		2,718
Non-interest income	3,550		2,760		10,918		17,228		3,938		2,431		9,393		15,762
Non-interest expense	24,669		1,636		10,887		37,192		23,024		1,877		12,503		37,404
Income (loss) before income taxes	$	6,711	$	1,154	$	80	$	7,945	$	13,531	$	557	$	(3,059)	$	11,029
Total Assets	$	2,248,950	$	10,347	$	92,287	$	2,351,584	$	2,143,278	$	8,485	$	55,114	$	2,206,877

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Earnings per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Numerator for earnings per share:
Net income available to common stockholders	$ 3,326	$ 4,645	$ 6,002	$ 8,666
Denominators for earnings per share:
Weighted average shares outstanding (in shares)	11,247	11,240	11,246	11,348
Average unearned ESOP shares (in shares)	(151)	(178)	(154)	(181)
Basic weighted averages shares outstanding (in shares)	11,096	11,062	11,092	11,167
Dilutive effects of assumed exercises of stock options (in shares)	54	72	86	165
Dilutive effects of SERP shares (in shares)	0	170	0	162
Diluted weighted averages shares outstanding (in shares)	11,150	11,304	11,178	11,494
Basic earnings per share (in USD per share)	$ 0.30	$ 0.42	$ 0.54	$ 0.78
Diluted earnings per share (in USD per share)	$ 0.30	$ 0.41	$ 0.54	$ 0.75
Antidilutive shares excluded from computation of average dilutive earnings per share (in shares)	587	512	587	507

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Securities - Amortized Cost and Fair Value (Details) $ in Thousands	Jun. 30, 2024 USD ($) security	Dec. 31, 2023 USD ($) security
Securities available-for-sale:
Amortized cost	$ 169,751	$ 156,492
Gross unrealized gains	395	491
Gross unrealized losses	(11,005)	(10,964)
Allowance for credit losses	0	0
Fair value	$ 159,141	$ 146,019
# of Securities in unrealized loss position | security	139	133
Securities held to maturity:
Amortized cost	$ 35,089	$ 35,781
Gross unrecognized gains	9	52
Gross unrecognized losses	(3,403)	(3,103)
Allowance for credit losses	0	0
Securities, held-to-maturity, fair value	$ 31,695	$ 32,730
# of Securities in unrealized loss position | security	21	21
U.S. asset backed securities
Securities available-for-sale:
Amortized cost	$ 19,839	$ 17,012
Gross unrealized gains	58	25
Gross unrealized losses	(132)	(213)
Allowance for credit losses	0	0
Fair value	$ 19,765	$ 16,824
# of Securities in unrealized loss position | security	10	11
U.S. government agency MBS
Securities available-for-sale:
Amortized cost	$ 22,200	$ 22,750
Gross unrealized gains	174	364
Gross unrealized losses	(472)	(480)
Allowance for credit losses	0	0
Fair value	$ 21,902	$ 22,634
# of Securities in unrealized loss position | security	13	14
U.S. government agency CMO
Securities available-for-sale:
Amortized cost	$ 28,851	$ 21,850
Gross unrealized gains	0	0
Gross unrealized losses	(2,264)	(2,277)
Allowance for credit losses	0	0
Fair value	$ 26,587	$ 19,573
# of Securities in unrealized loss position | security	34	30
State and municipal securities
Securities available-for-sale:
Amortized cost	$ 41,224	$ 40,093
Gross unrealized gains	0	0
Gross unrealized losses	(4,298)	(3,877)
Allowance for credit losses	0	0
Fair value	$ 36,926	$ 36,216
# of Securities in unrealized loss position | security	32	31
Securities held to maturity:
Amortized cost		$ 35,781
Gross unrecognized gains		52
Gross unrecognized losses	$ (3,403)	(3,103)
Allowance for credit losses		0
Securities, held-to-maturity, fair value		$ 32,730
# of Securities in unrealized loss position | security		21
U.S. Treasuries
Securities available-for-sale:
Amortized cost	32,984	$ 32,982
Gross unrealized gains	0	0
Gross unrealized losses	(2,513)	(2,560)
Allowance for credit losses	0	0
Fair value	$ 30,471	$ 30,422
# of Securities in unrealized loss position | security	25	25
Non-U.S. government agency CMO
Securities available-for-sale:
Amortized cost	$ 15,663	$ 13,605
Gross unrealized gains	81	102
Gross unrealized losses	(487)	(552)
Allowance for credit losses	0	0
Fair value	$ 15,257	$ 13,155
# of Securities in unrealized loss position | security	12	9
Corporate bonds
Securities available-for-sale:
Amortized cost	$ 8,990	$ 8,200
Gross unrealized gains	82	0
Gross unrealized losses	(839)	(1,005)
Allowance for credit losses	0	0
Fair value	$ 8,233	$ 7,195
# of Securities in unrealized loss position | security	13	13

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Securities - Additional Information (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($) security	Jun. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)
Securities
Number of securities deemed other-than-temporarily impaired | security			0
Fair value	$ 159,141		$ 159,141		$ 146,019
Proceeds from the sale of available for sale investments		$ 13,500	0	$ 13,514
Loss on sale of investment securities	0	$ 54	0	$ 54
Asset Pledged as Collateral
Securities
Fair value	$ 54,300		$ 54,300		$ 60,100

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Securities - Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Securities available-for-sale:
Less than 12 Months, Fair Value	$ 25,589	$ 14,566
12 Months or More, Fair Value	109,825	110,242
Total Fair Value	135,414	124,808
Less than 12 Months, Unrealized Losses	(198)	(193)
12 Months or More, Unrealized Losses	(10,807)	(10,771)
Total Unrealized Losses	(11,005)	(10,964)
Securities held-to-maturity:
Less than 12 Months, Fair Value	1,047	1,021
12 Months or More, Fair Value	29,339	29,404
Total Fair Value	30,386	30,425
Less than 12 Months, Unrecognized Losses	(21)	(6)
12 Months or More, Unrecognized Losses	(3,383)	(3,097)
Total Unrecognized Losses	(3,403)	(3,103)
U.S. asset backed securities
Securities available-for-sale:
Less than 12 Months, Fair Value	7,348	4,981
12 Months or More, Fair Value	4,019	6,195
Total Fair Value	11,367	11,176
Less than 12 Months, Unrealized Losses	(31)	(25)
12 Months or More, Unrealized Losses	(101)	(188)
Total Unrealized Losses	(132)	(213)
U.S. government agency MBS
Securities available-for-sale:
Less than 12 Months, Fair Value	3,577	4,864
12 Months or More, Fair Value	8,156	8,170
Total Fair Value	11,733	13,034
Less than 12 Months, Unrealized Losses	(90)	(35)
12 Months or More, Unrealized Losses	(382)	(445)
Total Unrealized Losses	(472)	(480)
U.S. government agency CMO
Securities available-for-sale:
Less than 12 Months, Fair Value	7,771	2,687
12 Months or More, Fair Value	18,816	16,886
Total Fair Value	26,587	19,573
Less than 12 Months, Unrealized Losses	(50)	(36)
12 Months or More, Unrealized Losses	(2,214)	(2,241)
Total Unrealized Losses	(2,264)	(2,277)
State and municipal securities
Securities available-for-sale:
Less than 12 Months, Fair Value	1,491	0
12 Months or More, Fair Value	35,435	36,216
Total Fair Value	36,926	36,216
Less than 12 Months, Unrealized Losses	(5)	0
12 Months or More, Unrealized Losses	(4,293)	(3,877)
Total Unrealized Losses	(4,298)	(3,877)
Securities held-to-maturity:
Less than 12 Months, Fair Value	1,047	1,021
12 Months or More, Fair Value	29,339	29,404
Total Fair Value	30,386	30,425
Less than 12 Months, Unrecognized Losses	(21)	(6)
12 Months or More, Unrecognized Losses	(3,382)	(3,097)
Total Unrecognized Losses	(3,403)	(3,103)
U.S. Treasuries
Securities available-for-sale:
Less than 12 Months, Fair Value	0	0
12 Months or More, Fair Value	30,471	30,422
Total Fair Value	30,471	30,422
Less than 12 Months, Unrealized Losses	0	0
12 Months or More, Unrealized Losses	(2,513)	(2,560)
Total Unrealized Losses	(2,513)	(2,560)
Non-U.S. government agency CMO
Securities available-for-sale:
Less than 12 Months, Fair Value	5,402	1,127
12 Months or More, Fair Value	5,566	6,065
Total Fair Value	10,968	7,192
Less than 12 Months, Unrealized Losses	(22)	(4)
12 Months or More, Unrealized Losses	(465)	(548)
Total Unrealized Losses	(487)	(552)
Corporate bonds
Securities available-for-sale:
Less than 12 Months, Fair Value	0	907
12 Months or More, Fair Value	7,362	6,288
Total Fair Value	7,362	7,195
Less than 12 Months, Unrealized Losses	0	(93)
12 Months or More, Unrealized Losses	(839)	(912)
Total Unrealized Losses	$ (839)	$ (1,005)

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Securities - Contractual Maturities (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Contractual Maturities, Available-for-sale, Amortized Cost
Due in one year or less	$ 0
Due after one year through five years	32,984
Due after five years through ten years	18,451
Due after ten years	51,602
Subtotal	103,037
Mortgage-related securities	66,714
Amortized cost	169,751	$ 156,492
Contractual Maturities, Available-for-sale, Fair Value
Due in one year or less	0
Due after one year through five years	30,471
Due after five years through ten years	17,131
Due after ten years	47,793
Subtotal	95,395
Mortgage-related securities	63,746
Fair value	159,141	146,019
Contractual Maturities, Held-to-maturity, Amortized Cost
Due in one year or less	0
Due after one year through five years	3,225
Due after five years through ten years	5,775
Due after ten years	26,089
Subtotal	35,089
Mortgage-related securities	0
Amortized cost	35,089	35,781
Contractual Maturities, Held-to-maturity, Fair Value
Due in one year or less	0
Due after one year through five years	3,200
Due after five years through ten years	4,835
Due after ten years	23,660
Subtotal	31,695
Mortgage-related securities	0
Total	$ 31,695	$ 32,730

XML

Loans and Other Finance Receivables - Loans Outstanding by Category (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Loans Receivable
Total loans and other finance receivables	$ 1,983,141	$ 1,888,448
Residential mortgage real estate loans accounted under fair value option, at fair value	12,900	13,726
Residential mortgage real estate loans accounted under fair value option, at amortized cost	15,609	16,198
Unearned lease income included in leases, net	(13,404)	(19,210)
Unamortized net deferred loan origination costs	5,394	7,358
Real estate loans:
Loans Receivable
Total loans and other finance receivables	1,381,219	1,321,194
Real estate loans: | Commercial mortgage
Loans Receivable
Total loans and other finance receivables	775,298	737,863
Real estate loans: | Home equity lines and loans
Loans Receivable
Total loans and other finance receivables	83,828	76,287
Real estate loans: | Residential mortgage
Loans Receivable
Total loans and other finance receivables	259,469	260,604
Real estate loans: | Construction
Loans Receivable
Total loans and other finance receivables	262,624	246,440
Commercial and industrial
Loans Receivable
Total loans and other finance receivables	352,471	302,891
Small business loans
Loans Receivable
Total loans and other finance receivables	151,458	142,342
Consumer
Loans Receivable
Total loans and other finance receivables	369	389
Leases, net
Loans Receivable
Total loans and other finance receivables	$ 97,624	$ 121,632

XML

Loans and Other Finance Receivables - Age Analysis of Past Due Loans and Leases (Details) $ in Thousands	Jul. 17, 2024 USD ($)	Jun. 30, 2024 USD ($) loan	Dec. 31, 2023 USD ($) loan
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		$ 1,983,141	$ 1,888,448
Total accruing loans and leases		1,945,500	1,854,685
Nonaccrual loans and leases		$ 37,641	$ 33,763
% Delinquent		2.44%	2.10%
Residential mortgage real estate loans accounted under fair value option, at fair value		$ 12,900	$ 13,726
Home equity lines and loans
Age Analysis of Past Due Loans and Leases
Nonaccrual loans and leases		1,169	1,037
Residential mortgage
Age Analysis of Past Due Loans and Leases
Nonaccrual loans and leases		4,768	4,536
Construction
Age Analysis of Past Due Loans and Leases
Nonaccrual loans and leases		1,784	1,206
Real estate loans:
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		1,381,219	1,321,194
Real estate loans: | Commercial mortgage
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		775,298	737,863
Total accruing loans and leases		775,298	737,863
Nonaccrual loans and leases		$ 0	$ 0
% Delinquent		0.11%	0.08%
Real estate loans: | Home equity lines and loans
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		$ 83,828	$ 76,287
Total accruing loans and leases		82,659	75,250
Nonaccrual loans and leases		$ 1,169	$ 1,037
% Delinquent		1.56%	2.10%
Real estate loans: | Residential mortgage
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		$ 259,469	$ 260,604
Total accruing loans and leases		254,701	256,068
Nonaccrual loans and leases		$ 4,768	$ 4,536
% Delinquent		3.17%	2.16%
Real estate loans: | Construction
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		$ 262,624	$ 246,440
Total accruing loans and leases		260,840	245,234
Nonaccrual loans and leases		$ 1,784	$ 1,206
% Delinquent		2.56%	0.49%
Commercial and industrial
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		$ 352,471	$ 302,891
Total accruing loans and leases		339,124	287,478
Nonaccrual loans and leases		$ 13,347	$ 15,413
% Delinquent		3.79%	5.09%
Commercial and industrial | Subsequent event
Age Analysis of Past Due Loans and Leases
Discount on repurchase of commercial loan	$ 575
Increase in non-performing loans	$ 2,100
Small business loans
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		$ 151,458	$ 142,342
Total accruing loans and leases		137,185	132,902
Nonaccrual loans and leases		$ 14,273	$ 9,440
% Delinquent		9.42%	7.69%
Consumer
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		$ 369	$ 389
Total accruing loans and leases		369	389
Nonaccrual loans and leases		$ 0	$ 0
% Delinquent		0.00%	0.00%
Loans in process of foreclosure, number of loans | loan		4	4
Loans in process of foreclosure, amount		$ 1,300	$ 937
Leases, net
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		97,624	121,632
Total accruing loans and leases		95,324	119,501
Nonaccrual loans and leases		$ 2,300	$ 2,131
% Delinquent		3.75%	3.56%
30-89 days past due
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		$ 10,772	$ 5,936
30-89 days past due | Real estate loans: | Commercial mortgage
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		864	571
30-89 days past due | Real estate loans: | Home equity lines and loans
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		136	566
30-89 days past due | Real estate loans: | Residential mortgage
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		3,468	1,103
30-89 days past due | Real estate loans: | Construction
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		4,945	0
30-89 days past due | Residential mortgage | Residential mortgage
Age Analysis of Past Due Loans and Leases
Residential mortgage real estate loans accounted under fair value option, at fair value		0	0
30-89 days past due | Commercial and industrial
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		0	0
30-89 days past due | Small business loans
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		0	1,499
30-89 days past due | Consumer
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		0	0
30-89 days past due | Leases, net
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		1,359	2,197
Current
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		1,934,728	1,848,749
Current | Real estate loans: | Commercial mortgage
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		774,434	737,292
Current | Real estate loans: | Home equity lines and loans
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		82,523	74,684
Current | Real estate loans: | Residential mortgage
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		251,233	254,965
Current | Real estate loans: | Construction
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		255,895	245,234
Current | Residential mortgage | Residential mortgage
Age Analysis of Past Due Loans and Leases
Residential mortgage real estate loans accounted under fair value option, at fair value		12,400	12,900
Current | Commercial and industrial
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		339,124	287,478
Current | Small business loans
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		137,185	131,403
Current | Consumer
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		369	389
Current | Leases, net
Age Analysis of Past Due Loans and Leases
Total loans and other finance receivables		93,965	117,304
Nonaccrual | Residential mortgage | Residential mortgage
Age Analysis of Past Due Loans and Leases
Residential mortgage real estate loans accounted under fair value option, at fair value		$ 451	$ 786

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Loans and Other Finance Receivables - Schedule of Financing Receivables, Nonaccrual (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual without ACL	$ 13,994	$ 15,860
Nonaccrual with ACL	23,647	17,903
Nonaccrual loans and leases	37,641	33,763
Home equity lines and loans
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	1,169	1,037
Residential mortgage
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	4,768	4,536
Construction
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	1,784	1,206
Commercial mortgage
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	0	0
Real estate loans: | Home equity lines and loans
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual without ACL	1,169	1,037
Nonaccrual with ACL	0	0
Nonaccrual loans and leases	1,169	1,037
Real estate loans: | Residential mortgage
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual without ACL	4,487	4,536
Nonaccrual with ACL	281	0
Nonaccrual loans and leases	4,768	4,536
Real estate loans: | Construction
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual without ACL	1,784	1,206
Nonaccrual with ACL	0	0
Nonaccrual loans and leases	1,784	1,206
Real estate loans: | Commercial mortgage
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual without ACL	0	0
Nonaccrual with ACL	0	0
Nonaccrual loans and leases	0	0
Commercial and industrial
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual without ACL	433	3,343
Nonaccrual with ACL	12,914	12,070
Nonaccrual loans and leases	13,347	15,413
Small business loans
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual without ACL	3,821	3,607
Nonaccrual with ACL	10,452	5,833
Nonaccrual loans and leases	14,273	9,440
Leases, net
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual without ACL	2,300	2,131
Nonaccrual with ACL	0	0
Nonaccrual loans and leases	$ 2,300	$ 2,131

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Loans and Other Finance Receivables - Schedule of Non-Accruing Collateral-Dependent Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	$ 37,641	$ 33,763
Home equity lines and loans
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	1,169	1,037
Residential mortgage
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	4,768	4,536
Construction
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	1,784	1,206
Commercial and industrial
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	13,347	15,413
Small business loans
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	14,273	9,440
Leases, net
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	2,300	2,131
Commercial mortgage
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	0	0
Real estate
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	20,569	14,989
Real estate | Home equity lines and loans
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	1,169	1,037
Real estate | Residential mortgage
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	4,768	4,536
Real estate | Construction
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	1,784	1,206
Real estate | Commercial and industrial
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	1,598	1,890
Real estate | Small business loans
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	11,250	6,320
Real estate | Leases, net
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	0	0
Real estate | Commercial mortgage
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	0	0
Equipment and other
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	17,072	18,774
Equipment and other | Home equity lines and loans
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	0	0
Equipment and other | Residential mortgage
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	0	0
Equipment and other | Construction
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	0	0
Equipment and other | Commercial and industrial
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	11,749	13,523
Equipment and other | Small business loans
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	3,023	3,120
Equipment and other | Leases, net
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	2,300	2,131
Equipment and other | Commercial mortgage
Financing Receivable, Nonaccrual [Line Items]
Nonaccrual loans and leases	$ 0	$ 0

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Allowance for Credit Losses - Roll-forward of Allowance by Portfolio Segment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning Balance	$ 23,171	$ 20,442	$ 22,107	$ 18,828	$ 18,828
Charge-offs	(4,352)	(1,155)	(6,796)	(2,652)
Recoveries	238	168	371	213
Provision (recovery of provision) for credit losses	2,646	787	6,021	2,257
Ending balance	21,703	20,242	21,703	20,242	22,107
Adjustment to initially apply ASU No. 2016-13 for CECL
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning Balance				1,596	1,596
Commercial mortgage
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning Balance	4,179	3,475	4,375	4,095	4,095
Charge-offs	0	0	0	0	0
Recoveries	0	0	0	0
Provision (recovery of provision) for credit losses	(503)	(226)	(699)	(320)
Ending balance	3,676	3,249	3,676	3,249	4,375
Commercial mortgage | Adjustment to initially apply ASU No. 2016-13 for CECL
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning Balance				(526)	(526)
Home equity lines and loans
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning Balance	958	615	998	188	188
Charge-offs	(86)	(54)	(86)	(87)	(87)
Recoveries	26	1	27	3
Provision (recovery of provision) for credit losses	216	228	175	247
Ending balance	1,114	790	1,114	790	998
Home equity lines and loans | Adjustment to initially apply ASU No. 2016-13 for CECL
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning Balance				439	439
Residential mortgage
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning Balance	1,177	868	1,020	948	948
Charge-offs	0	0	0	0	0
Recoveries	0	0	0	0
Provision (recovery of provision) for credit losses	(118)	179	39	82
Ending balance	1,059	1,047	1,059	1,047	1,020
Residential mortgage | Adjustment to initially apply ASU No. 2016-13 for CECL
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning Balance				17	17
Construction
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning Balance	583	1,119	485	3,075	3,075
Charge-offs	0	0	0	0	0
Recoveries	0	0	0	0
Provision (recovery of provision) for credit losses	8	175	106	(18)
Ending balance	591	1,294	591	1,294	485
Construction | Adjustment to initially apply ASU No. 2016-13 for CECL
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning Balance				(1,763)	(1,763)
Commercial and industrial
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning Balance	5,083	2,733	4,518	4,012	4,012
Charge-offs	(1,620)	0	(1,828)	0	(266)
Recoveries	0	17	2	56
Provision (recovery of provision) for credit losses	1,348	(509)	2,119	(804)
Ending balance	4,811	2,241	4,811	2,241	4,518
Commercial and industrial | Adjustment to initially apply ASU No. 2016-13 for CECL
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning Balance				(1,023)	(1,023)
Small business loans
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning Balance	7,805	6,316	7,005	4,909	4,909
Charge-offs	(1,392)	(326)	(1,479)	(326)	(1,488)
Recoveries	64	0	67	0
Provision (recovery of provision) for credit losses	1,021	878	1,905	1,175
Ending balance	7,498	6,868	7,498	6,868	7,005
Small business loans | Adjustment to initially apply ASU No. 2016-13 for CECL
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning Balance				1,110	1,110
Consumer
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning Balance	1	0	0	3	3
Charge-offs	0	0	(1)	0	(2)
Recoveries	1	1	2	2
Provision (recovery of provision) for credit losses	(2)	(1)	(1)	(2)
Ending balance	0	0	0	0	0
Consumer | Adjustment to initially apply ASU No. 2016-13 for CECL
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning Balance				(3)	(3)
Leases, net
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning Balance	3,385	5,316	3,706	1,598	1,598
Charge-offs	(1,254)	(775)	(3,402)	(2,239)	(4,033)
Recoveries	147	149	273	152
Provision (recovery of provision) for credit losses	676	63	2,377	1,897
Ending balance	$ 2,954	$ 4,753	$ 2,954	4,753	3,706
Leases, net | Adjustment to initially apply ASU No. 2016-13 for CECL
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning Balance				$ 3,345	$ 3,345

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Allowance for Credit Losses - Provision for Credit Losses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Financing Receivable, Allowance for Credit Loss, Writeoff, after Recovery [Abstract]
Provision for credit losses - funded	$ 2,646	$ 787	$ 6,021	$ 2,257
Provision (recovery) for credit losses - unfunded	34	(82)	(475)	(153)
Provision (recovery of provision) for credit losses	$ 2,680	$ 705	$ 5,546	$ 2,104

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Allowance for Credit Losses - Allowance Allocated by Portfolio Segment (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Mar. 31, 2024	Dec. 31, 2023	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022
Impaired Loans
Allowance on loans and leases individually evaluated for impairment	$ 7,153		$ 6,496
Allowance on loans and leases collectively evaluated for impairment	14,550		15,611
Total allowance on loans and leases	21,703	$ 23,171	22,107	$ 20,242	$ 20,442	$ 18,828
Carrying value of loans and leases individually evaluated for impairment	37,190		32,977
Carrying value of loans and leases collectively evaluated for impairment	1,933,051		1,841,745
Total on carrying value of loans and leases	1,970,241		1,874,722
Commercial mortgage
Impaired Loans
Allowance on loans and leases individually evaluated for impairment	0		0
Allowance on loans and leases collectively evaluated for impairment	3,676		4,375
Total allowance on loans and leases	3,676	4,179	4,375	3,249	3,475	4,095
Carrying value of loans and leases individually evaluated for impairment	0		0
Carrying value of loans and leases collectively evaluated for impairment	775,298		737,863
Total on carrying value of loans and leases	775,298		737,863
Home equity lines and loans
Impaired Loans
Allowance on loans and leases individually evaluated for impairment	0		0
Allowance on loans and leases collectively evaluated for impairment	1,114		998
Total allowance on loans and leases	1,114	958	998	790	615	188
Carrying value of loans and leases individually evaluated for impairment	1,169		1,037
Carrying value of loans and leases collectively evaluated for impairment	82,659		75,250
Total on carrying value of loans and leases	83,828		76,287
Residential mortgage
Impaired Loans
Allowance on loans and leases individually evaluated for impairment	2		0
Allowance on loans and leases collectively evaluated for impairment	1,057		1,020
Total allowance on loans and leases	1,059	1,177	1,020	1,047	868	948
Carrying value of loans and leases individually evaluated for impairment	4,317		3,750
Carrying value of loans and leases collectively evaluated for impairment	242,252		243,128
Total on carrying value of loans and leases	246,569		246,878
Construction
Impaired Loans
Allowance on loans and leases individually evaluated for impairment	0		0
Allowance on loans and leases collectively evaluated for impairment	591		485
Total allowance on loans and leases	591	583	485	1,294	1,119	3,075
Carrying value of loans and leases individually evaluated for impairment	1,784		1,206
Carrying value of loans and leases collectively evaluated for impairment	260,840		245,234
Total on carrying value of loans and leases	262,624		246,440
Commercial and industrial
Impaired Loans
Allowance on loans and leases individually evaluated for impairment	3,422		3,691
Allowance on loans and leases collectively evaluated for impairment	1,389		827
Total allowance on loans and leases	4,811	5,083	4,518	2,241	2,733	4,012
Carrying value of loans and leases individually evaluated for impairment	13,347		15,413
Carrying value of loans and leases collectively evaluated for impairment	339,124		287,478
Total on carrying value of loans and leases	352,471		302,891
Small business loans
Impaired Loans
Allowance on loans and leases individually evaluated for impairment	3,729		2,805
Allowance on loans and leases collectively evaluated for impairment	3,769		4,200
Total allowance on loans and leases	7,498	7,805	7,005	6,868	6,316	4,909
Carrying value of loans and leases individually evaluated for impairment	14,273		9,440
Carrying value of loans and leases collectively evaluated for impairment	137,185		132,902
Total on carrying value of loans and leases	151,458		142,342
Consumer
Impaired Loans
Allowance on loans and leases individually evaluated for impairment	0		0
Allowance on loans and leases collectively evaluated for impairment	0		0
Total allowance on loans and leases	0	1	0	0	0	3
Carrying value of loans and leases individually evaluated for impairment	0		0
Carrying value of loans and leases collectively evaluated for impairment	369		389
Total on carrying value of loans and leases	369		389
Leases, net
Impaired Loans
Allowance on loans and leases individually evaluated for impairment	0		0
Allowance on loans and leases collectively evaluated for impairment	2,954		3,706
Total allowance on loans and leases	2,954	$ 3,385	3,706	$ 4,753	$ 5,316	$ 1,598
Carrying value of loans and leases individually evaluated for impairment	2,300		2,131
Carrying value of loans and leases collectively evaluated for impairment	95,324		119,501
Total on carrying value of loans and leases	$ 97,624		$ 121,632

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Allowance for Credit Losses - Carrying Value Based on Credit Quality Indicators (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Loans and Leases by Credit Ratings
Loans and other finance receivables, net of fees and costs	$ 1,988,535		$ 1,988,535		$ 1,895,806
Year-to-date gross charge-offs	(4,352)	$ (1,155)	(6,796)	$ (2,652)
Residential mortgage real estate loans accounted under fair value option, at fair value	12,900		12,900		13,726
Evaluated by performance status
Loans and Leases by Credit Ratings
2024	11,009		11,009		72,275
2024, Writeoff			0		(128)
2023	67,921		67,921		213,533
2023, Writeoff			(434)		(2,165)
2022	195,613		195,613		53,795
2022, Writeoff			(2,414)		(1,450)
2021	44,903		44,903		17,592
2021, Writeoff			(436)		(290)
2020	14,795		14,795		2,679
2020, Writeoff			(118)		(33)
Prior	16,113		16,113		15,266
Prior, Writeoff			0		0
Revolving Loans	78,036		78,036		70,046
Revolving Loans, Writeoff			(87)		(56)
Loans and other finance receivables, net of fees and costs	428,390		428,390		445,186
Year-to-date gross charge-offs			(3,489)		(4,122)
Performing
Loans and Leases by Credit Ratings
2024	11,009		11,009		72,012
2023	67,450		67,450		210,989
2022	192,507		192,507		53,427
2021	44,076		44,076		16,330
2020	13,769		13,769		2,679
Prior	14,842		14,842		13,909
Revolving Loans	76,478		76,478		68,649
Loans and other finance receivables, net of fees and costs	420,131		420,131		437,995
Nonperforming
Loans and Leases by Credit Ratings
2024	0		0		263
2023	471		471		2,544
2022	3,106		3,106		368
2021	827		827		1,262
2020	1,026		1,026		0
Prior	1,271		1,271		1,357
Revolving Loans	1,558		1,558		1,397
Loans and other finance receivables, net of fees and costs	8,259		8,259		7,191
Evaluated based on credit quality indicators
Loans and Leases by Credit Ratings
2024	173,859		173,859		236,944
2024, Writeoff			0		(209)
2023	238,507		238,507		315,940
2023, Writeoff			(500)		(55)
2022	281,218		281,218		252,137
2022, Writeoff			(772)		0
2021	233,440		233,440		152,463
2021, Writeoff			(140)		(13)
2020	144,545		144,545		76,296
2020, Writeoff			(75)		(912)
Prior	250,971		250,971		198,661
Prior, Writeoff			(1,324)		0
Revolving Loans Converted to Term Loans	1,301		1,301		1,301
Revolving Loans Converted to Term Loans, Writeoff			0		0
Revolving Loans	218,010		218,010		195,794
Revolving Loans, Writeoff			(496)		(565)
Loans and other finance receivables, net of fees and costs	1,541,851		1,541,851		1,429,536
Year-to-date gross charge-offs			(3,307)		(1,754)
Pass/Watch
Loans and Leases by Credit Ratings
2024	173,859		173,859		236,195
2023	237,898		237,898		314,408
2022	267,939		267,939		242,241
2021	223,190		223,190		145,007
2020	135,168		135,168		69,509
Prior	231,649		231,649		170,088
Revolving Loans Converted to Term Loans	634		634		634
Revolving Loans	192,598		192,598		170,210
Loans and other finance receivables, net of fees and costs	1,462,935		1,462,935		1,348,292
Special Mention
Loans and Leases by Credit Ratings
2024	0		0		500
2023	0		0		9
2022	7,115		7,115		1,329
2021	1,352		1,352		5,334
2020	5,487		5,487		4,852
Prior	9,599		9,599		15,665
Revolving Loans Converted to Term Loans	667		667		667
Revolving Loans	9,174		9,174		9,678
Loans and other finance receivables, net of fees and costs	33,394		33,394		38,034
Substandard
Loans and Leases by Credit Ratings
2024	0		0		249
2023	609		609		1,523
2022	6,164		6,164		8,567
2021	8,898		8,898		2,122
2020	3,890		3,890		1,935
Prior	9,723		9,723		12,908
Revolving Loans Converted to Term Loans	0		0		0
Revolving Loans	16,238		16,238		15,906
Loans and other finance receivables, net of fees and costs	45,522		45,522		43,210
Commercial mortgage
Loans and Leases by Credit Ratings
2024	52,276		52,276		106,541
2024, Writeoff			0		0
2023	107,359		107,359		160,302
2023, Writeoff			0		0
2022	165,093		165,093		159,218
2022, Writeoff			0		0
2021	154,167		154,167		101,960
2021, Writeoff			0		0
2020	95,686		95,686		62,358
2020, Writeoff			0		0
Prior	198,802		198,802		145,557
Prior, Writeoff			0		0
Revolving Loans Converted to Term Loans	1,178		1,178		1,178
Revolving Loans Converted to Term Loans, Writeoff			0		0
Revolving Loans	737		737		749
Revolving Loans, Writeoff			0		0
Loans and other finance receivables, net of fees and costs	775,298		775,298		737,863
Year-to-date gross charge-offs	0	0	0	0	0
Commercial mortgage | Pass/Watch
Loans and Leases by Credit Ratings
2024	52,276		52,276		106,341
2023	107,159		107,159		160,302
2022	160,661		160,661		158,647
2021	154,167		154,167		97,535
2020	90,830		90,830		56,382
Prior	188,101		188,101		133,349
Revolving Loans Converted to Term Loans	511		511		511
Revolving Loans	737		737		423
Loans and other finance receivables, net of fees and costs	754,442		754,442		713,490
Commercial mortgage | Special Mention
Loans and Leases by Credit Ratings
2024	0		0		0
2023	0		0		0
2022	4,432		4,432		0
2021	0		0		4,425
2020	4,856		4,856		4,341
Prior	8,248		8,248		9,975
Revolving Loans Converted to Term Loans	667		667		667
Revolving Loans	0		0		0
Loans and other finance receivables, net of fees and costs	18,203		18,203		19,408
Commercial mortgage | Substandard
Loans and Leases by Credit Ratings
2024	0		0		200
2023	200		200		0
2022	0		0		571
2021	0		0		0
2020	0		0		1,635
Prior	2,453		2,453		2,233
Revolving Loans Converted to Term Loans	0		0		0
Revolving Loans	0		0		326
Loans and other finance receivables, net of fees and costs	2,653		2,653		4,965
Construction
Loans and Leases by Credit Ratings
2024	42,396		42,396		67,776
2024, Writeoff			0		0
2023	77,671		77,671		88,737
2023, Writeoff			0		0
2022	58,161		58,161		23,122
2022, Writeoff			0		0
2021	15,766		15,766		27,336
2021, Writeoff			0		0
2020	25,521		25,521		2,818
2020, Writeoff			0		0
Prior	10,367		10,367		7,628
Prior, Writeoff			0		0
Revolving Loans Converted to Term Loans	123		123		123
Revolving Loans Converted to Term Loans, Writeoff			0		0
Revolving Loans	32,619		32,619		28,900
Revolving Loans, Writeoff			0		0
Loans and other finance receivables, net of fees and costs	262,624		262,624		246,440
Year-to-date gross charge-offs	0	0	0	0	0
Construction | Pass/Watch
Loans and Leases by Credit Ratings
2024	42,396		42,396		67,776
2023	77,671		77,671		88,737
2022	58,161		58,161		21,793
2021	14,347		14,347		27,336
2020	24,890		24,890		2,307
Prior	8,649		8,649		2,093
Revolving Loans Converted to Term Loans	123		123		123
Revolving Loans	29,184		29,184		25,976
Loans and other finance receivables, net of fees and costs	255,421		255,421		236,141
Construction | Special Mention
Loans and Leases by Credit Ratings
2024	0		0		0
2023	0		0		0
2022	0		0		1,329
2021	1,352		1,352		0
2020	631		631		511
Prior	0		0		4,329
Revolving Loans Converted to Term Loans	0		0		0
Revolving Loans	3,435		3,435		2,924
Loans and other finance receivables, net of fees and costs	5,418		5,418		9,093
Construction | Substandard
Loans and Leases by Credit Ratings
2024	0		0		0
2023	0		0		0
2022	0		0		0
2021	67		67		0
2020	0		0		0
Prior	1,718		1,718		1,206
Revolving Loans Converted to Term Loans	0		0		0
Revolving Loans	0		0		0
Loans and other finance receivables, net of fees and costs	1,785		1,785		1,206
Commercial and industrial
Loans and Leases by Credit Ratings
2024	61,487		61,487		26,814
2024, Writeoff			0		(209)
2023	24,256		24,256		38,757
2023, Writeoff			(500)		(55)
2022	28,040		28,040		27,429
2022, Writeoff			0		0
2021	24,833		24,833		8,449
2021, Writeoff			0		(2)
2020	9,555		9,555		4,448
2020, Writeoff			0		0
Prior	34,670		34,670		44,556
Prior, Writeoff			(1,324)		0
Revolving Loans Converted to Term Loans	0		0		0
Revolving Loans Converted to Term Loans, Writeoff			0		0
Revolving Loans	169,630		169,630		152,438
Revolving Loans, Writeoff			(4)		0
Loans and other finance receivables, net of fees and costs	352,471		352,471		302,891
Year-to-date gross charge-offs	(1,620)	0	(1,828)	0	(266)
Commercial and industrial | Pass/Watch
Loans and Leases by Credit Ratings
2024	61,487		61,487		26,314
2023	24,256		24,256		38,748
2022	21,417		21,417		24,523
2021	22,502		22,502		8,449
2020	9,555		9,555		4,148
Prior	27,767		27,767		33,726
Revolving Loans Converted to Term Loans	0		0		0
Revolving Loans	149,245		149,245		131,304
Loans and other finance receivables, net of fees and costs	316,229		316,229		267,212
Commercial and industrial | Special Mention
Loans and Leases by Credit Ratings
2024	0		0		500
2023	0		0		9
2022	2,683		2,683		0
2021	0		0		0
2020	0		0		0
Prior	1,351		1,351		1,361
Revolving Loans Converted to Term Loans	0		0		0
Revolving Loans	5,739		5,739		6,440
Loans and other finance receivables, net of fees and costs	9,773		9,773		8,310
Commercial and industrial | Substandard
Loans and Leases by Credit Ratings
2024	0		0		0
2023	0		0		0
2022	3,940		3,940		2,906
2021	2,331		2,331		0
2020	0		0		300
Prior	5,552		5,552		9,469
Revolving Loans Converted to Term Loans	0		0		0
Revolving Loans	14,646		14,646		14,694
Loans and other finance receivables, net of fees and costs	26,469		26,469		27,369
Small business loans
Loans and Leases by Credit Ratings
2024	17,700		17,700		35,813
2024, Writeoff			0		0
2023	29,221		29,221		28,144
2023, Writeoff			0		0
2022	29,924		29,924		42,368
2022, Writeoff			(772)		0
2021	38,674		38,674		14,718
2021, Writeoff			(140)		(11)
2020	13,783		13,783		6,672
2020, Writeoff			(75)		(912)
Prior	7,132		7,132		920
Prior, Writeoff			0		0
Revolving Loans Converted to Term Loans	0		0		0
Revolving Loans Converted to Term Loans, Writeoff			0		0
Revolving Loans	15,024		15,024		13,707
Revolving Loans, Writeoff			(492)		(565)
Loans and other finance receivables, net of fees and costs	151,458		151,458		142,342
Year-to-date gross charge-offs	(1,392)	(326)	(1,479)	(326)	(1,488)
Small business loans | Pass/Watch
Loans and Leases by Credit Ratings
2024	17,700		17,700		35,764
2023	28,812		28,812		26,621
2022	27,700		27,700		37,278
2021	32,174		32,174		11,687
2020	9,893		9,893		6,672
Prior	7,132		7,132		920
Revolving Loans Converted to Term Loans	0		0		0
Revolving Loans	13,432		13,432		12,507
Loans and other finance receivables, net of fees and costs	136,843		136,843		131,449
Small business loans | Special Mention
Loans and Leases by Credit Ratings
2024	0		0		0
2023	0		0		0
2022	0		0		0
2021	0		0		909
2020	0		0		0
Prior	0		0		0
Revolving Loans Converted to Term Loans	0		0		0
Revolving Loans	0		0		314
Loans and other finance receivables, net of fees and costs	0		0		1,223
Small business loans | Substandard
Loans and Leases by Credit Ratings
2024	0		0		49
2023	409		409		1,523
2022	2,224		2,224		5,090
2021	6,500		6,500		2,122
2020	3,890		3,890		0
Prior	0		0		0
Revolving Loans Converted to Term Loans	0		0		0
Revolving Loans	1,592		1,592		886
Loans and other finance receivables, net of fees and costs	14,615		14,615		9,670
Leases, net
Loans and Leases by Credit Ratings
2024	240		240		23,317
2024, Writeoff			0		(128)
2023	19,623		19,623		57,134
2023, Writeoff			(434)		(2,165)
2022	46,335		46,335		31,244
2022, Writeoff			(2,414)		(1,450)
2021	24,246		24,246		9,937
2021, Writeoff			(436)		(290)
2020	7,180		7,180		0
2020, Writeoff			(118)		0
Prior	0		0		0
Prior, Writeoff			0		0
Revolving Loans	0		0		0
Revolving Loans, Writeoff			0		0
Loans and other finance receivables, net of fees and costs	97,624		97,624		121,632
Year-to-date gross charge-offs	(1,254)	(775)	(3,402)	(2,239)	(4,033)
Leases, net | Performing
Loans and Leases by Credit Ratings
2024	240		240		23,054
2023	19,152		19,152		55,940
2022	45,406		45,406		30,876
2021	23,510		23,510		9,718
2020	7,024		7,024		0
Prior	0		0		0
Revolving Loans	0		0		0
Loans and other finance receivables, net of fees and costs	95,332		95,332		119,588
Leases, net | Nonperforming
Loans and Leases by Credit Ratings
2024	0		0		263
2023	471		471		1,194
2022	929		929		368
2021	736		736		219
2020	156		156		0
Prior	0		0		0
Revolving Loans	0		0		0
Loans and other finance receivables, net of fees and costs	2,292		2,292		2,044
Home equity lines and loans
Loans and Leases by Credit Ratings
2024	455		455		343
2024, Writeoff			0		0
2023	338		338		795
2023, Writeoff			0		0
2022	779		779		314
2022, Writeoff			0		0
2021	305		305		352
2021, Writeoff			0		0
2020	341		341		2,191
2020, Writeoff			0		(33)
Prior	3,610		3,610		2,295
Prior, Writeoff			0		0
Revolving Loans	78,000		78,000		69,997
Revolving Loans, Writeoff			(86)		(54)
Loans and other finance receivables, net of fees and costs	83,828		83,828		76,287
Year-to-date gross charge-offs	(86)	(54)	(86)	(87)	(87)
Home equity lines and loans | Performing
Loans and Leases by Credit Ratings
2024	455		455		343
2023	338		338		795
2022	779		779		314
2021	214		214		352
2020	341		341		2,191
Prior	3,610		3,610		2,295
Revolving Loans	76,442		76,442		68,600
Loans and other finance receivables, net of fees and costs	82,179		82,179		74,890
Home equity lines and loans | Nonperforming
Loans and Leases by Credit Ratings
2024	0		0		0
2023					0
2022					0
2021	91		91		0
2020					0
Prior					0
Revolving Loans	1,558		1,558		1,397
Loans and other finance receivables, net of fees and costs	1,649		1,649		1,397
Residential mortgage
Loans and Leases by Credit Ratings
2024	10,314		10,314		48,576
2024, Writeoff			0		0
2023	47,907		47,907		155,569
2023, Writeoff			0		0
2022	148,472		148,472		22,237
2022, Writeoff			0		0
2021	20,352		20,352		7,303
2021, Writeoff			0		0
2020	7,274		7,274		456
2020, Writeoff			0		0
Prior	12,250		12,250		12,737
Prior, Writeoff			0		0
Revolving Loans	0		0		0
Revolving Loans, Writeoff			0		0
Loans and other finance receivables, net of fees and costs	246,569		246,569		246,878
Year-to-date gross charge-offs	0	0	0	0	0
Residential mortgage | Performing
Loans and Leases by Credit Ratings
2024	10,314		10,314		48,576
2023	47,907		47,907		154,219
2022	146,295		146,295		22,237
2021	20,352		20,352		6,260
2020	6,404		6,404		456
Prior	10,979		10,979		11,380
Revolving Loans	0		0		0
Loans and other finance receivables, net of fees and costs	242,251		242,251		243,128
Residential mortgage | Nonperforming
Loans and Leases by Credit Ratings
2024	0		0		0
2023	0		0		1,350
2022	2,177		2,177		0
2021	0		0		1,043
2020	870		870		0
Prior	1,271		1,271		1,357
Revolving Loans	0		0		0
Loans and other finance receivables, net of fees and costs	4,318		4,318		3,750
Consumer
Loans and Leases by Credit Ratings
2024	0		0		39
2024, Writeoff			0		0
2023	53		53		35
2023, Writeoff			0		0
2022	27		27		0
2022, Writeoff			0		0
2021	0		0		0
2021, Writeoff			0		0
2020	0		0		32
2020, Writeoff			0		0
Prior	253		253		234
Prior, Writeoff			0		0
Revolving Loans	36		36		49
Revolving Loans, Writeoff			(1)		(2)
Loans and other finance receivables, net of fees and costs	369		369		389
Year-to-date gross charge-offs	0	$ 0	(1)	$ 0	(2)
Consumer | Performing
Loans and Leases by Credit Ratings
2024	0		0		39
2023	53		53		35
2022	27		27		0
2021	0		0		0
2020	0		0		32
Prior	253		253		234
Revolving Loans	36		36		49
Loans and other finance receivables, net of fees and costs	369		369		389
Consumer | Nonperforming
Loans and Leases by Credit Ratings
2024	0		0		0
2023	0		0		0
2022	0		0		0
2021	0		0		0
2020	0		0		0
Prior	0		0		0
Revolving Loans	0		0		0
Loans and other finance receivables, net of fees and costs	$ 0		$ 0		$ 0

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Allowance for Credit Losses - Modifications to Debtors Experiencing Financial Difficulty (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024 USD ($) loan modification	Jun. 30, 2023 USD ($) loan modification	Jun. 30, 2024 USD ($) loan modification	Jun. 30, 2023 USD ($) loan modification
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty:
Number of Loans | loan	3	1	8	1
Amortized Cost Basis	$ 1,402	$ 3,233	$ 3,311	$ 3,233
Related Reserve	$ 0	$ 0	$ 0	$ 0
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty:
Number of Loans | loan	5	1	10	1
Amortized Cost Basis	$ 2,800	$ 1,406	$ 5,634	$ 1,406
Related Reserve	$ 15	$ 422	$ 1,024	$ 422
Modifications granted to borrowers | modification	8	2	11	2
Number of loans defaulted during the period | loan	1	0	1	0
Small business loans
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty:
Number of Loans | loan			3	0
Amortized Cost Basis			$ 719	$ 0
Percentage of Total Class of Financing Receivable (as a percent)			0.50%	0.00%
Related Reserve			$ 0	$ 0
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty:
Number of Loans | loan	1	1	6
Amortized Cost Basis	$ 1,195	$ 0	$ 4,029	$ 0
Percentage of Total Class of Financing Receivable (as a percent)	0.008	0	0.027	0
Related Reserve	$ 15	$ 0	$ 1,024	$ 0
Commercial and industrial
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty:
Number of Loans | loan	3	1	5	1
Amortized Cost Basis	$ 1,402	$ 3,233	$ 2,592	$ 3,233
Percentage of Total Class of Financing Receivable (as a percent)	0.40%	1.00%	0.70%	1.00%
Related Reserve	$ 0	$ 0	$ 0	$ 0
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty:
Number of Loans | loan	4	1	4	1
Amortized Cost Basis	$ 1,605	$ 1,406	$ 1,605	$ 1,406
Percentage of Total Class of Financing Receivable (as a percent)	0.005	0.005	0.005	0.005
Related Reserve	$ 0	$ 422	$ 0	$ 422

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Short-Term Borrowings and Long-Term Debt - Additional Information (Details)	6 Months Ended
	Jun. 30, 2024 USD ($) borrowingFacility	Mar. 31, 2024 USD ($)	Dec. 31, 2023 USD ($)
Short-Term Borrowings
Borrowings	$ 142,994,000		$ 141,224,000
Letters of credit
Short-Term Borrowings
Maximum borrowing capacity	666,600,000		626,800,000
Proceeds from long term debt	$ 157,200,000
Fed Funds Overnight Borrowing
Short-Term Borrowings
Number of borrowing facilities | borrowingFacility	4
Borrowings	$ 947,000		0
Federal funds purchased, facility two
Short-Term Borrowings
Maximum borrowing capacity	56,000,000
Federal Reserve discount window
Short-Term Borrowings
Maximum borrowing capacity	11,100,000
Borrowings	0		0
FRB BTFP Advances
Short-Term Borrowings
Maximum borrowing capacity		$ 33,000,000
Borrowings	$ 0		$ 33,000,000

XML

Short-Term Borrowings and Long-Term Debt - Short-term Borrowings (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Short-Term Borrowings
Short term borrowings	$ 142,994	$ 141,224
FHLB Open Repo Plus Weekly
Short-Term Borrowings
Interest rate	5.67%
Short term borrowings	$ 95,080	104,792
FRB BTFP Advances
Short-Term Borrowings
Interest rate	4.76%
Short term borrowings	$ 0	33,000
Fed Funds Overnight Borrowing
Short-Term Borrowings
Interest rate	6.50%
Short term borrowings	$ 947	0
ACBB Holding Company Revolving LOC
Short-Term Borrowings
Interest rate	8.75%
Short term borrowings	$ 4,000	0
Mid-term Repo Fixed Maturing On 09/30/2024
Short-Term Borrowings
Interest rate	4.60%
Short term borrowings	$ 3,432	3,432
Mid-term Repo Fixed Maturing On 10/25/2024
Short-Term Borrowings
Interest rate	5.03%
Short term borrowings	$ 8,097	0
Mid-term Repo Fixed Maturing On 07/31/2024
Short-Term Borrowings
Interest rate	5.68%
Short term borrowings	$ 15,625	0
Mid-term Repo Fixed Maturing On 01/27/2025
Short-Term Borrowings
Interest rate	4.85%
Short term borrowings	$ 8,000	0
Mid-term Repo Fixed Maturing On 02/24/2025
Short-Term Borrowings
Interest rate	5.35%
Short term borrowings	$ 7,813	$ 0

XML

Short-Term Borrowings and Long-Term Debt - Long-term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Mid-term Repo Fixed
Long Term Debt
Long-term debt	$ 44,266	$ 33,672
Mid-term Repo Fixed Maturing On 12/22/2025
Long Term Debt
Interest rate	4.23%
Long-term debt	$ 8,935	8,935
Mid-term Repo Fixed Maturing On 05/20/2027
Long Term Debt
Interest rate	4.70%
Long-term debt	$ 10,594	0
Mid-term Repo Fixed Maturing On 10/14/2025
Long Term Debt
Interest rate	5.16%
Long-term debt	$ 9,492	9,492
Mid Term Repo Fixed Maturing On 7/14/2026
Long Term Debt
Interest rate	4.57%
Long-term debt	$ 15,245	$ 15,245

XML

Servicing Assets - Residential Mortgage Loans (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Servicing Asset at Amortized Cost, Balance [Roll Forward]
Balance at beginning of the period			$ 11,748
Balance at end of the period	$ 11,341		11,341
Mortgage Servicing Rights
Servicing Assets at Fair Value [Line Items]
Loans serviced	917,000		917,000		$ 945,200
Servicing fee income	578	$ 618	1,200	$ 1,300
Servicing Asset at Amortized Cost, Balance [Roll Forward]
Balance at beginning of the period	8,314	9,573	8,622	9,942
Servicing rights capitalized	22	0	32	0
Amortization of servicing rights	(310)	(335)	(628)	(706)
Change in valuation allowance	0	0	0	2
Balance at end of the period	8,026	9,238	8,026	9,238
SBA Loan Servicing Rights
Servicing Assets at Fair Value [Line Items]
Loans serviced	243,100		243,100		$ 225,800
Servicing Asset at Amortized Cost, Balance [Roll Forward]
Balance at beginning of the period	3,259	2,552	3,127	2,404
Servicing rights capitalized	256	512	453	726
Amortization of servicing rights	(219)	(252)	(460)	(447)
Change in valuation allowance	19	143	195	272
Balance at end of the period	3,315	2,955	3,315	2,955
Valuation Allowance for Impairment of Recognized Servicing Assets [Roll Forward]
Valuation allowance, beginning of period	(92)	(235)	(268)	(364)
Impairment	0	0	0	0
Recovery	19	143	195	272
Valuation allowance, end of the period	$ (73)	$ (92)	$ (73)	$ (92)

XML

Servicing Assets - MSR Sensitivity Analysis (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
SBA Loan Servicing Rights
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items]
Fair value of residential mortgage servicing rights	$ 3,644	$ 3,376
Weighted average life	3 years 2 months 12 days	3 years 6 months
Prepayment speed	16.47%	14.70%
Impact on fair value of a 10% adverse change in prepayment speed	$ (158)	$ (125)
Impact on fair value of a 20% adverse change in prepayment speed	$ (144)	$ (241)
Discount rate	13.05%	14.66%
Impact on fair value of a 10% adverse change in the discount rate	$ (81)	$ (74)
Impact on fair value of a 20% adverse change in the discount rate	(159)	(145)
Mortgage Servicing Rights
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items]
Fair value of residential mortgage servicing rights	$ 10,939	$ 11,221
Weighted average life	40 months	28 months
Prepayment speed	8.04%	8.57%
Impact on fair value of a 10% adverse change in prepayment speed	$ (486)	$ (506)
Impact on fair value of a 20% adverse change in prepayment speed	$ (934)	$ (973)
Discount rate	9.50%	9.50%
Impact on fair value of a 10% adverse change in the discount rate	$ (560)	$ (415)
Impact on fair value of a 20% adverse change in the discount rate	$ (1,063)	$ (799)

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Servicing Assets - SBA Loans (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Servicing Asset at Amortized Cost, Balance [Roll Forward]
Balance at beginning of the period			$ 11,748
Balance at end of the period	$ 11,341		11,341
SBA Loan Servicing Rights
Servicing Assets at Fair Value [Line Items]
Loans serviced	243,100		243,100		$ 225,800
Servicing Asset at Amortized Cost, Balance [Roll Forward]
Balance at beginning of the period	3,259	$ 2,552	3,127	$ 2,404
Servicing rights capitalized	256	512	453	726
Amortization of servicing rights	(219)	(252)	(460)	(447)
Change in valuation allowance	19	143	195	272
Balance at end of the period	3,315	2,955	3,315	2,955
Valuation Allowance for Impairment of Recognized Servicing Assets [Roll Forward]
Valuation allowance, beginning of period	(92)	(235)	(268)	(364)
Impairment	0	0	0	0
Recovery	19	143	195	272
Valuation allowance, end of the period	$ (73)	$ (92)	$ (73)	$ (92)

XML

Servicing Assets - SBA Sensitivity Analysis (Details) - SBA Loan Servicing Rights - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items]
Fair value of SBA loan servicing rights	$ 3,644	$ 3,376
Weighted average life	3 years 2 months 12 days	3 years 6 months
Prepayment speed	16.47%	14.70%
Impact on fair value of a 10% adverse change in prepayment speed	$ (158)	$ (125)
Impact on fair value of a 20% adverse change in prepayment speed	$ (144)	$ (241)
Discount rate	13.05%	14.66%
Impact on fair value of a 10% adverse change in the discount rate	$ (81)	$ (74)
Impact on fair value of a 20% adverse change in the discount rate	$ (159)	$ (145)

XML

Fair Value Measurements and Disclosures - Financial Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Assets
Fair value	$ 159,141	$ 146,019
Equity investments	2,088	2,121
U.S. asset backed securities
Assets
Fair value	19,765	16,824
U.S. government agency MBS
Assets
Fair value	21,902	22,634
U.S. government agency CMO
Assets
Fair value	26,587	19,573
State and municipal securities
Assets
Fair value	36,926	36,216
Non-U.S. government agency CMO
Assets
Fair value	15,257	13,155
Corporate bonds
Assets
Fair value	8,233	7,195
Recurring
Assets
Equity investments	2,088	2,121
Mortgage loans held for sale	54,278	24,816
Mortgage loans held for investment	12,900	13,726
Total	233,145	190,424
Liabilities
Total	3,719	3,613
Recurring | U.S. asset backed securities
Assets
Fair value	19,765	16,824
Recurring | U.S. government agency MBS
Assets
Fair value	21,902	22,634
Recurring | U.S. government agency CMO
Assets
Fair value	26,587	19,573
Recurring | State and municipal securities
Assets
Fair value	36,926	36,216
Recurring | U.S. Treasuries
Assets
Fair value	30,471	30,422
Recurring | Non-U.S. government agency CMO
Assets
Fair value	15,257	13,155
Recurring | Corporate bonds
Assets
Fair value	8,233	7,195
Recurring | Interest Rate Lock Commitments
Assets
Derivative assets, Fair value	451	214
Liabilities
Derivative Liability	52	17
Recurring | Forward Commitments
Assets
Derivative assets, Fair value	16
Liabilities
Derivative Liability	14	41
Recurring | Customer Derivatives - Interest Rate Swaps
Assets
Derivative assets, Fair value	3,658	3,528
Liabilities
Derivative Liability	3,649	3,544
Recurring | Interest rate swaps
Assets
Derivative assets, Fair value	613
Recurring | Customer Derivatives - Risk Participation Agreements
Liabilities
Derivative Liability	4	11
Recurring | Level 1
Assets
Equity investments	0	0
Mortgage loans held for sale	0	0
Mortgage loans held for investment	0	0
Total	30,471	30,422
Liabilities
Total	0	0
Recurring | Level 1 | U.S. asset backed securities
Assets
Fair value	0	0
Recurring | Level 1 | U.S. government agency MBS
Assets
Fair value	0	0
Recurring | Level 1 | U.S. government agency CMO
Assets
Fair value	0	0
Recurring | Level 1 | State and municipal securities
Assets
Fair value	0	0
Recurring | Level 1 | U.S. Treasuries
Assets
Fair value	30,471	30,422
Recurring | Level 1 | Non-U.S. government agency CMO
Assets
Fair value	0	0
Recurring | Level 1 | Corporate bonds
Assets
Fair value	0	0
Recurring | Level 1 | Interest Rate Lock Commitments
Assets
Derivative assets, Fair value	0	0
Liabilities
Derivative Liability	0	0
Recurring | Level 1 | Forward Commitments
Assets
Derivative assets, Fair value	0
Liabilities
Derivative Liability	0	0
Recurring | Level 1 | Customer Derivatives - Interest Rate Swaps
Assets
Derivative assets, Fair value	0	0
Liabilities
Derivative Liability	0	0
Recurring | Level 1 | Interest rate swaps
Assets
Derivative assets, Fair value	0
Recurring | Level 1 | Customer Derivatives - Risk Participation Agreements
Liabilities
Derivative Liability	0	0
Recurring | Level 2
Assets
Equity investments	2,088	2,121
Mortgage loans held for sale	54,278	24,816
Mortgage loans held for investment	12,900	13,726
Total	202,223	159,788
Liabilities
Total	3,667	3,596
Recurring | Level 2 | U.S. asset backed securities
Assets
Fair value	19,765	16,824
Recurring | Level 2 | U.S. government agency MBS
Assets
Fair value	21,902	22,634
Recurring | Level 2 | U.S. government agency CMO
Assets
Fair value	26,587	19,573
Recurring | Level 2 | State and municipal securities
Assets
Fair value	36,926	36,216
Recurring | Level 2 | U.S. Treasuries
Assets
Fair value	0	0
Recurring | Level 2 | Non-U.S. government agency CMO
Assets
Fair value	15,257	13,155
Recurring | Level 2 | Corporate bonds
Assets
Fair value	8,233	7,195
Recurring | Level 2 | Interest Rate Lock Commitments
Assets
Derivative assets, Fair value	0	0
Liabilities
Derivative Liability	0	0
Recurring | Level 2 | Forward Commitments
Assets
Derivative assets, Fair value	16
Liabilities
Derivative Liability	14	41
Recurring | Level 2 | Customer Derivatives - Interest Rate Swaps
Assets
Derivative assets, Fair value	3,658	3,528
Liabilities
Derivative Liability	3,649	3,544
Recurring | Level 2 | Interest rate swaps
Assets
Derivative assets, Fair value	613
Recurring | Level 2 | Customer Derivatives - Risk Participation Agreements
Liabilities
Derivative Liability	4	11
Recurring | Level 3
Assets
Equity investments	0	0
Mortgage loans held for sale	0	0
Mortgage loans held for investment	0	0
Total	451	214
Liabilities
Total	52	17
Recurring | Level 3 | U.S. asset backed securities
Assets
Fair value	0	0
Recurring | Level 3 | U.S. government agency MBS
Assets
Fair value	0	0
Recurring | Level 3 | U.S. government agency CMO
Assets
Fair value	0	0
Recurring | Level 3 | State and municipal securities
Assets
Fair value	0	0
Recurring | Level 3 | U.S. Treasuries
Assets
Fair value	0	0
Recurring | Level 3 | Non-U.S. government agency CMO
Assets
Fair value		0
Recurring | Level 3 | Corporate bonds
Assets
Fair value	0	0
Recurring | Level 3 | Interest Rate Lock Commitments
Assets
Derivative assets, Fair value	451	214
Liabilities
Derivative Liability	52	17
Recurring | Level 3 | Forward Commitments
Assets
Derivative assets, Fair value	0
Liabilities
Derivative Liability	0	0
Recurring | Level 3 | Customer Derivatives - Interest Rate Swaps
Assets
Derivative assets, Fair value	0	0
Liabilities
Derivative Liability	0	0
Recurring | Level 3 | Interest rate swaps
Assets
Derivative assets, Fair value	0
Recurring | Level 3 | Customer Derivatives - Risk Participation Agreements
Liabilities
Derivative Liability	$ 0	$ 0

XML

Fair Value Measurements and Disclosures - Financial Assets Measured at Fair Value on Non-recurring Basis (Details) - Nonrecurring - Level 3 - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Financial assets measured at fair value on a nonrecurring basis
Mortgage servicing rights	$ 8,026	$ 8,621
SBA loan servicing rights	3,315	3,127
Total	27,631	24,700
Commercial and industrial
Financial assets measured at fair value on a nonrecurring basis
Impaired loans	9,942	9,818
Small business loans
Financial assets measured at fair value on a nonrecurring basis
Impaired loans	$ 6,348	$ 3,134

XML

Fair Value Measurements and Disclosures - Level 3 Valuation (Details) - Level 3 - Valuation, Income Approach - Measurement Input, Appraised Value $ in Thousands	Jun. 30, 2024 USD ($)	Dec. 31, 2023 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Impaired loans	$ 16,290	$ 12,952
Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Impaired loans, measurement input (as a percent)	0.02	0.02
Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Impaired loans, measurement input (as a percent)	0.33	0.33

XML

Fair Value Measurements and Disclosures - Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Financial assets:
Loans at fair value	$ 12,900	$ 13,726
Level 1 | Carrying amount
Financial assets:
Cash and cash equivalents	24,058	56,697
Level 1 | Fair value
Financial assets:
Cash and cash equivalents	24,058	56,697
Level 2 | Carrying amount
Financial assets:
Mortgage loans held for sale	54,278	24,816
Mortgage loans held for investment	12,900	13,726
Financial liabilities:
Deposits	1,915,436	1,823,462
Borrowings	187,260	174,896
Subordinated debentures	49,897	49,836
Level 2 | Fair value
Financial assets:
Mortgage loans held for sale	54,278	24,816
Mortgage loans held for investment	12,900	13,726
Financial liabilities:
Deposits	1,912,200	1,834,700
Borrowings	196,300	176,400
Subordinated debentures	48,732	50,223
Level 3 | Carrying amount
Financial assets:
Loans at fair value	1,975,635	1,882,080
Level 3 | Fair value
Financial assets:
Loans at fair value	$ 1,905,722	$ 1,832,558

XML

Fair Value Measurements and Disclosures - Fair Value on a Recurring Basis (Details) - Interest Rate Lock Commitments - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at beginning of the period	$ 288	$ 139	$ 214	$ 87
Increase in value	163	122	237	174
Balance at end of the period	$ 451	$ 261	$ 451	$ 261

XML

Fair Value Measurements and Disclosures - Valuation Techniques for Level 3 Interest Rate Lock (Details) - Interest Rate Lock Commitments - Level 3 - Valuation Technique, Consensus Pricing Model $ in Thousands	Jun. 30, 2024 USD ($)	Dec. 31, 2023 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative asset	$ 451	$ 214
Valuation technique extensible list	Valuation Technique, Consensus Pricing Model	Valuation Technique, Consensus Pricing Model
Measurement input extensible list	Loan Origination Success Rate [Member]	Loan Origination Success Rate [Member]
Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative asset, measurement input (as a percent)	0.01	0.01
Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative asset, measurement input (as a percent)	0.99	0.99
Weighted Average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative asset, measurement input (as a percent)	0.8331	0.7948

XML

Derivative Financial Instruments - Notional Amounts and Fair Values of Derivative Financial Instruments (Details) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($) derivative_instrument	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)
Derivative Financial Instruments
Number of interest rate swaps entered into | derivative_instrument	3
Notional Amount		$ 277,091		$ 277,091		$ 226,652
Unrealized gains, net of tax recorded in total comprehensive income		133	$ 338	896	$ 338
Asset (Liability) Fair Value		1,019		1,019		(410)
Interest Rate Swap, One
Derivative Financial Instruments
Notional Amount	$ 25,000		$ 25,000		$ 25,000
Fixed interest rate (as a percent)	4.07%		4.07%		4.07%
Interest Rate Swap, Two
Derivative Financial Instruments
Notional Amount	$ 25,000		$ 25,000		$ 25,000
Fixed interest rate (as a percent)	4.027%		4.027%		4.027%
Interest Rate Swap, Three
Derivative Financial Instruments
Notional Amount	$ 25,000		$ 25,000		$ 25,000
Fixed interest rate (as a percent)	4.117%		4.117%		4.117%
Interest Rate Lock Commitments
Derivative Financial Instruments
Notional Amount		87,305		87,305		39,134
Asset (Liability) Fair Value		399		399		197
Interest Rate Lock Commitments | Other assets
Derivative Financial Instruments
Notional Amount		70,244		70,244		33,735
Asset (Liability) Fair Value		451		451		214
Interest Rate Lock Commitments | Other liabilities
Derivative Financial Instruments
Notional Amount		17,061		17,061		5,399
Asset (Liability) Fair Value		(52)		(52)		(17)
Forward Commitments
Derivative Financial Instruments
Notional Amount		8,500		8,500		4,250
Asset (Liability) Fair Value		2		2		(41)
Forward Commitments | Other assets
Derivative Financial Instruments
Notional Amount		3,750		3,750		0
Asset (Liability) Fair Value		16		16		0
Forward Commitments | Other liabilities
Derivative Financial Instruments
Notional Amount		4,750		4,750		4,250
Asset (Liability) Fair Value		(14)		(14)		(41)
Customer Derivatives - Interest Rate Swaps
Derivative Financial Instruments
Notional Amount		99,266		99,266		101,186
Asset (Liability) Fair Value		9		9		(17)
Customer Derivatives - Interest Rate Swaps | Other assets
Derivative Financial Instruments
Notional Amount		49,633		49,633		50,593
Asset (Liability) Fair Value		3,658		3,658		3,528
Customer Derivatives - Interest Rate Swaps | Other liabilities
Derivative Financial Instruments
Notional Amount		49,633		49,633		50,593
Asset (Liability) Fair Value		(3,649)		(3,649)		(3,544)
Customer Derivatives - Risk Participation Agreements
Derivative Financial Instruments
Notional Amount		7,020		7,020		7,082
Asset (Liability) Fair Value		(4)		(4)		(11)
Customer Derivatives - Risk Participation Agreements | Other assets
Derivative Financial Instruments
Notional Amount		0		0		0
Asset (Liability) Fair Value		0		0		0
Customer Derivatives - Risk Participation Agreements | Other liabilities
Derivative Financial Instruments
Notional Amount		7,020		7,020		7,082
Asset (Liability) Fair Value		(4)		(4)		(11)
Interest rate swaps
Derivative Financial Instruments
Notional Amount		75,000		75,000		75,000
Asset (Liability) Fair Value		613		613		(539)
Interest rate swaps | Other assets
Derivative Financial Instruments
Notional Amount		75,000		75,000		0
Asset (Liability) Fair Value		613		613		0
Interest rate swaps | Other liabilities
Derivative Financial Instruments
Notional Amount		0		0		75,000
Asset (Liability) Fair Value		$ 0		$ 0		$ (539)

XML

Derivative Financial Instruments - Fair Value Gains and Losses on Derivative Financial Instruments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Summary of the fair value gains and losses on derivative financial instruments
Net fair value (losses) gains on derivative financial instruments	$ 379	$ 617	$ 1,430	$ 548
Realized losses on derivatives	63	1	82	1
Interest Rate Lock Commitments
Summary of the fair value gains and losses on derivative financial instruments
Net fair value (losses) gains on derivative financial instruments	195	146	202	109
Forward Commitments
Summary of the fair value gains and losses on derivative financial instruments
Net fair value (losses) gains on derivative financial instruments	2	13	43	13
Customer Derivatives - Interest Rate Swaps
Summary of the fair value gains and losses on derivative financial instruments
Net fair value (losses) gains on derivative financial instruments	5	14	26	(14)
Customer Derivatives - Risk Participation Agreements
Summary of the fair value gains and losses on derivative financial instruments
Net fair value (losses) gains on derivative financial instruments	1	9	7	5
Interest rate swaps
Summary of the fair value gains and losses on derivative financial instruments
Net fair value (losses) gains on derivative financial instruments	$ 176	$ 435	$ 1,152	$ 435

XML

Segments (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($) office	Jun. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)
Segments
Number of loan production offices | office			8
Net-interest Income:
Net interest income	$ 16,846	$ 17,098	$ 33,455	$ 34,775
Provision (recovery of provision) for credit losses	2,680	705	5,546	2,104
Net interest income after provision for credit losses	14,166	16,393	27,909	32,671
Non-interest Income
Mortgage banking income	5,420	5,050	9,054	8,322
Wealth management income	1,444	1,235	2,761	2,431
SBA loan income	785	1,767	1,771	2,480
Net change in fair values	150	(235)	48	(188)
Net loss on hedging activity	(63)	(1)	(82)	(1)
Other	1,508	1,308	3,676	2,718
Total non-interest income	9,244	9,124	17,228	15,762
Total non-interest expense	19,018	19,615	37,192	37,404
Income (loss) before income taxes	4,392	5,902	7,945	11,029
Total Assets	2,351,584	2,206,877	2,351,584	2,206,877	$ 2,246,193
Bank
Net-interest Income:
Net interest income	16,784	17,102	33,376	34,721
Provision (recovery of provision) for credit losses	2,680	705	5,546	2,104
Net interest income after provision for credit losses	14,104	16,397	27,830	32,617
Non-interest Income
Mortgage banking income	67	81	155	139
Wealth management income	0	0	1	0
SBA loan income	785	1,767	1,771	2,480
Net change in fair values	6	23	34	(8)
Net loss on hedging activity	0	0	0	0
Other	815	637	1,589	1,327
Total non-interest income	1,673	2,508	3,550	3,938
Total non-interest expense	12,606	12,325	24,669	23,024
Income (loss) before income taxes	3,171	6,580	6,711	13,531
Total Assets	2,248,950	2,143,278	2,248,950	2,143,278
Wealth
Net-interest Income:
Net interest income	36	(29)	30	3
Provision (recovery of provision) for credit losses	0	0	0	0
Net interest income after provision for credit losses	36	(29)	30	3
Non-interest Income
Mortgage banking income	0	0	0	0
Wealth management income	1,444	1,235	2,760	2,431
SBA loan income	0	0	0	0
Net change in fair values	0	0	0	0
Net loss on hedging activity	0	0	0	0
Other	0	0	0	0
Total non-interest income	1,444	1,235	2,760	2,431
Total non-interest expense	804	889	1,636	1,877
Income (loss) before income taxes	676	317	1,154	557
Total Assets	10,347	8,485	10,347	8,485
Mortgage
Net-interest Income:
Net interest income	26	25	49	51
Provision (recovery of provision) for credit losses	0	0	0	0
Net interest income after provision for credit losses	26	25	49	51
Non-interest Income
Mortgage banking income	5,353	4,969	8,899	8,183
Wealth management income	0	0	0	0
SBA loan income	0	0	0	0
Net change in fair values	144	(258)	14	(180)
Net loss on hedging activity	(63)	(1)	(82)	(1)
Other	693	671	2,087	1,391
Total non-interest income	6,127	5,381	10,918	9,393
Total non-interest expense	5,608	6,401	10,887	12,503
Income (loss) before income taxes	545	(995)	80	(3,059)
Total Assets	$ 92,287	$ 55,114	$ 92,287	$ 55,114

XML

Label	Element	Value
Accounting Standards Update [Extensible Enumeration]	us-gaap_AccountingStandardsUpdateExtensibleList	Accounting Standards Update 2016-13 [Member]