Quarterly report [Sections 13 or 15(d)]

INCOME TAXES

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INCOME TAXES
 9 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES

12. INCOME TAXES

The Company’s effective tax rate for the three months ended September 30, 2025 and 2024 was 20.8% and 17.0%, respectively, and the effective tax rate for the nine months ended September 30, 2025 and 2024 was 17.2% and 19.7%, respectively. The increase in the effective tax rate for the three months ended September 30, 2025 is primarily due to the Sandy Spring acquisition, which resulted in additional state income tax expense, as well as an overall increase in the proportion of tax-exempt to pre-tax income. The decrease in the effective tax rate for the nine months ended September 30, 2025 primarily reflects the impact of the Sandy Spring acquisition, which resulted in a $8.0 million income tax benefit in the second quarter of 2025 related to the Company re-evaluating its state net deferred tax assets as a result of the Sandy Spring acquisition, as well as the impact of the $4.8 million valuation allowance established during the second quarter of 2024.

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As of each reporting date, the Company considers existing evidence, both positive and negative, that could impact the Company’s view regarding the future realization of deferred tax assets. The Company’s valuation allowance was $11.9 million and $4.4 million as of September 30, 2025 and December 31, 2024, respectively. The increase in the valuation allowance was due to the Sandy Spring acquisition and Sandy Spring’s historical valuation allowance related to net operating losses in certain state filing jurisdictions.

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On July 4, 2025, the One Big Beautiful Bill Act was enacted into law by the federal government. In accordance with ASC 740, Income Taxes, the Company recognized the total effect of the tax law changes in the quarter ended September 30, 2025, the interim period in which the law was enacted. The tax provisions of the One Big Beautiful Bill Act did not have a material impact on the Company’s income tax balances.