16. INCOME TAXES

The Company files income tax returns in the U.S., the Commonwealth of Virginia, Maryland, and other states. With few exceptions, the Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years prior to 2022.

Significant components of the Company’s net deferred tax assets and liabilities, which include balances associated with the Sandy Spring acquisition, consist of the following as of December 31, (dollars in thousands):

⁽¹⁾ Tax credit carryforward was included in the Other line item in the 2024 financial statement presentation.

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For more information about the Company’s assessment of deferred tax assets, refer to Note 1 “Summary of Significant Accounting Policies” in this Form 10-K.

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During 2025, the Company re-evaluated its net deferred tax assets as a result of the Sandy Spring acquisition and reviewed its business plan considering the Sandy Spring acquisition, as well as current and projected future realizations of state deferred tax items. As a result, the Company concluded it is more likely than not that a portion of certain state net operating loss carryforwards will not be realized and recorded a valuation allowance via a non-cash charge to income tax expense. The valuation allowance increased to $7.8 million at December 31, 2025 from $4.4 million in December 31, 2024, primarily due to the Sandy Spring acquisition and its historical valuation allowance related to net operating losses in certain state filing jurisdictions.

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The NOL carryforwards at December 31, were as follows (dollars in thousands):

N/A – not applicable as the NOL can be carried forward indefinitely

⁽¹⁾ The Company acquired a portion of these carryforwards and will be subject to limitations that could limit the

Company’s utilization in future periods.

⁽²⁾ Balance includes recognized built in loss carryforwards that are subject to the same limitations as net operating loss

carryforwards.

⁽³⁾ Balance is pre-tax and includes the expected effect of the North Carolina rate reprice.

⁽⁴⁾ Balance is pre-tax, pre-apportionment, and net of the valuation allowance.

⁽⁵⁾ Balance is pre-tax and pre-apportionment.

⁽⁶⁾ The Company generated tax credits in excess of allowable based on taxable income limitations. The amount is carried forward indefinitely until there is sufficient taxable income to absorb the utilization of the tax credits.

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The Company analyzed the tax positions taken or expected to be taken in its tax returns for the periods ending December 31, 2025, 2024, and 2023, and had no material liability related to uncertain tax positions in accordance with applicable ASC 740, Income Taxes.

The components of income tax expense (benefit) for the years ended December 31, were as follows (dollars in thousands):

⁽¹⁾ Does not reflect the deferred tax effects of unrealized gains and losses on AFS securities, unrealized gains and losses

for AFS securities transferred to HTM, unrealized gains and losses on BOLI or changes in fair values of cash flow hedges that are included in Accumulated Other Comprehensive (Loss) Income. Refer to Note 12 “Stockholders’ Equity” in this Form 10-K for additional information.

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Income tax expense for 2025, 2024, and 2023 varies from the amount computed by applying the statutory U.S. federal income tax rate to income before income taxes. A reconciliation between the expected and actual income tax expense, and resulting effective tax rate, is presented in the following table for the years ended December 31, (dollars in thousands):

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⁽¹⁾ State taxes in Maryland made up the majority (greater than 50 percent) of the tax effect in this category in 2025.

⁽²⁾ State taxes in Pennsylvania, Maryland, North Carolina, and South Carolina made up the majority (greater than 50 percent) of the tax effect in this category in 2023.

⁽³⁾ Includes the impact of the Sandy Spring acquisition.

⁽⁴⁾ Unrecognized tax benefits reflect potential exposure to certain state income tax filing obligations where the Company potentially has established a nexus but does not currently file income tax returns. The Company continues to monitor state tax developments and filing requirements for compliance and to manage related risks.

NM = Not Meaningful

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The following table presents income taxes paid (net refunds) for the years ended December 31, (dollars in thousands):

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⁽¹⁾ State and local jurisdictions were below the threshold for disaggregation for the years ended December 31, 2024 and 2023.

For the years ended December 31, 2025, 2024, and 2023 investment tax credits totaled approximately $12.1 million, $9.3 million, and $4.8 million, respectively.