Quarterly report [Sections 13 or 15(d)]

INCOME TAXES

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INCOME TAXES
 9 Months Ended
Sep. 30, 2026
INCOME TAXES  
INCOME TAXES

11. INCOME TAXES

The Company’s effective tax rate was 21.1% for the quarter ended September 30, 2026, compared to 20.8% for the quarter ended September 30, 2025. For the nine months ended September 30, 2026 and September 30, 2025, the effective tax rates were 21.1% and 17.2%, respectively. The increase in the effective tax rate for the nine months ended September 30, 2026 was primarily due to a $7.7 million income tax benefit recognized in the second quarter of 2025 related to the revaluation of the Company’s state net deferred tax asset following the Sandy Spring acquisition, as well as an overall increase in the proportion of taxable income to tax-exempt income.

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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 $5.8 million and $7.8 million as of September 30, 2026 and December 31, 2025, respectively. The decrease in the valuation allowance primarily reflected an increase in state taxable income, which increased the amount of certain state deferred tax assets expected to be utilized. The Company analyzed the tax positions taken or expected to be taken on its tax returns for the periods ending December 31, 2025, 2024, and 2023, and concluded the Company had no material liability related to uncertain tax positions.