Financial Data and Key Metrics Changes - Loans held for investment increased by $83 million, or 0.6% linked quarter, and $448 million, or 3.4% year-over-year [5] - Deposit base grew by $550 million, or 3.4% linked quarter, with non-interest-bearing deposits increasing by 5.9% linked quarter [5] - Net income for the third quarter was $56.8 million, representing fully diluted EPS of $0.94, up 2.2% from the prior quarter and 11.9% from the prior year [5][6] - Return on average assets was 1.21% and return on average tangible equity was 12.84% [6] - Net interest income expanded by 2.4% to $165.2 million, with a net interest margin of 3.83%, an increase of two basis points from the prior quarter [6] Business Line Data and Key Metrics Changes - Credit quality remained solid with net charge-offs of $4.4 million, representing 13 basis points of average loans [7] - Non-interest income totaled $39.9 million, up 0.1% linked quarter and 6.3% year-over-year [6] - Non-interest expense increased by $5.8 million, or 4.7% linked quarter, including approximately $2.3 million in non-routine items [6] Market Data and Key Metrics Changes - The company reported diversified loan growth led by commercial and industrial loans, municipal loans, and other real estate secured loans [5] - The total cost of deposits increased by 1.84%, or four basis points linked quarter [5] Company Strategy and Development Direction - The company is focused on organic growth initiatives and enhancing financial performance through hiring in key markets [4][10] - The guidance for loans held for investment is expected to increase mid-single digits for the full year 2025, with low single-digit growth in deposits [9] - The company plans to maintain a disciplined approach to capital deployment, focusing on organic loan growth and potential market expansion [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about maintaining momentum and improving financial performance, particularly in key growth markets [10][28] - The company anticipates a continued trend of lower provisions for credit losses compared to the full year 2024 [9] - Management acknowledged the competitive landscape but sees M&A activity as an opportunity for growth [23][29] Other Important Information - The company repurchased $11 million of common stock during the quarter, with a total of $37 million repurchased in the first nine months of the year [8] - The board declared a quarterly cash dividend of $0.24 per share, payable December 15 [8] Q&A Session Summary Question: Can you provide details on recent hiring and future plans? - The company hired approximately 29 new associates in the third quarter, with a focus on key markets like Houston and Atlanta [13][14] Question: Will there be an increase in expenses due to hiring? - Yes, the company expects incremental expense growth related to recent hiring levels [14][15] Question: What are the opportunities for growth in light of recent M&A activity? - Management sees M&A as an opportunity for both hiring and customer acquisition, particularly in competitive markets [22][23] Question: Can you discuss trends in classified and criticized loans? - There was a positive trend with a decrease of about $49 million in criticized loans this quarter [42] Question: What are the expectations for net interest margin and deposit costs? - The company anticipates maintaining net interest margin in the range of 3.80% to 3.83% and expects deposit costs to decrease [36][50]

Financial Data and Key Metrics Changes - The reported net income available to common shareholders was $16.8 million, with earnings per common share at $0.12. Adjusted operating earnings were $135.1 million or $0.95 per common share, resulting in an adjusted operating return on tangible common equity of 23.8% and an adjusted operating return on assets of 1.46% [18][19] - The CET1 capital ratio was 9.8%, and the loan to deposit ratio was approximately 88% at quarter end [10][24] - The tax equivalent net interest margin expanded by 38 basis points to 3.83%, driven by the incremental net accretion of purchase accounting adjustments related to the Sandy Spring acquisition [20][21] Business Line Data and Key Metrics Changes - The total loan portfolio fair value mark discount was $789.7 million, with loans held for investment totaling $8.6 billion and loans held for sale at $1.9 billion [17] - Non-interest income increased by $52.3 million to $81.5 million, primarily due to gains from the sale of commercial real estate loans and equity interest [22] - Reported non-interest expense increased by $145.5 million to $279.7 million, largely driven by merger-related costs [23] Market Data and Key Metrics Changes - Approximately 23% of total loans are in the Washington Metro Area, with the remaining 77% across other regions [14] - The unemployment rate in Maryland was reported at 3.3%, while Virginia's rate was 3.5%, indicating a robust economic environment [15] Company Strategy and Development Direction - The acquisition of Sandy Spring Bank is expected to bolster the company's position as a premier regional bank in the Lower Mid Atlantic, with plans for organic growth in North Carolina [9][30] - The company plans to open 10 new branches in North Carolina starting in 2026, focusing on markets with significant population growth [31][32] - The strategic plan will be shared during an Analyst Day in December, highlighting the next phase of growth and expansion [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the integration of Sandy Spring and the potential for sustainable growth, despite economic uncertainties [7][12] - The company has lowered its forecast for the 2025 net charge-off ratio to between 15 and 20 basis points, reflecting a stable credit quality outlook [13] - Management noted an improvement in business sentiment and loan pipelines, indicating a positive trajectory for loan growth in the second half of the year [11][66] Other Important Information - The company paid a common stock dividend of $0.34 per share, an increase of 6.3% from the previous year [25] - The effective tax rate for the second quarter was a negative 13.2%, reflecting an income tax benefit related to the reevaluation of state deferred tax assets [23] Q&A Session Summary Question: Loan growth outlook and plans for the Carolinas - Management indicated strong momentum in the loan pipeline and expressed optimism about growth in the Carolinas, particularly with the integration of American National Bank [38][40] Question: Expense outlook and efficiency ratio - The company is targeting a mid-40s efficiency ratio, inclusive of investments in the Carolinas, while maintaining a focus on technology investments [41][42] Question: Capital levels and deployment strategies - The CET1 ratio is expected to increase, with plans to invest in organic growth and consider share repurchases as capital accumulates [44][47] Question: Credit quality and government contractor segment - Credit quality remains stable, with the government contractor finance portfolio performing well due to increased defense spending [52][54] Question: Trends in loan yields and pricing competition - Loan yields have remained stable, with fixed-rate loans repricing in the 6.25% to 6.5% range [80][81] Question: Integration opportunities from the Sandy Spring acquisition - Management highlighted the potential for liquidity and new product offerings to enhance the former Sandy Spring franchise [85][86]

Financial Data and Key Metrics Changes - For Q2 2025, the company recorded net income of $10,200,000, or $0.41 per diluted share, with a return on average assets (ROA) of 1.04% [11] - Loans grew by $91,000,000, representing an annualized growth rate of 11%, while deposits increased by $48,000,000, or 6.2% annualized [12] - Net interest income rose by $1,900,000 compared to Q1, marking a 6% linked quarter growth, while pre-provision net revenue increased by $2,900,000, reflecting a 21% linked quarter growth [6][12] Business Line Data and Key Metrics Changes - The commercial and industrial (C and I) loans grew by $176,000,000, and owner-occupied commercial real estate loans increased by over $60,000,000 [11] - Noninterest income totaled $2,700,000 in Q2, up from $2,000,000 in Q1, driven by higher loan fees and a gain from the sale of the Paoli location [15] - Noninterest expenses were $20,900,000 for Q2, compared to $20,400,000 in Q1, with salary and employee benefits increasing due to executive severance payments [15][16] Market Data and Key Metrics Changes - The company experienced robust deposit growth, particularly in noninterest-bearing deposits, which increased by $55,000,000, contributing to a favorable mix shift [19] - Noninterest-bearing demand deposits comprised nearly 19% of total deposits at June 30, up from 17% a year ago [19] - The average cost of money market deposits declined by nearly 60 basis points, lowering overall interest costs by $2,800,000 compared to the prior year [21] Company Strategy and Development Direction - The company aims to evolve into a middle-market commercial bank, focusing on strengthening its core earnings profile and driving shareholder value through buyback programs and stable cash dividends [18] - The company is actively managing expenses and expects to return to historical levels of noninterest expense to average asset ratio of 1.9% to 2% [8][9] - The company is expanding its branch network, with new branches opened in Summit and planned in Oceansport, New Jersey, to enhance market presence [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining strong asset growth and revenue generation, despite potential normalization in loan growth rates in the second half of the year [10][38] - Credit quality remains stable, with low net charge-offs and a strong allowance for credit losses [7][14] - The company anticipates a stable net interest margin, with potential upside from efforts to lower deposit costs and replace lower-yielding assets with higher-yielding loans [13][75] Other Important Information - The company completed a subordinated debt offering, raising $35,000,000 at a low interest rate, which is expected to positively impact future capital flexibility [9][17] - The efficiency ratio improved to 56.24%, remaining below 60% for the twenty-fourth consecutive quarter [16] Q&A Session Summary Question: Insights on forward loan growth moderation - Management indicated that while loan growth may moderate, they expect to generate approximately $50,000,000 in net loan growth per quarter, with the majority coming from C and I and owner-occupied categories [36][40] Question: Growth drivers in C and I verticals - The growth in C and I loans has primarily been driven by new customer acquisition rather than line utilization, which has remained stable [41][43] Question: Outlook for deposits and noninterest-bearing deposits - Management is focused on increasing noninterest-bearing deposits and anticipates fluctuations due to seasonal factors, but overall trends remain positive [44][46] Question: Share repurchases as a capital use - Management believes they have the capital to be active in share repurchases, emphasizing a disciplined approach to timing and pricing [48][50] Question: M&A strategy and opportunities - The company maintains a disciplined M&A strategy, looking for opportunities that align with their growth objectives, particularly in low-cost deposit franchises [51][53] Question: Near-term NIM movements and loan yields - Management expects stable NIM in the near term, with potential for improvement as higher loan yields are achieved and deposit costs are managed down [60][62] Question: Nonperforming loans and credit quality - There were minor inflows into nonperforming loans, but overall credit quality remains strong with no systemic issues identified [89][92] Question: Impact of tariffs on loan demand - Management noted minimal impact from tariffs on borrower behavior, with no significant trends observed [93][94]