[10-Q] MetroCity Bankshares, Inc. Quarterly Earnings Report

Q: How did MCBS perform in Q3 2025?

Net income was $17.3 million versus $16.7 million a year ago; diluted EPS was $0.67 .

Q: What were MetroCity Bankshares' nine-month 2025 results?

Nine‑month net income was $50.4 million , with net interest income of $94.5 million .

Q: What is MCBS’s balance sheet size and equity?

Total assets were $3.63 billion and shareholders’ equity was $445.9 million as of September 30, 2025.

Q: How did loans and deposits change?

Loans held for investment were $2.95 billion and deposits were $2.69 billion . Loans held for sale were $231.3 million .

Q: What is the allowance for credit losses (ACL)?

The ACL was $17.9 million as of September 30, 2025.

Q: What dividends did MCBS declare?

A quarterly dividend of $0.25 per share was declared; year‑to‑date dividends totaled $0.71 per share.

Q: How many MCBS shares are outstanding?

There were 25,480,661 shares outstanding as of November 3, 2025.

Filing Impact

(Moderate)

Filing Sentiment

(Neutral)

Form Type

10-Q

Rhea-AI Filing Summary

MetroCity Bankshares reported steady third‑quarter performance. Net income was $17.3 million, up from $16.7 million a year ago, with diluted EPS of $0.67. Net interest income rose to $31.8 million from $30.3 million as interest expense declined year over year. The company recorded a $0.5 million net release of credit loss reserves versus a $0.6 million provision last year, supporting results.

For the nine months, net income reached $50.4 million versus $48.3 million, and net interest income increased to $94.5 million from $88.1 million. Total assets were $3.63 billion. Loans held for investment declined to $2.95 billion from $3.14 billion as residential mortgages were moved to held for sale; loans held for sale stood at $231.3 million. Deposits were $2.69 billion versus $2.74 billion at year‑end. Shareholders’ equity improved to $445.9 million, while accumulated other comprehensive income decreased.

The allowance for credit losses was $17.9 million. The company declared a $0.25 per‑share dividend in the quarter and $0.71 year‑to‑date. FHLB advances increased to $425.0 million.

Insights

Solid quarter: higher NII, stable credit, modest balance sheet shifts.

MetroCity Bankshares posted Q3 net income of $17.3M and diluted EPS of $0.67. Net interest income improved as total interest expense declined year over year, helping margin dynamics. A modest net reserve release ($0.5M) also aided earnings.

Loans held for investment fell as residential mortgages moved to held for sale ($231.3M at period end), while deposits edged lower versus year‑end. Shareholders’ equity rose to $445.9M, though accumulated other comprehensive income decreased, reflecting hedge and securities valuation.

Key dependencies include credit stability (ACL at $17.9M), funding mix (deposits vs. FHLB advances at $425.0M), and sale execution in mortgage and SBA pipelines. Subsequent filings may provide additional color on margin trends and portfolio mix.

11/07/2025 - 10:11 AM

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Table of Contents

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 September 30, 2025

☐ 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 001-39068

METROCITY BANKSHARES, INC.

(Exact name of registrant as specified in its charter)

Georgia	47-2528408
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)

5114 Buford Highway Doraville, Georgia	30340
(Address of principal executive offices)	(Zip Code)

(770) 455-4989

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each Exchange on which registered
Common Stock, par value $0.01 per share	MCBS	Nasdaq Global Select 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 ☒

As of November 3, 2025, the registrant had 25,480,661 shares of common stock, par value $0.01 per share, issued and outstanding.

Table of Contents

METROCITY BANKSHARES, INC.

Quarterly Report on Form 10-Q

September 30, 2025

TABLE OF CONTENTS

		Page
Part I.	Financial Information

Item l.	Financial Statements:
	Consolidated Balance Sheets as of September 30, 2025 (unaudited) and December 31, 2024	3
	Consolidated Statements of Income (unaudited) for the Three and Nine Months Ended September 30, 2025 and 2024	4
	Consolidated Statements of Comprehensive Income (unaudited) for the Three and Nine Months Ended September 30, 2025 and 2024	5
	Consolidated Statements of Shareholders’ Equity (unaudited) for the Three and Nine Months Ended September 30, 2025 and 2024	6
	Consolidated Statements of Cash Flows (unaudited) for the Three and Nine Months Ended September 30, 2025 and 2024	7
	Notes to Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	57
Item 4.	Controls and Procedures	59

Part II.	Other Information

Item 1.	Legal Proceedings	59
Item 1A.	Risk Factors	59
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	59
Item 3.	Defaults Upon Senior Securities	60
Item 4.	Mine Safety Disclosures	60
Item 5.	Other Information	60
Item 6.	Exhibits	60
	Signatures	62

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

METROCITY BANKSHARES, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)


	September 30,		December 31,
	2025		2024
	(Unaudited)
Assets:
Cash and due from banks	$	213,941	$	236,338
Federal funds sold		13,217		13,537
Cash and cash equivalents		227,158		249,875
Equity securities		18,605		10,300
Securities available for sale		15,365		17,391
Loans held for sale		231,259		—
Loans, less allowance for credit losses of $17,940 and $18,744, respectively		2,948,919		3,139,191
Accrued interest receivable		16,912		15,858
Federal Home Loan Bank stock		22,693		20,251
Premises and equipment, net		17,836		18,276
Operating lease right-of-use asset		7,712		7,850
Foreclosed real estate, net		919		427
SBA and USDA servicing asset		6,988		7,274
Mortgage servicing asset, net		1,662		1,409
Bank owned life insurance		75,148		73,285
Interest rate derivatives		9,435		21,790
Other assets		28,852		10,868
Total assets	$	3,629,463	$	3,594,045

Liabilities:
Deposits:
Non-interest-bearing demand	$	544,439	$	536,276
Interest-bearing		2,148,645		2,200,522
Total deposits		2,693,084		2,736,798

Federal Home Loan Bank advances		425,000		375,000
Operating lease liability		7,704		7,940
Accrued interest payable		3,567		3,498
Other liabilities		54,220		49,456
Total liabilities	$	3,183,575	$	3,172,692

Shareholders’ Equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding		—		—
Common stock, $0.01 par value, 40,000,000 shares authorized, 25,537,746 and 25,402,782 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively		255		254
Additional paid-in capital		51,151		49,216
Retained earnings		390,971		358,704
Accumulated other comprehensive income		3,511		13,179
Total shareholders’ equity		445,888		421,353
Total liabilities and shareholders’ equity	$	3,629,463	$	3,594,045

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

METROCITY BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollars in thousands, except per share data)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
Interest and dividend income:
Loans, including fees	$	50,975	$	50,336	$	152,164	$	150,980
Other investment income		2,884		3,417		7,980		9,175
Federal funds sold		144		80		427		144
Total interest income		54,003		53,833		160,571		160,299

Interest expense:
Deposits		17,799		19,602		53,272		61,442
FHLB advances and other borrowings		4,412		3,942		12,775		10,771
Total interest expense		22,211		23,544		66,047		72,213

Net interest income		31,792		30,289		94,524		88,086

Provision for credit losses:
Provision for loan losses		(581)		653		(348)		414
Provision for unfunded commitments		38		(71)		69		(100)
Provision for credit losses		(543)		582		(279)		314

Net interest income after provision for credit losses		32,335		29,707		94,803		87,772

Noninterest income:
Service charges on deposit accounts		551		531		1,556		1,510
Other service charges, commissions and fees		2,376		1,915		5,592		5,100
Gain on sale of residential mortgage loans		166		526		1,144		1,925
Mortgage servicing income, net		516		422		1,915		1,758
Gain on sale of SBA loans		558		1,083		1,859		2,134
SBA servicing income, net		1,203		1,231		2,758		3,287
Other income		808		907		2,543		2,028
Total noninterest income		6,178		6,615		17,367		17,742

Noninterest expense:
Salaries and employee benefits		8,953		8,512		26,000		23,930
Occupancy and equipment		1,410		1,430		4,207		4,118
Data processing		394		311		1,068		958
Advertising		161		145		477		474
Other expenses		3,756		3,262		10,834		9,573
Total noninterest expense		14,674		13,660		42,586		39,053

Income before provision for income taxes		23,839		22,662		69,584		66,461
Provision for income taxes		6,569		5,961		19,191		18,192
Net income available to common shareholders	$	17,270	$	16,701	$	50,393	$	48,269

Earnings per share:
Basic	$	0.68	$	0.66	$	1.98	$	1.91
Diluted	$	0.67	$	0.65	$	1.96	$	1.89

See accompanying notes to unaudited consolidated financial statements.

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METROCITY BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(Dollars in thousands)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024

Net income	$	17,270	$	16,701	$	50,393	$	48,269

Other comprehensive loss:

Unrealized holding gains on securities available for sale		459		534		233		264
Net changes in fair value of cash flow hedges		(3,342)		(17,859)		(13,393)		(12,906)
Tax effect		807		4,851		3,492		3,540

Other comprehensive loss		(2,076)		(12,474)		(9,668)		(9,102)

Comprehensive income	$	15,194	$	4,227	$	40,725	$	39,167

See accompanying notes to unaudited consolidated financial statements.

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METROCITY BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)

(Dollars in thousands, except per share data)


								Accumulated
	Common Stock			Additional				Other
	Number of			Paid-in		Retained		Comprehensive
	Shares	Amount		Capital		Earnings		Income (Loss)		Total
Three Months Ended:
Balance, July 1, 2025	25,537,746	$	255	$	50,212	$	380,046	$	5,587	$	436,100
Net income	—		—		—		17,270		—		17,270
Stock based compensation expense	—		—		939		—		—		939
Other comprehensive loss	—		—		—		—		(2,076)		(2,076)
Dividends declared on common stock ($0.25 per share)	—		—		—		(6,345)		—		(6,345)
Balance, September 30, 2025	25,537,746	$	255	$	51,151	$	390,971	$	3,511	$	445,888

Balance, July 1, 2024	25,331,916	$	253	$	46,644	$	336,749	$	23,582	$	407,228
Net income	—		—		—		16,701		—		16,701
Stock based compensation expense	—		—		837		—		—		837
Other comprehensive loss	—		—		—		—		(12,474)		(12,474)
Dividends declared on common stock ($0.20 per share)	—		—		—		(5,107)		—		(5,107)
Balance, September 30, 2024	25,331,916	$	253	$	47,481	$	348,343	$	11,108	$	407,185

Nine Months Ended:
Balance, January 1, 2025	25,402,782	$	254	$	49,216	$	358,704	$	13,179	$	421,353
Net income	—		—		—		50,393		—		50,393
Stock based compensation expense	—		—		1,967		—		—		1,967
Vesting of restricted stock	136,238		1		(1)		—		—		—
Repurchase of common stock	(1,274)		—		(31)		—		—		(31)
Other comprehensive loss	—		—		—		—		(9,668)		(9,668)
Dividends declared on common stock ($0.71 per share)	—		—		—		(18,126)		—		(18,126)
Balance, September 30, 2025	25,537,746	$	255	$	51,151	$	390,971	$	3,511	$	445,888

Balance, January 1, 2024	25,205,506	$	252	$	45,699	$	315,356	$	20,210	$	381,517
Net income	—		—		—		48,269		—		48,269
Stock based compensation expense	—		—		1,793		—		—		1,793
Vesting of restricted stock	126,820		1		(1)		—		—		—
Repurchase of common stock	(410)		—		(10)		—		—		(10)
Other comprehensive loss	—		—		—		—		(9,102)		(9,102)
Dividends declared on common stock ($0.60 per share)	—		—		—		(15,282)		—		(15,282)
Balance, September 30, 2024	25,331,916	$	253	$	47,481	$	348,343	$	11,108	$	407,185

See accompanying notes to unaudited consolidated financial statements.

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METROCITY BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in thousands)


	Nine Months Ended September 30,
	2025		2024
Cash flow from operating activities:
Net income	$	50,393	$	48,269
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion		2,652		2,200
Provision for credit losses		(279)		314
Stock based compensation expense		1,967		1,793
Unrealized gains recognized on equity securities		(305)		(233)
Gain on sale of foreclosed real estate		(28)		85
Write-down of foreclosed real estate		—		391
Gain on sale of residential real estate loans		(1,144)		(1,925)
Origination of SBA loans held for sale		(39,972)		(58,928)
Proceeds from sales of SBA loans held for sale		45,335		56,464
Gain on sale of SBA loans		(1,859)		(2,134)
Increase in cash value of bank owned life insurance		(1,863)		(1,713)
Increase in accrued interest receivable		(1,054)		(542)
(Increase) decrease in SBA and USDA servicing rights		286		(58)
Increase in mortgage servicing rights		(253)		(23)
Increase in state tax credits		(11,455)		—
(Increase) decrease in other assets		(3,037)		1,809
Increase (decrease) in accrued interest payable		69		(540)
Increase (decrease) in other liabilities		3,388		(999)
Net cash flow provided by operating activities		42,841		44,230

Cash flow from investing activities:
Purchases of equity securities		(8,000)		—
Proceeds from maturities, calls or paydowns of securities available for sale		2,216		503
Purchase of Federal Home Loan Bank stock		(2,442)		(2,405)
Proceeds from sales of residential real estate loans		113,753		189,414
Increase in loans, net		(158,951)		(111,541)
Purchases of premises and equipment		(449)		(877)
Proceeds from sales of foreclosed real estate owned		1,735		136
Net cash flow (used) provided by investing activities		(52,138)		75,230

Cash flow from financing activities:
Dividends paid on common stock		(18,559)		(15,225)
Repurchases of common stock		(31)		(10)
Decrease in deposits, net		(43,714)		(7,816)
Premiums paid for interest rate caps		(1,116)		—
Proceeds from Federal Home Loan Bank advances		100,000		450,000
Repayments of Federal Home Loan Bank advances		(50,000)		(400,000)
Net cash flow (used) provided by financing activities		(13,420)		26,949

Continued to following page.

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METROCITY BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in thousands)


	Nine Months Ended September 30,
	2025		2024

Net change in cash and cash equivalents		(22,717)		146,409
Cash and cash equivalents at beginning of period		249,875		144,805

Cash and cash equivalents at end of period	$	227,158	$	291,214

Supplemental schedule of noncash investing and financing activities:

Transfer of loans held for investment to loans held for sale	$	347,372	$	165,222

Transfer of loan principal to foreclosed real estate, net of write-downs	$	2,199	$	661

Initial recognition of operating lease right-of-use assets	$	1,233	$	—

Initial recognition of operating lease liabilities	$	1,233	$	—

Supplemental disclosures of cash flow information - Cash paid during the year for:

Interest	$	65,978	$	72,753

Income taxes	$	18,660	$	16,556

See accompanying notes to unaudited consolidated financial statements.

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METROCITY BANKSHARES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements include the accounts of MetroCity Bankshares, Inc. (“Company”) and its wholly-owned subsidiary, Metro City Bank (the “Bank”). The Company owns 100% of the Bank. The “Company” or “our,” as used herein, includes Metro City Bank unless the context indicates that we refer only to MetroCity Bankshares, Inc.

These unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) followed within the financial services industry for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information or notes required for complete financial statements.

The Company principally operates in one business segment, which is community banking.

In the opinion of management, all adjustments, consisting of normal and recurring items, considered necessary for a fair presentation of the consolidated financial statements for the interim periods have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain amounts reported in prior periods have been reclassified to conform to current year presentation. These reclassifications did not have a material effect on previously reported net income, shareholders’ equity or cash flows.

Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2024.

The Company’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements for the year ended December 31, 2024, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “Company’s 2024 Form 10-K”). There were no new accounting policies or changes to existing policies adopted during the first nine months of 2025 which had a significant effect on the Company’s results of operations or statement of financial condition. For interim reporting purposes, the Company follows the same basic accounting policies and considers each interim period as an integral part of an annual period.

Contingencies

Due to the nature of their activities, the Company and its subsidiary are at times engaged in various legal proceedings that arise in the course of normal business, some of which were outstanding as of September 30, 2025. Although the ultimate outcome of all claims and lawsuits outstanding as of September 30, 2025 cannot be ascertained at this time, it is the opinion of management that these matters, when resolved, will not have a material adverse effect on the Company’s results of operations or financial condition.

Operating Segments

Our Chief Executive Officer is our designated chief operating decision maker. While the chief operating decision maker monitors the revenue streams of the various products and services, our operations are managed and financial performance is evaluated on a Company-wide basis. Operating segments are aggregated into one segment as operating results for all segments are similar. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

The chief operating decision maker uses income before income taxes as the measure of segment profit or loss to assess the performance of and allocate resources to the Company’s one reportable operating segment. Interest income and noninterest income generated from our residential real estate and SBA loans provide the primary revenue in the operating

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segment. Interest expense, provision for credit losses, salaries, commissions and employee benefits, as well as occupancy and equipment expenses, provide the significant expenses in the operating segment. These figures are regularly provided to the chief operating decision maker and are monitored through budget-to-actual variance review

The Company has evaluated the Accounting Standards Updates issued during 2025 to date but does not expect those updates to have a material impact on the Company’s consolidated financial statements.

NOTE 2 – INVESTMENT SECURITIES

The amortized costs, gross unrealized gains and losses, and estimated fair values of securities available for sale as of September 30, 2025 and December 31, 2024 are summarized as follows:


	September 30, 2025
	Gross		Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Obligations of U.S. Government entities and agencies	$	2,504	$	—	$	—	$	2,504
States and political subdivisions		7,985		1		(1,543)		6,443
Mortgage-backed GSE residential		7,927		—		(1,509)		6,418
Total	$	18,416	$	1	$	(3,052)	$	15,365


	December 31, 2024
	Gross		Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Obligations of U.S. Government entities and agencies	$	4,467	$	—	$	—	$	4,467
States and political subdivisions		8,022		—		(1,485)		6,537
Mortgage-backed GSE residential		8,186		—		(1,799)		6,387
Total	$	20,675	$	—	$	(3,284)	$	17,391

The amortized costs and estimated fair values of investment securities available for sale at September 30, 2025 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Securities Available for Sale
	Amortized		Estimated
(Dollars in thousands)	Cost		Fair Value
Due in one year or less	$	1,239	$	1,235
Due after one year but less than five years		2,504		2,504
Due after five years but less than ten years		—		—
Due in more than ten years		6,746		5,208
Mortgage-backed GSE residential		7,927		6,418
Total	$	18,416	$	15,365

Accrued interest receivable for securities available for sale totaled $69,000 and $113,000 as of September 30, 2025 and December 31, 2024, respectively. This accrued interest receivable is included in the “accrued interest receivable” line item on the Company’s Consolidated Balance Sheets.

As of both September 30, 2025 and December 31, 2024, the Company had securities pledged to the Federal Reserve Bank Discount Window with a carrying amount of $12.9 million. There were no securities sold during the three and nine months ended September 30, 2025 and 2024.

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Information pertaining to securities with gross unrealized losses at September 30, 2025 and December 31, 2024 aggregated by investment category and length of time that individual securities have been in a continuous loss position, are summarized in the table below.


	September 30, 2025
	Twelve Months or Less				Over Twelve Months
	Gross		Estimated		Gross		Estimated
	Unrealized		Fair		Unrealized		Fair
(Dollars in thousands)	Losses		Value		Losses		Value
States and political subdivisions	$	—	$	—	$	1,543	$	6,068
Mortgage-backed GSE residential		—		—		1,509		6,418
Total	$	—	$	—	$	3,052	$	12,486


	December 31, 2024
	Twelve Months or Less				Over Twelve Months
	Gross		Estimated		Gross		Estimated
	Unrealized		Fair		Unrealized		Fair
(Dollars in thousands)	Losses		Value		Losses		Value
States and political subdivisions	$	—	$	—	$	1,485	$	6,537
Mortgage-backed GSE residential		—		—		1,799		6,387
Total	$	—	$	—	$	3,284	$	12,924

At September 30, 2025, the nineteen securities available for sale (10 municipal securities and 9 mortgage-backed securities) with an unrealized loss have depreciated 19.64% from the Company’s amortized cost basis. All of these securities have been in a loss position for greater than twelve months.

The Company does not believe that the securities available for sale that were in an unrealized loss position as of September 30, 2025 represent a credit loss impairment. As of September 30, 2025, there have been no payment defaults nor do we currently expect any future payment defaults. Furthermore, the Company does not intend to sell these securities, and it is not more likely than not that the Company will be required to sell the investment securities before recovery of their amortized cost basis, which may be at maturity.

Equity Securities

As of September 30, 2025 and December 31, 2024, the Company had equity securities with carrying values totaling $18.6 million and $10.3 million, respectively. The equity securities consist of our investment in a market-rate bond mutual fund that invests in high quality fixed income bonds, mainly government agency securities whose proceeds are designed to positively impact community development throughout the United States. The mutual fund focuses exclusively on providing affordable housing to low- and moderate-income borrowers and renters, including those in Majority Minority Census Tracts.

During the three months ended September 30, 2025 and 2024, we recognized unrealized gains of $124,000 and $292,000, respectively, in net income on our equity securities. During the nine months ended September 30, 2025 and 2024, we recognized unrealized gains of $305,000 and $233,000, respectively, in net income on our equity securities. These unrealized gains and losses are recorded in “Other Income” on the Consolidated Statements of Income.

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NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

Major classifications of loans held for investment at September 30, 2025 and December 31, 2024 are summarized as follows:


	September 30,		December 31,
(Dollars in thousands)	2025		2024
Construction and development	$	32,415	$	21,569
Commercial real estate		814,464		762,033
Commercial and industrial		69,430		78,220
Residential real estate		2,057,281		2,303,234
Consumer and other		325		260
Total loans receivable	$	2,973,915	$	3,165,316
Unearned income		(7,056)		(7,381)
Allowance for credit losses		(17,940)		(18,744)
Loans held for investment, net	$	2,948,919	$	3,139,191

The Company is not committed to lend additional funds to borrowers with nonaccrual or restructured loans.

In the normal course of business, the Company may sell and purchase loan participations to and from other financial institutions and related parties. Commercial loan participations are sold as needed to comply with the legal lending limits per borrower as imposed by regulatory authorities. The participations are sold without recourse and the Company imposes no transfer or ownership restrictions on the purchaser.

The Company elected to exclude accrued interest receivable from the amortized cost basis of loans disclosed throughout this note. As of September 30, 2025 and December 31, 2024, accrued interest receivable for loans totaled $16.7 million and $15.7 million, respectively, and is included in the “accrued interest receivable” line item on the Company’s Consolidated Balance Sheets.

Allowance for Credit Losses

A summary of changes in the allowance for credit losses by portfolio segment for the three and nine months ended September 30, 2025 and 2024 is as follows:


	Three Months Ended September 30, 2025
	Construction
	and		Commercial		Commercial		Residential		Consumer
(Dollars in thousands)	Development		Real Estate		and Industrial		Real Estate		and Other		Total
Allowance for credit losses:
Beginning balance	$	47	$	7,602	$	1,403	$	9,694	$	2	$	18,748
Charge-offs		—		(110)		(121)		—		—		(231)
Recoveries		—		—		4		—		—		4
Provision for loan losses		17		202		(53)		(749)		2		(581)
Ending balance	$	64	$	7,694	$	1,233	$	8,945	$	4	$	17,940

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	Three Months Ended September 30, 2024
	Construction
	and		Commercial		Commercial		Residential		Consumer
(Dollars in thousands)	Development		Real Estate		and Industrial		Real Estate		and Other		Total
Allowance for credit losses:
Beginning balance	$	25	$	7,018	$	698	$	10,217	$	2	$	17,960
Charge-offs		—		—		(28)		—		—		(28)
Recoveries		—		—		4		—		—		4
Provision for loan losses		(13)		177		517		(28)		—		653
Ending balance	$	12	$	7,195	$	1,191	$	10,189	$	2	$	18,589


	Nine Months Ended September 30, 2025
	Construction
	and		Commercial		Commercial		Residential		Consumer
(Dollars in thousands)	Development		Real Estate		and Industrial		Real Estate		and Other		Total
Allowance for credit losses:
Beginning balance	$	31	$	7,265	$	1,380	$	10,066	$	2	$	18,744
Charge-offs		—		(173)		(294)		—		—		(467)
Recoveries		—		2		9		—		—		11
Provision for loan losses		33		600		138		(1,121)		2		(348)
Ending balance	$	64	$	7,694	$	1,233	$	8,945	$	4	$	17,940


	Nine Months Ended September 30, 2024
	Construction
	and		Commercial		Commercial		Residential		Consumer
(Dollars in thousands)	Development		Real Estate		and Industrial		Real Estate		and Other		Total
Allowance for credit losses:
Beginning balance	$	46	$	6,876	$	588	$	10,597	$	5	$	18,112
Charge-offs		—		—		(28)		—		—		(28)
Recoveries		—		83		8		—		—		91
Provision for loan losses		(34)		236		623		(408)		(3)		414
Ending balance	$	12	$	7,195	$	1,191	$	10,189	$	2	$	18,589

The allowance for credit losses was $17.9 million as of September 30, 2025 compared to $18.7 million as of December 31, 2024, a decrease of $804,000. The decrease was primarily due to the decrease in reserves allocated to our individually analyzed loans and commercial and industrial loan portfolio due to charge-offs and decrease in loan balances, as well as the decrease in general reserves allocated to our residential real estate loan portfolio as a large amount of residential mortgage loans were moved from loans held for investment to loans held for sale during the nine months ended September 30, 2025. These decreases were offset by the increase in the general reserves allocated to our commercial real estate and construction and development loan portfolios due to loan growth.

Allowance for Unfunded Commitments

The Company records an allowance for credit losses on unfunded loan commitments, unless the commitments to extend credit are unconditionally cancelable, through a charge to provision for unfunded commitments in the Company’s Consolidated Statements of Income. The allowance for credit losses on off-balance sheet credit exposures is estimated by loan segment using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur. The allowance for unfunded commitments totaled $233,000, $165,000 and $216,000 as of September 30, 2025, December 31, 2024 and September 30, 2024, respectively, and is included in “Other Liabilities” on the Company’s Consolidated Balance Sheets.

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Collateral-Dependent Loans

Collateral-dependent loans are loans for which foreclosure is probable or loans for which the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The estimated credit losses for these loans are based on the collateral’s fair value, less selling costs. In most cases, the Company records a partial charge-off to reduce the loan’s carrying value to the collateral’s fair value, less selling costs, at the time of foreclosure. As of September 30, 2025, there were $10.6 million, $1.3 million and $199,000 of collateral-dependent loans which were secured by residential real estate, commercial real estate and equipment, respectively. As of December 31, 2024, there were $14.2 million, $4.3 million and $569,000 of collateral-dependent loans which were secured by residential real estate, commercial real estate and equipment, respectively. The allowance for credit losses allocated to these loans as of September 30, 2025 and December 31, 2024 was $243,000 and $748,000, respectively.

Past Due and Nonaccrual Loans

A primary credit quality indicator for financial institutions is delinquent balances. Delinquencies are updated on a daily basis and are continuously monitored. Loans are placed on nonaccrual status as needed based on repayment status and consideration of accounting and regulatory guidelines. Nonaccrual balances are updated and reported on a daily basis.

The following summarizes the Company’s past due and nonaccrual loans, by portfolio segment, as of September 30, 2025 and December 31, 2024:


							Accruing		Total				Total
(Dollars in thousands)							Greater than		Accruing				Financing
September 30, 2025	Current		30-59 Days		60-89 Days		90 Days		Past Due		Nonaccrual		Receivables
Construction and development	$	31,592	$	—	$	—	$	—	$	—	$	—	$	31,592
Commercial real estate		804,839		—		4,698		—		4,698		1,583		811,120
Commercial and industrial		68,147		—		108		—		108		848		69,103
Residential real estate		2,039,056		—		5,062		—		5,062		10,601		2,054,719
Consumer and other		325		—		—		—		—		—		325
Total	$	2,943,959	$	—	$	9,868	$	—	$	9,868	$	13,032	$	2,966,859


							Accruing		Total				Total
(Dollars in thousands)							Greater than		Accruing				Financing
December 31, 2024	Current		30-59 Days		60-89 Days		90 Days		Past Due		Nonaccrual		Receivables
Construction and development	$	21,390	$	—	$	—	$	—	$	—	$	—	$	21,390
Commercial real estate		752,686		1,705		1,257		—		2,962		3,316		758,964
Commercial and industrial		77,310		—		82		—		82		526		77,918
Residential real estate		2,271,175		10,777		3,283		—		14,060		14,168		2,299,403
Consumer and other		260		—		—		—		—		—		260
Total	$	3,122,821	$	12,482	$	4,622	$	—	$	17,104	$	18,010	$	3,157,935

The following table presents an analysis of nonaccrual loans with and without a related allowance for credit losses as of September 30, 2025 and December 31, 2024:


	Nonaccrual		Nonaccrual
(Dollars in thousands)	Loans With a		Loans Without a		Total
September 30, 2025	Related ACL		Related ACL		Nonaccrual Loans
Construction and development	$	—	$	—	$	—
Commercial real estate		1,583		—		1,583
Commercial and industrial		588		260		848
Residential real estate		—		10,601		10,601
Total	$	2,171	$	10,861	$	13,032

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	Nonaccrual		Nonaccrual
(Dollars in thousands)	Loans With a		Loans Without a		Total
December 31, 2024	Related ACL		Related ACL		Nonaccrual Loans
Construction and development	$	—	$	—	$	—
Commercial real estate		1,738		1,578		3,316
Commercial and industrial		329		197		526
Residential real estate		—		14,168		14,168
Total	$	2,067	$	15,943	$	18,010

All payments received while a loan is on nonaccrual status are applied against the principal balance of the loan. The Company does not recognize interest income while loans are on nonaccrual status.

Credit Quality Indicators

The Company utilizes a ten grade loan risk rating system for its loan portfolio as follows:

●

Loans rated Pass – Loans in this category have low to average risk. There are six loan risk ratings (grades 1-6) included in loans rated Pass.

●

Loans rated Special Mention (grade 7) – Loans do not presently expose the Company to a sufficient degree of risk to warrant adverse classification, but do possess deficiencies deserving close attention.

●

Loans rated Substandard (grade 8) – Loans are inadequately protected by the current credit-worthiness and paying capability of the obligor or of the collateral pledged, if any.

●

Loans rated Doubtful (grade 9) – Loans which have all the weaknesses inherent in loans classified Substandard, with the added characteristic that the weaknesses make collections or liquidation in full, or on the basis of currently known facts, conditions and values, highly questionable or improbable.

●

Loans rated Loss (grade 10) – Loans classified Loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted.

Loan grades are monitored regularly and updated as necessary based upon review of repayment status and consideration of periodic updates regarding the borrower’s financial condition and capacity to meet contractual requirements.

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The following tables present the loan portfolio’s amortized cost by loan type, risk rating and year of origination as of September 30, 2025 and December 31, 2024. There were no loans with a risk rating of Doubtful or Loss at September 30, 2025 and December 31, 2024.


(Dollars in thousands)	Term Loan by Origination Year												Revolving
September 30, 2025	2025		2024		2023		2022		2021		Prior		Loans		Total Loans
Construction and development
Pass	$	5,389	$	21,230	$	—	$	4,792	$	181	$	—	$	—	$	31,592
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total construction and development	$	5,389	$	21,230	$	—	$	4,792	$	181	$	—	$	—	$	31,592
Commercial real estate
Pass	$	132,857	$	108,929	$	136,919	$	191,370	$	84,852	$	138,114	$	434	$	793,475
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		443		4,660		17		12,525		—		17,645
Total commercial real estate	$	132,857	$	108,929	$	137,362	$	196,030	$	84,869	$	150,639	$	434	$	811,120

Commercial real estate:
Current period gross write offs	$	—	$	—	$	—	$	—	$	110	$	63	$	—	$	173

Commercial and industrial
Pass	$	5,586	$	5,450	$	14,725	$	9,349	$	3,241	$	3,428	$	25,856	$	67,635
Special Mention		—		—		—		—		—		496		—		496
Substandard		—		—		—		193		195		584		—		972
Total commercial and industrial	$	5,586	$	5,450	$	14,725	$	9,542	$	3,436	$	4,508	$	25,856	$	69,103

Commercial and industrial:
Current period gross write offs	$	—	$	—	$	—	$	—	$	196	$	98	$	—	$	294

Residential real estate
Pass	$	278,058	$	107,492	$	107,882	$	547,576	$	678,016	$	322,189	$	—	$	2,041,213
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		837		1,452		2,764		1,499		6,954		—		13,506
Total residential real estate	$	278,058	$	108,329	$	109,334	$	550,340	$	679,515	$	329,143	$	—	$	2,054,719
Consumer and other
Pass	$	325	$	—	$	—	$	—	$	—	$	—	$	—	$	325
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total consumer and other	$	325	$	—	$	—	$	—	$	—	$	—	$	—	$	325

Total loans	$	422,215	$	243,938	$	261,421	$	760,704	$	768,001	$	484,290	$	26,290	$	2,966,859

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(Dollars in thousands)	Term Loan by Origination Year												Revolving
December 31, 2024	2024		2023		2022		2021		2020		Prior		Loans		Total Loans
Construction and development
Pass	$	16,069	$	620	$	2,814	$	183	$	1,156	$	—	$	—	$	20,842
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		548		—		—		—		548
Total construction and development	$	16,069	$	620	$	2,814	$	731	$	1,156	$	—	$	—	$	21,390
Commercial real estate
Pass	$	124,106	$	149,105	$	196,578	$	84,817	$	71,425	$	103,393	$	380	$	729,804
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		450		4,678		12,282		4,467		7,283		—		29,160
Total commercial real estate	$	124,106	$	149,555	$	201,256	$	97,099	$	75,892	$	110,676	$	380	$	758,964
Commercial and industrial
Pass	$	5,938	$	16,277	$	10,660	$	3,646	$	1,954	$	2,908	$	34,167	$	75,550
Special Mention		—		—		—		—		—		1,133		—		1,133
Substandard		—		—		193		405		349		288		—		1,235
Total commercial and industrial	$	5,938	$	16,277	$	10,853	$	4,051	$	2,303	$	4,329	$	34,167	$	77,918

Commercial and industrial:
Current period gross write offs	$	—	$	—	$	64	$	—	$	—	$	66	$	—	$	130

Residential real estate
Pass	$	337,878	$	167,059	$	635,481	$	743,553	$	245,418	$	152,943	$	—	$	2,282,332
Special Mention		—		—		—		—		—		—		—		—
Substandard		415		1,638		2,047		2,910		1,529		8,532		—		17,071
Total residential real estate	$	338,293	$	168,697	$	637,528	$	746,463	$	246,947	$	161,475	$	—	$	2,299,403
Consumer and other
Pass	$	260	$	—	$	—	$	—	$	—	$	—	$	—	$	260
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total consumer and other	$	260	$	—	$	—	$	—	$	—	$	—	$	—	$	260

Total loans	$	484,666	$	335,149	$	852,451	$	848,344	$	326,298	$	276,480	$	34,547	$	3,157,935

During the nine months ended September 30, 2025, two construction and development revolving loans totaling $2.7 million were converted to a commercial real estate term loan. During the year ended December 31, 2024, four construction and development revolving loans totaling $16.2 million were converted to commercial real estate term loans.

Loan Modifications to Borrowers Experiencing Financial Difficulty.

Modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, payment deferrals, term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral.

During the nine months ended September 30, 2025, there was one commercial real estate loan modification totaling $12.2 million made to a borrower experiencing financial difficulty. The borrower of this loan modification was granted P&I payment deferrals totaling $324,000 so no payments were required to be made during the deferral period, which ended in May 2025. No loan modifications were made to borrowers experiencing financial difficulty during the three months ended September 30, 2025.

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The following table presents the amortized cost basis of loan modifications made to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2024.


	Interest				Interest				% of Total
(Dollars in thousands)	Term		Payment		Rate				Financing
Three and Nine Months Ended September 30, 2024	Extension		Delay		Reduction		Total		Receivable
Construction and development	$	—	$	—	$	—	$	—	—	%
Commercial real estate		—		12,928		—		12,928	1.76
Commercial and industrial		—		497		—		497	0.78
Residential real estate		—		—		—		—	—
Consumer and other		—		—		—		—	—
Total	$	—	$	13,425	$	—	$	13,425	0.43	%

The following table presents the financial effect of the loan modifications made to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2024.


	Weighted/Average		Weighted/Average		Weighted/Average
(Dollars in thousands)	Months of		Payment		Interest Rate
Three and Nine Months Ended September 30, 2024	Term Extension		Deferral		Reduction
Construction and development		—	$	—		—	%
Commercial real estate		—		233		—
Commercial and industrial		—		12		—
Residential real estate		—		—		—
Consumer and other		—		—		—
Total		—	$	245		—	%

No loan modifications previously made to borrowers experiencing financial difficulty defaulted during the three and nine months ended September 30, 2025. There was one commercial and industrial loan modification totaling $147,000 made to a borrower experiencing financial difficulty that defaulted during the three and nine months ended September 30, 2024. No charge-offs of previously modified loans were recorded during the three and nine months ended September 30, 2025 and 2024.

NOTE 4 – SBA AND USDA LOAN SERVICING

The Company sells the guaranteed portion of certain SBA and USDA loans it originates and continues to service the sold portion of the loan. The portion of the loans sold are not included in the financial statements of the Company. As of September 30, 2025 and December 31, 2024, the unpaid principal balances of serviced loans totaled $460.7 million and $479.7 million, respectively.

Activity for SBA and USDA loan servicing rights are as follows:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(Dollars in thousands)	2025		2024		2025		2024
Beginning of period	$	6,823	$	7,108	$	7,274	$	7,251
Change in fair value		165		201		(286)		58
End of period, fair value	$	6,988	$	7,309	$	6,988	$	7,309

Fair value at September 30, 2025 and December 31, 2024 was determined using discount rates ranging from 5.97% to 11.30% and 5.22% to 10.78%, respectively, and prepayment speeds ranging from 6.72% to 21.02% and 9.82% to 21.47%, respectively, depending on the stratification of the specific right. Average default rates are based on the industry average for the applicable NAICS/SIC code.

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Comparable market values and a valuation model that calculates the present value of future cash flows were used to estimate fair value. For purposes of fair value measurement, risk characteristics including product type and interest rate, were used to stratify the originated loan servicing rights.

NOTE 5 – RESIDENTIAL MORTGAGE LOAN SERVICING

Residential mortgage loans serviced for others are not reported as assets. The outstanding principal of these loans at September 30, 2025 and December 31, 2024 was $538.7 million and $527.0 million, respectively.

Activity for mortgage loan servicing rights and the related valuation allowance are as follows:


(Dollars in thousands)	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Mortgage loan servicing rights:	2025		2024		2025		2024
Beginning of period	$	1,676	$	1,454	$	1,409	$	1,273
Additions		126		310		663		1,232
Amortization expense		(159)		(216)		(414)		(957)
Valuation allowance		19		(252)		4		(252)
End of period, carrying value	$	1,662	$	1,296	$	1,662	$	1,296


(Dollars in thousands)	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
Valuation allowance:	2025		2024		2025		2024
Beginning balance	$	35	$	—	$	20	$	—
Additions expensed		—		252		43		252
Reductions credited to operations		(19)		—		(47)		—
Direct write-downs		—		—		—		—
Ending balance	$	16	$	252	$	16	$	252

The fair value of servicing rights was $6.1 million and $6.8 million at September 30, 2025 and December 31, 2024, respectively. Fair value at September 30, 2025 was determined by using a discount rate of 12.61%, prepayment speeds of 18.58%, and a weighted average default rate of 1.66%. Fair value at December 31, 2024 was determined by using a discount rate of 13.07%, prepayment speeds of 16.82%, and a weighted average default rate of 1.52%.

NOTE 6 – FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS

Advances from the Federal Home Loan Bank (“FHLB”) at September 30, 2025 and December 31, 2024 are summarized as follows:


(Dollars in thousands)	September 30, 2025		December 31, 2024
Convertible advance maturing December 4, 2026; fixed rate of 3.739%	$	50,000	$	—
Convertible advance maturing April 22, 2027; fixed rate of 4.174%		25,000		25,000
Convertible advance maturing April 23, 2027; fixed rate of 4.177%		25,000		25,000
Convertible advance maturing April 26, 2027; fixed rate of 4.193%		50,000		50,000
Convertible advance maturing May 7, 2027; fixed rate of 4.089%		100,000		100,000
Convertible advance maturing May 13, 2027; fixed rate of 4.099%		50,000		50,000
Convertible advance maturing May 14, 2027; fixed rate of 4.100%		75,000		75,000
Convertible advance maturing June 24, 2027; fixed rate of 3.993%		50,000		50,000
Total FHLB advances	$	425,000	$	375,000

The FHLB advances outstanding at September 30, 2025 all have a conversion feature that allows the FHLB to call the advances every three months. At September 30, 2025 and December 31, 2024, the Company had a line of credit with the FHLB, set as a percentage of total assets, with maximum borrowing capacity of $1.08 billion and $1.07 billion, respectively. The available borrowing amounts are collateralized by the Company’s FHLB stock and pledged residential real estate loans, which totaled $2.03 billion and $2.27 billion at September 30, 2025 and December 31, 2024, respectively.

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At September 30, 2025, the Company had unsecured federal funds lines available with correspondent banks of approximately $52.5 million. There were no advances outstanding on these lines at September 30, 2025.

At September 30, 2025 and December 31, 2024, the Company had Federal Reserve Discount Window funds available of approximately $575.7 million and $539.3 million, respectively. The funds are collateralized by a pool of construction and development, commercial real estate and commercial and industrial loans with carrying balances totaling $720.2 million and $667.6 million as of September 30, 2025 and December 31, 2024, respectively, as well as all of the Company’s municipal and mortgage backed securities. There were no outstanding borrowings on this line as of September 30, 2025.

NOTE 7 – OPERATING LEASES

The Company has entered into various operating leases for certain branch locations with terms extending through December 2034. Generally, these leases have initial lease terms of ten years or less. Many of the leases have one or more renewal options which typically are for five years at the then fair market rental rates. We assessed these renewal options using a threshold of reasonably certain. For leases where we were reasonably certain to renew, those option periods were included within the lease term, and therefore, the measurement of the right-of-use (“ROU”) asset and lease liability. None of our leases include options to terminate the lease and none have initial terms of 12 months or less (i.e. short-term leases). Operating leases in which the Company is the lessee are recorded as operating lease ROU assets and operating lease liabilities on the Consolidated Balance Sheets. The Company currently does not have any finance leases.

Operating lease ROU assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Company’s incremental collateralized borrowing rate provided by the FHLB at the lease commencement date. ROU assets are further adjusted for lease incentives, if any. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in “Occupancy and Equipment” expense in the Consolidated Statements of Income.

The components of lease cost for the three and nine months ended September 30, 2025 and 2024 were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2025		2024		2025		2024
Operating lease cost	$	533	$	539	$	1,693	$	1,633
Variable lease cost		55		49		107		147
Short-term lease cost		—		—		—		—
Sublease income		—		—		—		—
Total net lease cost	$	588	$	588	$	1,800	$	1,780

Future maturities of the Company’s operating lease liabilities are summarized as follows:


(Dollars in thousands)
Twelve Months Ended:	Lease Liability
September 30, 2026	$	2,072
September 30, 2027		1,813
September 30, 2028		1,469
September 30, 2029		1,007
September 30, 2030		688
After September 30, 2030		1,522
Total lease payments		8,571
Less: interest discount		(867)
Present value of lease liabilities	$	7,704

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Supplemental Lease Information	September 30, 2025
Weighted-average remaining lease term (years)	5.8
Weighted-average discount rate	3.83	%


	Nine Months Ended September 30,
(Dollars in thousands)	2025		2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (cash payments)	$	1,655	$	1,564
Operating cash flows from operating leases (lease liability reduction)	$	1,430	$	1,356
Operating lease right-of-use assets obtained in exchange for leases entered into during the period	$	1,233	$	—

NOTE 8 – INTEREST RATE DERIVATIVES

During 2021 and 2022, the Company entered into fourteen separate interest rate swap agreements with notional amounts totaling $800.0 million. Six of the interest rate swaps are two-year forward three-year term swaps (five-year total term) where cash settlements began in October 2023, January 2024 or April 2024. Four of the interest rate swaps are two-year forward two-year term swaps (four-year total term) where cash settlements began in November 2023 or April 2024. Two of the interest rate swaps are a one-year forward two-year term swap (three-year total term) and a one-year forward three-year term swap (four-year term total) where cash settlements began in May 2023 or July 2023. The two remaining interest rate swaps are 3-year spot swaps where cash settlements began in June 2022 and December 2022. The swap agreements were designated as cash flow hedges of our deposit accounts that are indexed to the Federal Funds Effective rate. The swaps are determined to be highly effective since inception and therefore no amount of ineffectiveness has been included in net income. The aggregate fair value of the swaps amounted to an unrealized gain of $8.4 million and $20.4 million and an unrealized loss of $55,000 and $243,000 at September 30, 2025 and December 31, 2024, respectively. These unrealized gains and losses are recorded in “Interest Rate Derivatives” and “Other Liabilities” on the Consolidated Balance Sheets. The Company expects the hedges to remain highly effective during the remaining terms of the swaps.

During January 2025, the Company entered into three interest rate cap agreements with notional amounts totaling $200.0 million, all with a cap rate of 4.50%. One of these interest rate caps is a two-year spot cap where cash settlements began in February 2025. The other two interest rate caps are forward starting two-year term caps where cash settlements began in June 2025 or July 2025. During October 2021, the Company entered into an interest rate cap agreement with a notional amount of $50.0 million at a cap rate of 2.50%. This interest rate cap is a two-year forward three-year term (five-year total term) where cash settlements began in November 2023. The interest rate cap agreements were designated as cash flow hedges of our deposit accounts that are indexed to the Federal Funds Effective rate. The rate cap premium paid by the Company at inception will be amortized on a straight line basis to deposit interest expense over the total term of the interest rate cap agreement. The aggregate fair value of the interest rate caps, inclusive of unamortized interest rate cap premiums, amounted to an unrealized gain of $1.0 million and $1.4 million and an unrealized loss of $459,000 and $0 at September 30, 2025 and December 31, 2024, respectively. These unrealized gains and losses are recorded in “Interest Rate Derivatives” and “Other Liabilities” on the Consolidated Balance Sheets.

The Company is exposed to credit related losses in the event of the nonperformance by the counterparties to the interest rate swaps. The Company performs an initial credit evaluation and ongoing monitoring procedures for all counterparties and currently anticipates that all counterparties will be able to fully satisfy their obligation under the contracts. In addition, the Company may require collateral from counterparties in the form of cash deposits in the event that the fair value of the contracts are positive and such fair value for all positions with the counterparty exceeds the credit support thresholds specified by the underlying agreement. Conversely, the Company is required to post cash deposits as collateral in the event the fair value of the contracts are negative and are below the credit support thresholds. At September 30, 2025, there were no cash deposits pledged as collateral by the Company. At September 30, 2025, the Company had $9.4 million of restricted cash obtained from the counterparties as collateral for the significant unrealized gains on our interest rate derivatives.

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Summary information for the interest rate swaps designated as cash flow hedges is as follows:


	As of or for the		As of or for the
	Nine Months Ended		Year Ended
(Dollars in thousands)	September 30, 2025		December 31, 2024
Notional amounts	$	700,000	$	800,000
Weighted-average pay rate		2.20%		2.28%
Weighted-average receive rate		4.32%		5.15%
Weighted-average maturity		4.3 years		4.2 years
Weighted-average remaining maturity		0.7 years		1.4 years
Net interest income	$	11,892	$	20,863

Summary information for the interest rate caps designated as cash flow hedges is as follows:


	As of or for the		As of or for the
	Nine Months Ended		Year Ended
(Dollars in thousands)	September 30, 2025		December 31, 2024
Notional amounts	$	250,000	$	50,000
Rate cap premiums		993		226
Weighted-average cap rate		4.10%		2.50%
Weighted-average maturity		2.8 years		5.0 years
Weighted-average remaining maturity		1.4 years		1.8 years
Net interest income	$	341	$	1,219

NOTE 9 – LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS

The Company 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 and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit written is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. Financial instruments where contract amounts represent credit risk as of September 30, 2025 and December 31, 2024 include:


	September 30,		December 31,
(Dollars in thousands)	2025		2024
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit	$	107,853	$	47,369
Standby letters of credit	$	9,979	$	5,782

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments to extend credit includes $107.9 million of unused lines of credit and $10.0 million for standby letters of credit as of September 30, 2025. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company upon extension of credit is based on management’s credit evaluation of the counterparty.

Standby letters of credit written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan commitments to customers.

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The Company maintains cash deposits with a financial institution that during the year are in excess of the insured limitation of the Federal Deposit Insurance Corporation. If the financial institution were not to honor its contractual liability, the Company could incur losses. Management is of the opinion that there is not material risk because of the financial strength of the institution.

NOTE 10 – FAIR VALUE

Financial Instruments Measured at Fair Value

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

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The following presents the assets and liabilities as of September 30, 2025 and December 31, 2024 which are measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fall, and the financial instruments carried on the consolidated balance sheet by caption and by level in the fair value hierarchy, for which a nonrecurring change in fair value has been recorded:


	September 30, 2025
									Total Gains
(Dollars in thousands)	Total		Level 1		Level 2		Level 3		(Losses)
Assets
Recurring fair value measurements:
Securities available for sale:
Obligations of U.S. Government entities and agencies	$	2,504	$	—	$	—	$	2,504
States and political subdivisions		6,443		—		6,443		—
Mortgage-backed GSE residential		6,418		—		6,418		—
Total securities available for sale		15,365		—		12,861		2,504

Equity securities		18,605		18,605		—		—
SBA and USDA servicing asset		6,988		—		—		6,988
Interest rate derivatives		9,435		—		9,435		—
	$	50,393	$	18,605	$	22,296	$	9,492
Nonrecurring fair value measurements:
Collateral-dependent loans	$	1,497	$	—	$	—	$	1,497	$	129

Liabilities
Recurring fair value measurements:
Interest rate derivatives	$	514	$	—	$	514	$	—


	December 31, 2024
									Total Gains
(Dollars in thousands)	Total		Level 1		Level 2		Level 3		(Losses)
Assets
Recurring fair value measurements:
Securities available for sale:
Obligations of U.S. Government entities and agencies	$	4,467	$	—	$	—	$	4,467
States and political subdivisions		6,537		—		6,537		—
Mortgage-backed GSE residential		6,387		—		6,387		—
Total securities available for sale		17,391		—		12,924		4,467

Equity securities		10,300		10,300		—		—
SBA and USDA servicing asset		7,274		—		—		7,274
Interest rate derivatives		21,790		—		21,790		—
	$	56,755	$	10,300	$	34,714	$	11,741
Nonrecurring fair value measurements:
Collateral-dependent loans	$	1,505	$		$		$	1,505	$	11
Foreclosed real estate, net		427		—		—		427		(278)
	$	1,932	$	—	$	—	$	1,932	$	(267)

Liabilities
Recurring fair value measurements:
Interest rate swaps	$	243	$	—	$	243	$	—

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The Company used the following methods and significant assumptions to estimate fair value:

Securities, Available for Sale: The Company carries securities available for sale at fair value. For securities where quoted prices are not available (Level 2), the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. The investments in the Company’s portfolio are generally not quoted on an exchange but are actively traded in the secondary institutional markets.

The Company owns certain SBA investments for which the fair value is determined using Level 3 hierarchy inputs and assumptions as the trading market for such securities was determined to be “not active.” This determination was based on the limited number of trades or, in certain cases, the existence of no reported trades. Discounted cash flows are calculated by a third party using interest rate curves that are updated to incorporate current market conditions, including prepayment vectors and credit risk. During time when trading is more liquid, broker quotes are used to validate the model.

Equity Securities: The Company carries equity securities at fair value. Equity securities are measured at fair value using quoted market prices on nationally recognized and foreign securities exchanges (Level 1).

SBA and USDA Servicing Assets: The fair values of the Company’s servicing assets are determined using Level 3 inputs. All separately recognized servicing assets and servicing liabilities are initially measured at fair value and at each reporting date and changes in fair value are reported in earnings in the period in which they occur.

Interest Rate Derivatives: Exchange-traded derivatives are valued using quoted prices and are classified within Level 1 of the valuation hierarchy. However, few classes of derivative contracts are listed on an exchange; thus, the Company’s derivative positions are valued by third parties using their valuation models and confirmed by the Company. Since the model inputs can be observed in a liquid market and the models do not require significant judgement, such derivative contracts are classified within Level 2 of the fair value hierarchy. The Company’s interest rate derivatives contracts (designated as cash flow hedges) are classified within Level 2.

Under certain circumstances we make adjustments to fair value for our assets and liabilities although they are not measured at fair value on an ongoing basis.

Collateral-dependent loans: Collateral-dependent loans are loans where repayment is expected to be provided solely by the sale of the underlying collateral and there are no other available and reliable sources of repayment. Fair value for both collateral-dependent loans are measured based on the value of the collateral securing these loans and are classified at a Level 3 in the fair value hierarchy. Collateral may include real estate, or business assets including equipment, inventory and accounts receivable. The value of real estate collateral is determined based on an appraisal by qualified licensed appraisers hired by the Company. The value of business equipment is based on an appraisal by qualified licensed appraisers hired by the Company if significant, or the equipment’s net book value on the business’ financial statements. Inventory and accounts receivable collateral are valued based on independent field examiner review or aging reports. Appraisals may utilize a single valuation approach or a combination or approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available for similar loans and collateral underlying such loans. Appraised values are reviewed by management using historical knowledge, market considerations, and knowledge of the client and client’s business.

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Changes in level 3 fair value measurements

The table below presents a reconciliation of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2025 and 2024:


	Obligations of		SBA and USDA
(Dollars in thousands)	U.S. Government		Servicing
Three Months Ended:	Entities and Agencies		Asset		Liabilities
Fair value, July 1, 2025	$	2,534	$	6,823	$	—
Total gains included in income		—		165		—
Settlements		—		—		—
Prepayments/paydowns		(30)		—		—
Transfers in and/or out of Level 3		—		—		—
Fair value, September 30, 2025	$	2,504	$	6,988	$	—

Fair value, July 1, 2024	$	4,554	$	7,108	$	—
Total gains included in income		—		201		—
Settlements		—		—		—
Prepayments/paydowns		(43)		—		—
Transfers in and/or out of Level 3		—		—		—
Fair value, September 30, 2024	$	4,511	$	7,309	$	—

Nine Months Ended:
Fair value, January 1, 2025	$	4,467	$	7,274	$	—
Total losses included in income		—		(286)		—
Settlements		—		—		—
Prepayments/paydowns		(1,963)		—		—
Transfers in and/or out of Level 3		—		—		—
Fair value, September 30, 2025	$	2,504	$	6,988	$	—

Fair value, January 1, 2024	$	4,637	$	7,251	$	—
Total gains included in income		—		58		—
Settlements		—		—		—
Prepayments/paydowns		(126)		—		—
Transfers in and/or out of Level 3		—		—		—
Fair value, September 30, 2024	$	4,511	$	7,309	$	—

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There were no gains or losses included in earnings for securities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the periods presented above. The only activity for these securities were prepayments. There were no purchases, sales, or transfers into and out of Level 3. The following table presents quantitative information about recurring Level 3 fair value measures at September 30, 2025 and December 31, 2024:


	Valuation	Unobservable	General
	Technique	Input	Range
September 30, 2025:
Recurring:
Obligations of U.S. Government entities and agencies	Discounted cash flows	Discount rate	4%-6%
SBA and USDA servicing asset	Discounted cash flows	Prepayment speed	6.72%-21.02%
		Discount rate	5.97%-11.30%
Nonrecurring:
Collateral-dependent loans	Appraised value less estimated selling costs	Estimated selling costs	6%

December 31, 2024:
Recurring:
Obligations of U.S. Government entities and agencies	Discounted cash flows	Discount rate	4%-6%
SBA and USDA servicing asset	Discounted cash flows	Prepayment speed	9.82%-21.47%
		Discount rate	5.22%-10.78%
Nonrecurring:
Collateral-dependent loans	Appraised value less estimated selling costs	Estimated selling costs	6%
Foreclosed real estate	Appraised value less estimated selling costs	Estimated selling costs	6%

The carrying amounts and estimated fair values of the Company’s financial instruments at September 30, 2025 and December 31, 2024 are as follows:


	Carrying			Estimated Fair Value at September 30, 2025
(Dollars in thousands)	Amount		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash, due from banks, and federal funds sold	$	227,158	$	—	$	227,158	$	—	$	227,158
Investment securities		33,970		18,605		12,861		2,504		33,970
FHLB stock		22,693		—		—		—		N/A
Loans held for sale		237,682		—		237,682		—		237,682
Loans, net		2,942,496		—		—		2,884,235		2,884,235
Accrued interest receivable		16,912		—		59		16,853		16,912
SBA and USDA servicing asset		6,988		—		—		6,988		6,988
Mortgage servicing asset		1,662		—		—		6,123		6,123
Interest rate derivatives		9,435		—		9,435		—		9,435
Financial Liabilities:
Deposits		2,693,084		—		2,693,084		—		2,693,084
Federal Home Loan Bank advances		425,000		—		428,230		—		428,230
Accrued interest payable		3,567		—		3,567		—		3,567
Interest rate derivatives		514		—		514		—		514

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	Carrying		Estimated Fair Value at December 31, 2024
(Dollars in thousands)	Amount		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash, due from banks, and federal funds sold	$	249,875	$	—	$	249,875	$	—	$	249,875
Investment securities		27,691		10,300		12,924		4,467		27,691
FHLB stock		20,251		—		—		—		N/A
Loans held for sale		—		—		—		—		—
Loans, net		3,139,191		—		—		3,043,446		3,043,446
Accrued interest receivable		15,858		—		99		15,759		15,858
SBA and USDA servicing asset		7,274		—		—		7,274		7,274
Mortgage servicing asset		1,409		—		—		6,760		6,760
Interest rate derivatives		21,790		—		21,790		—		21,790
Financial Liabilities:
Deposits		2,736,798		—		2,735,977		—		2,735,977
Federal Home Loan Bank advances		375,000		—		376,950		—		376,950
Accrued interest payable		3,498		—		3,498		—		3,498
Interest rate derivatives		243		—		243		—		243

NOTE 11 – REGULATORY MATTERS

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Under the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (“Basel III rules”), the Bank must hold a capital conservation buffer of 2.50% above the adequately capitalized risk-based capital ratios. The net unrealized gain or loss on available for sale securities, if any, is not included in computing regulatory capital. Management believes as of September 30, 2025 the Company and Bank meet all capital adequacy requirements to which they are subject.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At September 30, 2025 and December 31, 2024, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.

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								To Be Well Capitalized
					Minimum Capital Required -			Under Prompt Corrective
	Actual				Basel III			Action Provisions:
(Dollars in thousands)	Amount		Ratio		Amount ≥	Ratio ≥		Amount ≥	Ratio ≥
As of September 30, 2025:
Total Capital (to Risk Weighted Assets)
Consolidated	$	460,549	20.74	%	233,111	10.5	%	N/A	N/A
Bank		458,026	20.63	%	233,105	10.5		222,005	10.0	%
September 1, 2025 to September 30, 2025
Consolidated		442,376	19.93	%	188,709	8.5	%	N/A	N/A
Bank		439,853	19.81	%	188,704	8.5		177,604	8.0	%
Common Tier 1 (CET1)
Consolidated		442,376	19.93	%	155,407	7.0	%	N/A	N/A
Bank		439,853	19.81	%	155,404	7.0		144,303	6.5	%
Tier 1 Capital (to Average Assets)
Consolidated		442,376	12.21	%	144,971	4.0	%	N/A	N/A
Bank		439,853	12.14	%	144,951	4.0		181,188	5.0	%

As of December 31, 2024:
Total Capital (to Risk Weighted Assets)
Consolidated	$	427,083	20.05	%	223,622	10.5	%	N/A	N/A
Bank		424,383	19.93	%	223,616	10.5		212,968	10.0	%
Tier I Capital (to Risk Weighted Assets)
Consolidated		408,174	19.17	%	181,027	8.5	%	N/A	N/A
Bank		405,474	19.04	%	181,023	8.5		170,374	8.0	%
Common Tier 1 (CET1)
Consolidated		408,174	19.17	%	149,081	7.0	%	N/A	N/A
Bank		405,474	19.04	%	149,077	7.0		138,429	6.5	%
Tier 1 Capital (to Average Assets)
Consolidated		408,174	11.57	%	141,149	4.0	%	N/A	N/A
Bank		405,474	11.49	%	141,127	4.0		176,409	5.0	%

NOTE 12 – STOCK BASED COMPENSATION

The Company adopted the MetroCity Bankshares, Inc. 2018 Stock Option Plan (the “Prior Option Plan”) effective as of April 18, 2018, and the Prior Option Plan was approved by the Company’s shareholders on May 30, 2018. The Prior Option Plan provided for awards of stock options to officers, employees and directors of the Company. The Board of Directors of the Company determined that it was in the best interests of the Company and its shareholders to amend and restate the Prior Option Plan to provide for the grant of additional types of awards. Acting pursuant to its authority under the Prior Option Plan, the Board of Directors approved and adopted the MetroCity Bankshares, Inc. 2018 Omnibus Incentive Plan (the “2018 Incentive Plan”), which constitutes the amended and restated version of the Prior Option Plan. The Board of Directors has reserved 2,400,000 shares of Company common stock for issuance pursuant to awards granted under the 2018 Incentive Plan, any or all of which may be granted as nonqualified stock options, incentive stock options, restricted stock, restricted stock units, performance awards and other stock-based awards. In the event all or a portion of a stock award is forfeited, cancelled, expires, or is terminated before becoming vested, paid, exercised, converted, or otherwise settled in full, any unissued or forfeited shares again become available for issuance pursuant to awards granted under the 2018 Incentive Plan and do not count against the maximum number of reserved shares. In addition, shares of common stock deducted or withheld to satisfy tax withholding obligations will be added back to the share reserve and will again be available for issuance pursuant to awards granted under the plan. The 2018 Incentive Plan is administered by the Compensation Committee of our Board of Directors (the “Committee”). The determination of award recipients under the

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2018 Incentive Plan, and the terms of those awards, will be made by the Committee. At September 30, 2025, 240,000 stock options had been granted and 985,783 shares of restricted stock had been issued under the 2018 Incentive Plan.

Stock Options

A summary of stock option activity for the nine months ended September 30, 2025 is presented below:


		Weighted
		Average
	Shares	Exercise Price
Outstanding at January 1, 2025	169,134	$	12.70
Granted	—		—
Exercised	—		—
Forfeited	—		—
Outstanding at September 30, 2025	169,134	$	12.70

The Company recognized no compensation expense for stock options during the three and nine months ended September 30, 2025 and 2024. As of September 30, 2025 and December 31, 2024, all of the cost related to the outstanding stock options had been recognized.

Restricted Stock Units

The Company has periodically issued restricted stock units to its directors, executive officers and certain employees under the 2018 Incentive Plan. Compensation expense for restricted stock is based upon the grant date fair value of the shares and is recognized over the vesting period of the units. Shares of restricted stock units issued to officers and employees vest in equal annual installments on the first three anniversaries of the grant date. Shares of restricted stock units issued to directors vest 25% on the grant date and 25% on each of the first three anniversaries of the grant date.

A summary of restricted stock activity for the nine months ended September 30, 2025 is presented below:


		Weighted-
		Average Grant-
Nonvested Shares	Shares	Date Fair Value
Nonvested at January 1, 2025	207,865	$	20.20
Granted	106,882		27.94
Vested	(136,238)		21.31
Forfeited	—		—
Nonvested at September 30, 2025	178,509	$	23.99

During the three months ended September 30, 2025 and 2024, the Company recognized compensation expense for restricted stock of $939,000 and $837,000, respectively. During the nine months ended September 30, 2025 and 2024, the Company recognized compensation expense for restricted stock of $2.0 million and $1.8 million, respectively. As of September 30, 2025 and December 31, 2024, there was $3.7 million and $2.9 million, respectively, of total unrecognized compensation cost related to nonvested shares granted under the 2018 Incentive Plan. As of September 30, 2025, the cost is expected to be recognized over a weighted-average period of 2.2 years.

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NOTE 13 – EARNINGS PER SHARE

The following table presents the calculation of basic and diluted earnings per common share for the periods indicated:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands, except per share data)	2025		2024		2025		2024
Basic earnings per share
Net Income	$	17,270	$	16,701	$	50,393	$	48,269

Weighted average common shares outstanding		25,537,746		25,331,916		25,462,345		25,261,347

Basic earnings per common share	$	0.68	$	0.66	$	1.98	$	1.91

Diluted earnings per share
Net Income	$	17,270	$	16,701	$	50,393	$	48,269

Weighted average common shares outstanding for basic earnings per common share		25,537,746		25,331,916		25,462,345		25,261,347
Add: Dilutive effects of restricted stock and options		273,676		342,942		273,343		329,725

Average shares and dilutive potential common shares		25,811,422		25,674,858		25,735,688		25,591,072

Diluted earnings per common share	$	0.67	$	0.65	$	1.96	$	1.89

There were no stock options or restricted stock excluded from the computation of diluted earnings per common share since they were antidilutive for the three and nine months ended September 30, 2025 and 2024.

NOTE 14 – BUSINESS COMBINATION

First IC Corporation

On March 16, 2025, the Company and the Bank entered into an Agreement and Plan of Reorganization (the “Reorganization Agreement”) with First IC Corporation, a Georgia corporation (“First IC”), and First IC Bank, a Georgia-state chartered bank and the wholly-owned subsidiary of First IC (“First IC Bank”), whereby First IC will be merged with and into the Company and First IC Bank will be merged with and into the Bank. Each share of First IC common stock will, at the effective time of the transaction, be converted into the right to receive the pro-rata share of (1) $111,965,213 in cash and (2) 3,384,588 shares of Company common stock, each as may be adjusted in accordance with the terms of the Reorganization Agreement. At September 30, 2025, First IC had approximately $1.2 billion in total assets, $1.1 billion in total loans and $916.1 million in total deposits. The pro forma company is projected to have approximately $4.8 billion in total assets, $3.6 billion in total deposits and $4.2 billion in total loans.

On July 15, 2025, the Company and the Bank announced their receipt of all required regulatory approvals and non-objections to complete the transactions contemplated by the Reorganization Agreement. In addition, on July 15, 2025, First IC’s shareholders voted to approve the Reorganization Agreement and the transactions contemplated thereby, including the merger.

The merger is expected to be completed later in the fourth quarter of 2025, and remains subject to the satisfaction of customary closing conditions.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The purpose of this discussion and analysis is to focus on significant changes in the financial condition of MetroCity Bancshares, Inc. and our wholly owned subsidiary, Metro City Bank, from December 31, 2024 through September 30, 2025 and on our results of operations for the three and nine months ended September 30, 2025 and 2024. This discussion and analysis should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2024 included in our Annual Report on Form 10-K, and information presented elsewhere in this Quarterly Report on Form 10-Q, particularly the unaudited consolidated financial statements and related notes appearing in Item 1.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “strive,” “projection,” “goal,” “target,” “outlook,” “aim,” “would,” “annualized” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

A number of important factors could cause our actual results to differ materially from those indicated in these forward-looking statements, including those factors discussed elsewhere in this quarterly report and the following:

●

general economic and business conditions in our local markets, including conditions affecting employment levels, interest rates, inflation, tariffs or trade wars (including reduced consumer spending, supply chain issues, and adverse impacts to credit quality), slowdowns in economic growth, the threat of recession, volatile equity capital markets, property and casualty insurance costs, collateral values, customer income, creditworthiness and confidence, spending and savings that may affect customer bankruptcies, defaults, charge-offs and deposit activity; and the impact of the foregoing on customer and client behavior (including the velocity and levels of deposit withdrawals and loan repayment);

●

changes in the interest rate environment (including changes to the federal funds rate and the impact on the level and composition of deposits (as well as the cost of, and competition for, deposits), loan demand, liquidity and the values of loan collateral, securities and market fluctuations, and interest rate sensitive assets and liabilities), and competition in our markets may result in increased funding costs or reduced earning assets yields, thus reducing our margins and net interest income;

●

adverse developments in the banking industry and the impact of such developments on customer confidence, liquidity and regulatory responses to these developments (including increases in the cost of our deposit insurance assessments and increased regulatory scrutiny), our ability to effectively manage our liquidity risk and any growth plans and the availability of capital and funding;

●

our ability to comply with applicable capital and liquidity requirements, including our ability to generate liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital markets;

●

the risk that a future economic downturn and contraction could have a material adverse effect on our capital, financial condition, credit quality, results of operations and future growth, including the risk that the strength of

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the current economic environment could be weakened by the continued impact of prolonged elevated interest rates and inflation;

●

factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our primary market areas, the financial health of our borrowers and the success of various projects that we finance;

●

concentration of our loan portfolio in real estate loans;

●

changes in the prices, values and sales volumes of commercial and residential real estate, especially as they relate to the value of collateral supporting the Company’s loans;

●

weakness in the real estate market, including the secondary residential mortgage market, which can affect, among other things, the value of collateral securing mortgage loans, mortgage loan originations and delinquencies, profits on sales of mortgage loans, and the value of mortgage servicing rights;

●

credit and lending risks associated with our construction and development, commercial real estate, commercial and industrial, residential real estate and SBA loan portfolios;

●

negative impacts related to our mortgage banking services, including declines in our mortgage originations or profitability due to prolonged elevated interest rates and increased competition and regulation, the Bank’s or third party’s failure to satisfy mortgage servicing obligations, loan modifications, the effects of judicial or regulatory requirements or guidance, and the possibility of the Bank being required to repurchase mortgage loans or indemnify buyers;

●

the impact of prolonged elevated interest rates on our financial projections, models and guidance;

●

our ability to attract sufficient loans that meet prudent credit standards, including in our construction and development, commercial and industrial and owner-occupied commercial real estate loan categories;

●

our ability to attract and maintain business banking relationships with well-qualified businesses, real estate developers and investors with proven track records in our market areas;

●

our ability to successfully manage our credit risk and the sufficiency of our allowance for credit losses (“ACL”);

●

the adequacy of our reserves (including ACL) and the appropriateness of our methodology for calculating such reserves;

●

our ability to successfully execute our business strategy to achieve profitable growth;

●

the concentration of our business within our geographic areas of operation and to the general Asian-American population within our primary market areas;

●

our focus on small and mid-sized businesses;

●

our ability to manage our growth;

●

the risks related to the pending First IC Corporation merger including, without limitation: (i) the diversion of management’s time on issues related to the merger; (ii) unexpected transaction costs, including the costs of integrating operations; (iii) the risks that the businesses will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; (iv) the potential failure to fully or timely realize expected revenues and revenue synergies, including as the result of revenues following the merger being lower than expected; (v) the risk of deposit and customer attrition and changes in deposit mix; (vi) unexpected operating and other costs, which may differ or change from expectations; (vii) the risks of customer and employee loss and

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business disruptions, including, without limitation, as the result of difficulties in maintaining relationships with employees; and (viii) increased competitive pressures and solicitations of customers by competitors;

●

potential delays or other problems in implementing and executing our growth, expansion and acquisition or divestment strategies, including delays in obtaining regulatory or other necessary approvals or the failure to realize any anticipated benefits or synergies from any acquisitions or growth strategies;

●

our ability to increase our operating efficiency;

●

significant turbulence or a disruption in the capital or financial markets and the effect of a fall in stock market prices on our investment securities;

●

risks that our cost of funding could increase, in the event we are unable to continue to attract stable, low-cost deposits and reduce our cost of deposits;

●

inability of our risk management framework (including internal controls) to effectively mitigate credit risk, interest rate risk, liquidity risk, price risk, compliance risk, operational risk (including by virtue of our relationships with third-party business partners, as well as our relationships with third-party vendors and other service providers), strategic risk, reputational risk and other risks inherent to the business of banking;

●

our ability to maintain expenses in line with current projections;

●

the makeup of our asset mix and investments;

●

external economic, political and/or market factors, such as changes in monetary and fiscal policies and laws, and also including the interest rate policies of the Federal Reserve, inflation or deflation, changes in the demand for loans, and fluctuations in consumer spending, borrowing and savings habits, which may have an adverse impact on our financial condition;

●

the institution and outcome of litigation and other legal proceeding against us or to which we may become subject to and the potential effect on our reputation;

●

the impact of recent and future legislative and regulatory changes;

●

uncertainties surrounding geopolitical events, trade policy, taxation policy, and monetary policy which continue to impact the outlook for future economic growth, including U.S. imposition of tariffs and consideration of responsive actions by these nations or the expansion of import fees and tariffs among a larger group of nations, which is bringing greater ambiguity to the outlook for future economic growth;

●

the potential implementation of a regulatory reform agenda under the current presidential administration that is significantly different than that of the prior administration, impacting rulemaking, supervision, examination and enforcement priorities of the federal banking agencies;

●

examinations by our regulatory authorities;

●

continued or increasing competition from other financial institutions, credit unions, and non-bank financial services companies (including fintech companies), many of which are subject to different regulations than we are;

●

challenges arising from unsuccessful attempts to expand into new geographic markets, products, or services;

●

restraints on the ability of the Bank to pay dividends to us, which could limit our liquidity;

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●

increased capital requirements imposed by banking regulators, which may require us to raise capital at a time when capital is not available on favorable terms or at all;

●

inaccuracies in our assumptions about future events, which could result in material differences between our financial projections and actual financial performance;

●

changes in our management personnel or our inability to retain, motivate and hire qualified management personnel;

●

the dependence of our operating model on our ability to attract and retain experienced and talented bankers in each of our markets, which may be impacted as a result of labor shortages;

●

our ability to identify and address cyber-security risks, fraud and systems errors, including the impact on our reputation and the costs and effects required to address such risks, fraud and systems errors;

●

disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems, which may be exacerbated by the development of generative artificial intelligence, and the cost of defending against them and any reputational or other financial risks following such a cybersecurity incident;

●

our business relationships with, and reliance upon, third parties that have strategic partnerships with us or that provide key components of our business infrastructure, including the costs of services and products provided to us by third parties, and disruptions in service, security breaches, financial difficulties with or other adverse events affecting a third-party vendor or business relationship;

●

an inability to keep pace with the rate of technological advances due to a lack of resources to invest in new technologies;

●

fraudulent and negligent acts by our clients, employees or vendors and our ability to identify and address such acts;

●

risks related to potential acquisitions;

●

the impact of any claims or legal actions to which we may be subject, including any effect on our reputation;

●

compliance with governmental and regulatory requirements, including the Dodd-Frank Act and others relating to banking, consumer protection, securities and tax matters, and our ability to maintain licenses required in connection with commercial mortgage origination, sale and servicing operations;

●

changes in the scope and cost of Federal Deposit Insurance Corporation (“FDIC”) insurance and other coverage;

●

changes in our accounting standards;

●

changes in federal tax law or policy;

●

the effects of war or other conflicts, civil unrest, acts of terrorism, acts of God, natural disasters, health emergencies, epidemics or pandemics, climate changes, or other catastrophic events that may affect general economic conditions or cause other disruptions and/or increase costs, including, but not limited to, property and casualty and other insurance cost;

●

risks related to diversity, equity and inclusion (“DEI”) and environmental, social and governance (“ESG”) strategies and initiatives, the scope and pace of which could alter the Company’s reputation and shareholder, associate, customer and third-party affiliations or result in litigation in connection with anti-DEI and anti-ESG laws, rules or activism;

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●

a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, and uncertainties surrounding the debt ceiling and the federal budget;

●

the effects of the current U.S. government shutdown, including the impact of prolonged closures or staffing reductions at government agencies effecting our business or our customers; and

●

other risks and factors identified in the Company’s 2024 Form 10-K, including those identified under the heading “Risk Factors”, and detailed from time to time in our other filings with the U.S. Securities and Exchange Commission.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this Quarterly Report on Form 10-Q. Because of these risks and other uncertainties, our actual future results, performance or achievement, or industry results, may be materially different from the results indicated by the forward looking statements in this Quarterly Report on Form 10-Q. In addition, our past results of operations are not necessarily indicative of our future results. You should not rely on any forward looking statements, which represent our beliefs, assumptions and estimates only as of the dates on which they were made, as predictions of future events. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Pending Acquisition of First IC Corporation and First IC Bank

The merger is expected to be completed later in the fourth quarter of 2025, and remains subject to the satisfaction of customary closing conditions.

Critical Accounting Policies and Estimates

Our accounting and reporting estimates conform with U.S. GAAP and general practices within the financial services industry. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We consider accounting estimates that can (1) be replaced by other reasonable estimates and/or (2) changes to an estimate from period to period that have a material impact on the presentation of our financial condition, changes in financial condition or results of operations as well as (3) those estimates that require significant and complex assumptions about matters that are highly uncertain to be critical accounting estimates. We consider our critical accounting policies to include the allowance for credit losses, servicing assets, fair value of financial instruments and income taxes.

Critical accounting estimates include a high degree of uncertainty in the underlying assumptions. Management bases its estimates on historical experience, current information and other factors deemed relevant. The development, selection and disclosure of our critical accounting estimates are reviewed with the Audit Committee of the Company’s Board of

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Directors. Actual results could differ from these estimates. For additional information regarding critical accounting policies, refer to “Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” and Note 1 of our consolidated financial statements as of December 31, 2024 in the Company’s 2024 Form 10-K. There have been no significant changes in the Company’s application of critical accounting policies since December 31, 2024.

Reserve for Credit Losses

A consequence of lending activities is that we may incur credit losses. The amount of such losses will vary depending upon the risk characteristics of the loan lease portfolio as affected by economic conditions such as rising interest rates and the financial performance of borrowers.

The reserve for credit losses consists of the allowance for credit losses (“ACL”) and the allowance for unfunded commitments. The estimate of expected credit losses under the current expected credit loss (“CECL”) methodology is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. We then consider whether the historical loss experience should be adjusted for loan-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience was used. Finally, we consider forecasts about future economic conditions that are reasonable and supportable. The allowance for unfunded commitments represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit. This allowance is estimated by loan segment at each balance sheet date under the CECL model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur.

Management’s evaluation of the appropriateness of the reserve for credit losses is often the most critical of accounting estimates for a financial institution. Our determination of the amount of the reserve for credit losses is a critical accounting estimate as it requires significant reliance on the credit risk rating we assign to individual borrowers, the use of estimates and significant judgment as to the amount and timing of expected future cash flows, reliance on historical loss rates on homogenous portfolios, consideration of our quantitative and qualitative evaluation of economic factors, and the reliance on our reasonable and supportable forecasts. The reserve for credit losses attributable to each portfolio segment also includes an amount for inherent risks not reflected in the historical analyses. Relevant factors include, but are not limited to, concentrations of credit risk (geographic, large borrower, and industry), changes in underwriting standards, changes in collateral values, experience and depth of lending staff, trends in delinquencies, and the volume and terms of loans.

See Note 1 and Note 3 of our consolidated financial statements as of December 31, 2024 in the Company’s 2024 Form 10-K and as of September 30, 2025, included elsewhere in this Form 10-Q, for additional information on the reserve and allowance for credit losses.

Overview

MetroCity Bankshares, Inc. is a bank holding company headquartered in the Atlanta metropolitan area. We operate through our wholly-owned banking subsidiary, Metro City Bank, a Georgia state-chartered commercial bank that was founded in 2006. We currently operate 20 full-service branch locations in multi-ethnic communities in Alabama, Florida, Georgia, New York, New Jersey, Texas and Virginia. As of September 30, 2025, we had total assets of $3.63 billion, total loans of $3.20 billion, total deposits of $2.69 billion and total shareholders’ equity of $445.9 million.

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We are a full-service commercial bank focused on delivering personalized service in an efficient and reliable manner to the small to medium-sized businesses and individuals in our markets, predominantly Asian-American communities in growing metropolitan markets in the Eastern U.S. and Texas. We offer a suite of loan and deposit products tailored to meet the needs of the businesses and individuals already established in our communities, as well as first generation immigrants who desire to establish and grow their own businesses, purchase a home, or educate their children in the United States. Through our diverse and experienced management team and talented employees, we are able to speak the language of our customers and provide them with services and products in a culturally competent manner.

Selected Financial Data

The following table sets forth unaudited selected financial data for the most recent five quarters and for the nine months ended September 30, 2025 and 2024. This data should be read in conjunction with the unaudited consolidated financial statements and accompanying notes included in Item 1 and the information contained in this Item 2.

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	As of or for the Three Months Ended															As of or for the Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
(Dollars in thousands, except per share data)	2025			2025			2025			2024			2024			2025			2024
Selected income statement data:
Interest income	$	54,003		$	54,049		$	52,519		$	52,614		$	53,833		$	160,571		$	160,299
Interest expense		22,211			21,871			21,965			22,554			23,544			66,047			72,213
Net interest income		31,792			32,178			30,554			30,060			30,289			94,524			88,086
Provision for credit losses		(543)			129			135			202			582			(279)			314
Noninterest income		6,178			5,733			5,456			5,321			6,615			17,367			17,742
Noninterest expense		14,674			14,113			13,799			14,326			13,660			42,586			39,053
Income tax expense		6,569			6,843			5,779			4,618			5,961			19,191			18,192
Net income		17,270			16,826			16,297			16,235			16,701			50,393			48,269
Per share data:
Basic income per share	$	0.68		$	0.66		$	0.64		$	0.64		$	0.66		$	1.98		$	1.91
Diluted income per share	$	0.67		$	0.65		$	0.63		$	0.63		$	0.65		$	1.96		$	1.89
Dividends per share	$	0.25		$	0.23		$	0.23		$	0.23		$	0.20		$	0.71		$	0.60
Book value per share (at period end)	$	17.46		$	17.08		$	16.85		$	16.59		$	16.07		$	17.46		$	16.07
Shares of common stock outstanding		25,537,746			25,537,746			25,402,782			25,402,782			25,331,916			25,537,746			25,331,916
Weighted average diluted shares		25,811,422			25,715,206			25,707,989			25,659,483			25,674,858			25,735,688			25,591,072
Performance ratios:
Return on average assets		1.89	%		1.87	%		1.85	%		1.82	%		1.86	%		1.87	%		1.80	%
Return on average equity⁽¹⁾		15.69			15.74			15.67			15.84			16.26			15.70			16.27
Dividend payout ratio		37.23			35.01			36.14			36.18			30.58			36.13			31.66
Yield on total loans		6.37			6.49			6.40			6.31			6.43			6.42			6.41
Yield on average earning assets		6.24			6.34			6.31			6.25			6.36			6.30			6.36
Cost of average interest bearing liabilities		3.42			3.39			3.48			3.55			3.69			3.43			3.77
Cost of deposits		3.28			3.25			3.36			3.45			3.61			3.30			3.74
Net interest margin		3.68			3.77			3.67			3.57			3.58			3.71			3.50
Efficiency ratio⁽²⁾		38.65			37.23			38.32			40.49			37.01			38.06			36.90
Asset quality data (at period end):
Net charge-offs/(recoveries) to average loans held for investment		0.03	%		0.01	%		0.02	%		0.01	%		0.00	%		0.02	%		(0.00)	%

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Nonperforming assets to gross loans and OREO		0.47			0.49			0.59			0.58			0.51			0.47			0.51
ACL to nonperforming loans		137.66			129.76			110.52			104.08			129.85			137.66			129.85
ACL to loans held for investment		0.60			0.60			0.59			0.59			0.60			0.60			0.60
Balance sheet and capital ratios:
Gross loans held for investment to deposits		110.43	%		116.34	%		114.73	%		115.66	%		113.67	%		110.43	%		113.67	%
Noninterest bearing deposits to deposits		20.22			20.41			19.73			19.60			20.29			20.22			20.29
Investment securities to assets		0.94			0.93			0.93			0.77			0.81			0.94			0.81
Common equity to assets		12.29			12.06			11.69			11.72			11.41			12.29			11.41
Leverage ratio		12.21			11.91			11.76			11.57			11.12			12.21			11.12
Common equity tier 1 ratio		19.93			19.91			19.23			19.17			19.12			19.93			19.12
Tier 1 risk-based capital ratio		19.93			19.91			19.23			19.17			19.12			19.93			19.12
Total risk-based capital ratio		20.74			20.78			20.09			20.05			20.03			20.74			20.03
Mortgage and SBA loan data:
Mortgage loans serviced for others	$	538,675		$	559,112		$	537,590		$	527,039		$	556,442		$	538,675		$	556,442
Mortgage loan production		168,562			93,156			91,122			103,250			122,355			352,840			310,427
Mortgage loan sales		18,248			54,309			40,051			—			54,193			112,608			187,490
SBA loans serviced for others		460,720			480,867			474,143			479,669			487,359			460,720			487,359
SBA loan production		17,777			29,337			20,012			35,730			35,839			67,126			55,533
SBA loan sales		13,415			20,707			16,579			19,236			28,858			50,701			52,923

(1)

Our return on average equity, excluding average accumulated other comprehensive income and merger-related expenses (non-GAAP financial measurement), for the three months ended September 30, 2025 and 2024 was 16.10% and 17.25%, respectively. Our return on average equity, excluding average accumulated other comprehensive income and merger-related expenses (non-GAAP financial measurement), for the nine months ended September 30, 2025 and 2024 was 16.25% and 17.27%, respectively.

(2)	Represents noninterest expense divided by total revenue (net interest income and total noninterest income).

Non-GAAP Financial Measures

This Form 10-Q includes financial information determined by methods other than in accordance with generally accepted accounting principles (“GAAP”). This financial information includes “return on average equity”, which excludes average accumulated other comprehensive income and merger-related expenses. These measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies.

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The following table reconciles the non-GAAP financial measurement for return on average equity to the most directly comparable GAAP measurement for return on average equity for the three and nine months ended September 30, 2025 and 2024:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(Dollars in thousands)	2025			2024			2025			2024
Average shareholder’s equity (GAAP)	$	436,619		$	408,665		$	429,035		$	396,304
Less: average accumulated other comprehensive income		(5,552)			(23,539)			(9,099)			(22,918)
Adjusted average shareholder’s equity (non-GAAP)	$	431,067		$	385,126		$	419,936		$	373,386

Net income (GAAP)	$	17,270		$	16,701		$	50,393		$	48,269
Less: First IC-merger related expenses (net of tax effect)		218			—			650			—
Adjusted net income (non-GAAP)	$	17,488		$	16,701		$	51,043		$	48,269

Return on average shareholder’s equity (GAAP)		15.69	%		16.26	%		15.70	%		16.27	%
Adjusted return on average shareholder’s equity (non-GAAP)		16.10	%		17.25	%		16.25	%		17.27	%

Results of Operations

We recorded net income of $17.3 million for the three months ended September 30, 2025 compared to $16.7 million for the three months ended September 30, 2024, an increase of $569,000, or 3.4%. This increase was due to an increase in net interest income of $1.5 million and a decrease in provision for credit losses of $1.1 million, offset by increases in noninterest expense of $1.0 million and income tax expense of $608,000 and a decrease in noninterest income of $437,000.

For the nine months ended September 30, 2025, we recorded net income of $50.4 million compared to $48.3 million for the nine months ended September 30, 2024, an increase of $2.1 million, or 4.4%. This increase was due to an increase in net interest income of $6.4 million and a decrease in provision for credit losses of $593,000, offset by increases in noninterest expense $3.5 million and income tax expense of $1.0 million and a decrease in noninterest income of $375,000.

Basic and diluted earnings per common share for the three months ended September 30, 2025 was $0.68 and $0.67, respectively, compared to $0.66 and $0.65 for the basic and diluted earnings per common share for the three months ended September 30, 2024. For the nine months ended September 30, 2025, basic and diluted earnings per common share was $1.98 and $1.96, respectively, compared to $1.91 and $1.89 for the nine months ended September 30, 2024, respectively.

Interest Income

Interest income totaled $54.0 million for the three months ended September 30, 2025, an increase of $170,000, or 0.3%, from the three months ended September 30, 2024, primarily due to a $59.5 million increase in average loan balances and a $4.1 million increase in the average total investments balance, offset by an 83 basis points decrease in the total investments yield and a six basis points decrease in the loan yield. The increase in average loans is due to an increase of $72.0 million in average commercial real estate loans, an increase of $15.0 million in average construction and development loans and an increase of $7.1 million in commercial and industrial loans, offset by a decrease of $34.5 million in average residential real estate loans. As compared to the three months ended September 30, 2024, the yield on average interest-earning assets decreased by 12 basis points to 6.24% from 6.36% with the yield on average loans decreasing by six basis points and the yield on average total investments decreasing by 83 basis points.

Interest income totaled $160.6 million for the nine months ended September 30, 2025 compared to $160.3 million for the same period in 2024, an increase of $272,000, or 0.2%, primarily due to a $22.7 million increase in average loan balances and a $20.3 million increase in the average total investments balance, offset by a 99 basis point decrease in the

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total investments yield. The increase in average loans is due to an increase of $68.7 million in average commercial real estate loans, an increase of $10.1 million in average construction and development loans and an increase of $5.8 million in average commercial and industrial loans, offset by a $61.9 million decrease in average residential mortgage loans. As compared to the nine months ended September 30, 2024, the yield on average interest-earning assets decreased by six basis points to 6.30% from 6.36% with the yield on average loans increasing by one basis point and the yield on average total investments decreasing by 99 basis points.

Interest Expense

Interest expense for the three months ended September 30, 2025 decreased $1.3 million, or 5.7%, to $22.2 million compared to interest expense of $23.5 million for the three months ended September 30, 2024, primarily due to a 33 basis points decrease in deposit costs coupled with a $10.4 million decrease in average deposit balances, offset by a $49.3 million increase in the average borrowings balance. The 33 basis points decrease in deposit costs was primarily driven by an 81 basis points decrease in the cost on average time deposits, offset by a 55 basis points increase in the cost on average interest-bearing demand deposits and savings accounts and a 15 basis points increase in the cost of average money market deposits. Average time deposits and money market deposits decreased by $71.2 million and $8.0 million, respectively, while average interest-bearing demand deposits and savings accounts increased by $68.8 million. Average borrowings for the three months ended September 30, 2025 increased by $49.3 million while borrowing costs decreased by five basis points compared to the three months ended September 30, 2024.

Interest expense totaled $66.0 million for the nine months ended September 30, 2025, a decrease of $6.2 million, or 8.5%, compared to the same period in 2024, primarily due to a 44 basis points decrease in deposit costs coupled with a $33.3 million decrease in average interest-bearing deposit balances. Average borrowings outstanding for the nine months ended September 30, 2025 increased by $50.9 million with an increase in rate of 17 basis points compared to the same period in 2024.

The Company currently has effective interest rate derivative agreements totaling $950.0 million that are designated as cash flow hedges of our deposit accounts indexed to the Federal Funds Effective rate. The weighted average pay rate for these interest rate derivatives is 2.70%. During the three and nine months ended September 30, 2025, we recorded a credit to interest expense of $3.8 million and $12.2 million, respectively, from the benefit received on these interest rate derivatives compared to a credit to interest expense of $6.4 million and $17.0 million recorded during the three and nine month periods ended September 30, 2024, respectively. Based on the Federal Funds Effective rate as of September 30, 2025 (4.09%), the Company would estimate to record a credit to interest expense of approximately $3.2 million for the remainder of 2025 and $7.6 million in 2026 from the benefit received on these interest rate derivatives. See Note 8 of our consolidated financial statements as of September 30, 2025, included elsewhere in this Form 10-Q, for additional information on these interest rate derivatives.

Net Interest Margin

The net interest margin for the three months ended September 30, 2025 increased by 10 basis points to 3.68% from 3.58% for the three months ended September 30, 2024, primarily due to a 27 basis points decrease in the cost of average interest-bearing liabilities of $2.57 billion, offset by a 12 basis points decrease in the yield on average interest-earning assets of $3.43 billion. Average earning assets for the three months ended September 30, 2025 increased by $63.6 million from the three months ended September 30, 2024, due to a $59.5 million increase in average loans and a $4.1 million increase in average total investments. Average interest-bearing liabilities for the three months ended September 30, 2025 increased by $38.9 million from the three months ended September 30, 2024, driven by the increase in average borrowings of $49.3 million, offset by a $10.4 million decrease in average interest-bearing deposits.

The net interest margin for the nine months ended September 30, 2025 increased by 21 basis points to 3.71% from 3.50% for the nine months ended September 30, 2024, primarily due to a 34 basis points decrease in the cost of average interest-bearing liabilities of $2.57 billion, offset by a six basis points decrease in the yield on average interest-earning assets of $3.41 billion. Average earning assets increased by $43.0 million, due to a $22.7 million increase in average loans and a $20.3 million increase in average total investments. Average interest-bearing liabilities increased by $17.6 million,

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primarily driven by an increase in average borrowings of $50.9 million, offset by a $33.3 million decrease in average interest-bearing deposit balances.

Net interest margin and net interest income are influenced by internal and external factors. Internal factors include balance sheet changes on both volume and mix and pricing decisions, and external factors include changes in market interest rates, competition and the shape of the interest rate yield curve. The increase in our net interest margin is primarily the result of our decreasing deposit costs.

Average Balances, Interest and Yields

The following tables present, for the three and nine months ended September 30, 2025 and 2024, information about: (i) weighted average balances, the total dollar amount of interest income from interest-earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin.


	Three Months Ended September 30,
	2025						2024
	Average		Interest and		Yield /		Average		Interest and		Yield /
(Dollars in thousands)	Balance		Fees		Rate		Balance		Fees		Rate
Earning Assets:
Federal funds sold and other investments⁽¹⁾	$	219,283	$	2,760	4.99	%	$	220,826	$	3,308	5.96	%
Investment securities		36,960		268	2.88			31,309		189	2.40
Total investments		256,243		3,028	4.69			252,135		3,497	5.52
Construction and development		29,130		613	8.35			14,170		302	8.48
Commercial real estate		812,759		17,239	8.42			740,720		17,132	9.20
Commercial and industrial		71,655		1,600	8.86			64,584		1,593	9.81
Residential real estate		2,261,108		31,480	5.52			2,295,573		31,267	5.42
Consumer and other		327		43	52.17			394		42	42.41
Gross loans⁽²⁾		3,174,979		50,975	6.37			3,115,441		50,336	6.43
Total earning assets		3,431,222		54,003	6.24			3,367,576		53,833	6.36
Noninterest-earning assets		193,365						207,093
Total assets		3,624,587						3,574,669
Interest-bearing liabilities:
NOW and savings deposits		188,576		1,476	3.11			119,759		770	2.56
Money market deposits		974,500		6,480	2.64			982,517		6,156	2.49
Time deposits		986,719		9,843	3.96			1,057,956		12,676	4.77
Total interest-bearing deposits		2,149,795		17,799	3.28			2,160,232		19,602	3.61
Borrowings		425,000		4,412	4.12			375,677		3,942	4.17
Total interest-bearing liabilities		2,574,795		22,211	3.42			2,535,909		23,544	3.69
Noninterest-bearing liabilities:
Noninterest-bearing deposits		538,755						542,939
Other noninterest-bearing liabilities		74,418						87,156
Total noninterest-bearing liabilities		613,173						630,095
Shareholders’ equity		436,619						408,665
Total liabilities and shareholders’ equity	$	3,624,587					$	3,574,669
Net interest income			$	31,792					$	30,289
Net interest spread					2.82						2.67
Net interest margin					3.68						3.58

(1)	Includes income and average balances for term federal funds, interest-earning cash accounts, and other miscellaneous earning assets.

(2)	Average loan balances include nonaccrual loans and loans held for sale.

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	Nine Months Ended September 30,
	2025						2024
	Average		Interest and		Yield /		Average		Interest and		Yield /
(Dollars in thousands)	Balance		Fees		Rate		Balance		Fees		Rate
Earning Assets:
Federal funds sold and other investments⁽¹⁾	$	203,740	$	7,706	5.06	%	$	187,398	$	8,729	6.22	%
Investment securities		35,363		701	2.65			31,428		590	2.51
Total investments		239,103		8,407	4.70			218,826		9,319	5.69
Construction and development		26,933		1,673	8.31			16,871		1,127	8.92
Commercial real estate		800,301		51,008	8.52			731,573		50,270	9.18
Commercial and industrial		71,905		4,732	8.80			66,116		4,894	9.89
Residential real estate		2,270,373		94,603	5.57			2,332,271		94,565	5.42
Consumer and other		323		148	61.26			311		124	53.26
Gross loans⁽²⁾		3,169,835		152,164	6.42			3,147,142		150,980	6.41
Total earning assets		3,408,938		160,571	6.30			3,365,968		160,299	6.36
Noninterest-earning assets		196,632						214,756
Total assets		3,605,570						3,580,724
Interest-bearing liabilities:
NOW and savings deposits		168,503		3,516	2.79			140,539		2,852	2.71
Money market deposits		1,005,777		19,617	2.61			1,019,394		21,984	2.88
Time deposits		986,618		30,139	4.08			1,034,256		36,606	4.73
Total interest-bearing deposits		2,160,898		53,272	3.30			2,194,189		61,442	3.74
Borrowings		413,853		12,775	4.13			362,965		10,771	3.96
Total interest-bearing liabilities		2,574,751		66,047	3.43			2,557,154		72,213	3.77
Noninterest-bearing liabilities:
Noninterest-bearing deposits		529,075						536,807
Other noninterest-bearing liabilities		72,709						90,459
Total noninterest-bearing liabilities		601,784						627,266
Shareholders’ equity		429,035						396,304
Total liabilities and shareholders’ equity	$	3,605,570					$	3,580,724
Net interest income			$	94,524					$	88,086
Net interest spread					2.87						2.59
Net interest margin					3.71						3.50

(1)	Includes income and average balances for term federal funds, interest-earning cash accounts, and other miscellaneous earning assets.

(2)	Average loan balances include nonaccrual loans and loans held for sale.

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Rate/Volume Analysis

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. The following table sets forth the effects of changing rates and volumes on our net interest income during the period shown. Information is provided with respect to (i) effects on interest income attributable to changes in volume (change in volume multiplied by prior rate) and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume). Change applicable to both volumes and rate have been allocated to volume.


	Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
	Increase (Decrease) Due to Change in:
(Dollars in thousands)	Volume		Yield/Rate		Total Change
Earning assets:
Federal funds sold and other investments⁽¹⁾	$	(20)	$	(528)	$	(548)
Investment securities		273		(194)		79
Total investments		253		(722)		(469)
Construction and development		320		(9)		311
Commercial real estate		1,581		(1,474)		107
Commercial and industrial		170		(163)		7
Residential real estate		(442)		655		213
Consumer and Other		(1)		2		1
Gross loans⁽²⁾		1,628		(989)		639
Total earning assets		1,881		(1,711)		170
Interest-bearing liabilities:
NOW and savings deposits		213		493		706
Money market deposits		(592)		916		324
Time deposits		(797)		(2,036)		(2,833)
Total interest-bearing deposits		(1,176)		(627)		(1,803)
Borrowings		519		(49)		470
Total interest-bearing liabilities		(657)		(676)		(1,333)
Net interest income	$	2,538	$	(1,035)	$	1,503

(1)	Includes income and average balances for term federal funds, interest-earning cash accounts, and other miscellaneous earning assets.

(2)	Average loan balances include nonaccrual loans and loans held for sale.

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	Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
	Increase (Decrease) Due to Change in:
(Dollars in thousands)	Volume		Yield/Rate		Total Change
Earning assets:
Federal funds sold and other investments⁽¹⁾	$	633	$	(1,656)	$	(1,023)
Investment securities		535		(424)		111
Total investments		1,168		(2,080)		(912)
Construction and development		549		(3)		546
Commercial real estate		5,052		(4,314)		738
Commercial and industrial		401		(563)		(162)
Residential real estate		(2,995)		3,033		38
Consumer and Other		21		3		24
Gross loans⁽²⁾		3,028		(1,844)		1,184
Total earning assets		4,196		(3,924)		272
Interest-bearing liabilities:
NOW and savings deposits		421		243		664
Money market deposits		(2,173)		(194)		(2,367)
Time deposits		(4,724)		(1,743)		(6,467)
Total interest-bearing deposits		(6,476)		(1,694)		(8,170)
Borrowings		1,571		433		2,004
Total interest-bearing liabilities		(4,905)		(1,261)		(6,166)
Net interest income	$	9,101	$	(2,663)	$	6,438

(1)	Includes income and average balances for term federal funds, interest-earning cash accounts, and other miscellaneous earning assets.

(2)	Average loan balances include nonaccrual loans and loans held for sale.

Provision for Credit Losses

The provision for credit losses reflects our internal calculation and judgment of the appropriate amount of the allowance for credit losses. We maintain the allowance for credit losses at levels we believe are appropriate to cover our estimate of expected credit losses over the life of loans in the portfolio as of the end of the reporting period. The allowance for credit losses is determined through detailed quarterly analyses of our loan portfolio. The allowance for credit losses is based on our loss experience, changes in the economic environment, reasonable and supportable forecasts, as well as an ongoing assessment of credit quality and environmental factors not reflective in historical loss rates. Additional qualitative factors that are considered in determining the amount of the allowance for credit losses are concentrations of credit risk (geographic, large borrower, and industry), changes in underwriting standards, changes in collateral value, experience and depth of lending staff, trends in delinquencies, and the volume and terms of loans.

We recorded a credit to the provision for credit losses of $543,000 and $279,000 during the three and nine months ended September 30, 2025 compared to a provision for credit losses of $582,000 and $314,000 recorded during the three and nine months ended September 30, 2024. The credit to provision expense recorded during the nine months ended September 30, 2025 was primarily due to the decrease in reserves allocated to our individually analyzed loans, as well as the decrease in general reserves allocated to our residential mortgage loan portfolio as a large amount of residential mortgage loans were moved from loans held for investment to loans held for sale during the three months ended September 30, 2025, partially offset by the increase in reserves allocated to our commercial real estate loan portfolio and unfunded loan commitments. Our ACL as a percentage of gross loans for the periods ended September 30, 2025, December 31, 2024 and September 30, 2024 was 0.60%, 0.59% and 0.60%, respectively. Our ACL as a percentage of gross loans is relatively lower than our peers due to our high percentage of residential mortgage loans, which tend to have lower allowance for credit loss ratios compared to other commercial or consumer loans due to their low LTVs.

See the section captioned “Allowance for Credit Losses” elsewhere in this document for further analysis of our provision for credit losses.

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Noninterest Income

Noninterest income for the three months ended September 30, 2025 was $6.2 million, a decrease of $437,000, or 6.6%, compared to $6.6 million for the three months ended September 30, 2024. Noninterest income for the nine months ended September 30, 2025 was $17.4 million, a decrease of $375,000, or 2.1%, compared to $17.7 million for the nine months ended September 30, 2024.

The following table sets forth the major components of our noninterest income for the three and nine months ended September 30, 2025 and 2024:


	Three Months Ended September 30,								Nine Months Ended September 30,
(Dollars in thousands)	2025		2024		$ Change		% Change		2025		2024		$ Change		% Change
Noninterest income:
Service charges on deposit accounts	$	551	$	531	$	20	3.8	%	$	1,556	$	1,510	$	46	3.0	%
Other service charges, commissions and fees		2,376		1,915		461	24.1			5,592		5,100		492	9.6
Gain on sale of residential mortgage loans		166		526		(360)	(68.4)			1,144		1,925		(781)	(40.6)
Mortgage servicing income, net		516		422		94	22.3			1,915		1,758		157	8.9
Gain on sale of SBA loans		558		1,083		(525)	(48.5)			1,859		2,134		(275)	(12.9)
SBA servicing income, net		1,203		1,231		(28)	(2.3)			2,758		3,287		(529)	(16.1)
Other income		808		907		(99)	(10.9)			2,543		2,028		515	25.4
Total noninterest income	$	6,178	$	6,615	$	(437)	(6.6)	%	$	17,367	$	17,742	$	(375)	(2.1)	%

Service charges on deposit accounts increased $20,000, or 3.8%, to $551,000 for the three months ended September 30, 2025 compared to $531,000 for the three months ended September 30, 2024. Service charges on deposit accounts were $1.6 million for the nine months ended September 30, 2025 compared to $1.5 million for the nine months ended September 30, 2024, an increase of $46,000, or 3.0%. These increases were primarily attributable to higher service charges on business checking accounts, analysis fees, overdraft fees and charge back fees.

Other service charges, commissions and fees increased $461,000, or 24.1%, to $2.4 million for the three months ended September 30, 2025 compared to $1.9 million for the three months ended September 30, 2024. Other service charges, commissions and fees increased $492,000, or 9.6%, to $5.6 million for the nine months ended September 30, 2025 compared to $5.1 million for the nine months ended September 30, 2024. These increases were mainly attributable to higher origination, underwriting and processing fees earned from our origination of residential mortgage loans. Mortgage loan originations totaled $168.6 million and $352.8 million during the three and nine months ended September 30, 2025, compared to $122.4 million and $310.4 million during the three and nine months ended September 30, 2024.

Total gain on sale of loans was $724,000 for the three months ended September 30, 2025 compared to $1.6 million for the three months ended September 30, 2024, a decrease of $885,000, or 55.0%. Total gain on sale of loans was $3.0 million for the nine months ended September 30, 2025 compared to $4.1 million for the nine months ended September 30, 2024, a decrease of $1.1 million, or 26.0%.

Gain on sale of residential mortgage loans totaled $166,000 and $1.1 million for the three and nine months ended September 30, 2025 as we sold $18.2 million and $112.6 million in residential mortgage loans during these periods with an average premium of 1.06% and 1.08%, respectively. Gain on sale of residential mortgage loans totaled $526,000 and $1.9 million for the three and nine months ended September 30, 2024 as we sold $54.2 million and $187.5 million in residential mortgage loans during these periods with an average premium of 1.05%.

Gain on sale of SBA loans totaled $558,000 and $1.9 million for the three and nine months ended September 30, 2025 compared to $1.1 million and $2.1 million for the three and nine months ended September 30, 2024. We sold $13.4 million and $50.7 million in SBA loans during the three and nine months ended September 30, 2025 with average premiums of

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6.13% and 5.89%, respectively. We sold $28.9 million and $52.9 million in SBA loans during the three and nine months ended September 30, 2024 with average premiums of 6.67% and 6.69%, respectively.

Mortgage loan servicing income, net of amortization, increased by $94,000, or 22.3%, to $516,000 during the three months ended September 30, 2025 compared to $422,000 for the three months ended September 30, 2024. Mortgage loan servicing income increased by $157,000, or 8.9%, to $1.9 million during the nine months ended September 30, 2025 compared to $1.8 million for the nine months ended September 30, 2024. The changes in mortgage loan servicing income were primarily due to decreases in mortgage servicing amortization and fair value impairment on our mortgage servicing assets, offset by decreases in capitalized mortgage servicing assets and mortgage servicing fees. Included in mortgage loan servicing income for the three and nine months ended September 30, 2025 was $530,000 and $1.7 million in mortgage servicing fees compared to $580,000 and $1.7 million for the three and nine months ended September 30, 2024 and capitalized mortgage servicing assets of $126,000 and $663,000 for the three and nine months ended September 30, 2025 compared to $310,000 and $1.2 million for the three and nine months ended September 30, 2024. These amounts were offset by mortgage loan servicing asset amortization of $159,000 and $414,000 for the three and nine months ended September 30, 2025 compared to $216,000 and $957,000 during the three and nine months ended September 30, 2024. During the three and nine months ended September 30, 2025, we recorded a fair value impairment recovery of $19,000 and $4,000, respectively, on our mortgage servicing assets. During the three and nine months ended September 30, 2024, we recorded a fair value impairment of $252,000 on our mortgage servicing assets. Our total residential mortgage loan servicing portfolio was $538.7 million at September 30, 2025 compared to $556.4 million at September 30, 2024.

SBA servicing income decreased by $28,000, or 2.3%, to $1.2 million for the three months ended September 30, 2025 compared to $1.2 million for the three months ended September 30, 2024. SBA servicing income was $2.8 million for the nine months ended September 30, 2025 compared to $3.3 million for the nine months ended September 30, 2024, a decrease of $529,000, or 16.1%. Our total SBA and USDA loan servicing portfolio was $460.7 million as of September 30, 2025 compared to $487.4 million as of September 30, 2024. Included in SBA servicing income for the three and nine months ended September 30, 2025 was $1.0 million and $3.0 million in SBA servicing fees compared to $1.0 million and $3.2 million for the three and nine months ended September 30, 2024. Our SBA servicing rights are carried at fair value and the inputs used to calculate fair value change from period to period. During the three months ended September 30, 2025, we recorded a $165,000 fair value increase to our SBA servicing rights compared to a $201,000 fair value increase to our SBA servicing rights during the three months ended September 30, 2024. During the nine months ended September 30, 2025, we recorded a $286,000 fair value charge to our SBA servicing rights compared to a $58,000 fair value increase during the nine months ended September 30, 2024.

Other noninterest income decreased by $99,000, or 10.9%, to $808,000 for the three months ended September 30, 2025 compared to $907,000 for the three months ended September 30, 2024. Other noninterest income was $2.5 million for the nine months ended September 30, 2025 compared to $2.0 million for the nine months ended September 30, 2024, an increase of $515,000, or 25.4%. The increase for the nine months ended September 30, 2025 was mainly due to increases in bank owned life insurance income, gains on sale of foreclosed real estate and unrealized gains on our equity securities. The largest component of other noninterest income is the income on bank owned life insurance which totaled $628,000 and $1.9 million, respectively, for the three and nine months ended September 30, 2025 compared to $609,000 and $1.7 million, respectively for the three and nine months ended September 30, 2024. Also included in other noninterest income are fair value gains/losses on our equity securities, which totaled $124,000 (gain) and $305,000 (gain) for the three and nine months ended September 30, 2025, respectively, compared to $292,000 (gain) and $233,000 (gain) for the three and nine months ended September 30, 2024, respectively.

Noninterest Expense

Noninterest expense for the three months ended September 30, 2025 was $14.5 million compared to $13.7 million for the three months ended September 30, 2024, an increase of $1.0 million, or 7.4%. Noninterest expense for the nine months

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ended September 30, 2025 was $42.6 million compared to $39.1 million for the nine months ended September 30, 2024, an increase of $3.5 million, or 9.0%.

The following table sets forth the major components of our noninterest expense for the three and nine months ended September 30, 2025 and 2024:


	Three Months Ended September 30,								Nine Months Ended September 30,
(Dollars in thousands)	2025		2024		$ Change		% Change		2025		2024		$ Change		% Change
Noninterest Expense:
Salaries and employee benefits	$	8,953	$	8,512	$	441	5.2	%	$	26,000	$	23,930	$	2,070	8.7	%
Occupancy and equipment		1,410		1,430		(20)	(1.4)			4,207		4,118		89	2.2
Data processing		394		311		83	26.7			1,068		958		110	11.5
Advertising		161		145		16	11.0			477		474		3	0.6
Other expenses		3,756		3,262		494	15.1			10,834		9,573		1,261	13.2
Total noninterest expense	$	14,674	$	13,660	$	1,014	7.4	%	$	42,586	$	39,053	$	3,533	9.0	%

Salaries and employee benefits expense for the three months ended September 30, 2025 was $9.0 million compared to $8.5 million for the three months ended September 30, 2024, an increase of $441,000, or 5.2%. Salaries and employee benefits expense for the nine months ended September 30, 2025 was $26.0 million compared to $23.9 million for the nine months ended September 30, 2024, an increase of $2.1 million, or 8.7%. These increases were primarily attributable to higher employee salaries and incentives, loan officer commissions, stock-based compensation expense and employee insurance.

Occupancy and equipment expense for the three months ended September 30, 2025 was $1.4 million, a decrease of $20,000, or 1.4%, compared to the three months ended September 30, 2024. Occupancy and equipment expense for the nine months ended September 30, 2025 was $4.2 million compared to $4.1 million for the nine months ended September 30, 2024, an increase of $89,000, or 2.2%. These increases were primarily due to higher property taxes, utilities, maintenance expense, rent expense, and depreciation expense.

Data processing expense for the three months ended September 30, 2025 was $394,000 compared to $311,000 for the three months ended September 30, 2024, an increase of $83,000, or 26.7%. Data processing expense for the nine months ended September 30, 2025 was $1.1 million compared to $958,000 for the nine months ended September 30, 2024, an increase of $110,000, or 11.5%. These increases were primarily due to the continued growth in our loans and deposits, as well as enhancements to our existing systems.

Advertising expenses for the three and nine months ended September 30, 2025 remained relatively flat compared to the same periods in 2024.

Other expenses for the three months ended September 30, 2025 were $3.8 million compared to $3.3 million for the three months ended September 30, 2024, an increase of $494,000, or 15.1%. This increase was primarily due to higher FDIC insurance premiums, professional fees, security expenses, loan related expenses and First IC merger-related expenses, offset by lower foreclosed real estate related expenses. Other operating expenses for the nine months ended September 30, 2025 were $10.8 million compared to $9.6 million for the nine months ended September 30, 2024, an increase of $1.3 million, or 13.2%. This increase was primarily due to higher security expenses, professional fees, loan related expenses and First IC merger-related expenses, partially offset by lower FDIC insurance premiums and foreclosed real estate related expenses. First IC merger related expenses were $301,000 and $897,000 for the three and nine months ended September 30, 2025, respectively. We had no merger-related expenses during the three and nine month periods ended September 30, 2024. Included in other expenses for the nine months ended September 30, 2025 and 2024 were directors’ fees of approximately $551,000 and $477,000, respectively.

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Income Tax Expense

Income tax expense for the three months ended September 30, 2025 and 2024 was $6.6 million and $6.0 million, respectively. The Company’s effective tax rates were 27.6% and 26.3% for the three months ended September 30, 2025 and 2024, respectively.

Income tax expense for the nine months ended September 30, 2025 and 2024 was $19.2 million and $18.2 million, respectively. The Company’s effective tax rates were 27.6% and 27.4% for the nine months ended September 30, 2025 and 2024, respectively.

Financial Condition

Total assets increased $35.4 million, or 1.0%, to $3.63 billion at September 30, 2025 as compared to $3.59 billion at December 31, 2024. The increase in total assets was primarily attributable to increases in loans held for sale of $237.7 million, other assets of $18.0 million, equity securities of $8.3 million, Federal Home Loan Bank stock of $2.4 million, bank owned life insurance of $1.9 million and accrued interest receivable of $1.1 million, partially offset by decreases in loans held for investment of $197.5 million, cash and due from banks of $22.4 million, interest rate derivatives of $12.4 million and securities available for sale of $2.0 million.

Our investment securities portfolio made up 0.94% of our total assets at September 30, 2025 compared to 0.77% at December 31, 2024.

Loans

Gross loans held for investment decreased $197.8 million, or 6.2%, to $2.97 billion as of September 30, 2025 as compared to $3.17 billion as of December 31, 2024. Our loan decrease during the nine months ended September 30, 2025 was comprised of an increase of $10.9 million, or 50.3%, in construction and development loans, an increase of $52.4 million, or 6.9%, in commercial real estate loans, a decrease of $8.8 million, or 11.2%, in commercial and industrial loans, a decrease of $252.4 million, or 11.0%, in residential real estate loans and an increase of $65,000, or 25.0%, in consumer and other loans. We had loans held for sale of $237.7 million as of September 30, 2025 compared to no loans held for sale as of December 31, 2024.

The following table presents the ending balance of each major category in our loan portfolio held for investment at the dates indicated.


	September 30, 2025				December 31, 2024
(Dollars in thousands)	Amount		% of Total		Amount		% of Total
Construction and development	$	32,415	1.0	%	$	21,569	0.7	%
Commercial real estate		814,464	27.4	%		762,033	24.1	%
Commercial and industrial		69,430	2.4	%		78,220	2.5	%
Residential real estate		2,057,281	69.2	%		2,303,234	72.7	%
Consumer and other		325	—	%		260	—	%
Gross loans	$	2,973,915	100.0	%	$	3,165,316	100.0	%
Less unearned income		(7,056)				(7,381)
Total loans held for investment	$	2,966,859			$	3,157,935

SBA and USDA Loan Servicing

As of September 30, 2025 and December 31, 2024, we serviced $460.7 million and $479.7 million, respectively, in SBA and USDA loans for others. We carried a servicing asset of $7.0 million and $7.3 million at September 30, 2025 and December 31, 2024, respectively. See Note 4 of our consolidated financial statements as of September 30, 2025, included elsewhere in this Form 10-Q, for additional information on the activity for SBA and USDA loan servicing rights for the three and nine months ended September 30, 2025 and 2024.

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Residential Mortgage Loan Servicing

As of September 30, 2025, we serviced $538.7 million in residential mortgage loans for others compared to $527.0 million as of December 31, 2024. We carried a servicing asset, net of amortization, of $1.7 million and $1.4 million at September 30, 2025 and December 31, 2024, respectively. Amortization relating to the mortgage loan servicing asset was $159,000 and $414,000 for the three and nine months ended September 30, 2025, respectively, compared to $216,000 and $957,000 for the three and nine months ended September 30, 2024, respectively. During the three and nine months ended September 30, 2025, we recorded fair value impairment recoveries of $19,000 and $4,000, respectively, on our mortgage servicing asset. During the three and nine months ended September 30, 2024, we recorded a fair value impairment of $252,000 on our mortgage servicing asset. See Note 5 of our consolidated financial statements as of September 30, 2025, included elsewhere in this Form 10-Q, for additional information on the activity for mortgage loans servicing rights for the three and nine months ended September 30, 2025 and 2024.

Asset Quality

Nonperforming Loans

Asset quality remained strong during the third quarter of 2025 as our nonperforming loans to total loans remained low at 0.44% as of September 30, 2025. Nonperforming loans were $13.0 million at September 30, 2025 compared to $18.0 million at December 31, 2024. The decrease from December 31, 2024 to September 30, 2025 was attributable to a $5.0 million decrease in nonaccrual loans. We did not recognize any interest income on nonaccrual loans during the three and nine months ended September 30, 2025 or the year ended December 31, 2024.

The following table sets forth the allocation of our nonperforming assets among our different asset categories as of the dates indicated. Nonperforming loans include nonaccrual loans and loans past due 90 days or more and still accruing interest. Nonperforming assets consist of nonperforming loans plus foreclosed real estate. Nonaccrual loans at September 30, 2025 comprised of $1.6 million of commercial real estate loans, $848,000 of commercial and industrial loans and $10.6 million of residential real estate loans. Nonaccrual loans at December 31, 2024 comprised of $3.3 million of commercial real estate loans, $526,000 of commercial and industrial loans, and $14.2 million of residential real estate loans.


(Dollars in thousands)	September 30, 2025			December 31, 2024
Nonaccrual loans	$	13,032		$	18,010
Past due loans 90 days or more and still accruing		—			—
Total nonperforming loans		13,032			18,010
Foreclosed real estate		919			427
Total nonperforming assets	$	13,951		$	18,437
Nonperforming loans to gross loans		0.44	%		0.57	%
Nonperforming assets to total assets		0.38	%		0.51	%
Allowance for credit losses to nonperforming loans		137.66	%		104.08	%

Allowance for Credit Losses

The allowance for credit losses was $17.9 million at September 30, 2025 compared to $18.7 million at December 31, 2024, a decrease of $804,000. The decrease was primarily due to the decrease in reserves allocated to our residential real estate and commercial and industrial loan portfolios and individually analyzed loans, as well as $467,000 of charge-offs recorded on three loans during the nine months ended September 30, 2025, partially offset by the increase in the general reserves allocated to our commercial real estate and construction and development loan portfolios.

We maintain a reserve for credit losses that consists of two components, the allowance for credit losses and the allowance for unfunded commitments. The allowance for credit losses provides for the risk of credit losses expected in our loan portfolio and is based on loss estimates derived from a comprehensive quarterly evaluation. The evaluation reflects analyses of individual borrowers for impairment coupled with analysis of historical loss experience in various loan pools that have been grouped based on similar risk characteristics, supplemented as necessary by credit judgment that

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considers observable trends, conditions, reasonable and supportable forecasts, and other relevant environmental and economic factors. The level of the allowance for credit losses is adjusted by recording an expense or credit through the provision for credit losses. The level of the allowance for unfunded commitments is adjusted by recording an expense or credit in other noninterest expense. The allowance for unfunded commitments was created upon adoption of CECL on January 1, 2023 and had a balance of $233,000 as of September 30, 2025 compared to $216,000 as of September 30, 2024.

Loans that do not share risk characteristics are evaluated on an individual basis. For collateral dependent loans where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the loan to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. When repayment is expected to be from the operation of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the present value of expected cash flows from the operation of the collateral. When repayment is expected to be from the sale of the collateral, expected credit losses are calculated as the amount by which the amortized costs basis of the loan exceeds the fair value of the underlying collateral less estimated cost to sell. The ACL may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the loan.

The impact of utilizing the CECL approach to calculate the allowance for credit losses will be significantly influenced by the composition, characteristics and quality of our loan portfolio, as well as the prevailing economic conditions and forecasts utilized. Material changes to these and other relevant factors may result in greater volatility to the provision for credit losses, and therefore, greater volatility to our reported earnings. See Note 1 and Note 3 of our consolidated financial statements as of September 30, 2025, included elsewhere in this Form 10-Q, and as of December 31, 2024 in the Company’s 2024 Form 10-K, for additional information on the on the allowance for credit losses and the allowance for unfunded commitments.

It is the policy of management to maintain the allowance for credit losses at a level adequate for risks inherent in the loan portfolio. The FDIC and GA DBF also review the allowance for credit losses as an integral part of their examination process. Based on information currently available, management believes that our allowance for credit losses is adequate. However, the loan portfolio can be adversely affected if economic conditions and the real estate market in our market areas were to weaken. The effect of such events, although uncertain at this time, could result in an increase in the level of nonperforming loans and increased credit losses, which could adversely affect our future growth and profitability. No assurance of the ultimate level of credit losses can be given with any certainty.

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Analysis of the Allowance for Credit Losses. The following table provides an analysis of the allowance for credit losses, provision for credit losses and net charge-offs for the periods presented below:


	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2025			2024			2025			2024
Balance, beginning of period	$	18,748		$	17,960		$	18,744		$	18,112
CECL adoption (Day 1) impact		—			—			—			—
Charge-offs:
Construction and development		—			—			—			—
Commercial real estate		110			—			173			—
Commercial and industrial		121			28			294			28
Residential real estate		—			—			—			—
Consumer and other		—			—			—			—
Total charge-offs		231			28			467			28
Recoveries:
Construction and development		—			—			—			—
Commercial real estate		—			—			2			83
Commercial and industrial		4			4			9			8
Residential real estate		—			—			—			—
Consumer and other		—			—			—			—
Total recoveries		4			4			11			91
Net (recoveries)/charge-offs		227			24			456			(63)
Provision for loan losses		(581)			653			(348)			414
Balance, end of period	$	17,940		$	18,589		$	17,940		$	18,589
Total loans at end of period⁽¹⁾	$	2,973,915		$	3,095,499		$	2,973,915		$	3,095,499
Average loans⁽¹⁾		3,124,291			3,113,142			3,135,858			3,122,273
Net charge-offs to average loans		0.03	%		0.00	%		0.02	%		(0.00)	%
Allowance for credit losses to total loans		0.60	%		0.60	%		0.60	%		0.60	%

(1)	Excludes loans held for sale.

Management believes the allowance for credit losses is adequate to provide for losses expected in the loan portfolio as of September 30, 2025.

Deposits

Total deposits decreased $43.7 million to $2.69 billion at September 30, 2025 compared to $2.74 billion at December 31, 2024. The decrease was due to a $55.9 million decrease in money market accounts (includes a $128.4 million decrease in brokered money market accounts, offset by a $72.5 million increase in retail money market accounts), a $26.8 million decrease in time deposits and a $773,000 decrease in savings accounts, offset by a $31.6 million increase in interest-bearing demand deposits (includes a $79.0 million increase in brokered interest-bearing demand deposits, offset by a $47.4 million decrease in retail interest-bearing demand deposits) and a $8.2 million increase in noninterest-bearing deposits. As of September 30, 2025 and December 31, 2024, 20.2% and 19.6% of total deposits, respectively, were comprised of noninterest-bearing demand accounts and 79.8% and 80.4%, respectively, of interest-bearing deposit accounts.

As of September 30, 2025 and December 31, 2024, the Company had estimated uninsured deposits of $712.7 million and $666.4 million, respectively. These estimates were derived using the same methodologies and assumptions used for the Bank’s regulatory reporting. Uninsured deposits were 26.1% of total deposits at September 30, 2025, compared to 24.1% and 23.6% at December 31, 2024 and September 30, 2024, respectively. As of September 30, 2025, we had $1.29 billion of available borrowing capacity at the Federal Home Loan Bank ($657.8 million), Federal Reserve Discount Window ($575.7 million) and various other financial institutions (fed fund lines totaling $52.5 million).

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We had $672.5 million of brokered deposits, or 25.0% of total deposits, at September 30, 2025 compared to $721.8 million, or 26.4% of total deposits, at December 31, 2024. We use brokered deposits, subject to certain limitations and requirements, as a source of funding to support our asset growth and augment the deposits generated from our branch network, which are our principal source of funding. Our level of brokered deposits varies from time to time depending on competitive interest rate conditions and other factors and tends to increase as a percentage of total deposits when the brokered deposits are less costly than issuing internet certificates of deposit or borrowing from the Federal Home Loan Bank.

We use interest rate swap and cap agreements to hedge our deposit accounts that are indexed to the Federal Funds Effective Rate. These swap agreements are designated as cash flow hedges. As of September 30, 2025, the total amount of deposits tied to the Federal Funds Effective Rate was $970.4 million. See Note 8 of our consolidated financial statements as of September 30, 2025, included elsewhere in this Form 10-Q, for additional information.

The following tables summarize our average deposit balances and weighted average rates for the three and nine months ended September 30, 2025 and 2024.


	Three Months Ended September 30,
	2025					2024
	Average		Weighted			Average		Weighted
(Dollars in thousands)	Balance		Average Rate			Balance		Average Rate
Noninterest-bearing demand	$	538,755		—	%	$	542,939	—	%
Interest-bearing demand deposits		84,207		1.94			78,076	1.76
Savings and money market deposits		399,795		3.66			275,966	4.32
Brokered deposits		679,074		2.25			748,234	1.91
Time deposits		986,719		3.96			1,057,956	4.77
Total interest-bearing deposits		2,149,795		3.28			2,160,232	3.61
Total deposits	$	2,688,550		2.63		$	2,703,171	2.88


	Nine Months Ended September 30,
	2025					2024
	Average		Weighted			Average		Weighted
(Dollars in thousands)	Balance		Average Rate			Balance		Average Rate
Noninterest-bearing demand	$	529,075		—	%	$	536,807	—	%
Interest-bearing demand deposits		107,346		2.21			97,913	2.42
Savings and money market deposits		379,849		3.66			312,631	3.93
Brokered deposits		687,085		2.13			749,389	2.47
Time deposits		986,618		4.08			1,034,256	4.73
Total interest-bearing deposits		2,160,898		3.30			2,194,189	3.74
Total deposits	$	2,689,973		2.65		$	2,730,996	3.01

The weighted average rates shown in the tables above are inclusive of the benefit received from the interest rate derivatives that hedge our deposit accounts tied to the Federal Funds Effective Rate. During the three and nine months ended September 30, 2025, we recorded a credit to interest expense of $3.8 million and $12.2 million, respectively, from the benefit received on these interest rate derivatives compared to a credit to interest expense of $6.4 million and $17.0 million recorded during the three and nine months ended September 30, 2024, respectively. These benefits resulted in a 56 basis points and 61 basis points reduction to the total deposits weighted average rate for the three and nine months ended September 30, 2025, respectively, compared to a 95 basis points and 83 basis points reduction for the three and nine months ended September 30, 2024, respectively.

Borrowed Funds

Other than deposits, we also utilized FHLB advances as a supplementary funding source to finance our operations. The advances from the FHLB are collateralized by residential real estate loans. At September 30, 2025 and December 31, 2024, we had available borrowing capacity from the FHLB of $657.8 million and $692.6 million, respectively. At

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September 30, 2025 and December 31, 2024, we had $425.0 million and $375.0 million, respectively, of outstanding advances from the FHLB.

In addition to our advances with the FHLB, we maintain federal funds agreements with our correspondent banks. Our available borrowings under these agreements were $52.5 million and $47.5 million at September 30, 2025 and December 31, 2024, respectively. We did not have any advances outstanding under these agreements as of September 30, 2025 and December 31, 2024. We also have access to the Federal Reserve’s discount window in the amount of $575.7 million and $551.6 million at September 30, 2025 and December 31, 2024, respectively. No discount window borrowings were outstanding as of September 30, 2025 and December 31, 2024. We also maintain relationships in the capital markets with brokers to issue certificates of deposit and money market accounts, if necessary.

Liquidity and Capital Resources

Liquidity

Liquidity refers to the measure of our ability to meet the cash flow requirements of depositors and borrowers, while at the same time meeting our operating, capital and strategic cash flow needs, all at a reasonable cost. We continuously monitor our liquidity position to ensure that assets and liabilities are managed in a manner that will meet all short-term and long-term cash requirements. We manage our liquidity position to meet the daily cash flow needs of customers, while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of our shareholders.

Our liquidity position is supported by management of liquid assets and access to alternative sources of funds. Our liquid assets include cash, interest-bearing deposits in correspondent banks, federal funds sold, and fair value of unpledged investment securities. Other available sources of liquidity include wholesale/brokered deposits, and additional borrowings from correspondent banks, FHLB advances, and the Federal Reserve discount window.

Our short-term and long-term liquidity requirements are primarily met through cash flow from operations, redeployment of prepaying and maturing balances in our loan and investment portfolios, and increases in customer deposits. Other alternative sources of funds will supplement these primary sources to the extent necessary to meet additional liquidity requirements on either a short-term or long-term basis.

As part of our liquidity management strategy, we open federal funds lines with our correspondent banks. As of September 30, 2025 and December 31, 2024, we had $52.5 million and $47.5 million, respectively, of unsecured federal funds lines with no amounts advanced. In addition, the Company had Federal Reserve Discount Window funds available of approximately $575.7 million and $551.6 million at September 30, 2025 and December 31, 2024, respectively. The FRB discount window line is collateralized by a pool of construction and development, commercial real estate and commercial and industrial loans with carrying balances totaling $720.2 million as of September 30, 2025, as well as all of the Company’s municipal and mortgage backed securities. There were no outstanding borrowings on this line as of September 30, 2025 and December 31, 2024.

At September 30, 2025 and December 31, 2024, we had $425.0 million and $375.0 million, respectively, of outstanding advances from the FHLB. Based on the values of loans pledged as collateral, we had $657.8 million and $692.6 million of additional borrowing availability with the FHLB as of September 30, 2025 and December 31, 2024, respectively. We also maintain relationships in the capital markets with brokers to issue certificates of deposit and money market accounts, if necessary.

Capital Requirements

The Company and the Bank are required under federal law to maintain certain minimum capital levels based on ratios of capital to total assets and capital to risk-weighted assets. The required capital ratios are minimums, and the federal banking agencies may determine that a banking organization, based on its size, complexity or risk profile, must maintain a higher level of capital in order to operate in a safe and sound manner. Risks such as concentration of credit risks and the risk arising from non-traditional activities, as well as the institution’s exposure to a decline in the economic value of its

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capital due to changes in interest rates, and an institution’s ability to manage those risks are important factors that are to be taken into account by the federal banking agencies in assessing an institution’s overall capital adequacy.

The table below summarizes the capital requirements applicable to the Company and the Bank in order to be considered “well-capitalized” from a regulatory perspective, as well as the Company’s and the Bank’s capital ratios as of September 30, 2025 and December 31, 2024. The Bank exceeded all regulatory capital requirements and was considered to be “well-capitalized” as of September 30, 2025 and December 31, 2024. As of December 31, 2024, the FDIC categorized the Bank as well-capitalized under the prompt corrective action framework. There have been no conditions or events since December 31, 2024 that management believes would change this classification. While the Company believes that it has sufficient capital to withstand an extended economic recession, its reported and regulatory capital ratios could be adversely impacted in future periods.


					Regulatory
					Capital Ratio
					Requirements		Minimum
					including		Requirement
					fully phased-		for “Well
					in Capital		Capitalized”
					Conservation		Depository
	September 30, 2025		December 31, 2024		Buffer		Institution
Total capital (to risk-weighted assets)
Consolidated	20.74	%	20.05	%	10.50	%	N/A
Bank	20.63	%	19.93	%	10.50		10.00	%
Tier 1 capital (to risk-weighted assets)
Consolidated	19.93	%	19.17	%	8.50	%	N/A
Bank	19.81	%	19.04	%	8.50		8.00	%
CET1 capital (to risk-weighted assets)
Consolidated	19.93	%	19.17	%	7.00	%	N/A
Bank	19.81	%	19.04	%	7.00		6.50	%
Tier 1 capital (to average assets)
Consolidated	12.21	%	11.57	%	4.00	%	N/A
Bank	12.14	%	11.49	%	4.00		5.00	%

Dividends

On October 15, 2025, the Company declared a cash dividend of $0.25 per share, payable on November 7, 2025, to common shareholders of record as of October 29, 2025. Any future determination to pay dividends to holders of our common stock will depend on our results of operations, financial condition, capital requirements, banking regulations, contractual restrictions and any other factors that our board of directors may deem relevant.

Off-Balance Sheet Arrangements

We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in our consolidated balance sheet. The contractual or notional amounts of those instruments reflect the extent of involvement we have in particular classes of financial instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if we deem collateral is necessary upon extension of credit, is based on management’s credit evaluation of the counterparty.

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Standby letters of credit are conditional commitments issued by us to guarantee the performance of a customer to a third party. They are intended to be disbursed, subject to certain condition, upon request of the borrower.

See Note 9 of our consolidated financial statements as of September 30, 2025, included elsewhere in this Form 10-Q, for more information regarding our off-balance sheet arrangements as of September 30, 2025 and December 31, 2024.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Risk

Market risk represents the risk of loss due to changes in market values of assets and liabilities. We incur market risk in the normal course of business through exposures to market interest rates, equity prices, and credit spreads. We have identified interest rate risk as our primary source of market risk.

Interest Rate Risk

Interest rate risk is the risk to earnings and value arising from changes in market interest rates. Interest rate risk arises from timing differences in the repricings and maturities of interest-earning assets and interest-bearing liabilities (repricing risk), changes in the expected maturities of assets and liabilities arising from embedded options, such as borrowers’ ability to prepay home mortgage loans at any time and depositors’ ability to redeem certificates of deposit before maturity (option risk), changes in the shape of the yield curve where interest rates increase or decrease in a nonparallel fashion (yield curve risk), and changes in spread relationships between different yield curves, such as U.S. Treasuries and Federal funds effective (basis risk).

Our board of directors establishes broad policy limits with respect to interest rate risk. As part of this policy, the asset liability committee, or ALCO, establishes specific operating guidelines within the parameters of the board of directors’ policies. In general, the ALCO focuses on ensuring a stable and steadily increasing flow of net interest income through managing the size and mix of the balance sheet. The management of interest rate risk is an active process which encompasses monitoring loan and deposit flows complemented by investment and funding activities. Effective management of interest rate risk begins with understanding the dynamic characteristics of assets and liabilities and determining the appropriate interest rate risk posture given business forecasts, management objectives, market expectations, and policy constraints.

An asset sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate higher net interest income, as rates earned on our interest-earning assets would reprice upward more quickly than rates paid on our interest-bearing liabilities, thus expanding our net interest margin. Conversely, a liability sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate lower net interest income, as rates paid on our interest-bearing liabilities would reprice upward more quickly than rates earned on our interest-earning assets, thus compressing our net interest margin.

Interest rate risk measurement is calculated and reported to the ALCO at least quarterly. The information reported includes period-end results and identifies any policy limits exceeded, along with an assessment of the policy limit breach and the action plan and timeline for resolution, mitigation, or assumption of the risk.

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Evaluation of Interest Rate Risk

We use income simulations, an analysis of core funding utilization, and economic value of equity (EVE) simulations as our primary tools in measuring and managing interest rate risk. These tools are utilized to quantify the potential earnings impact of changing interest rates over a two year simulation horizon (income simulations) as well as identify expected earnings trends given longer term rate cycles (long term simulations, core funding utilizations, and EVE simulation). A standard gap report and funding matrix will also be utilized to provide supporting detailed information on the expected timing of cashflow and repricing opportunities.

There are an infinite number of potential interest rate scenarios, each of which can be accompanied by differing economic/political/regulatory climates; can generate multiple differing behavior patterns by markets, borrowers, depositors, etc.; and can last for varying degrees of time. Therefore, by definition, interest rate risk sensitivity cannot be predicted with certainty. Accordingly, the Bank’s interest rate risk measurement philosophy focuses on maintaining an appropriate balance between theoretical and practical scenarios; especially given the primary objective of the Bank’s overall asset/liability management process is to facilitate meaningful strategy development and implementation.

Therefore, we model a set of interest rate scenarios capturing the financial effects of a range of plausible rate scenarios, the collective impact of which will enable the Bank to clearly understand the nature and extent of its sensitivity to interest rate changes. Doing so necessitates an assessment of rate changes over varying time horizons and of varying/sufficient degrees such that the impact of embedded options within the balance sheet are sufficiently examined.

We use a net interest income simulation model to measure and evaluate potential changes in our net interest income. We run three standard and plausible simulations comparing current or flat rates with a +/- 200 basis point ramp in rates over 12 and 24 months. These rate scenarios are considered appropriate as we believe they represent a more realistic range of rate movements that could occur in the near to medium term. This analysis also provides the foundation for historical tracking of interest rate risk. The impact of interest rate derivatives, such as interest rate swaps and caps, is included in the model.

Potential changes to our net interest income in hypothetical rising and declining rate scenarios calculated as of September 30, 2025 and December 31, 2024 are presented in the following table:


	Net Interest Income Sensitivity
	12 Month Projection				24 Month Projection
(Ramp in basis points)	+200		-200		+200		-200
September 30, 2025	0.20	%	(0.20)	%	(7.70)	%	5.00	%
December 31, 2024	(0.20)	%	(1.30)	%	(7.00)	%	2.50	%

We also model the impact of rate changes on our Economic Value of Equity, or EVE. We base the modeling of EVE based on interest rate shocks as shocks are considered more appropriate for EVE, which accelerates future interest rate risk into current capital via a present value calculation of all future cashflows from the bank’s existing inventory of assets and liabilities. Our simulation model incorporates interest rate shocks of +/- 100, 200, 300, and 400 basis points. The results of the model are presented in the table below:


	Economic Value of Equity Sensitivity
(Shock in basis points)	+400		+300		+200		+100		-100		-200		-300		-400
September 30, 2025	(19.80)	%	(14.30)	%	(9.00)	%	(3.90)	%	3.00	%	4.60	%	3.60	%	(2.50)	%
December 31, 2024	(26.30)	%	(19.40)	%	(12.50)	%	(5.80)	%	4.30	%	7.10	%	6.20	%	4.30	%

Our simulation model incorporates various assumptions, which we believe are reasonable but which may have a significant impact on results such as: (i) the timing of changes in interest rates; (ii) shifts or rotations in the yield curve; (iii) re-pricing characteristics for market-rate-sensitive instruments; (iv) varying loan prepayment speeds for different interest rate scenarios; and (v) the overall growth and mix of assets and liabilities. Because of limitations inherent in any approach used to measure interest rate risk, simulation results are not intended 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 asset-liability management strategies and manage our interest rate risk.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2025. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2025.

Changes in Internal Control over Financial Reporting

During the quarter ended September 30, 2025, there was no change in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 of the Exchange Act that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company is continually monitoring and assessing changes in processes and activities to determine any potential impact on the design and operating effectiveness of internal controls over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are a party to various legal proceedings such as claims and lawsuits arising in the course of our normal business activities. Although the ultimate outcome of all claims and lawsuits outstanding as of September 30, 2025 cannot be ascertained at this time, it is the opinion of management that these matters, when resolved, will not have a material adverse effect on our business, results of operations or financial condition.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in “Part I – Item 1A – Risk Factors” of the Company’s 2024 Form 10-K, which could materially affect its business, financial position, results of operations, cash flows, or future results. Please be aware that these risks may change over time and other risks may prove to be important in the future. New risks may emerge at any time, and we cannot predict such risks or estimate the extent to which they may affect our business, financial condition or results of operations, or the trading price of our securities.

There are no material changes during the period covered by this Report to the risk factors previously disclosed in the Company’s 2024 Form 10-K.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

On October 16, 2024, the Company announced the continuation of its share repurchase program that expired on September 30, 2024 (“2024 Prior Share Repurchase Plan”), and authorized the Company to repurchase up to 925,250 shares of the Company’s outstanding shares of common stock, which is the number of remaining shares authorized for repurchase from the 2024 Prior Share Repurchase Plan. The share repurchase program began on October 17, 2024 and ended on September 30, 2025. The repurchases are made in compliance with all Securities and Exchange Commission rules, including Rule 10b-18, and other legal requirements and may be made in part under Rule 10b5-1 plans, which permits stock repurchases when the Company might otherwise be precluded from doing so. Repurchases can be made from time-to-time in the open market or through privately negotiated transactions depending on market and/or other

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conditions. The repurchase program may be modified, suspended or discontinued at any time and does not obligate the Company to purchase any shares of its common stock.

The following table summarizes the repurchases of our common shares for the three months ended September 30, 2025.


				Total Number of
				Shares Repurchased	Maximum Number of
				as Part of Publicly	Shares That May Yet Be
	Total Number of	Average Price Paid		Announced	Purchased Under
	Shares Repurchased	Per Share		Plans or Programs	the Plans or Programs
July 1, 2025 to July 31, 2025	—	$	—	—	923,976
August 1, 2025 to August 31, 2025	—		—	—	923,976
September 1, 2025 to September 30, 2025	—		—	—	923,976
Total	—	$	—	—	923,976

On September 17, 2025, the Company announced the continuation of its share repurchase program that expired on September 30, 2025 (“2025 Prior Share Repurchase Plan”), and authorized the Company to repurchase up to 923,976 shares of the Company’s outstanding shares of common stock, which is the number of remaining shares authorized for repurchase from the 2025 Prior Share Repurchase Plan. The continuation of the share repurchase program began on October 1, 2025 and will end on September 30, 2026. The repurchases will be made in compliance with all Securities and Exchange Commission rules, including Rule 10b-18, and other legal requirements and may be made in part under Rule 10b5-1 plans, which permits stock repurchases when the Company might otherwise be precluded from doing so. Repurchases can be made from time-to-time in the open market or through privately negotiated transactions depending on market and/or other conditions. The repurchase program may be modified, suspended or discontinued at any time and does not obligate the Company to purchase any shares of its common stock.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

During the third quarter of 2025, none of our other executive officers or directors adopted Rule 10b5-1 trading plans and none of our directors or executive officers terminated a Rule 10b5-1 trading plan or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).

Item 6. Exhibits


Exhibit No.		Description of Exhibit
2.1		Agreement and Plan of Reorganization, by and among MetroCity Bankshares, Inc., Metro City Bank, First IC Corporation, and First IC Bank, dated as of March 16, 2025 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed March 17, 2025)
3.1		Restated Articles of Incorporation of MetroCity Bankshares, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 filed September 4, 2019 (File No. 333-233625)
3.2		Amended and Restated Bylaws of MetroCity Bankshares, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 filed September 4, 2019 (File No. 333-233625)
31.1		Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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31.2		Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline 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.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File - the cover page has been formatted in Inline XBRL and contained within the Inline XBRL Instance Document in Exhibit 101

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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.

	METROCITY BANKSHARES, INC.

Date: November 7, 2025	By:	/s/ Nack Y. Paek
		Nack Y. Paek
		Chief Executive Officer

Date: November 7, 2025	By:	/s/ Lucas Stewart
		Lucas Stewart
		Chief Financial Officer

Source: View Original Filing on SEC EDGAR

FAQ

How did MCBS perform in Q3 2025?

Net income was $17.3 million versus $16.7 million a year ago; diluted EPS was $0.67.

What were MetroCity Bankshares' nine-month 2025 results?

Nine‑month net income was $50.4 million, with net interest income of $94.5 million.

What is MCBS’s balance sheet size and equity?

Total assets were $3.63 billion and shareholders’ equity was $445.9 million as of September 30, 2025.

How did loans and deposits change?

Loans held for investment were $2.95 billion and deposits were $2.69 billion. Loans held for sale were $231.3 million.

What is the allowance for credit losses (ACL)?

The ACL was $17.9 million as of September 30, 2025.

What dividends did MCBS declare?

A quarterly dividend of $0.25 per share was declared; year‑to‑date dividends totaled $0.71 per share.

How many MCBS shares are outstanding?

There were 25,480,661 shares outstanding as of November 3, 2025.

[10-Q] MetroCity Bankshares, Inc. Quarterly Earnings Report

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How did MCBS perform in Q3 2025?

What were MetroCity Bankshares' nine-month 2025 results?

What is MCBS’s balance sheet size and equity?

How did loans and deposits change?

What is the allowance for credit losses (ACL)?

What dividends did MCBS declare?

How many MCBS shares are outstanding?

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[10-Q] MetroCity Bankshares, Inc. Quarterly Earnings Report

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Bank equity analyst neutral

FAQ

How did MCBS perform in Q3 2025?

What were MetroCity Bankshares' nine-month 2025 results?

What is MCBS’s balance sheet size and equity?

How did loans and deposits change?

What is the allowance for credit losses (ACL)?

What dividends did MCBS declare?

How many MCBS shares are outstanding?

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MCBS Stock Data