What changed in this filing

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Item 1. Financial Statements

2024-11-06 compared with 2024-08-07 · 197 added, 260 removed, 907 unchanged (34% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

($ in thousands - unaudited) June 30,

($ in thousands - unaudited) September 30,

2024 December 31,

29 unchanged sentences

Issued & outstanding:

none as of June 30, 2024 and December 31, 2023

none and none , respectively

Common stock, no par value per share.

1 unchanged sentence

Issued & outstanding:

41,187,943 shares and 41,109,987 shares as of June 30, 2024 and December 31, 2023, respectively

41,340,099 shares and 41,109,987 shares, respectively

970,450 963,990

8 unchanged sentences

Consolidated Statements of Income

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

($ in thousands, except share data - unaudited) 2024 2023 2024 2023

21 unchanged sentences

Securities losses, net — — ( 1,161 ) —

Other income 854 739 1,570 1,448

Other income, net ( 670 ) 1,329 900 2,777

Total noninterest income 13,579 15,177 41,076 42,948

Noninterest Expense

Salaries 27,809 28,676 55,451 57,997

Employee benefits 6,703 6,165 12,972 12,558

Salaries incentives and commissions expense 29,955 29,394 85,406 87,391

Employee benefit expense 6,495 6,539 19,467 19,097

Total personnel expense 36,450 35,933 104,873 106,488

1 unchanged sentence

Merger and acquisition expenses — — — 13,506

Intangibles amortization 1,669 2,049 3,428 4,194

Intangibles amortization expense 1,613 1,953 5,041 6,147

Other operating expenses 16,931 19,335 52,120 56,809

11 unchanged sentences

First Bancorp and Subsidiaries

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended

June 30, Six Months Ended June 30,

September 30, Nine Months Ended September 30,

($ in thousands - unaudited) 2024 2023 2024 2023

10 unchanged sentences

Other comprehensive income (loss) 60,385 ( 62,610 ) 53,224 ( 58,777 )

Comprehensive income $ 35,494 $ 5,295 $ 46,823 $ 48,397

Comprehensive income (loss) $ 79,065 $ ( 32,717 ) $ 125,888 $ 15,680

See accompanying notes to unaudited consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Shareholders’ Equity

($ in thousands, except share data - unaudited) Common Stock Retained

($ and share data in thousands - unaudited) Common Stock Retained

Earnings Stock in

4 unchanged sentences

Shares Amount

Three Months Ended June 30, 2023

Balances, April 1, 2023 40,987 $ 959,422 $ 654,573 $ ( 1,608 ) $ 1,608 $ ( 314,034 ) $ 1,299,961

Three Months Ended September 30, 2023

Balances, July 1, 2023 41,083 $ 960,851 $ 674,933 $ ( 1,365 ) $ 1,365 $ ( 338,142 ) $ 1,297,642

Net income 29,893 29,893

2 unchanged sentences

Change in Rabbi Trust Obligation ( 10 ) 10 —

Stock option exercised 23 488 488

Stock withheld for payment of taxes ( 6 ) ( 186 ) ( 186 )

Stock options exercised 2 66 66

Stock-based compensation — 1,727 1,727

Other comprehensive loss ( 62,610 ) ( 62,610 )

Balances, June 30, 2023 41,083 $ 960,851 $ 674,933 $ ( 1,365 ) $ 1,365 $ ( 338,142 ) $ 1,297,642

Three Months Ended June 30, 2024

Balances, April 1, 2024 41,156 $ 965,429 $ 732,643 $ ( 1,396 ) $ 1,396 $ ( 321,973 ) $ 1,376,099

Balances, September 30, 2023 41,085 $ 962,644 $ 695,791 $ ( 1,375 ) $ 1,375 $ ( 400,752 ) $ 1,257,683

Three Months Ended September 30, 2024

Balances, July 1, 2024 41,188 $ 967,239 $ 752,294 $ ( 1,139 ) $ 1,139 $ ( 315,191 ) $ 1,404,342

Net income 18,680 18,680

3 unchanged sentences

Stock options exercised 111 2,324 2,324

Stock withheld for payment of taxes ( 11 ) ( 478 ) ( 478 )

Stock-based compensation 52 1,365 1,365

Other comprehensive income 60,385 60,385

Balances, June 30, 2024 41,188 $ 967,239 $ 752,294 $ ( 1,139 ) $ 1,139 $ ( 315,191 ) $ 1,404,342

Balances, September 30, 2024 41,340 $ 970,450 $ 761,881 $ ( 1,148 ) $ 1,148 $ ( 254,806 ) $ 1,477,525

See accompanying notes to unaudited consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Shareholders’ Equity

($ in thousands, except share data - unaudited) Common Stock Retained

($ and share data in thousands - unaudited) Common Stock Retained

Earnings Stock in

4 unchanged sentences

Shares Amount

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Balances, January 1, 2023 35,704 $ 725,153 $ 648,418 $ ( 1,585 ) $ 1,585 $ ( 341,975 ) $ 1,031,596

4 unchanged sentences

Equity issued related to acquisition 5,033 229,489 229,489

Stock option exercised 193 3,703 3,703

Stock options exercised 195 3,769 3,769

Stock withheld for payment of taxes ( 6 ) ( 186 ) ( 186 )

Stock-based compensation 159 4,419 4,419

Other comprehensive income 3,833 3,833

Balances, June 31, 2023 41,083 $ 960,851 $ 674,933 $ ( 1,365 ) $ 1,365 $ ( 338,142 ) $ 1,297,642

Six Months Ended June 30, 2024

Other comprehensive loss ( 58,777 ) ( 58,777 )

Balances, September 30, 2023 41,085 $ 962,644 $ 695,791 $ ( 1,375 ) $ 1,375 $ ( 400,752 ) $ 1,257,683

Nine Months Ended September 30, 2024

Balances, January 1, 2024 41,110 $ 963,990 $ 716,420 $ ( 1,385 ) $ 1,385 $ ( 308,030 ) $ 1,372,380

3 unchanged sentences

Change in Rabbi Trust Obligation 237 ( 237 ) —

Stock option exercised 52 1,105 1,105

Stock options exercised 163 3,429 3,429

Stock withheld for payment of taxes ( 15 ) ( 604 ) ( 604 )

Stock-based compensation 82 3,635 3,635

Other comprehensive loss ( 7,161 ) ( 7,161 )

Balances, June 30, 2024 41,188 $ 967,239 $ 752,294 $ ( 1,139 ) $ 1,139 $ ( 315,191 ) $ 1,404,342

Other comprehensive income 53,224 53,224

Balances, September 30, 2024 41,340 $ 970,450 $ 761,881 $ ( 1,148 ) $ 1,148 $ ( 254,806 ) $ 1,477,525

See accompanying notes to unaudited consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

($ in thousands-unaudited) 2024 2023

4 unchanged sentences

Net security premium amortization 6,700 7,082

Deferred income taxes ( 1,358 ) ( 2,324 )

Deferred income taxes, net ( 5,814 ) ( 2,839 )

Loan discount accretion ( 8,060 ) ( 10,354 )

2 unchanged sentences

Securities losses, net 1,161 —

Other gains, net ( 555 ) ( 561 )

Other (gains) losses, net ( 504 ) ( 1,402 )

Bank-owned life insurance income ( 3,548 ) ( 3,216 )

7 unchanged sentences

Gains on sale of loans ( 4,955 ) ( 3,340 )

Origination of presold mortgage loans in process of settlement and SBA loans held for sale ( 76,938 ) ( 64,117 )

Proceeds from sales of presold mortgage loans in process of settlement and SBA loans 82,784 57,369

Increase in accrued interest receivable 1,746 2,001

Decrease in other assets 952 4,048

Increase in accrued interest payable 29 1,725

Decrease in other liabilities 453 1,553

Net cash provided by operating activities 67,630 65,154

Origination of presold mortgage loans and SBA loans held for sale ( 120,281 ) ( 107,878 )

Proceeds from sales of presold mortgage loans and SBA loans 131,430 92,162

Decrease (increase) in accrued interest receivable 4,461 1,033

(Increase) decrease in other assets ( 2,527 ) 10,713

(Decrease) increase in accrued interest payable ( 133 ) 2,391

Increase (decrease) in other liabilities 3,762 793

Net cash provided by (used in) operating activities 106,052 93,229

Cash Flows From Investing Activities

22 unchanged sentences

Net cash (used) provided by financing activities ( 90,716 ) 12,542

Increase in cash and cash equivalents 370,557 90,357

Increase (decrease) in cash and cash equivalents 506,586 3,271

Cash and cash equivalents, beginning of period 237,855 270,318

2 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

($ in thousands-unaudited) 2024 2023

2 unchanged sentences

Cash paid during the period for income taxes 26,084 21,856

Unrealized (loss) gain on securities available for sale, net of taxes ( 7,200 ) 3,765

Unrealized gain (loss) on securities available for sale, net of taxes 53,166 ( 58,878 )

Foreclosed loans transferred to other real estate 1,066 1,000

1 unchanged sentence

Cancellation of operating lease right-of-use assets and operating lease liabilities ( 1,497 ) —

Initial recognition of operating lease right-of-use assets and operating lease liabilities — 260

Revision of operating lease right-of-use assets and operating lease liabilities — ( 562 )

Acquisition of GrandSouth Bancorporation — See Note 2

11 unchanged sentences

Accordingly, they do not include all information and notes necessary for complete financial statements in accordance with GAAP.

In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the consolidated financial position of the Company as of June 30, 2024, the consolidated results of income, comprehensive income and shareholders' equity for the three and six months ended June 30, 2024 and 2023, and the consolidated cash flows for the six months ended June 30, 2024 and 2023.

In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the consolidated financial position of the Company as of September 30, 2024, the consolidated results of income, comprehensive income and shareholders' equity for the three and nine months ended September 30, 2024 and 2023, and the consolidated cash flows for the nine months ended September 30, 2024 and 2023.

Any such adjustments were of a normal, recurring nature.

3 unchanged sentences

Such reclassifications had no effect on previously reported shareholders’ equity or net income.

Refer to Note 1 of the 2023 Annual Report filed with the Securities and Exchange Commission (“SEC”) for a discussion of accounting policies and other relevant information with respect to the financial statements.

The Company has evaluated all subsequent events through the date the consolidated financial statements were issued.

15 unchanged sentences

Other accounting standards that have been issued or proposed by the Financial Accounting Standards Board ("FASB") or other standards-setting bodies are not expected to have a material impact on the Company’s consolidated financial statements.

On January 1, 2023, the Company completed its acquisition of GrandSouth Bancorporation ("GrandSouth"), in an all-stock transaction pursuant to the Agreement and Plan of Merger and Reorganization (the "Merger Agreement"), dated June 21, 2022, between the Company and GrandSouth.

At the closing of the transaction, GrandSouth merged into the Company.

Following the merger of the Company and GrandSouth, GrandSouth Bank, a wholly-owned subsidiary of GrandSouth, merged into the Bank with the Bank being the surviving entity.

On January 1, 2023, the Company completed its acquisition of GrandSouth Bancorporation ("GrandSouth"), in an all-stock transaction.

The results of GrandSouth are included beginning on the January 1, 2023 acquisition date.

Pursuant to the Merger Agreement, each share of common and preferred stock of GrandSouth issued and outstanding immediately prior to the effective time of the acquisition was converted into 0.91 shares of the Company's common stock.

As a result, the Company issued 5,032,834 shares of the Company common stock effective January 1, 2023.

In addition, GrandSouth common stock options outstanding at the merger effective time were converted to options to acquire 0.91 shares of the Company's common stock resulting in 542,345 options with an average exercise price of approximately $ 20.14 .

The total consideration transferred at the close of the transaction was $ 229.5 million which was determined based on the number of shares issued and the closing market price of the Company's stock immediately prior to the merger effective time of $ 42.84 .

In addition to the stock issued, the fair value of the converted stock options calculated in accordance with FASB Accounting Standards Codification ("ASC") 805-30-55 was included in the total consideration of the transaction.

As a result of the merger, eight branches in South Carolina were added to the Company's branch network.

The acquisition accomplished the Company's strategic initiative to expand its presence in South Carolina, specifically in the high-growth markets of the state including Greenville, Charleston and Columbia.

Significant synergies were anticipated to be gained from the acquisition, with asset growth and revenue enhancement opportunities from the new markets and expanded customer base.

Accordingly, the Company recognized goodwill in the transaction related primarily to the reasons noted, as well as the positive earnings of GrandSouth.

This transaction was accounted for using the acquisition method of accounting for business combinations, and accordingly, the assets acquired, intangible assets identified, and liabilities assumed of GrandSouth were recorded based on estimates of fair values as of January 1, 2023.

The determination of fair value requires management to make estimates about discount rates, future expected cash flows, market conditions, and other future events that are highly subjective in nature and subject to change.

Estimated fair values were based on management’s best estimates, using the information available at the date of acquisition, including the use of third-party valuation specialists.

Management has finalized the valuations of all acquired assets and liabilities assumed in the GrandSouth acquisition.

The following table summarizes the estimated fair value of acquired assets, identified intangible assets, and liabilities assumed as of January 1, 2023.

Following the table is a discussion of valuation approaches utilized in estimating the fair values in accordance with ASC 805-10, " Business Combinations ." The $ 114.5 million in goodwill that resulted from this transaction is non-deductible for tax purposes.

($ in thousands) Fair Value Estimate

Assets acquired:

Cash and cash equivalents $ 22,610

Securities available for sale 112,363

Loans, gross 996,833

Allowance for loan losses ( 5,610 )

Premises and equipment 20,268

Core deposit intangible 28,840

Operating right-of-use lease assets 732

Other assets 27,163

Total 1,203,199

Liabilities assumed:

Deposits 1,045,308

Borrowings 38,800

Other liabilities 4,089

Total 1,088,197

Net identifiable assets acquired 115,002

Total consideration 229,489

Goodwill recorded related to acquisition of GrandSouth $ 114,487

The following is a description of the methods used to determine the fair values of significant assets acquired and liabilities assumed included in the table above.

Cash and cash equivalents:

This consists primarily of cash and due from banks, and interest-bearing deposits with banks.

The carrying amount of these assets was a reasonable estimate of fair value based on the short-term nature of these assets.

Securities available for sale:

Fair value of securities was measured based on quoted market prices, where available.

If a quoted market price was not available, fair value was estimated using quoted market prices for similar securities and adjusted for differences between the quoted instrument and the instrument being valued.

Substantially all of the securities acquired from GrandSouth were liquidated at their recorded fair value upon close of the transaction or shortly thereafter.

There was no gain or loss recorded on the sale of acquired securities.

Fair value of loans acquired was based on a discounted cash flow methodology that considered factors including loan type and related collateral, classification status, remaining term of the loan, fixed or variable interest rate, amortization status, and current discount rates.

Expected cash flows were derived using inputs consistent with management's assessment of credit risk for allowance measurement, including estimated future credit losses and estimated prepayments.

A total fair value adjustment of $ 29.5 million was recorded.

Purchased loans with financial deterioration ("PCD loans") were determined based primarily on internal grades, delinquency status, and other evidence of credit deterioration.

The Company calculated the initial allowance of $ 5.6 million on PCD loans in accordance with its current expected credit loss model ("CECL") and reclassified that amount from the fair value adjustment to establish the initial allowance for credit losses ("ACL") on PCD loans.

The following table presents additional information related to the acquired loan portfolio at the acquisition date:

($ in thousands) January 1, 2023

Par value $ 152,487

Allowance for credit losses ( 5,610 )

Non-credit discount ( 1,370 )

Purchase price 145,507

Non-PCD Loans:

Fair Value 845,716

Gross contractual amounts receivable 865,132

Estimate of contractual cash flows not expected to be collected 22,542

Land and buildings held for use were valued at appraised values, which reflected considerations of recent disposition values for similar property types with adjustments for characteristics of individual properties.

Intangible assets:

Core deposit intangible ("CDI") asset represents the value of the relationships with deposit customers.

The fair value for the core deposit intangible asset was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, cost of deposit base, net maintenance cost attributable to customer deposits and an estimate of the cost associated with alternative funding sources.

The discount rates used for CDI assets were based on market rates.

The CDI is being amortized over 10 years utilizing the sum of the months digits accelerated method, which results in a weighted-average amortization period of approximately 41 months.

Lease Assets and Lease Liabilities:

Lease assets and lease liabilities were measured using a methodology that involved estimating the future lease payments over the remaining lease term with discounting using a discount rate.

The lease term was determined for individual leases based on management's assessment of the probability of exercising existing renewal options.

The fair values used for the demand and savings deposits by definition equal the amount payable on demand at the acquisition date.

Fair values for time deposits were estimated using a discounted cash flow analysis applying interest rates currently offered to the contractual interest rates on such time deposits.

The fair values of long-term debt instruments were estimated based on quoted market prices for instrument if available, or for similar instruments if not available.

The book values and approximate fair values of investment securities at June 30, 2024 and December 31, 2023 are summarized as follows:

($ in thousands) June 30, 2024 December 31, 2023

The operations of GrandSouth have been integrated into existing First Bank operations and therefore separate results of operations or balance sheet information is not presented.

The book values and approximate fair values of investment securities at September 30, 2024 and December 31, 2023 are summarized as follows:

($ in thousands) September 30, 2024 December 31, 2023

Value Unrealized Amortized

11 unchanged sentences

Total held to maturity $ 521,801 $ 448,300 $ 29 $ ( 73,530 ) $ 533,678 $ 449,623 $ 39 $ ( 84,094 )

All of the Company’s mortgage-backed securities were issued by government-sponsored enterprises ("GSEs"), except for private mortgage-backed securities with a fair value of $ 0.7 million as of June 30, 2024 and December 31, 2023.

The following table presents information regarding all securities with unrealized losses at June 30, 2024:

The following table presents information regarding all securities with unrealized losses at September 30, 2024:

Securities in an Unrealized

Loss Position for

Less than 12 Months Securities in an Unrealized

Less than Twelve Months Securities in an Unrealized

Loss Position for

More than 12 Months Total

More than Twelve Months Total

($ in thousands) Fair Value Unrealized

1 unchanged sentence

Losses Fair Value Unrealized

Treasuries $ — $ — $ — $ — $ — $ —

Government-sponsored enterprise securities $ — $ — $ 62,872 $ 9,096 $ 62,872 $ 9,096

6 unchanged sentences

Loss Position for

Less than 12 Months Securities in an Unrealized

Less than Twelve Months Securities in an Unrealized

Loss Position for

More than 12 Months Total

More than Twelve Months Total

($ in thousands) Fair Value Unrealized

7 unchanged sentences

Total unrealized loss position $ 1,117 $ 5 $ 2,628,150 $ 484,839 $ 2,629,267 $ 484,844

As of June 30, 2024, the Company's securities portfolio included 621 securities of which 600 securities were in an unrealized loss position.

As of September 30, 2024, the Company's securities portfolio included 620 securities of which 586 securities were in an unrealized loss position.

As of December 31, 2023, the Company's securities portfolio included 657 securities of which 632 securities were in an unrealized loss position.

In the above tables, all of the securities that were in an unrealized loss position at June 30, 2024 and December 31, 2023 are bonds that the Company has determined are in a loss position due primarily to interest rate factors and not credit quality concerns.

In the above tables, all of the securities that were in an unrealized loss position at September 30, 2024 and December 31, 2023 are bonds that the Company has determined are in a loss position due primarily to interest rate factors and not credit quality concerns.

In arriving at this conclusion, the Company reviewed third-party credit ratings and considered the severity of the impairment.

2 unchanged sentences

Nearly all of our mortgage-backed securities were issued by Federal Home Loan Mortgage Corporation ("FHLMC"), Federal National Mortgage Association ("FNMA"), Government National Mortgage Association ("GNMA"), or the Small Business Administration ("SBA"), each of which is a government agency or GSE and guarantees the repayment of the securities.

At June 30, 2024 and December 31, 2023, the Company determined that expected credit losses associated with held to maturity securities and available for sale debt securities were insignificant.

The book values and approximate fair values of investment securities at June 30, 2024, by contractual maturity, are summarized in the table below.

At September 30, 2024 and December 31, 2023, the Company determined that expected credit losses associated with held to maturity securities and available for sale debt securities were insignificant.

The book values and fair values of investment securities at September 30, 2024, by contractual maturity, are summarized in the table below.

Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

2 unchanged sentences

Value Amortized

Due within one year $ 2,501 $ 2,485 $ — $ —

Due after one year but within five years $ 39,996 $ 35,320 $ 5,394 $ 5,289

3 unchanged sentences

Total securities $ 2,238,996 $ 1,907,458 $ 521,801 $ 448,300

At June 30, 2024 and December 31, 2023, investment securities with carrying values of $ 874.1 million and $ 971.3 million, respectively, were pledged as collateral for public deposits.

In addition, at June 30, 2024 and December 31, 2023, investment securities with carrying values of $ 627.0 million and $ 679.0 million, respectively, were pledged as collateral for Federal Reserve Bank ("Federal Reserve") borrowings.

At June 30, 2024 and December 31, 2023, there were no holdings of securities of any one issuer, other than the U.S.

At September 30, 2024 and December 31, 2023, investment securities with carrying values of $ 924.8 million and $ 971.3 million, respectively, were pledged as collateral for public deposits.

In addition, at September 30, 2024 and December 31, 2023, investment securities with carrying values of $ 582.6 million and $ 679.0 million, respectively, were pledged as collateral for Federal Reserve Bank ("Federal Reserve") borrowings.

At September 30, 2024 and December 31, 2023, there were no holdings of securities of any one issuer, other than the U.S.

Government and its agencies or GSEs, in an amount greater than 10% of shareholders' equity.

There were no sales of investment securities during the three months ended September 30, 2024.

During the second quarter of 2024, the Company sold all of its holdings of Class B shares of Visa, Inc.

1 unchanged sentence

As the Class B stock did not initially have a readily determinable fair value, it was carried at $0 prior to the sale.

During the three and six months ended June 30, 2024, the Company received proceeds from sales of securities of $ 138.2 million and recorded $ 4.7 million in gross losses from the sales.

During the second quarter of 2024, the Company received proceeds from sales of securities of $ 138.2 million and recorded $ 4.7 million in gross losses from the sales.

This loss was partially offset by the $ 4.5 million gain on the sale of the Visa stock discussed above.

During the first quarter of 2024, the Company received proceeds from the call of a security of $ 5.2 million and recorded a $ 975 thousand loss related to the unamortized premium balance at the time of the call.

Included in "Securities losses, net" in the consolidated statements of income, during the first quarter of 2024, the Company received proceeds from the call of a security of $ 5.2 million and recorded a $ 975 thousand loss related to the unamortized premium balance at the time of the call.

During the first quarter of 2023, the Company sold substantially all of the securities acquired from GrandSouth at their initially recorded fair values.

Accordingly, there was no gain or loss recorded on the sale of acquired securities.

Included in “Other assets” in the consolidated balance sheets are investments in Federal Home Loan Bank (“FHLB”) and Federal Reserve stock totaling $ 41.4 million and $ 54.5 million at June 30, 2024 and December 31, 2023, respectively.

Included in “Other assets” in the consolidated balance sheets are investments in Federal Home Loan Bank (“FHLB”) and Federal Reserve stock totaling $ 41.2 million and $ 54.5 million at September 30, 2024 and December 31, 2023, respectively.

These investments do not have readily determinable fair values.

The FHLB stock had a cost of $ 8.5 million and $ 21.7 million at June 30, 2024 and December 31, 2023, respectively, and serves as part of the collateral for the Company’s line of credit with the FHLB and is also a requirement for membership in the FHLB system.

The Federal Reserve stock had a cost and fair value of $ 32.9 million and $ 32.8 million at June 30, 2024 and December 31, 2023, respectively, and is a requirement for Federal Reserve member bank qualification.

The FHLB stock had a cost of $ 8.5 million and $ 21.7 million at September 30, 2024 and December 31, 2023, respectively, and serves as part of the collateral for the Company’s line of credit with the FHLB and is also a requirement for membership in the FHLB system.

The Federal Reserve stock had a cost and fair value of $ 32.7 million and $ 32.8 million at September 30, 2024 and December 31, 2023, respectively, and is a requirement for Federal Reserve member bank qualification.

Periodically, both the FHLB and Federal Reserve recalculate the Company’s required level of holdings, and the Company either buys more stock or redeems a portion of the stock at cost.

2 unchanged sentences

The following is a summary of the major categories of total loans outstanding:

($ in thousands) June 30, 2024 December 31, 2023

($ in thousands) September 30, 2024 December 31, 2023

Amount Percentage Amount Percentage

11 unchanged sentences

Also included in the table above are various SBA loans, generally originated under the SBA 7A program, with additional information on these loans presented in the table below.

($ in thousands) June 30, 2024 December 31, 2023

($ in thousands) September 30, 2024 December 31, 2023

Guaranteed portions of SBA loans included in table above $ 36,131 $ 35,462

2 unchanged sentences

Sold portions of SBA loans with servicing retained - not included in tables above $ 341,517 $ 349,275

At June 30, 2024 and December 31, 2023, there were remaining unaccreted discounts on the retained portion of sold SBA loans amounting to $ 3.2 million and $ 3.5 milion, respectively.

At June 30, 2024 and December 31, 2023, l oans in the amount of $ 6.6 billion and $ 6.5 billion, respectively, were pledged as collateral for certain borrowings.

At June 30, 2024 and December 31, 2023, total loans included loans to executive officers and directors of the Company, and their associates, totaling approximately $ 63.9 million and $ 63.7 million, respectively.

While there was one new loan, advances on existing loans totaled approximately $ 1.3 million for the six months ended June 30, 2024, and repayments amounted to $ 1.0 million for that period.

Available credit on related party loans totaled $ 1.3 million and $ 2.7 million at June 30, 2024 and December 31, 2023, respectively.

As of June 30, 2024 and December 31, 2023, unamortized discounts on all acquired loans totaled $ 19.3 million and $ 24.0 million, respectively.

At September 30, 2024 and December 31, 2023, there were remaining unaccreted discounts on the retained portion of sold SBA loans amounting to $ 3.3 million and $ 3.5 million, respectively.

At September 30, 2024 and December 31, 2023, l oans in the amount of $ 6.6 billion and $ 6.5 billion, respectively, were pledged as collateral for certain borrowings.

At September 30, 2024 and December 31, 2023, total loans included loans to executive officers and directors of the Company, and their associates, totaling approximately $ 63.3 million and $ 63.7 million, respectively.

While there was one new loan, advances on existing loans totaled approximately $ 1.3 million for the nine months ended September 30, 2024, and repayments amounted to $ 1.6 million for that period.

Available credit on related party loans totaled $ 1.0 million and $ 2.7 million at September 30, 2024 and December 31, 2023, respectively.

As of September 30, 2024 and December 31, 2023, unamortized discounts on all acquired loans totaled $ 17.3 million and $ 24.0 million, respectively.

Loan discounts are generally amortized as yield adjustments over the respective lives of the loans, so long as the loans perform.

There was no impairment of acquired loans during the three and nine months ended September 30, 2024 that would require acceleration of amortization or charge off of unamortized discount.

Nonperforming assets ("NPAs") are defined as nonaccrual loans, modifications to borrowers in financial distress, loans past due 90 or more days and still accruing interest, and foreclosed real estate.

The following table summarizes the NPAs for each date presented.

($ in thousands) June 30,

($ in thousands) September 30,

2024 December 31,

1 unchanged sentence

Modifications to borrowers in financial distress 10,262 11,719

Accruing loans > 90 days past due — —

Total nonperforming loans 44,387 43,927

1 unchanged sentence

Total nonperforming assets $ 45,906 $ 44,789

At June 30, 2024 and December 31, 2023, the Company had $ 1.8 million and $ 1.0 million, respectively, in residential mortgage loans in the process of foreclosure.

At June 30, 2024 and December 31, 2023, there was one loan with a commitment to lend an immaterial amount of additional funds to a borrower whose loan was nonperforming.

The following table is a summary of the Company’s nonaccrual loans by major categories as of June 30, 2024:

At September 30, 2024 and December 31, 2023, the Company had $ 0.8 million and $ 1.0 million, respectively, in residential mortgage loans in the process of foreclosure.

At September 30, 2024 and December 31, 2023, there were two and one loans, respectively, with commitments to lend an immaterial amount of additional funds to a borrower whose loan was nonperforming.

The following table is a summary of the Company’s nonaccrual loans by major categories as of September 30, 2024:

($ in thousands) Nonaccrual Loans with No Allowance Nonaccrual Loans with an Allowance Total Nonaccrual Loans

20 unchanged sentences

The following table represents the accrued interest receivables written off by reversing interest income during each period indicated:

($ in thousands) Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

($ in thousands) Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023

Commercial and industrial $ 360 $ 182

6 unchanged sentences

Total $ 725 $ 367

The following table presents an analysis of the payment status of the Company’s loans as of June 30, 2024:

The following table presents an analysis of the payment status of the Company’s loans as of September 30, 2024:

($ in thousands) Accruing

32 unchanged sentences

These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the Allowance for Credit Losses ("ACL").

The following table presents an analysis of collateral dependent loans of the Company as of June 30, 2024:

The following table presents an analysis of collateral dependent loans of the Company as of September 30, 2024:

($ in thousands) Residential Property Business Assets Commercial Property Total Collateral-Dependent Loans

Commercial and industrial $ — $ 597 $ — $ 597

Construction, development & other land loans — 263 2,541 2,804

Commercial real estate - owner occupied $ — $ — $ 879 $ 879

9 unchanged sentences

There have been no material changes from the treatment of collateral dependent loans under CECL as discussed in Note 4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

The following tables presents the activity in the ACL on loans for each of the periods indicated.

The following tables presents the activity in the ACL on loans for each of the periods indicated to include Purchase Credit Deterioration (“PCD”) activity in applicable periods.

Fluctuations in the ACL each period are based on loan mix and growth, changes in the levels of nonperforming loans, economic forecasts impacting loss drivers, other assumptions and inputs to the current expected credit loss ("CECL") model, and as occurred in 2023, adjustments for acquired loan portfolios.

The change to the level of ACL during the six months ended June 30, 2024 was determined based primarily on updated economic forecasts, which are a key assumption in the CECL model and which indicated improvement in certain economic forecasts along with reductions in loan balances during the period, partially offset by a continued reduction of the commercial real estate pricing index, thus resulting in little change to the ACL for the quarter or year to date.

The change to the level of ACL during the nine months ended September 30, 2024 was determined based primarily on updated economic forecasts, which are a key assumption in the CECL model and which indicated improvement in certain economic forecasts along with reductions in loan balances during the period, partially offset by a continued reduction of the commercial real estate pricing index.

Other than the impact from Hurricane Helene, there was little change to the ACL for the quarter or year to date.

($ in thousands) Beginning balance Charge-offs Recoveries Provisions / (Reversals) Ending balance

As of and for the three months ended June 30, 2024

As of and for the three months ended September 30, 2024

Commercial and industrial $ 19,837 $ ( 1,913 ) $ 246 $ ( 27 ) $ 18,143

7 unchanged sentences

Total $ 110,058 $ ( 2,688 ) $ 565 $ 14,783 $ 122,718

As of and for the six months ended June 30, 2024

As of and for the nine months ended September 30, 2024

Commercial and industrial $ 21,227 $ ( 5,976 ) $ 1,346 $ 1,546 $ 18,143

8 unchanged sentences

($ in thousands) Beginning balance Initial ACL for acquired PCD loans Charge-offs Recoveries Provisions / (Reversals) Ending balance

As of and for the three months ended June 30, 2023

As of and for the three months ended September 30, 2023

Commercial and industrial $ 23,442 $ — $ ( 2,650 ) $ 450 $ 1,202 $ 22,444

7 unchanged sentences

Total $ 109,230 $ — $ ( 3,203 ) $ 971 $ 1,200 $ 108,198

As of and for the six months ended June 30, 2023

As of and for the nine months ended September 30, 2023

Commercial and industrial $ 17,718 $ 5,197 $ ( 6,361 ) $ 1,216 $ 4,674 $ 22,444

14 unchanged sentences

($ in thousands) 2024 2023 2022 2021 2020 Prior Revolving Total

As of June 30, 2024

As of September 30, 2024

Commercial and industrial

112 unchanged sentences

For loans included in the “combination” columns below, multiple types of modifications have been made on the same loan within the current reporting period.

The followings tables present the amortized cost basis at June 30, 2024 and June 30, 2023 of the loans modified during the three and six months then ended for borrowers experiencing financial difficulty, by loan category and type of concession granted.

The followings tables present the amortized cost basis at September 30, 2024 and September 30, 2023 of the loans modified during the three and nine months then ended for borrowers experiencing financial difficulty, by loan category and type of concession granted.

($ in thousands) Payment Delay Term Extension Combination - Term Extension and Payment Delay Combination - Interest Rate Reduction and Term Extension Total Percent of Total Class of Loans

As of and for the three months ended June 30, 2024

Commercial and industrial $ — $ 1 $ — $ 96 $ 97 0.01 %

Residential 1-4 family real estate — 203 — — 203 0.01 %

As of and for the three months ended September 30, 2024

Construction, development & other land loans $ — $ 143 $ — $ — $ 143 0.02 %

Home equity loans/lines of credit — 96 — — 96 0.03 %

Total $ — $ 239 $ — $ — $ 239 — %

As of and for the six months ended June 30, 2024

As of and for the nine months ended September 30, 2024

Commercial and industrial $ 114 $ 1 $ 878 $ 92 $ 1,085 0.13 %

Construction, development & other land loans — 208 — — 208 0.03 %

Commercial real estate - non owner occupied — 107 — — 107 — %

3 unchanged sentences

($ in thousands) Payment Delay Term Extension Combination - Interest Rate Reduction and Term Extension Total Percent of Total Class of Loans

As of and for the three months ended June 30, 2023

As of and for the three months ended September 30, 2023

Commercial and industrial $ 1,142 $ 117 $ — $ 1,259 0.14 %

Construction, development & other land loans — 594 — 594 0.06 %

Commercial real estate - owner occupied — 4,023 — 4,023 0.32 %

Commercial real estate - non owner occupied — 131 — 131 0.01 %

Residential 1-4 family real estate — 245 — 245 0.02 %

Home equity loans/lines of credit 24 401 99 524 0.16 %

Consumer loans — 9 — 9 0.01 %

Total $ 1,166 $ 5,520 $ 99 $ 6,785 0.08 %

As of and for the six months ended June 30, 2023

As of and for the nine months ended September 30, 2023

Commercial and industrial $ 2,589 $ 216 $ — $ 2,805 0.31 %

6 unchanged sentences

Total $ 2,798 $ 7,816 $ 109 $ 10,723 0.13 %

For the three and six months ended June 30, 2024 and June 30, 2023, there were no modifications for borrowers experiencing financial difficulty with principal forgiveness concessions.

The following table describes the financial effect for the three and six months ended June 30, 2024 of the modifications made for borrowers experiencing financial difficulty:

For the three and nine months ended September 30, 2024 and September 30, 2023, there were no modifications for borrowers experiencing financial difficulty with principal forgiveness concessions.

The following table describes the financial effect for the three and nine months ended September 30, 2024 of the modifications made for borrowers experiencing financial difficulty:

Financial Effect of Modification to Borrowers Experiencing Financial Difficulty

1 unchanged sentence

(in months) Weighted Average Term Extension

For the three months ended June 30, 2024

Commercial and industrial 0.75 % 0 27

Residential 1-4 family real estate — % 0 103

For the three months ended September 30, 2024

Construction, development & other land loans — % 0 8

Home equity loans/lines of credit — % 0 40

For the six months ended June 30, 2024

For the nine months ended September 30, 2024

Commercial and industrial 0.75 % 36 13

Construction, development & other land loans — % 0 6

Commercial real estate - non owner occupied — % 0 13

1 unchanged sentence

Home equity loans/lines of credit 2.13 % 0 65

The following table describes the financial effect for the three and six months ended June 30, 2023 of the modifications made for borrowers experiencing financial difficulty:

The following table describes the financial effect for the three and nine months ended September 30, 2023 of the modifications made for borrowers experiencing financial difficulty:

Financial Effect of Modification to Borrowers Experiencing Financial Difficulty

1 unchanged sentence

(in months) Weighted Average Term Extension

For the three months ended June 30, 2023

For the three months ended September 30, 2023

Commercial and industrial — % 6 26

Construction, development & other land loans — % 0 8

Commercial real estate - owner occupied — % 0 32

Commercial real estate - non owner occupied — % 0 11

Residential 1-4 family real estate — % 0 23

Home equity loans/lines of credit 2.61 % 24 84

For the six months ended June 30, 2023

Consumer loans — % 0 24

For the nine months ended September 30, 2023

Commercial and industrial — % 4 20

6 unchanged sentences

The Company closely monitors the performance of the loans that are modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table depicts the performance of loans that were modified in the last twelve months as of June 30, 2024:

The following table depicts the performance of loans that were modified in the last twelve months as of September 30, 2024:

Payment Status (Amortized Cost Basis)

2 unchanged sentences

Construction, development & other land loans 250 — — —

Commercial real estate - owner occupied 3,888 — — —

Commercial real estate - non owner occupied 107 — — —

13 unchanged sentences

$ 11,640 $ 79 $ — $ —

None of the modifications made for borrowers experiencing financial difficulty during the three and six months ended June 30, 2024 and June 30, 2023 are considered to have had a payment default.

None of the modifications made for borrowers experiencing financial difficulty during the three and nine months ended September 30, 2024 and September 30, 2023 are considered to have had a payment default.

Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off.

5 unchanged sentences

There have been no material changes to the primary loan markets (as identified by counties) from year end.

Impact of Hurricane Helene

Within the portions of Western North and South Carolina that were significantly impacted by Hurricane Helene, the Company identified borrowers with approximately $ 755 million of loans outstanding.

The following is a summary of the categories of those loans outstanding as of September 30, 2024:

($ in thousands) Balance

Commercial and industrial $ 10,481

Construction, development & other land loans 29,429

Commercial real estate - owner occupied 98,958

Commercial real estate - non owner occupied 284,825

Multi-family real estate 25,677

Residential 1-4 family real estate 266,554

Home equity loans/lines of credit 39,470

Consumer loans —

Total $ 755,394

Given that the storm impacted the area just prior to September 30, 2024 and recovery continues in many communities, the Company performed analyses to identify possible impacts from the storm and has reserved accordingly based upon the information available at this time.

The Company applied increased reserve rates based upon severe economic factors to the approximately $ 755 million of loans in the most impacted path of Hurricane Helene.

Additionally, the Company performed an initial evaluation of the largest commercial loans in that area and applied incremental reserves to those loans that were suspected of having higher potential property damage or economic impact from the storm.

Due to the potential exposure from Hurricane Helene, the ACL on these impacted loans increased by $ 13.0 million, expanding the ACL as a percent of loans in the impacted geography from 1.29 % to 3.01 % as of September 30, 2024 and adding 16 basis points to the overall ACL as a percent of total loans, which was 1.53 % as of September 30, 2024.

Allowance for Unfunded Loan Commitments

3 unchanged sentences

The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the ACL on loans.

allowance for unfunded loan commitments of $ 9.9 million and $ 11.4 million at June 30, 2024 and December 31, 2023, respectively, were separately classified on the consolidated balance sheets within "Other liabilities."

The following table presents the balance and activity in the allowance for unfunded loan commitments for the six months ended June 30, 2024 and 2023:

($ in thousands) June 30, 2024 June 30, 2023

The allowance for unfunded loan commitments of $ 9.3 million and $ 11.4 million at September 30, 2024 and

December 31, 2023, respectively, were separately classified on the consolidated balance sheets within "Other liabilities."

The following table presents the balance and activity in the allowance for unfunded loan commitments for the three and nine months ended September 30, 2024 and 2023:

Three months ended September 30, Nine months ended September 30,

($ in thousands) 2024 2023 2024 2023

Beginning balance $ 9,860 $ 13,019 $ 11,369 $ 13,306

5 unchanged sentences

Allowance for Credit Losses - Securities Held to Maturity

The ACL for securities held to maturity was insignificant at June 30, 2024 and December 31, 2023.

The ACL for securities held to maturity was insignificant at September 30, 2024 and December 31, 2023.

Goodwill, Other Intangible Assets and Servicing Assets

The following is a summary of the gross carrying amount and accumulated amortization of amortizable intangible assets and the carrying amount of unamortized intangible assets as of the periods presented.

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

($ in thousands) Gross Carrying

11 unchanged sentences

Customer lists are generally amortized over five years and core deposit intangibles are generally amortized over 10 years, both at an accelerated rate.

Amortization expense of all amortizable intangible assets totaled $ 1.7 million and $ 2.0 million for the three months ended June 30, 2024 and 2023, respectively, and $ 3.4 million and $ 4.2 million for the six months ended June 30, 2024 and 2023, respectively.

Amortization expense of all amortizable intangible assets totaled $ 1.6 million and $ 2.0 million for the three months ended September 30, 2024 and 2023, respectively, and $ 5.0 million and $ 6.1 million for the nine months ended September 30, 2024 and 2023, respectively.

Goodwill is evaluated for impairment on at least an annual basis, with the annual evaluation occurring as of October 31 of each year.

8 unchanged sentences

($ in thousands) Estimated Amortization

July 1, 2024 to December 31, 2024 $ 3,176

October 1, 2024 to December 31, 2024 $ 1,562

Thereafter 5,380

Total $ 24,466

The Company recorded SBA guaranteed servicing fee income of $ 0.8 million and $ 0.9 million for the three months ended June 30, 2024 and 2023, respectively, and $ 1.5 million and $ 1.8 million for the six months ended June 30, 2024 and 2023, respectively.

There was no impairment of SBA servicing assets at June 30, 2024 and December 31, 2023 and no significant changes in fair value assumptions from year end.

The following table presents the changes in the SBA servicing assets (included in "Other assets" in the Company's consolidated balance sheet) for the three and six months ended June 30, 2024 and 2023:

Three months ended June 30, Six months ended June 30,

The Company recorded SBA guaranteed servicing fee income of $ 0.8 million for the three months ended September 30, 2024 and 2023, and $ 2.3 million and $ 2.7 million for the nine months ended September 30, 2024 and 2023, respectively.

There was no impairment of SBA servicing assets at September 30, 2024 and December 31, 2023 and no significant methodology changes have been made since year end.

The following table presents the changes in the SBA servicing assets (included in "Other assets" in the Company's consolidated balance sheet) for the three and nine months ended September 30, 2024 and 2023:

Three months ended September 30, Nine months ended September 30,

($ in thousands) 2024 2023 2024 2023

3 unchanged sentences

Ending balance, net $ 2,960 $ 3,515 $ 2,960 $ 3,515

The following tables present information regarding the Company’s outstanding borrowings at June 30, 2024 and December 31, 2023 (dollars in thousands):

Description Due date Call Feature Balance at June 30, 2024 Interest Rate

The following tables present information regarding the Company’s outstanding borrowings at September 30, 2024 ($ in thousands):

Description Due date Call Feature Balance at September 30, 2024 Interest Rate

FHLB Principal Reducing Credit 6/26/2028 to 12/20/2028

12 unchanged sentences

Subordinated Debentures 11/15/2030 Continuous by Company beginning 11/15/2025 18,000 4.38 % fixed

Total borrowings / weighted average rate as of June 30, 2024

Total borrowings / weighted average rate as of September 30, 2024

96,138 6.69 %

1 unchanged sentence

Total borrowings $ 91,694

During the first and second quarters of 2024, the Company redeemed borrowings under the FRB Bank Term Funding Program totaling $ 18.0 million and $ 231.0 million, respectively.

Also during the second quarter, the Company redeemed $ 10.0 million of subordinated debentures.

The following tables present information regarding the Company’s outstanding borrowings at December 31, 2023 ($ in thousands):

Description Due date Call Feature Balance at December 31, 2023 Interest Rate

FHLB Principal Reducing Credit 6/26/2028 None $ 203 0.25 % fixed

FHLB Principal Reducing Credit 7/17/2028 None 31 0.00 % fixed

FHLB Principal Reducing Credit 8/18/2028 None 151 1.00 % fixed

FHLB Principal Reducing Credit 8/22/2028 None 151 1.00 % fixed

FHLB Principal Reducing Credit 12/20/2028 None 315 0.50 % fixed

FHLB Principal Reducing Credit 6/26/2028 to 12/20/2028

None $ 851 0.00 % to 1.00 % fixed

FHLB Fixed Rate Credit 1/16/2024 None 80,000 5.59 % fixed

21 unchanged sentences

The Company enters into leases in the normal course of business.

As of June 30, 2024, the Company leased 14 bank branch offices for which the land and buildings are leased and ten branch offices for which the land is leased but the buildings are owned.

As of September 30, 2024, the Company leased 14 bank branch offices for which the land and buildings are leased and ten branch offices for which the land is leased but the buildings are owned.

The Company also leases office space for several operational departments.

The lease agreements have maturity dates ranging from November 2024 through May 2076, some of which include options for multiple five - and ten-year extensions.

The weighted average remaining life of the lease term for these leases was 20.9 years as of June 30, 2024.

The weighted average remaining life of the lease term for these leases was 21.1 years as of September 30, 2024.

Certain of the Company's lease agreements include variable lease payments based on changes in inflation, with the impact of that factor being insignificant to the Company's total lease expense.

As permitted by applicable accounting standards, the Company has elected not to recognize leases with original lease terms of 12 months or less (short-term leases) on the Company's consolidated balance sheets.

As permitted by applicable accounting standards, the Company has elected not to recognize leases with original lease terms of twelve months or less (short-term leases) on the Company's consolidated balance sheets.

The short-term lease cost for each period presented was insignificant.

4 unchanged sentences

The Company uses its incremental borrowing rate, on a collateralized basis, at lease commencement to calculate the present value of lease payments when the rate implicit in the lease is not known.

The weighted average discount rates for leases were 3.30 % and 3.19 % as of June 30, 2024 and December 31, 2023, respectively.

The right-of-use assets, included in "Other assets" on the Company's consolidated balance sheet, and lease liabilities, included in "Other liabilities" on the Company's consolidated balance sheet, were $ 14.6 million and $ 15.3 million as of June 30, 2024, respectively, and were $ 17.1 million and $ 17.8 million as of December 31, 2023, respectively.

Total operating lease expenses, included in "Other operating expenses" in the Company's consolidated statement of income, were $ 0.5 million and $ 0.8 million for the three months ended June 30, 2024 and 2023, respectively, and $ 1.2 million and $ 1.5 million for the six months ended June 30, 2024 and 2023, respectively.

Future undiscounted lease payments for operating leases with initial terms of greater than one year as of June 30, 2024 are as follows:

The weighted average discount rates for leases were 3.32 % and 3.19 % as of September 30, 2024 and December 31, 2023, respectively.

The right-of-use assets, included in "Other assets" on the Company's consolidated balance sheet, and lease liabilities, included in "Other liabilities" on the Company's consolidated balance sheet, were $ 14.1 million and $ 14.9 million as of September 30, 2024, respectively, and were $ 17.1 million and $ 17.8 million as of December 31, 2023, respectively.

Total operating lease expenses, included in "Other operating expenses" in the Company's consolidated statement of income, were $ 0.6 million and $ 0.8 million for the three months ended September 30, 2024 and 2023, respectively, and $ 1.8 million and $ 2.3 million for the nine months ended September 30, 2024 and 2023, respectively.

Future undiscounted lease payments for operating leases with initial terms of greater than one year as of September 30, 2024 are as follows:

($ in thousands)

July 1, 2024 to December 31, 2024 $ 1,139

October 1, 2024 to December 31, 2024 $ 550

Thereafter 16,120

3 unchanged sentences

Pension Plans

The Company recorded periodic pension cost totaling $ 63,000 and $ 50,000 for the three months ended June 30, 2024 and 2023, respectively, and $ 126,000 and $ 101,000 for the six months ended June 30, 2024 and 2023, respectively.

The Company recorded periodic pension cost totaling $ 63,000 and $ 51,000 for the three months ended September 30, 2024 and 2023, respectively, and $ 189,000 and $ 152,000 for the nine months ended September 30, 2024 and 2023, respectively.

Fair Value of Financial Instruments

5 unchanged sentences

Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The following table summarizes the Company’s financial instruments that were measured at fair value on a recurring and nonrecurring basis at June 30, 2024:

The following table summarizes the Company’s financial instruments that were measured at fair value on a recurring and nonrecurring basis at September 30, 2024:

($ in thousands)

Description of Financial Instruments

Fair Value at June 30, 2024 Quoted Prices in Active Markets for Identical Assets

Fair Value at September 30, 2024 Quoted Prices in Active Markets for Identical Assets

(Level 1) Significant Other

33 unchanged sentences

Matrix pricing is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.

For the Company, Level 2 securities include mortgage-backed securities, commercial mortgage-backed obligations, government-sponsored enterprise securities, and corporate bonds.

In cases where Level 1 or Level 2 inputs are not available, securities may be classified within Level 3 of the hierarchy.

For the Company, Level 2 securities include U.S Treasury bonds, mortgage-backed securities, commercial mortgage-backed obligations, government-sponsored enterprise securities, and corporate bonds.

In cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.

The Company reviews the pricing methodologies utilized by the bond accounting provider to ensure the fair value determination is consistent with the applicable accounting guidance and that the investments are properly classified in the fair value hierarchy.

11 unchanged sentences

Any fair value adjustments are recorded in the period incurred as provision for credit losses on the consolidated statements of income.

For Level 3 assets and liabilities measured at fair value on a non-recurring basis as of June 30, 2024, the significant unobservable inputs used in the fair value measurements were as presented in the tables below:

($ in thousands) Fair Value at June 30, 2024 Valuation

Technique Significant Unobservable

Inputs Range (Weighted Average)

Individually evaluated loans - collateral-dependent $ 4,561 Appraised value Discounts applied for estimated costs to sell 10 %

For Level 3 assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2023, the significant unobservable inputs used in the fair value measurements were as follows:

($ in thousands) Fair Value at December 31, 2023 Valuation

Technique Significant Unobservable

Inputs Range (Weighted Average)

Individually evaluated loans - collateral-dependent $ 1,953 Appraised value Discounts applied for estimated costs to sell 10 %

In the above tables, weighted average discounts were calculated on relative fair value for underlying loans based on the range of discount rates applied.

The discount applied for estimated costs to sell collateral on individually evaluated loans was 10%.

The carrying amounts and estimated fair values of financial instruments not carried at fair value at June 30, 2024 and December 31, 2023 were as follows:

June 30, 2024 December 31, 2023

There were no significant changes in the reported amount of Level 3 assets and liabilities measured at fair value on either a recurring or a non-recurring basis as of September 30, 2024.

The carrying amounts and estimated fair values of financial instruments not carried at fair value at September 30, 2024 and December 31, 2023 were as follows:

September 30, 2024 December 31, 2023

($ in thousands) Level in Fair

7 unchanged sentences

Total loans, net of allowance Level 3 7,890,820 7,232,306 8,040,249 7,379,079

Accrued interest receivable Level 1 35,605 35,605 37,351 37,351

Bank-owned life insurance Level 1 186,031 186,031 183,897 183,897

SBA Servicing Asset Level 3 2,960 3,946 3,351 4,049

2 unchanged sentences

Borrowings Level 2 91,694 80,268 630,158 615,614

Accrued interest payable Level 1 5,728 5,728 5,699 5,699

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.

4 unchanged sentences

Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.

Significant assets and liabilities that are not considered financial assets or liabilities include net premises and equipment, intangible and other assets such as deferred income taxes, prepaid expense accounts, income taxes currently payable, and other various accrued expenses.

Significant assets and liabilities that are not considered financial assets or liabilities include

net premises and equipment, intangible and other assets such as deferred income taxes, prepaid expense accounts, income taxes currently payable, and other various accrued expenses.

In addition, the income tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.

Stock-Based Compensation

The Company recorded total stock-based compensation expense of $ 0.9 million and $ 1.1 million for the three months ended June 30, 2024 and 2023, respectively, and $ 1.6 million and $ 2.2 million for the six months ended June 30, 2024 and 2023, respectively.

The Company recorded total stock-based compensation expense of $ 1.4 million and $ 1.2 million for the three months ended September 30, 2024 and 2023, respectively, and $ 3.0 million and $ 3.4 million for the nine months ended September 30, 2024 and 2023, respectively.

These amounts are included in "Total personnel expense" on the accompanying consolidated statements of income.

The Company recog nized income tax benefits related to stock-based compensation expense in its income statement of $ 218,000 an d $ 261,000 for the three months ended June 30, 2024 and 2023, respectively and $ 371,000 and $ 520,000 for the six months ended June 30, 2024 and 2023, respectively.

At June 30, 2024, the sole equity-based compensation plan of the Company was the First Bancorp 2024 Equity Plan (the "Equity Plan"), which was approved by shareholders on May 31, 2024.

As of June 30, 2024, the Equity Plan had 1,976,567 shares remaining available for grant.

During the quarter, the First Bancorp 2014 Equity Plan expired and was replaced by the Equity Plan.

The Company recog nized income tax benefits related to stock-based compensation expense in its income statement of $ 304,000 an d $ 278,000 for the three months ended September 30, 2024 and 2023, respectively, and $ 675,000 and $ 798,000 for the nine months ended September 30, 2024 and 2023, respectively.

At September 30, 2024, the sole equity-based compensation plan of the Company was the First Bancorp 2024 Equity Plan (the "Equity Plan"), which was approved by shareholders on May 31, 2024.

As of September 30, 2024, the Equity Plan had 1,929,731 shares remaining available for grant.

During the second quarter, the First Bancorp 2014 Equity Plan expired and was replaced by the Equity Plan.

The Equity Plan is intended to serve as a means to attract, retain, and motivate key employees and directors and to associate the interests of the Equity Plan's participants with those of the Company and its shareholders.

The Equity Plan allows for both grants of stock options and other types of equity-based compensation, including stock appreciation rights, restricted and unrestricted stock, restricted performance stock, and performance units.

last several years, the only equity-based compensation granted by the Company has been shares of restricted stock, as it relates to employees, and unrestricted stock as it relates to non-employee directors.

For the last several years, the only equity-based compensation granted by the Company has been shares of restricted stock, as it relates to employees, and unrestricted stock as it relates to non-employee directors.

There have been no material changes to the treatment of stock awards and equity grants as discussed in Note 15 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

2 unchanged sentences

Compensation expense associated with these director awards is fully recognized by the date of the award since there are no vesting conditions.

The following table presents information regarding the activity for the first six months of 2024 related to the Company’s outstanding restricted stock awards:

The following table presents information regarding the activity for the first nine months of 2024 related to the Company’s outstanding restricted stock awards:

Long-Term Restricted Stock Awards

5 unchanged sentences

Forfeited or expired during the period — —

Nonvested at June 30, 2024 300,921 $ 37.31

Total unrecognized compensation expense as of June 30, 2024 amounted to $ 3.9 million with a weighted average remaining term of 1.5 years.

For the nonvested awards that were outstanding at June 30, 2024, the Company expects to record $ 2.6 million in compensation expense in the next 12 months, $ 1.7 million of which is expected to be recorded in the remaining quarters of 2024.

Nonvested at September 30, 2024 307,870 $ 37.42

Total unrecognized compensation expense as of September 30, 2024 amounted to $ 4.4 million with a weighted average remaining term of 1.9 years.

For the nonvested awards that were outstanding at September 30, 2024, the Company expects to record $ 2.9 million in compensation expense in the next twelve months, $ 1.3 million of which is expected to be recorded in the remaining quarter of 2024.

Earnings Per Share

The following is a reconciliation of the numerators and denominators used in computing Basic and Diluted Earnings Per Common Share ("EPS"):

For the Three Months Ended June 30,

For the Three Months Ended September 30,

($ in thousands except per share amounts) Income

10 unchanged sentences

Diluted EPS per common share $ 18,680 41,366,743 $ 0.45 $ 29,893 41,199,058 $ 0.73

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

($ in thousands except per share amounts) Income

11 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) ("AOCI") for the Company for the periods shows were as follows:

($ in thousands) June 30, 2024 December 31, 2023

The components of accumulated other comprehensive income (loss) ("AOCI") for the Company for the periods shown were as follows:

($ in thousands) September 30, 2024 December 31, 2023

Unrealized loss on securities available for sale $ ( 331,538 ) $ ( 400,720 )

5 unchanged sentences

Total accumulated other comprehensive loss $ ( 254,806 ) $ ( 308,030 )

The following tables disclose the changes in AOCI for the three and six months ended June 30, 2024 and 2023 (all amounts are net of tax):

For the Three Months Ended June 30, 2024

The following tables disclose the changes in AOCI for the three and nine months ended September 30, 2024 and 2023 (all amounts are net of tax):

For the Three Months Ended September 30, 2024

($ in thousands) Unrealized Loss on

6 unchanged sentences

Ending balance $ ( 254,787 ) $ ( 19 ) $ ( 254,806 )

For the Three Months Ended June 30, 2023

For the Three Months Ended September 30, 2023

($ in thousands) Unrealized Loss on

6 unchanged sentences

Ending balance $ ( 400,895 ) $ 143 $ ( 400,752 )

For the Six Months Ended June 30, 2024

For the Nine Months Ended September 30, 2024

($ in thousands) Unrealized Loss on

2 unchanged sentences

Beginning balance $ ( 307,953 ) $ ( 77 ) $ ( 308,030 )

Other comprehensive loss before reclassifications ( 8,092 ) — ( 8,092 )

Other comprehensive income before reclassifications 52,274 — 52,274

Amounts reclassified from accumulated other comprehensive income

Net current-period other comprehensive (loss) income ( 7,200 ) 39 ( 7,161 )

Net current-period other comprehensive income 53,166 58 53,224

Ending balance $ ( 254,787 ) $ ( 19 ) $ ( 254,806 )

For the Six Months Ended June 30, 2023

For the Nine Months Ended September 30, 2023

($ in thousands) Unrealized Loss on

2 unchanged sentences

Beginning balance $ ( 342,017 ) $ 42 $ ( 341,975 )

Other comprehensive income before reclassifications 3,766 — 3,766

Other comprehensive loss before reclassifications ( 58,878 ) — ( 58,878 )

Amounts reclassified from accumulated other comprehensive income

Net current-period other comprehensive income 3,766 67 3,833

Net current-period other comprehensive (loss) income ( 58,878 ) 101 ( 58,777 )

Ending balance $ ( 400,895 ) $ 143 $ ( 400,752 )

3 unchanged sentences

All of the Company’s revenues that are in the scope of the “ Revenue from Contracts with Customers ” accounting standard (“ASC 606”) are recognized within noninterest income.

The following table presents the Company’s sources of noninterest income for the three and six months ended June 30, 2024 and 2023.

The following table presents the Company’s sources of noninterest income for the three and nine months ended September 30, 2024 and 2023.

Items outside the scope of ASC 606 are noted as such.

For the Three Months Ended For the Six Months Ended

($ in thousands) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

For the Three Months Ended For the Nine Months Ended

($ in thousands) September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Noninterest Income in-scope of ASC 606:

10 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements