What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-26 compared with 2024-02-28 · 437 added, 619 removed, 1554 unchanged (40% of the section changed)

Financial Statements and Supplementary Data

First Bancorp and Subsidiaries

First Bancorp

Consolidated Balance Sheets

December 31, 2023 and 2022

($ in thousands) 2023 2022

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

Cash and due from banks, noninterest-bearing

4 unchanged sentences

507,507 237,855

Securities available for sale

Securities available for sale (amortized cost of $ 2,411,117 and $ 2,590,099 , respectively)

2,043,062 2,189,379

Securities held to maturity (fair values of $ 449,623 in 2023 and $ 432,528 in 2022)

Securities held to maturity (fair values of $ 428,571 and $ 449,623 , respectively)

519,998 533,678

Presold mortgages and SBA loans in process of settlement 2,667 1,282

Presold mortgages in process of settlement 5,942 2,667

8,094,676 8,150,102

2 unchanged sentences

Premises and equipment, net 143,459 150,957

Operating right-of-use lease assets

17,063 18,733

Accrued interest receivable

10 unchanged sentences

91,876 630,158

630,158 287,507

Accrued interest payable

Operating lease liabilities

17,833 19,391

Other liabilities

7 unchanged sentences

Issued & outstanding:

none in 2023 and 2022

none and none , respectively

Common stock, no par value per share.

1 unchanged sentence

Issued & outstanding:

41,109,987 shares in 2023 and 35,704,154 shares in 2022

41,347,418 shares and 41,109,987 shares, respectively

971,313 963,990

4 unchanged sentences

Rabbi trust obligation

Accumulated other comprehensive loss ( 308,030 ) ( 341,975 )

Accumulated other comprehensive income (loss) ( 282,029 ) ( 308,030 )

Total shareholders’ equity 1,445,611 1,372,380

1,372,380 1,031,596

Total liabilities and shareholders’ equity $ 12,147,694 $ 12,114,942

See accompanying notes to consolidated financial statements.

First Bancorp and Subsidiaries

First Bancorp

Consolidated Statements of Income

Years Ended December 31, 2023, 2022 and 2021

Year Ended December 31,

($ in thousands, except per share data) 2024 2023 2022

18 unchanged sentences

332,273 346,843 325,015

Provision for loan losses 19,750 12,600 9,611

(Reversal of) provision for unfunded commitments ( 1,937 ) ( 200 ) 5,420

Total provision for credit losses 17,813 12,400 15,031

Provision for credit losses 16,448 17,813 12,400

Net interest income after provision for credit losses 315,825 329,030 312,615

1 unchanged sentence

Service charges on deposit accounts 16,620 16,800 15,368

16,800 15,523 12,317

Other service charges, commissions and fees

22,270 26,294 25,516

Presold mortgage loan gains 1,613 2,102 10,975

Commissions from sales of insurance and financial products

5,503 5,195 6,947

SBA consulting fees

1,803 2,608 7,231

Other service charges and fees 22,267 22,085 26,288

Presold mortgage loan fees and gains on sale 2,292 1,613 2,102

Commissions from sales of financial products 5,270 5,503 5,195

SBA loan sale gains 3,630 2,489 5,076

2,489 5,076 7,329

Bank-owned life insurance income 4,773 4,350 3,847

4,350 3,847 2,885

Securities losses, net ( 37,981 ) — —

Other gains, net 2,662 7,340 1,648

Other income, net 1,028 4,465 9,948

Total noninterest income

1 unchanged sentence

Noninterest Expense

114,377 96,321 86,815

Employee benefits

25,474 21,397 16,434

Salaries incentives and commissions expense 113,853 114,415 96,359

Employee benefit expense 26,169 25,436 21,359

Total personnel expense 140,022 139,851 117,718

139,851 117,718 103,249

Occupancy expense

14,963 12,796 11,528

Equipment related expenses

6,027 5,808 4,492

Occupancy and equipment expense 19,984 20,990 18,604

Merger and acquisition expenses

— 13,695 5,072

Intangibles amortization

8,003 3,684 3,531

Intangibles amortization expense 6,604 8,003 3,684

Other operating expenses

7 unchanged sentences

Earnings per common share:

$ 2.54 4.12 3.19

Earnings per common share:

2.53 4.12 3.19

Basic $ 1.85 $ 2.54 $ 4.12

Diluted 1.84 2.53 4.12

Weighted average common shares outstanding:

2 unchanged sentences

See accompanying notes to consolidated financial statements.

First Bancorp and Subsidiaries

First Bancorp

Consolidated Statements of Comprehensive Income (Loss)

Years Ended December 31, 2023, 2022 and 2021

Year Ended December 31,

($ in thousands) 2024 2023 2022

2 unchanged sentences

Unrealized gains (losses) on securities available for sale:

Unrealized holding gains (losses) arising during the period, pretax 43,343 ( 411,996 ) ( 53,752 )

Tax (expense) benefit ( 9,279 ) 94,677 12,352

Unrealized holding (losses) gains arising during the period, pretax ( 5,316 ) 43,343 ( 411,996 )

Tax benefit (expense) 2,043 ( 9,279 ) 94,677

Reclassification to realized losses 37,981 — —

10 unchanged sentences

See accompanying notes to consolidated financial statements.

First Bancorp and Subsidiaries

First Bancorp

Consolidated Statements of Shareholders’ Equity

Years Ended December 31, 2023, 2022 and 2021

($ in thousands, except per share data) Common stock Retained

3 unchanged sentences

Balances, January 1, 2022 35,629 $ 722,671 $ 532,874 $ ( 1,803 ) $ 1,803 $ ( 24,970 ) $ 1,230,575

Adoption of new accounting standard ( 17,051 ) ( 17,051 )

Net income 146,936 146,936

2 unchanged sentences

Change in Rabbi Trust Obligation 218 ( 218 ) —

Equity issued pursuant to acquisition 7,070 324,389 324,389

Stock repurchases ( 107 ) ( 4,036 ) ( 4,036 )

Stock withheld for payment of taxes ( 25 ) ( 840 ) ( 840 )

Stock-based compensation 100 3,322 3,322

Other comprehensive income ( 39,320 ) ( 39,320 )

Other comprehensive loss ( 317,005 ) ( 317,005 )

Balances, December 31, 2022 35,704 725,153 648,418 ( 1,585 ) 1,585 ( 341,975 ) 1,031,596

3 unchanged sentences

Change in Rabbi Trust Obligation 200 ( 200 ) —

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

Stock option exercises 237 4,519 4,519

Stock withheld for payment of taxes ( 23 ) ( 743 ) ( 743 )

Stock-based compensation 159 5,572 5,572

Other comprehensive loss ( 317,005 ) ( 317,005 )

Other comprehensive income 33,945 33,945

Balances, December 31, 2023 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 ) —

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

Stock option exercises 192 4,094 4,094

1 unchanged sentence

Stock-based compensation 83 4,920 4,920

Other comprehensive loss 33,945 33,945

Other comprehensive income 26,001 26,001

Balances, December 31, 2024 41,347 $ 971,313 $ 756,327 $ ( 1,148 ) $ 1,148 $ ( 282,029 ) $ 1,445,611

See accompanying notes to consolidated financial statements.

First Bancorp and Subsidiaries

First Bancorp

Consolidated Statements of Cash Flows

Years Ended December 31, 2023, 2022 and 2021

Year Ended December 31,

($ in thousands) 2024 2023 2022

2 unchanged sentences

Reconciliation of net income to net cash provided by operating activities:

Provision for credit losses and unfunded commitments, net 17,813 12,400 15,031

Provision for credit losses 16,448 17,813 12,400

Net security premium amortization 8,628 9,337 12,005

Deferred tax benefit ( 782 ) ( 1,810 ) ( 4,800 )

Deferred income taxes, net ( 4,869 ) ( 782 ) ( 1,810 )

Loan discount accretion ( 10,718 ) ( 13,277 ) ( 5,622 )

Deposit and debt discount (premium) accretion (amortization), net 3,943 ( 340 ) ( 47 )

Foreclosed property (gains) losses/write-downs, net ( 150 ) ( 372 ) 24

Losses on sales of securities available for sale, net — — 1,237

Other gains, net ( 1,857 ) ( 4,069 ) ( 1,648 )

Deposit and debt discount accretion, net 1,593 3,943 ( 340 )

Foreclosed property gains, net ( 245 ) ( 150 ) ( 372 )

Securities losses, net 37,981 — —

Other (gains) losses, net ( 633 ) ( 1,857 ) ( 4,069 )

Bank-owned life insurance income ( 4,773 ) ( 4,350 ) ( 3,847 )

Net amortization of deferred loan fees ( 1,225 ) ( 301 ) ( 1,994 )

Net amortization of deferred loan costs/(fees) ( 1,366 ) ( 1,225 ) ( 301 )

Depreciation of premises and equipment 7,760 7,754 6,859

4 unchanged sentences

Amortization and impairment of SBA servicing assets 1,699 1,356 2,800

Fees/gains from sales of presold mortgages and SBA loans ( 4,102 ) ( 7,178 ) ( 18,304 )

Originations of presold mortgage loans in process of settlement ( 84,696 ) ( 104,596 ) ( 326,019 )

Proceeds from sales of presold mortgage loans in process of settlement 84,957 124,181 359,300

Origination of SBA loans for sale ( 52,787 ) ( 74,452 ) ( 88,304 )

Proceeds from sales of SBA loans 39,930 119,549 79,125

Increase in accrued interest receivable ( 1,904 ) ( 3,814 ) ( 773 )

Decrease in other assets 12,435 11,352 17,412

Increase (decrease) in accrued interest payable 2,579 2,131 ( 683 )

(Decrease) increase in other liabilities ( 949 ) ( 8,009 ) 394

Net cash provided by operating activities 131,396 230,654 142,335

Gains on sale of loans ( 5,922 ) ( 4,102 ) ( 7,178 )

Origination of presold mortgage loans and SBA loans held for sale ( 133,352 ) ( 137,483 ) ( 179,048 )

Proceeds from sales of presold mortgage loans and SBA loans 174,541 124,887 243,730

Decrease (increase) in accrued interest receivable 1,022 ( 1,904 ) ( 3,814 )

(Increase) decrease in other assets ( 5,396 ) 12,435 11,352

(Decrease) increase in accrued interest payable ( 1,095 ) 2,579 2,131

Increase (decrease) in other liabilities 5,662 ( 949 ) ( 8,009 )

Net cash provided by (used in) operating activities 174,781 131,396 230,654

Cash Flows From Investing Activities

4 unchanged sentences

Proceeds from sales of securities available for sale 385,125 111,863 —

Proceeds from sale of VISA B shares 4,522 — —

Purchases of Federal Reserve and FHLB stock ( 39,697 ) ( 85,819 ) ( 48,159 )

Redemptions of Federal Reserve and FHLB stock 52,990 70,928 30,915

Purchases of bank owned life insurance — — ( 25,000 )

Proceeds from bank owned life insurance death benefits 210 137 8,312

Purchases of other investments ( 6,824 ) ( 9,754 ) ( 7,990 )

Net increase in loans ( 466,488 ) ( 558,398 ) ( 97,559 )

Net decrease (increase) in loans 17,494 ( 466,488 ) ( 558,398 )

Proceeds from sales of foreclosed properties 758 967 2,904

2 unchanged sentences

Net cash received in acquisition activities — 22,610 —

Net cash received in disposition activities — — 11,314

Net cash used by investing activities ( 191,365 ) ( 713,359 ) ( 1,273,877 )

Net cash provided by (used in) investing activities 169,666 ( 191,365 ) ( 713,359 )

Cash Flows From Financing Activities

Net (decrease) increase in deposits ( 244,339 ) 103,494 1,258,193

Advances from other borrowings 3,348,000 1,252,000 —

Repayment of other borrowings ( 3,044,991 ) ( 1,032,133 ) ( 5,729 )

Net increase (decrease) in deposits 498,100 ( 244,339 ) 103,494

Proceeds from the issuance of FHLB and FRB borrowings 986,000 3,348,000 1,252,000

Repayment of FHLB and FRB borrowings ( 1,515,049 ) ( 3,044,991 ) ( 1,032,133 )

Repayment of subordinated debentures ( 10,000 ) — —

Cash dividends paid – common stock ( 36,249 ) ( 34,940 ) ( 30,660 )

Repurchases of common stock — — ( 4,036 )

Proceeds from stock option exercises 4,094 4,519 —

Payment of taxes related to stock withheld ( 1,691 ) ( 743 ) ( 840 )

Net cash provided by financing activities 27,506 291,861 1,225,414

(Decrease) increase in Cash and Cash Equivalents ( 32,463 ) ( 190,844 ) 93,872

Net cash (used) provided by financing activities ( 74,795 ) 27,506 291,861

Increase (decrease) in cash and cash equivalents 269,652 ( 32,463 ) ( 190,844 )

Cash and Cash Equivalents, beginning of year 237,855 270,318 461,162

Cash and Cash Equivalents, end of year $ 507,507 $ 237,855 $ 270,318

First Bancorp and Subsidiaries

First Bancorp

Consolidated Statements of Cash Flows

Years Ended December 31, 2023, 2022 and 2021

Year Ended December 31,

($ in thousands) 2024 2023 2022

4 unchanged sentences

Foreclosed loans transferred to foreclosed real estate 4,551 1,036 119

Accrued dividends at period end 9,046 7,857 7,125

Accrued dividends at end of period 9,105 9,046 7,857

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

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

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

Derecognition of intangible assets related to sale of insurance operations — — ( 10,229 )

Acquisition of GrandSouth Bancorporation — See Note 2 —

See accompanying notes to consolidated financial statements.

First Bancorp and Subsidiaries

First Bancorp

Notes to Consolidated Financial Statements

December 31, 2024

Summary Note 1.

Summary of Significant Accounting Policies

Basis of Presentation - The consolidated financial statements include the accounts of First Bancorp (the “Company”) and its wholly owned subsidiary First Bank (the “Bank”).

The Bank has three wholly owned subsidiaries that are fully consolidated, SBA Complete, Inc.

(“SBA Complete”) Magnolia Financial, Inc.

The Bank has two wholly owned subsidiaries that are fully consolidated, Magnolia Financial, Inc.

("Magnolia Financial") and First Troy SPE, LLC.

1 unchanged sentence

The principal activity of the Company is the ownership and operation of the Bank, a state chartered bank with its main office in Southern Pines, North Carolina.

SBA Complete specializes in providing consulting services for financial institutions across the country related to Small Business Administration (“SBA”) loan origination and servicing.

Magnolia Financial is a business financing company that makes loans throughout the southeastern United States.

2 unchanged sentences

The trusts are not consolidated for financial reporting purposes as they are variable interest entities and the Company is not the primary beneficiary.

The Bank formerly operated a third subsidiary, SBA Complete, Inc.

("SBA Complete"), which specialized in providing consulting services for financial institutions across the country related to Small Business Administration (“SBA”) loan origination and servicing.

During the second quarter of 2024, SBA Complete became inactive with certain activities transitioning to the Bank.

All significant intercompany accounts and transactions have been eliminated.

27 unchanged sentences

Substantially all of the state and local government securities held by the Company are highly rated by major rating agencies.

Accrued interest receivable of $ 4.2 million and $ 4.3 million at December 31, 2023 and December 31, 2022, respectively, on HTM debt securities was excluded from the estimate of credit losses.

Accrued interest receivable on HTM debt securities was excluded from the estimate of credit losses.

Allowance for Credit Losses - Securities Available for Sale - For AFS debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or if it is more likely than not that it will be required to sell the security before recovery of the amortized cost basis.

If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income with the establishment of an allowance under CECL.

If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value.

For debt securities AFS that do not meet the aforementioned criteria, the Company evaluates whether any decline in fair value is due to credit loss factors.

2 unchanged sentences

If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses on AFS securities is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis.

Any impairment that has not been recorded through an ACL is recognized in other comprehensive income.

Any impairment that has not been recorded through an ACL is recognized in other comprehensive income (loss).

Changes in the ACL under CECL are recorded as provision for (or reversal of) credit loss expense.

Losses are charged against the allowance when management believes the uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable of $ 5.2 million and $ 5.7 million at December 31, 2023 and December 31, 2022, respectively, on AFS debt securities was excluded from the estimate of credit losses.

Presold Mortgages in Process of Settlement - As a part of normal business operations, the Company originates residential mortgage loans that have been pre-approved by secondary investors to be sold on a best efforts basis.

Accrued interest receivable on AFS debt securities was excluded from the estimate of credit losses.

Presold Mortgages Held for Sale - As a part of normal business operations, the Company originates residential mortgage loans that have been pre-approved by secondary investors to be sold on a best efforts basis.

The terms of the loans are set by the secondary investors, and the purchase price that the investor will pay for the loan is agreed to prior to the funding of the loan by the Company.

11 unchanged sentences

The accrual of interest is generally discontinued when a loan becomes 90 days past due and is not well collateralized and in the process of collection, or when management believes, after considering economic and business conditions and collection efforts, that the principal or interest will not be collectible in the normal course of business.

All accrued interest is reversed against interest income when a loan is placed on nonaccrual status.

Interest received on such loans is accounted for using

the cost-recovery method, until qualifying for return to accrual.

All accrued interest is reversed against

interest income when a loan is placed on nonaccrual status.

So long as a loan is on nonaccrual status, interest received on such loans is accounted for using the cost-recovery method.

Under the cost-recovery method, interest income is not recognized until the loan balance is reduced to zero.

15 unchanged sentences

maturity date, payment amount, interest rate, etc.), and the results are aggregated at the pool level.

A probability of default and loss given default, as adjusted for recoveries, are applied to the discounted cash flows for each pool, while considering prepayment and principal curtailment assumptions driven by each loan's collateral type.

When the DCF method is used to determine the ACL, management adjusts the effective interest rate used to discount expected cash flows to incorporate expected prepayments.

35 unchanged sentences

For the contractual term that extends beyond the reasonable and supportable forecast period, the Company reverts to the long-term mean of historical factors over 12 quarters using a straight-line approach.

The Company generally utilizes a four-quarter forecast and a 12-quarter reversion period to the long-term average, which is then held static for the remainder of the forecast period.

The Company generally utilizes a four-quarter forecast and a 12-quarter reversion period to the long-term average, which is then held static for the remainder of the life of the loans.

Included in its systematic methodology to determine its ACL on loans, management considers the need to qualitatively adjust expected credit losses for information not already captured in the loss estimation process.

These qualitative adjustments either increase or decrease the quantitative model estimation (i.e., formulaic model results).

These qualitative adjustments consider a range of maximum and minimum loss rates and can either increase or decrease the quantitative model estimation (i.e., formulaic model results).

Each period the Company considers qualitative factors that are relevant within the qualitative framework that includes the following:

23 unchanged sentences

A SBA servicing asset is recorded for the fair value of that fee based on an analysis of discounted cash flows that incorporates estimates of (1) market servicing costs, (2) market-based prepayment rates, and (3) market profit margins.

SBA servicing assets are included in “Other intangible assets” on the consolidated balance sheets.

SBA servicing assets are included in “Other assets” on the consolidated balance sheets.

SBA servicing assets are initially recorded at fair value and amortized against income over the lives of the related loans as a reduction of servicing fee income, generally five years .

SBA servicing asset amortization expense is recorded in noninterest income as an offset to SBA servicing fees within the line item "Other service charges, commissions and fees" on the consolidated statement of income.

SBA servicing asset amortization expense is recorded in noninterest income as an offset to SBA servicing fees within the line item "Other service charges and fees" on the consolidated statement of income.

SBA servicing assets are tested for impairment on a quarterly basis by comparing their estimated fair values, aggregated by year of origination, to the related carrying values.

2 unchanged sentences

Control over financial assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

If the sale criteria are not met, the transfer is recorded as a secured borrowing in which the assets remain on the balance sheet and the proceeds from the transaction are recognized as a liability.

Premises and Equipment - Premises and equipment are stated at cost less accumulated depreciation.

8 unchanged sentences

Foreclosed Properties - Foreclosed properties consists primarily of real estate acquired by the Company through legal foreclosure or deed in lieu of foreclosure.

The property is initially carried at the lower of cost or the estimated fair value of the property less estimated selling costs.

If there are subsequent declines in fair value, which is reviewed routinely by management, the property is written down to its fair value through a charge to expense recorded within noninterest expense on the "Other operating expenses" line in the consolidated statements of income.

The property is initially carried at the estimated fair value of the property less estimated selling costs.

Subsequent to foreclosure, any decline in fair value or gain or loss on disposition are recorded through noninterest expense on the "Other operating expenses" line in the consolidated statements of income.

Capital expenditures made to improve the property are capitalized.

Costs of holding real estate, such as property taxes, insurance, and maintenance, less related revenues during the holding period, are recorded as expense as they are incurred.

Foreclosed properties are included in the "Other assets" line on the consolidated balance sheets and totaled $ 0.9 million and $ 0.7 million at December 31, 2023 and 2022, respectively.

Costs incurred to maintain the property are expensed as incurred and are also included in "Other operating expenses." Foreclosed properties are included in the "Other assets" line on the consolidated balance sheets and totaled $ 5.0 million and $ 0.9 million at December 31, 2024 and 2023, respectively.

Bank-Owned Life Insurance – The Company has purchased life insurance policies on certain current and past key employees and directors where the insurance policy benefits and ownership are retained by the employer.

15 unchanged sentences

There are inherent risks associated with the Company’s investments in such companies, which may result in income statement volatility in future periods.

At December 31, 2023 and 2022, the Company’s investments in limited partnerships and LLCs totaled $ 27.6 million and $ 18.5 million, respectively, and are included in "Other assets" on the consolidated balance sheets.

Federal Home Loan Bank ("FHLB") Stock - The Company is a member of the FHLB system.

3 unchanged sentences

Federal Reserve Bank ("Federal Reserve", "FRB") Stock - The Company is a member of its regional Federal Reserve and is required to own stock based on its level of capital.

Federal Reserve stock is carried at cost and is

recorded in "Other assets" on the consolidated balance sheets.

Federal Reserve stock is carried at cost and is recorded in "Other assets" on the consolidated balance sheets.

Cash dividends are reported as income, recorded within interest income in the "Other, principally overnight investments" line on the consolidated statements of income.

52 unchanged sentences

Accounting Standards Adopted in 2024

ASU 2022-02, "Financial Instruments-Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage D isclosures ." The amendments contained in this ASU eliminate the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty.

This ASU also requires entities to disclose current period gross write-offs by year of origination for financing receivables.

The Company adopted ASU 2022-02 effective January 1, 2023 using a modified retrospective transition approach for the amendments related to the recognition and measurement of TDRs.

The impact of the adoption resulted in an immaterial change to the ACL, thus no adjustment to retained earnings was recorded.

Disclosures have been updated in Note 4 to comply with the ASU as required.

In addition, TDR disclosures are presented in Note 4 for comparative periods only and are not required to be updated in current periods.

ASU 2022-03, "Fair Value Measurements (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions." This ASU clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security, and, therefore, is not considered in measuring fair value.

The Company adopted ASU 2022-03 January 1, 2023 with no material impact on its financial statements.

ASU 2022-06 , " Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 ." ASU 2022-06 deferred the sunset date of the London Interbank Offered Rate ("LIBOR") to December 31, 2024, after which entities will no longer be permitted to apply the relief prescribed in ASU 2020-04, Reference Rate Reform (Topic 848);

moreover, it applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

ASU 2022-06 was adopted in the third quarter of 2023 with no material effect on its financial statements.

Accounting Standards Pending Adoption

ASU 2023-02 , “ Investments—Equity Method and Joint Ventures (Topic 323):

Accounting Standards Update ("ASU") 2023-02, “Investments—Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method” permits reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met.

This update is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

The adoption of ASU 2023-02 is not expected to have a significant impact on the Company's consolidated financial statements.

This update was adopted on January 1, 2024.

The adoption of ASU 2023-02 did not have a significant impact on the Company's consolidated financial statements.

ASU 2023-07, "Segment Reporting (Topic 280):

1 unchanged sentence

ASU 2023-07 clarifies that an entity which has a single reportable segment is to provide all the disclosures required by Topic 280 and ASU 2023-07.

The amendment is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

The adoption of ASU 2023-07 is not expected to have a significant impact on the Company's consolidated financial statements.

The amendment was

adopted on January 1, 2024 and will be applicable for interim periods within fiscal years beginning after December 15, 2024.

See Note 22 for the adoption of ASU 2023-07.

Accounting Standards Pending Adoption

ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures” amended existing guidance to improve the transparency of income tax disclosures, including disclosure of specific categories in the rate reconciliation, providing additional information for certain reconciling items, and providing details on income taxes paid.

Improvements to Income Tax Disclosures” amends existing guidance to improve the transparency of income tax disclosures, including disclosure of specific categories in the rate reconciliation, providing additional information for certain reconciling items, and providing details on income taxes paid.

The amendments are effective for annual periods beginning after December 15, 2024.

The adoption of ASU 2023-09 is not expected to have a significant impact on the Company's consolidated financial statements.

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 financial position, results of operations or cash flows.

ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses” amended the Income Statement—Reporting Comprehensive Income topic in the Accounting Standards Codification to require public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to financial statements.

The amendments are effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The Company will apply the amendments retrospectively to all prior periods presented in the financial statements after the effective date.

The adoption of ASU 2023-09 is not expected to have a significant impact on the Company's consolidated financial statements.

ASU 2024-04, “Debt-Debt With Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments” amended the Debt topic in the Accounting Standards Codification to clarify requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion.

The amendments are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods.

Early adoption is permitted for all entities that have adopted the amendments in ASU 2020-06.

The Company will apply the amendments prospectively to any settlements of convertible debt instruments that occur after the effective date of the guidance.

The adoption of ASU 2023-09 is not expected to have a significant impact on the Company's consolidated financial statements.

On January 1, 2023, the Company completed its acquisition of 100 % 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.

15 unchanged sentences

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.

The following table summarizes the 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.

29 unchanged sentences

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.

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 mark of $ 29.5 million was recorded.

33 unchanged sentences

These amounts are included in the Company’s consolidated financial statements as of and for the year ended December 31, 2023.

Merger-related costs have been excluded from these amounts and the provisions for credit loss amounts associated with non-PCD loans and unfunded commitments that were discussed above have also been excluded.

The operations of GrandSouth have been integrated into existing First Bank operations and therefore separate results of operations are not presented for the year ended December 31, 2024.

Merger-related costs have been excluded from these amounts and the provisions for credit

loss amounts associated with non-PCD loans and unfunded commitments that were discussed above have also been excluded.

($ in thousands, unaudited) Revenue Net Income

11 unchanged sentences

Mortgage-backed securities 2,261,924 1,897,175 60 ( 364,809 ) 2,323,674 1,937,784 30 ( 385,920 )

2,323,674 1,937,784 30 ( 385,920 ) 2,467,839 2,045,000 4 ( 422,843 )

Corporate bonds 16,181 15,692 — ( 489 ) 19,676 18,759 — ( 917 )

19,676 18,759 — ( 917 ) 44,340 43,279 — ( 1,061 )

Total available for sale $ 2,411,117 $ 2,043,062 $ 60 $ ( 368,115 ) $ 2,590,099 $ 2,189,379 $ 30 $ ( 400,750 )

1 unchanged sentence

Mortgage-backed securities $ 9,198 $ 8,739 $ — $ ( 459 ) $ 12,085 $ 11,447 $ — $ ( 638 )

$ 12,085 11,447 — ( 638 ) 15,150 14,221 — ( 929 )

State and local governments 510,800 419,832 1 ( 90,969 ) 521,593 438,176 39 ( 83,456 )

521,593 438,176 39 ( 83,456 ) 526,550 418,307 7 ( 108,250 )

Total held to maturity $ 519,998 $ 428,571 $ 1 $ ( 91,428 ) $ 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 and $ 0.8 million as of December 31, 2023 and 2022, respectively.

Accrued interest receivable on AFS debt securities was $ 4.6 million and $ 5.2 million at December 31, 2024 and December 31, 2023, respectively.

Accrued interest receivable on HTM debt securities was of $ 4.2 million as of December 31, 2024 and December 31, 2023.

The following table presents information regarding securities with unrealized losses at December 31, 2024:

42 unchanged sentences

Value Amortized

Debt securities

Due within one year $ — $ — $ — $ —

5 unchanged sentences

At December 31, 2024 and 2023, investment securities with carrying values of $ 806.0 million and $ 971.3 million, respectively, were pledged as collateral for public deposits.

In addition, at December 31, 2023 and 2022, investment securities with carrying values of $ 679.0 million and zero , respectively, were pledged as collateral for FRB borrowings.

In addition, at December 31, 2024 and 2023, investment securities with carrying values of $ 661.0 million and $ 679.0 million, respectively, were pledged as collateral to the FRB to secure any such borrowings.

At December 31, 2024 and 2023, there were no holdings of securities of any one issuer, other than the US Government and its agencies or GSEs, in an amount greater than 10% of shareholders' equity.

In 2023 and 2022, there were no sales of investment securities with the exception of securities acquired from GrandSouth in 2023 which were subsequently liquidated as discussed in Note 2.

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

(“Visa”) stock that were received upon Visa’s initial public offering and recognized a gain of $ 4.5 million.

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

During 2024, the Company received proceeds from sales of securities of $ 385.1 million and recorded $ 41.5 million in gross losses from the sales.

These losses were partially offset by the $ 4.5 million gain on the sale of the Visa stock discussed above.

Also Included in "Securities losses, net" in the consolidated statements of income, during 2024, the Company received proceeds from the call of a security of $ 5.2 million and recorded a $ 1.0 million loss related to the unamortized premium balance at the time of the call.

In 2023, there were no sales of investment securities with the exception of securities acquired from GrandSouth which were subsequently liquidated as discussed in Note 2.

There was no gain or loss associated with the sale of acquired securities.

In 2021, the Company received proceeds from sales of securities of $ 106.5 million and recorded $ 1.2 million in net gains from the sales.

In 2022, there were no sales of investment securities.

Included in “Other assets” in the consolidated balance sheets are investments in FHLB and Federal Reserve stock totaling $ 41.3 million and $ 54.5 million at December 31, 2024 and 2023, respectively.

4 unchanged sentences

The Company determined that neither stock was impaired at either period end.

The Company owns 12,356 Class B shares of Visa, Inc.

(“Visa”) stock that were received upon Visa’s initial public offering.

These shares are expected to convert into Class A Visa shares subsequent to the settlement of certain litigation against Visa, to which the Company is not a party.

The Class B shares have transfer restrictions, and the conversion rate into Class A shares is periodically adjusted as Visa settles litigation.

The conversion rate at December 31, 2023 was approximately 1.59 , which means the Company would receive approximately 19,615 Class A shares if the stock had converted on that date.

This Class B stock does not have a readily determinable fair value and is carried at zero .

If a readily determinable fair value becomes available for the Class B shares, or upon the conversion to Class A shares, the Company will adjust the carrying value of the stock to its market value with a credit to earnings.

Loans, Allowance for Credit Losses, and Asset Quality Information

10 unchanged sentences

Consumer loans 70,653 1 % 68,443 1 %

8,150,280 100 % 6,666,548 100 %

Unamortized net deferred loan fees ( 178 ) ( 1,403 )

Subtotal 8,093,488 100 % 8,150,280 100 %

Unamortized net deferred loan costs/(fees) 1,188 ( 178 )

$ 8,094,676 $ 8,150,102

7 unchanged sentences

At December 31, 2024 and December 31, 2023, there were remaining unaccreted discounts on the retained portion of sold SBA loans amounting to $ 2.9 million and $ 3.5 million respectively.

At December 31, 2023 and December 31, 2022, loans in the amount of $ 6.5 billion and $ 5.3 billion, respectively, were pledged as collateral for certain borrowings.

At December 31, 2024 and December 31, 2023, loans in the amount of $ 6.7 billion and $ 6.5 billion, respectively, were pledged as collateral to the FRB and the FHLB for borrowing capacity.

Refer to Note 9 for further discussion.

At December 31, 2023 and 2022, total loans included loans to executive officers and directors of the Company, and their associates, totaling approximately $ 63.7 million and $ 6.0 million, respectively.

There were nine new loans and advances on existing loans totaling approximately $ 58.5 million for the year ended December 31, 2023 and repayments amounted to $ 0.8 million for that period.

At December 31, 2024 and 2023, total loans included loans to executive officers and directors of the Company, totaling approximately $ 62.9 million and $ 63.7 million, respectively.

There was one new loan and advances on existing loans totaling approximately $ 1.2 million for the year ended December 31, 2024 and repayments amounted to $ 2.0 million for that period.

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

As of December 31, 2024 and 2023, unamortized discounts on all acquired loans totaled $ 15.1 million and $ 24.0 million, respectively.

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

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 years ended December 31, 2024 and December 31, 2023 that would require acceleration of amortization or charge off of unamortized discount.

Nonperforming assets ("NPAs") are defined as nonaccrual loans, FDMs, loans past due 90 or more days and still accruing interest, foreclosed real estate, and prior to the adoption of ASU 2022-02 on January 1, 2023, TDRs.

The following table summarizes the NPAs for each period presented:

The following table summarizes the NPAs for each date presented.

($ in thousands) December 31,

2 unchanged sentences

Nonaccrual loans $ 31,779 $ 32,208

Modifications to borrowers in financial distress 11,719 —

TDRs - accruing — 9,121

Financial Difficulty Modifications 10,173 11,719

Accruing loans > 90 days past due — —

Total nonperforming loans 41,952 43,927

1 unchanged sentence

Total nonperforming assets $ 46,917 $ 44,789

At December 31, 2023 and 2022, the Company had $ 1.0 million and $ 0.8 million in residential mortgage loans in process of foreclosure, respectively.

At December 31, 2023 and December 31, 2022, there was one loan with an immaterial commitment to lend additional funds to borrowers whose loans were nonperforming.

The following table is a summary of the Company’s nonaccrual loans by major categories for the year ended December 31, 2023.

At December 31, 2024 and 2023, the Company had $ 1.2 million and $ 1.0 million, respectively, in residential mortgage loans in process of foreclosure.

At December 31, 2024 and December 31, 2023, there were, respectively, two loans and one loan with commitments to lend $ 0.4 million and an $ 0.2 million of additional funds to a borrower whose loans were nonperforming.

The following table is a summary of the Company’s nonaccrual loans by major categories as of December 31, 2024.

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

7 unchanged sentences

Total $ 879 $ 30,900 $ 31,779

The following table is a summary of the Company’s nonaccrual loans by major categories for the year ended December 31, 2022.

The following table is a summary of the Company’s nonaccrual loans by major categories as of December 31, 2023.

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

7 unchanged sentences

Total $ 8,559 $ 23,649 $ 32,208

There is no interest income recognized during the periods presented on nonaccrual loans.

The Company follows its nonaccrual policy of reversing contractual interest income in the income statement when the Company places a loan on nonaccrual status.

The following table represents the accrued interest receivables written off by reversing interest income for the periods indicate.

There was no interest income recognized during the periods presented on nonaccrual loans.

In the period that the Company places a loan on nonaccrual status, contractual interest income is reversed in the consolidated income statement.

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

($ in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023

9 unchanged sentences

($ in thousands) Accruing

Past Due Accruing 60-

Current Accruing

Past Due Accruing 60-

Past Due Nonaccrual

Loans Accruing

Current Total Loans

Loans Total Loans

Commercial and industrial $ 906,903 $ 2,442 $ 541 $ 9,804 $ 919,690

11 unchanged sentences

($ in thousands) Accruing

Past Due Accruing 60-

Current Accruing

Past Due Accruing 60-

Past Due Nonaccrual

Loans Accruing

Current Total Loans

Loans Total Loans

Commercial and industrial $ 892,003 $ 3,726 $ 257 $ 9,876 $ 905,862

13 unchanged sentences

The following table presents an analysis of collateral dependent loans of the Company as of December 31, 2024.

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

Commercial and industrial $ — 2,385 — — 2,385

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

Commercial real estate - owner occupied $ 879 $ 879

Commercial real estate - non owner occupied — — — 6,121 6,121

Home equity loans/lines of credit 534 — — — 534

Total $ 879 $ 879

The following table presents an analysis of collateral dependent loans of the Company as of December 31, 2023.

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

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

Commercial and industrial $ — $ 2,385 $ — $ 2,385

1 unchanged sentence

Commercial real estate - non owner occupied — — 6,121 6,121

Residential 1-4 family real estate 157 — — — 157

Home equity loans/lines of credit 534 — — 534

Total $ 534 $ 2,385 $ 7,263 $ 10,182

4 unchanged sentences

For loans secured by real estate, the Company's policy is to write nonaccrual loans down to 90 % of the appraised value, which considers estimated selling costs.

For real estate collateral that is in industries that are undergoing heightened stress, the Company often discounts the collateral values by an additional 10 % to 25 % due to additional discounts that are estimated to be incurred in a near-term sale.

For non-real estate collateral secured loans, the Company generally writes nonaccrual loans down to 75 % of the appraised value, which provides for selling costs and liquidity discounts that are usually incurred when disposing of non-real estate collateral.

For real estate collateral, the Company may discount the collateral values due to factors including market trends, collateral condition, or near-term sales.

For loans secured by non-real estate collateral, the Company generally writes nonaccrual loans down to provide for selling costs and liquidity discounts that are usually

incurred when disposing of non-real estate collateral.

For reviewed loans that are not on nonaccrual basis, the Company assigns a specific allowance based on the parameters noted above.

There is no significant over-coverage of collateral for any of the loan types noted above.

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 CECL model, and as occurred in 2024, adjustments for acquired loan portfolios.

Much of the change to the level of ACL during the year ended December 31, 2023 is attributed to the acquisition of GrandSouth.

In addition to the initial allowance recorded for PCD loans of $ 5.6 million, the Company recorded an initial provision of $ 12.2 million related to the non-PCD loans in the GrandSouth portfolio.

Much of the change to the level of ACL during the year ended December 31, 2024 is attributed to the potential exposure from Hurricane Helene.

The balance of the change was a result of loan growth during the year and updated prepayment speed estimates in the CECL model, which have slowed with market rate increases, thus requiring additional allowance for the estimated longer life of loans.

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

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

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

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

As of and for the year ended December 31, 2024

8 unchanged sentences

$ 109,853 $ ( 9,587 ) $ 3,555 $ 18,751 $ 122,572

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

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

As of and for the year ended December 31, 2023

8 unchanged sentences

$ 90,967 $ 5,610 $ ( 10,175 ) $ 3,701 $ 19,750 $ 109,853

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

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

As of and for the year ended December 31, 2022

7 unchanged sentences

Consumer loans 2,656 ( 840 ) 207 877 2,900

Unallocated 213 — ( 213 ) — — — —

$ 78,789 $ ( 4,465 ) $ 4,043 $ 12,600 $ 90,967

3 unchanged sentences

Loans that are risk-graded as substandard during the origination process are declined.

After loans are initially graded, they are monitored regularly for credit quality based on many factors, such as payment history, the borrower’s financial status, and changes in collateral value.

After loans are initially graded, they are monitored regularly for credit quality based on many factors, such as

payment history, the borrower’s financial status, and changes in collateral value.

Loans can be downgraded or upgraded depending on management’s evaluation of these factors.

26 unchanged sentences

In the tables that follow, substantially all of the "Classified" loans have grades of 7 or Fail, with those categories having similar levels of risk.

Revolving lines of credit that converted to term loans during the years ended December 31, 2023 and December 31, 2022 totaled $ 25.9 million and $ 7.9 million, respectively.

As presented in the tables that follow, as of December 31, 2023, the Company had $ 44.1 million in loans graded as Special Mention and $ 54.2 million in loans graded as Classified, which includes all nonaccrual loans at that date.

As of December 31, 2022, the Company had $ 39.0 million in loans graded as Special Mention and $ 48.5 million in loans graded as Classified, which includes all nonaccrual loans at that date.

As presented in the tables that follow, as of December 31, 2024, the Company had $ 37.1 million in loans graded Special Mention and $ 65.8 million in loans graded Classified, which includes all nonaccrual loans at that date.

As of December 31, 2023, the Company had $ 44.1 million in loans graded Special Mention and $ 54.2 million in loans graded Classified, which includes all nonaccrual loans at that date.

Term Loans by Year of Origination

62 unchanged sentences

Total commercial and industrial 141,193 164,830 111,956 76,886 40,590 65,785 304,622 905,862

Gross charge-offs, YTD 171 1,036 713 537 821 1,547 3,533 8,358

Construction, development & other land loans

3 unchanged sentences

Total construction, development & other land loans 565,144 232,431 90,433 16,662 11,608 5,831 70,871 992,980

Gross charge-offs, YTD — — — — — 120 — 120

Commercial real estate - owner occupied

3 unchanged sentences

Total commercial real estate - owner occupied 215,243 327,890 301,127 198,055 100,495 92,941 23,271 1,259,022

Gross charge-offs, YTD — — 49 — — 92 3 144

Commercial real estate - non owner occupied

3 unchanged sentences

Total commercial real estate - non owner occupied 521,820 749,085 722,522 291,842 121,332 92,116 29,343 2,528,060

Gross charge-offs, YTD — — 235 — — — — 235

Multi-family real estate

3 unchanged sentences

Total multi-family real estate 57,378 137,533 139,879 43,881 12,231 10,323 20,151 421,376

Gross charge-offs, YTD — — — — — — — —

Residential 1-4 family real estate

3 unchanged sentences

Total residential 1-4 family real estate 365,939 400,574 318,191 187,264 95,626 268,628 3,247 1,639,469

Gross charge-offs, YTD — — — — — 4 — 4

Home equity loans/lines of credit

3 unchanged sentences

Total home equity loans/lines of credit 3,248 1,136 1,409 314 611 1,243 327,107 335,068

Gross charge-offs, YTD — — — — — — 309 309

Consumer loans

3 unchanged sentences

Total consumer loans 16,627 12,913 5,044 2,173 435 463 30,788 68,443

Gross charge-offs, YTD 34 79 73 23 — 1 795 1,005

Total loans $ 1,886,592 $ 2,026,392 $ 1,690,561 $ 817,077 $ 382,928 $ 537,330 $ 809,400 8,150,280

1 unchanged sentence

Total loans, net of deferred loan fees $ 8,150,102

Total gross charge-offs, year to date

$ 205 $ 1,115 $ 1,070 $ 560 $ 821 $ 1,764 $ 4,640 $ 10,175

Loan Modifications to Borrowers Experiencing Financial Difficulty

Effective January 1, 2023, we adopted ASU 2022-02 which eliminated the accounting guidance for TDRs and requires disclosures for certain loan modifications when a borrower is experiencing financial difficulty.

Occasionally, the Company modifies loans to borrowers in financial distress as a part of our loss mitigation activities.

4 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 December 31, 2023 of the loans modified during the twelve months then ended for borrowers experiencing financial difficulty, by loan category and type of concession granted.

Payment Delay Term Extension Combination - Interest Rate Reduction and Term Extension Total Percent of Total Class of Loans

The followings tables present the amortized cost basis at December 31, 2024 and December 31, 2023 of the loans modified during the twelve months then ended for borrowers experiencing financial difficulty, by loan category and type of concession granted.

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

As of and for the year ended December 31, 2024

Commercial and industrial $ 180 $ 911 $ 878 $ 92 $ 2,061 0.22 %

4 unchanged sentences

Home equity loans/lines of credit — 413 — 238 651 0.19 %

Total $ 180 $ 1,792 $ 1,009 $ 330 $ 3,311 0.04 %

As of and for the year ended December 31, 2023

Commercial and industrial $ 2,590 $ 251 $ — $ — $ 2,841 0.31 %

Construction, development & other land loans — 354 — 8 362 0.04 %

Commercial real estate - owner occupied 210 4,245 — — 4,455 0.35 %

Commercial real estate - non owner occupied — 206 — — 206 0.01 %

Residential 1-4 family real estate — 735 — — 735 0.04 %

Home equity loans/lines of credit 557 2,436 — 121 3,114 0.93 %

Consumer loans — 6 — — 6 0.01 %

Total $ 3,357 $ 8,233 $ — $ 129 $ 11,719 0.14 %

For the twelve months ended December 31, 2023, there were no modifications for borrowers experiencing financial difficulty with principal forgiveness concessions.

The following tables describes the financial effect for the twelve months ended December 31, 2023 of the modifications made for borrowers experiencing financial difficulty:

We offered a 90 day forbearance to those impacted by Hurricane Helene.

For the twelve months ended December 31, 2024 and December 31, 2023, there were no modifications for borrowers experiencing financial difficulty with principal forgiveness concessions.

The following tables describe the financial effect for the twelve months ended December 31, 2024 and December 31, 2023 of the modifications made for borrowers experiencing financial difficulty:

Financial Effect of Modification to Borrowers Experiencing Financial Difficulty

Weighted Average Interest Rate Reduction Weighted Average Payment Delay (in months) Weighted Average Term Extension (in months)

For the year ended December 31, 2024

Commercial and industrial 0.75 % 11 10

4 unchanged sentences

Home equity loans/lines of credit 1.76 % 0 61

For the year ended December 31, 2023

Commercial and industrial — % 4 31

Construction, development & other land loans 1.55 % 0 19

Commercial real estate - owner occupied — % 11 34

Commercial real estate - non owner occupied — % 0 13

Residential 1-4 family real estate — % 0 23

Home equity loans/lines of credit 2.40 % 13 49

Consumer loans — % 0 24

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 presents the performance of loans that have been modified in the last twelve months as of December 31, 2023:

The following table presents the performance of loans that have been modified in the last twelve months as of December 31, 2024 and December 31, 2023:

Payment Status (Amortized Cost Basis)

Current 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due

($ in thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due

For the year ended December 31, 2024

Commercial and industrial $ 1,183 $ — $ — $ 878

4 unchanged sentences

Home equity loans/lines of credit 583 — 68 —

Total $ 2,307 $ — $ 68 $ 936

For the year ended December 31, 2023

Commercial and industrial $ 2,841 $ — $ — $ —

Construction, development & other land loans 362 — — —

Commercial real estate - owner occupied 4,455 — — —

Commercial real estate - non owner occupied 206 — — —

Residential 1-4 family real estate 656 79 — —

Home equity loans/lines of credit 3,114 — — —

Consumer loans 6 — — —

Total $ 11,640 $ 79 $ — $ —

The following table presents the amortized cost basis of loans that had a payment default during the year ended December 31, 2024 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty by loan category and type of concession granted.

Amortized Cost Basis of Modified Receivables That Subsequently Defaulted

Term Extension Total

For the year ended December 31, 2024

Residential 1-4 family real estate $ 58 $ 58

Total $ 58 $ 58

None of the modifications made for borrowers experiencing financial difficulty during the twelve months ended December 31, 2023 are considered to have had a payment default.

4 unchanged sentences

Concessions may have included interest rate reductions or below market interest rates, principal forgiveness, extension of terms and other actions intended to minimize potential losses.

The vast majority of the Company’s TDRs modified during the years ended December 31, 2022 and 2021 related to interest rate reductions combined with extension of terms.

The vast majority of the Company’s TDRs modified during the year ended December 31, 2022 related to interest rate reductions combined with extension of terms.

The Company does not generally grant principal forgiveness.

15 unchanged sentences

Total TDRs arising during period 12 $ 1,137 $ 1,140

For the year ended December 31, 2021

($ in thousands, except number of contracts) Number of

Contracts Pre-

Balances Post-

TDRs – Accruing

Residential 1-4 family real estate 1 $ 33 33

TDRs – Nonaccrual

Commercial and industrial 5 1,438 1,435

Construction, development & other land loans 1 75 75

Commercial real estate - owner occupied 3 553 553

Commercial real estate - non owner occupied 1 1,176 1,176

Residential 1-4 family real estate 1 263 263

Total TDRs arising during period 12 $ 3,538 3,535

The Company considered a TDR loan to have defaulted when it became 90 or more days delinquent under the modified terms, had been transferred to nonaccrual status, or had been transferred to foreclosed real estate.

There were no accruing TDRs that were modified in the twelve months preceding December 31, 2022 and 2021 and that defaulted during the twelve months ended December 31, 2022 and 2021.

There were no accruing TDRs that were modified in the twelve months preceding December 31, 2022 and that defaulted during the twelve months ended December 31, 2022.

Concentration of Credit Risk

The Company’s loan portfolio is not concentrated in loans to any single borrower or to a relatively small number of borrowers.

Additionally, management is not aware of any concentrations of loans to classes of borrowers or industries that would be similarly affected by economic conditions.

Additionally, management is not aware of any concentrations of loans to classes of borrowers or

industries that would be similarly affected by economic conditions.

Approximately 88 % of the Company's loan portfolio is secured by real estate and is therefore susceptible to changes in real estate valuations.

Most of our business activity is with customers located within the markets where we have banking operations.

Most of the Company's business activity is with customers located within the markets where we have banking operations.

While our exposure to credit risk is affected by changes in the economy within our markets, the risk is not significantly concentrated.

8 unchanged sentences

In addition to monitoring potential concentrations of loans to particular borrowers or groups of borrowers, industries, and geographic regions, the Company monitors exposure to credit risk that could arise from potential concentrations of lending products and practices The Company has determined that there is no concentration of credit risk associated with its lending policies or practices.

Impact of Hurricane Helene

The Company identified borrowers with approximately $ 744 million of loans outstanding within the portions of Western North and South Carolina that were significantly impacted by Hurricane Helene.

The following is a summary of the categories of those loans outstanding as of December 31, 2024:

($ in thousands) Balance

Commercial and industrial $ 10,543

Construction, development & other land loans 24,891

Commercial real estate - owner occupied 96,412

Commercial real estate - non owner occupied 287,076

Multi-family real estate 25,424

Residential 1-4 family real estate 262,166

Home equity loans/lines of credit 37,472

Consumer loans —

Total $ 743,984

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 as of December 31, 2024.

The Company applied increased reserve rates based upon severe economic factors to the approximately $ 744 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 1.25 % to 3.00 % as of December 31, 2024 and adding 16 basis points to the overall ACL as a percent of total loans, which was 1.51 % as of December 31, 2024.

We offered a 90 day forbearance to those loan customers impacted by Hurricane Helene.

Allowance for Unfunded Loan Commitments

2 unchanged sentences

The allowance for lending-related commitments on off-balance sheet credit exposures is adjusted as a provision for credit loss expense.

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, and are discussed in Note 1.

The allowance for unfunded loan commitments of $ 11.4 million and $ 13.3 million at December 31, 2023 and December 31, 2022, respectively, were included in "Other liabilities" on the consolidated balance sheets.

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, and are discussed in Note 1.

The allowance for unfunded loan commitments were included in "Other liabilities" on the consolidated balance sheets.

The following table prese nts the balance and activity in the allowance for unfunded loan commitments for twelve months ended December 31, 2024 and December 31, 2023:

6 unchanged sentences

Ending balance $ 9,066 $ 11,369

Allowance for Credit Losses - Securities Held Maturity

The ACL for securities held to maturity was insignificant at December 31, 2023 and December 31, 2022.

Premises and Equipment

Premises and equipment at December 31, 2024 and 2023 consisted of the following:

($ in thousands) Estimated Useful Lives 2023 2022

($ in thousands) Estimated Useful Lives December 31, 2024 December 31, 2023

Land $ 51,053 $ 52,443

3 unchanged sentences

35,696 35,214

Vehicles 3 years

Vehicles 3 to 5 years

Leasehold improvements 1 to 39 years

2 unchanged sentences

Total premises and equipment $ 143,459 $ 150,957

Depreciation expense amounted to $ 7.8 million, $ 6.9 million, and $ 6.2 million for the years ended December 31, 2023, 2022, and 2021, respectively, and is recorded in occupancy expense.

Goodwill and Other Intangible Assets

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

Depreciation expense amounted to $ 7.8 million, $ 7.8 million, and $ 6.9 million for the years ended December 31, 2024, 2023, and 2022, respectively, and is recorded in occupancy and equipment expense.

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.

December 31, 2024 December 31, 2023

8 unchanged sentences

Other 100 100 — 100 83 17

Intangibles before servicing assets 60,690 31,182 29,508 31,850 23,179 8,671

SBA servicing assets 13,966 10,616 3,350 13,264 9,260 4,004

Total amortizable intangible assets $ 59,590 $ 36,686 $ 22,904 $ 60,690 $ 31,183 $ 29,507

3 unchanged sentences

In connection with the GrandSouth acquisition on January 1, 2023, the Company recorded $ 28.8 million in core deposit intangibles.

Amortization expense of all other intangible assets, excluding the SBA servicing asset, totaled $ 8.0 million, $ 3.7 million, and $ 3.5 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The portfolio of SBA loans serviced for others, which were not included in the accompanying consolidated balances sheets, was $ 349.3 million and $ 392.4 million, respectively, at December 31, 2023 and 2022.

There were no other loans serviced for others in any year presented.

Amortization expense of all amortizable intangible assets totaled $ 6.6 million, $ 8.0 million, and $ 3.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.

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

Goodwill is also evaluated for impairment any time there is a triggering event indicating that impairment may have occurred.

No triggering events were identified during 2024 or 2023 and, therefore, the Company did not perform interim impairment evaluations in either of those years.

The Company's most recent evaluation of goodwill, which occurred in the fourth quarter of 2024, indicated that there was no goodwill impairment.

There was no change to carrying amounts of goodwill during 2024.

The following table presents the changes in carrying amounts of goodwill:

($ in thousands) Total Goodwill

Balance at December 31, 2022 $ 364,263

Additions from acquisition of GrandSouth 114,487

Balance at December 31, 2023 478,750

Net activity during 2024 —

Balance at December 31, 2024 $ 478,750

The following table presents the estimated amortization expense schedule related to amortizable intangible assets.

These amounts will be recorded as "Intangibles amortization expense" within the noninterest expense section of the consolidated statements of income.

These estimates are subject to change in future periods to the extent management determines it is necessary to make adjustments to the carrying value or estimated useful lives of amortizable intangible assets.

($ in thousands) Estimated

Amortization Expense

Thereafter 2,937

Total $ 22,904

During 2024, 2023 and 2022, the Company recorded $ 3.2 million, $ 3.5 million, and $ 3.4 million , respectively, in SBA guaranteed servicing fee income.

There was no impairment of SBA servicing assets at December 31, 2023 and $ 352 thousand as of December 31, 2022.

Impairment charges or reversals are nominal in each year and are included with amortization expense in noninterest income as an offset to SBA servicing income.

A summary of the key assumptions used in the discounted cash flow method utilized to estimate the fair value of the SBA servicing asset were as follows:

There was no impairment of SBA servicing assets at December 31, 2024 and December 31, 2023.

A summary of the key assumptions used in the discounted cash flow method utilized to estimate the fair value of the SBA servicing assets were as follows:

December 31, 2024 December 31, 2023

8 unchanged sentences

Servicing cost 0.40 % 0.40 %

The following table presents the changes in the SBA servicing assets for each period indicated.

The following table presents the changes in the SBA servicing assets (included in "Other assets" in the Company's consolidated balance sheet) for each period indicated.

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

3 unchanged sentences

Ending balance, net $ 2,605 $ 3,350

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

Goodwill is also evaluated for impairment any time there is a triggering event indicating that impairment may have occurred.

No triggering events were identified during 2023 or 2022, and therefore, the Company did not perform interim impairment evaluations in either of those years.

Each of the Company's goodwill impairment evaluations for the periods presented, including the most recent, which occurred in the fourth quarter of 2023, indicated that there was no goodwill impairment.

The following table presents the changes in carrying amounts of goodwill:

($ in thousands) Total Goodwill

Balance at December 31, 2021 $ 364,263

Net activity during 2022 —

Balance at December 31, 2022 364,263

Additions from acquisition of GrandSouth 114,487

Balance at December 31, 2023 $ 478,750

The following table presents the estimated amortization expense schedule related to acquisition-related amortizable intangible assets, excluding the SBA servicing assets.

These amounts will be recorded as "Intangibles amortization expense" within the noninterest expense section of the consolidated statements of income.

($ in thousands) Estimated

Amortization Expense

Thereafter 5,380

Total $ 29,508

The components of income tax expense (benefit) for the years ended December 31, 2024, 2023, and 2022 are as follows:

4 unchanged sentences

- State ( 300 ) ( 301 ) ( 152 )

$ 27,825 38,283 24,675

Total $ 21,902 $ 27,825 $ 38,283

The following is a reconciliation of federal income tax expense at the statutory rate of 21% at December 31, 2024, December 31, 2023, and December 31, 2022, to the income tax provision reported in the financial statements.

2 unchanged sentences

Increase (decrease) in income taxes resulting from:

Tax-exempt interest income ( 2,175 ) ( 1,976 ) ( 1,589 )

Low income housing and other tax credits ( 630 ) ( 669 ) ( 1,229 )

Bank-owned life insurance income ( 920 ) ( 1,511 ) ( 589 )

Non-deductible interest expense 241 26 14

Tax-exempt interest income, net ( 1,937 ) ( 1,934 ) ( 1,950 )

State income taxes, net of federal benefit 2,928 2,809 3,369

Nondeductible merger expenses 489 107 242

Change in valuation allowance ( 13 ) ( 20 ) ( 10 )

Nondeductible compensation 274 97 27

Other, net 306 ( 761 ) ( 2,032 )

Total $ 21,902 $ 27,825 $ 38,283

In the table above, for 2024, the Other, net amount includes $ 1.7 million related to incremental state tax-related expenses for prior years, net of associated federal benefit amounts and $ 0.8 million related to deferred tax adjustments.

The sources and tax effects of temporary differences that give rise to significant portions of the deferred tax assets, which are included in Other assets on the consolidated balance sheets are as follows at December 31, 2024 and 2023:

1 unchanged sentence

Deferred tax assets:

Allowance for credit losses on loans $ 25,431 20,900

Allowance for credit losses on unfunded commitments 2,632 3,057

Excess book over tax pension plan cost 403 365

Deferred compensation 1,453 638

Federal & state net operating loss and tax credit carryforwards 188 197

Accruals, book versus tax 3,462 4,404

Allowance for credit losses on loans and unfunded commitments $ 30,257 $ 28,063

Unrealized losses on securities available for sale 85,940 92,767

Foreclosed real estate — 3

Basis differences in assets acquired in FDIC transactions 46 —

Purchase accounting adjustments 3,358 4,691

Equity compensation 1,524 768

Partnership investments 773 652

Leases 178 151

SBA servicing asset 31 77

Operating lease liability 3,342 4,100

All other 8,077 7,886

Gross deferred tax assets 130,974 137,507

Valuation allowance ( 17 ) ( 30 )

Net deferred tax assets 133,585 136,210

Deferred tax liabilities:

2 unchanged sentences

Amortizable basis of intangible assets ( 14,442 ) ( 15,523 )

Basis differences in assets acquired in FDIC transactions — ( 108 )

Trust preferred securities ( 388 ) ( 416 )

Pension — ( 12 )

Right of use lease asset ( 3,161 ) ( 3,922 )

All other ( 578 ) ( 388 )

Gross deferred tax liabilities ( 25,311 ) ( 29,855 )

Net deferred tax asset $ 105,663 $ 107,652

The valuation allowances for 2023 and 2022 related to state net operating loss carryforwards.

The realization of the remaining net deferred tax assets is determined to be more likely than not.

The Company had no significant uncertain tax positions, and thus no reserve for uncertain tax positions has been recorded.

The company had recorded deminimis valuation allowances for 2024 and 2023 related to state net operating loss carryforwards for which the realization of the remaining deferred tax assets is determined to be more likely than not.

The Company had no significant uncertain tax positions, and thus no such reserve for uncertain tax positions has been recorded.

Additionally, the Company determined that it has no material unrecognized tax benefits that if recognized would affect the effective tax rate.

3 unchanged sentences

There are no indications of any material adjustments relating to any examination currently being conducted by any taxing authority.

Retained earnings at December 31, 2023 and 2022 included approximately $ 6.9 million representing pre-1988 tax bad debt reserve base year amounts for which no deferred income tax liability has been provided since these reserves are not expected to reverse or may never reverse.

Circumstances that would require an accrual of a portion or all of this unrecorded tax liability are a reduction in qualifying loan levels relative to the end of 1987, failure to meet the definition of a bank, dividend payments in excess of accumulated tax earnings and profits, or other distributions in dissolution, liquidation or redemption of the Bank’s stock.

The following table lists the composition of the deposit portfolio as of the end of the respective years.

14 unchanged sentences

Deposits received from executive officers and directors and their associates totaled approximately $ 5.0 million and $ 4.6 million at December 31, 2024 and 2023, respectively.

Deposit overdrafts of approximately $ 1.1 million and $ 0.8 million at December 31, 2023 and 2022 are included within "Loans" on the consolidated balance sheets.

Deposit overdrafts of approximately $ 1.1 million at December 31, 2024 and 2023 are included within "Loans" on the consolidated balance sheets.

As of December 31, 2024 and 2023, the Company held $ 360.9 million and $ 355.2 million, respectively, in time deposits of more than $250,000 (which was the FDIC insurance limit for insured deposits as of December 31, 2024).

3 unchanged sentences

In addition to insured deposits, there were deposits with a balance totaling $ 690.5 million at December 31, 2024 which were collateralized by investment securities such that approximately 67.6 % of our total deposits were insured or collateralized at that date.

The Company’s deposit portfolio is not concentrated in deposits to any single customer or to a relatively small number of customers.

The Company’s deposit portfolio is not concentrated in deposits from any single customer or to a relatively small number of customers.

Additionally, management is not aware of any concentrations of deposits to classes of customers or industries that would be similarly affected by economic conditions.

6 unchanged sentences

Borrowings and Borrowings Availability

The following tables presents information regarding the Company’s outstanding borrowings at December 31, 2023 (dollars are 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 Fixed Rate Credit 1/16/2024 None 80,000 5.59 % fixed

FHLB Fixed Rate Credit 2/27/2024 None 100,000 5.61 % fixed

FHLB Fixed Rate Credit 3/20/2024 None 100,000 5.61 % fixed

FRB Bank Term Funding Program 12/20/2024 None 224,000 4.85 % fixed

FRB Bank Term Funding Program 12/27/2024 None 25,000 4.83 % fixed

Trust Preferred Securities 1/23/2034 Quarterly by Company

beginning 1/23/2009 10,310 8.30 % at 12/31/23

adjustable rate

3 month CME Term SOFR + 2.91 %

Trust Preferred Securities 1/23/2034 Quarterly by Company

beginning 1/23/2009 10,310 8.40 % at 12/31/23

adjustable rate

3 month CME Term SOFR + 3.01 %

Trust Preferred Securities 9/20/2034 Quarterly by Company

beginning 9/20/2009 12,372 7.78 % at 12/31/23

adjustable rate

3 month CME Term SOFR + 2.41 %

Trust Preferred Securities 1/7/2035 Quarterly by Company

beginning 1/7/2010 10,310 7.66 % at 12/31/23

adjustable rate

3 month CME Term SOFR + 2.00 %

Trust Preferred Securities 6/15/2036 Quarterly by Company

beginning 6/15/2011 25,774 7.04 % at 12/31/23

adjustable rate

3 month CME Term SOFR + 1.65 %

Trust Preferred Securities 6/23/2036 Quarterly by Company beginning 6/23/2011 8,248 7.47 % at 12/31/23

adjustable rate

3 month CME Term SOFR + 2.11 %

Subordinated Debentures 11/30/2028 Continuous by Company beginning 11/30/2023 10,000 9.09 % at 12/31/23

adjustable rate

3 month CME Term SOFR + 3.69 %

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

The following tables presents information regarding the Company’s outstanding borrowings at December 31, 2024 ($ are in thousands) :

Description Due Date Call Feature Balance Interest Rate

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

None $ 802 0.00 % to 1.00 % fixed

Trust Preferred Securities 1/23/2034 Quarterly by Company beginning 1/23/2009 10,310 7.50 % at 12/31/24 adjustable rate 3 month CME Term SOFR + 2.91 %

Trust Preferred Securities 1/23/2034 Quarterly by Company beginning 1/23/2009 10,310 7.61 % at 12/31/24 adjustable rate 3 month CME Term SOFR + 3.01 %

Trust Preferred Securities 9/20/2034 Quarterly by Company beginning 9/20/2009 12,372 6.77 % at 12/31/24 adjustable rate 3 month CME Term SOFR + 2.41 %

Trust Preferred Securities 1/7/2035 Quarterly by Company beginning 1/7/2010 10,310 6.92 % at 12/31/24 adjustable rate 3 month CME Term SOFR + 2.00 %

Trust Preferred Securities 6/15/2036 Quarterly by Company beginning 6/15/2011 25,774 6.01 % at 12/31/24 adjustable rate 3 month CME Term SOFR + 1.65 %

Trust Preferred Securities 6/23/2036 Quarterly by Company beginning 6/23/2011 8,248 6.45 % at 12/31/24 adjustable rate 3 month CME Term SOFR + 2.11 %

Subordinated Debentures 11/15/2030 Continuous by Company beginning 11/15/2025 18,000 4.38 % fixed at 12/31/24 until 11/15/25, then adjustable rate 3 month CME Term SOFR + 4.16 %

Total borrowings / weighted average rate as of December 31, 2024 96,126 6.22 %

2 unchanged sentences

The following table presents information regarding the Company’s outstanding borrowings at December 31, 2023 (dollars are in thousands) :

Description Due date Call Feature Balance at December 31,

2022 Interest Rate

FHLB Principal Reducing Credit 7/24/2023 None $ 32 1.00 % fixed

FHLB Principal Reducing Credit 12/22/2023 None 912 1.25 % fixed

FHLB Principal Reducing Credit 6/26/2028 None 214 0.25 % fixed

FHLB Principal Reducing Credit 7/17/2028 None 38 0.00 % fixed

FHLB Principal Reducing Credit 8/18/2028 None 158 1.00 % fixed

FHLB Principal Reducing Credit 8/22/2028 None 159 1.00 % fixed

FHLB Principal Reducing Credit 12/20/2028 None 329 0.50 % fixed

Description Due date Call Feature Balance Interest Rate

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

1 unchanged sentence

FHLB Fixed Rate Credit 3/20/2024 None 100,000 5.61 % fixed

FHLB Daily Rate Credit 8/23/2023 None 40,000 4.57 % fixed

Trust Preferred Securities 1/23/2034 Quarterly by Company

beginning 1/23/2009 10,310 7.06 % at 12/31/22 adjustable rate

3 month LIBOR + 2.65 %

Trust Preferred Securities 1/23/2034 Quarterly by Company

beginning 1/23/2009 10,310 7.16 % at 12/31/22 adjustable rate

3 month LIBOR + 2.75 %

Trust Preferred Securities 9/20/2034 Quarterly by Company

beginning 9/20/2009 12,372 6.90 % at 12/31/22

adjustable rate

3 month LIBOR + 2.15 %

Trust Preferred Securities 1/7/2035 Quarterly by Company

beginning 1/7/2010 10,310 6.08 % at 12/31/22

adjustable rate

3 month LIBOR + 2.00 %

Trust Preferred Securities 6/15/2036 Quarterly by Company

beginning 6/15/2011 25,774 6.16 % at 12/31/22

adjustable rate

3 month LIBOR + 1.39 %

FRB Bank Term Funding Program 12/20/2024 None 224,000 4.85 % fixed

FRB Bank Term Funding Program 12/27/2024 None 25,000 4.83 % fixed

Trust Preferred Securities 1/23/2034 Quarterly by Company beginning 1/23/2009 10,310 8.30 % at 12/31/23 adjustable rate 3 month CME Term SOFR + 2.91 %

Trust Preferred Securities 1/23/2034 Quarterly by Company beginning 1/23/2009 10,310 8.40 % at 12/31/23 adjustable rate 3 month CME Term SOFR + 3.01 %

Trust Preferred Securities 9/20/2034 Quarterly by Company beginning 9/20/2009 12,372 7.78 % at 12/31/23 adjustable rate 3 month CME Term SOFR + 2.41 %

Trust Preferred Securities 1/7/2035 Quarterly by Company beginning 1/7/2010 10,310 7.66 % at 12/31/23 adjustable rate 3 month CME Term SOFR + 2.00 %

Trust Preferred Securities 6/15/2036 Quarterly by Company beginning 6/15/2011 25,774 7.04 % at 12/31/23 adjustable rate 3 month CME Term SOFR + 1.65 %

Trust Preferred Securities 6/23/2036 Quarterly by Company beginning 6/23/2011 8,248 7.47 % at 12/31/23 adjustable rate 3 month CME Term SOFR + 2.11 %

Subordinated Debentures 11/30/2028 Continuous by Company beginning 11/30/2023 10,000 9.09 % at 12/31/23 adjustable rate 3 month CME Term SOFR + 3.69 %

Subordinated Debentures 11/15/2030 Continuous by Company beginning 11/15/2025 18,000 4.38 % fixed at 12/31/23

until 11/15/25, then adjustable rate 3 month CME Term SOFR + 4.16 %

Total borrowings / weighted average rate as of December 31, 2023 635,175 5.57 %

2 unchanged sentences

All outstanding FHLB and FRB borrowings may be accelerated immediately by the FHLB and FRB, respectively, in certain circumstances, including material adverse changes in the condition of the Company or if the Company’s qualifying collateral amounts to less than that required under the terms of the borrowing agreement.

In the above tables, at December 31, 2023, short-term borrowings (original maturity terms of less than twelve months) totaled $ 529.0 million and had a weighted average interest rate of 5.25 %.

In the above tables, at December 31, 2024, there were no short-term borrowings (original maturity of less than twelve months).

At December 31, 2023, short-term borrowings totaled $ 529.0 million and had a weighted average interest rate of 5.25 % .

1 unchanged sentence

These unsecured debt securities qualify as Tier I capital for capital adequacy requirements.

The Subordinated Debentures in the tables above are borrowings issued by GrandSouth and acquired by the Company on January 1, 2023.

The Subordinated Debentures in the tables above are borrowings issued by GrandSouth and assumed by the Company on January 1, 2023.

These unsecured debt securities qualify as Tier II capital for capital adequacy requirements.

2 unchanged sentences

As of December 31, 2024, the line of credit is secured by a blanket lien on portions of the Company's real estate loan portfolio totaling approximately $ 2.4 billion and the Company's FHLB stock totaling $ 8.5 million.

$ 280.9 million was outstanding on the line of credit at December 31, 2023 and $ 221.8 million was outstanding at December 31, 2022;

$ 0.8 million was

outstanding on the line of credit at December 31, 2024 and $ 280.9 million was outstanding at December 31, 2023;

• A total of $ 265.0 million federal funds lines of credit with correspondent banks which allow the Company to purchase federal funds on an overnight, unsecured basis.

None was outstanding at December 31, 2024 or 2023;

• A $ 294.1 million line of credit through the Federal Reserve's Bank Term Funding Program, secured by specific investment securities, with $ 249.0 million outstanding at December 31, 2023;

• An approximately $ 767.4 million line of credit through the Federal Reserve's discount window borrowing program, which was secured at December 31, 2024 by a blanket lien on a portion of the Company’s commercial and consumer loan portfolios (excluding real estate collateral) totaling approximately $ 303.0 million and specific investment securities with a carrying value of $ 697.5 million.

None was outstanding at December 31, 2023 or 2022, respectively.

No borrowings were outstanding at December 31, 2024 or 2023, respectively.

At December 31, 2024, the contractual maturities of borrowings were as follows for the years ending:

($ in thousands) FHLB Principal Reducing Credit FHLB Fixed Rate Credit FRB Bank Term Funding Program Trust Preferred Securities Subordinated Debentures Total

2024 $ — 280,000 249,000 — — 529,000

2025 — — — — — —

2026 — — — — — —

($ in thousands) FHLB Principal Reducing Credit Trust Preferred Securities Subordinated Debentures Total

2025 $ — $ — $ — $ —

5 unchanged sentences

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

As of December 31, 2023, the Company leased 17 branch offices for which the land and buildings are leased and ten branch offices for which the land is leased but the building is owned.

As of December 31, 2024, the Company leased 13 branch offices for which the land and buildings are leased and nine branch offices for which the land is leased but the building is owned.

The Company also leases office space for several operational departments.

All of the Company’s leases are operating leases and the lease agreements have maturity dates ranging from January 2024 through May 2076, some of which include options for multiple five - and ten-year extensions.

All of the Company’s leases are operating leases and the lease agreements have maturity dates ranging from April 2026 to May 2076, some of which include options for multiple five - and ten-year extensions.

The Company includes lease extension options in the lease term if, after considering relevant economic, market, and strategic factors, it is reasonably certain the Company will exercise the option.

7 unchanged sentences

Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

The Company uses its incremental borrowing rate, based on for a fully collateralized loan with a maturity similar to the lease term, at lease commencement to calculate the present value of lease payments when the rate implicit in the lease is not known.

The Company uses its incremental borrowing rate, based on a fully collateralized fully amortizing borrowing with a maturity similar to the lease term, 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 rate for leases was 3.34 % and 3.19 % as of December 31, 2024 and 2023, respectively.

The right-of-use assets and lease liabilities were $ 17.1 million and $ 17.8 million as of December 31, 2023, respectively, and were $ 18.7 million and $ 19.4 million as of December 31, 2022, respectively.

Total operating lease expense charged to operations under all operating lease agreements was $ 3.1 million in 2023, $ 2.9 million in 2022, and $ 2.6 million in 2021.

These expenses are recorded within noninterest expense in the "Equipment related expenses" line on the consolidated statements of income.

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 $ 13.8 million and $ 14.6

million as of December 31, 2024, respectively, and were $ 17.1 million and $ 17.8 million as of December 31, 2023, respectively.

Total operating lease expenses, included in "Occupancy and equipment expenses" in the Company's consolidated statement of income, was $ 2.5 million in 2024, $ 3.1 million in 2023, and $ 2.9 million in 2022.

Future undiscounted lease payments for operating leases with initial terms of one year or more as of December 31, 2024 for each of the five calendar years ending December 31, 2029 are as follows:

9 unchanged sentences

An eligible employee may contribute up to 15 % of annual salary to the plan, not to exceed IRC limits.

For each of the years ended December 31, 2023, 2022, and 2021, the Company matched 100 % of the employee’s contribution up to 6 %.

For the years ended December 31, 2024, 2023, and 2022, the Company matched 100 % of the employee’s contribution up to 4 %, 6 % and 6 %, respectively.

The Company’s matching contribution expense was $ 6.8 million, $ 6.1 million, and $ 4.9 million for the years ended December 31, 2024, 2023, and 2022, respectively.

1 unchanged sentence

The Company’s matching and discretionary contributions are made according to the same investment elections each participant has established for their deferral contributions.

During 2024, upon the dissolution of the Pension Plan, as discussed below, the remaining balance of plan assets was transferred to the 401(k) Plan, the expense for which is included in the 2024 contribution expense shown above.

Historically, the Company offered a noncontributory defined benefit retirement plan (the “Pension Plan”) that qualified under Section 401(a) of the IRC.

The Pension Plan provided for a monthly payment, at normal retirement age of 65, equal to one-twelfth of the sum of (i) 0.75 % of Final Average Annual Compensation ( five highest consecutive calendar years’ earnings out of the last ten years of employment) multiplied by the employee’s years of service not in excess of 40 years, and (ii) 0.65 % of Final Average Annual Compensation in excess of the average social security wage base multiplied by years of service not in excess of 35 years.

Benefits were fully vested after five years of service.

Effective December 31, 2012, the Company froze the Pension Plan for all participants and has not made any contributions to the Pension Plan in any year presented.

In March 2023, the Company’s Board of Directors (the "Board") approved a resolution to terminate the Pension Plan.

During the second quarter of 2023, the Company commenced the Pension Plan termination process and on July 31, 2023, the Pension Plan was amended to terminate it as of that date.

During the fourth quarter of 2023, the Pension Plan settled benefits through lump-sum payments of approximately $ 9.2 million to eligible participants electing that option and purchased annuity contracts from One America (the "Insurer") which irrevocably transferred to the Insurer approximately $ 19.5 million of the Pension Plan's obligations and related assets, thereby reducing the Pension Plan's obligations at December 31, 2023 to zero .

The Insurer will administer all future payments to remaining participants of the Pension Plan.

The Pension Plan's net funded position was sufficient to cover the lump sum payments and the purchase of the annuity contract, settling all benefit obligations with no additional funding required.

As a result of this transaction, the Company recognized a one-time, non-cash pension settlement charge of $ 1.0 million.

After the settlement of the benefit obligations and payment of expenses, the Company had excess assets in the Pension Plan of approximately $ 2.5 million.

The Company has elected to utilize the remaining surplus

after payment of final administrative expenses for future contributions under the Company’s 401(k) plan.

The assets will be held in the Pension Plan trust account until the contributions are made and are included in "Other assets" on the consolidated balance sheets.

Prior to the termination of the Pension Plan, the investment objective was to ensure that there were sufficient assets to fund regular pension benefits payable to employees over the long-term life of the plan.

Plan assets were allocated in a manner to closely duration-match the actuarial projected cash flows of the plan liabilities.

In 2018, the Pension Plan adopted a liability-driven investment strategy to help meet the objectives.

This strategy employed a structured fixed-income portfolio designed to reduce volatility in the Pension Plan’s future funding requirements and funding status.

This was accomplished by using a blend of high quality corporate and government fixed-income securities, with both intermediate and long-term durations.

The following table reconciles the beginning and ending balances of the Pension Plan’s benefit obligation, as computed by the Company with assistance from its independent actuarial consultants, and its plan assets, with the difference between the two amounts representing the funded status of the Pension Plan as of the end of the respective year.

($ in thousands) 2023 2022 2021

Change in benefit obligation

Benefit obligation at beginning of year $ 30,611 41,657 44,750

Service cost — — —

Interest cost 1,451 1,043 981

Actuarial gain ( 1,470 ) ( 10,286 ) ( 2,041 )

Benefits paid, including lump sums ( 11,135 ) ( 1,803 ) ( 2,033 )

Transfer to insurer ( 19,457 ) — —

Accumulated benefit obligation at end of year — 30,611 41,657

Change in plan assets

Plan assets at beginning of year 33,655 44,904 48,167

Actual return on plan assets ( 547 ) ( 9,446 ) ( 1,230 )

Employer contributions — — —

Benefits paid, including lump sums ( 11,135 ) ( 1,803 ) ( 2,033 )

Transfer to insurer ( 19,457 ) — —

Plan assets at end of year 2,517 33,655 44,904

Funded status at end of year (1)

$ 2,517 3,044 3,247

(1) - As of December 31, 2023, the Pension Plan was terminated and surplus assets were held in the Pension Plan's trust account until deployed as contributions to the Company's 401(k) Plan in 2024 and 2025.

The following table presents information regarding the amounts recognized in accumulated other comprehensive income (loss) (“AOCI”) at December 31, 2023 and 2022, as it relates to the Pension Plan.

($ in thousands) 2023 2022

Net actuarial loss $ — ( 1,497 )

Prior service cost — —

Amount recognized in AOCI before tax effect — ( 1,497 )

Tax benefit — 344

Net amount recognized as decrease to AOCI $ — ( 1,153 )

The following table reconciles the beginning and ending balances of AOCI at December 31, 2023 and 2022, as it relates to the Pension Plan:

($ in thousands) 2023 2022

Accumulated other comprehensive loss at beginning of fiscal year

$ ( 1,153 ) ( 1,110 )

Net loss arising during period ( 693 ) ( 312 )

Recognition of net actuarial loss due to plan settlement 998 —

Amortization of net unrecognized actuarial loss 1,192 256

Tax (benefit) expense of changes during the year, net ( 344 ) 13

Accumulated other comprehensive loss at end of fiscal year

$ — ( 1,153 )

The following table reconciles the beginning and ending balances of the prepaid pension cost related to the Pension Plan for the periods presented.

As noted above, there are no remaining obligations of the Pension Plan and assets at December 31, 2023 represent the surplus cash held in the Pension Plan's trust account for contributions to be made to the Company's 401(k) plan during 2024 and 2025.

($ in thousands) 2023 2022

Prepaid pension cost as of beginning of fiscal year

$ 4,542 4,689

Net periodic pension cost for fiscal year

( 2,025 ) ( 147 )

Actual employer contributions

Prepaid pension asset as of end of fiscal year $ 2,517 4,542

Net pension cost for the Pension Plan included the following components for the years ended December 31, 2023, 2022, and 2021:

($ in thousands) 2023 2022 2021

Service cost – benefits earned during the period $ — — —

Interest cost on projected benefit obligation 1,451 1,043 981

Expected return on plan assets ( 1,616 ) ( 1,152 ) ( 1,059 )

Net amortization and deferral 1,192 256 577

Recognized settlement loss 998 — —

Net periodic pension cost $ 2,025 147 499

The components of net periodic benefit cost other than the service cost component are included in the line item "Other operating expenses" in the consolidated statements of income.

The following assumptions were used in determining the actuarial information for the Pension Plan for the years ended December 31, 2023, 2022, and 2021:

2023 2022 2021

Discount rate used to determine net periodic pension cost 4.94 % 2.62 % 2.24 %

Expected long-term rate of return on assets 4.94 % 2.62 % 2.24 %

Discount rate used to calculate end of year liability disclosures (1)

n/a 4.94 % 2.62 %

(1) - As of December 31, 2023, there were no Pension Plan obligations or liabilities.

The Company’s discount rate policy for the Pension Plan is based on a calculation of the Company’s expected pension payments, with those payments discounted using the FTSE yield curve (formerly called the Citigroup Pension Index yield curve) that matches the specific expected cash flows of the Pension Plan.

As noted above, the remaining assets in the Pension Plan's trust account at December 31, 2023 represent the surplus cash held for contributions to be made to the Company's 401(k) plan during 2024 and 2025.

The cash balance is held in an interest-bearing money market accounts and is considered a Level 1 fair value asset.

The Pension Plan assets at December 31, 2022 included $ 194.0 thousand of cash and cash equivalents which consisted of interest-bearing money market accounts and is considered a Level 1 fair value asset.

The Pension Plans' Level 2 assets totaled $ 33.5 million and consisted of fixed income commingled funds that primarily include investments in U.S.

government securities and corporate bonds.

The commingled funds are valued at the net asset value ("NAV") for the units in the fund.

The NAV, as provided by the Trustee, is used as practical expedient to estimate fair value.

The NAV is based on the fair value of the underlying investments held by the fund.

In 2023, the Company’s Board of Directors (the "Board") approved a resolution to terminate the Pension Plan.

During 2023, the Company commenced the Pension Plan termination process and on July 31, 2023, the Pension Plan was amended to terminate it as of that date.

Subsequently in 2023, the Pension Plan settled benefits through lump-sum payments of approximately $ 9.2 million to eligible participants electing that option and purchased annuity contracts from One America (the "Insurer") which irrevocably transferred to the Insurer approximately $ 19.5 million of the Pension Plan's obligations and related assets, thereby reducing the Pension Plan's obligations at December 31, 2023 to zero .

The Company utilized the remaining surplus for future contributions under the Company’s 401(k) Plan and the remaining balance was transferred to the 401(k) Plan during 2024.

Supplemental Executive Retirement Plan

Historically, the Company sponsored a Supplemental Executive Retirement Plan (the “SERP”) for the benefit of certain senior management executives of the Company.

The purpose of the SERP was to provide additional monthly pension benefits to ensure that each such senior management executive would receive lifetime monthly pension benefits equal to 3 % of his or her final average compensation multiplied by his or her years of service (maximum of 20 years) to the Company or its subsidiaries, subject to a maximum of 60 % of his or her final average compensation.

The amount of a participant’s monthly SERP benefit is reduced by (i) the amount payable under the Company’s Pension Plan (described above), and (ii) 50 % of the participant’s primary social security benefit.

Final average compensation means the average of the five highest consecutive calendar years of earnings during the last ten years of service prior to termination of employment.

The purpose of the SERP was to provide additional monthly pension benefits.

The SERP is an unfunded plan.

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Amount recognized in AOCI before tax effect 111 ( 100 )

Tax benefit (expense) 23 ( 356 )

Net amount recognized as (decrease) increase to AOCI $ ( 77 ) 1,195

Tax (expense) benefit ( 26 ) 23

Net amount recognized as increase (decrease) to AOCI $ 85 $ ( 77 )

The following table reconciles the beginning and ending balances of AOCI at December 31, 2024 and 2023, as it relates to the SERP:

($ in thousands) 2024 2023

Accumulated other comprehensive income at beginning of fiscal year $ 1,195 838

Accumulated other comprehensive (loss) income at beginning of fiscal year $ ( 77 ) $ 1,195

Net gain arising during period 111 86

Prior service cost — —

Amortization of unrecognized actuarial loss ( 1,737 ) ( 544 )

Tax benefit (expense) related to changes during the year, net 379 ( 106 )

Accumulated other comprehensive (loss) income at end of fiscal year $ ( 77 ) 1,195

Amortization of unrecognized actuarial gain (loss) 100 ( 1,737 )

Amortization of prior service cost and transition obligation — —

Tax (expense) benefit related to changes during the year, net ( 49 ) 379

Accumulated other comprehensive income (loss) at end of fiscal year $ 85 $ ( 77 )

The following table reconciles the beginning and ending balances of the prepaid pension cost related to the SERP:

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Accrued liability as of beginning of fiscal year $ ( 3,251 ) $ ( 5,071 )

Net periodic pension cost for fiscal year 1,579 432

Net periodic pension (cost) income for fiscal year ( 251 ) 1,579

Benefits paid 241 241

4 unchanged sentences

Interest cost on projected benefit obligation 151 158 112

Amortization of net actuarial (loss) gain ( 1,737 ) ( 544 ) 15

Net periodic pension cost $ ( 1,579 ) ( 432 ) 134

Amortization of net actuarial gain (loss) 100 ( 1,737 ) ( 544 )

Net periodic pension cost (income) $ 251 $ ( 1,579 ) $ ( 432 )

The components of net periodic benefit cost other than the service cost component are included in the line item "Other operating expenses" in the consolidated statements of income.

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The Company has no carrying amount for these standby letters of credit at either of those dates.

The nature of the standby letters of credit is a stand-alone

obligation made on behalf of the Company’s customers to suppliers of the customers to guarantee payments owed to the supplier by the customer.

The standby letters of credit are generally for terms for one year, at which time they may be renewed for another year if both parties agree.

The nature of the standby letters of credit is a stand-alone obligation made on behalf of the Company’s customers to suppliers of the customers to guarantee payments owed to the supplier by the customer.

The standby letters of credit are generally for a term of one year, at which time they may be renewed for another year if both parties agree.

The Company maintains an allowance for unfunded loan commitments which is included in "Other liabilities" in the consolidated balance sheets.

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The Company also periodically invests in limited partnerships and LLCs primarily for the purposes of fulfilling CRA requirements and obtaining tax credits.

As of December 31, 2023, the Company had a remaining funding commitments of $ 26.3 million related to these investments.

As of December 31, 2024, the Company had a remaining funding commitment of $ 32.1 million related to these investments.

The Company, in the normal course of business, may be subject to various pending and threatened lawsuits in which claims for monetary damages are asserted.

1 unchanged sentence

Derivatives and Hedging Activities

In the normal course of business, the Company is exposed to certain risk arising from both its business operations and economic conditions.

As an element of its risk management strategies, the Company may enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates.

In the normal course of business, the Company is exposed to certain risks arising from both its business operations and economic conditions.

As an element of its risk management strategies, the Company may enter into derivative

financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates.

To accommodate customers, the Company may enter into interest rate swaps with certain commercial loan customers, with offsetting positions to dealers under a back-to-back swap program.

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The Company's derivative instruments are carried at fair value and included in "Other assets" for derivatives with positive fair values and "Other liabilities" for derivatives with negative fair values on the consolidated balance sheets.

The table below presents the fair value of Company’s derivative financial instruments as of the date indicated.

As of December 31, 2023

($ in thousands) Notional Amount Derivative Assets Derivative Liabilities

The table below presents the fair value of Company’s derivative financial instruments as of the dates indicated.

As of December 31, 2024 As of December 31, 2023

Fair Value Fair Value

($ in thousands) Notional Amount Derivative Assets Derivative Liabilities Notional Amount Derivative Assets Derivative Liabilities

Derivatives not designated as hedging instruments:

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The table below presents the gains and losses recognized in income related to derivative financial instruments that are not designated as hedging instruments.

Gains and losses on interest rate swap undesignated hedges are included in "Other gains, net" on the consolidated statements of income for the date indicated.

Gains and losses on interest rate swap not designated as hedges are included in "Other gains, net" on the consolidated statements of income for the date indicated.

Gains (Losses)

($ in thousands) Year Ended December 31, 2023

($ in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023

Customer interest rate swaps and counterparty offsets $ 53 $ ( 54 )

Total $ 53 $ ( 54 )

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of December 31, 2023.

The Company’s interest rate swaps are subject to master netting arrangements between the Company and its counterparties, however, the Company has not made a policy election

to offset its derivative positions.

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of December 31, 2024 and December 31, 2023.

The Company’s interest rate swaps are subject to master netting arrangements between the Company and its counterparties, however, the Company has not made a policy election to offset its derivative positions.

The interest rate swaps with borrowers are cross collateralized with the underlying loan and, therefore, there is no posted collateral.

Interest rate swap agreements with third-party counterparties contain provisions that require the Company to post collateral if the derivative exposure exceeds a threshold amount and receive collateral for agreements in a net asset position.

As of December 31, 2023 Gross Amounts of Recognized Assets Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Assets presented in the Consolidated Balance Sheets Gross Amounts Not Offset in the Consolidated Balance Sheets

Financial Instruments Cash Collateral Received Net Amount

Gross Amounts of Recognized Assets Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Assets presented in the Consolidated Balance Sheets Gross Amounts Not Offset in the Consolidated Balance Sheets

($ in thousands) Financial Instruments Cash Collateral Received Net Amount

Interest rate swaps

As of December 31, 2024 $ 301 $ — $ 301 $ — $ — $ 301

As of December 31, 2023 $ 295 $ — $ 295 $ — $ — $ 295

Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts of Liabilities presented in the Consolidated Balance Sheets Gross Amounts Not Offset in the Consolidated Balance Sheets

Financial Instruments Cash Collateral Posted Net Amount

($ in thousands) Financial Instruments Cash Collateral Posted Net Amount

Interest rate swaps

The commitments to originate residential mortgage loans and forward loan sales commitments are freestanding derivative instruments which were immaterial at December 31, 2023 and 2022.

As of December 31, 2024 $ 302 $ — $ 302 $ — $ 150 $ 152

As of December 31, 2023 $ 349 $ — $ 349 $ — $ 330 $ 19

The commitments to originate residential mortgage loans and forward loan sales commitments are freestanding derivative instruments which were immaterial at December 31, 2024 and December 31, 2023.

Credit-risk-related Contingent Features

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The credit support agreement requires collateralization of exposure beyond specified minimum threshold amounts.

As of December 31, 2023, the fair value of derivatives in a net liability position, including accrued interest, was $ 349 thousand.

As of December 31, 2023, the Company has minimum collateral posting thresholds with its derivative counterparty and has posted collateral of $ 330 thousand.

As of December 31, 2024 and December 31, 2023, respectively, the fair value of derivatives in a net liability position, including accrued interest, was $ 302 thousand and $ 349 thousand.

As of December 31, 2024 and December 31, 2023, respectively, the Company has minimum collateral posting thresholds with its derivative counterparty and has posted collateral of $ 150 thousand and $ 330 thousand.

Fair Value of Financial Instruments

35 unchanged sentences

Total available for sale securities $ 2,189,379 $ — $ 2,189,379 $ —

Derivative financial assets $ 295 $ — $ 295 $ —

Presold Mortgages in process of settlement $ 2,667 $ — $ 2,667 $ —

Impaired loans

9,590 — — 9,590

Foreclosed real estate

Derivative financial liabilities $ 349 $ — $ 349 $ —

Individually evaluated loans $ 1,953 $ — $ — $ 1,953

The following is a description of the valuation methodologies used for instruments measured at fair value.

2 unchanged sentences

Most of the fair values for the Company’s Level 2 securities are determined by the Company's third-party bond accounting provider using matrix pricing.

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.

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 US Treasury securities, 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.

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

Foreclosed real estate – Foreclosed real estate, consisting of properties obtained through foreclosure or in satisfaction of loans, is reported at the lower of cost or fair value.

Fair value is measured on a non-recurring basis and is based upon independent market prices or current appraisals that are generally prepared using an income or market valuation approach and conducted by an independent, licensed third party appraiser, adjusted for estimated selling costs (Level 3).

Appraisals used in this analysis are generally obtained at least annually based on when the assets were acquired, and thus the appraisals are not necessarily as of the period ends presented.

At the time of foreclosure, any excess of the loan balance over the fair value of the real estate held as collateral is treated as a charge against the ACL.

For any real estate valuations subsequent to foreclosure, any excess of the real estate recorded value over the fair value of the real estate is treated as a foreclosed real estate write-down on the consolidated statements of income.

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 presented in the tables below.

($ 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 %

For Level 3 assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2022, the significant unobservable inputs used in the fair value measurements were as follows:

($ in thousands) Fair Value at December 31,

2022 Valuation

Technique Significant Unobservable

Inputs Range (Weighted Average)

Individually evaluated loans - collateral-dependent $ 5,680 Appraised value Discounts applied for estimated costs to sell 10 %

Individually evaluated loans - valued at PV of expected cash flows 3,910 PV of expected cash flows Discount rates used in the calculation of PV of expected cash flows 5.5 % - 11.1 %

Foreclosed real estate 38 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%.

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 nonrecurring basis as of December 31, 2024.

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

13 unchanged sentences

Level 3 7,972,104 7,514,505 8,040,249 7,379,079

Accrued interest receivable

Level 1 37,351 37,351 29,710 29,710

Bank-owned life insurance

Level 1 183,897 183,897 164,592 164,592

SBA servicing asset Level 3 2,604 3,746 3,351 4,049

2 unchanged sentences

Level 2 91,876 81,216 630,158 615,614

Accrued interest payable

Level 1 5,699 5,699 2,738 2,738

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

1 unchanged sentence

Because no highly liquid market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors.

These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.

These estimates are subjective in nature and involve uncertainties and

matters of significant judgment and therefore cannot be determined with precision.

Changes in assumptions could significantly affect the estimates.

3 unchanged sentences

Stock-Based Compensation

The Company recorded total stock-based compensation expense of $ 4.6 million, $ 3.0 million, and $ 2.3 million for the years ended December 31, 2023, 2022, and 2021, respectively, include in "Total personnel expense" on the accompanying consolidated statements of income.

The Company recorded total stock-based compensation expense of $ 4.3 million, $ 4.6 million, and $ 3.0 million for the years ended December 31, 2024, 2023, and 2022, respectively, which is include in "Total personnel expense" on the accompanying consolidated statements of income.

The Company recognized $ 1.0 million, $ 1.1 million, and $ 0.7 million of income tax benefits related to stock-based compensation expense in its income statement for the years ended December 31, 2024, 2023, and 2022, respectively.

3 unchanged sentences

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.

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.

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.

Recent restricted stock awards to employees typically include service-related vesting conditions only.

8 unchanged sentences

In addition to employee equity awards, the Company's practice is to grant unrestricted common shares to each non-employee director (currently 13 in total) in June of each year.

These grants were each valued at approximately $ 37,500 in 2023 and $ 32,000 in 2022.

These grants were each valued at approximately $ 37,500 in 2024, $ 37,500 in 2023 and $ 32,000 in 2022.

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

On May 31, 2024, the Company granted 15,457 shares of common stock to non-employee directors ( 1,189 shares per director), at a fair market value of $ 31.55 per share, which was the closing price of the Company’s common stock on that date, which resulted in $ 487,500 in expense.

On June 1, 2023, the Company granted 17,094 shares of common stock to non-employee directors ( 1,221 shares per director), at a fair market value of $ 30.69 per share, which was the closing price of the Company’s common stock on that date, which resulted in $ 525,000 in expense.

22 unchanged sentences

The Company issues new shares of common stock when options are exercised.

No options were granted in 2024.

Stock option activity and related information is presented below as of and for the periods indicated:

8 unchanged sentences

Forfeited or expired during the period — —

Balance at December 31, 2023 305,585 20.95

Exercised during the period ( 194,884 ) 21.70

Forfeited or expired during the period — —

Outstanding at December 31, 2024 110,701 $ 19.63 4.24 $ 2,694

7 unchanged sentences

The fair value of the replacement options issued in conjunction with the GrandSouth acquisition as of January 1, 2023 was measured using the Black-Scholes option pricing model.

The following table illustrates the assumptions for the Black-Scholes model used in determining the fair value of options granted:

For the twelve months ended

December 31, 2023

The following table illustrates the assumptions for the Black-Scholes model used in determining the fair value of options granted during the year ended December 31, 2023:

Fair value per option, weighted average $ 24.85

12 unchanged sentences

Rabbi Trust Obligations

With the acquisition of Carolina Bank in March 2017, the Company assumed a deferred compensation plan structured as a Rabbi Trust for certain members of Carolina Bank’s board of directors that is fully funded by Company common stock, which was valued at $ 7.7 million on the date of acquisition.

Subsequent to this acquisition, approximately $ 6.8 million of the deferred compensation has been paid to the plan participants.

The balances of the related asset and liability were $ 1.4 million and $ 1.6 million at December 31, 2023 and December 31, 2022, respectively, both of which are presented as components of shareholders’ equity.

Subsequent to the acquisition, payments have been made to plan participants and the related asset and liability were both $ 1.1 million at December 31, 2024 and $ 1.4 million at December 31, 2023, respectively, and are presented as components of shareholders’ equity.

Stock Repurchases

Pursuant to authorizations by the Company's Board, the Company from time to time has repurchased shares of common stock in private transactions and in open-market purchases.

The Company did not repurchase any shares of the Company's common stock during either 2023 or 2022.

As of December 31, 2023, there was no share repurchase program in place.

On January 30, 2024, the Board of Directors of the Company authorized the repurchase of up to $ 40 million of the Company’s common stock.

Any such repurchases would be made pursuant to a plan approved by and containing provisions about the timing, purchase prices and quantities purchased determined by management in its discretion.

During the years ended December 31, 2024 and December 31, 2023, the Company did not make any such purchases.

Earnings Per Share

2 unchanged sentences

2024 2023 2022

($ in thousands except per

share amounts) Income Shares Per Share

($ in thousands except per share amounts) Income Shares Per Share

Amount Income Shares Per Share

6 unchanged sentences

Diluted EPS per common share $ 76,215 41,327,216 $ 1.84 $ 104,131 41,164,834 $ 2.53 $ 146,936 35,674,730 $ 4.12

For the year ended December 31, 2023 , there were no options that were anti-dilutive.

There were no outstanding options in other year presented.

For the years ended December 31, 2024 and December 31, 2023 , there were no options that were anti-dilutive.

There were no outstanding options in 2022.

Accumulated Other Comprehensive Income (Loss)

The components of AOCI for the Company are as follows:

The components of AOCI for the Company for the periods shown were as follows:

($ in thousands) December 31,

2 unchanged sentences

Unrealized loss on securities available for sale $ ( 368,055 ) $ ( 400,720 ) $ ( 444,063 )

Deferred tax asset 92,767 102,046 7,369

Tax effect 85,941 92,767 102,046

Net unrealized loss on securities available for sale ( 282,114 ) ( 307,953 ) ( 342,017 )

Postretirement plans (liability) asset ( 100 ) 54 ( 353 )

Deferred tax asset (liability) 23 ( 12 ) 81

Net postretirement plans (liability) asset ( 77 ) 42 ( 272 )

Postretirement plans asset (liability) 111 ( 100 ) 54

Tax effect ( 26 ) 23 ( 12 )

Net postretirement plans asset (liability) 85 ( 77 ) 42

Total accumulated other comprehensive loss $ ( 282,029 ) $ ( 308,030 ) $ ( 341,975 )

7 unchanged sentences

Ending balance at December 31, 2022 ( 342,017 ) 42 ( 341,975 )

Other comprehensive (loss) income before reclassifications ( 317,319 ) 536 ( 316,783 )

Other comprehensive income (loss) before reclassifications 34,064 ( 466 ) 33,598

Amounts reclassified from accumulated other comprehensive income

— ( 222 ) ( 222 )

Net current-period other comprehensive (loss) income ( 317,319 ) 314 ( 317,005 )

Net current-period other comprehensive income (loss) 34,064 ( 119 ) 33,945

Ending balance at December 31, 2023 ( 307,953 ) ( 77 ) ( 308,030 )

Other comprehensive income (loss) before reclassifications 34,064 ( 466 ) 33,598

Other comprehensive (loss) income before reclassifications ( 3,273 ) 85 ( 3,188 )

Amounts reclassified from accumulated other comprehensive income

29,112 77 29,189

Net current-period other comprehensive income (loss) 25,839 162 26,001

Ending balance at December 31, 2024 $ ( 282,114 ) $ 85 $ ( 282,029 )

Amounts reclassified from AOCI for Unrealized Gain (Loss) on Securities AFS represent realized securities gains or losses, net of tax effects.

Amounts reclassified from AOCI for unrealized gain (loss) on securities available for sale represent realized securities gains or losses, net of tax effects.

Amounts reclassified from AOCI for postretirement plans asset (liability) represent amortization of amounts included in AOCI, net of taxes, and are recorded in the "Other operating expenses" line item of the consolidated statements of income.

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Revenue from Contracts with Customers

All of the Company’s revenues that are in the scope of ASC Topic 606:

Revenue from Contracts with Customers (“ASC 606”) are recognized within noninterest income.

The following table presents the Company’s sources of noninterest income for years ended December 31, 2023, 2022, and 2021.

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 years ended December 31, 2024, 2023, and 2022.

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

3 unchanged sentences

Service charges on deposit accounts $ 16,620 $ 16,800 $ 15,368

Other service charges, commissions, and fees:

Other service charges and fees:

Bankcard Interchange income, net 9,306 9,319 14,996

Other service charges and fees 6,945 6,405 5,866

Commissions from sales of insurance and financial products:

Insurance income — — 2,725

Wealth management income 5,503 5,195 4,160

SBA consulting fees 1,803 2,608 7,231

Commissions from sales of financial products 5,270 5,503 5,195

Portion of other income in-scope of ASC 606 312 1,803 2,608

Noninterest income (in-scope of ASC 606) 38,453 39,830 44,033

9 unchanged sentences

Service charges on deposits are withdrawn from the customer’s account balance.

Other service charges, commissions, and fees:

Substantially all of these revenues are recognized at the point in time the services are provided.

Other service charges and fees:

The Company earns interchange income on its customers’ debit and credit card usage and earns fees from other services utilized by its customers.

5 unchanged sentences

Payment is typically received immediately or in the following month.

Commissions from the sale of insurance and financial products:

The Company earns commissions from the sale of wealth management products and also earned commissions from the sale of insurance policies until the sale of First Bank Insurance Services on June 30, 2021.

Substantially all of these revenues are recognized at the point in time the services are provided, with some recognized in the following month.

Commissions from the sale of financial products:

The Company earns commissions from the sale of wealth management products.

Wealth management income primarily consists of commissions received on financial product sales, such as annuities.

2 unchanged sentences

The Company also earns some fees from asset management, which is billed quarterly and due upon billing for services rendered in the most recent period, for which the performance obligation has been satisfied.

Insurance income, which was earned by the Company until June 30, 2021, generally consisted of commissions from the sale of insurance policies and performance-based commissions from insurance companies.

The Company recognized commission income from the sale of insurance policies when it acted as an agent between the

insurance company and the policyholder.

The Company’s performance obligation was generally satisfied upon the issuance of the insurance policy and is due upon billing.

SBA Consulting fees:

The Company earns fees for its consulting services related to the origination of SBA loans.

Fees are based on a percentage of the dollar amount of the originated loans and are recorded when the performance obligation has been satisfied and are due upon billing.

Substantially all of these revenues are recognized at the point in time that the services are provided.

Most contracts with customers are cancellable by either party without penalty or they are short-term in nature, with a contract duration of less than one year.

Accordingly, most revenue deferred for the reporting period ended December 31, 2024 is expected to be earned within one year .

The Company has made no significant judgments in applying the revenue guidance prescribed in ASC 606 that affect the determination of the amount and timing of revenue from the above-described contracts with customers.

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Noninterest income:

Other service charges, commissions, and fees – interchange fees, net $ 9,319 14,996 17,323

Bankcard Interchange income, net 9,306 9,319 14,996

Noninterest expense:

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Other operating expenses – data processing expense 8,916 8,733 7,535

Other operating expenses – credit card rewards expense 3,841 547 3,431

Other operating expenses – FDIC insurance expense 6,559 6,982 2,913

Segment Reporting

The Company is a bank holding company, whose principal activity is the ownership and management of its wholly-owned subsidiary, First Bank (the "Bank").

As a community-oriented financial institution, substantially all of the Company’s operations involve the delivery of loan and deposit products or the provision of financial advice to customers.

Management makes operating decisions and assesses performance based on an ongoing review of these banking operations, which constitute the Company’s only operating segment for financial reporting purposes.

The accounting policies of the banking operations segment are the same as those described in the summary of significant accounting policies.

The measure of segment assets is reported on the balance sheet as total consolidated assets.

The role of chief operating decision maker is comprised of the executive leadership team to include the Company's Chief Executive Officer, the Bank's Chief Executive Officer, the Bank's President, the Company's Chief Financial Officer.

The chief operating decision makers use pre-tax net income to allocate resources in the annual budget and forecasting process.

The chief operating decision makers consider budget-to-actual variances on a monthly basis for profit measures when making decisions about allocating capital and personnel to the operating segment.

The chief operating decision makers use the Consolidated Statements of Income and Consolidated Balance Sheets to ascertain measures or performance such as revenue, profit or loss, significant expenses and assets.

Depreciation expense amounted to $ 7.8 million, $ 7.8 million, and $ 6.9 million for the years ended December 31, 2024, 2023, and 2022, respectively, and is recorded in occupancy expense.

Condensed Parent Company Information

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Cash on deposit with bank subsidiary $ 24,005 $ 4,597

$ 4,597 5,611

Investment in subsidiaries 1,523,626 1,478,750

Premises and equipment 7 7

$ 1,483,733 1,106,469

Other assets 521 379

Total assets $ 1,548,159 $ 1,483,733

Liabilities and shareholders’ equity

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Trust preferred securities 73,472 73,130

73,130 65,665

Other liabilities 11,474 11,046

Total liabilities 102,548 111,353

111,353 74,873

Shareholders’ equity 1,445,611 1,372,380

Total liabilities and shareholders’ equity $ 1,548,159 $ 1,483,733

$ 1,483,733 1,106,469

CONDENSED STATEMENTS OF INCOME Year Ended December 31,

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Operating Activities:

$ 104,131 146,936 95,644

Net income $ 76,215 $ 104,131 $ 146,936

Equity in undistributed earnings of subsidiaries ( 13,954 ) ( 79,241 ) ( 133,147 )

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Financing Activities:

Repayment of subordinated debentures ( 10,000 ) — —

Payment of common stock cash dividends ( 36,253 ) ( 34,940 ) ( 30,660 )

( 34,940 ) ( 30,660 ) ( 22,228 )

Repurchases of common stock — — —

Proceeds from stock option exercises 4,094 4,519 —

Stock withheld for payment of taxes

( 743 ) ( 840 ) ( 786 )

Cash paid for shares withheld for payroll taxes on stock based compensation ( 1,691 ) ( 743 ) ( 840 )

Net cash used in financing activities ( 43,850 ) ( 31,164 ) ( 31,500 )

Net (decrease) increase in cash ( 1,014 ) ( 13,014 ) 3,341

Net increase (decrease) in cash 19,408 ( 1,014 ) ( 13,014 )

Cash, beginning of year 4,597 5,611 18,625

5,611 18,625 15,284

Cash, end of year $ 24,005 $ 4,597 $ 5,611

$ 4,597 5,611 18,625

Report of Independent Registered Public Accounting Firm

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In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 , in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated February 28, 2024 expressed an adverse opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated February 26, 2025, expressed an unqualified opinion thereon.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Allowance for Credit Losses

As described in Notes 1 and 4 to the Company's consolidated financial statements, the Company had a gross loan portfolio of approximately $8.2 billion and related allowance for credit losses of approximately $109.9 million as of December 31, 2023.

The allowance for credit losses consists of quantitative and qualitative components.

The Company considers historical default and loss experience, current and projected economic conditions, asset quality trends, and known and inherent risks in the portfolio to develop the quantitative component.

This quantitative component is then adjusted for qualitative risk factors that involve management assessments and subjective assumptions that require a high degree of management’s judgment.

We identified management’s judgments and assumptions used in the determination of the qualitative factors as described in Note 1 and the selection of the appropriate macroeconomic forecasts to be used in the reasonable and supportable forecast period of the allowance for credit losses as a critical audit matter.

Auditing these complex judgments and assumptions involved especially challenging auditor judgment due to the subjective nature of management’s qualitative assessment, inherent uncertainty involved in forecasting, and the nature and extent of audit effort required to address these matters, including the extent of specialized skills and knowledge needed.

The primary procedures we performed to address this critical audit matter included:

• Assessing the reasonableness of management’s significant judgments and assumptions related to the determination of the qualitative factors for collectively evaluated loans by assessing consistent application of evaluation and conclusions reached, including consideration of contradictory evidence.

• Evaluating the relevance and reliability of data used in determining the qualitative factors by comparing the data to internally developed and third-party sources, and other audit evidence gathered.

• Utilizing personnel with specialized skill and knowledge with evaluating the reasonableness of the macroeconomic forecasts used in the reasonable and supportable forecast period by comparing to third-party sources.

Acquisition of GrandSouth Bancorporation

As described in Note 2 to the Company’s consolidated financial statements, the Company completed its acquisition of GrandSouth Bancorporation on January 1, 2023, for a total purchase consideration of $229.5 million, with total assets acquired of $1.2 billion, liabilities assumed of $1.1 billion and resulting goodwill of $114.5 million.

Determination of the acquisition date fair values of the assets acquired and liabilities assumed requires the Company to make significant estimates and assumptions.

In determining the fair values of loans acquired, the Company must determine projected prepayment and discount rates, among other assumptions.

We identified the determination of the projected prepayment and discount rate assumptions in the valuation of loans acquired as a critical audit matter.

Auditing these significant assumptions involved especially challenging and subjective auditor judgment due to the nature and extent of audit effort required to address these matters, including evaluating the appropriateness of the market data selected and use of specialized skill and knowledge needed.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses on Loans

As described in Note 4 to the Company’s consolidated financial statements, the Company reported an allowance for credit losses on loans (“ACL”) of approximately $122.6 million as of December 31, 2024.

As described in Note 1 to the Company's consolidated financial statements, the ACL represents management’s estimate of credit losses for the remaining estimated life of the loan portfolio using a quantitative lifetime loss model, which uses assumptions and data elements, some of which are subjective in nature.

There is also a qualitative component of the ACL that is derived by applying qualitative risk scoring to a range of maximum and minimum loss rates for each of the identified qualitative factors.

Management makes significant judgments regarding selecting reasonable and supportable economic forecast factors used in the quantitative model and qualitative risk scores used in the qualitative component of the ACL.

We identified these economic forecast factors and qualitative risk scores as a critical audit matter because they involve especially subjective and complex judgement in auditing whether these were reasonable and supportable.

These assumptions required a high degree of auditor judgment and increased extent of effort, specialized skills, and knowledge.

The primary procedures we performed to address this critical audit matter included:

• Testing the completeness and accuracy of the loan level data utilized in the valuation of the acquisition date fair value of loans acquired by (i) evaluating the reliability of data utilized in the valuation of loans acquired and (ii) confirming loan level data with borrowers on a sample basis, and agreeing loan level data to supporting documentation.

• Utilizing personnel with specialized skill and knowledge in valuation of loans to assist with evaluation of projected prepayment and discount rate assumptions used in the valuation of the loans acquired.

This includes utilizing information obtained from market sources to test the assumptions and identify potential sources of disconfirming information.

• Testing the design and operating effectiveness of the Company’s controls over the selected economic forecast factors and qualitative risk scores.

• Assessing the reasonableness of management’s judgments in determining the selected economic forecast factors and qualitative risks scores, including assessing the consistency of management’s application of its underlying framework for determining these assumptions and assessing for potential bias and potential contradictory evidence.

• Utilizing personnel with specialized skill and knowledge to assist with assessing the relevance and reliability of the data used in determining the selected economic forecast factors, including comparing the data to third-party sources.

/s/ BDO USA, P.C.

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We have audited First Bancorp’s (the “Company’s”) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).

In our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

We do not express an opinion or any other form of assurance on management’s statements referring to any corrective actions taken by the Company after the date of management’s assessment.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income (loss), shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”) and our report dated February 28, 2024 expressed an unqualified opinion thereon.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income (loss), shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and our report dated February 26, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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We believe that our audit provides a reasonable basis for our opinion.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

A material weakness regarding management’s failure to maintain effective information technology general controls in the areas of user access management and segregation of duties, within an application supporting the Company’s accounting and reporting processes, has been identified.

As a result, many of the Company’s manual controls dependent upon the information derived from this information technology application were also ineffective, as segregation of duties was not appropriately designed.

This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2023 financial statements, and this report does not affect our report dated February 28, 2024 on those financial statements.

Definition and Limitations of Internal Control over Financial Reporting

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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-K

Item 8. Financial Statements and Supplementary Data