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Item 7. Management’s Discussion and Analysis

Item 7. Management’s Discussion and Analysis of Results of Operations and Financial Condition 
 This MD&A is intended to assist readers in understanding our results of operations and changes in financial position for the past three years. It should be read in conjunction with the consolidated financial statements and accompanying notes included in Item 8 of this Report. This discussion may contain forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those anticipated in forward-looking statements as a result of various factors. 
 
 Overview and 2024 Highlights 
 The Company is a bank holding company headquartered in Southern Pines, North Carolina. We provide diversified financial services primarily though the Bank, our principal subsidiary, including commercial and consumer banking services, mortgage lending, SBA lending, accounts receivable financing, and investment advisory services. As of December 31, 2024, the Bank had a 113 branch network in North Carolina and South Carolina and 1,371 full-time equivalent employees. We have grown organically as well as through strategic acquisitions as discussed previously in "Recent Developments and Acquisitions". 
 2024 Financial Highlights: 
 • Return on average assets was 0.63% for the year ended December 31, 2024, as compared to 0.87% for the prior year. Return on average common equity of 5.38% was reported for the year ended December 31, 2024, as compared to 8.05% for the prior year. 
 • Our total assets at December 31, 2024 were $12.1 billion, a 0.3% increase from a year earlier. 
 • Total loans outstanding contracted by $0.1 billion, or 0.7%, during the year. Loans totaled $8.1 billion at December 31, 2024. 
 • Credit quality continued to be strong with the NPA to total assets ratio at 0.39% as of December 31, 2024, as compared to 0.37% at December 31, 2023. Net charge offs as a percentage of average loans were 0.07% for 2024, as compared to 0.08% for the prior year. 
 • Capital remained strong with a total CET1 ratio of 14.35%, up from 13.20% for the prior year, and total risk-based capital ratio of 16.63% as of December 31, 2024, an increase from 15.54% for the prior year. 
 • We earned net income of $76.2 million, or $1.84 diluted EPS, during 2024 compared to net income of $104.1 million, or $2.53 diluted EPS, in 2023. As noted below, 2024 results were dampened by a $13 million provision related to potential exposures from Hurricane Helene and a $36.8 million securities loss transaction that took place during the fourth quarter of 2024. See the following for discussion of changes to net income: 
 • Net interest income for 2024 decreased $14.6 million, or 4.2%, driven by increased interest expense offset by higher interest income. The NIM on a tax-equivalent basis was 2.91% for 2024, a decrease of 15 basis points from the prior year. Despite the growth in average earning assets, the market-driven increase in rates on liabilities in the first half of 2024 occurred at a more rapid pace than the increase in yields on assets which resulted in the reduction in NIM for 2024. 
 • Total interest income increased $30.3 million in 2024 as compared to 2023, driven by higher interest income on loans of $22.3 million related to a combination of higher volumes of average balances and increased yields. Interest income on other interest-earning assets, primarily overnight funds, increased $12.8 million, primarily the result of higher volumes. 
 • The 2024 increase in interest expense of $44.9 million was driven by higher market rates in late 2023 and the first half of 2024 which resulted in repricing of our deposits and a corresponding $57.2 million increase in interest expense, especially in money market accounts which accounted for $47.9 million of the increase. Offsetting the increase in interest expense on deposits was a reduction in interest expense on borrowings, which fell $12.4 million, primarily a result of lower average balances of borrowings outstanding. 
 • Provision for credit losses for 2024 of $16.4 million was down from $17.8 million in 2023 due primarily to the initial provision established for acquired non-PCD loans of $12.2 million in 2023, 
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 lower organic loan growth in 2024 and generally positive updated economic forecasts, which are a key driver in the Company's CECL model as discussed further in the "Provision for Loan Losses" section below, and a reduction in the level of unfunded commitments. This was partially offset by the $13 million provision related to potential exposure from Hurricane Helene in 2024. 
 • Noninterest income declined $39.4 million in 2024, which resulted primarily from the $38.0 million securities loss, $36.8 million of which was related to a securities loss-earnback transaction that took place in the fourth quarter of 2024. Refer to "Noninterest Income" section below for further discussion. 
 • Noninterest expense decreased $18.8 million in 2024, primarily related to the GrandSouth acquisition completed January 1, 2023, which resulted in merger and acquisition expense of $13.7 million in 2023. In 2024, the Company actively managed headcount and applied additional expense controls. Refer to "Noninterest Expense" section below for further discussion. 
 • Income tax expense was down $5.9 million from the prior year relative to lower pre-tax income. The 2024 effective tax rate of 22.3% was up from the prior year as the result of incremental state tax-related expenses recorded in 2024 relating to prior years. 
 
 Current Economic Conditions 
 Recent economic activity has shown resilience with generally positive domestic results, low unemployment and increased demand for goods and services. While inflationary pressures continue, monetary policy actions taken by the Federal Reserve over the last three years have resulted in a lower inflation rate in 2024. A mix of positive and negative economic indicators remained present at the end of 2024 and there continues to be some uncertainty in economic conditions, and as such, we could be subject to ongoing risks, which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations. 
 Our financial position and results of operations are susceptible, among other factors, to the ability of our loan customers to meet their loan obligations to us, the availability of our workforce, the availability of our vendors, and the volatility in the value of assets held by us or securing our loans. We have not realized significant negative impact on our loan portfolio or asset quality to date as a result of the current economic conditions. However, the economic pressures and uncertainties, increased consumer demand and recent volatility in both short-term and long-term interest rates have resulted in, and may continue to result in, specific changes in consumer and business spending and borrowing habits, given the current and expected interest rate environment, which could make it difficult to grow assets and income. 
 The extent to which the current economic conditions have a further impact on our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including actions taken by governmental authorities in response to inflationary trends and recessionary risks. 
 
 Critical Accounting Estimates 
 The accounting principles we follow and our methods of applying these principles conform with GAAP and with general practices followed by the banking industry. Certain policies inherently have a greater reliance on the use of estimates, assumptions, or judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. We have identified the determination of our ACL and related Allowance for Unfunded Commitments, as well as business combinations, related fair value measurements and goodwill determination to be the accounting areas that require the most subjective or complex judgments, estimates, and assumptions, and where changes in those judgments, estimates, and assumptions (based on new or additional information, changes in the economic climate and/or market interest rates, etc.) could have a significant effect on our financial statements. See the "Allowance for Credit Losses, Allowance for Unfunded Commitments, and Loan Loss Experience" discussion in the Financial Condition section of Management's Discussion and Analysis. 
 Our most significant accounting policies are presented in Note 1 to the accompanying consolidated financial statements. These policies, along with the disclosures presented in the other notes to the consolidated financial statements and in this MD&A, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. 
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 Allowance for Credit Losses on Loans and Allowance for Unfunded Commitments 
 While management uses the best information available to establish the ACL, future adjustments to the ACL and methodology may be necessary if economic or other conditions differ substantially from the assumptions used in making the estimates. We perform periodic and systematic detailed reviews of the loan portfolio to identify trends and to assess the overall collectability of the portfolio. We believe the accounting estimate related to the ACL is a “critical accounting estimate” as: (1) changes in it can materially affect the provision for loan losses and net income; (2) it requires management to predict borrowers’ likelihood or capacity to repay, including evaluation of inherently uncertain future economic conditions; (3) the value of underlying collateral must be estimated on collateral-dependent loans; (4) prepayment activity must be projected to estimate the life of loans that often are shorter than contractual terms; and (5) it requires estimation of a reasonable and supportable forecast period for credit losses. Accordingly, this is a highly subjective process and requires significant judgment since it is difficult to evaluate current and future economic conditions in relation to an overall credit cycle and estimate the timing and extent of loss events that are expected to occur prior to end of a loan’s estimated life. 
 Our ACL is assessed at each quarterly balance sheet date and adjustments are recorded in the provision for loan losses on the consolidated statements of income. There are many factors affecting the ACL, some of which are quantitative, while others require qualitative judgment. There are both internal factors (i.e., loan balances, historical loss rates, credit quality, the contractual lives of loans), external factors (i.e., economic conditions such as trends in housing prices, interest rates, GDP, inflation, and unemployment), and assumptions of probability of default and loss given default by loan category, that can impact the ACL estimate. One of the most significant assumptions is the macroeconomic scenario forecasts that determine the economic variables utilized in the ACL model. Due to the inherent uncertainty in the macroeconomic forecasts, we evaluate a baseline scenario quarterly, as well as upside or downside macroeconomic scenarios to assess the most reasonable scenario based on review of the variable forecasts for each scenario, comparison to expectations, and sensitivity of variations in each scenario. 
 The most significant variable in the economic forecasts is the national unemployment rate (which has remained relatively stable), and changes in unemployment forecasts can have significant impact to the estimated ACL. Other economic variables include national GDP, the national commercial real estate pricing index and the national home price index. We use the national unemployment rate in all of our models regardless of the loan portfolio type, and we use a second economic variable in each cohort model depending on the loan portfolio type. The ACL quantitative estimate is sensitive to changes in the economic variable forecasts during the twelve-month reasonable and supportable forecast period with a straight-line reversion over the next three years to long-term average loss factors. There have been no changes to the reasonable and supportable period or reversion period in any year presented. 
 Although management believes its process for determining the ACL adequately considers all the factors that could potentially result in credit losses, the process includes subjective elements and is susceptible to significant change. To the extent actual outcomes differ from management estimates, additional provision for loan losses could be required that could adversely affect our earnings or financial position in future periods. 
 PCD loans represent assets that are acquired with evidence of more than insignificant credit quality deterioration since origination at the acquisition date. At acquisition, the allowance on PCD assets is booked directly to the ACL. Any subsequent changes in the ACL on PCD assets is recorded through the provision for loan losses on the consolidated statements of income. 
 We believe that the ACL is adequate to absorb the expected life of loan credit losses on the portfolio of loans as of the balance sheet date. Actual losses incurred may differ materially from our estimates. For example, inflationary pressures and recessionary concerns leading to macroeconomic economic deterioration, higher unemployment and declines in real estate and other asset valuations could affect our loss experience and assumptions utilized in our model. 
 We estimate expected credit losses on unfunded commitments to extend credit over the contractual period in which we are exposed to credit risk on the underlying commitments, unless the obligation is unconditionally cancellable. The allowance for off-balance sheet credit exposures, which is included in "Other liabilities" on the consolidated balance sheets, is adjusted for as an increase or decrease to the provision for unfunded commitments. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The methodology is based on a loss rate approach that starts with the probability of funding based on historical experience. Similar to the methodology discussed above 
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 related to the loans receivable portfolio, adjustments are made to the historical losses for current conditions and reasonable and supportable forecasts. 
 Additional information on the loan portfolio and ACL can be found in the sections of this Item 7 titled “Nonperforming Assets” and “Allowance for Credit Losses and Loan Loss Experience” below. 
 Business Combinations and Goodwill 
 We believe that the accounting for business combinations, goodwill, and other intangible assets also involves a higher degree of judgment than most other significant accounting policies. Pursuant to applicable accounting guidance, we recognize assets acquired, including identified intangible assets, and the liabilities assumed in acquisitions at their fair values as of the acquisition date, with the related transaction costs expensed in the period incurred. Specified items such as acquired operating lease assets and liabilities as lessee, employee benefit plans, and income-tax related balances are recognized in accordance with accounting guidance that results in measurements that may differ from fair value. Determining the fair value of assets acquired and liabilities assumed often involves estimates based on internal or third-party valuations which include appraisals, discounted cash flow analysis, or other valuation techniques that may include estimates of attrition, inflation, asset growth rates, discount rates, credit risk, multiples of earnings, or other relevant factors. The determination of fair value may require us to make point-in-time estimates about discount rates, future expected cash flows, market conditions, and other future events that can be volatile in nature and challenging to assess. While we use the best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, the estimates are inherently uncertain and subject to refinement. 
 The primary identifiable intangible asset we typically record in connection with a whole bank or bank branch acquisition is the value of the core deposit intangibles which represents the estimated value of the long-term deposit relationships acquired in the transaction. Determining the amount of identifiable intangible assets and their average lives involves multiple assumptions and estimates and is typically determined by performing a discounted cash flow analysis, which involves a combination of any or all of the following assumptions: customer attrition/runoff, alternative funding costs, deposit servicing costs, and discount rates. The core deposit intangibles are amortized over the estimated useful lives of the deposit accounts based on a method that we believe reasonably approximates the anticipated benefit stream from this intangible. The estimated useful lives are periodically reviewed for reasonableness and have generally been estimated to have a life ranging from seven to ten years, with an accelerated rate of amortization. We review identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Our policy is that an impairment loss is recognized, equal to the difference between the asset’s carrying amount and its fair value, if the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Estimating future cash flows involves the use of multiple estimates and assumptions, such as those listed above. 
 The ACL for PCD assets is recognized within business combination accounting with no initial impact to net income. Changes in estimates of expected credit losses on PCD loans after acquisition are recognized as provision expense (or reversal of provision expense) in subsequent periods as they arise. The ACL for non-PCD assets is recognized as provision expense in the same reporting period as the business combination. Estimated loan losses for acquired loans are determined using methodologies and applying estimates and assumptions that were described previously in the Allowance for Credit Losses on Loans and Allowance for Unfunded Commitments section above. 
 Non-PCD loans acquired are generally estimated at fair value using a discounted cash flow approach with assumptions of discount rate, remaining life, prepayments, probability of default, and loss given default. The actual cash flows on these loans could differ materially from the fair value estimates. The amount we record as the fair values for the loans is generally less than the contractual unpaid principal balance due from the borrowers, with the difference being referred to as the “discount” on the acquired loans. Discounts on acquired non-PCD loans are accreted to interest income over their estimated remaining lives, which may include prepayment estimates in certain circumstances. 
 Similarly, premiums or discounts on acquired debt are accreted or amortized to interest expense over their remaining lives. Actual accretion or amortization of premiums and discounts from a business acquisition may differ materially from our estimates impacting our operating results. 
 We believe that the accounting for goodwill also involves a higher degree of judgment than most other significant accounting policies. Goodwill arising from business combinations represents the excess of the purchase price over the sum of the estimated fair values of the tangible and identifiable intangible assets acquired less the estimated fair 
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 value of the liabilities assumed. Goodwill has an indefinite useful life and is evaluated for impairment annually or more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. 
 ASC 350-10 establishes standards for an impairment assessment of goodwill. At each reporting date between annual goodwill impairment tests, we consider potential indicators of impairment. Generally, absent potential impairment indicators, we perform an annual assessment of whether the events and circumstances resulted in it being more likely than not that the fair value of any reporting unit was less than its carrying value. Impairment indicators considered include the condition of the economy and banking industry; government intervention and regulatory updates; the impact of recent events to financial performance and cost factors of the reporting unit; performance of the Company's stock, and other relevant events. During 2024 there were no triggers warranting interim impairment assessments and for the 2024 annual assessment, we concluded that it was more likely than not that the fair value exceeded its carrying value. At December 31, 2024, we had $478.8 million of goodwill. 
 Recent Accounting Standards and Pronouncements 
 
 
 For information relating to recent accounting standards and pronouncements, see Note 1 to our consolidated financial statements entitled “Summary of Significant Accounting Policies.” 
 
 
RESULTS OF OPERATIONS 
 The following discussion reviews the results of operations and key drivers to change in the results of 2024 as compared to 2023. For a description of our results of operations for 2023 as compared to 2022, refer to the "Overview and 2023 Highlights," Results of Operations," and "Analysis of Financial Condition and Changes in Financial Condition" sections of Item 7 in our 2023 Form 10-K. 
 
 Net Interest Income 
 Net interest income is our largest source of revenue and is the difference between the interest earned on interest-earning assets (generally loans and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (generally deposits and borrowed funds). Changes in the net interest income are the result of changes in volume and the net interest spread which affects NIM. Volume refers to the average dollar levels of interest-earning assets and interest-bearing liabilities. Net interest spread refers to the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. NIM refers to net interest income divided by average interest-earning assets and is influenced by the level and relative mix of interest-earning assets and interest-bearing liabilities. Net interest income is also influenced by external factors such as local economic conditions, competition for loans and deposits, and market interest rates. 
 Net interest income amounted to $332.3 million in 2024, a decrease of $14.6 million, or 4.2%, from $346.8 million in 2023. The decrease was primarily due to the increase in rates on interest-bearing deposits, specifically money market accounts, partially offset by lower interest expense on borrowings, a result of lower average balances on borrowings. Partially offsetting the increased interest expense was increased interest income, primarily the result of higher average balances on interest-bearing assets. Within interest-bearing assets, interest income was positively impacted by growth in the average balances of loans and other interest-earning assets, primarily overnight funds, partially offset by lower average balances on taxable securities. 
 In line with the lower net interest income related to the increase in the cost of interest-bearing liabilities was the compression of our NIM which, on a tax-equivalent basis, declined to 2.91% in 2024 from 3.06% in 2023. For internal purposes, we evaluate our NIM on a tax-equivalent basis by adding the tax benefit realized from tax-exempt loans and securities to reported interest income, then dividing by total average earning assets. We believe that analysis of NIM on a tax-equivalent basis is useful and appropriate because it allows a comparison of net interest in different periods without taking into account the different mix of taxable versus non-taxable loans and investments that may have existed during those periods. The following is a reconciliation of reported net interest income to tax- 
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 equivalent net interest income and the resulting NIM as reported and on a tax-equivalent basis. 
 ($ in thousands) Year ended December 31, 
 2024 2023 2022 
 Net interest income, as reported $ 332,273 $ 346,843 $ 325,015 
 Tax-equivalent adjustment 2,983 2,694 2,780 
 Net interest income, tax-equivalent $ 335,256 $ 349,537 $ 327,795 
 Net interest margin, as reported 2.89 % 3.03 % 3.25 % 
 Net interest margin, tax-equivalent 2.91 % 3.06 % 3.28 % 

 Our total cost of deposits has been more impacted by the FOMC's changes in short term rates than the yield on our interest-earning assets. The target federal funds rate peaked at 5.50% in July 2023 and remained there until beginning to decrease in September 2024, falling a total of 100 basis points by the end of 2024, helping to increase our NIM (tax-equivalent) to 3.07% in the fourth quarter of 2024 . As shown in the chart below, our NIM (tax-equivalent) has grown 27 basis points since its recent low for the first quarter of 2024. This NIM (tax-equivalent) expansion is the result of our yield on interest-earning assets continuing to earn at higher rates, increasing 11 basis points during the same period, while our total cost of deposits peaked in the third quarter of 2024, declining to 1.57% for the fourth quarter of 2024. 
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 First Bancorp Comparison of Net Interest Margin (Tax-Equivalent), 
 Yield on Earning Assets and Total Cost of Deposits 
 Eight Quarters Ended December 31, 2024 
 
 Our NIM for all periods presented below benefited from the net accretion income arising from purchase accounting premiums/discounts associated with acquisitions. Presented in the table below is the amount of accretion which increased net interest income in each year presented. 
 
 Year ended December 31, 
 ($ in thousands) 2024 2023 2022 
 Interest income – increased by accretion of loan discount on acquired loans 
 $ 8,938 $ 11,507 $ 5,621 
 
 Total interest income impact 8,938 11,507 5,621 
 Interest expense – (increased) reduced by (discount accretion) premium amortization of deposits (826) (3,101) 593 
 Interest expense – increased by discount accretion of borrowings 
 (767) (842) (254) 
 Total net interest expense impact (1,593) (3,943) 339 
 Impact on net interest income $ 7,345 $ 7,564 $ 5,960 

 The most significant component of the purchase accounting adjustments in each year was loan discount accretion on purchased loans. Generally, the level of loan discount accretion will decline each year after an acquisition due to the natural reduction in the outstanding balance of acquired loans. Alternately, levels of accretion will increase as a result of acquisitions and related additions to loan discounts on acquired portfolios which are accreted to income as experienced in 2023 with the GrandSouth acquisition. 
 At December 31, 2024 and 2023, unaccreted loan discount on purchased loans amounted to $15.1 million and $24.0 million, respectively. The GrandSouth acquired portfolio comprises the majority of the remaining unaccreted loan discount at December 31, 2024. 
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 The following table presents the major components of the net interest income and NIM. 
 
 Average Balances and Net Interest Income Analysis 
 Year Ended December 31, 
 2024 2023 2022 
 ($ in thousands) Average
Volume Interest
Earned
or Paid Avg.
Rate Average
Volume Interest
Earned
or Paid Avg.
Rate Average
Volume Interest
Earned
or Paid Avg.
Rate 
 Assets 
 Loans (1) (2) 
 $ 8,046,681 $ 441,181 5.48 % $ 7,902,628 $ 418,853 5.30 % $ 6,293,319 $ 278,188 4.42 % 
 Taxable securities 
 2,608,494 47,510 1.82 % 2,920,040 52,276 1.79 % 3,059,683 53,536 1.75 % 
 Non-taxable securities 
 291,520 4,466 1.53 % 296,287 4,485 1.51 % 296,803 4,387 1.48 % 
 Short-term investments, primarily interest-bearing cash 561,886 26,083 4.64 % 314,537 13,330 4.24 % 339,437 5,007 1.48 % 
 Total interest-earning assets 
 11,508,581 519,240 4.51 % 11,433,492 488,944 4.28 % 9,989,242 341,118 3.41 % 
 Cash and due from banks 
 84,997 93,182 104,374 
 Premises and equipment 
 147,916 151,980 135,163 
 Other assets 
 393,001 354,379 327,993 
 Total assets 
 $ 12,134,495 $ 12,033,033 $ 10,556,772 
 
 Liabilities and Equity 
 
 Interest-bearing checking $ 1,395,856 $ 9,910 0.71 % $ 1,457,272 $ 6,192 0.42 % $ 1,545,573 $ 1,219 0.08 % 
 Money market deposits 4,039,999 126,531 3.13 % 3,355,992 78,643 2.34 % 2,515,897 5,610 0.22 % 
 Savings deposits 564,473 1,209 0.21 % 668,730 1,024 0.15 % 739,681 459 0.06 % 
 Other time deposits 666,868 20,429 3.06 % 737,330 19,023 2.58 % 551,852 2,541 0.46 % 
 Time deposits >$250,000 373,851 14,006 3.75 % 343,669 9,984 2.90 % 287,194 1,520 0.53 % 
 Total interest-bearing deposits 7,041,047 172,085 2.44 % 6,562,993 114,866 1.75 % 5,640,197 11,349 0.20 % 
 Short-term borrowings 137,692 7,116 5.17 % 374,254 19,289 5.15 % 52,273 1,828 3.50 % 
 Long-term borrowings 95,275 7,766 8.15 % 99,858 7,946 7.96 % 65,531 2,926 4.46 % 
 Total interest-bearing liabilities 
 7,274,014 186,967 2.57 % 7,037,105 142,101 2.02 % 5,758,001 16,103 0.28 % 
 Noninterest-bearing checking 3,367,035 3,613,973 3,643,330 
 Total sources of funds 10,641,049 1.76 % 10,651,078 1.33 % 9,401,331 0.17 % 
 Other liabilities 
 76,985 88,870 58,056 
 Shareholders’ equity 
 1,416,461 1,293,085 1,097,385 
 Total liabilities and shareholders’ equity 
 $ 12,134,495 $ 12,033,033 $ 10,556,772 
 Net yield on interest-earning assets and net interest income 
 $ 332,273 2.89 % $ 346,843 3.03 % $ 325,015 3.25 % 
 Net yield on interest-earning assets and net interest income – tax-equivalent (3) 
 $ 335,256 2.91 % $ 349,537 3.06 % $ 327,795 3.28 % 
 Interest rate spread 
 1.94 % 2.26 % 3.13 % 
 Average prime rate 8.31 % 8.20 % 4.86 % 

 (1) Average loans include nonaccruing loans, the effect of which is to lower the average rate shown. Interest earned includes recognized net loan fees, including late fees, prepayment fees, and deferred loan (cost)/fee amortization, in the amounts of $(1.1) million , $0.5 million, and $3.1 million for 2024, 2023, and 2022, respectively. 
 (2) Includes accretion of discount on acquired loans of $8.9 million, $11.5 million, and $5.6 million in 2024, 2023, and 2022, respectively. 
 (3) Includes tax-equivalent adjustments of $3.0 million, $2.7 million and $2.8 million in 2024, 2023, and 2022, respectively, to reflect the federal and state tax benefit that we receive related to tax-exempt securities and tax-exempt loans, which carry interest rates lower than similar taxable investments/loans due to their tax exempt status. This amount has been computed assuming a 23% tax rate and is reduced by the related nondeductible portion of interest expense. 
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 The following table presents additional detail regarding the estimated impact that changes in loan and deposit volumes and changes in the interest rates we earned/paid had on our net interest income in 2024 and 2023. 
 
 Volume and Rate Variance Analysis 
 Year Ended December 31, 2024 Year Ended December 31, 2023 
 Change Attributable to Change Attributable to 
 ($ in thousands) Changes
in Volumes Changes
in Rates Total
Increase
(Decrease) Changes
in Volumes Changes
in Rates Total
Increase
(Decrease) 
 Interest income: 
 Loans $ 7,767 $ 14,561 $ 22,328 $ 78,177 $ 62,464 $ 140,641 
 Taxable securities (5,626) 860 (4,766) (2,472) 1,212 (1,260) 
 Non-taxable securities (73) 54 (19) (8) 106 98 
 Other interest-earning assets, primarily overnight funds 10,982 1,771 12,753 (711) 9,034 8,323 
 Total interest income 13,050 17,246 30,296 74,986 72,816 147,802 
 
 Interest expense: 
 Interest bearing checking accounts (348) 4,066 3,718 (223) 5,196 4,973 
 Money market accounts 18,726 29,162 47,888 10,780 62,253 73,033 
 Savings accounts (192) 377 185 (77) 642 565 
 Other time (2,479) 3,885 1,406 4,244 12,238 16,482 
 Time deposits >$250,000 1,004 3,018 4,022 970 7,494 8,464 
 Total interest-bearing deposits 16,711 40,508 57,219 15,694 87,823 103,517 
 Short-term borrowings (12,208) 35 (12,173) 13,950 3,531 17,481 
 Long-term borrowings (369) 189 (180) 2,112 2,888 5,000 
 Total interest expense 4,134 40,732 44,866 31,756 94,242 125,998 
 
 Net interest income $ 8,916 $ (23,486) $ (14,570) $ 43,230 $ (21,426) $ 21,804 

 Note - Changes attributable to both volume and rate are allocated equally between rate and volume variances. 
 
 
 Overall, as demonstrated in the above table, net interest income contracted $14.6 million in 2024. Higher rates on interest-bearing liabilities were partially offset by higher rates on interest-earning assets and higher earning asset volumes. 
 • For 2024, higher market rates contributed to an additional $14.6 million of loan interest income while higher loan volume resulted in a $7.8 million increase in interest income. Variable rate loans comprised approximately 23% of the loan portfolio at December 31, 2024, and, accordingly, the magnitude of the immediate yield impact we experience from each rate change is limited. 
 • Decreases in the overall volume of average investment securities, partially offset by higher yields on the portfolio, resulted in decreased interest income of $4.8 million in 2024. 
 • Higher volumes on other interest-earning assets (primarily interest-bearing cash balances) along with higher yields resulted in an increase in interest income of $12.8 million for the year. 
 • The increase of $57.2 million in interest expense on deposits was driven by higher rates on accounts as we repriced deposits during late 2023 and the start of 2024 in response to the market increases and to retain and grow deposits to meet our funding needs, combined with higher volumes, primarily in money market deposit accounts. 
 • Lower levels of borrowings, historically short-term FHLB advances to fund loan demand and deposit fluctuations, contributed $12.6 million to the decrease in borrowings interest expense, which, in total, decreased $12.4 million in 2024. 
 
 Provision for Credit Losses and Provision for Unfunded Commitments 
 The provision for credit losses is comprised of the provision for loan losses and the provision for unfunded commitments. The provision recorded in each period represents the amount required such that the total ACL reflects the current estimate of life of loan credit losses in the loan portfolio and the allowance for unfunded commitments 
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 reflects the current expected losses on unfunded loan commitments that are expected to result in outstanding loan balances. Our estimate of credit losses is determined using a complex model that relies on reasonable and supportable forecasts and historical loss information to determine the balance of the ACL and allowance for unfunded commitments. The allowance for unfunded commitments is included in "Other liabilities" in the consolidated balance sheets. 
 The provision for loan losses was $18.8 million in 2024 and $19.8 million in 2023. The amount of provision recorded in each period was the amount required such that the total ACL reflected the appropriate balance as determined under the CECL model. The primary contributor to the lower provision in 2024 was the initial provision established for acquired non-PCD loans of $12.2 million recorded in 2023 as a result of the acquisition of GrandSouth. The provision for loan losses for 2024 included $13 million related to potential credit exposure from Hurricane Helene. We subscribe to a third-party service which provides quarterly macroeconomic scenarios for the United States economy. For 2024, we continue to utilize the baseline forecast, which incorporates an equal probability of the United States economy performing better or worse than the projection. The economic forecasts throughout the year have exhibited general stability of the economy demonstrated in relatively low unemployment rates, solid GDP, relatively stable consumer and producer price indices, and mixed results for real estate price indices for commercial and residential properties. These improving economic projections translated to lower forecasted losses in our loan portfolio and, thus a lower estimated ACL, exclusive of portfolio growth and the reserves related to Hurricane Helene. 
 Also under the CECL method, in 2024 we recorded a reduction in the provision for unfunded commitments of $2.3 million compared to a reduction of $1.9 million for 2023. Changes in the level of provision each year are generally related to fluctuations in the level of available credit lines and updated loss drivers. 
 Within the portions of Western North and South Carolina that were significantly impacted by Hurricane Helene, the Company identified borrowers with approximately $744 million of loans outstanding as of December 31, 2024. The Company continues to update analyses to identify impacts from the storm and has applied increased reserve rates based upon severe economic factors to the loans in the path of Helene. Additionally, the Company continues to evaluate the largest commercial loans in that population and applied incremental reserves to those loans that were suspected of having higher potential property damage or economic impact from the storm. The incremental reserve for potential exposure from Hurricane Helene was $13.0 million and added 16 basis points to the Allowance for Credit Losses as of December 31, 2024. 
 Additional discussion of the CECL method and our asset quality and credit metrics, which impact our provision for credit losses, is provided in the "Nonperforming Assets" and "Allowance for Credit Losses and Loan Loss Experience" sections following. 
 
 Noninterest Income 
 Our noninterest income amounted to $17.9 million in 2024, $57.3 million in 2023, and $67.8 million in 2022. 
 The decreased noninterest income for the year ended December 31, 2024 as compared to the same period in 2023 is a result of "Securities losses, net" in 2024 and lower "Other income, net," partially offset by increased "SBA loan sale gains." Details of the more significant components of noninterest income are presented in the table below. For the year ended December 31, 2024, the change in "Other income, net" was related to the timing of the recognition of gain and loss from other investment activity, which does not include AFS or HTM securities. 
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 Noninterest Income 
 Year Ended December 31, 
 ($ in thousands) 2024 2023 2022 
 Service charges on deposit accounts 
 $ 16,620 $ 16,800 $ 15,368 
 Other service charges and fees - bankcard and interchange income, net 9,306 9,319 14,996 
 Other service charges - other 12,961 12,766 11,292 
 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 
 Bank-owned life insurance ("BOLI") income 4,773 4,350 3,847 
 Securities losses, net (37,981) — — 
 Other gains, net 1,028 4,465 9,948 
 Total noninterest income $ 17,899 $ 57,305 $ 67,824 

 Service charges on deposit accounts decreased $0.2 million, or 1.1%, in 2024 as compared to 2023. 
 Other service charges and fees - bankcard interchange income, net represents interchange income from debit and credit card transactions, net of associated interchange expense and amounted to $9.3 million in 2024, a 0.1% decrease from the $9.3 million in 2023. 
 Other service charges - other includes items such as ATM charges, wire transfer fees, safety deposit box rentals, fees from sales of personalized checks, and check cashing fees. Also included in this category are SBA guarantee servicing fees and related servicing rights amortization which fluctuate based on the volume of and prepayment speeds on SBA loans serviced for others. The increase in this item in 2024 was of $0.2 million, or 1.5%. 
 Securities losses, net was $38.0 million in 2024. Of this balance, $36.8 million related to a securities loss-earnback transaction from the fourth quarter in which the Company sold $283.8 million of AFS securities bearing 1.62% at a loss of approximately $36.8 million and a purchased a total of $494.9 million in AFS securities bearing 5.21%. 
 Other gains, net amounted to a net gain of $1.0 million for 2024. For 2022, the balance consisted primarily of death benefits realized on BOLI policies which were nominal in 2023 and 2024. The decline from 2023 to 2024 was primarily driven by SBA consulting fees, which declined from $2.6 million in 2022 to $0.3 million in 2024 as the Company ceased offering these services in early 2024. 
 
 Noninterest Expenses 
 Total noninterest expenses totaled $235.6 million, $254.4 million, and $195.2 million, for 2024, 2023, and 2022, respectively. 
 The primary contributors to the $18.8 million decrease for the year ended December 31, 2024 as compared to the same period in 2023 were the $13.7 million of "Merger and acquisition expenses" recorded in 2023 and the $1.9 million decrease in "Non-credit losses." For the year ended December 31, 2024, there was an overall effort by management to actively control headcount and expenses. 
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 The following table presents the primary components of noninterest expense. 
 
 Noninterest Expenses 
 Year Ended December 31, 
 ($ in thousands) 2024 2023 2022 
 Salaries incentives and commissions expense $ 113,853 $ 114,377 $ 96,321 
 Employee benefit expense 26,169 25,474 21,397 
 Total personnel expense 140,022 139,851 117,718 
 Occupancy and equipment expense 19,984 20,990 18,604 
 Credit card rewards and other bankcard expenses 6,572 5,288 1,653 
 Telephone and data lines 3,390 3,960 3,631 
 Software licenses and other software costs 7,691 8,717 6,064 
 Data processing expense 8,916 8,733 7,535 
 Professional fees 6,207 5,409 4,350 
 Advertising and marketing 3,416 4,055 3,032 
 Non-credit losses 2,830 4,766 2,730 
 FDIC insurance costs 6,559 6,982 2,913 
 Corporate insurance costs 2,302 2,275 1,975 
 Merger and acquisition expenses — 13,695 5,072 
 Intangibles amortization expense 6,604 8,003 3,684 
 Foreclosed property (gains) losses, net (245) (150) (372) 
 Other operating expenses 21,359 21,805 16,631 
 Total noninterest expense $ 235,607 $ 254,379 $ 195,220 

 Noninterest expenses decreased 7.4% from 2023 to 2024. The decrease was driven by the merger and acquisition expenses of $13.7 million recorded in 2023 related to the acquisition of GrandSouth along with other elevated expenses from the acquisition. 
 Non-credit losses decreased $1.9 million as compared to the prior year driven by the implementation of additional measures to detect and prevent losses that led to a decrease in check fraud losses for 2024. Impacting noninterest expense in 2023 were increases for software costs related to the GrandSouth acquisition, including the transition of new customers. These costs did not continue in 2024. Occupancy and equipment expense in 2023 included elevated expenses related to building repairs and maintenance. 
 Offsetting the previously discussed decreases in noninterest expenses, was the increase in credit card rewards and other bankcard expenses, which were related to higher volumes of customer accounts and transactions. 
 
 Income Taxes 
 We recorded income tax expense of $21.9 million in 2024, $27.8 million in 2023, and $38.3 million in 2022. Our effective tax rates were at 22.3% for 2024, 21.1% for 2023, and 20.7% for 2022. The slight increase in effective tax rate for 2023 was attributable primarily to merger and acquisition expenses recorded resulting in non-deductible adjustments for tax purposes. The higher effective tax rate for 2024 was attributable primarily to incremental state tax-related expense related to prior years, changes in state tax income apportionment, and the negative impact of decreasing deferred tax assets related to the North Carolina corporate income tax reduction effective January 1, 2025 and for future years. 
 
 
 
 ANALYSIS OF FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION 
 
 Loans 
 The loan portfolio is the largest category of our earning assets and is comprised of commercial loans, real estate mortgage loans, real estate construction loans, and consumer loans. The majority of our loan portfolio is within our North Carolina and South Carolina market areas. We also have a portfolio of SBA loans that have been made on a nationwide basis. The diversity of the economic bases of our market areas has historically provided a stable lending environment. 
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 Total loans amounted to $8.1 billion at December 31, 2024, a decrease of $55.4 million, or 0.7%, from December 31, 2023. The following table provides a summary of the loan portfolio composition at each of the past five year ends. 
 
 Loan Portfolio Composition 
 As of December 31, 
 2024 2023 2022 2021 2020 
 ($ in thousands) Amount % of
Total
Loans Amount % of
Total
Loans Amount % of
Total
Loans Amount % of
Total
Loans Amount % of
Total
Loans 
 Commercial and industrial $ 919,690 11 % $ 905,862 11 % $ 641,941 9 % $ 648,997 11 % $ 782,549 17 % 
 Construction, development & other land loans 647,167 8 % 992,980 12 % 934,176 14 % 828,549 13 % 570,672 12 % 
 Commercial real estate - owner occupied 1,248,812 16 % 1,259,022 16 % 1,036,270 16 % 991,775 16 % 754,570 16 % 
 Commercial real estate - non owner occupied 2,625,554 33 % 2,528,060 31 % 2,123,811 32 % 1,813,849 31 % 1,096,781 23 % 
 Multi-family real estate 506,407 6 % 421,376 5 % 350,180 5 % 389,113 6 % 197,852 4 % 
 Residential 1-4 family real estate 1,729,322 21 % 1,639,469 20 % 1,195,785 18 % 1,021,966 17 % 972,378 21 % 
 Home equity loans/lines of credit 345,883 4 % 335,068 4 % 323,726 5 % 331,932 5 % 306,256 6 % 
 Consumer loans 70,653 1 % 68,443 1 % 60,659 1 % 57,238 1 % 53,955 1 % 
 Loans, gross 8,093,488 100 % 8,150,280 100 % 6,666,548 100 % 6,083,419 100 % 4,735,013 100 % 
 Unamortized net deferred loan (fees) costs 1,188 (178) (1,403) (1,704) (3,698) 
 Total loans $ 8,094,676 $ 8,150,102 $ 6,665,145 $ 6,081,715 $ 4,731,315 

 The majority of our loan portfolio over the years has been real estate mortgage loans, including commercial and residential mortgages. All loan categories secured by real estate, including construction and land loans, have historically ranged from approximately 82% to 90% of the loan portfolio. Except for construction, land development, and other land loans, the majority of our real estate loans are personal and commercial loans where cash flow from the borrower’s occupation or business is the primary repayment source, with the real estate pledged providing a secondary repayment source. 
 The largest component of our portfolio is non-owner occupied commercial real estate loans, followed by residential 1-4 family real estate and owner occupied commercial real estate loans. As demonstrated in the table above, while there have been some variations in the relative percentage of each loan category to the total portfolio over the years, the nature of our portfolio has not changed drastically from the prior year or the historical averages. The higher percentage for commercial and industrial loan category in 2020 was an anomaly related to PPP loans made under the provisions of the CARES Act, which were forgiven in accordance with the PPP loan provisions starting in late 2020 and through early 2022. 
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 A summary of scheduled loan maturities, based on contractual maturity dates, over certain time periods is presented below, with fixed rate loans and adjustable rate loans shown separately. 
 
 Loan Maturities 
 As of December 31, 2024 
 Due within
one year Due after one year but
within five years Due after five years but
within fifteen years Due after fifteen
years Total 
 ($ in thousands) Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield 
 Variable Rate Loans: 
 Commercial and industrial $ 177,351 6.62 % $ 70,703 7.58 % $ 45,046 9.66 % $ 320 9.58 % $ 293,420 7.32 % 
 Construction, development & other land loans 182,083 7.99 % 138,902 7.29 % 32,610 6.92 % 3,827 9.89 % 357,422 7.64 % 
 Commercial real estate - owner occupied 23,692 7.38 % 60,821 7.25 % 21,316 6.90 % 59,217 8.94 % 165,046 7.83 % 
 Commercial real estate - non owner occupied 22,683 7.30 % 185,679 6.88 % 54,385 6.30 % 14,323 9.03 % 277,070 6.91 % 
 Multi-family real estate 1,233 7.87 % 8,392 6.77 % 22,814 6.77 % — — % 32,439 6.81 % 
 Residential 1-4 family real estate 6,561 7.65 % 42,352 7.32 % 30,691 6.99 % 333,083 4.65 % 412,687 5.15 % 
 Home equity loans/lines of credit 11,578 7.83 % 39,435 7.34 % 283,341 7.62 % — — % 334,354 7.60 % 
 Consumer loans 3,216 8.78 % 7,759 10.65 % — — % 868 9.71 % 11,843 10.07 % 
 Total at variable rates 428,397 7.35 % 554,043 7.18 % 490,203 7.51 % 411,638 5.48 % 1,884,281 6.95 % 
 Fixed Rate Loans: 
 Commercial and industrial 137,763 17.33 % 257,657 5.24 % 129,741 3.61 % 91,816 2.94 % 616,977 7.26 % 
 Construction, development & other land loans 83,778 6.66 % 124,710 5.33 % 81,035 5.28 % 132 6.00 % 289,655 5.70 % 
 Commercial real estate - owner occupied 69,754 4.28 % 592,382 4.85 % 412,179 4.34 % 84 8.50 % 1,074,399 4.62 % 
 Commercial real estate - non owner occupied 184,222 4.30 % 1,597,228 4.41 % 566,576 4.09 % 172 6.50 % 2,348,198 4.33 % 
 Multi-family real estate 31,732 5.18 % 260,406 4.00 % 181,830 4.22 % — — % 473,968 4.17 % 
 Residential 1-4 family real estate 32,722 4.45 % 311,714 4.99 % 135,223 4.59 % 827,565 3.93 % 1,307,224 4.26 % 
 Home equity loans/lines of credit 2,058 5.97 % 5,061 6.62 % 2,161 4.91 % 454 5.50 % 9,734 6.05 % 
 Consumer loans 965 6.78 % 48,635 8.58 % 6,593 8.23 % 2,268 16.78 % 58,461 8.83 % 
 Total at fixed rates 542,994 8.03 % 3,197,793 4.65 % 1,515,338 4.26 % 922,491 3.86 % 6,178,616 4.75 % 
 
 Subtotal 971,391 7.73 % 3,751,836 5.01 % 2,005,541 5.05 % 1,334,129 4.36 % 8,062,897 5.27 % 
 Nonaccrual loans 31,779 — — — 31,779 
 Total loans $ 1,003,170 $ 3,751,836 $ 2,005,541 $ 1,334,129 $ 8,094,676 

 Note: The above table is based on contractual scheduled maturities. Early repayment of loans or renewals at maturity are not considered in this table. 
 Approximately 12% of our accruing loans outstanding at December 31, 2024 mature within one year and 59% of total loans mature within five years. As of December 31, 2024, the percentages of variable rate loans and fixed rate loans as compared to total performing loans were 23% and 77%, respectively. During 2024, the Company continued to focus on shifting more loans to variable rates as the mix was 19% variable and 81% fixed at December 31, 2023. While fixed rate loans present market interest rate risk, we measure our interest rate risk closely. Refer to additional discussion in the section “Interest Rate Risk” below. 
 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. 
 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 such as loans that subject borrowers to substantial payment increases (e.g. principal deferral periods, loans with initial interest-only periods, etc.), and loans with high loan-to-value ratios. Additionally, there are industry practices that could subject the Company to increased credit risk should economic conditions change over the course of a loan’s life. For example, the Bank makes variable rate loans and fixed rate principal-amortizing loans with maturities prior to the loan being fully paid (i.e. balloon payment loans). These loans are underwritten and monitored to manage the associated risks. The Company has determined that there is no concentration of credit risk associated with its lending policies or practices. 
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 Most of our business activity is with customers located within the markets where we have banking operations. Therefore, our exposure to credit risk is significantly affected by changes in the economy within our markets. Approximately 88% of our loan portfolio is secured by real estate and is therefore susceptible to changes in real estate valuations. 
 The following tables provides a summary of the outstanding balances of the commercial real estate-owner occupied, commercial real estate-non owner occupied and multi-family real estate loan portfolio compositions at December 31, 2024 by geographic region. 
 
 Region 
 ($ in thousands) Commercial real estate - owner occupied Commercial real estate - non owner occupied Multi-family real estate Total 
 Charlotte, NC $ 79,605 $ 429,889 $ 55,139 $ 564,633 
 Piedmont Triad, NC 103,071 266,487 24,056 393,614 
 Research Triangle, NC 105,488 358,053 45,276 508,817 
 Wilmington, NC 121,805 233,196 76,481 431,482 
 Asheville, NC 62,520 204,189 18,698 285,407 
 Other areas in NC 476,594 664,105 186,496 1,327,195 
 Greenville-Spartanburg, SC 65,824 79,395 2,743 147,962 
 Columbia, SC 10,645 37,535 7,282 55,462 
 Charleston, SC 64,469 109,007 56,981 230,457 
 Other areas in SC 80,264 140,394 17,093 237,751 
 Other states 78,527 103,304 16,162 197,993 
 Total $ 1,248,812 $ 2,625,554 $ 506,407 $ 4,380,773 

 As noted above and described in the Item 1. Business section, we do not have concentrations geographically or by CRE category. 
 
 
 
 Nonperforming Assets 
 NPAs include nonaccrual loans, modifications to borrowers in financial distress, loans past due 90 or more days and still accruing interest, foreclosed real estate and, prior to the adoption of ASU 2022-02, accruing TDRs. 
 Nonaccrual loans are loans on which interest income is no longer being recognized or accrued because management has determined that the collection of interest is doubtful. Placing loans on nonaccrual status negatively impacts earnings because (1) interest accrued but unpaid as of the date a loan is placed on nonaccrual status is reversed and deducted from interest income; (2) future accruals of interest income are not recognized until it becomes probable that both principal and interest will be paid; and (3) principal charged-off, if appropriate, may necessitate additional provisions for loan losses that are charged against earnings. As a matter of policy, we generally place all loans that are past due 90 or more days on nonaccrual basis. There were no accruing loans that were past due 90 or more days at December 31, 2024 and December 31, 2023. 
 In some cases, where borrowers are experiencing financial difficulties, loans may be restructured to provide terms significantly different from the originally contracted terms. 
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 The following table summarizes our NPAs at the dates indicated. 
 
 Nonperforming Assets 
 As of December 31, 
 ($ in thousands) 2024 2023 2022 2021 2020 
 Nonperforming assets 
 Nonaccrual loans $ 31,779 $ 32,208 $ 28,514 $ 34,696 $ 35,076 
 Modifications to borrowers in financial distress 10,173 11,719 — — — 
 TDRs - accruing — — 9,121 13,866 9,497 
 Accruing loans >90 days past due — — — 1,004 — 
 Total nonperforming loans 41,952 43,927 37,635 49,566 44,573 
 Foreclosed real estate 4,965 862 658 3,071 2,424 
 Total nonperforming assets $ 46,917 $ 44,789 $ 38,293 $ 52,637 $ 46,997 
 
 Allowance for credit losses $ 122,572 $ 109,853 $ 90,967 $ 78,789 $ 52,388 
 Total Loans 8,094,676 8,150,102 6,665,145 6,081,715 4,731,315 
 
 Asset Quality Ratios 
 Nonaccrual loans to total loans 0.39 % 0.40 % 0.43 % 0.57 % 0.74 % 
 Nonperforming loans to total loans 0.52 % 0.54 % 0.56 % 0.82 % 0.94 % 
 Nonperforming assets to total loans and foreclosed real estate 0.58 % 0.55 % 0.57 % 0.87 % 0.99 % 
 Nonperforming assets to total assets 0.39 % 0.37 % 0.36 % 0.50 % 0.64 % 
 Allowance for credit losses to total loans 1.51 % 1.35 % 1.36 % 1.30 % 1.11 % 
 Allowance for credit losses to nonaccrual loans 385.70 % 341.07 % 319.03 % 227.08 % 149.36 % 
 Allowance for credit losses to nonperforming loans 292.17 % 250.08 % 241.71 % 158.96 % 117.53 % 

 Our asset quality continues to be strong as demonstrated by stable or improving trends in all ratios as presented in the table above. Our total nonperforming loans to total loans was 0.52% at December 31, 2024, while our total NPA ratio was 0.39% at that date. Additional discussion of the credit quality classification status of our loans is contained in Note 4 to our consolidated financial statements. 
 "Commercial and industrial" is the largest category of nonaccrual loans, at $9.8 million, or 30.9% of total nonaccrual loans, followed by "Residential 1-4 family real estate" at $9.5 million, or 29.9% of total nonaccrual loans and "Commercial real estate - owner occupied" at $9.4 million, or 29.5% of total nonaccrual loans. 
 As of December 31, 2024, SBA loans accounted for approximately $15.5 million of our nonaccrual loans, or 11.4%, of the total SBA portfolio, and carried guarantees from the SBA totaling $7.4 million. This is compared to $18.2 million, or 12.7%, of the SBA portfolio at December 31, 2023. We continue to closely monitor the SBA loan portfolio and give it appropriate consideration when evaluating the adequacy of the ACL as those loans are generally considered inherently more risky than other loans in our portfolio. Refer to additional discussion of the ACL below. 
 As shown in Note 4 to the consolidated financial statements, our accruing past due loans (30 or more days) totaled $38.0 million at December 31, 2024, with the majority (52.8%) being in the residential 1-4 family real estate category. 
 We classify loans as “special mention” when there is a defined weakness or weaknesses that jeopardize the repayment by the borrower and there is a distinct possibility that we could sustain some loss if the deficiency is not corrected. Performing special mention loans, which are still accruing interest, totaled $37.1 million and $44.1 million as of December 31, 2024 and 2023, respectively. In addition, loans that are in the risk category of "classified" which are still accruing interest totaled $34.0 million at December 31, 2024 and $22.0 million at December 31, 2023. These loans have a risk of further deterioration and potential loss to the Bank. 
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 Total foreclosed real estate amounted to $5.0 million at December 31, 2024, compared to $0.9 million in 2023. Nine properties were added to foreclosed real estate during 2024 and we completed the sale of five properties during the year. Two of the 2024 additions were within the population that sold in 2024. 
 
 
 
 Allowance for Credit Losses, Allowance for Unfunded Commitments, and Loan Loss Experience 
 The total ACL amounted to $122.6 million at December 31, 2024 compared to $109.9 million at December 31, 2023. Fluctuations in the ACL 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 2023, adjustments for acquired loan portfolios. As discussed previously in the "Provision for Credit Losses and Provision for Unfunded Commitments" section, much of the change to the level of ACL during the year ended December 31, 2024 resulted from the provision of $13.0 million related to potential impact from Hurricane Helene. The ACL as a percent of loans at December 31, 2024 was 1.51%, 16 basis points of which was attributable to the potential impact from Hurricane Helene. 
 Within the portions of Western North and South Carolina that were significantly impacted by Hurricane Helene, the Company identified borrowers with approximately $744 million of loans outstanding. 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 

 The Company continues to update analyses to identify impacts from the storm and has applied increased reserve rates based upon severe economic factors to the loans in the path of Helene. Additionally, the Company continues to evaluate the largest commercial loans in that population and applied incremental reserves to those loans that were suspected of having higher potential property damage or economic impact from the storm. 
 The ACL reflects our estimate of life of loan expected credit losses that will result from the inability of our borrowers to make required loan payments. We use systematic methodologies to determine the ACL for loans and the allowance for certain off-balance-sheet credit exposures. The ACL is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loan portfolio. 
 We consider the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan portfolio. Our estimate of the ACL involves a high degree of judgment. Therefore, the process for determining expected credit losses may result in a range of expected credit losses. The ACL is calculated using collectively evaluated pools for loans with similar risk characteristics applying the DCF method. When a loan no longer shares similar risk characteristics with its segment, the loan is evaluated on an individual basis applying a DCF or asset approach for collateral-dependent loans. Refer also to the discussion of the critical estimates utilized in the ACL in the prior section, Critical Accounting Estimates, and refer to Note 1 of the consolidated financial statements for a discussion of our CECL methodology used to determine the ACL. 
 Our assessment of the ACL involves uncertainty and judgment and is subject to change in future periods. The amount of any changes could be significant if the assessment of loan quality or collateral values changes substantially with respect to one or more loan relationships or portfolios or if there is a significant change in the reasonable and supportable forecast used to model our expected credit losses. The allocation of the ACL as presented in the following table is based on reasonable and supportable forecasts, historical data, subjective judgment, and estimates and therefore, may not be predictive of the specific amounts or loan categories in which charge-offs may ultimately occur. In addition, bank regulatory authorities, as part of their periodic examination of the 
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 Bank, may require adjustments to the provision for loan losses in future periods if, in their opinion, the results of their review warrant such additions. 
 The following table sets forth the allocation of the ACL by loan category at the dates indicated. However, the ACL is available to absorb losses in any and all categories. 
 
 Allocation of the Allowance for Credit Losses 
 As of December 31, 
 ($ in thousands) 2024 % of
Loan Category 2023 % of
Loan Category 2022 % of
Loan Category 2021 % of
Loan Category 2020 % of
Loan Category 
 Commercial and industrial $ 19,474 2.12 % $ 21,227 2.34 % $ 17,718 2.76 % $ 16,249 2.50 % $ 11,316 1.45 % 
 Construction, development & other land loans 9,314 1.44 % 13,940 1.40 % 15,128 1.62 % 16,519 1.99 % 5,355 0.94 % 
 Commercial real estate - owner occupied 19,380 1.55 % 18,218 1.45 % 14,972 1.44 % 12,317 1.24 % 10,608 1.41 % 
 Commercial real estate - non owner occupied 27,768 1.06 % 24,916 0.99 % 22,780 1.07 % 16,789 0.93 % 11,465 1.05 % 
 Multi-family real estate 5,476 1.08 % 3,825 0.91 % 2,957 0.84 % 1,236 0.32 % 1,530 0.77 % 
 Residential 1-4 family real estate 33,552 1.94 % 21,396 1.31 % 11,354 0.95 % 8,686 0.85 % 8,048 0.83 % 
 Home equity loans/lines of credit 4,111 1.19 % 3,339 1.00 % 3,158 0.98 % 4,337 1.31 % 2,375 0.78 % 
 Consumer loans 3,497 4.95 % 2,992 4.37 % 2,900 4.78 % 2,656 4.64 % 1,478 2.74 % 
 Total allocated 122,572 109,853 90,967 78,789 52,175 
 Unallocated — n/a — n/a — n/a — n/a 213 n/a 
 Total $ 122,572 1.51 % $ 109,853 1.35 % $ 90,967 1.36 % $ 78,789 1.30 % $ 52,388 1.11 % 
 
 Note: "% of Loan Category" represents the ACL as a percent of the respective total loan categories presented previously in the Loan Portfolio Composition table. 
 n/a - not applicable 

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 For the years indicated, the following table summarized our net loss experience by loan category and key ratios demonstrating the asset quality trends over the most recent five years. 
 
 Loan Ratios, Loss and Recovery Experience 
 As of December 31, 
 ($ in thousands) 2024 2023 2022 2021 2020 
 Loans outstanding at end of year $ 8,094,676 $ 8,150,102 $ 6,665,145 $ 6,081,715 $ 4,731,315 
 Average amount of loans outstanding 8,046,681 7,902,628 6,293,280 5,018,391 4,702,743 
 Allowance for credit losses, at end of year 122,572 109,853 90,967 78,789 52,388 
 
 Net loan (charge-offs) recoveries 
 Commercial and industrial $ (4,915) $ (6,965) $ (1,763) $ (1,978) $ (4,863) 
 Construction, development & other land loans 150 250 480 703 1,501 
 Commercial real estate - owner occupied (187) 321 477 (212) (335) 
 Commercial real estate - non owner occupied (355) 502 432 (1,562) (24) 
 Multi-family real estate — 13 11 12 12 
 Residential 1-4 family real estate 292 373 17 488 276 
 Home equity loans/lines of credit 270 (211) 557 178 (37) 
 Consumer loans (1,287) (757) (633) (309) (579) 
 Total net charge-offs $ (6,032) $ (6,474) $ (422) $ (2,680) $ (4,049) 
 Average loans 
 Commercial and industrial $ 877,989 $ 865,043 $ 619,480 $ 700,557 $ 707,976 
 Construction, development & other land loans 810,564 1,053,422 857,880 619,928 615,717 
 Commercial real estate - owner occupied 1,239,411 1,224,284 1,012,275 812,764 776,166 
 Commercial real estate - non owner occupied 2,552,146 2,464,389 1,968,944 1,322,685 1,012,182 
 Multi-family real estate 466,588 402,814 357,491 256,396 193,415 
 Residential 1-4 family real estate 1,696,449 1,482,941 1,091,788 951,573 1,028,334 
 Home equity loans/lines of credit 331,995 341,778 326,592 300,291 316,593 
 Consumer loans 71,539 67,957 58,830 54,197 52,360 
 Total average loans $ 8,046,681 $ 7,902,628 $ 6,293,280 $ 5,018,391 $ 4,702,743 
 
 Ratios 
 Allowance for credit losses as a percent of loans at end of year 1.51 % 1.35 % 1.36 % 1.30 % 1.11 % 
 Allowance for credit losses as a multiple of net charge-offs 20.32 16.97 215.56 29.40 12.94 
 Provision for loan losses as a percent of net charge-offs 310.86 % 305.07 % 2,985.78 % 358.62% 865.37% 
 Recoveries of loans previously charged-off as a percent of loans charged-off 37.08 % 36.37 % 90.55 % 64.75 % 52.38 % 
 Total net charge-offs as a percent of average loans (0.07 %) (0.08 %) (0.01 %) (0.05 %) (0.09 %) 
 Net (charge-offs) recoveries by loan category as a percent of average loans: 
 Commercial and industrial (0.56 %) (0.81 %) (0.28 %) (0.28 %) (0.69 %) 
 Construction, development & other land loans 0.02 % 0.02 % 0.06 % 0.11 % 0.24 % 
 Commercial real estate - owner occupied (0.02 %) 0.03 % 0.05 % (0.03 %) (0.04 %) 
 Commercial real estate - non owner occupied (0.01 %) 0.02 % 0.02 % (0.12 %) — % 
 Multi-family real estate — % — % — % — % 0.01 % 
 Residential 1-4 family real estate 0.02 % 0.03 % — % 0.05 % 0.03 % 
 Home equity loans/lines of credit 0.08 % (0.06 %) 0.17 % 0.06 % (0.01 %) 
 Consumer loans (1.80 %) (1.11 %) (1.08 %) (0.57 %) (1.11 %) 

 
 
 
 
 
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 Securities 
 Our securities portfolio and the breakout of AFS and HTM securities is presented in the following table. 
 
 Securities Portfolio Composition 
 As of December 31, 
 ($ in thousands) 2024 2023 2022 
 Securities available for sale: 
 US Treasury securities $ 120,581 $ 172,570 $ 168,758 
 Government-sponsored enterprise securities 
 9,614 60,266 57,456 
 Mortgage-backed securities 
 1,897,175 1,937,784 2,045,000 
 Corporate bonds 
 15,692 18,759 43,279 
 
 Total securities available for sale 
 2,043,062 2,189,379 2,314,493 
 
 Securities held to maturity: 
 Mortgage-backed securities 
 9,198 12,085 15,150 
 State and local governments 
 510,800 521,593 526,550 
 Total securities held to maturity 
 519,998 533,678 541,700 
 
 Total securities $ 2,563,060 $ 2,723,057 $ 2,856,193 
 
 Average total securities during year, at amortized cost $ 2,900,014 $ 3,216,327 $ 3,356,486 

 
 
 The decrease in securities for the year ended December 31, 2024 was primarily due to regular principal repayments received on mortgage-backed securities as well as maturities of other securities. Generally, we invested cash flows from amortizing investments in interest bearing cash deposits. During 2024, we sold $426.7 million of securities, with a weighted average yield of 1.93% , at a loss of $ 41.5 million and we purchased $495.0 million of securities, with a weighted average yield of 5.21%. Partially offsetting this loss was a $ 4.5 million gain on the sale of the Class B shares of Visa, Inc. stock. Also impacting the change in balances of AFS securities was the improvement in unrealized loss on AFS securities which was $368.1 million at December 31, 2024 as compared to $400.7 million at December 31, 2023. 
 The composition of the investment securities portfolio reflects our investment strategy of maintaining an appropriate level of liquidity while providing a relatively stable source of income. The investment portfolio also provides a balance to interest rate risk and credit risk in other categories of the balance sheet while providing a vehicle for the investment of available funds, furnishing liquidity, and supplying securities to pledge as required collateral for certain deposits. Essentially all of our mortgage-backed securities, which include both AFS and HTM securities, are issued by GSEs or GNMA, and are traded in liquid secondary markets. These securities are recorded on the balance sheet at fair value for the AFS portfolio and at cost for the HTM portfolio. 
 The table below presents the composition, tax equivalent yields, and remaining maturities of our securities as of December 31, 2024. For more information about these securities, including gross unrealized gains and losses by type of security and securities pledged, see Note 3 to the consolidated financial statements. 
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 Securities Portfolio Maturity Schedule 
 ($ in thousands) US Treasury securities Government & govt.-sponsored enterprise securities Mortgage-backed securities (1) 
 Corporate debt securities Total Weighted Average Yield (2) 
 
 Securities available for sale 
 Remaining maturity: 
 One year or less $ — $ — $ 451 $ — $ 451 2.56 % 
 After one through five years 81,944 — 500,416 — 582,360 4.16 % 
 After five through ten years 38,637 9,614 1,220,972 15,692 1,284,915 1.97 % 
 After ten years — — 175,336 — 175,336 2.48 % 
 Fair Value $ 120,581 $ 9,614 $ 1,897,175 $ 15,692 $ 2,043,062 
 Amortized cost $ 121,051 $ 11,961 $ 2,261,924 $ 16,181 $ 2,411,117 2.41 % 
 Weighted-average yield (2) 
 4.28 % 1.32 % 2.30 % 4.22 % 2.41 % 
 Weighted average maturity years 4.84 6.64 6.78 4.99 6.64 
 
 Mortgage-backed securities (1) 
 State and local governments Total Weighted Average Yield (2) 
 
 Securities held to maturity 
 Remaining maturity: 
 One year or less $ — $ — $ — — % 
 After one through five years 9,198 5,638 14,836 2.67 % 
 After five through ten years — 186,842 186,842 1.98 % 
 After ten years — 318,320 318,320 2.12 % 
 Amortized cost $ 9,198 $ 510,800 $ 519,998 
 Fair value $ 8,739 $ 419,832 $ 428,571 2.09 % 
 Weighted-average yield (2) 
 2.47 % 2.08 % 2.09 % 
 Weighted average maturity years 2.37 9.71 9.60 

 (1) Mortgage-backed securities are shown maturing in the periods consistent with their estimated lives based on expected prepayment speeds. 
 (2) Yields have been computed using coupon interest, adding discount accretion or subtracting premium amortization, as appropriate, on a ratable basis over the life of each security. Weighted average yield for each maturity range has been computed on a fully taxable-equivalent basis using the amortized cost of each security in that range. Yields on tax-exempt investments have been adjusted to a taxable equivalent basis using a 23.35% tax rate. 
 
 
 Nearly all of our $1.9 billion in AFS mortgage-backed securities at December 31, 2024 were issued by the FHLMC, FNMA, GNMA, or the SBA, each of which is a government agency or a GSE and guarantees the repayment of the securities. Included in this total are private-label commerical mortgage-backed securities of $0.7 million. Mortgage-backed securities vary in their repayment in correlation with the underlying pools of mortgage loans. 
 At December 31, 2024, we held $520.0 million in securities classified as HTM, which are carried at amortized cost. These securities had fair values that were lower than their carrying values by $91.4 million at December 31, 2024. Approximately $9.2 million of the HTM securities were mortgage-backed securities that have been issued by either the FHLMC or FNMA. The remaining $510.8 million in HTM securities were comprised almost entirely of highly-rated municipal bonds issued by state and local governments throughout the nation. We have no significant concentration of bond holdings from one state or local government entity, with the single largest exposure to any one entity being $8.9 million. We have evaluated any unrealized losses on individual securities at each year end and determined them to be of a temporary nature and caused by fluctuations in market interest rates, not by concerns about the ability of the issuers to meet their obligations. 
 
 Deposits 
 Deposits represent the primary funding source for our loans and investments. Total deposits amounted to $10.5 billion at December 31, 2024, an increase of $498.9 million, or 5.0%, from December 31, 2023. Deposit growth for the year was entirely organic as there were no acquisitions during 2024. Accounting for most of the growth during 2024, retail deposits grew $501.9 million, or 5.0%, from the prior year end. Brokered deposits ended 2024 at $9.6 million. We continue to have a diversified and granular deposit base which has remained a stable source of funding. At December 31, 2024, noninterest-bearing deposits accounted for 32% of total deposits. This contributes to our low cost of funds. 
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 The table below presents our historical deposit mix which continues to be predominately transaction and non-time deposit accounts. As demonstrated in the below table, total time deposits have declined to 8% of total deposits at December 31, 2024 from 13% at December 31, 2020. Such a shift in mix is beneficial for us, as non-time deposit accounts generally carry lower interest rates compared to time deposits and we are able to reprice these deposit categories as market rates move over time. Approximately 97% of our time deposits mature within one year. 
 
 Deposit Composition 
 As of December 31, 
 2024 2023 2022 2021 2020 
 ($ in thousands) Amount % of
Total Amount % of
Total Amount % of
Total Amount % of
Total Amount % of
Total 
 Noninterest-bearing checking accounts $ 3,367,624 32 % $ 3,379,876 34 % $ 3,566,003 39 % $ 3,348,622 37 % $ 2,210,012 35 % 
 Interest-bearing checking accounts 1,398,395 13 % 1,411,142 14 % 1,514,166 16 % 1,593,231 17 % 1,172,022 19 % 
 Money market accounts 4,285,405 41 % 3,653,506 36 % 2,416,146 26 % 2,562,283 28 % 1,581,364 25 % 
 Savings accounts 542,133 5 % 608,380 6 % 728,641 8 % 708,054 8 % 519,266 8 % 
 Other time deposits 566,514 5 % 610,887 6 % 464,343 5 % 547,669 6 % 415,269 7 % 
 Time deposits >$250,000 360,854 4 % 355,209 4 % 276,319 3 % 357,355 4 % 355,441 6 % 
 Total customer deposits 10,520,925 100 % 10,019,000 100 % 8,965,618 97 % 9,117,214 100 % 6,253,374 100 % 
 Brokered Deposits 9,600 — % 12,599 — % 261,911 3 % 7,415 — % 20,222 — % 
 Total deposits $ 10,530,525 100 % $ 10,031,599 100 % $ 9,227,529 100 % $ 9,124,629 100 % $ 6,273,596 100 % 

 While our customer deposits have remained fairly stable, there continues to be competition for deposits by both in-market and out-of-market competitors. We routinely engage in activities designed to grow and retain deposits, including emphasizing relationship banking to new and existing customers where borrowers are encouraged to maintain deposit accounts with us; pricing deposits at rate levels that will attract and/or retain deposits; and continually working to identify and introduce new products that will attract customers or enhance our appeal as a primary provider of financial services. 
 The table below presents maturities of time deposits which are individually greater than the FDIC insurance limit of $250,000 as of December 31, 2024. 
 
 As of December 31, 2024 
 ($ in thousands) 3 Months
or Less Over 3 to 6
Months Over 6 to 12
Months Over 12
Months Total 
 Time deposits greater than the FDIC insurance limit of $250,000 $ 183,946 $ 98,753 $ 68,152 $ 10,003 $ 360,854 

 As shown above, time deposits in excess of $250,000 totaled $360.9 million at December 31, 2024. On an individual account basis, there was a total of $185.0 million which was in excess of $250,000. This assessment of time deposit accounts does not evaluate total deposit relationships, account ownership types or other factors for determining the actual uninsured balances by customer. 
 As of December 31, 2024 and December 31, 2023, the estimated uninsured deposits we held totaled approximately $4.1 billion and $3.7 billion, respectively. As of December 31, 2024 and December 31, 2023, respectively, our insured were $6.4 billion, or 61.0% of total deposits, and $6.3 billion or 63.3% of total deposits. When coupled with deposits collateralized by investment securities with balances totaling $690.5 million and $820.9 million as of December 31, 2024 and December 31, 2023, respectively, approximately 67.6% and 71.5% of our total deposits were insured or collateralized as December 31, 2024 and December 31, 2023, respectively. 
 We do not take deposits through foreign offices. Deposits at December 31, 2024 from foreign depositors were nominal. 
 
 Borrowings 
 Although not the case as of December 31, 2024, we have historically utilized short-term borrowings to provide balance sheet liquidity and to fund imbalances in our loan growth compared to our deposit growth. In addition, we have long-term debt in the form of trust preferred securities and subordinated debentures and have the availability to borrow from the FHLB or FRB. 
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 Total borrowings at December 31, 2024 decreased $538.3 million from the prior year end. Redemptions of FHLB advances comprised $280.0 million of the decrease and redemptions of FRB borrowings under the Bank Term Funding Program comprised $249.0 million of the decrease. During the year, the Company redeemed $10.0 million of subordinated debentures. 
 Our borrowings outstanding as of the dates presented were as follows: 
 
 ($ in thousands) December 31, 2024 December 31, 2023 
 FHLB advances $ 802 $ 280,851 
 FRB borrowings — 249,000 
 Trust preferred capital issuances 77,324 77,324 
 Subordinated debentures 18,000 28,000 
 96,126 635,175 
 Unamortized discounts on acquired borrowings (4,250) (5,017) 
 $ 91,876 $ 630,158 

 As noted in the table above, at December 31, 2024, we had $77.3 million of borrowings structured as trust preferred capital securities which qualify as Tier I capital for regulatory capital adequacy requirements. The Company issued $46.4 million of these securities with the balance assumed from acquisitions. The $18.0 million of unsecured subordinated debentures are borrowings issued by GrandSouth which we acquired and which qualify as Tier II capital for regulatory capital adequacy requirements. 
 At December 31, 2024, the Company had several sources of readily available borrowing capacity: 
 • An existing borrowing capacity with the FHLB of approximately $1.4 billion which can be structured as either short-term or long-term borrowings, depending on the particular funding or liquidity need, and is secured by a blanket lien on most of our real estate loan portfolio, select investment securities, and our FHLB stock (of which $0.8 million and $280.9 million were outstanding at December 31, 2024 and December 31, 2023, respectively). 
 • Federal funds lines with several correspondent banks totaling $265.0 million which provide for overnight unsecured federal funds purchased (of which none were outstanding at December 31, 2024 and December 31, 2023); and, 
 • A line of credit with the Federal Reserve through its discount window borrowing program of approximately $767.4 million which is secured by a blanket lien on a portion of our commercial and consumer loan portfolio (excluding real estate loans) and specific investment securities. All of this line was available at both December 31, 2024 and December 31, 2023. 
 Refer to Note 9 to the consolidated financial statements for additional discussion of our borrowings. 
 
 Liquidity, Commitments, and Contingencies 
 Our liquidity is determined by our ability to convert assets to cash or to acquire alternative sources of funds to meet the needs of our customers who are withdrawing or borrowing funds, and our ability to maintain required reserve levels, pay expenses, and operate the Company on an ongoing basis. Our primary liquidity sources are net income from operations, cash and due from banks, federal funds sold, and other short-term investments. Our securities portfolio has a high percentage of amortizing mortgage-backed securities generating monthly cash flows. In addition, the portfolio is comprised almost entirely of readily marketable securities, which could also be sold to provide cash. We also maintain available lines of credit from the FHLB and the Federal Reserve, as well as federal funds lines from several correspondent banks which are summarized below. 
 At December 31, 2024, the Company had several sources of readily available borrowing capacity as described above in the Borrowings section. 
 Liquidity is evaluated as both on-balance sheet (primarily cash and cash-equivalents, unpledged securities, and other marketable assets) and off-balance sheet (readily available lines of credit or other funding sources). Our overall on-balance sheet liquidity ratio was 17.6% at December 31, 2024. Our total liquidity ratio, including the $2.4 billion in available lines of credit, was 34.9% as of that date. The increase in available lines of credit during 2024 
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 was a result of the redemption of FHLB advances along with additional loan and security collateral being transferred to the FHLB and the Federal Reserve to enhance the levels of off-balance sheet liquidity. 
 We continue to manage liquidity sources and believe our liquidity sources, including unused lines of credit, are at an acceptable level and remain adequate to meet our operating needs in the foreseeable future. We will continue to monitor our liquidity position carefully and will explore and implement strategies to increase liquidity if deemed appropriate. 
 In the normal course of business we have various outstanding contractual obligations that will require future cash outflows. In addition, there are commitments and contingent liabilities, such as commitments to extend credit, that may or may not require future cash outflows. Certain of the outstanding commitments and contingent liabilities, such as commitments to extend credit, are not reflected in the financial statements. 
 Presented below is a summary of our contractual obligations and other commercial commitments outstanding as of December 31, 2024. 
 
 Contractual Obligations and Other Commercial Commitments 
 Payments Due Per Period ($ in thousands) 
 Contractual Obligation as of December 31, 2024 Less
than 1 Year 1-3 Years 4-5 Years After 5 Years Total 
 Borrowings $ — $ 802 $ 18,000 $ 77,324 $ 96,126 
 Operating leases 1,800 2,753 2,232 15,033 21,818 
 Time deposits, including brokered deposits 887,633 41,636 7,632 67 936,968 
 Non-qualified postretirement plan liabilities 566 1,151 1,143 4,175 7,035 
 Committed investment obligations 16,062 16,062 — — 32,124 
 Estimated interest expense on borrowings and time deposits (1) 
 31,500 12,430 12,044 27,989 83,963 
 Total contractual cash obligations $ 937,561 $ 74,834 $ 41,051 $ 124,588 $ 1,178,034 
 (1) Represents forecasted interest expense on borrowings and time deposits based on interest rates and balances at December 31, 2024. Forecasts are based on the contractual maturity of each liability. 
 

 
 Amount of Commitment Expiration Per Period ($ in thousands) 
 Other Commercial Commitments as of December 31, 2024 Less
than 1 Year 1-3 Years 4-5 Years After 5 Years Total
Amounts
Committed 
 Credit cards 
 $ — $ — $ — $ 312,222 $ 312,222 
 Lines of credit and loan commitments 
 440,428 606,514 169,154 817,844 2,033,940 
 Standby letters of credit 
 24,365 73 40 — 24,478 
 Total commercial commitments 
 $ 464,793 $ 606,587 $ 169,194 $ 1,130,066 $ 2,370,640 

 As presented in the table above, at December 31, 2024, we had $24.5 million in standby letters of credit outstanding. We had no carrying amount for these standby letters of credit. The nature of standby letters of credit is that of a stand-alone obligation made on behalf of our customers to suppliers of the customers to guarantee payments owed to the suppliers by the customers. The standby letters of credit are generally for terms of one year, at which time they may be renewed for another year if both parties agree. The payment of the guarantees would generally be triggered by a continued nonpayment of an obligation owed by the customer to the supplier. In the event that we are required to honor a standby letter of credit, a note, already executed by the customer, becomes effective providing repayment terms and any collateral. 
 It has been our experience that deposit withdrawals are generally able to be replaced with new deposits when needed or through short-term advances from the FHLB. We believe that the Bank can meet its contractual cash obligations and existing commitments from normal operations. 
 
 Capital Resources and Shareholders’ Equity 
 Shareholders’ equity at December 31, 2024 amounted to $1.4 billion, a $73.2 million, or 5.3%, incre ase from December 31, 2023. The two basic components that typically have the largest impact on our shareholders’ equity are net income, which increases shareholders’ equity, and dividends declared, which decreases shareholders’ equity. Additionally, any stock issuances can significantly increase shareholders’ equity, including those associated 
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 with acquisitions such as in 2023, and any stock repurchases reduce shareholders’ equity. Finally, fluctuations in the amount of AOCI, generally driven by market interest rate changes resulting in increases or decreases in unrealized gains/losses on AFS securities, can have a significant impact on total equity. In 2024, the most significant factors that impacted our shareholders' equity were (1) $76.2 million net income reported for 2024, which increased equity, (2) common stock dividends declared of $36.3 million, which reduced equity; and (3) $26.0 million increase in equity related to changes in AOCI driven by lower unrealized losses on AFS securities. 
 As discussed in “Borrowings” above, we also currently have $77.3 million in trust preferred securities outstanding, all of which qualify as Tier I capital under regulatory standards and $18.0 million of unsecured subordinated debentures which qualify as Tier II capital for regulatory capital adequacy requirements. We are not aware of any recommendations of regulatory authorities or otherwise which, if they were to be implemented, would have a material effect on our liquidity, capital resources, or operations. 
 The Company and the Bank must comply with regulatory capital requirements established by the Federal Reserve and the Commissioner. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on our financial statements. The primary source of funds for the payment of dividends by the Company is dividends received from its subsidiary, the Bank. The Bank, as a North Carolina banking corporation, may declare dividends so long as such dividends do not reduce its capital below its applicable required capital (typically, the level of capital required to be deemed “adequately capitalized”). As of December 31, 2024, approximately $1.1 billion of the Company’s investment in the Bank is restricted as to transfer to the Company without obtaining prior regulatory approval. 
 Our regulatory capital ratios as of December 31, 2024, 2023 and 2022 are presented in the table below. All of our capital ratios significantly exceeded the minimum regulatory thresholds for all periods presented. 
 
 Risk-Based and Leverage Capital Ratios 
 As of December 31, 
 ($ in thousands) 2024 2023 2022 
 Risk-Based and Leverage Capital 
 Common Equity Tier I capital: 
 Shareholders’ equity $ 1,445,611 $ 1,372,380 $ 1,031,596 
 Intangible assets, net of deferred tax liability (487,660) (493,383) (363,202) 
 Accumulated other comprehensive income adjustments 282,029 308,030 341,975 
 Total Common Equity Tier I capital 1,239,980 1,187,027 1,010,369 
 Add: Trust preferred securities eligible for Tier I capital treatment 71,148 70,807 63,589 
 Total Tier I leverage capital 1,311,128 1,257,834 1,073,958 
 Tier II capital: 
 Add: Allowable allowance for credit losses and unfunded commitments 108,320 112,491 97,126 
 Add: Subordinated debentures eligible for Tier II capital treatment 17,602 27,177 — 
 Tier II capital additions 125,922 139,668 97,126 
 Total capital $ 1,437,050 $ 1,397,502 $ 1,171,084 
 Total risk weighted assets $ 8,642,315 $ 8,991,087 $ 7,762,894 
 Adjusted fourth quarter average tangible assets $ 11,756,111 $ 11,532,812 $ 10,215,571 
 
 Risk-based and Leverage capital ratios: 
 Common equity Tier I capital to Tier I risk adjusted assets 14.35 % 13.20 % 13.02 % 
 Tier I capital to Tier I risk adjusted assets 15.17 % 13.99 % 13.83 % 
 Total risk-based capital to Tier II risk-adjusted assets 16.63 % 15.54 % 15.09 % 
 Tier I leverage capital to adjusted fourth quarter average assets 11.15 % 10.91 % 10.51 % 

 Our goal is to maintain our capital ratios at levels at least 200 basis points higher than the regulatory “well capitalized” thresholds set for banks. At December 31, 2024, our leverage ratio was 11.15% compared to the regulatory well capitalized bank-level threshold of 4.00% and our total risk-based capital ratio was 16.63% compared to the 10.50% regulatory well capitalized threshold. The increase in capital levels in 2024 was related to the growth in net income, reduction in risk weighted assets, and improvements in our AOCI unrealized losses on AFS securities, partially offset by the redemption of $10 million of subordinated debentures. 
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 In addition to regulatory capital ratios, we also closely monitor our ratio of TCE to tangible assets, which is a non-GAAP financial measure. The TCE ratio was 8.22% at December 31, 2024 compared to 7.56% at December 31, 2023, with the increase of 66 basis points related primarily to the improvement in our AOCI unrealized loss on AFS securities included in equity. 
 The following table reconciles common equity to tangible common equity and provides the calculation of the TCE ratio: 
 
 ($ in thousands) December 31, 2024 December 31, 2023 
 Reconciliation of Common Equity to TCE 
 Total shareholders' common equity $ 1,445,611 $ 1,372,380 
 Less: Goodwill and other intangibles (487,660) (493,211) 
 Tangible common equity $ 957,951 $ 879,169 
 Reconciliation of Total Assets to Tangible Assets 
 Total assets $ 12,147,694 $ 12,114,942 
 Less: Goodwill and other intangibles (487,660) (493,211) 
 Tangible assets $ 11,660,034 $ 11,621,731 
 TCE divided by Tangible Assets 8.22 % 7.56 % 

 See “Supervision and Regulation” under “Business” in Item 1. and Note 19 to the consolidated financial statements for discussion of other matters that may affect our capital resources. 
 
 Off-Balance Sheet Arrangements and Derivative Financial Instruments 
 Off-balance sheet arrangements include transactions, agreements, or other contractual arrangements pursuant to which we have obligations or provide guarantees on behalf of an unconsolidated entity. We have no off-balance sheet arrangements of this kind other than letters of credit and repayment guarantees associated with our trust preferred securities and subordinated debentures. 
 In the normal course of business, we are exposed to certain risks arising from both our business operations and economic conditions. As an element of our risk management strategies, we 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. Derivative financial instruments include futures, forwards, interest rate swaps, options contracts, and other financial instruments with similar characteristics. 
 We do not engage in significant derivatives activities, however, in 2023 to accommodate customers, we implemented a program whereby we enter into interest rate swaps with certain commercial loan customers, with offsetting positions to dealers under a back-to-back swap program. At December 31, 2024, the Company's derivative financial instruments consist entirely of customer back-to-back interest rate swaps which are not designated as hedges. Under this program, the Company executes interest rate swaps with commercial banking customers to facilitate their risk management strategies. Those interest rate swaps are simultaneously economically hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate derivatives associated with this program are not designated as hedging instruments, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings. Refer to Note 13 of the consolidated financial statements for additional discussion of our derivative positions. 
 
 Current Accounting Matters 
 We prepare our consolidated financial statements and related disclosures in conformity with standards established by, among others, the FASB. Because the information needed by users of financial reports is dynamic, the FASB frequently issues new rules and proposes new rules for companies to apply in reporting their activities. See Note 1 to our consolidated financial statements for a discussion of recent rule proposals and changes. 
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 Selected Financial Information 
 
 Year Ended December 31, 
 ($ in thousands, except per share data) 2024 2023 2022 2021 2020 
 Income Statement Data 
 Interest income $ 519,240 $ 488,944 $ 341,118 $ 255,918 $ 237,684 
 Interest expense 186,967 142,101 16,103 9,523 19,562 
 Net interest income 332,273 346,843 325,015 246,395 218,122 
 Provision for credit losses 16,448 17,813 12,400 15,031 35,039 
 Net interest income after provision 315,825 329,030 312,615 231,364 183,083 
 Noninterest income 17,899 57,305 67,824 73,611 81,346 
 Noninterest expense 235,607 254,379 195,220 184,656 161,298 
 Income before income taxes 98,117 131,956 185,219 120,319 103,131 
 Income tax expense 21,902 27,825 38,283 24,675 21,654 
 Net income 76,215 104,131 146,936 95,644 81,477 
 
 
 Per Common Share Data 
 Earnings per common share – basic $ 1.85 $ 2.54 $ 4.12 $ 3.19 $ 2.81 
 Earnings per common share – diluted 1.84 2.53 4.12 3.19 2.81 
 Cash dividends declared 0.88 0.88 0.88 0.80 0.72 
 Market Price 
 High 49.20 43.24 49.00 50.92 40.00 
 Low 29.79 26.48 32.90 32.47 17.32 
 Close 43.97 37.01 42.84 45.72 33.83 
 Stated book value – common 34.96 33.38 28.89 34.54 31.26 
 Common shares outstanding at year end 41,347,418 41,109,987 35,704,154 35,629,177 28,579,335 
 
 
 Selected Balance Sheet Data (at year end) 
 Total assets $ 12,147,694 $ 12,114,942 $ 10,625,049 $ 10,508,901 $ 7,289,751 
 Loans 8,094,676 8,150,102 6,665,145 6,081,715 4,731,315 
 Allowance for credit losses (122,572) (109,853) 90,967 78,789 52,388 
 Intangible assets 501,654 508,257 372,933 376,618 248,850 
 Deposits 10,530,525 10,031,599 9,227,529 9,124,629 6,273,596 
 Borrowings 91,876 630,158 287,507 67,386 61,829 
 Total shareholders’ equity 1,445,611 1,372,380 1,031,596 1,230,575 893,421 
 
 
 Selected Average Balances 
 Total assets 12,134,495 12,033,033 10,556,772 8,495,645 6,765,998 
 Loans 8,046,681 7,902,628 6,293,319 5,018,391 4,702,743 
 Earning assets 11,508,581 11,433,492 9,989,242 7,871,319 6,160,100 
 Deposits 10,408,082 10,176,966 9,283,527 7,401,910 5,644,290 
 Interest-bearing liabilities 7,274,014 7,037,105 5,758,001 4,736,343 3,897,912 
 Total shareholders’ equity 1,416,461 1,293,085 1,097,385 969,775 874,532 
 
 
 Ratios 
 Return on average assets 0.63 % 0.87 % 1.39 % 1.13 % 1.20 % 
 Return on average common equity 5.38 % 8.05 % 13.40 % 9.86 % 9.32 % 
 Total risk-based capital ratio 16.63 % 15.54 % 15.09 % 14.67 % 15.37 % 
 Net interest margin (taxable-equivalent basis) 2.91 % 3.06 % 3.28 % 3.16 % 3.56 % 
 Loans to deposits at year end 76.87 % 81.24 % 72.23 % 66.65 % 75.42 % 
 Allowance for loan losses to total loans 1.51 % 1.35 % 1.36 % 1.30 % 1.11 % 
 Nonperforming assets to total assets at year end 0.39 % 0.37 % 0.36 % 0.50 % 0.64 % 
 Net (charge-offs) recoveries to average total loans (0.07 %) (0.08 %) (0.01 %) (0.05 %) (0.09 %) 
 
 Note - During both 2023 and 2021, the Company completed significant acquisitions impacting the comparisons for each of those years. See additional discussion under "Recent Developments and Acquisitions" in Item 1. 

 
 
 
 
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 Table of Contents
FIRST BANCORP /NC/ 10-K

Item 7. Management’s Discussion and Analysis
