FIRST BANCORP /NC/ 10-Q

Item 1 - Financial Statements First Bancorp Consolidated Balance Sheets ($ in thousands - unaudited) March 31, 2025 December 31, 2024 Assets Cash and due from banks, noninterest-bearing $ 149,781 $ 78,596 Due from banks, interest-bearing 622,660 428,911 Total cash and cash equivalents 772,441 507,507 Securities available for sale (amortized cost of $ 2,385,730 and $ 2,411,117 , respectively) 2,064,516 2,043,062 Securities held to maturity (fair values of $ 430,601 and $ 428,571 , respectively) 518,265 519,998 Presold mortgages in process of settlement 5,166 5,942 Loans 8,103,033 8,094,676 Allowance for credit losses on loans ( 120,631 ) ( 122,572 ) Net loans 7,982,402 7,972,104 Premises and equipment, net 141,954 143,459 Accrued interest receivable 35,452 36,329 Goodwill 478,750 478,750 Other intangible assets, net 21,388 22,904 Bank-owned life insurance 189,597 188,460 Other assets 226,314 229,179 Total assets $ 12,436,245 $ 12,147,694 Liabilities Deposits Noninterest-bearing deposits $ 3,476,786 $ 3,367,624 Interest-bearing deposits 7,267,873 7,162,901 Total deposits 10,744,659 10,530,525 Borrowings 92,055 91,876 Accrued interest payable 4,935 4,604 Other liabilities 86,420 75,078 Total liabilities 10,928,069 10,702,083 Commitments and contingencies Shareholders' Equity Preferred stock, no par value per share. Authorized: 5,000,000 shares Issued & outstanding: none and none , respectively — — Common stock, no par value per share. Authorized: 60,000,000 shares Issued & outstanding: 41,368,828 shares and 41,347,418 shares, respectively 971,174 971,313 Retained earnings 783,630 756,327 Stock in rabbi trust assumed in acquisition ( 1,166 ) ( 1,148 ) Rabbi trust obligation 1,166 1,148 Accumulated other comprehensive income (loss) ( 246,628 ) ( 282,029 ) Total shareholders’ equity 1,508,176 1,445,611 Total liabilities and shareholders’ equity $ 12,436,245 $ 12,147,694 See accompanying notes to unaudited consolidated financial statements. Page 4 Index First Bancorp Consolidated Statements of Income Three Months Ended March 31, ($ in thousands, except share data - unaudited) 2025 2024 Interest Income Interest and fees on loans $ 110,533 $ 109,798 Interest on investment securities: Taxable interest income 15,524 12,728 Tax-exempt interest income 1,116 1,117 Other, principally overnight investments 5,487 2,971 Total interest income 132,660 126,614 Interest Expense Interest on deposits 38,119 39,135 Interest on borrowings 1,658 8,205 Total interest expense 39,777 47,340 Net interest income 92,883 79,274 Provision for credit losses 1,116 1,200 Net interest income after provision for credit losses 91,767 78,074 Noninterest Income Service charges on deposit accounts 3,767 3,868 Other service charges and fees 5,883 5,570 Presold mortgage loan fees and gains on sale 450 338 Commissions from sales of financial products 1,408 1,320 SBA loan sale gains 52 895 Bank-owned life insurance income 1,228 1,164 Securities losses, net — ( 975 ) Other income, net 114 716 Total noninterest income 12,902 12,896 Noninterest Expense Salaries incentives and commissions expense 28,661 27,642 Employee benefit expense 6,095 6,269 Total personnel expense 34,756 33,911 Occupancy and equipment expense 5,192 6,075 Merger and acquisition expenses — — Intangibles amortization expense 1,516 1,759 Other operating expenses 16,429 17,442 Total noninterest expenses 57,893 59,187 Income before income taxes 46,776 31,783 Income tax expense 10,370 6,511 Net income $ 36,406 $ 25,272 Earnings per common share: Basic $ 0.88 $ 0.61 Diluted 0.88 0.61 Weighted average common shares outstanding: Basic 41,130,779 40,843,865 Diluted 41,406,525 41,249,636 See accompanying notes to unaudited consolidated financial statements. Page 5 Index First Bancorp Consolidated Statements of Comprehensive Income (Loss) Three Months Ended March 31, ($ in thousands - unaudited) 2025 2024 Net income $ 36,406 $ 25,272 Other comprehensive income (loss): Unrealized gains (losses) on securities available for sale: Unrealized holding gains (losses) arising during the period, pretax 46,841 ( 19,143 ) Tax (expense) benefit ( 11,440 ) 4,432 Reclassification to realized losses — 975 Tax expense — ( 226 ) Postretirement Plans: Amortization of unrecognized net actuarial losses — 25 Tax benefit — ( 6 ) Other comprehensive income (loss) 35,401 ( 13,943 ) Comprehensive income (loss) $ 71,807 $ 11,329 See accompanying notes to unaudited consolidated financial statements. Page 6 Index First Bancorp Consolidated Statements of Shareholders’ Equity ($ in thousands, except per share data - unaudited) Common Stock Retained earnings Stock in rabbi trust assumed in acquisition Rabbi trust obligation Accumulated other comprehensive income (loss) Total shareholders’ equity Shares Amount Three Months Ended March 31, 2024 Balances, January 1, 2024 41,110 $ 963,990 $ 716,420 $ ( 1,385 ) $ 1,385 $ ( 308,030 ) $ 1,372,380 Net income 25,272 25,272 Cash dividends declared ($ 0.22 per common share) ( 9,049 ) ( 9,049 ) Change in Rabbi Trust Obligation ( 11 ) 11 — Stock options exercised 36 726 726 Stock withheld for payment of taxes ( 4 ) ( 126 ) ( 126 ) Stock-based compensation 14 839 839 Other comprehensive loss ( 13,943 ) ( 13,943 ) Balances, March 31, 2024 41,156 $ 965,429 $ 732,643 $ ( 1,396 ) $ 1,396 $ ( 321,973 ) $ 1,376,099 Three Months Ended March 31, 2025 Balances, January 1, 2025 41,347 $ 971,313 $ 756,327 $ ( 1,148 ) $ 1,148 $ ( 282,029 ) $ 1,445,611 Net income 36,406 36,406 Cash dividends declared ($ 0.22 per common share) ( 9,103 ) ( 9,103 ) Change in Rabbi Trust Obligation ( 18 ) 18 — Stock options exercised 13 126 126 Stock repurchases ( 25 ) ( 992 ) ( 992 ) Stock withheld for payment of taxes ( 8 ) ( 293 ) ( 293 ) Stock-based compensation 42 1,020 1,020 Other comprehensive income 35,401 35,401 Balances, March 31, 2025 41,369 $ 971,174 $ 783,630 $ ( 1,166 ) $ 1,166 $ ( 246,628 ) $ 1,508,176 See accompanying notes to unaudited consolidated financial statements. Page 7 Index First Bancorp Consolidated Statements of Cash Flows Three Months Ended March 31, ($ in thousands-unaudited) 2025 2024 Cash Flows From Operating Activities Net income $ 36,406 $ 25,272 Reconciliation of net income to net cash provided by operating activities: Provision for credit losses 1,116 1,200 Net security premium amortization 1,432 2,164 Deferred income taxes, net 2,046 ( 379 ) Loan discount accretion ( 2,193 ) ( 2,881 ) Deposit and debt discount accretion, net 294 472 Foreclosed property gains, net ( 18 ) — Securities losses, net — 975 Other (gains) losses, net ( 109 ) ( 459 ) Bank-owned life insurance income ( 1,228 ) ( 1,164 ) Net amortization of deferred loan costs/(fees) 49 ( 418 ) Depreciation of premises and equipment 1,796 2,019 Amortization of operating lease right-of-use assets 314 512 Repayments of lease obligations ( 297 ) ( 490 ) Stock-based compensation expense 1,020 662 Amortization of intangible assets 1,516 1,759 Amortization and impairment of SBA servicing assets 362 437 Gains on sale of loans ( 502 ) ( 1,233 ) Origination of presold mortgage loans and SBA loans held for sale ( 17,158 ) ( 31,252 ) Proceeds from sales of presold mortgage loans and SBA loans 21,669 31,351 Decrease (increase) in accrued interest receivable 877 2,204 Decrease (increase) in other assets 8,702 ( 51,175 ) Increase (decrease) in accrued interest payable 331 4,148 (Decrease) Increase in other liabilities ( 3,829 ) ( 3,816 ) Net cash provided by (used in) operating activities 52,596 ( 20,092 ) Cash Flows From Investing Activities Purchases of securities available for sale ( 10,000 ) — Proceeds from maturities, calls and principal repayments of securities available for sale 35,050 81,700 Proceeds from maturities, calls and principal repayments of securities held to maturity 638 5,940 Purchases of Federal Reserve and FHLB stock ( 283 ) ( 15,778 ) Redemptions of Federal Reserve and FHLB stock — 28,880 Proceeds from bank owned life insurance death benefits 91 — Purchases of other investments ( 4,423 ) ( 251 ) Net (increase) decrease in loans ( 13,298 ) 72,244 Proceeds from sales of foreclosed properties 709 — Purchases of premises and equipment ( 243 ) ( 1,641 ) Proceeds from sales of premises and equipment 342 10 Net cash provided by (used in) investing activities 8,583 171,104 Cash Flows From Financing Activities Net increase (decrease) in deposits 214,031 271,429 Proceeds from the issuance of FHLB and FRB borrowings — 481,000 Repayment of FHLB and FRB borrowings ( 12 ) ( 779,012 ) Cash dividends paid – common stock ( 9,105 ) ( 9,042 ) Repurchases of common stock ( 992 ) — Proceeds from stock option exercises 126 726 Payment of taxes related to stock withheld ( 293 ) ( 126 ) Net cash provided by (used in) financing activities 203,755 ( 35,025 ) Increase (decrease) in cash and cash equivalents 264,934 115,987 Cash and cash equivalents, beginning of period 507,507 237,855 Cash and cash equivalents, end of period $ 772,441 $ 353,842 (Continued) Page 8 Index First Bancorp Consolidated Statements of Cash Flows Three Months Ended March 31, ($ in thousands-unaudited) 2025 2024 Supplemental Disclosures of Cash Flow Information: Cash paid during the period for interest $ 39,259 $ 42,825 Cash paid during the period for income taxes 41 22 Non-cash: Unrealized gain (loss) on securities available for sale, net of taxes 35,401 ( 13,962 ) Non-cash: Foreclosed loans transferred to foreclosed real estate 495 — Non-cash: Accrued dividends at end of period 9,103 9,052 See accompanying notes to consolidated financial statements. Page 9 Index First Bancorp Notes to Consolidated Financial Statements (unaudited) Note 1. Organization and Basis of Presentation The consolidated financial statements include the accounts of First Bancorp (the “Company”) and its wholly owned subsidiary First Bank (the “Bank”). The Bank has two wholly owned subsidiaries that are fully consolidated, Magnolia Financial, Inc. ("Magnolia Financial"), and First Troy SPE, LLC. All significant intercompany accounts and transactions have been eliminated. The Bank formerly operated a third subsidiary, SBA Complete, Inc. ("SBA Complete"), which specialized in providing consulting services for financial institutions across the country related to Small Business Administration (“SBA”) loan origination and servicing. During the second quarter of 2024, SBA Complete became inactive with certain activities transitioning to the Bank. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and notes necessary for complete financial statements in accordance with GAAP. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the consolidated financial position of the Company as of March 31, 2025, the consolidated results of income, comprehensive income and shareholders' equity for the three months ended March 31, 2025 and 2024, and the consolidated cash flows for the three months ended March 31, 2025 and 2024. Any such adjustments were of a normal, recurring nature. These interim financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes in the 2024 Annual Report for the year ended December 31, 2024. Operating results for interim period are not necessarily indicative of the results that may be expected for the full year. In certain instances, amounts reported in prior years’ consolidated financial statements have been reclassified to conform to the current presentation. Such reclassifications had no effect on previously reported shareholders’ equity or net income. Refer to Note 1 of the 2024 Annual Report filed with the Securities and Exchange Commission (“SEC”) for a discussion of accounting policies and other relevant information with respect to the consolidated financial statements. The Company has evaluated all subsequent events through the date the consolidated financial statements were issued. Accounting Standards Adopted in 2025 The Company did not adopt any accounting standards during the first three months of 2025. Accounting Standards Pending Adoption ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” amended existing guidance to improve the transparency of income tax disclosures, including disclosure of specific categories in the rate reconciliation, providing additional information for certain reconciling items, and providing details on income taxes paid. The amendments are effective for annual periods beginning after December 15, 2024. The adoption of ASU 2023-09 is not expected to have a significant impact on the Company's consolidated financial statements. ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” amended the Income Statement—Reporting Comprehensive Income topic in the Accounting Standards Codification to require public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to financial statements. The amendments are effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company will apply the amendments retrospectively to all prior periods presented in the financial statements after the effective date. The Page 10 Index adoption of ASU 2023-09 is not expected to have a significant impact on the Company's consolidated financial statements. ASU 2024-04, “Debt-Debt With Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments” amended the Debt topic in the Accounting Standards Codification to clarify requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The amendments are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in ASU 2020-06. The Company will apply the amendments prospectively to any settlements of convertible debt instruments that occur after the effective date of the guidance. The adoption of ASU 2024-04 is not expected to have a significant impact on the Company's consolidated financial statements. Other accounting standards that have been issued or proposed by the Financial Accounting Standards Board ("FASB") or other standards-setting bodies are not expected to have a material impact on the Company’s consolidated financial statements. Note 2. Securities The book values and approximate fair values of investment securities at March 31, 2025 and December 31, 2024 are summarized as follows: ($ in thousands) March 31, 2025 December 31, 2024 Amortized Cost Fair Value Unrealized Amortized Cost Fair Value Unrealized Gains (Losses) Gains (Losses) Securities available for sale: U.S. Treasuries $ 121,255 $ 123,011 $ 1,756 $ — $ 121,051 $ 120,581 $ — $ ( 470 ) Government-sponsored enterprise securities 11,963 9,938 — ( 2,025 ) 11,961 9,614 — ( 2,347 ) Mortgage-backed securities 2,226,328 1,905,461 1,241 ( 322,108 ) 2,261,924 1,897,175 60 ( 364,809 ) Corporate bonds 26,184 26,106 12 ( 90 ) 16,181 15,692 — ( 489 ) Total available for sale $ 2,385,730 $ 2,064,516 $ 3,009 $ ( 324,223 ) $ 2,411,117 $ 2,043,062 $ 60 $ ( 368,115 ) Securities held to maturity: Mortgage-backed securities $ 8,543 $ 8,198 $ — $ ( 345 ) $ 9,198 $ 8,739 $ — $ ( 459 ) State and local governments 509,722 422,403 2 ( 87,321 ) 510,800 419,832 1 ( 90,969 ) Total held to maturity $ 518,265 $ 430,601 $ 2 $ ( 87,666 ) $ 519,998 $ 428,571 $ 1 $ ( 91,428 ) All of the Company’s mortgage-backed securities were issued by government-sponsored enterprises ("GSEs"), except for private mortgage-backed securities with a fair value of $ 0.7 million as of March 31, 2025 and December 31, 2024. Accrued interest receivable on available for sale ("AFS") debt securities was $ 4.9 million and $ 4.6 million at March 31, 2025 and December 31, 2024, respectively. Accrued interest receivable on held to maturity ("HTM") debt securities was $ 3.0 million and $ 4.2 million as of March 31, 2025 and December 31, 2024. Page 11 Index The following table presents information regarding all securities with unrealized losses at March 31, 2025: Securities in an Unrealized Loss Position for Less than Twelve Months Securities in an Unrealized Loss Position for More than Twelve Months Total ($ in thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Government-sponsored enterprise securities $ — $ — $ 9,938 $ 2,025 $ 9,938 $ 2,025 Mortgage-backed securities 142,720 353 1,553,577 322,100 1,696,297 322,453 Corporate bonds 400 34 13,944 56 14,344 90 State and local governments 4,593 81 416,924 87,240 421,517 87,321 Total unrealized loss position $ 147,713 $ 468 $ 1,994,383 $ 411,421 $ 2,142,096 $ 411,889 The following table presents information regarding all securities with unrealized losses at December 31, 2024: Securities in an Unrealized Loss Position for Less than Twelve Months Securities in an Unrealized Loss Position for More than Twelve Months Total ($ in thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasuries $ 120,581 $ 470 $ — $ — $ 120,581 $ 470 Government-sponsored enterprise securities — — 9,614 2,347 9,614 2,347 Mortgage-backed securities 317,015 1,845 1,538,156 363,423 1,855,171 365,268 Corporate bonds 380 51 13,562 438 13,942 489 State and local governments 4,513 75 414,331 90,894 418,844 90,969 Total unrealized loss position $ 442,489 $ 2,441 $ 1,975,663 $ 457,102 $ 2,418,152 $ 459,543 As of March 31, 2025, the Company's securities portfolio included 583 securities of which 543 securities were in an unrealized loss position. As of December 31, 2024, the Company's securities portfolio included 584 securities of which 560 securities were in an unrealized loss position. In the above tables, all of the securities that were in an unrealized loss position at March 31, 2025 and December 31, 2024 are bonds that the Company has determined are in a loss position due primarily to interest rate factors and not credit quality concerns. In arriving at this conclusion, the Company reviewed third-party credit ratings and considered the severity of the impairment. The state and local government investments are comprised almost entirely of highly-rated municipal bonds issued by state and local governments throughout the nation. The Company has no significant concentrations of bond holdings from any one state or local government entity. Nearly all of the Company's mortgage-backed securities were issued by Federal Home Loan Mortgage Corporation ("FHLMC"), Federal National Mortgage Association ("FNMA"), Government National Mortgage Association ("GNMA"), or SBA, each of which is a government agency or GSE and guarantees the repayment of its securities. The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell these securities before recovery of the amortized cost. At March 31, 2025 and December 31, 2024, the Company determined that expected credit losses associated with HTM securities and AFS debt securities were insignificant. Page 12 Index The book values and fair values of investment securities at March 31, 2025, by contractual maturity, are summarized in the table below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities Available for Sale Securities Held to Maturity ($ in thousands) Amortized Cost Fair Value Amortized Cost Fair Value Due after one year but within five years $ 93,116 $ 94,247 $ 5,623 $ 5,473 Due after five years but within ten years 66,286 64,808 195,466 164,687 Due after ten years — — 308,633 252,243 Mortgage-backed securities 2,226,328 1,905,461 8,543 8,198 Total securities $ 2,385,730 $ 2,064,516 $ 518,265 $ 430,601 At March 31, 2025 and December 31, 2024, investment securities with carrying values of $ 858.4 million and $ 806.0 million, respectively, were pledged as collateral for public deposits. In addition, at March 31, 2025 and December 31, 2024, investment securities with carrying values of $ 664.0 million and $ 661.0 million, respectively, were pledged as collateral to the Federal Reserve Bank ("Federal Reserve") to secure any such borrowings. At March 31, 2025 and December 31, 2024, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies or GSEs, in an amount greater than 10% of shareholders' equity. There were no sales of investment securities during the three months ended March 31, 2025 or March 31, 2024. During the first quarter of 2024, the Company received proceeds from the unanticipated call of a security of $ 5.2 million and recorded a $ 975.2 thousand loss related to the unamortized premium balance at the time of the call. Included in “Other assets” in the consolidated balance sheets are investments in Federal Home Loan Bank (“FHLB”) and Federal Reserve stock totaling $ 41.5 million and $ 41.3 million at March 31, 2025 and December 31, 2024, respectively. These investments do not have readily determinable fair values. The FHLB stock had a cost of $ 8.5 million at March 31, 2025 and December 31, 2024, and serves as part of the collateral for the Company’s line of credit with the FHLB and is also a requirement for membership in the FHLB system. The Federal Reserve stock had a cost of $ 33.0 million and $ 32.7 million at March 31, 2025 and December 31, 2024, respectively, and is a requirement for Federal Reserve member bank qualification. Periodically, both the FHLB and Federal Reserve recalculate the Company’s required level of holdings, and the Company either buys more stock or redeems a portion of the stock at cost. The Company determined that neither stock was impaired at either period end. Note 3. Loans, Allowance for Credit Losses, and Asset Quality Information The following is a summary of the major categories of total loans outstanding: ($ in thousands) March 31, 2025 December 31, 2024 Amount Percentage Amount Percentage Commercial and industrial $ 890,071 11 % $ 919,690 11 % Construction, development & other land loans 644,439 8 % 647,167 8 % Commercial real estate - owner occupied 1,233,732 15 % 1,248,812 16 % Commercial real estate - non owner occupied 2,701,746 34 % 2,625,554 33 % Multi-family real estate 512,958 6 % 506,407 6 % Residential 1-4 family real estate 1,709,593 21 % 1,729,322 21 % Home equity loans/lines of credit 341,240 4 % 345,883 4 % Consumer loans 68,115 1 % 70,653 1 % Subtotal 8,101,894 100 % 8,093,488 100 % Unamortized net deferred loan costs/(fees) 1,139 1,188 Total loans $ 8,103,033 $ 8,094,676 Page 13 Index Also included in the table above are various SBA loans, generally originated under the SBA 7A program, with additional information on these loans presented in the table below. ($ in thousands) March 31, 2025 December 31, 2024 Guaranteed portions of SBA loans included in table above $ 45,160 $ 34,095 Unguaranteed portions of SBA loans included in table above 100,627 101,356 Total SBA loans included in the table above $ 145,787 $ 135,451 Sold portions of SBA loans with servicing retained - not included in tables above $ 317,473 $ 330,482 At March 31, 2025 and December 31, 2024, there were remaining unaccreted discounts on the retained portion of sold SBA loans amounting to $ 2.5 million and $ 2.9 million, respectively. At March 31, 2025 and December 31, 2024, l oans in the amount of $ 6.8 billion and $ 6.7 billion, respectively, were pledged as collateral for certain borrowings. At March 31, 2025 and December 31, 2024, total loans included loans to directors and executive officers of the Company, and their associates, totaling approximately $ 62.3 million and $ 62.9 million, respectively. While there were no new loans, advances on existing loans totaled approximately $ 5.0 thousand for the three months ended March 31, 2025, and repayments amounted to $ 0.6 million for that period. Available credit on related party loans totaled $ 1.1 million and $ 1.0 million at March 31, 2025 and December 31, 2024, respectively. As of March 31, 2025 and December 31, 2024, unamortized discounts on all acquired loans totaled $ 13.3 million and $ 15.1 million, respectively. Loan discounts are generally amortized as yield adjustments over the respective lives of the loans, so long as the loans perform. There was no impairment of acquired loans during the three months ended March 31, 2025 or March 31, 2024 that would require acceleration of amortization or charge off of unamortized discount. Nonperforming assets ("NPAs") are defined as nonaccrual loans, loans past due 90 or more days and still accruing interest, and foreclosed properties. The following table summarizes the NPAs for each date presented. ($ in thousands) March 31, 2025 December 31, 2024 Nonaccrual loans $ 29,081 $ 31,779 Accruing loans > 90 days past due — — Total nonperforming loans 29,081 31,779 Foreclosed properties 4,769 4,965 Total nonperforming assets $ 33,850 $ 36,744 At March 31, 2025 and December 31, 2024, the Company had $ 0.9 million and $ 1.2 million, respectively, in residential mortgage loans in the process of foreclosure. At March 31, 2025 and December 31, 2024, there was one nonperforming loan with a commitment to lend $ 0.2 million of additional funds to a borrower whose loan was nonperforming. Page 14 Index The following table is a summary of the Company’s nonaccrual loans by major categories as of March 31, 2025: ($ in thousands) Nonaccrual Loans with No Allowance Nonaccrual Loans with an Allowance Total Nonaccrual Loans Commercial and industrial $ — $ 9,681 $ 9,681 Construction, development & other land loans — 154 154 Commercial real estate - owner occupied 1,420 7,979 9,399 Commercial real estate - non owner occupied — 1,157 1,157 Residential 1-4 family real estate 868 5,831 6,699 Home equity loans/lines of credit — 1,781 1,781 Consumer loans — 210 210 Total $ 2,288 $ 26,793 $ 29,081 The following table is a summary of the Company’s nonaccrual loans by major categories as of December 31, 2024: ($ in thousands) Nonaccrual Loans with No Allowance Nonaccrual Loans with an Allowance Total Nonaccrual Loans Commercial and industrial $ — $ 9,804 $ 9,804 Construction, development & other land loans — 90 90 Commercial real estate - owner occupied 879 8,488 9,367 Commercial real estate - non owner occupied — 887 887 Residential 1-4 family real estate — 9,487 9,487 Home equity loans/lines of credit — 1,795 1,795 Consumer loans — 349 349 Total $ 879 $ 30,900 $ 31,779 There was no interest income recognized during the periods presented on nonaccrual loans. In the period that the Company places a loan on nonaccrual status, contractual interest income is reversed in the consolidated income statement. The following table represents the accrued interest receivables written off by reversing interest income during each period indicated: ($ in thousands) Three Months Ended March 31, 2025 Three Months Ended March 31, 2024 Commercial and industrial $ 95 $ 216 Construction, development & other land loans 42 — Commercial real estate - owner occupied 179 148 Commercial real estate - non owner occupied 61 — Residential 1-4 family real estate 93 29 Home equity loans/lines of credit 32 7 Consumer loans 2 — Total $ 504 $ 400 Page 15 Index The following table presents an analysis of the payment status of the Company’s loans as of March 31, 2025: ($ in thousands) Accruing Current Accruing 30-59 Days Past Due Accruing 60-89 Days Past Due Nonaccrual Loans Total Loans Receivable Commercial and industrial $ 878,227 $ 1,693 $ 470 $ 9,681 $ 890,071 Construction, development & other land loans 644,210 75 — 154 644,439 Commercial real estate - owner occupied 1,220,120 3,439 774 9,399 1,233,732 Commercial real estate - non owner occupied 2,697,808 2,781 — 1,157 2,701,746 Multi-family real estate 512,958 — — — 512,958 Residential 1-4 family real estate 1,687,970 13,722 1,202 6,699 1,709,593 Home equity loans/lines of credit 338,498 840 121 1,781 341,240 Consumer loans 67,428 311 166 210 68,115 Total $ 8,047,219 $ 22,861 $ 2,733 $ 29,081 8,101,894 Unamortized net deferred loan costs/(fees) 1,139 Total loans $ 8,103,033 The following table presents an analysis of the payment status of the Company’s loans as of December 31, 2024: ($ in thousands) Accruing Current Accruing 30-59 Days Past Due Accruing 60-89 Days Past Due Nonaccrual Loans Total Loans Receivable Commercial and industrial $ 906,903 $ 2,442 $ 541 $ 9,804 $ 919,690 Construction, development & other land loans 647,077 — — 90 647,167 Commercial real estate - owner occupied 1,236,396 2,073 976 9,367 1,248,812 Commercial real estate - non owner occupied 2,614,843 9,678 146 887 2,625,554 Multi-family real estate 506,407 — — — 506,407 Residential 1-4 family real estate 1,699,800 12,973 7,062 9,487 1,729,322 Home equity loans/lines of credit 342,551 1,118 419 1,795 345,883 Consumer loans 69,775 317 212 349 70,653 Total $ 8,023,752 $ 28,601 $ 9,356 $ 31,779 8,093,488 Unamortized net deferred loan costs/(fees) 1,188 Total loans $ 8,094,676 Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. The Company reviews individually evaluated loans on nonaccrual with a net book balance of $ 500,000 or greater for designation as collateral dependent loans, as well as certain other loans that may still be accruing interest and/or are less than $ 500,000 in size that management of the Company designates as having higher risk. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the Allowance for Credit Losses ("ACL"). The following table presents an analysis of collateral dependent loans of the Company as of March 31, 2025: ($ in thousands) Residential Property Commercial Property Total Collateral-Dependent Loans Commercial real estate - owner occupied $ — $ 2,039 $ 2,039 Residential 1-4 family real estate 868 — 868 Total $ 868 $ 2,039 $ 2,907 Page 16 Index The following table presents an analysis of collateral dependent loans of the Company as of December 31, 2024: ($ in thousands) Commercial Property Total Collateral-Dependent Loans Commercial real estate - owner occupied $ 879 $ 879 Total $ 879 $ 879 There have been no material changes from the treatment of collateral dependent loans under CECL as discussed in Note 4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2024. The following tables present the activity in the ACL on loans for each of the periods indicated to include Purchase Credit Deterioration (“PCD”) activity in applicable periods. Fluctuations in the ACL each period are based on loan mix and growth, changes in the levels of nonperforming loans, economic forecasts impacting loss drivers, other assumptions and inputs to the current expected credit loss ("CECL") model. The change to the level of ACL during the three months ended March 31, 2025 was determined based primarily on updated economic forecasts, which are a key assumption in the CECL model and which indicated improvement in certain economic forecasts along with reductions in loan balances during the period, partially offset by a continued reduction of the commercial real estate pricing index. ($ in thousands) Beginning balance Charge-offs Recoveries Provisions / (Reversals) Ending balance As of and for the three months ended March 31, 2025 Commercial and industrial $ 19,474 $ ( 2,216 ) $ 497 $ 1,520 $ 19,275 Construction, development & other land loans 9,314 — 73 ( 1,718 ) 7,669 Commercial real estate - owner occupied 19,380 ( 437 ) 106 276 19,325 Commercial real estate - non owner occupied 27,768 ( 905 ) 3 1,518 28,384 Multi-family real estate 5,476 — — ( 461 ) 5,015 Residential 1-4 family real estate 33,552 ( 124 ) 29 278 33,735 Home equity loans/lines of credit 4,111 ( 68 ) 19 ( 560 ) 3,502 Consumer loans 3,497 ( 370 ) 54 545 3,726 Total $ 122,572 $ ( 4,120 ) $ 781 $ 1,398 $ 120,631 ($ in thousands) Beginning balance Charge-offs Recoveries Provisions / (Reversals) Ending balance As of and for the three months ended March 31, 2024 Commercial and industrial $ 21,227 $ ( 1,585 ) $ 243 $ 409 $ 20,294 Construction, development & other land loans 13,940 ( 79 ) 97 ( 2,175 ) 11,783 Commercial real estate - owner occupied 18,218 ( 58 ) 4 ( 1 ) 18,163 Commercial real estate - non owner occupied 24,916 ( 158 ) 2 1,492 26,252 Multi-family real estate 3,825 — — 597 4,422 Residential 1-4 family real estate 21,396 — 121 1,187 22,704 Home equity loans/lines of credit 3,339 — 5 ( 8 ) 3,336 Consumer loans 2,992 ( 235 ) 57 299 3,113 Total $ 109,853 $ ( 2,115 ) $ 529 $ 1,800 $ 110,067 Credit Quality Indicators There have been no material changes from the treatment of credit quality tracking and risk grade descriptions as discussed in Note 4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2024. In the tables that follow, substantially all of the "Classified" loans have grades of 7 or Fail, with those categories having similar levels of risk. The tables below present the Company’s recorded investment in loans by credit quality indicators by year of origination or renewal as of the periods indicated. Acquired loans are presented in the year originated, not in the year of acquisition. Page 17 Index Term Loans by Year of Origination ($ in thousands) 2025 2024 2023 2022 2021 Prior Revolving Total As of March 31, 2025 Commercial and industrial Pass $ 51,703 $ 99,649 $ 77,546 $ 113,399 $ 74,421 $ 127,394 $ 330,270 $ 874,382 Special Mention — 942 24 47 109 997 1,722 3,841 Classified — 635 1,779 3,279 644 4,226 1,285 11,848 Total commercial and industrial 51,703 101,226 79,349 116,725 75,174 132,617 333,277 890,071 Gross charge-offs, YTD — 257 682 311 — 283 683 2,216 Construction, development & other land loans Pass 105,921 303,411 107,225 42,726 23,116 16,842 43,774 643,015 Special Mention — — 597 72 7 2 — 678 Classified — 327 72 77 — 270 — 746 Total construction, development & other land loans 105,921 303,738 107,894 42,875 23,123 17,114 43,774 644,439 Gross charge-offs, YTD — — — — — — — — Commercial real estate - owner occupied Pass 54,275 182,010 210,964 250,877 244,498 240,520 16,283 1,199,427 Special Mention 2,454 6,302 1,849 2,377 181 6,840 1,511 21,514 Classified 57 1,065 172 2,618 494 8,335 50 12,791 Total commercial real estate - owner occupied 56,786 189,377 212,985 255,872 245,173 255,695 17,844 1,233,732 Gross charge-offs, YTD — 420 — 17 — — — 437 Commercial real estate - non owner occupied Pass 184,148 455,742 428,016 656,857 599,986 337,470 27,864 2,690,083 Special Mention 50 1,478 319 189 8 1,607 918 4,569 Classified — 225 422 562 — 5,885 — 7,094 Total commercial real estate - non owner occupied 184,198 457,445 428,757 657,608 599,994 344,962 28,782 2,701,746 Gross charge-offs, YTD — 905 — — — — — 905 Multi-family real estate Pass 44,527 51,033 68,696 113,280 157,671 48,984 28,629 512,820 Special Mention — — — — — — — — Classified — — 138 — — — — 138 Total multi-family real estate 44,527 51,033 68,834 113,280 157,671 48,984 28,629 512,958 Gross charge-offs, YTD — — — — — — — — Residential 1-4 family real estate Pass 97,764 133,378 325,821 400,866 288,499 445,618 3,032 1,694,978 Special Mention 146 33 — 9 86 727 — 1,001 Classified 19 1,294 1,011 2,968 721 7,601 — 13,614 Total residential 1-4 family real estate 97,929 134,705 326,832 403,843 289,306 453,946 3,032 1,709,593 Gross charge-offs, YTD — — — — — 124 — 124 Home equity loans/lines of credit Pass 1,121 1,620 2,629 618 242 1,055 328,677 335,962 Special Mention — 120 — — — — 15 135 Classified 39 88 148 — 89 6 4,773 5,143 Total home equity loans/lines of credit 1,160 1,828 2,777 618 331 1,061 333,465 341,240 Gross charge-offs, YTD — — — 68 — — — 68 Consumer loans Pass 4,309 13,131 8,472 5,964 2,003 1,107 32,785 67,771 Special Mention — — — — — — 19 19 Classified — 47 38 41 8 23 168 325 Total consumer loans 4,309 13,178 8,510 6,005 2,011 1,130 32,972 68,115 Gross charge-offs, YTD — 49 14 1 — 37 269 370 Total loans $ 546,533 $ 1,252,530 $ 1,235,938 $ 1,596,826 $ 1,392,783 $ 1,255,509 $ 821,775 8,101,894 Unamortized net deferred loan costs/(fees) 1,139 Total loans, net of deferred loan costs/(fees) $ 8,103,033 Total gross charge-offs, year to date $ — $ 1,631 $ 696 $ 397 $ — $ 444 $ 952 $ 4,120 Page 18 Index Term Loans by Year of Origination ($ in thousands) 2024 2023 2022 2021 2020 Prior Revolving Total As of December 31, 2024 Commercial and industrial Pass $ 114,786 $ 81,851 $ 120,769 $ 82,810 $ 59,218 $ 70,986 $ 373,850 $ 904,270 Special Mention 1,076 26 190 36 259 804 1,825 4,216 Classified 266 2,496 3,254 713 1,199 2,634 642 11,204 Total commercial and industrial 116,128 84,373 124,213 83,559 60,676 74,424 376,317 919,690 Gross charge-offs, YTD 306 669 849 318 137 929 4,070 7,278 Construction, development & other land loans Pass 355,734 124,323 60,305 29,823 12,727 5,276 57,177 645,365 Special Mention — 605 77 8 — 2 11 703 Classified 227 449 80 — 67 276 — 1,099 Total construction, development & other land loans 355,961 125,377 60,462 29,831 12,794 5,554 57,188 647,167 Gross charge-offs, YTD — 79 — — — — — 79 Commercial real estate - owner occupied Pass 194,193 222,718 261,634 252,929 153,634 109,559 15,772 1,210,439 Special Mention 9,927 1,869 2,731 184 147 7,007 — 21,865 Classified 4,506 235 2,085 1,294 1,188 7,200 — 16,508 Total commercial real estate - owner occupied 208,626 224,822 266,450 254,407 154,969 123,766 15,772 1,248,812 Gross charge-offs, YTD — 25 — 19 114 65 — 223 Commercial real estate - non owner occupied Pass 482,433 434,713 668,168 602,028 252,260 132,316 29,922 2,601,840 Special Mention 1,648 265 189 11 331 5,721 54 8,219 Classified 12,725 429 566 — 88 1,687 — 15,495 Total commercial real estate - non owner occupied 496,806 435,407 668,923 602,039 252,679 139,724 29,976 2,625,554 Gross charge-offs, YTD — — — — 304 158 — 462 Multi-family real estate Pass 87,803 65,508 114,627 159,038 40,940 9,926 27,630 505,472 Special Mention — — — — — 793 — 793 Classified — 142 — — — — — 142 Total multi-family real estate 87,803 65,650 114,627 159,038 40,940 10,719 27,630 506,407 Gross charge-offs, YTD — — — — — — — — Residential 1-4 family real estate Pass 216,725 347,472 404,809 278,197 166,013 296,870 2,768 1,712,854 Special Mention 74 — 10 95 61 740 — 980 Classified 3,968 227 2,558 544 1,558 6,633 — 15,488 Total residential 1-4 family real estate 220,767 347,699 407,377 278,836 167,632 304,243 2,768 1,729,322 Gross charge-offs, YTD — — — — — 18 — 18 Home equity loans/lines of credit Pass 2,096 2,672 645 251 259 832 333,434 340,189 Special Mention 120 153 — — — — 15 288 Classified 88 43 68 90 — 7 5,110 5,406 Total home equity loans/lines of credit 2,304 2,868 713 341 259 839 338,559 345,883 Gross charge-offs, YTD — — — — — — 2 2 Consumer loans Pass 14,623 10,005 7,059 2,380 1,049 320 34,747 70,183 Special Mention — — — — — — 21 21 Classified 33 21 27 9 — 28 331 449 Total consumer loans 14,656 10,026 7,086 2,389 1,049 348 35,099 70,653 Gross charge-offs, YTD 6 121 41 37 2 10 1,308 1,525 Total loans $ 1,503,051 $ 1,296,222 $ 1,649,851 $ 1,410,440 $ 690,998 $ 659,617 $ 883,309 8,093,488 Unamortized net deferred loan costs/(fees) 1,188 Total loans, net of deferred loan costs/(fees) $ 8,094,676 Total gross charge-offs, year to date $ 312 $ 894 $ 890 $ 374 $ 557 $ 1,180 $ 5,380 $ 9,587 Page 19 Index Loan Modifications to Borrowers Experiencing Financial Difficulty Occasionally, the Company modifies loans to borrowers in financial distress as a part of our loss mitigation activities. Various types of modification may be offered including principal forgiveness, term extension, payment delays, or interest rate reductions. In some cases, the Company will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession may be granted. For loans included in the “combination” columns below, multiple types of modifications have been made on the same loan within the current reporting period. The following table is a summary of the Company's nonaccrual and accruing modifications for borrowers experiencing financial difficulty by major categories for each date presented. March 31, 2025 December 31, 2024 ($ in thousands) Accruing loans Nonaccrual loans Total Accruing loans Nonaccrual loans Total Commercial and industrial $ 158 $ 936 $ 1,094 $ 165 $ 2,118 $ 2,283 Construction, development & other land loans 311 — 311 212 — 212 Commercial real estate - owner occupied 3,943 913 4,856 3,974 175 4,149 Commercial real estate - non owner occupied 4,417 560 4,977 — 149 149 Multi-family real estate — — — — — — Residential 1-4 family real estate 370 219 589 380 285 665 Home equity loans/lines of credit 2,383 503 2,886 2,143 572 2,715 Consumer loans — — — — — — Total $ 11,582 $ 3,131 $ 14,713 $ 6,874 $ 3,299 $ 10,173 The following tables present the amortized cost basis at March 31, 2025 and March 31, 2024 of the loans modified during the three months then ended for borrowers experiencing financial difficulty, by loan category and type of concession granted. ($ in thousands) Payment Delay Term Extension Combination - Payment Delay and Term Extension Total Percent of Total Class of Loans As of and for the three months ended March 31, 2025 Commercial and industrial $ 67 $ — $ — $ 67 0.01 % Commercial real estate - owner occupied — 741 — 741 0.06 % Commercial real estate - non owner occupied 468 — 4,371 4,839 0.18 % Residential 1-4 family real estate — 18 — 18 — % Home equity loans/lines of credit — 300 — 300 0.09 % Total $ 535 $ 1,059 $ 4,371 $ 5,965 0.07 % ($ in thousands) Payment Delay Term Extension Combination - Principal Forgiveness and Term Extension Combination - Interest Rate Reduction and Term Extension Total Percent of Total Class of Loans As of and for the three months ended March 31, 2024 Commercial and industrial $ 114 $ — $ 878 $ — $ 992 0.11 % Commercial real estate - non owner occupied — 115 — — 115 — % Home equity loans/lines of credit — 47 — 179 226 0.07 % Total $ 114 $ 162 $ 878 $ 179 $ 1,333 0.02 % For the three months ended March 31, 2025 and March 31, 2024, there were no modifications for borrowers experiencing financial difficulty with principal forgiveness concessions. Page 20 Index The following table describes the financial effect for the three months ended March 31, 2025 of the modifications made for borrowers experiencing financial difficulty: Financial Effect of Modification to Borrowers Experiencing Financial Difficulty Weighted Average Payment Delay (in months) Weighted Average Term Extension (in months) For the three months ended March 31, 2025 Commercial and industrial 5 0 Commercial real estate - owner occupied 0 11 Commercial real estate - non owner occupied 7 7 Residential 1-4 family real estate 0 56 Home equity loans/lines of credit 0 107 The following table describes the financial effect for the three months ended March 31, 2024 of the modifications made for borrowers experiencing financial difficulty: Financial Effect of Modification to Borrowers Experiencing Financial Difficulty Weighted Average Interest Rate Reduction Weighted Average Payment Delay (in months) Weighted Average Term Extension (in months) For the three months ended March 31, 2024 Commercial and industrial — % 36 12 Commercial real estate - non owner occupied — % 0 13 Home equity loans/lines of credit 2.09 % 0 32 The Company closely monitors the performance of the loans that are modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table depicts the performance of loans that were modified in the last twelve months as of March 31, 2025: Payment Status (Amortized Cost Basis) ($ in thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due Commercial and industrial $ 253 $ — $ — $ — Construction, development & other land loans 272 — — — Commercial real estate - owner occupied 869 — — — Commercial real estate - non owner occupied 4,418 — — 422 Residential 1-4 family real estate 312 — 51 — Home equity loans/lines of credit 688 — — — $ 6,812 $ — $ 51 $ 422 Page 21 Index The following table depicts the performance of loans that were modified in the last twelve months as of December 31, 2024: Payment Status (Amortized Cost Basis) ($ in thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due Commercial and industrial $ 1,183 $ — $ — $ 878 Construction, development & other land loans 171 — — — Commercial real estate - owner occupied 131 — — — Commercial real estate - non owner occupied 102 — — — Residential 1-4 family real estate 137 — — 58 Home equity loans/lines of credit 583 — 68 — $ 2,307 $ — $ 68 $ 936 The following table presents the amortized cost basis of loans that had a payment default during the three months ended March 31, 2025 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty by loan category and type of concession granted. Amortized Cost Basis of Modified Receivables That Subsequently Defaulted ($ in thousands) Term Extension Total Residential 1-4 family real estate $ 51 $ 51 Total $ 51 $ 51 During the three months ended March 31, 2024, none of the loans to borrowers experiencing financial difficulty that were modified in the twelve months prior were considered to have had a payment default. At March 31, 2025, there were no commitments to lend additional funds to a borrower experiencing financial difficulty for whom a modification had been made. At December 31, 2024, there was a commitment to lend $ 0.1 million of additional funds to one borrower experiencing financial difficulty for whom a modification had been made. Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is adjusted by the same amount. Concentration of Credit Risk The Company’s loan portfolio is not concentrated in loans to any single borrower or to a relatively small number of borrowers. Additionally, management is not aware of any concentrations of loans to classes of borrowers or industries that would be similarly affected by economic conditions. Approximately 88 % of the Company's loan portfolio is secured by real estate and is therefore susceptible to changes in real estate valuations. There have been no material changes to the primary loan markets (as identified by counties) from year end. Page 22 Index Impact of Hurricane Helene The Company identified borrowers with approximately $ 722 million of loans outstanding within the portions of Western North and South Carolina that were significantly impacted by Hurricane Helene. The following is a summary of the categories of those loans outstanding as of March 31, 2025: ($ in thousands) Balance Commercial and industrial $ 16,106 Construction, development & other land loans 22,071 Commercial real estate - owner occupied 94,837 Commercial real estate - non owner occupied 275,421 Multi-family real estate 25,130 Residential 1-4 family real estate 252,647 Home equity loans/lines of credit 35,894 Consumer loans — Total $ 722,106 Given that the recovery from the storm is ongoing in many impacted communities, the Company continues to evaluate possible impacts from the storm on borrowers and has reserved accordingly based upon the information available as of March 31, 2025. The Company applied increased reserve rates based upon severe economic factors to the approximately $ 722 million of loans in the most impacted path of Hurricane Helene. Additionally, the Company continues to evaluate the largest commercial loans in that area and applied incremental reserves to those loans that were suspected of having higher potential property damage or economic impact from the storm. Due to the potential exposure from Hurricane Helene, the ACL on these impacted loans was $ 11.0 million as of March 31, 2025, adding 14 basis points to the overall ACL as a percent of total loans,which was 1.49 % as of March 31, 2025. Allowance for Unfunded Loan Commitments In addition to the ACL on loans, the Company maintains an allowance for lending-related commitments such as unfunded loan commitments and letters of credit. The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for lending-related commitments on off-balance sheet credit exposures is adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the ACL on loans. The allowance for unfunded loan commitments were included in "Other liabilities" on the consolidated balance sheets. The following table presents the balance and activity in the allowance for unfunded loan commitments for the three months ended March 31, 2025 and 2024: Three months ended March 31, ($ in thousands) 2025 2024 Beginning balance $ 9,066 $ 11,369 Charge-offs — — Recoveries — — Reversal of provision for unfunded commitments ( 282 ) ( 601 ) Ending balance $ 8,784 $ 10,768 Page 23 Index Note 4. Goodwill, Other Intangible Assets and Servicing Assets The following is a summary of the gross carrying amount and accumulated amortization of amortizable intangible assets and the carrying amount of unamortized intangible assets as of the periods presented. March 31, 2025 December 31, 2024 ($ in thousands) Gross Carrying Amount Accumulated Amortization Net Amount Gross Carrying Amount Accumulated Amortization Net Amount Amortizable intangible assets: Customer lists $ 1,600 $ 1,467 $ 133 $ 1,600 $ 1,387 $ 213 Core deposit intangibles 57,890 36,635 21,255 57,890 35,199 22,691 Other intangibles 100 100 — 100 100 — Total amortizable intangible assets $ 59,590 $ 38,202 $ 21,388 $ 59,590 $ 36,686 $ 22,904 Unamortizable intangible assets: Goodwill $ 478,750 $ 478,750 Customer lists are generally amortized over five years and core deposit intangibles are generally amortized over 10 years, both at an accelerated rate. Amortization expense of all amortizable intangible assets totaled $ 1.5 million and $ 1.8 million for the three months ended March 31, 2025 and 2024, respectively. Goodwill is evaluated for impairment on at least an annual basis, with the annual evaluation occurring as of October 31 of each year. Goodwill is also evaluated for impairment any time there is a triggering event indicating that impairment may have occurred. No triggering events were identified during 2025 to date and, therefore, the Company did not perform interim impairment evaluations. The Company's most recent evaluation of goodwill, which occurred in the fourth quarter of 2024, indicated that there was no goodwill impairment. There was no change to carrying amounts of goodwill during 2025. The following table presents the estimated amortization expense schedule related to amortizable intangible assets. These amounts will be recorded as "Intangibles amortization expense" within the noninterest expense section of the consolidated statements of income. These estimates are subject to change in future periods to the extent management determines it is necessary to make adjustments to the carrying value or estimated useful lives of amortizable intangible assets. ($ in thousands) Estimated Amortization Expense April 1, 2025 to December 31, 2025 $ 4,156 2026 4,705 2027 3,950 2028 3,197 2029 2,443 Thereafter 2,937 Total $ 21,388 During the three months ended March 31, 2025 and 2024, the Company recorded $ 0.7 million in SBA guaranteed servicing fee income. There was no impairment of SBA servicing assets at March 31, 2025 and December 31, 2024 and no significant methodology changes have been made since year end. Page 24 Index The following table presents the changes in the SBA servicing assets (included in "Other assets" in the Company's consolidated balance sheet) for each period indicated: Three months ended March 31, ($ in thousands) 2025 2024 Beginning balance, net $ 2,605 $ 3,350 Add: New servicing assets 13 224 Less: Amortization expense and impairment charges 362 437 Ending balance, net $ 2,256 $ 3,137 Note 5. Borrowings The following tables present information regarding the Company’s outstanding borrowings at March 31, 2025: ($ in thousands) Description Due date Call Feature Balance Interest Rate FHLB Principal Reducing Credit 6/26/2028 to 12/20/2028 None $ 790 0.00 % to 1.00 % fixed Trust Preferred Securities 1/23/2034 Quarterly by Company 10,310 7.20 % at 3/31/25 adjustable rate 3 month CME Term SOFR+ 2.91 % Trust Preferred Securities 1/23/2034 Quarterly by Company 10,310 7.30 % at 3/31/25 adjustable rate 3 month CME Term SOFR + 3.01 % Trust Preferred Securities 9/20/2034 Quarterly by Company 12,372 6.72 % at 3/31/25 adjustable rate 3 month CME Term SOFR + 2.41 % Trust Preferred Securities 1/7/2035 Quarterly by Company 10,310 6.56 % at 3/31/25 adjustable rate 3 month CME Term SOFR + 2.00 % Trust Preferred Securities 6/15/2036 Quarterly by Company 25,774 5.95 % at 3/31/25 adjustable rate 3 month CME Term SOFR + 1.65 % Trust Preferred Securities 6/23/2036 Quarterly by Company 8,248 6.41 % at 3/31/25 adjustable rate 3 month CME Term SOFR + 2.11 % Subordinated Debentures 11/15/2030 Continuous by Company beginning 11/15/2025 18,000 4.38 % fixed at 3/31/25 until 11/15/25, then adjustable rate 3 month CME Term SOFR + 4.16 % Total borrowings / weighted average rate as of March 31, 2025 96,114 6.09 % Unamortized discount on acquired borrowings ( 4,059 ) Total borrowings $ 92,055 Page 25 Index The following tables present information regarding the Company’s outstanding borrowings at December 31, 2024: ($ in thousands) Description Due date Call Feature Balance Interest Rate FHLB Principal Reducing Credit 6/26/2028 to 12/20/2028 None $ 802 0.00 % to 1.00 % fixed Trust Preferred Securities 1/23/2034 Quarterly by Company 10,310 7.50 % at 12/31/24 adjustable rate 3 month CME Term SOFR + 2.91 % Trust Preferred Securities 1/23/2034 Quarterly by Company 10,310 7.61 % at 12/31/24 adjustable rate 3 month CME Term SOFR + 3.01 % Trust Preferred Securities 9/20/2034 Quarterly by Company 12,372 6.77 % at 12/31/24 adjustable rate 3 month CME Term SOFR + 2.41 % Trust Preferred Securities 1/7/2035 Quarterly by Company 10,310 6.92 % at 12/31/24 adjustable rate 3 month CME Term SOFR + 2.00 % Trust Preferred Securities 6/15/2036 Quarterly by Company 25,774 6.01 % at 12/31/24 adjustable rate 3 month CME Term SOFR + 1.65 % Trust Preferred Securities 6/23/2036 Quarterly by Company 8,248 6.45 % at 12/31/24 adjustable rate 3 month CME Term SOFR + 2.11 % Subordinated Debentures 11/15/2030 Continuous by Company beginning 11/15/2025 18,000 4.38 % fixed at 12/31/24 until 11/15/25, then adjustable rate 3 month CME Term SOFR + 4.16 % Total borrowings / weighted average rate as of December 31, 2024 96,126 6.22 % Unamortized discount on acquired borrowings ( 4,250 ) Total borrowings $ 91,876 Note 6. Leases The Company enters into leases in the normal course of business. As of March 31, 2025, the Company leased 13 bank branch offices for which the land and buildings are leased and nine branch offices for which the land is leased but the buildings are owned. The Company also leases office space for several operational departments. All of the Company’s leases are operating leases and the lease agreements have maturity dates ranging from April 2026 through May 2076, some of which include options for multiple five - and ten-year extensions. The Company includes lease extension options in the lease term if, after considering relevant economic, market, and strategic factors, it is reasonably certain the Company will exercise the option. The weighted average remaining life of the lease term for these leases was 21.3 years as of March 31, 2025 and 21.2 years as of December 31, 2024. Certain of the Company's lease agreements include variable lease payments based on changes in inflation, with the impact of that factor being insignificant to the Company's total lease expense. As permitted by applicable accounting standards, the Company has elected not to recognize leases with original lease terms of 12 months or less (short-term leases) on the Company's consolidated balance sheets. The short-term lease cost for each period presented was insignificant. Leases are classified as either operating or finance leases at the lease commencement date and all of the Company's leases have been determined to be operating leases. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the applicable lease term. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company uses its incremental borrowing rate, on a collateralized basis, at lease commencement to calculate the present value of lease payments when the rate implicit in the lease is not known. The weighted average discount rates for leases were 3.34 % as of March 31, 2025 and December 31, 2024. The right-of-use assets, included in "Other assets" on the Company's consolidated balance sheets, and lease liabilities, included in "Other liabilities" on the Company's consolidated balance sheets, were $ 13.4 million and $ 14.3 Page 26 Index million as of March 31, 2025, respectively, and were $ 13.8 million and $ 14.6 million as of December 31, 2024, respectively. Total operating lease expenses, included in "Other operating expenses" in the Company's consolidated statements of income, were $ 0.6 million and $ 0.7 million for the three months ended March 31, 2025 and 2024, respectively. Future undiscounted lease payments for operating leases with initial terms of greater than one year as of March 31, 2025 are as follows: ($ in thousands) April 1, 2025 to December 31, 2025 $ 1,333 2026 1,517 2027 1,236 2028 1,145 2029 1,087 Thereafter 15,033 Total undiscounted lease payments 21,351 Less effect of discounting ( 7,094 ) Present value of estimated lease payments (lease liability) $ 14,257 Note 7. Fair Value of Financial Instruments Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal and most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value: Level 1: Quoted prices (unadjusted) of identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. Page 27 Index The following table summarizes the Company’s financial instruments that were measured at fair value on a recurring and nonrecurring basis at March 31, 2025: ($ in thousands) Description of Financial Instruments Fair Value at March 31, 2025 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Recurring Securities available for sale: U.S. Treasury $ 123,011 $ — $ 123,011 $ — Government-sponsored enterprise securities $ 9,938 $ — $ 9,938 $ — Mortgage-backed securities 1,905,461 — 1,904,765 696 Corporate bonds 26,106 — 24,356 1,750 Total available for sale securities $ 2,064,516 $ — $ 2,062,070 $ 2,446 Derivative financial assets $ 915 $ — $ 915 $ — Presold mortgages in process of settlement $ 5,166 $ — $ 5,166 $ — Derivative financial liabilities $ 917 $ — $ 917 $ — Nonrecurring Individually evaluated loans $ 2,907 $ — $ — $ 2,907 The following table summarizes the Company’s financial instruments that were measured at fair value on a recurring and nonrecurring basis at December 31, 2024: ($ in thousands) Description of Financial Instruments Fair Value at December 31, 2024 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Recurring Securities available for sale: US Treasury securities $ 120,581 $ — $ 120,581 $ — Government-sponsored enterprise securities 9,614 — 9,614 — Mortgage-backed securities 1,897,175 — 1,896,469 706 Corporate bonds 15,692 — 13,942 1,750 Total available for sale securities $ 2,043,062 $ — $ 2,040,606 $ 2,456 Derivative financial assets $ 301 $ — $ 301 $ — Presold mortgages in process of settlement $ 5,942 $ — $ 5,942 $ — Derivative financial liabilities $ 302 $ — $ 302 $ — Nonrecurring Individually evaluated loans $ 879 $ — $ — $ 879 The following is a description of the valuation methodologies used for financial instruments measured at fair value. Securities Available for Sale — When quoted market prices are available in an active market, the securities are classified as Level 1 in the valuation hierarchy. If quoted market prices are not available, but fair values can be estimated by observing quoted prices of securities with similar characteristics, the securities are classified as Level 2 on the valuation hierarchy. Most of the fair values for the Company’s Level 2 securities are determined by the Company's third-party bond accounting provider using matrix pricing. Matrix pricing is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities. For the Company, Level 2 securities include U.S Treasury bonds, mortgage- Page 28 Index backed securities, commercial mortgage-backed obligations, government-sponsored enterprise securities, and corporate bonds. In cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. The Company reviews the pricing methodologies utilized by the bond accounting provider to ensure the fair value determination is consistent with the applicable accounting guidance and that the investments are properly classified in the fair value hierarchy. Presold Mortgages in Process of Settlemen t - The fair value is based on the committed price that an investor has agreed to pay for the loan which is considered a Level 2 input. Derivative financial assets and liabilities - The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. These are considered a Level 2 input. Individually evaluated loans — Fair values for individually evaluated loans are measured on a non-recurring basis and are based on the underlying collateral values securing the loans, adjusted for estimated selling costs, or the net present value of the cash flows expected to be received for such loans. Collateral may be in the form of real estate or business assets including equipment, inventory and accounts receivable. The vast majority of the collateral is real estate. The value of real estate collateral is generally determined by third-party appraisers using an income or market valuation approach based on an appraisal conducted by an independent, licensed third party appraiser (Level 3). The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable borrower’s financial statements if not considered significant. Likewise, values for inventory and accounts receivable collateral are based on borrower financial statement balances or aging reports on a discounted basis as appropriate (Level 3). Appraisals used in this analysis are generally obtained at least annually based on when the loans first became impaired, and thus the appraisals are not necessarily as of the period ends presented. Any fair value adjustments are recorded in the period incurred as provision for credit losses on the consolidated statements of income. There were no significant changes in the reported amount of Level 3 assets and liabilities measured at fair value on either a recurring or a non-recurring basis as of March 31, 2025. The carrying amounts and estimated fair values of financial instruments not carried at fair value at March 31, 2025 and December 31, 2024 were as follows: March 31, 2025 December 31, 2024 ($ in thousands) Level in Fair Value Hierarchy Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Cash and due from banks, noninterest-bearing Level 1 $ 149,781 $ 149,781 $ 78,596 $ 78,596 Due from banks, interest-bearing Level 1 622,660 622,660 428,911 428,911 Securities held to maturity Level 2 518,265 430,601 519,998 428,571 Total loans, net of allowance Level 3 7,982,402 7,528,796 7,972,104 7,514,505 SBA Servicing Asset Level 3 2,256 3,416 2,604 3,746 Demand deposits, money market and savings Level 1 9,851,264 9,851,264 9,593,557 9,593,557 Time deposits Level 2 893,395 889,419 936,968 933,523 Borrowings Level 2 92,055 83,064 91,876 81,216 Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no highly liquid market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Page 29 Index Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial assets or liabilities include net premises and equipment, intangible and other assets such as deferred income taxes, prepaid expense accounts, income taxes currently payable, and other various accrued expenses. In addition, the income tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates. Note 8. Stock-Based Compensation The Company recorded total stock-based compensation expense of $ 1.0 million and $ 0.7 million for the three months ended March 31, 2025 and 2024, respectively. These amounts are included in "Total personnel expense" on the accompanying consolidated statements of income. The Company recog nized income tax benefits related to stock-based compensation expense in its income statement of $ 238,000 an d $ 153,000 for the three months ended March 31, 2025 and 2024, respectively. At March 31, 2025, the sole equity-based compensation plan of the Company was the First Bancorp 2024 Equity Plan (the "Equity Plan"), which was approved by shareholders on May 31, 2024. As of March 31, 2025, the Equity Plan had 1,884,484 shares remaining available for grant. The Equity Plan is intended to serve as a means to attract, retain, and motivate key employees and directors and to associate the interests of the Equity Plan's participants with those of the Company and its shareholders. The Equity Plan allows for both grants of stock options and other types of equity-based compensation, including stock appreciation rights, restricted and unrestricted stock, restricted performance stock, and performance units. For the last several years, the only equity-based compensation granted by the Company has been shares of restricted stock, as it relates to employees, and unrestricted stock as it relates to non-employee directors. There have been no material changes to the treatment of stock awards and equity grants as discussed in Note 15 of the Company's Annual Report on Form 10-K for the year ended December 31, 2024. In addition to employee equity awards, the Company's practice is to grant unrestricted common shares to each non-employee director (currently eleven in total) in June of each year. The grants were valued at approximately $ 37,500 in 2024 and are expected to be the same in 2025. Compensation expense associated with these director awards is fully recognized by the date of the award since there are no vesting conditions. The following table presents information regarding the activity for the first three months of 2025 related to the Company’s outstanding restricted stock awards: Long-Term Restricted Stock Awards Number of Units Weighted-Average Grant-Date Fair Value Nonvested at January 1, 2025 236,951 $ 36.43 Granted during the period 46,064 41.20 Vested during the period ( 27,622 ) 42.84 Forfeited or expired during the period ( 4,069 ) 41.88 Nonvested at March 31, 2025 251,324 $ 36.51 Total unrecognized compensation expense as of March 31, 2025 amounted to $ 3.7 million with a weighted average remaining term of 2.3 years. For the nonvested awards that were outstanding at March 31, 2025, the Company expects to record $ 2.0 million in compensation expense in the next twelve months, $ 1.7 million of which is expected to be recorded in the remaining quarters of 2025. Page 30 Index Note 9. Earnings Per Share The following is a reconciliation of the numerators and denominators used in computing Basic and Diluted Earnings Per Common Share ("EPS"): For the Three Months Ended March 31, 2025 2024 ($ in thousands except per share amounts) Income (Numerator) Shares (Denominator) Per Share Amount Income (Numerator) Shares (Denominator) Per Share Amount Basic EPS: Net income $ 36,406 $ 25,272 Less: income allocated to restricted stock ( 198 ) ( 178 ) Basic EPS per common share $ 36,208 41,130,779 $ 0.88 $ 25,094 40,843,865 $ 0.61 Diluted EPS: Net income $ 36,406 41,130,779 $ 25,272 40,843,865 Effect of dilutive securities — 275,746 — 405,771 Diluted EPS per common share $ 36,406 41,406,525 $ 0.88 $ 25,272 41,249,636 $ 0.61 Note 10. Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive income (loss) ("AOCI") for the Company for the periods shown were as follows: ($ in thousands) March 31, 2025 December 31, 2024 Unrealized loss on securities available for sale $ ( 321,214 ) $ ( 368,055 ) Tax effect 74,501 85,941 Net unrealized loss on securities available for sale ( 246,713 ) ( 282,114 ) Postretirement plans asset (liability) 111 111 Tax effect ( 26 ) ( 26 ) Net postretirement plans asset (liability) 85 85 Total accumulated other comprehensive income (loss) $ ( 246,628 ) $ ( 282,029 ) Page 31 Index The following tables disclose the changes in AOCI for the three months ended March 31, 2025 and 2024 (all amounts are net of tax): For the Three Months Ended March 31, 2025 ($ in thousands) Unrealized Loss on Securities Available for Sale Postretirement Plans Asset (Liability) Total Beginning balance $ ( 282,114 ) $ 85 $ ( 282,029 ) Other comprehensive income before reclassifications 35,401 — 35,401 Net current period other comprehensive income 35,401 — 35,401 Ending balance $ ( 246,713 ) $ 85 $ ( 246,628 ) For the Three Months Ended March 31, 2024 ($ in thousands) Unrealized Loss on Securities Available for Sale Postretirement Plans Asset (Liability) Total Beginning balance $ ( 307,953 ) $ ( 77 ) $ ( 308,030 ) Other comprehensive loss before reclassifications ( 14,711 ) — ( 14,711 ) Amounts reclassified from accumulated other comprehensive income 749 19 768 Net current period other comprehensive (loss) income ( 13,962 ) 19 ( 13,943 ) Ending balance $ ( 321,915 ) $ ( 58 ) $ ( 321,973 ) Amounts reclassified from AOCI for unrealized gain (loss) on securities AFS represent realized securities gains or losses, net of tax effects. Amounts reclassified from AOCI for postretirement plans asset (liability) represent amortization of amounts included in AOCI, net of taxes, and are recorded in the "Other operating expenses" line item of the consolidated statements of income. Note 11. Revenue from Contracts with Customers All of the Company’s revenues that are in the scope of the “ Revenue from Contracts with Customers ” accounting standard (“ASC 606”) are recognized within noninterest income. The following table presents the Company’s sources of noninterest income for the three months ended March 31, 2025 and 2024. Items outside the scope of ASC 606 are noted as such. For the Three Months Ended ($ in thousands) March 31, 2025 March 31, 2024 Noninterest Income in-scope of ASC 606: Service charges on deposit accounts $ 3,767 $ 3,868 Other service charges and fees: Bankcard interchange income, net 2,327 2,314 Other service charges and fees 2,125 1,848 Commissions from sales of financial products 1,408 1,320 Portion of other income in-scope of ASC 606 — 257 Noninterest income (in-scope of ASC 606) 9,627 9,607 Noninterest income (out-of-scope of ASC 606) 3,275 3,289 Total noninterest income $ 12,902 $ 12,896 There have been no material changes from the Company's revenue streams accounted for under ASC 606 as discussed in Note 20 of the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Page 32 Index Note 12. Segment Reporting The Company is a bank holding company, whose principal activity is the ownership and management of its wholly-owned subsidiary, First Bank (the "Bank"). As a community-oriented financial institution, substantially all of the Company’s operations involve the delivery of loan and deposit products or the provision of financial advice to customers. Management makes operating decisions and assesses performance based on an ongoing review of these banking operations, which constitute the Company’s only operating segment for financial reporting purposes. The accounting policies of the banking operations segment are the same as those described in the Summary of Significant Accounting Policies as discussed in Note 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2024. The measure of segment assets is reported on the balance sheet as total consolidated assets. The role of chief operating decision maker is comprised of the executive leadership team to include the Company's Chief Executive Officer, the Bank's Chief Executive Officer, the Company's President, and the Company's Chief Financial Officer. The chief operating decision makers use pre-tax net income to allocate resources in the annual budget and forecasting process. The chief operating decision makers consider budget-to-actual variances on a monthly basis for profit measures when making decisions about allocating capital and personnel to the operating segment. The chief operating decision makers use the Consolidated Statements of Income and Consolidated Balance Sheets to ascertain measures or performance such as revenue, profit or loss, significant expenses and assets. Depreciation expense amounted to $ 1.8 million, and $ 2.0 million, for the three months ended March 31, 2025 and March 31, 2024, respectively, and is recorded in Occupancy and equipment expense on the Consolidated Statements of Income. Page 33 Index