What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-25 compared with 2025-02-26 · 372 added, 353 removed, 1638 unchanged (31% of the section changed)

97 unchanged sentences

Merger and acquisition expenses

— 13,695 5,072

Intangibles amortization expense 5,672 6,604 8,003

11 unchanged sentences

Weighted average common shares outstanding:

41,021,475 40,746,772 35,485,620

41,327,216 41,164,834 35,674,730

Basic 41,196,459 41,021,475 40,746,772

Diluted 41,453,247 41,327,216 41,164,834

See accompanying notes to consolidated financial statements.

6 unchanged sentences

Unrealized gains (losses) on securities available for sale:

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

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

Unrealized holding gains (losses) arising during the period, pretax 102,306 ( 5,316 ) 43,343

Tax (expense) benefit ( 24,607 ) 2,043 ( 9,279 )

Reclassification to realized losses 71,627 37,981 —

1 unchanged sentence

Postretirement plans:

Net gains (losses) arising during period 111 ( 607 ) 695

Tax (expense) benefit ( 26 ) 141 ( 159 )

Amortization of unrecognized net actuarial gains (losses) 100 ( 545 ) ( 288 )

Tax (expense) benefit ( 23 ) 126 66

Net (losses) gains arising during period ( 102 ) 111 ( 607 )

Tax benefit (expense) 23 ( 26 ) 141

Amortization of unrecognized net actuarial (losses) gains ( 111 ) 100 ( 545 )

Tax benefit (expense) 26 ( 23 ) 126

Reclassification of net actuarial losses due to settlement to realized losses — — 998

14 unchanged sentences

Change in Rabbi Trust Obligation 200 ( 200 ) —

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

Stock option exercises 237 4,519 4,519

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

Stock-based compensation 159 5,572 5,572

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

Other comprehensive income 33,945 33,945

Balances, December 31, 2023 41,110 963,990 716,420 ( 1,385 ) 1,385 ( 308,030 ) 1,372,380

3 unchanged sentences

Change in Rabbi Trust Obligation 237 ( 237 ) —

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

Stock option exercises 192 4,094 4,094

7 unchanged sentences

Change in Rabbi Trust Obligation 263 ( 263 ) —

Stock repurchases ( 25 ) ( 991 ) ( 991 )

Stock option exercises 84 1,491 1,491

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Deposit and debt discount accretion, net 1,087 1,593 3,943

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

Foreclosed real estate gains, net 261 ( 245 ) ( 150 )

Securities losses, net 71,627 37,981 —

11 unchanged sentences

Proceeds from sales of presold mortgage loans and SBA loans 100,428 174,541 124,887

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

Increase (decrease) in accrued interest receivable ( 2,877 ) 1,022 ( 1,904 )

(Increase) decrease in other assets ( 6,220 ) ( 5,396 ) 12,435

(Decrease) increase in accrued interest payable ( 857 ) ( 1,095 ) 2,579

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

(Decrease) increase in other liabilities ( 20,652 ) 5,662 ( 949 )

Net cash provided by (used in) operating activities 203,131 174,781 131,396

1 unchanged sentence

Purchases of securities available for sale ( 585,084 ) ( 494,895 ) ( 1,169 )

Purchases of securities held to maturity — — ( 39,004 )

Proceeds from maturities, calls and principal repayments of securities available for sale 216,476 243,029 165,358

6 unchanged sentences

Purchases of other investments ( 29,927 ) ( 6,824 ) ( 9,754 )

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

Proceeds from sales of foreclosed properties 758 967 2,904

Net (increase) decrease in loans ( 638,661 ) 17,494 ( 466,488 )

Proceeds from sales of foreclosed real estate 5,052 758 967

Purchases of premises and equipment ( 4,245 ) ( 2,657 ) ( 4,421 )

8 unchanged sentences

Cash dividends paid – common stock ( 37,284 ) ( 36,249 ) ( 34,940 )

Repurchases of common stock ( 991 ) — —

Proceeds from stock option exercises 1,491 4,094 4,519

Payment of taxes related to stock withheld ( 1,692 ) ( 1,691 ) ( 743 )

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

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

Net cash provided (used) by financing activities 161,026 ( 74,795 ) 27,506

(Decrease) increase in cash and cash equivalents ( 197,912 ) 269,652 ( 32,463 )

Cash and Cash Equivalents, beginning of year 507,507 237,855 270,318

7 unchanged sentences

Cash paid during the period for income taxes 11,020 33,500 29,734

Cash paid during the period for the purchase of transferable tax credits 9,337 — —

Unrealized gain (loss) on securities available for sale, net of taxes 132,818 25,839 34,064

4 unchanged sentences

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

Affordable housing investments obtained in exchange for funding commitments 130,743 — —

Acquisition of GrandSouth Bancorporation — — See Note 2

22 unchanged sentences

Actual results could materially differ from those estimates.

The most significant estimates made by the Company in the preparation of its consolidated financial statements are the determination of the allowance for credit losses on loans, the allowance for unfunded commitments, the accounting and impairment testing related to intangible assets, the fair value determination for acquired assets and liabilities, and the resulting accretion or amortization of purchase accounting premiums or discounts.

Loss Contingencies – Loss contingencies, including claims and legal actions arising in the ordinary course of business, are record as liabilities when the likelihood of loss is probable, and an amount or range of loss can be reasonably estimated.

The Company does not believe there now are such matters that will have a material effect on the financial statements.

Dividend Restriction – Banking regulations require maintaining certain capital levels and may limit the dividends paid by the bank to the holding company or by the holding company to shareholders.

Business Combinations – The Company accounts for business combinations using the acquisition method of accounting.

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

All accrued interest is reversed against

interest income when a loan is placed on nonaccrual status.

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

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

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Repayment is primarily dependent on lease income generated from the underlying collateral.

The Company generally requires loan to value of 80 % or lower, debt service coverage of 1.30 x or better and overall lease terms to match or extend beyond the term of the loan.

Company generally requires loan to value of 80 % or lower, debt service coverage of 1.30 x or better and overall lease terms to match or extend beyond the term of the loan.

• Consumer real estate mortgage loans - Consumer real estate mortgage consists primarily of loans secured by 1-4 family residential properties, including home equity lines of credit.

Repayment is primarily dependent on the personal cash flow of the borrower and may be affected by changes in general economic conditions.

The Company generally requires a debt-to-income below 40 % on all home equity lines of credit with loan to

value generally 80 % or less and a minimum credit score of 660 .

The Company generally requires a debt-to-income below 40 % on all home equity lines of credit with loan to value generally 80 % or less and a minimum credit score of 660 .

Portfolio mortgage loans will vary depending on the product, but generally require credit scores of 640 or greater, debt to income below 50 % and loan to value maximum of 90 %.

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In determining the proper level of default rates and loss given default, management has determined that the loss experience of the Company provides the best basis for its assessment of expected credit losses.

It therefore utilizes its own historical credit loss experience by each loan segment over an economic cycle, while excluding loss experience from certain acquired institutions (i.e., failed banks).

It therefore utilizes its own historical credit loss experience by each loan segment over an economic cycle, while excluding loss experience from certain acquired institutions.

Management considers forward-looking information in estimating expected credit losses.

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

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

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

This is done through the use of a scorecard, which considers, through the use of weighting and risk scoring, a range of maximum and minimum loss rates and can either increase or decrease the quantitative model estimation (i.e., formulaic model results).

Through the use of the score card, each period the Company considers qualitative factors that are relevant within the qualitative framework that includes the following:

1) changes in lending policies, procedures, and strategies, 2) changes in the nature and volume of the portfolio, 3) staff experience, 4) changes in volume and trends in classified loans, delinquencies, and nonaccrual loans, 5) concentration risk, 6) trends in underlying collateral value, 7) external factors, including competition and legal and regulatory factors, 8) changes in the quality of the Company's loan review system, and 9) economic conditions not already captured.

2 unchanged sentences

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 allowance is calculated

using the same aggregate reserve rates calculated for the funded portion of loans at the portfolio level applied to the amount of commitments expected to fund.

Financial Difficulty Modifications ("FDM") - A loan that is refinanced or restructured by the Company when a borrower is experiencing financial difficulty is generally considered a FDM.

The allowance is calculated using the same aggregate reserve rates calculated for the funded portion of loans at the portfolio level applied to the amount of commitments expected to fund.

Loan Modifications to Borrowers Experiencing Financial - A loan that is refinanced or restructured by the Company when a borrower is experiencing financial difficulty is generally considered a Financial Difficulty Modification ("FDM").

Such modification is evaluated to determine if the changes to the loan result in a new loan or a continuation of the existing loan, and to determine the appropriate treatment of deferred loan fees/costs, (i.e.

2 unchanged sentences

FDMs that share similar risk characteristics and consistently discounted based on the post-modification effective rate.

Troubled Debt Restructurings ("TDR") - Prior to the adoption of Accounting Standards Update ("ASU") 2022-02 on January 1, 2023, a TDR was generally considered a loan for which the terms were modified resulting in a more than insignificant concession, and for which the borrower was experiencing financial difficulties.

The ACL on a TDR was measured using the same method as all other loans held for investment, except that the original interest rate was used to discount the expected cash flows, not the rate specified within the restructuring.

Small Business Administration ("SBA") Loans Held for Sale and SBA Retained Loan Discount – All SBA loans originated are underwritten and documented as prescribed by the SBA.

2 unchanged sentences

SBA loans classified as held for sale are carried at the lower of cost or fair value.

The Company generally sells the guaranteed portion of the SBA loan as soon as it is eligible to be sold and retains the servicing right.

For any guaranteed portion of an SBA loan that is sold, the Company generally sells that portion as soon as its eligible to be sold and retains the servicing right.

When the guaranteed portion of an SBA loan is sold, the Company allocates the carrying basis of the loan between the guaranteed portion of the loan sold, the unguaranteed portion of the loans retained, and the servicing asset based on their relative fair values.

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Maintenance and repairs are charged to operations in the year incurred.

Gains and losses on dispositions are included in current operations and are recorded within noninterest expense on the "Other operating expenses" line on the consolidated statements of income.

Gains and losses on dispositions are included in current

operations and are recorded within noninterest expense on the "Other operating expenses" line on the consolidated statements of income.

Goodwill and Other Intangible Assets - Business combinations are accounted for using the acquisition method of accounting.

2 unchanged sentences

Goodwill is not amortized, but rather is subject to fair value impairment tests on at least an annual basis.

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

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

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

1 unchanged sentence

Capital expenditures made to improve the property are capitalized.

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

Costs incurred to maintain the property are expensed as incurred and are also included in "Other operating expenses." Foreclosed real estate are included in the "Other assets" line on the consolidated balance sheets and totaled $ 1.4 million and $ 5.0 million at December 31, 2025 and 2024, respectively.

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

1 unchanged sentence

Income from these policies and changes in the net cash surrender value are recorded within noninterest income as “Bank-owned life insurance income” on the consolidated statements of income.

Income Taxes - Income taxes are accounted for under the asset and liability method.

Income Taxes - On December 14, 2023, the FASB issued ASU No.

2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”).

ASU 2023-09 amends ASC 740, Income Taxes to expand income tax disclosures and requires that the Company disclose (i) the income tax rate reconciliation using both percentages and reporting currency amounts;

(ii) specific categories within the income tax rate reconciliation;

(iii) additional information for reconciling items that meet a quantitative threshold;

(iv) the composition of state and local income taxes by jurisdiction;

and (v) the amount of income taxes paid disaggregated by jurisdiction.

The Company adopted ASU 2023-09 for the year ended December 31, 2025 on a prospective basis.

See Note 7 for additional information.

Income taxes are accounted for under the asset and liability method.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.

3 unchanged sentences

Other Investments – The Company accounts for its investments in limited partnerships and limited liability companies (“LLCs”) using the equity method of accounting if the percentage ownership and degree of management influence in the investments warrants such accounting treatment.

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

Under the equity method of accounting, the Company records its initial investment at cost.

Subsequently, the carrying amount of the investment is increased or decreased to reflect the Company’s share of income or loss of the investee, recorded within noninterest income as "Other gains, net" on the consolidated statements of income.

Subsequently, the carrying amount of the investment is increased or decreased to reflect the Company’s share of income or loss of the investee, recorded within noninterest income as "Other income, net" on the consolidated statements of income.

The Company’s recognition of earnings or losses from an equity method investment is based on the Company’s ownership percentage in the investee and the investee’s earnings on a quarterly basis.

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Such financial instruments are recorded when they are funded.

Leases - The Company leases certain branch locations and administrative offices which are generally classified as operating leases with right-of-use assets being included in other assets and the associated lease obligations being included in other liabilities.

Leases - The Company leases certain branch locations and administrative offices which are generally classified as operating leases with right-of-use assets and the associated lease obligations being recorded, respectively, in "Other assets" and "Other liabilities" on the consolidated balance sheets.

For leases where the Company is the lessee that have initial terms greater than one year, right-of-use assets and corresponding lease liabilities are reported on the balance sheet.

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Accounting Standards Adopted in 2025

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

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

This update was adopted on January 1, 2024.

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

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

Improvements to Reportable Segment Disclosures" amended existing guidance to improve disclosures about a public entity’s reportable segments and provide more detailed information about a reportable segment’s expenses.

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

The amendment was

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

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

Accounting Standards Pending Adoption

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

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

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.

The adoption of ASU

2023-09 did not have a significant impact on the Company's consolidated financial statements.

Disclosures have been updated in Note 7 to comply with the ASU as required.

Accounting Standards Pending Adoption

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

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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 Company will apply the

amendments retrospectively to all prior periods presented in the financial statements after the effective date.

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

ASU 2025-07, "Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) " amended the Derivatives and Hedging and Revenue from Contracts with Customers topics in the Accounting Standards Codification to refine derivative scope and clarify the accounting treatment of share-based noncash consideration from customers in revenue contracts.

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

Early adoption is permitted.

Entities may apply the guidance prospectively or on a modified retrospective basis.

The adoption of ASU 2025-07 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.

ASU 2025-08, "Financial Instruments-Credit Losses (Topic 326):

Purchased Loans" amended the Financial Instruments—Credit Losses topic in the Accounting Standards Codification to expand the population of acquired financial assets subject to the gross-up approach.

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

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

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

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

Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance.

The Company does not expect these amendments to have a material effect on its financial statements.

The accounting for future business combinations, if any, would be impacted.

ASU 2025-09, "Derivatives and Hedging (Topic 815):

Hedge Accounting Improvements" amended the Derivatives and Hedging topic in the Accounting Standards Codification to clarify certain aspects of the guidance on hedge accounting and to address several incremental hedge accounting issues arising from the global reference rate reform initiative.

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

Early adoption is permitted on any date on or after the issuance of this ASU.

Upon adoption of the amendments, entities are permitted to modify certain critical terms of certain existing hedging relationships without dedesignating the hedge.

The Company does not expect these amendments to have a material effect on its financial statements.

ASU 2025-11, "Interim Reporting (Topic 270):

Narrow-Scope Improvements" amended the Interim Reporting topic in the Accounting Standards Codification to clarify current interim reporting requirements.

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

Early adoption is permitted.

The Company will apply the amendments retrospectively to any or all prior periods presented in the financial statements.

The Company does not expect these amendments to have a material effect on its 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.

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Supplemental Pro Forma Financial Information

The following table presents certain pro forma information as if GrandSouth had been acquired on January 1, 2022.

These results combine the historical results of GrandSouth with the Company’s results and, while certain adjustments were made for the estimated impact of certain fair value adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition taken place on January 1, 2022.

Merger-related costs related to this acquisition of $ 13.7 million for 2023 were recorded by the Company and were excluded from the pro forma information below.

In addition, no adjustments have been made to such pro forma information to eliminate the provision for loan losses recorded by GrandSouth in the amount of $ 2.2 million for 2022.

Pro forma information for the year 2023 was adjusted to eliminate the following:

1) the non-PCD provision for loan losses recorded on the acquisition date of $ 12.2 million and 2) the initial recording of a provision for credit losses associated with GrandSouth’s unfunded commitments of $ 1.9 million.

If the GrandSouth acquisition had occurred at the beginning of 2022, the acquisition date credit loss reserve amounts would have been included in the fair value measurements of GrandSouth and also included in the goodwill calculation.

The following table also discloses the impact of the acquisition of GrandSouth from the acquisition date of January 1, 2023 through December 31, 2023.

The following table discloses the impact of the acquisition of GrandSouth from the acquisition date of January 1, 2023 through December 31, 2023.

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

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

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

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

The operations of GrandSouth have been integrated into the Bank's existing operations and therefore separate results of operations are not presented for the years ended December 31, 2025 and December 31, 2024.

Merger-related costs have been excluded from these amounts and

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

($ in thousands, unaudited) Revenue Net Income

1 unchanged sentence

Actual GrandSouth results included in statement of income since acquisition date $ 58,301 $ 22,058

Year Ended December 31, 2022

Supplemental consolidated pro forma as if GrandSouth had been acquired on January 1, 2022 454,579 161,826

The book values and approximate fair values of investment securities at December 31, 2025 and 2024 are summarized as follows:

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Accrued interest receivable on HTM debt securities was of $ 4.2 million as of December 31, 2025 and December 31, 2024.

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

The following table presents information regarding all securities with unrealized losses at December 31, 2025:

Securities in an Unrealized

12 unchanged sentences

Total temporarily impaired securities $ 181,075 $ 769 $ 1,512,307 $ 265,224 $ 1,693,382 $ 265,993

The following table presents information regarding securities with unrealized losses at December 31, 2023:

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

Securities in an Unrealized

12 unchanged sentences

Total temporarily impaired securities $ 442,489 $ 2,441 $ 1,975,663 $ 457,102 $ 2,418,152 $ 459,543

As of December 31, 2024, the Company's securities portfolio held 584 securities of which 560 securities were in an unrealized loss position.

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

As of December 31, 2025, the Company's securities portfolio included 573 securities of which 491 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 December 31, 2025 and 2024 are bonds that the Company has determined are in a loss position due primarily to interest rate factors and not credit quality concerns.

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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.

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 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 December 31, 2024 and 2023, the Company determined that expected credit losses associated with HTM securities and AFS debt securities were insignificant.

The book values and approximate fair values of investment securities at December 31, 2024, by contractual maturity, are summarized in the table below.

At December 31, 2025 and 2024, the Company determined that expected credit losses associated with HTM securities were insignificant.

The book values and fair values of investment securities at December 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.

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In addition, at December 31, 2025 and 2024, investment securities with carrying values of $ 622.1 million and $ 661.0 million, respectively, were pledged as collateral to the FRB to secure any such borrowings.

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

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

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

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

At December 31, 2025 and 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.

During 2025, the Company received proceeds from sales of securities of $ 464.7 million and recorded $ 71.6 million in gross losses from the sales.

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

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

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

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

1 unchanged sentence

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

In 2022, there were no sales of investment securities.

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

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

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

Included in “Other assets” in the consolidated balance sheets are investments in FHLB and Federal Reserve stock totaling $ 41.6 million and $ 41.3 million at December 31, 2025 and 2024, respectively.

These investments do not have readily determinable fair values.

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

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

The FHLB stock had a cost of $ 8.5 million at December 31, 2025 and 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 $ 33.1 million and $ 32.7 million at December 31, 2025 and 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.

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$ 8,722,419 $ 8,094,676

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

The above table includes SBA loans, generally originated under the SBA 7A loan program, with additional information on these loans presented in the table below.

($ in thousands) December 31,

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At December 31, 2025 and December 31, 2024, there were remaining unaccreted discounts on the retained portion of sold SBA loans amounting to $ 2.0 million and $ 2.9 million respectively.

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

At December 31, 2025 and December 31, 2024, loans in the amount of $ 7.1 billion and $ 6.7 billion, respectively, were pledged as collateral to the Federal Reserve and the FHLB for borrowing capacity.

Refer to Note 9 for further discussion.

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

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

At December 31, 2025 and 2024, total loans included loans to directors and executive officers of the Company, and their associates, totaling approximately $ 60.7 million and $ 62.9 million, respectively.

There were no new loans or advances on existing loans for the year ended December 31, 2025 and repayments amounted to $ 1.9 million for that period.

Loans with a total balance of $ 0.3 million were removed from the population as the director retired from the board during 2025.

Available credit on related party loans totaled $ 0.3 million and $ 1.0 million at December 31, 2025 and December 31, 2024, respectively.

As of December 31, 2025 and 2024, unamortized discounts on all acquired loans totaled $ 8.8 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 years ended December 31, 2024 and December 31, 2023 that would require acceleration of amortization or charge off of unamortized discount.

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

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

The following table summarizes the NPAs for each date presented.

3 unchanged sentences

Nonaccrual loans $ 36,315 $ 31,779

Financial Difficulty Modifications 10,173 11,719

Accruing loans > 90 days past due — —

Total nonperforming loans 36,315 31,779

Foreclosed properties 4,965 862

Foreclosed real estate 1,425 4,965

Total nonperforming assets $ 37,740 $ 36,744

At December 31, 2025 and 2024, the Company had $ 1.0 million and $ 1.2 million, respectively, in residential mortgage loans in process of foreclosure.

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

At December 31, 2025 and December 31, 2024, there were commitments to lend immaterial amounts of additional funds to borrowers whose loans were nonperforming.

The following table is a summary of the Company’s nonaccrual loans by major categories as of December 31, 2025.

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

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

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

Commercial and industrial $ 513 $ 225

Construction, development & other land loans 2 10

Commercial real estate - owner occupied 372 124

Commercial real estate - non owner occupied 55 186

Residential 1-4 family real estate 73 38

Home equity loans/lines of credit 31 57

Consumer loans 2 2

Total $ 1,048 $ 642

The following table presents an analysis of the payment status of the Company’s loans as of December 31, 2025.

32 unchanged sentences

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.

Collateral dependent loans are individually evaluated 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 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 ACL.

2 unchanged sentences

Commercial real estate - owner occupied $ 5,390 $ 5,390

Commercial real estate - non owner occupied 4,269 4,269

Total $ 9,659 $ 9,659

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

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

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

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

Commercial real estate - owner occupied $ 879 $ 879

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

Home equity loans/lines of credit 534 — — 534

Total $ 879 $ 879

5 unchanged sentences

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

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

incurred when disposing of non-real estate collateral.

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

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

Fluctuations in the ACL each period are based on loan mix and growth, changes in the levels of nonperforming loans, economic forecasts impacting loss drivers, other assumptions and inputs to the CECL model, and as occurred in 2024, adjustments for acquired loan portfolios.

occurred in 2025, adjustments for acquired loan portfolios.

Much of the change to the level of ACL during the year ended December 31, 2025 is attributed to the potential exposure from Hurricane Helene.

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

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

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

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

9 unchanged sentences

$ 122,572 $ ( 11,629 ) $ 3,074 $ 9,564 $ 123,581

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

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

As of and for the year ended December 31, 2024

8 unchanged sentences

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

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

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

As of and for the year ended December 31, 2023

12 unchanged sentences

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

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

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

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

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

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(Fail) Consumer loans with a well-defined weakness, such as exceptions of any kind with no mitigating factors, history of paying outside the terms of the note, insufficient income to support the current level of debt, etc.

In the tables that follow, substantially all of the "Classified" loans have grades of 7 or Fail for consumer loans, 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.

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.

As presented in the tables that follow, as of December 31, 2025, the Company had $ 29.3 million in loans graded Special Mention and $ 58.5 million in loans graded Classified, which includes all nonaccrual loans at that date.

119 unchanged sentences

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

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

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

As of and for the year ended December 31, 2024

The following table presents the amortized cost basis at December 31, 2025 of the FDMs modified during the twelve months then ended for borrowers experiencing financial difficulty, by loan category and type of concession granted.

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

Commercial and industrial $ 484 $ 674 $ — $ 38 $ 1,196 0.11 %

Construction, development & other land loans — 171 — — 171 0.03 %

Commercial real estate - owner occupied 722 112 — — 834 0.06 %

3 unchanged sentences

Total $ 1,251 $ 5,994 $ 10 $ 38 $ 7,293 0.08 %

As of and for the year ended December 31, 2023

The following table presents the amortized cost basis at December 31, 2024 of the FDMs modified during the twelve months then ended for borrowers experiencing financial difficulty, by loan category and type of concession granted.

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

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

4 unchanged sentences

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

Consumer loans — 6 — — 6 0.01 %

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

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

For the twelve months ended December 31, 2025 and December 31, 2024, there were no modifications for borrowers experiencing financial difficulty with principal forgiveness concessions.

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

The following table reflects the financial effect for the twelve months ended December 31, 2025 of the modifications made for borrowers experiencing financial difficulty:

Financial Effect of Modification to Borrowers Experiencing Financial Difficulty

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

For the year ended December 31, 2024

Commercial and industrial 2.24 % 6 22

Construction, development & other land loans — % 0 5

Commercial real estate - owner occupied — % 6 52

2 unchanged sentences

Home equity loans/lines of credit — % 0 50

For the year ended December 31, 2023

The following table reflects the financial effect for the twelve months ended December 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)

Commercial and industrial 0.75 % 11 10

4 unchanged sentences

Home equity loans/lines of credit 1.76 % 0 61

Consumer loans — % 0 24

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

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

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

The following table presents the performance of loans that have been modified in the last twelve months as of December 31, 2025:

Payment Status (Amortized Cost Basis)

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

For the year ended December 31, 2024

Commercial and industrial $ 594 $ 38 $ — $ 563

Construction, development & other land loans 171 — — —

Commercial real estate - owner occupied 500 334 — —

3 unchanged sentences

Total $ 6,228 $ 502 $ — $ 563

For the year ended December 31, 2023

The following table presents the performance of FDMs that have been 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

4 unchanged sentences

Home equity loans/lines of credit 583 — 68 —

Consumer loans 6 — — —

Total $ 2,307 $ — $ 68 $ 936

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

The following table presents the amortized cost basis of FDMs that had a payment default during the year ended December 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

Payment Delay Term Extension Combination - Interest Rate Reduction and Term Extension Total

Commercial and industrial $ 75 $ 488 $ 38 $ 601

Commercial real estate - non owner occupied 334 — — 334

Home equity loans/lines of credit — 130 — 130

Total $ 409 $ 618 $ 38 $ 1,065

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

Amortized Cost Basis of Modified Receivables That Subsequently Defaulted

Term Extension Total

For the year ended December 31, 2024

Residential 1-4 family real estate $ 58 $ 58

Total $ 58 $ 58

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

At December 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.

TDR Disclosures Prior to the Adoption of ASU 2022-02

The restructuring of a loan was considered a TDR if both (i) the borrower was experiencing financial difficulties and (ii) the creditor had granted a concession.

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

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

The Company does not generally grant principal forgiveness.

The Company’s TDRs can be classified as either nonaccrual or accruing based on the loan’s payment status.

The TDRs that are nonaccrual are reported within the nonaccrual loan totals presented previously.

The following tables present information related to loans modified in a TDR during periods as indicated.

For the year ended December 31, 2022

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

Contracts Pre-

Balances Post-

TDRs – Accruing

Commercial and industrial 2 $ 143 $ 143

Construction, development & other land loans 1 67 67

Residential 1-4 family real estate 2 75 78

TDRs – Nonaccrual

Commercial and industrial 5 744 744

Commercial real estate - non owner occupied 1 72 72

Residential 1-4 family real estate 1 36 36

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

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

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

Concentration of Credit Risk

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

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

industries that would be similarly affected by economic conditions.

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

Approximately 87 % of the Company's loan portfolio is secured by real estate and is therefore susceptible to changes in real estate valuations.

4 unchanged sentences

Percentage of Loans Outstanding

Wake County, North Carolina 9.7 % 10.1 %

New Hanover County, North Carolina 9.5 % 8.9 %

Wake County, North Carolina 9.4 % 9.7 %

Mecklenburg County, North Carolina 8.2 % 7.8 %

Buncombe County, North Carolina 5.0 % 5.2 %

Guilford County, North Carolina 4.9 % 5.0 %

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

Impact of Hurricane Helene

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

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

($ in thousands) Balance

Commercial and industrial $ 10,543

Construction, development & other land loans 24,891

Commercial real estate - owner occupied 96,412

Commercial real estate - non owner occupied 287,076

Multi-family real estate 25,424

Residential 1-4 family real estate 262,166

Home equity loans/lines of credit 37,472

Consumer loans —

Total $ 743,984

Given that the storm impacted the area just prior to September 30, 2024 and recovery continues in many communities, the Company performed analyses to identify possible impacts from the storm and has reserved accordingly based upon the information available as of December 31, 2024.

The Company applied increased reserve rates based upon severe economic factors to the approximately $ 744 million of loans in the most impacted path of Hurricane Helene.

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

Due to the potential exposure from Hurricane Helene, the ACL on these impacted loans increased by $ 13.0 million, expanding the ACL as a percent of loans in the impacted geography from 1.25 % to 3.00 % as of December 31, 2024 and adding 16 basis points to the overall ACL as a percent of total loans, which was 1.51 % as of December 31, 2024.

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

In the portions of Western North and South Carolina that were significantly impacted by Hurricane Helene in third quarter of 2024, the Company identified borrowers who were potentially impacted.

During 2025, the Company evaluated the commercial loan portfolio and adjusted risk ratings and nonaccrual status as applicable.

Therefore, for those relationships, the normal reserving process for December 31, 2025 was applied.

For the potentially impacted consumer loans, the Company applied increased reserve rates based upon severe economic factors to the approximately $ 268 million of loans (primarily Residential 1-4 family real estate) in the most impacted path of Hurricane Helene.

Due to the potential exposure from Hurricane Helene, the ACL on these impacted consumer loans was $ 1.9 million as of December 31, 2025, adding 2 basis points to the overall ACL as a percent of total loans, which was 1.42 % as of December 31, 2025.

As of December 31, 2024, the ACL on the population of potentially impacted commercial and consumer loans was $ 13.0 million, adding 16 basis points to the overall ACL as a percent of total loans, which was 1.51 %.

Allowance for Unfunded Loan Commitments

2 unchanged sentences

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

The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived

from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the ACL on loans, and are discussed in Note 1.

The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the ACL on loans, and are discussed in Note 1.

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

2 unchanged sentences

Beginning balance $ 9,066 $ 11,369

Initial provision for credit losses on unfunded commitments acquired from GrandSouth — 1,921

Charge-offs — —

Recoveries — —

Reversal of provision for unfunded commitments ( 2,303 ) ( 3,858 )

Provision (reversal) for unfunded commitments 1,938 ( 2,303 )

Ending balance $ 11,004 $ 9,066

29 unchanged sentences

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

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

Amortization expense of all amortizable intangible assets totaled $ 5.7 million, $ 6.6 million, and $ 8.0 million for the years ended December 31, 2025, 2024 and 2023, respectively.

3 unchanged sentences

The Company's most recent evaluation of goodwill, which occurred in the fourth quarter of 2025, indicated that there was no goodwill impairment.

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

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

($ in thousands) Total Goodwill

Balance at December 31, 2022 $ 364,263

Additions from acquisition of GrandSouth 114,487

Balance at December 31, 2023 478,750

Net activity during 2024 —

Balance at December 31, 2024 $ 478,750

There was no change to carrying amounts of goodwill during 2025 or 2024.

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.

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

2 unchanged sentences

Total $ 17,232

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

During 2025, 2024 and 2023, the Company recorded $ 2.8 million, $ 3.2 million, and $ 3.5 million, respectively, in SBA guaranteed servicing fee income, which is included in "Other service charges and fees" on the consolidated income statements.

There was no impairment of SBA servicing assets at December 31, 2025 and December 31, 2024.

14 unchanged sentences

New servicing assets 284 954

Amortization expense and impairment charges ( 1,699 ) ( 1,356 )

Amortization expense ( 1,141 ) ( 1,699 )

Ending balance, net $ 1,748 $ 2,605

6 unchanged sentences

Total $ 28,452 $ 21,902 $ 27,825

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

Beginning in 2025 on a prospective basis, the Company adopted ASU 2023-09.

See Accounting Standards Adopted in 2025 in Note 1 for additional details on the adoption.

The following is a reconciliation of federal income tax expense at the statutory rate of 21% at December 31, 2025 to the income tax provision reported in the financial statements.

($ in thousands) 2025

Amount Percent

Tax provision at statutory rate $ 29,295 21.00 %

State and local income taxes, net of federal income tax effect (1)

Non-taxable / non-deductible items ( 2,032 ) ( 1.46 ) %

Tax credits (2)

( 828 ) ( 0.59 ) %

Other adjustments 573 0.41 %

Total provision for income taxes and effective tax rate $ 28,452 20.40 %

(1) - State taxes in North Carolina made up the majority (greater than 50 percent) of this category.

(2) - Net of proportional amortization of qualifying affordable housing investments.

As previously disclosed for the years ended December 31, 2024 and December 31, 2023, the following is a reconciliation of federal income tax expense at the statutory rate of 21% to the income tax provision reported in the financial statements.

($ in thousands) 2024 2023

Tax provision at statutory rate $ 20,605 $ 27,711

Increase (decrease) in income taxes resulting from:

4 unchanged sentences

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

The following table presents income taxes paid (net of refunds received) for the year ended December 31, 2025.

($ in thousands) 2025

US Federal $ 9,000

North Carolina 1,070

Other US State and Local 950

Total $ 11,020

The sources and tax effects of temporary differences that give rise to significant portions of the deferred tax assets, which are included in Other assets on the consolidated balance sheets are as follows at December 31, 2025 and 2024:

1 unchanged sentence

Deferred tax assets:

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

Net operating loss carryforwards $ 134,335 $ —

Unrealized losses on securities available for sale 44,764 85,940

Purchase accounting adjustments 3,358 4,691

Allowance for credit losses on loans and unfunded commitments — 30,257

Operating lease liability 3,211 3,342

Purchase accounting adjustments 1,254 3,358

All other 7,086 8,077

1 unchanged sentence

Deferred tax liabilities:

Loan fees ( 2,483 ) ( 2,952 )

Depreciable basis of fixed assets ( 4,647 ) ( 7,070 )

Security valuation ( 58,352 ) —

Loan valuation ( 72,232 ) —

Amortizable basis of intangible assets ( 13,427 ) ( 14,442 )

Depreciable basis of fixed assets ( 5,777 ) ( 4,647 )

Right of use lease asset ( 3,015 ) ( 3,161 )

Loan fees ( 2,485 ) ( 2,483 )

All other ( 882 ) ( 578 )

1 unchanged sentence

Net deferred tax asset $ 34,480 $ 105,663

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

The Company recorded de minimis valuation allowances for 2025 and 2024 related to state net operating loss carryforwards for which the realization of the remaining deferred tax assets is determined to be more likely than not.

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

23 unchanged sentences

Brokered deposits were $ 4.9 million and $ 9.6 million at December 31, 2025 and 2024, respectively.

Total reciprocal deposits through the Certificate of Deposit Account Registry Services ("CDARS") and Insured Cash Sweep ("ICS") were $ 18.4 million and $ 26.6 million at December 31, 2024 and 2023, respectively.

Total reciprocal deposits through CDARS and ICS were $ 19.9 million and $ 18.4 million at December 31, 2025 and 2024, respectively.

As of December 31, 2025, the estimated insured deposits totaled $ 6.5 billion or 60.2 % of total deposits, while approximately $ 4.3 billion of the Company's total deposits were uninsured deposits.

19 unchanged sentences

Trust Preferred Securities 6/23/2036 Quarterly by Company beginning 6/23/2011 8,248 5.80 % at 12/31/25 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 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, 2025 78,077 5.97 %

5 unchanged sentences

None $ 802 0.00 % to 1.00 % fixed

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

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

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

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

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

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

4 unchanged sentences

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

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

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

3 unchanged sentences

Total borrowings $ 91,876

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

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

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

Any borrowings from the FHLB and FRB are subject to acceleration in certain circumstances, including material adverse changes in the condition of the Company or if the Company’s qualifying collateral amounts to less than that required under the terms of the borrowing agreement.

In the above tables, at December 31, 2025 and December 31, 2024, there were no short-term borrowings (original maturity of less than twelve months).

Trust Preferred Securities in the above tables are borrowings structured as trust preferred capital securities which were issued by various unconsolidated subsidiaries of the Company as discussed in Note 1.

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

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

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

The Subordinated Debentures in the 2024 table above were borrowings issued by GrandSouth and assumed by the Company on January 1, 2023.

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

The Company repaid the Subordinated Debentures during the fourth quarter of 2025.

At December 31, 2025, the Company had several sources of readily available borrowing capacity:

1 unchanged sentence

As of December 31, 2025, the line of credit is secured by a blanket lien on portions of the Company's real estate loan portfolio totaling approximately $ 2.3 billion and the Company's FHLB stock totaling $ 8.6 million.

$ 0.8 million was

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

$ 0.8 million was outstanding on the line of credit at December 31, 2025 and $ 0.8 million was outstanding at December 31, 2024;

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

3 unchanged sentences

At December 31, 2025, the contractual maturities of borrowings were as follows for the years ending:

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

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

2026 $ — $ — $ —

5 unchanged sentences

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

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

As of December 31, 2025, the Company leased 13 branch offices for which the land and buildings are leased and ten branch offices for which the land is leased but the building is owned.

The Company also leases office space for several operational departments.

3 unchanged sentences

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

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

As permitted by applicable accounting standards, the Company has elected not to recognize leases with original lease terms of 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 as previously noted, all of the Company's leases have been determined to be operating leases.

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 lease term.

1 unchanged sentence

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

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

The 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 rate for leases was 3.41 % and 3.34 % as of December 31, 2025 and 2024, respectively.

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

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

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

The right-of-use assets, included in " Other assets " on the Company's consolidated balance sheet, and lease liabilities, included in " Other liabilities " on the Company's consolidated balance sheet were $ 13.4 million and $ 14.2 million as of December 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 statement of income, was $ 2.5 million in 2025, $ 2.5 million in 2024, and $ 3.1 million in 2023.

Future undiscounted lease payments for operating leases with initial terms of greater than one year as of December 31, 2025 are as follows:

($ in thousands)

4 unchanged sentences

Employee Benefit Plans

The Company sponsors a retirement savings plan pursuant to Section 401(k) of the Internal Revenue Code ("IRC").

New employees who have met the age requirement are automatically enrolled in the plan at a 6 % deferral rate.

The Company sponsors a retirement savings plan (the "401(k) Plan") pursuant to Section 401(k) of the Internal Revenue Code ("IRC").

New employees who have met the age requirement are automatically enrolled in the 401(k) Plan at a 6 % deferral rate.

The automatic deferral can be modified by the employee at any time.

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The Company’s matching contribution expense was $ 6.0 million, $ 6.8 million, and $ 6.1 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Although discretionary contributions by the Company are permitted by the plan, the Company did not make any such contributions in the years presented.

Discretionary contributions by the Company are permitted by the plan.

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

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

The balance was allocated to participants per the terms of the plan.

The Company did not make any other discretionary contributions to the plan.

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

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

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

During 2023, the Company commenced the Pension Plan termination

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

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

1 unchanged sentence

Supplemental Executive Retirement Plan

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

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

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

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

The SERP is an unfunded plan.

7 unchanged sentences

Interest cost 160 151 158

Actuarial gain ( 111 ) ( 86 ) ( 1,006 )

Actuarial loss (gain) 102 ( 111 ) ( 86 )

Benefits paid ( 241 ) ( 241 ) ( 241 )

8 unchanged sentences

Amount recognized in AOCI before tax effect ( 102 ) 111

Tax (expense) benefit ( 26 ) 23

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

Tax benefit (expense) 23 ( 26 )

Net amount recognized as (decrease) increase to AOCI $ ( 79 ) $ 85

The following table reconciles the beginning and ending balances of AOCI at December 31, 2025 and 2024, as it relates to the SERP:

($ in thousands) 2025 2024

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

Net gain arising during period 111 86

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

Net (loss) gain arising during period ( 102 ) 111

Prior service cost — —

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

Amortization of unrecognized actuarial (loss) gain ( 111 ) 100

Amortization of prior service cost and transition obligation — —

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

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

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

Accumulated other comprehensive (loss) income at end of fiscal year $ ( 79 ) $ 85

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

1 unchanged sentence

Accrued liability as of beginning of fiscal year $ ( 3,261 ) $ ( 3,251 )

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

Net periodic pension cost for fiscal year ( 49 ) ( 251 )

Benefits paid 241 241

4 unchanged sentences

Interest cost on projected benefit obligation 160 151 158

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

Amortization of net actuarial (loss) gain ( 111 ) 100 ( 1,737 )

Net periodic pension cost (income) $ 49 $ 251 $ ( 1,579 )

22 unchanged sentences

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

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

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

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

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

1 unchanged sentence

The allowance for unfunded loan commitments is determined as part of the quarterly ACL analysis.

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

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

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

The Company is not involved in any legal proceedings which, in management’s opinion, could have a material effect on the consolidated financial position of the Company.

Affordable Housing and Certain Other Equity Method Investments

The Company invests in affordable housing projects throughout its market area as a means of supporting local communities.

The Company receives tax credits related to these investments.

For qualifying affordable housing projects, the Company recognizes the liability for future contribution commitments at the date of investment in the entity.

The Company may also provide construction financing to these and other similar projects;

however, permanent financing is generally obtained by the projects from independent third parties upon completion of construction.

Any unfunded portion of these lending commitments is included above in loan commitments.

In certain circumstances, the Company may participate in the permanent financing through a nonprofit third party.

The Company’s maximum exposure to losses relative to investments in the entities is generally limited to the sum of the investments, future funding commitments and any related loans to the entity.

Loans to these entities are underwritten in substantially the same manner as the Company’s other loans and are generally secured.

The Company has investments in and future funding commitments related to small business investment companies ("SBICs") and certain other equity method investments.

The risk exposure relating to such commitments is generally limited to the amount of investments and future funding commitments made.

The Company generally does not lend to these entities.

The following table summarizes affordable housing and other equity investments.

($ in thousands) Balance Sheet Location December 31, 2025 December 31, 2024

Investments in affordable housing projects:

Carrying amount Other assets $ 135,992 $ 20,432

Amount of future funding commitments included in carrying amount Other liabilities $ 110,856 $ 15,752

SBIC and certain other equity method investments:

Carrying amount Other assets $ 36,524 $ 27,210

Amount of future funding commitments not included in carrying amount NA $ 16,054 $ 14,930

During the year ended December 31, 2025, the Company recognized proportional amortization expense of $ 1.0 million, which is included within "Income tax expense" on the consolidated statements of income.

During 2024, and 2023, these amounts were de minimis.

Additionally, during the years ended December 31, 2025, 2024, and 2023, the Company recognized tax credits of $ 1.1 million, $ 0.6 million and $ 0.6 million, respectively, which was included within income tax expense on the consolidated statements of income.

Derivatives and Hedging Activities

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

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

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

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

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

1 unchanged sentence

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 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.

Those interest rate swaps

are simultaneously 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.

9 unchanged sentences

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

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

Gains (Losses)

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

(Losses) Gains

($ in thousands) Year Ended December 31, 2025 Year Ended December 31, 2024

22 unchanged sentences

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

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

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

As of December 31, 2025 and December 31, 2024, respectively, the fair value of derivatives in a net liability position, including accrued interest, was $ 3.4 million and $ 302 thousand.

As of December 31, 2025 and December 31, 2024, respectively, the Company has minimum collateral posting thresholds with its derivative counterparty and has posted collateral of $ 3.5 million and $ 150 thousand.

Fair Value of Financial Instruments

13 unchanged sentences

Securities available for sale:

US Treasury securities $ 120,581 $ — $ 120,581 $ —

Treasury securities $ 168,095 $ — $ 168,095 $ —

Government-sponsored enterprise securities 1,758 — 1,758 —

2 unchanged sentences

Total available for sale securities $ 2,048,556 $ — $ 2,046,889 $ 1,667

$ 2,043,062 $ — $ 2,040,606 $ 2,456

Derivative financial assets $ 3,418 $ — $ 3,418 $ —

2 unchanged sentences

Individually evaluated loans $ 9,659 $ — $ — $ 9,659

Foreclosed real estate $ 168 $ — $ — $ 168

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.

5 unchanged sentences

Securities available for sale:

US Treasury securities $ 172,570 $ — $ 172,570 $ —

Treasury securities $ 120,581 $ — $ 120,581 $ —

Government-sponsored enterprise securities 9,614 — 9,614 —

27 unchanged sentences

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

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

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

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

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

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

There were no significant changes in the reported amount of Level 3 assets and liabilities measured at fair value on either a recurring or a nonrecurring basis as of December 31, 2025.

21 unchanged sentences

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

These estimates are subjective in nature and involve uncertainties and

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

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

Changes in assumptions could significantly affect the estimates.

3 unchanged sentences

Stock-Based Compensation

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

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

The Company recorded total stock-based compensation expense of $ 3.4 million, $ 4.3 million, and $ 4.6 million for the years ended December 31, 2025, 2024, and 2023, respectively, which is included in "Total personnel expense" on the accompanying consolidated statements of income.

The Company recognized income tax benefits related to stock-based compensation expense in its income statement of $ 0.8 million, $ 1.0 million, and $ 1.1 million for the years ended December 31, 2025, 2024, and 2023, respectively.

At December 31, 2025, the sole equity-based compensation plan for the Company is the First Bancorp 2024 Equity Plan (the "Equity Plan"), which was approved by shareholders on May 31, 2024.

As of December 31, 2025, the Equity Plan had 1,826,655 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 Plan's participants with those of the Company and its shareholders.

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.

7 unchanged sentences

Compensation expense is based on the estimated number of stock awards that will ultimately vest.

Over the past five years, there have been insignificant amounts of forfeitures, and therefore the Company assumes that all awards granted with service conditions will vest.

Over the past five years, there have been relatively few forfeitures, and therefore the Company assumes that all awards granted with service conditions will vest.

The Company recognizes forfeitures as they occur.

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

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

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

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

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

On June 1, 2022, the Company granted 10,344 shares of common stock to non-employee directors ( 862 shares per director), at a fair market value of $ 37.12 per share, which was the closing price of the Company's common stock on that date, which resulted in $ 384,000 in expense.

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

The grants were valued at approximately $ 37,500 in 2025, $ 37,500 in 2024 and $ 37,500 in 2023.

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

The following tables presents information regarding the activity during 2025, 2024 and 2023 related to the Company’s share grant to non-employee directors:

For the year ended December 31, Date of grant Fair market value of common share Common shares granted Number of non-employee directors Common shares granted per non-employee director Grant expense

2025 June 2, 2025 $ 40.63 8,307 9 923 $ 337,500

2024 May 31, 2024 $ 31.55 15,457 13 1,189 $ 487,500

2023 June 1, 2023 $ 30.69 17,094 14 1,221 $ 525,000

The expense associated with director grants is classified as "Other operating expense" in the consolidated statements of income.

The following table presents information regarding the activity during 2022, 2023, and 2024 related to the Company’s outstanding restricted stock:

Long-Term Restricted Stock

Shares Weighted Average Grant Date Fair Value

The following table presents information regarding the activity during 2023, 2024, and 2025 related to the Company’s outstanding restricted stock awards:

Long-Term Restricted Stock Awards

Shares Weighted-Average

Grant-Date Fair Value

Nonvested at January 1, 2023 223,012 $ 36.14

13 unchanged sentences

Total unrecognized compensation expense as of December 31, 2025 amounted to $ 3.6 million with a weighted average remaining term of 2.1 years.

The Company expects to record $ 2.1 million of compensation expense in the next twelve months related to these nonvested awards that are outstanding at December 31, 2024.

For the nonvested awards that were outstanding at December 31, 2025, the Company expects to record $ 1.8 million in compensation expense in the next twelve months.

As discussed in Note 2, in conjunction with the GrandSouth acquisition, GrandSouth common stock options outstanding at January 1, 2023 became fully vested under the change in control provisions in the GrandSouth option plans and were converted into replacement options to acquire 0.91 shares of the Company's common stock.

14 unchanged sentences

Forfeited or expired during the period — —

Balance at December 31, 2024 110,701 19.63

Exercised during the period ( 91,483 ) 19.79

Forfeited or expired during the period — —

Outstanding at December 31, 2025 19,218 $ 18.89 4.16 $ 613

Exercisable at December 31, 2025 19,218 $ 18.89 4.16 $ 613

Stock options outstanding are summarized as follows as of December 31, 2024:

Shares Range Weighted Average Price Weighted Average Remaining Life in Years

36,567 $ 15.38 - 18.18

40,303 $ 18.19 18.19 4.47

33,831 $ 18.20 - 31.32

110,701 $ 19.63 4.24

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

18 unchanged sentences

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

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

On January 30, 2024, the Board authorized the repurchase of up to $ 40.0 million of the Company’s common stock.

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

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

During the year ended December 31, 2025, 24,849 shares were repurchased.

During the year ended December 31, 2024, the Company did not make any such purchases.

As of December 31, 2025, The Company has remaining authorization to purchase up to $ 39.0 million of outstanding stock under the program.

Earnings Per Share

11 unchanged sentences

Diluted EPS per common share $ 111,048 41,453,247 $ 2.68 $ 76,215 41,327,216 $ 1.84 $ 104,131 41,164,834 $ 2.53

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

There were no outstanding options in 2022.

For the years ended December 31, 2025, December 31, 2024 and December 31, 2023 , there were no options that were anti-dilutive.

Accumulated Other Comprehensive Income (Loss)

6 unchanged sentences

Net unrealized loss on securities available for sale ( 149,296 ) ( 282,114 ) ( 307,953 )

Postretirement plans asset (liability) 111 ( 100 ) 54

Postretirement plans (liability) asset ( 102 ) 111 ( 100 )

Tax effect 23 ( 26 ) 23

Net postretirement plans asset (liability) 85 ( 77 ) 42

Total accumulated other comprehensive loss $ ( 282,029 ) $ ( 308,030 ) $ ( 341,975 )

Net postretirement plans (liability) asset ( 79 ) 85 ( 77 )

Total accumulated other comprehensive (loss) income $ ( 149,375 ) $ ( 282,029 ) $ ( 308,030 )

The following table discloses the changes in AOCI for the years ended December 31, 2025, 2024, and 2023 (all amounts are net of tax).

3 unchanged sentences

Amounts reclassified from accumulated other comprehensive income

— ( 222 ) ( 222 )

Net current-period other comprehensive (loss) income 34,064 ( 119 ) 33,945

2 unchanged sentences

Amounts reclassified from accumulated other comprehensive income

29,112 77 29,189

Net current-period other comprehensive income (loss) 25,839 162 26,001

Ending balance at December 31, 2024 ( 282,114 ) 85 ( 282,029 )

Other comprehensive (loss) income before reclassifications ( 3,273 ) 85 ( 3,188 )

Other comprehensive income (loss) before reclassifications 77,699 ( 79 ) 77,620

Amounts reclassified from accumulated other comprehensive income

2 unchanged sentences

Ending balance at December 31, 2025 $ ( 149,296 ) $ ( 79 ) $ ( 149,375 )

Amounts reclassified from AOCI for unrealized gain (loss) on securities available for sale represent realized securities gains or losses, net of tax effects.

Amounts reclassified from AOCI for unrealized gain (loss) on AFS securities 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.

33 unchanged sentences

Common Equity Tier I Capital Ratio

$ 1,187,027 13.20 % $ 629,376 7.00 % N/A N/A

$ 1,291,074 14.36 % $ 629,256 7.00 % $ 584,309 6.50 %

Company $ 1,239,980 14.35 % $ 604,868 7.00 % N/A N/A

Bank $ 1,315,671 15.23 % $ 604,708 7.00 % $ 561,514 6.50 %

Total Capital Ratio

$ 1,397,502 15.54 % $ 944,064 10.50 % N/A N/A

$ 1,403,551 15.61 % $ 943,884 10.50 % $ 898,938 10.00 %

Company $ 1,437,050 16.63 % $ 907,338 10.50 % N/A N/A

Bank $ 1,423,966 16.48 % $ 907,260 10.50 % $ 864,057 10.00 %

Tier I Capital Ratio

$ 1,257,834 13.99 % $ 764,242 8.50 % N/A N/A

$ 1,291,074 14.36 % $ 764,097 8.50 % $ 719,150 8.00 %

Company $ 1,311,128 15.17 % $ 734,647 8.50 % N/A N/A

Bank $ 1,315,671 15.23 % $ 734,288 8.50 % $ 691,094 8.00 %

Leverage Ratio

$ 1,257,834 10.91 % $ 461,312 4.00 % N/A N/A

$ 1,291,074 11.20 % $ 461,248 4.00 % $ 576,560 5.00 %

Company $ 1,311,128 11.15 % $ 470,360 4.00 % N/A N/A

Bank $ 1,315,671 11.19 % $ 470,302 4.00 % $ 587,878 5.00 %

Revenue from Contracts with Customers

54 unchanged sentences

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.

The Company is a bank holding company, whose principal activity is the ownership and management the Bank, its wholly-owned subsidiary.

As a community focused 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.

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The measure of segment assets is reported on the balance sheet as total consolidated assets.

The role of chief operating decision maker is comprised of the executive leadership team to include the Company's Chief Executive Officer, the Bank's Chief Executive Officer, the Bank's President, the Company's Chief Financial Officer.

The 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, the Company's Chief Financial Officer, and the Company's Chief Operating Officer.

The chief operating decision makers use pre-tax net income to allocate resources in the annual budget and forecasting process.

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The chief operating decision makers use the Consolidated Statements of Income and Consolidated Balance Sheets to ascertain measures or performance such as revenue, profit or loss, significant expenses and assets.

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

Depreciation expense amounted to $ 6.8 million, $ 7.8 million, and $ 7.8 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Depreciation expense is recorded in Occupancy and equipment expense on the Consolidated Statements of Income.

Condensed Parent Company Information

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and the Board of Directors of First Bancorp

Southern Pines, North Carolina

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of First Bancorp (the "Company") as of December 31, 2025, the related consolidated statements of income, comprehensive income (loss), shareholders’ equity, and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the "financial statements").

We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework:

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework:

(2013) issued by COSO.

Basis for Opinions

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance and Provision for Credit Losses on Loans – Qualitative Adjustments to the Expected Credit Loss Rate

As described in Notes 1 and 4 to the consolidated financial statements, the Allowance for Credit Losses (“ACL”) is an estimate that is deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial assets.

For collectively evaluated loans, the Discounted Cash Flow (“DCF”) method is used for substantially all pools.

It therefore utilizes its own historical credit loss experience by each loan segment over an economic cycle.

Management also considers forward-looking information in estimating expected credit losses.

Management considers the need to qualitatively adjust expected credit losses for information not already captured in the loss estimation process.

These qualitative adjustments consider a range of maximum and minimum loss rates and can either increase or decrease the quantitative model estimation.

Each period the Company considers qualitative adjustments that are relevant within the qualitative framework.

This includes weighting and risk scoring among the qualitative adjustments within the qualitative framework.

We identified the auditing of the weighting and risk scoring of the qualitative adjustments as a critical audit matter because of the significant auditor judgment applied and significant audit effort required to evaluate the subjective and complex judgments made by management.

The primary procedures we performed to address this critical audit matter included:

Testing the design and operating effectiveness of internal controls over:

• Management’s evaluation of the relevance and reliability of data used in determination of the qualitative adjustments.

• Management’s methodology for qualitative adjustments and judgments in risk scoring and weighting qualitative adjustments to the ACL estimate

• Management’s significant assumptions, judgments, and conclusions reached in determining the qualitative adjustments.

Substantively testing management’s qualitative adjustments, which included:

• Evaluating the reasonableness of management’s methodology related to determining the qualitative adjustments.

• Evaluating the reasonableness of management’s significant assumptions, judgments, and conclusions reached in determining the qualitative adjustments.

• Evaluating the relevance and reliability of data used by management in determining the qualitative adjustments.

• Testing the completeness and accuracy of data inputs to the CECL model which affects the accuracy of calculations of qualitative adjustments.

/s/ Crowe LLP

We have served as the Company's auditor since 2025.

Fort Lauderdale, Florida

February 25, 2026

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of First Bancorp (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income (loss), shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 , in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated February 26, 2025, expressed an unqualified opinion thereon.

We have audited the accompanying consolidated balance sheets of First Bancorp (the “Company”) as of December 31, 2024, the related consolidated statements of income, comprehensive income (loss), shareholders’ equity, and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses on Loans

As described in Note 4 to the Company’s consolidated financial statements, the Company reported an allowance for credit losses on loans (“ACL”) of approximately $122.6 million as of December 31, 2024.

As described in Note 1 to the Company's consolidated financial statements, the ACL represents management’s estimate of credit losses for the remaining estimated life of the loan portfolio using a quantitative lifetime loss model, which uses assumptions and data elements, some of which are subjective in nature.

There is also a qualitative component of the ACL that is derived by applying qualitative risk scoring to a range of maximum and minimum loss rates for each of the identified qualitative factors.

Management makes significant judgments regarding selecting reasonable and supportable economic forecast factors used in the quantitative model and qualitative risk scores used in the qualitative component of the ACL.

We identified these economic forecast factors and qualitative risk scores as a critical audit matter because they involve especially subjective and complex judgement in auditing whether these were reasonable and supportable.

These assumptions required a high degree of auditor judgment and increased extent of effort, specialized skills, and knowledge.

The primary procedures we performed to address this critical audit matter included:

• Testing the design and operating effectiveness of the Company’s controls over the selected economic forecast factors and qualitative risk scores.

• Assessing the reasonableness of management’s judgments in determining the selected economic forecast factors and qualitative risks scores, including assessing the consistency of management’s application of its underlying framework for determining these assumptions and assessing for potential bias and potential contradictory evidence.

• Utilizing personnel with specialized skill and knowledge to assist with assessing the relevance and reliability of the data used in determining the selected economic forecast factors, including comparing the data to third-party sources.

/s/ BDO USA, P.C.

We have served as the Company's auditor since 2019.

Philadelphia, Pennsylvania

February 26, 2025

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

First Bancorp

Southern Pines, North Carolina

Opinion on Internal Control over Financial Reporting

We have audited First Bancorp’s (the “Company’s”) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income (loss), shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and our report dated February 26, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

/s/ BDO USA, P.C.

We have served as the Company's auditor from 2019 to 2024.

Philadelphia, Pennsylvania

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data