Item 1. Financial Statements
Item 1 - Financial Statements
First Bancorp
Consolidated Balance Sheets
($ in thousands - unaudited) March 31,
2026 December 31,
2025
Assets
Cash and due from banks, noninterest-bearing $ 135,176 $ 146,759
Due from banks, interest-bearing 462,815 162,836
Total cash and cash equivalents 597,991 309,595
Securities available for sale (amortized cost of $ 2,177,316 and $ 2,242,678 , respectively)
1,979,606 2,048,556
Securities held to maturity (fair values of $ 440,882 and $ 448,452 , respectively)
511,429 513,099
Presold mortgages in process of settlement 11,191 7,790
Loans 8,793,814 8,722,419
Allowance for credit losses on loans ( 124,734 ) ( 123,581 )
Net loans 8,669,080 8,598,838
Premises and equipment, net 139,374 139,125
Accrued interest receivable 37,296 39,206
Goodwill 478,750 478,750
Other intangible assets, net 15,985 17,232
Bank-owned life insurance 194,626 193,286
Other assets 312,406 322,862
Total assets $ 12,947,734 $ 12,668,339
Liabilities
Deposits
Noninterest-bearing deposits $ 3,596,629 $ 3,486,985
Interest-bearing deposits 7,415,854 7,261,436
Total deposits 11,012,483 10,748,421
Borrowings 74,643 74,569
Accrued interest payable 3,733 3,747
Other liabilities 173,925 187,434
Total liabilities 11,264,784 11,014,171
Commitments and contingencies
Shareholders' Equity
Preferred stock, no par value per share. Authorized: 5,000,000 shares
Issued & outstanding: none and none , respectively
— —
Common stock, no par value per share. Authorized: 60,000,000 shares
Issued & outstanding: 41,375,026 shares and 41,466,227 shares, respectively
968,675 973,884
Retained earnings 866,387 829,659
Stock in rabbi trust assumed in acquisition ( 893 ) ( 885 )
Rabbi trust obligation 893 885
Accumulated other comprehensive income (loss) ( 152,112 ) ( 149,375 )
Total shareholders’ equity 1,682,950 1,654,168
Total liabilities and shareholders’ equity $ 12,947,734 $ 12,668,339
See accompanying notes to unaudited consolidated financial statements.
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First Bancorp
Consolidated Statements of Income
Three Months Ended March 31,
($ in thousands, except per share data - unaudited) 2026 2025
Interest Income
Interest and fees on loans $ 120,747 $ 110,497
Interest on investment securities:
Taxable interest income 17,556 15,524
Tax-exempt interest income 1,115 1,116
Other, principally overnight investments 2,972 5,487
Total interest income 142,390 132,624
Interest Expense
Interest on deposits 34,046 38,119
Interest on borrowings 1,228 1,658
Total interest expense 35,274 39,777
Net interest income 107,116 92,847
Provision for credit losses 3,083 1,116
Net interest income after provision for credit losses 104,033 91,731
Noninterest Income
Service charges on deposit accounts 3,954 3,767
Other service charges and fees 5,942 5,919
Presold mortgage loan fees and gains on sale 669 450
Commissions from sales of financial products 1,492 1,408
SBA loan sale gains 903 52
Bank-owned life insurance income 1,340 1,228
Other income, net 878 132
Total noninterest income 15,178 12,956
Noninterest Expense
Salaries, incentives and commissions expense 29,978 28,661
Employee benefit expense 6,516 6,095
Total personnel expense 36,494 34,756
Occupancy and equipment expense 5,355 5,192
Intangibles amortization expense 1,247 1,516
Other operating expenses 17,122 16,447
Total noninterest expenses 60,218 57,911
Income before income taxes 58,993 46,776
Income tax expense 12,334 10,370
Net income $ 46,659 $ 36,406
Earnings per common share:
Basic $ 1.13 $ 0.88
Diluted 1.13 0.88
Weighted average common shares outstanding:
Basic 41,250,500 41,130,779
Diluted 41,459,357 41,406,525
See accompanying notes to unaudited consolidated financial statements.
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First Bancorp
Consolidated Statements of Comprehensive Income (Loss)
Three Months Ended March 31,
($ in thousands - unaudited) 2026 2025
Net income $ 46,659 $ 36,406
Other comprehensive income (loss):
Unrealized gains (losses) on securities available for sale:
Unrealized holding (losses) gains arising during the period, pretax ( 3,588 ) 46,841
Tax benefit (expense) 831 ( 11,440 )
Postretirement Plans:
Amortization of unrecognized net actuarial losses 26 —
Tax (expense) benefit ( 6 ) —
Other comprehensive (loss) income ( 2,737 ) 35,401
Comprehensive income (loss) $ 43,922 $ 71,807
See accompanying notes to unaudited consolidated financial statements.
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First Bancorp
Consolidated Statements of Shareholders’ Equity
($ in thousands, except per share data - unaudited) Common Stock Retained
earnings Stock in rabbi trust assumed in acquisition Rabbi trust obligation Accumulated other comprehensive income (loss) Total shareholders’ equity
Shares Amount
Three Months Ended March 31, 2025
Balances, January 1, 2025 41,347 $ 971,313 $ 756,327 $ ( 1,148 ) $ 1,148 $ ( 282,029 ) $ 1,445,611
Net income 36,406 36,406
Cash dividends declared ($ 0.22 per common share)
( 9,103 ) ( 9,103 )
Change in Rabbi Trust Obligation ( 18 ) 18 —
Stock options exercised 13 126 126
Stock repurchases ( 25 ) ( 992 ) ( 992 )
Stock withheld for payment of taxes ( 8 ) ( 293 ) ( 293 )
Stock-based compensation 42 1,020 1,020
Other comprehensive income 35,401 35,401
Balances, March 31, 2025 41,369 $ 971,174 $ 783,630 $ ( 1,166 ) $ 1,166 $ ( 246,628 ) $ 1,508,176
Three Months Ended March 31, 2026
Balances, January 1, 2026 41,466 $ 973,884 $ 829,659 $ ( 885 ) $ 885 $ ( 149,375 ) $ 1,654,168
Net income 46,659 46,659
Cash dividends declared ($ 0.24 per common share)
( 9,931 ) ( 9,931 )
Change in Rabbi Trust Obligation ( 8 ) 8 —
Stock options exercised 2 36 36
Stock repurchases ( 93 ) ( 5,147 ) ( 5,147 )
Stock withheld for payment of taxes ( 18 ) ( 1,047 ) ( 1,047 )
Stock-based compensation 18 949 949
Other comprehensive income ( 2,737 ) ( 2,737 )
Balances, March 31, 2026 41,375 $ 968,675 $ 866,387 $ ( 893 ) $ 893 $ ( 152,112 ) $ 1,682,950
See accompanying notes to unaudited consolidated financial statements.
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First Bancorp
Consolidated Statements of Cash Flows
Three Months Ended March 31,
($ in thousands-unaudited) 2026 2025
Cash Flows From Operating Activities
Net income $ 46,659 $ 36,406
Reconciliation of net income to net cash provided by operating activities:
Provision for credit losses 3,083 1,116
Net security premium amortization 587 1,432
Deferred income taxes, net 3,254 2,046
Loan discount accretion ( 1,293 ) ( 2,193 )
Deposit and debt discount accretion, net 148 294
Foreclosed property losses (gains), net ( 52 ) ( 18 )
Other (gains) losses, net ( 825 ) ( 109 )
Bank-owned life insurance income ( 1,340 ) ( 1,228 )
Net amortization of deferred loan costs/(fees) 1,097 49
Depreciation of premises and equipment 1,630 1,796
Amortization of operating lease right-of-use assets 345 314
Repayments of lease obligations ( 329 ) ( 297 )
Stock-based compensation expense 949 1,020
Amortization of intangible assets 1,247 1,516
Amortization and impairment of SBA servicing assets 194 362
Gains on sale of loans ( 1,572 ) ( 502 )
Origination of presold mortgage loans and SBA loans held for sale ( 39,820 ) ( 17,158 )
Proceeds from sales of presold mortgage loans and SBA loans 44,844 21,669
Decrease (increase) in accrued interest receivable 1,910 877
Decrease (increase) in other assets 4,202 8,702
(Decrease) increase in accrued interest payable ( 14 ) 331
(Decrease) increase in other liabilities ( 3,708 ) ( 3,829 )
Net cash provided by (used in) operating activities 61,196 52,596
Cash Flows From Investing Activities
Purchases of securities available for sale ( 1,275 ) ( 10,000 )
Proceeds from maturities, calls and principal repayments of securities available for sale 67,141 35,050
Proceeds from maturities, calls and principal repayments of securities held to maturity 579 638
Purchases of Federal Reserve and FHLB stock ( 375 ) ( 283 )
Proceeds from bank owned life insurance death benefits — 91
Purchases of other investments ( 6,035 ) ( 4,423 )
Net (increase) decrease in loans ( 79,835 ) ( 13,298 )
Proceeds from sales of foreclosed properties 524 709
Purchases of premises and equipment ( 1,879 ) ( 243 )
Proceeds from sales of premises and equipment 62 342
Net cash (used in) provided by investing activities ( 21,093 ) 8,583
Cash Flows From Financing Activities
Net increase (decrease) in deposits 264,000 214,031
Repayment of FHLB and FRB borrowings ( 12 ) ( 12 )
Cash dividends paid – common stock ( 9,537 ) ( 9,105 )
Repurchases of common stock ( 5,147 ) ( 992 )
Proceeds from stock option exercises 36 126
Payment of taxes related to stock withheld ( 1,047 ) ( 293 )
Net cash provided by (used in) financing activities 248,293 203,755
Increase (decrease) in cash and cash equivalents 288,396 264,934
Cash and cash equivalents, beginning of period 309,595 507,507
Cash and cash equivalents, end of period $ 597,991 $ 772,441
(Continued)
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First Bancorp
Consolidated Statements of Cash Flows
Three Months Ended March 31,
($ in thousands-unaudited) 2026 2025
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest $ 35,141 $ 39,259
Cash paid during the period for income taxes 817 41
Non-cash: Unrealized (loss) gain on securities available for sale, net of taxes ( 2,757 ) 35,401
Non-cash: Foreclosed loans transferred to foreclosed real estate 213 495
Non-cash: Accrued dividends at end of period 9,931 9,103
Non-cash: Initial recognition of operating lease right-of-use assets and liabilities 686 —
Non-cash: Affordable housing investments obtained in exchange for funding commitments ( 5,023 ) —
See accompanying notes to consolidated financial statements.
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First Bancorp
Notes to Consolidated Financial Statements
(unaudited)
Note 1. Organization and Basis of Presentation
The consolidated financial statements include the accounts of First Bancorp (the “Company”) and its wholly owned subsidiary First Bank (the “Bank”). The Bank has two wholly owned subsidiaries that are fully consolidated, Magnolia Financial, Inc. ("Magnolia Financial"), and First Troy SPE, LLC. All significant intercompany accounts and transactions have been eliminated.
The Bank formerly operated a third subsidiary, SBA Complete, Inc. ("SBA Complete"), which specialized in providing consulting services for financial institutions across the country related to Small Business Administration (“SBA”) loan origination and servicing. During the second quarter of 2024, SBA Complete became inactive with certain activities transitioning to the Bank.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and notes necessary for complete financial statements in accordance with GAAP. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the consolidated financial position of the Company as of March 31, 2026, the consolidated results of income, comprehensive income and shareholders' equity for the three months ended March 31, 2026 and 2025, and the consolidated cash flows for the three months ended March 31, 2026 and 2025. Any such adjustments were of a normal, recurring nature. These interim financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes in the 2025 Annual Report for the year ended December 31, 2025. Operating results for interim period are not necessarily indicative of the results that may be expected for the full year.
In certain instances, amounts reported in prior years’ consolidated financial statements have been reclassified to conform to the current presentation. Such reclassifications had no effect on previously reported shareholders’ equity or net income.
Refer to Note 1 of the 2025 Annual Report filed with the Securities and Exchange Commission (“SEC”) for a discussion of accounting policies and other relevant information with respect to the consolidated financial statements.
The Company has evaluated all subsequent events through the date the consolidated financial statements were issued.
Accounting Standards Adopted in 2026
The Company did not adopt any accounting standards during the first three months of 2026.
Accounting Standards Pending Adoption
ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” amended the Income Statement—Reporting Comprehensive Income topic in the Accounting Standards Codification to require public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to financial statements. The amendments are effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company will apply the
amendments retrospectively to all prior periods presented in the financial statements after the effective date. The adoption of ASU 2023-09 is not expected to have a significant impact on the Company's consolidated financial
statements.
ASU 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
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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 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 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.
Note 2. Securities
The book values and approximate fair values of investment securities at March 31, 2026 and December 31, 2025 are summarized as follows:
($ in thousands) March 31, 2026 December 31, 2025
Amortized
Cost Fair
Value Unrealized Amortized
Cost Fair
Value Unrealized
Gains (Losses) Gains (Losses)
Securities available for sale:
U.S. Treasuries $ 165,320 $ 166,669 $ 1,664 $ ( 315 ) $ 165,137 $ 168,095 $ 3,004 $ ( 46 )
Government-sponsored enterprise securities 1,971 1,769 — ( 202 ) 1,968 1,758 — ( 210 )
Mortgage-backed securities 1,994,830 1,796,043 2,724 ( 201,511 ) 2,057,381 1,860,357 4,008 ( 201,032 )
Corporate bonds 15,195 15,125 52 ( 122 ) 18,192 18,346 193 ( 39 )
Total available for sale $ 2,177,316 $ 1,979,606 $ 4,440 $ ( 202,150 ) $ 2,242,678 $ 2,048,556 $ 7,205 $ ( 201,327 )
Securities held to maturity:
Mortgage-backed securities $ 6,143 $ 5,942 $ — $ ( 201 ) $ 6,735 $ 6,536 $ — $ ( 199 )
State and local governments 505,286 434,940 5 ( 70,351 ) 506,364 441,916 19 ( 64,467 )
Total held to maturity $ 511,429 $ 440,882 $ 5 $ ( 70,552 ) $ 513,099 $ 448,452 $ 19 $ ( 64,666 )
All of the Company’s mortgage-backed securities were issued by government-sponsored enterprises ("GSEs"), except for private mortgage-backed securities with a fair value of $ 0.7 million as of March 31, 2026 and December 31, 2025.
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Accrued interest receivable on available for sale ("AFS") debt securities was $ 5.3 million and $ 5.2 million at March 31, 2026 and December 31, 2025, respectively. Accrued interest receivable on held to maturity ("HTM") debt securities was $ 3.0 million and $ 4.2 million as of March 31, 2026 and December 31, 2025, respectively.
The following table presents information regarding all securities with unrealized losses at March 31, 2026:
Securities in an Unrealized
Loss Position for
Less than Twelve Months Securities in an Unrealized
Loss Position for
More than Twelve Months Total
($ in thousands) Fair Value Unrealized
Losses Fair Value Unrealized
Losses Fair Value Unrealized
Losses
U.S. Treasuries $ 35,011 $ 315 $ — $ — $ 35,011 $ 315
Government-sponsored enterprise securities $ — $ — $ 1,769 $ 202 $ 1,769 $ 202
Mortgage-backed securities 292,670 2,292 1,035,498 199,420 1,328,168 201,712
Corporate bonds 10,628 122 — — 10,628 122
State and local governments 1,416 4 429,568 70,347 430,984 70,351
Total unrealized loss position $ 339,725 $ 2,733 $ 1,466,835 $ 269,969 $ 1,806,560 $ 272,702
The following table presents information regarding all securities with unrealized losses at December 31, 2025:
Securities in an Unrealized
Loss Position for
Less than Twelve Months Securities in an Unrealized
Loss Position for
More than Twelve Months Total
($ in thousands) Fair Value Unrealized
Losses Fair Value Unrealized
Losses Fair Value Unrealized
Losses
U.S. Treasuries $ 19,959 $ 46 $ — $ — $ 19,959 $ 46
Government-sponsored enterprise securities — — 1,758 210 1,758 210
Mortgage-backed securities 157,405 684 1,074,038 200,547 1,231,443 201,231
Corporate bonds 3,711 39 — — 3,711 39
State and local governments — — 436,511 64,467 436,511 64,467
Total unrealized loss position $ 181,075 $ 769 $ 1,512,307 $ 265,224 $ 1,693,382 $ 265,993
As of March 31, 2026, the Company's securities portfolio included 573 securities of which 506 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.
In the above tables, all of the securities that were in an unrealized loss position at March 31, 2026 and December 31, 2025 are bonds that the Company has determined are in a loss position due primarily to interest rate factors and not credit quality concerns. In arriving at this conclusion, the Company reviewed third-party credit ratings and considered the severity of the impairment. The state and local government investments are comprised almost entirely of highly-rated municipal bonds issued by state and local governments throughout the nation. The Company has no significant concentrations of bond holdings from any one state or local government entity. Substantially all of the Company's mortgage-backed securities were issued by Federal Home Loan Mortgage Corporation ("FHLMC"), Federal National Mortgage Association ("FNMA"), Government National Mortgage Association ("GNMA"), or SBA, each of which is a government agency or GSE and guarantees the repayment of its securities. The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell these securities before recovery of the amortized cost.
At March 31, 2026 and December 31, 2025, the Company determined that expected credit losses associated with HTM securities were insignificant.
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The book values and fair values of investment securities at March 31, 2026, by contractual maturity, are summarized in the table below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
Securities Available for Sale Securities Held to Maturity
($ in thousands) Amortized
Cost Fair
Value Amortized
Cost Fair
Value
Due after one year but within five years $ 157,065 $ 158,555 $ 10,844 $ 10,341
Due after five years but within ten years 25,421 25,008 283,223 245,842
Due after ten years — — 211,219 178,757
Mortgage-backed securities 1,994,830 1,796,043 6,143 5,942
Total securities $ 2,177,316 $ 1,979,606 $ 511,429 $ 440,882
At March 31, 2026 and December 31, 2025, investment securities with carrying values of $ 888.7 million and $ 876.8 million, respectively, were pledged as collateral for public deposits. In addition, at March 31, 2026 and December 31, 2025, investment securities with carrying values of $ 619.8 million and $ 622.1 million, respectively, were pledged as collateral to the Federal Reserve Bank ("Federal Reserve") to secure any such borrowings.
At March 31, 2026 and December 31, 2025, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies or GSEs, in an amount greater than 10% of shareholders' equity.
There were no sales of investment securities during the three months ended March 31, 2026 or March 31, 2025.
Included in “Other assets” in the consolidated balance sheets are investments in Federal Home Loan Bank (“FHLB”) and Federal Reserve stock totaling $ 42.0 million and $ 41.6 million at March 31, 2026 and December 31, 2025, respectively. These investments do not have readily determinable fair values. The FHLB stock had a cost of $ 8.9 million and $ 8.5 million at March 31, 2026 and December 31, 2025, 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 of $ 33.1 million at March 31, 2026 and December 31, 2025, respectively, and is a requirement for Federal Reserve member bank qualification. Periodically, both the FHLB and Federal Reserve recalculate the Company’s required level of holdings, and the Company either buys more stock or redeems a portion of the stock at cost. The Company determined that neither stock was impaired at either period end.
Note 3. Loans, Allowance for Credit Losses, and Asset Quality Information
The following is a summary of the major categories of total loans outstanding:
($ in thousands) March 31, 2026 December 31, 2025
Amount Percentage Amount Percentage
Commercial and industrial $ 1,000,037 11 % $ 1,046,438 12 %
Construction, development & other land loans 821,826 10 % 753,199 9 %
Commercial real estate - owner occupied 1,352,473 15 % 1,353,912 15 %
Commercial real estate - non owner occupied 2,921,210 33 % 2,843,555 33 %
Multi-family real estate 545,586 6 % 537,015 6 %
Residential 1-4 family real estate 1,717,550 20 % 1,736,453 20 %
Home equity loans/lines of credit 369,062 4 % 383,652 4 %
Consumer loans 66,430 1 % 67,458 1 %
Subtotal 8,794,174 100 % 8,721,682 100 %
Unamortized net deferred loan costs/(fees) ( 360 ) 737
Total loans $ 8,793,814 $ 8,722,419
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Also included in the table above are various SBA loans, generally originated under the SBA 7A program, with additional information on these loans presented in the table below.
($ in thousands) March 31, 2026 December 31, 2025
Guaranteed portions of SBA loans included in table above $ 50,914 $ 61,501
Unguaranteed portions of SBA loans included in table above 99,054 100,509
Total SBA loans included in the table above $ 149,968 $ 162,010
Sold portions of SBA loans with servicing retained - not included in tables above $ 289,613 $ 284,649
At March 31, 2026 and December 31, 2025, there were remaining unaccreted discounts on the retained portion of sold SBA loans amounting to $ 2.1 million and $ 2.0 million, respectively.
At March 31, 2026 and December 31, 2025, loans in the amount of $ 7.3 billion and $ 7.1 billion, respectively, were pledged as collateral to the Federal Reserve and the FHLB for borrowing capacity. Refer to Note 5 for further discussion.
At March 31, 2026 and December 31, 2025, total loans included loans to directors and executive officers of the Company, and their associates, totaling approximately $ 60.2 million and $ 60.7 million, respectively. Available credit on related party loans totaled zero and $ 0.3 million at March 31, 2026 and December 31, 2025, respectively.
As of March 31, 2026 and December 31, 2025, unamortized discounts on all acquired loans totaled $ 7.7 million and $ 8.8 million, respectively.
Nonperforming assets ("NPAs") are defined as nonaccrual loans, loans past due 90 or more days and still accruing interest, and foreclosed properties.
The following table summarizes the NPAs for each date presented.
($ in thousands) March 31,
2026 December 31,
2025
Nonaccrual loans $ 41,032 $ 36,315
Accruing loans > 90 days past due — —
Total nonperforming loans 41,032 36,315
Foreclosed properties 740 1,425
Total nonperforming assets $ 41,772 $ 37,740
At March 31, 2026 and December 31, 2025, the Company had $ 0.9 million and $ 1.0 million, respectively, in residential mortgage loans in the process of foreclosure.
At March 31, 2026 and December 31, 2025, there were commitments to lend an immaterial amount 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 March 31, 2026:
($ in thousands) Nonaccrual Loans with No Allowance Nonaccrual Loans with an Allowance Total Nonaccrual Loans
Commercial and industrial $ — $ 8,910 $ 8,910
Construction, development & other land loans — 205 205
Commercial real estate - owner occupied 1,806 11,784 13,590
Commercial real estate - non owner occupied 5,439 255 5,694
Residential 1-4 family real estate — 9,684 9,684
Home equity loans/lines of credit — 2,678 2,678
Consumer loans — 271 271
Total $ 7,245 $ 33,787 $ 41,032
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The following table is a summary of the Company’s nonaccrual loans by major categories as of December 31, 2025:
($ in thousands) Nonaccrual Loans with No Allowance Nonaccrual Loans with an Allowance Total Nonaccrual Loans
Commercial and industrial $ — $ 9,130 $ 9,130
Construction, development & other land loans — 202 202
Commercial real estate - owner occupied 1,825 11,639 13,464
Commercial real estate - non owner occupied 4,269 709 4,978
Residential 1-4 family real estate — 5,908 5,908
Home equity loans/lines of credit — 2,407 2,407
Consumer loans — 226 226
Total $ 6,094 $ 30,221 $ 36,315
There was no interest income recognized during the periods presented on nonaccrual loans. In the period that the Company places a loan on nonaccrual status, contractual interest income is reversed in the consolidated income statement.
The following table presents an analysis of the payment status of the Company’s loans as of March 31, 2026:
($ in thousands) Accruing
Current Accruing
30-59
Days Past
Due Accruing
60-89
Days
Past
Due Nonaccrual
Loans Total Loans
Receivable
Commercial and industrial $ 988,571 $ 2,162 $ 394 $ 8,910 $ 1,000,037
Construction, development & other land loans 821,199 422 — 205 821,826
Commercial real estate - owner occupied 1,335,632 3,095 156 13,590 1,352,473
Commercial real estate - non owner occupied 2,910,793 4,723 — 5,694 2,921,210
Multi-family real estate 545,586 — — — 545,586
Residential 1-4 family real estate 1,701,149 5,086 1,631 9,684 1,717,550
Home equity loans/lines of credit 364,903 1,350 131 2,678 369,062
Consumer loans 65,621 319 219 271 66,430
Total $ 8,733,454 $ 17,157 $ 2,531 $ 41,032 8,794,174
Unamortized net deferred loan costs/(fees) ( 360 )
Total loans $ 8,793,814
The following table presents an analysis of the payment status of the Company’s loans as of December 31, 2025:
($ in thousands) Accruing
Current Accruing
30-59
Days
Past
Due Accruing
60-89
Days
Past
Due Nonaccrual
Loans Total Loans
Receivable
Commercial and industrial $ 1,034,943 $ 1,824 $ 541 $ 9,130 $ 1,046,438
Construction, development & other land loans 752,388 602 7 202 753,199
Commercial real estate - owner occupied 1,338,042 2,130 276 13,464 1,353,912
Commercial real estate - non owner occupied 2,838,054 — 523 4,978 2,843,555
Multi-family real estate 537,015 — — — 537,015
Residential 1-4 family real estate 1,720,305 6,685 3,555 5,908 1,736,453
Home equity loans/lines of credit 379,437 1,570 238 2,407 383,652
Consumer loans 66,692 290 250 226 67,458
Total $ 8,666,876 $ 13,101 $ 5,390 $ 36,315 8,721,682
Unamortized net deferred loan costs/(fees) 737
Total loans $ 8,722,419
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.
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The following table presents an analysis of collateral dependent loans of the Company as of March 31, 2026:
($ in thousands) Commercial Property Total Collateral-Dependent Loans
Commercial real estate - owner occupied $ 5,371 $ 5,371
Commercial real estate - non owner occupied 5,439 5,439
Total $ 10,810 $ 10,810
The following table presents an analysis of collateral dependent loans of the Company as of December 31, 2025:
($ in thousands) Commercial Property Total Collateral-Dependent Loans
Commercial real estate - owner occupied $ 5,390 $ 5,390
Commercial real estate - non owner occupied 4,269 4,269
Total $ 9,659 $ 9,659
There have been no material changes from the treatment of collateral dependent loans under the current expected credit loss ("CECL") model as discussed in Note 4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
The Company continues to utilize the third-party baseline forecast, which incorporates an equal probability of the United States economy performing better or worse than the projection, as the best forecast to use for macroeconomic factors in the model. Management continued to consistently apply various other factors as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, such as prepayments, qualitative factor scorecards, macroeconomic drivers, reasonable and supportable forecast periods, reversion to long-term average, etc.
The following tables present the activity in the allowance for credit losses ("ACL") on loans for each of the periods indicated.
($ in thousands) Beginning balance Charge-offs Recoveries Provisions / (Reversals) Ending balance
As of and for the three months ended March 31, 2026
Commercial and industrial $ 20,044 $ ( 1,413 ) $ 331 $ 411 $ 19,373
Construction, development & other land loans 11,465 — 31 3,282 14,778
Commercial real estate - owner occupied 20,298 ( 247 ) 132 ( 1,117 ) 19,066
Commercial real estate - non owner occupied 25,017 — 8 ( 847 ) 24,178
Multi-family real estate 5,205 — — 412 5,617
Residential 1-4 family real estate 34,068 ( 5 ) 46 ( 23 ) 34,086
Home equity loans/lines of credit 3,519 — 10 ( 195 ) 3,334
Consumer loans 3,965 ( 345 ) 54 628 4,302
Total $ 123,581 $ ( 2,010 ) $ 612 $ 2,551 $ 124,734
($ in thousands) Beginning balance Charge-offs Recoveries Provisions / (Reversals) Ending balance
As of and for the three months ended March 31, 2025
Commercial and industrial $ 19,474 $ ( 2,216 ) $ 497 $ 1,520 $ 19,275
Construction, development & other land loans 9,314 — 73 ( 1,718 ) 7,669
Commercial real estate - owner occupied 19,380 ( 437 ) 106 276 19,325
Commercial real estate - non owner occupied 27,768 ( 905 ) 3 1,518 28,384
Multi-family real estate 5,476 — — ( 461 ) 5,015
Residential 1-4 family real estate 33,552 ( 124 ) 29 278 33,735
Home equity loans/lines of credit 4,111 ( 68 ) 19 ( 560 ) 3,502
Consumer loans 3,497 ( 370 ) 54 545 3,726
Total $ 122,572 $ ( 4,120 ) $ 781 $ 1,398 $ 120,631
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Credit Quality Indicators
There have been no material changes from the treatment of credit quality tracking and risk grade descriptions as discussed in Note 4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
In the tables that follow, substantially all of the "Classified" loans have grades of 7 for commercial loans 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.
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Term Loans by Year of Origination
($ in thousands) 2026 2025 2024 2023 2022 Prior Revolving Total
As of March 31, 2026
Commercial and industrial
Pass $ 54,765 $ 195,495 $ 63,820 $ 38,928 $ 83,718 $ 155,207 $ 394,046 $ 985,979
Special Mention — 100 225 251 93 227 1,872 2,768
Classified — 927 691 944 3,128 3,758 1,842 11,290
Total commercial and industrial 54,765 196,522 64,736 40,123 86,939 159,192 397,760 1,000,037
Gross charge-offs, YTD 11 — 18 12 — 405 967 1,413
Construction, development & other land loans
Pass 147,642 411,950 98,226 72,521 17,391 25,101 48,139 820,970
Special Mention — — — 562 41 — — 603
Classified — 57 47 72 65 12 — 253
Total construction, development & other land loans 147,642 412,007 98,273 73,155 17,497 25,113 48,139 821,826
Gross charge-offs, YTD — — — — — — — —
Commercial real estate - owner occupied
Pass 83,707 270,584 176,989 175,290 198,521 377,221 28,249 1,310,561
Special Mention 468 4,321 3,213 1,778 2,989 6,849 2,440 22,058
Classified 146 98 1,949 1,363 2,300 13,998 — 19,854
Total commercial real estate - owner occupied 84,321 275,003 182,151 178,431 203,810 398,068 30,689 1,352,473
Gross charge-offs, YTD — — — — — 247 — 247
Commercial real estate - non owner occupied
Pass 280,386 664,634 365,050 342,362 563,935 668,600 24,647 2,909,614
Special Mention — 136 1,123 — — 369 — 1,628
Classified — 4,280 45 — 530 5,113 — 9,968
Total commercial real estate - non owner occupied 280,386 669,050 366,218 342,362 564,465 674,082 24,647 2,921,210
Gross charge-offs, YTD — — — — — — — —
Multi-family real estate
Pass 23,166 104,738 57,359 63,589 105,642 173,848 17,116 545,458
Special Mention — — — — — — — —
Classified — — — 128 — — — 128
Total multi-family real estate 23,166 104,738 57,359 63,717 105,642 173,848 17,116 545,586
Gross charge-offs, YTD — — — — — — — —
Residential 1-4 family real estate
Pass 53,349 233,904 148,521 291,781 369,227 601,893 57 1,698,732
Special Mention — 382 18 — 161 626 — 1,187
Classified — 3,517 144 418 2,340 11,212 — 17,631
Total residential 1-4 family real estate 53,349 237,803 148,683 292,199 371,728 613,731 57 1,717,550
Gross charge-offs, YTD — — — — — 5 — 5
Home equity loans/lines of credit
Pass 295 3,476 1,229 669 542 470 355,953 362,634
Special Mention — — — — — — 12 12
Classified 33 149 — 254 — 175 5,805 6,416
Total home equity loans/lines of credit 328 3,625 1,229 923 542 645 361,770 369,062
Gross charge-offs, YTD — — — — — — — —
Consumer loans
Pass 5,013 13,283 7,142 3,992 2,782 1,345 32,426 65,983
Special Mention — — — — — — 17 17
Classified — 42 110 24 23 2 229 430
Total consumer loans 5,013 13,325 7,252 4,016 2,805 1,347 32,672 66,430
Gross charge-offs, YTD 27 41 — — — — 277 345
Total loans $ 648,970 $ 1,912,073 $ 925,901 $ 994,926 $ 1,353,428 $ 2,046,026 $ 912,850 8,794,174
Unamortized net deferred loan costs/(fees) ( 360 )
Total loans, net of deferred loan costs/(fees) $ 8,793,814
Total gross charge-offs, year to date $ 38 $ 41 $ 18 $ 12 $ — $ 657 $ 1,244 $ 2,010
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Term Loans by Year of Origination
($ in thousands) 2025 2024 2023 2022 2021 Prior Revolving Total
As of December 31, 2025
Commercial and industrial
Pass $ 213,147 $ 79,715 $ 43,504 $ 91,590 $ 57,804 $ 108,133 $ 439,840 $ 1,033,733
Special Mention 85 260 164 109 82 262 1,416 2,378
Classified 515 157 949 3,177 416 3,692 1,421 10,327
Total commercial and industrial 213,747 80,132 44,617 94,876 58,302 112,087 442,677 1,046,438
Gross charge-offs, YTD 35 646 780 903 174 802 4,401 7,741
Construction, development & other land loans
Pass 469,670 115,650 76,839 18,463 18,724 8,840 39,702 747,888
Special Mention 4,172 — 573 48 — — — 4,793
Classified 57 49 72 68 2 270 — 518
Total construction, development & other land loans 473,899 115,699 77,484 18,579 18,726 9,110 39,702 753,199
Gross charge-offs, YTD — — — — — — — —
Commercial real estate - owner occupied
Pass 298,490 187,305 185,070 215,615 220,148 184,358 25,429 1,316,415
Special Mention 2,428 2,856 1,802 3,018 406 6,541 1,757 18,808
Classified 112 1,393 568 2,313 474 13,786 43 18,689
Total commercial real estate - owner occupied 301,030 191,554 187,440 220,946 221,028 204,685 27,229 1,353,912
Gross charge-offs, YTD — 420 — 17 — 903 — 1,340
Commercial real estate - non owner occupied
Pass 724,974 374,312 376,910 594,522 529,233 205,946 29,622 2,835,519
Special Mention 136 1,131 — — 1 382 — 1,650
Classified 78 662 — 546 — 5,100 — 6,386
Total commercial real estate - non owner occupied 725,188 376,105 376,910 595,068 529,234 211,428 29,622 2,843,555
Gross charge-offs, YTD — 905 — 33 — — — 938
Multi-family real estate
Pass 100,953 65,838 63,983 109,323 148,234 33,429 15,124 536,884
Special Mention — — — — — — — —
Classified — — 131 — — — — 131
Total multi-family real estate 100,953 65,838 64,114 109,323 148,234 33,429 15,124 537,015
Gross charge-offs, YTD — — — — — — — —
Residential 1-4 family real estate
Pass 166,356 230,701 301,965 373,118 264,824 381,796 61 1,718,821
Special Mention 390 424 — — 267 630 — 1,711
Classified 151 2,561 420 2,273 1,894 8,622 — 15,921
Total residential 1-4 family real estate 166,897 233,686 302,385 375,391 266,985 391,048 61 1,736,453
Gross charge-offs, YTD — — — — — 127 — 127
Home equity loans/lines of credit
Pass 3,785 1,255 1,894 659 203 420 369,296 377,512
Special Mention — — — — — — — —
Classified 158 34 254 — 88 3 5,603 6,140
Total home equity loans/lines of credit 3,943 1,289 2,148 659 291 423 374,899 383,652
Gross charge-offs, YTD — — — 68 — — 1 69
Consumer loans
Pass 15,044 8,619 4,952 3,390 1,063 580 33,403 67,051
Special Mention — — — — — — — —
Classified 49 74 36 24 4 — 220 407
Total consumer loans 15,093 8,693 4,988 3,414 1,067 580 33,623 67,458
Gross charge-offs, YTD 25 149 115 12 1 37 1,075 1,414
Total loans $ 2,000,750 $ 1,072,996 $ 1,060,086 $ 1,418,256 $ 1,243,867 $ 962,790 $ 962,937 8,721,682
Unamortized net deferred loan costs/(fees) 737
Total loans, net of deferred loan costs/(fees) $ 8,722,419
Total gross charge-offs, year to date $ 60 $ 2,120 $ 895 $ 1,033 $ 175 $ 1,869 $ 5,477 $ 11,629
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Loan Modifications to Borrowers Experiencing Financial Difficulty
Occasionally, the Company modifies loans to borrowers in financial distress as a part of our loss mitigation activities. Various types of modification may be offered including principal forgiveness, term extension, payment delays, or interest rate reductions. In some cases, the Company will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession may be granted. For loans included in the “Combination” columns below, multiple types of modifications have been made on the same loan within the current reporting period.
The following table presents the amortized cost basis at March 31, 2026 of the loans modified during the three month periods then ended for borrowers experiencing financial difficulty, by loan category and type of concession granted.
($ in thousands) Payment Delay Term Extension Total Percent of Total Class of Loans
As of and for the three months ended March 31, 2026
Commercial real estate - owner occupied $ 1,675 $ — $ 1,675 0.12 %
Commercial real estate - non owner occupied — 45 45 — %
Residential 1-4 family real estate — 82 82 — %
Home equity loans/lines of credit — 297 297 0.08 %
Consumer loans — 19 19 0.03 %
Total $ 1,675 $ 443 $ 2,118 0.02 %
The following table presents the amortized cost basis at March 31, 2025 of the loans modified during the three month periods then ended for borrowers experiencing financial difficulty, by loan category and type of concession granted.
($ in thousands) Payment Delay Term Extension Combination - Term Extension and Payment Delay Total Percent of Total Class of Loans
As of and for the three months ended March 31, 2025
Commercial and industrial $ 67 $ — $ — $ 67 0.01 %
Commercial real estate - owner occupied — 741 — 741 0.06 %
Commercial real estate - non owner occupied 468 — 4,371 4,839 0.18 %
Residential 1-4 family real estate — 18 — 18 — %
Home equity loans/lines of credit — 300 — 300 0.09 %
Total $ 535 $ 1,059 $ 4,371 $ 5,965 0.07 %
For the three months ended March 31, 2026 and March 31, 2025, there were no modifications for borrowers experiencing financial difficulty with principal forgiveness concessions.
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The following table describes the financial effect for the three months ended March 31, 2026 of the modifications made for borrowers experiencing financial difficulty:
Financial Effect of Modification to Borrowers Experiencing Financial Difficulty
Weighted Average Payment Delay
(in months) Weighted Average Term Extension
(in months)
For the three months ended March 31, 2026
Commercial real estate - owner occupied 12 0
Commercial real estate - non owner occupied 0 12
Residential 1-4 family real estate 0 61
Home equity loans/lines of credit 0 109
Consumer loans 0 39
The following table describes the financial effect for the three months ended March 31, 2025 of the modifications made for borrowers experiencing financial difficulty:
Financial Effect of Modification to Borrowers Experiencing Financial Difficulty
Weighted Average Payment Delay
(in months) Weighted Average Term Extension
(in months)
For the three months ended March 31, 2025
Commercial and industrial 5 0
Commercial real estate - owner occupied 0 11
Commercial real estate - non owner occupied 7 7
Residential 1-4 family real estate 0 56
Home equity loans/lines of credit 0 107
The Company closely monitors the performance of the modified loans that are to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table depicts the performance of loans that were modified in the last twelve months as of March 31, 2026:
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 $ 767 $ — $ 23 $ 1,128
Construction, development & other land loans 31 — — —
Commercial real estate - owner occupied 3,814 324 63 —
Commercial real estate - non owner occupied 4,164 — — —
Residential 1-4 family real estate 612 80 — —
Home equity loans/lines of credit 1,720 — 124 75
Consumer loans 19 — — —
$ 11,127 $ 404 $ 210 $ 1,203
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The following table depicts the performance of loans that were 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
Commercial and industrial $ 594 $ 38 $ — $ 563
Commercial real estate - owner occupied 500 334 — —
Commercial real estate - non owner occupied 4,316 — — —
Residential 1-4 family real estate 144 — — —
Home equity loans/lines of credit 674 130 — —
$ 6,228 $ 502 $ — $ 563
The following table presents the amortized cost basis of loans that had a payment default during the three months ended March 31, 2026 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty by loan category and type of concession granted.
($ in thousands) Payment Delay Term Extension Combination - Interest Rate Reduction and Term Extension Total
Commercial and industrial $ — $ 405 $ 27 $ 432
Commercial real estate - owner occupied 324 63 — 387
Home equity loans/lines of credit — 124 — 124
Total $ 324 $ 592 $ 27 $ 943
The following table presents the amortized cost basis of loans that had a payment default during the three months ended March 31, 2025 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty by loan category and type of concession granted.
($ in thousands) Term Extension Total
Residential 1-4 family real estate $ 51 $ 51
Total $ 51 $ 51
At March 31, 2026 and December 31, 2025, there were no commitments to lend additional funds to a borrower experiencing financial difficulty for whom a modification had been made.
Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is adjusted by the same amount.
Concentration of Credit Risk
The Company’s loan portfolio is not concentrated in loans to any single borrower or to a relatively small number of borrowers. Additionally, management is not aware of any concentrations of loans to classes of borrowers or industries that would be similarly affected by economic conditions. Approximately 88 % of the Company's loan portfolio is secured by real estate and is therefore susceptible to changes in real estate valuations. There have been no material changes to the primary loan markets (as identified by counties) from year end.
Impact of 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 2026, 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 March 31, 2026 was applied. For the potentially
impacted consumer loans, the Company applied increased reserve rates based upon severe economic factors to
the approximately $ 258 million of loans (primarily Residential 1-4 family real estate) in the most impacted path of
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Hurricane Helene. Due to the potential exposure from Hurricane Helene, the ACL on these impacted consumer
loans was $ 1.9 million as of March 31, 2026, adding 2 basis points to the overall ACL as a percent of total
loans, which was 1.42 % as of March 31, 2026. As of December 31, 2025, the ACL on the population of
potentially impacted commercial and consumer loans was $ 1.9 million, adding 2 basis points to the overall ACL
as a percent of total loans, which was 1.42 %.
Allowance for Unfunded Loan Commitments
In addition to the ACL on loans, the Company maintains an allowance for lending-related commitments such as unfunded loan commitments and letters of credit. The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for lending-related commitments on off-balance sheet credit exposures is adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the ACL on loans. The allowance for unfunded loan commitments was included in "Other liabilities" on the consolidated balance sheets.
The following table presents the balance and activity in the allowance for unfunded loan commitments for the three months ended March 31, 2026 and 2025:
Three months ended March 31,
($ in thousands) 2026 2025
Beginning balance $ 11,004 $ 9,066
Charge-offs — —
Recoveries — —
Provision for (reversal of) unfunded commitments 532 ( 282 )
Ending balance $ 11,536 $ 8,784
Note 4. Goodwill, Other Intangible Assets and Servicing Assets
The following is a summary of the gross carrying amount and accumulated amortization of amortizable intangible assets and the carrying amount of unamortized intangible assets as of the periods presented.
March 31, 2026 December 31, 2025
($ in thousands) Gross Carrying
Amount Accumulated
Amortization Net Amount Gross Carrying
Amount Accumulated
Amortization Net Amount
Amortizable intangible assets:
Customer lists $ 1,600 $ 1,600 $ — $ 1,600 $ 1,600 $ —
Core deposit intangibles 57,890 41,905 15,985 57,890 40,658 17,232
Other intangibles 100 100 — 100 100 —
Total amortizable intangible assets $ 59,590 $ 43,605 $ 15,985 $ 59,590 $ 42,358 $ 17,232
Unamortizable intangible assets:
Goodwill $ 478,750 $ 478,750
Customer lists are generally amortized over five years and core deposit intangibles are generally amortized over 10 years, both at an accelerated rate.
Amortization expense of all amortizable intangible assets totaled $ 1.2 million and $ 1.5 million for the three months ended March 31, 2026 and 2025, respectively.
Goodwill is evaluated for impairment on at least an annual basis, with the annual evaluation occurring as of October 31 of each year. Goodwill is also evaluated for impairment any time there is a triggering event indicating that impairment may have occurred. No triggering events were identified during 2026 to date and, therefore, the Company did not perform interim impairment evaluations. The Company's most recent evaluation of goodwill, which
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occurred in the fourth quarter of 2025, indicated that there was no goodwill impairment. There was no change to carrying amounts of goodwill during the three months ended March 31, 2026.
Other than the expected amortization expense recognized during the three months ended March 31, 2026, there have been no material changes to the estimated amortization expense related to amortizable intangible assets as discussed in Note 6 of the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
The Company recorded SBA guaranteed servicing fee income of $ 0.7 million during the three months ended March 31, 2026 and 2025.
There was no impairment of SBA servicing assets at March 31, 2026 and December 31, 2025 and no significant methodology changes have been made since year end.
The following table presents the changes in the SBA servicing assets (included in "Other assets" in the Company's consolidated balance sheet) for each period indicated:
Three months ended March 31,
($ in thousands) 2026 2025
Beginning balance, net $ 1,748 $ 2,605
Add: New servicing assets 262 13
Less: Amortization expense and impairment charges 194 362
Ending balance, net $ 1,816 $ 2,256
Note 5. Borrowings
The following tables present information regarding the Company’s outstanding borrowings at March 31, 2026:
($ in thousands)
Description Due date Call Feature Balance Interest Rate
FHLB Principal Reducing Credit 6/26/2028 to 12/20/2028
None $ 740 0.00 % to 1.00 % fixed
Trust Preferred Securities 1/23/2034 Quarterly by Company 10,310 6.58 % at 3/31/26 adjustable rate 3 month CME Term SOFR+ 2.91 %
Trust Preferred Securities 1/23/2034 Quarterly by Company 10,310 6.68 % at 3/31/26 adjustable rate 3 month CME Term SOFR + 3.01 %
Trust Preferred Securities 9/20/2034 Quarterly by Company 12,372 6.10 % at 3/31/26 adjustable rate 3 month CME Term SOFR + 2.41 %
Trust Preferred Securities 1/7/2035 Quarterly by Company 10,310 5.93 % at 3/31/26 adjustable rate 3 month CME Term SOFR + 2.00 %
Trust Preferred Securities 6/15/2036 Quarterly by Company 25,774 5.33 % at 3/31/26 adjustable rate 3 month CME Term SOFR + 1.65 %
Trust Preferred Securities 6/23/2036 Quarterly by Company 8,248 5.80 % at 3/31/26 adjustable rate 3 month CME Term SOFR + 2.11 %
Total borrowings / weighted average rate as of March 31, 2026
78,064 5.88 %
Unamortized discount on acquired borrowings ( 3,421 )
Total borrowings $ 74,643
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The following tables present information regarding the Company’s outstanding borrowings at December 31, 2025:
($ in thousands)
Description Due date Call Feature Balance Interest Rate
FHLB Principal Reducing Credit 6/26/2028 to 12/20/2028
None $ 753 0.00 % to 1.00 % fixed
Trust Preferred Securities 1/23/2034 Quarterly by Company 10,310 6.75 % at 12/31/25 adjustable rate 3 month CME Term SOFR + 2.91 %
Trust Preferred Securities 1/23/2034 Quarterly by Company 10,310 6.85 % at 12/31/25 adjustable rate 3 month CME Term SOFR + 3.01 %
Trust Preferred Securities 9/20/2034 Quarterly by Company 12,372 6.11 % at 12/31/25 adjustable rate 3 month CME Term SOFR + 2.41 %
Trust Preferred Securities 1/7/2035 Quarterly by Company 10,310 6.17 % at 12/31/25 adjustable rate 3 month CME Term SOFR + 2.00 %
Trust Preferred Securities 6/15/2036 Quarterly by Company 25,774 5.37 % at 12/31/25 adjustable rate 3 month CME Term SOFR + 1.65 %
Trust Preferred Securities 6/23/2036 Quarterly by Company 8,248 5.80 % at 12/31/25 adjustable rate 3 month CME Term SOFR + 2.11 %
Total borrowings / weighted average rate as of December 31, 2025
78,077 5.97 %
Unamortized discount on acquired borrowings ( 3,508 )
Total borrowings $ 74,569
Note 6. Leases
The Company enters into leases in the normal course of business. As of March 31, 2026, the Company leased 15 bank branch offices for which the land and buildings are leased and ten branch offices for which the land is leased but the buildings are owned. The Company also leases office space for several operational departments. All of the Company’s leases are operating leases and the lease agreements have maturity dates ranging from April 2026 through May 2076, some of which include options for multiple five-year and ten-year extensions. The Company includes lease extension options in the lease term if, after considering relevant economic, market, and strategic factors, it is reasonably certain the Company will exercise the option. The weighted average remaining life of the lease term for these leases was 20.3 years as of March 31, 2026 and 20.8 years as of December 31, 2025. Certain of the Company's lease agreements include variable lease payments based on changes in inflation, with the impact of that factor being insignificant to the Company's total lease expense. As permitted by applicable accounting standards, the Company has elected not to recognize leases with original lease terms of 12 months or less (short-term leases) on the Company's consolidated balance sheets. The short-term lease cost for each period presented was insignificant.
Leases are classified as either operating or finance leases at the lease commencement date and all of the Company's leases have been determined to be operating leases. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the applicable lease term. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.
The Company uses its incremental borrowing rate, on a collateralized basis, at lease commencement to calculate the present value of lease payments when the rate implicit in the lease is not known. The weighted average discount rates for leases were 3.44 % and 3.41 % as of March 31, 2026 and December 31, 2025, respectively.
The right-of-use assets, included in "Other assets" on the Company's consolidated balance sheets, and lease liabilities, included in "Other liabilities" on the Company's consolidated balance sheets, were $ 13.7 million and $ 14.6 million as of March 31, 2026, respectively, and were $ 13.4 million and $ 14.2 million as of December 31, 2025, respectively.
Total operating lease expenses, included in "Other operating expenses" in the Company's consolidated statements of income, were $ 0.6 million for the three months ended March 31, 2026 and 2025.
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Future undiscounted lease payments for operating leases with initial terms of greater than one year as of March 31, 2026 are as follows:
($ in thousands)
April 1, 2026 to December 31, 2026 $ 1,253
2027 1,456
2028 1,369
2029 1,316
2030 1,019
Thereafter 15,051
Total undiscounted lease payments 21,464
Less effect of discounting ( 6,871 )
Present value of estimated lease payments (lease liability) $ 14,593
Note 7. Fair Value of Financial Instruments
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal and most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:
Level 1: Quoted prices (unadjusted) of identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
The following table summarizes the Company’s financial instruments that were measured at fair value on a recurring and nonrecurring basis at March 31, 2026:
($ in thousands)
Description of Financial Instruments
Fair Value at March 31, 2026 Quoted Prices in Active Markets for Identical Assets
(Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable Inputs
(Level 3)
Recurring
Securities available for sale:
U.S. Treasury $ 166,669 $ — $ 166,669 $ —
Government-sponsored enterprise securities 1,769 — 1,769 —
Mortgage-backed securities 1,796,043 — 1,795,384 659
Corporate bonds 15,125 — 14,125 1,000
Total available for sale securities $ 1,979,606 $ — $ 1,977,947 $ 1,659
Derivative financial assets $ 2,307 $ — $ 2,307 $ —
Presold mortgages in process of settlement $ 11,191 $ — $ 11,191 $ —
Derivative financial liabilities $ 2,341 $ — $ 2,341 $ —
Nonrecurring
Individually evaluated loans $ 4,223 $ — $ — $ 4,223
Foreclosed real estate 175 — — 175
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The following table summarizes the Company’s financial instruments that were measured at fair value on a recurring and nonrecurring basis at December 31, 2025:
($ in thousands)
Description of Financial Instruments
Fair Value at December 31, 2025 Quoted Prices in Active Markets for Identical Assets
(Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3)
Recurring
Securities available for sale:
US Treasury securities $ 168,095 $ — $ 168,095 $ —
Government-sponsored enterprise securities 1,758 — 1,758 —
Mortgage-backed securities 1,860,357 — 1,859,690 667
Corporate bonds 18,346 — 17,346 1,000
Total available for sale securities $ 2,048,556 $ — $ 2,046,889 $ 1,667
Derivative financial assets $ 3,418 $ — $ 3,418 $ —
Presold mortgages in process of settlement $ 7,790 $ — $ 7,790 $ —
Derivative financial liabilities $ 3,445 $ — $ 3,445 $ —
Nonrecurring
Individually evaluated loans $ 9,659 $ — $ — $ 9,659
Foreclosed real estate 168 — — 168
The following is a description of the valuation methodologies used for financial instruments measured at fair value.
Securities Available for Sale — When quoted market prices are available in an active market, the securities are classified as Level 1 in the valuation hierarchy. If quoted market prices are not available, but fair values can be estimated by observing quoted prices of securities with similar characteristics, the securities are classified as Level 2 on the valuation hierarchy. Most of the fair values for the Company’s Level 2 securities are determined by the Company's third-party bond accounting provider using matrix pricing. Matrix pricing is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities. For the Company, Level 2 securities include U.S Treasury bonds, mortgage-backed securities, commercial mortgage-backed obligations, government-sponsored enterprise securities, and corporate bonds. In cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.
The Company reviews the pricing methodologies utilized by the bond accounting provider to ensure the fair value determination is consistent with the applicable accounting guidance and that the investments are properly classified in the fair value hierarchy.
Presold Mortgages in Process of Settlemen t - The fair value is based on the committed price that an investor has agreed to pay for the loan which is considered a Level 2 input.
Derivative financial assets and liabilities - The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. These are considered a Level 2 input.
Individually evaluated loans — Fair values for individually evaluated loans are measured on a non-recurring basis and are based on the underlying collateral values securing the loans, adjusted for estimated selling costs, or the net present value of the cash flows expected to be received for such loans. Collateral may be in the form of real estate or business assets including equipment, inventory and accounts receivable. The vast majority of the collateral is real estate. The value of real estate collateral is generally determined by third-party appraisers using an income or market valuation approach based on an appraisal conducted by an independent, licensed third party appraiser (Level 3). The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable borrower’s financial
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statements if not considered significant. Likewise, values for inventory and accounts receivable collateral are based on borrower financial statement balances or aging reports on a discounted basis as appropriate (Level 3). Appraisals used in this analysis are generally obtained at least annually based on when the loans first became impaired, and thus the appraisals are not necessarily as of the period ends presented. Any fair value adjustments are recorded in the period incurred as provision for credit losses on the consolidated statements of income.
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 non-recurring basis as of March 31, 2026.
The carrying amounts and estimated fair values of financial instruments not carried at fair value at March 31, 2026 and December 31, 2025 were as follows:
March 31, 2026 December 31, 2025
($ in thousands) Level in Fair
Value
Hierarchy Carrying
Amount Estimated
Fair Value Carrying
Amount Estimated
Fair Value
Cash and due from banks, noninterest-bearing Level 1 $ 135,176 $ 135,176 $ 146,759 $ 146,759
Due from banks, interest-bearing Level 1 462,815 462,815 162,836 162,836
Securities held to maturity Level 2 511,429 440,882 513,099 448,452
Total loans, net of allowance Level 3 8,669,080 8,361,619 8,598,838 8,259,890
SBA servicing asset Level 3 1,816 3,122 1,747 2,963
Demand deposits, money market and savings Level 1 10,210,120 10,210,120 9,944,779 9,944,779
Time deposits Level 2 802,363 799,703 803,642 801,150
Borrowings Level 2 74,643 69,034 74,569 69,421
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no highly liquid market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial assets or liabilities include net premises and equipment, intangible and other assets such as deferred income taxes, prepaid expense accounts, income taxes currently payable, and other various accrued expenses. In addition, the income tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.
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Note 8. Stock-Based Compensation
The Company recorded total stock-based compensation expense of $ 0.7 million and $ 1.0 million for the three months ended March 31, 2026 and 2025, respectively. These amounts are included in "Total personnel expense" on the accompanying consolidated statements of income.
The Company recog nized income tax benefits related to stock-based compensation expense in its income statement of $ 167,000 an d $ 238,000 for the three months ended March 31, 2026 and 2025, respectively.
At March 31, 2026, the sole equity-based compensation plan of the Company was the First Bancorp 2024 Equity Plan (the "Equity Plan"), which was approved by shareholders on May 31, 2024. As of March 31, 2026, the Equity Plan had 1,808,912 shares remaining available for grant.
The Equity Plan is intended to serve as a means to attract, retain, and motivate key employees and directors and to associate the interests of the Equity Plan's participants with those of the Company and its shareholders. The Equity Plan allows for both grants of stock options and other types of equity-based compensation, including stock appreciation rights, restricted and unrestricted stock, restricted performance stock, and performance units. For the last several years, the only equity-based compensation granted by the Company has been shares of restricted stock, as it relates to employees, and unrestricted stock as it relates to non-employee directors.
There have been no material changes to the treatment of stock awards and equity grants as discussed in Note 15 of the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
In addition to employee equity awards, the Company's practice is to grant unrestricted common shares to each non-employee director (currently eleven in total) in June of each year. The grants were valued at approximately $ 37,500 in 2025. Compensation expense associated with these director awards is fully recognized by the date of the award since there are no vesting conditions.
The following table presents information regarding the activity for the first three months of 2026 related to the Company’s outstanding restricted stock awards:
Long-Term Restricted Stock Awards
Number of Units Weighted-Average
Grant-Date Fair Value
Nonvested at January 1, 2026 206,624 $ 38.08
Granted during the period 17,743 56.34
Vested during the period ( 45,797 ) 35.91
Forfeited or expired during the period — —
Nonvested at March 31, 2026 178,570 $ 40.33
Total unrecognized compensation expense as of March 31, 2026 amounted to $ 3.6 million with a weighted average remaining term of 2.1 years. For the nonvested awards that were outstanding at March 31, 2026, the Company expects to record $ 2.0 million in compensation expense in the next twelve months, $ 1.6 million of which is expected to be recorded in the remaining quarters of 2026.
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Note 9. Earnings Per Share
The following is a reconciliation of the numerators and denominators used in computing Basic and Diluted Earnings Per Common Share ("EPS"):
For the Three Months Ended March 31,
2026 2025
($ in thousands except per share amounts) Income
(Numerator) Shares
(Denominator) Per Share
Amount Income
(Numerator) Shares
(Denominator) Per Share
Amount
Basic EPS:
Net income $ 46,659 $ 36,406
Less: income allocated to restricted stock ( 222 ) ( 198 )
Basic EPS per common share $ 46,437 41,250,500 $ 1.13 $ 36,208 41,130,779 $ 0.88
Diluted EPS:
Net income $ 46,659 41,250,500 $ 36,406 41,130,779
Effect of dilutive securities — 208,857 — 275,746
Diluted EPS per common share $ 46,659 41,459,357 $ 1.13 $ 36,406 41,406,525 $ 0.88
Note 10. Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive income (loss) ("AOCI") for the Company for the periods shown were as follows:
($ in thousands) March 31, 2026 December 31, 2025
Unrealized loss on securities available for sale $ ( 197,710 ) $ ( 194,122 )
Tax effect 45,657 44,826
Net unrealized loss on securities available for sale ( 152,053 ) ( 149,296 )
Postretirement plans asset (liability) ( 77 ) ( 102 )
Tax effect 18 23
Net postretirement plans asset (liability) ( 59 ) ( 79 )
Total accumulated other comprehensive income (loss) $ ( 152,112 ) $ ( 149,375 )
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The following tables disclose the changes in AOCI for the three months ended March 31, 2026 and 2025 (all amounts are net of tax):
For the Three Months Ended March 31, 2026
($ in thousands) Unrealized Loss on
Securities
Available for Sale Postretirement Plans Asset
(Liability) Total
Beginning balance $ ( 149,296 ) $ ( 79 ) $ ( 149,375 )
Other comprehensive income before reclassifications ( 2,757 ) 20 ( 2,737 )
Net current period other comprehensive income ( 2,757 ) 20 ( 2,737 )
Ending balance $ ( 152,053 ) $ ( 59 ) $ ( 152,112 )
For the Three Months Ended March 31, 2025
($ in thousands) Unrealized Loss on
Securities
Available for Sale Postretirement Plans Asset
(Liability) Total
Beginning balance $ ( 282,114 ) $ 85 $ ( 282,029 )
Other comprehensive income before reclassifications 35,401 — 35,401
Net current period other comprehensive income 35,401 — 35,401
Ending balance $ ( 246,713 ) $ 85 $ ( 246,628 )
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.
Note 11. Revenue from Contracts with Customers
All of the Company’s revenues that are in the scope of the “ Revenue from Contracts with Customers ” accounting standard (“ASC 606”) are recognized within noninterest income. The following table presents the Company’s sources of noninterest income for the three months ended March 31, 2026 and 2025. Items outside the scope of ASC 606 are noted as such.
For the Three Months Ended
($ in thousands) March 31, 2026 March 31, 2025
Noninterest Income in-scope of ASC 606:
Service charges on deposit accounts $ 3,954 $ 3,767
Other service charges and fees:
Bankcard interchange income, net 2,123 2,327
Other service charges and fees 2,145 2,125
Commissions from sales of financial products 1,492 1,408
Portion of other income in-scope of ASC 606 — —
Noninterest income (in-scope of ASC 606) 9,714 9,627
Noninterest income (out-of-scope of ASC 606) 5,464 3,329
Total noninterest income $ 15,178 $ 12,956
There have been no material changes from the Company's revenue streams accounted for under ASC 606 as discussed in Note 20 of the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
Note 12. Segment Reporting
The Company is a bank holding company, whose principal activity is the ownership and management of its wholly-owned subsidiary, the Bank. As a community focused financial institution, substantially all of the Company’s
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operations involve the delivery of loan and deposit products or the provision of financial advice to customers. Management makes operating decisions and assesses performance based on an ongoing review of these banking operations, which constitute the Company’s only operating segment for financial reporting purposes.
The accounting policies of the banking operations segment are the same as those described in the Summary of Significant Accounting Policies as discussed in Note 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2025. 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, and the Company's Chief Financial Officer. The chief operating decision makers use pre-tax net income to allocate resources in the annual budget and forecasting process. The chief operating decision makers consider budget-to-actual variances on a monthly basis for profit measures when making decisions about allocating capital and personnel to the operating segment.
The chief operating decision makers use the Consolidated Statements of Income and Consolidated Balance Sheets to ascertain measures or performance such as revenue, profit or loss, significant expenses and assets.
Depreciation expense amounted to $ 1.6 million and $ 1.8 million for the three months ended March 31, 2026 and 2025, respectively. Depreciation expense is recorded in Occupancy and equipment expense on the Consolidated Statements of Income.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.