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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

Commission File Number 0-15572

FIRST BANCORP

(Exact Name of Registrant as Specified in its Charter)

North Carolina

56-1421916

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification Number)

205 SE Broad St.,

Southern Pines

North Carolina

28387

(Address of Principal Executive Offices)

(Zip Code)

(Registrant's telephone number, including area code)

(910)

246-2500

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered:
Common Stock, No Par Value	FBNC	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of shares of the registrant's Common Stock outstanding on April 30, 2026 was 41,375,413.

INDEX

FIRST BANCORP AND SUBSIDIARIES


			Page

Part I. Financial Information

Item 1 - Financial Statements (unaudited)
Consolidated Balance Sheets			4
Consolidated Statements of Income			5
Consolidated Statements of Comprehensive Income (Loss)			6
Consolidated Statements of Shareholders’ Equity			7
Consolidated Statements of Cash Flows			8
Notes to Consolidated Financial Statements			10
Item 2 – Management’s Discussion and Analysis of Consolidated Results of Operations and Financial Condition			32
Item 3 – Quantitative and Qualitative Disclosures About Market Risk			45
Item 4 – Controls and Procedures			47

Part II. Other Information

Item 1 – Legal Proceedings			47
Item 1A – Risk Factors			47
Item 5 - Other Information			47
Item 6 – Exhibits			48
Signatures			49

Page 2

Index

FORWARD-LOOKING STATEMENTS

Part I of this report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, which statements are inherently subject to risks and uncertainties. Forward-looking statements are statements that include projections, predictions, expectations or beliefs about future events or results or otherwise are not statements of historical fact. Further, forward-looking statements are intended to speak only as of the date made. Such statements are often characterized by the use of qualifying words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” or other statements concerning our opinions or judgment about future events. Our actual results may differ materially from those anticipated in any forward-looking statements, as they will depend on many factors about which we are unsure, including many factors which are beyond our control. Factors that could influence the accuracy of such forward-looking statements include, but are not limited to, the financial success or changing strategies of our customers, our level of success in integrating acquisitions, actions of government regulators, the level of market interest rates, geopolitical influences and general economic conditions. For additional information about factors that could affect the matters discussed in this paragraph, see the “Risk Factors” section of our 2025 Annual Report on Form 10-K ("2025 Annual Report") and Item 1A of Part II of this report.

Page 3

Index

Part I. Financial Information

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

Page 14

Index

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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Index

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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Index

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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Index


	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

Page 18

Index


	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

Page 19

Index

Loan Modifications to Borrowers Experiencing Financial Difficulty

Occasionally, the Company modifies loans to borrowers in financial distress as a part of our loss mitigation activities. Various types of modification may be offered including principal forgiveness, term extension, payment delays, or interest rate reductions. In some cases, the Company will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession may be granted. For loans included in the “Combination” columns below, multiple types of modifications have been made on the same loan within the current reporting period.

The following table 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.

Page 20

Index

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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Index

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

Page 22

Index

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 Settlement - 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

FIRST BANCORP /NC/ 10-Q