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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2026

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _______ to _______

Commission File Number 001-39068

METROCITY BANKSHARES, INC.

(Exact name of registrant as specified in its charter)

Georgia	47-2528408
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)

5114 Buford Highway Doraville, Georgia	30340
(Address of principal executive offices)	(Zip Code)

(770) 455-4989

(Registrant’s telephone number, including area code)

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


Title of each class	Trading Symbol(s)	Name of each Exchange on which registered
Common Stock, par value $0.01 per share	MCBS	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 12 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.

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 ☒

As of May 4, 2026, the registrant had 28,660,042 shares of common stock, par value $0.01 per share, issued and outstanding.

Table of Contents

METROCITY BANKSHARES, INC.

Quarterly Report on Form 10-Q

March 31, 2026

TABLE OF CONTENTS

		Page
Part I.	Financial Information

Item l.	Financial Statements:
	Consolidated Balance Sheets as of March 31, 2026 (unaudited) and December 31, 2025	3
	Consolidated Statements of Income (unaudited) for the Three Months Ended March 31, 2026 and 2025	4
	Consolidated Statements of Comprehensive Income (unaudited) for the Three Months Ended March 31, 2026 and 2025	5
	Consolidated Statements of Shareholders’ Equity (unaudited) for the Three Months Ended March 31, 2026 and 2025	6
	Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2026 and 2025	7
	Notes to Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	53
Item 4.	Controls and Procedures	54

Part II.	Other Information

Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	55
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	56
Item 5.	Other Information	56
Item 6.	Exhibits	56
	Signatures	58

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

METROCITY BANKSHARES, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)


	March 31,		December 31,
	2026		2025
	(Unaudited)
Assets:
Cash and due from banks	$	373,956	$	370,832
Federal funds sold		13,645		12,844
Cash and cash equivalents		387,601		383,676
Equity securities		18,564		18,646
Securities available for sale		26,616		47,179
Loans held for sale		—		9,741
Loans, less allowance for credit losses of $26,700 and $27,843, respectively		3,974,414		4,023,554
Accrued interest receivable		20,299		20,298
Federal Home Loan Bank stock		23,487		27,565
Premises and equipment, net		29,633		29,879
Operating lease right-of-use asset		14,412		15,193
Foreclosed real estate, net		1,147		208
SBA and USDA servicing asset		11,267		10,601
Mortgage servicing asset, net		1,484		1,660
Bank owned life insurance		76,424		75,786
Goodwill		56,048		56,048
Core deposit intangible		12,309		12,627
Interest rate derivatives		4,970		6,343
Other assets		29,672		29,396
Total assets	$	4,688,347	$	4,768,400

Liabilities:
Deposits:
Non-interest-bearing demand	$	799,190	$	780,828
Interest-bearing		2,827,484		2,865,173
Total deposits		3,626,674		3,646,001

Federal Home Loan Bank advances		425,000		510,000
Operating lease liability		14,516		15,306
Accrued interest payable		10,200		10,731
Other liabilities		57,801		42,178
Total liabilities	$	4,134,191	$	4,224,216

Shareholders’ Equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding		—		—
Common stock, $0.01 par value, 40,000,000 shares authorized, 28,660,042 and 28,817,967 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively		286		1,159
Additional paid-in capital		135,531		138,675
Retained earnings		417,750		402,684
Accumulated other comprehensive income		589		1,666
Total shareholders’ equity		554,156		544,184
Total liabilities and shareholders’ equity	$	4,688,347	$	4,768,400

See accompanying notes to unaudited consolidated financial statements.

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METROCITY BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollars in thousands, except per share data)


		Three Months Ended
		March 31,
		2026			2025
Interest and dividend income:
Loans, including fees		$	67,139		$	50,253
Other investment income			3,730			2,126
Federal funds sold			121			140
Total interest income			70,990			52,519

Interest expense:
Deposits			22,077			17,977
FHLB advances and other borrowings			4,426			3,988
Total interest expense			26,503			21,965

Net interest income			44,487			30,554

Provision for credit losses:
Provision for loan losses			(869)			17
Provision for unfunded commitments			56			118
Provision for credit losses			(813)			135

Net interest income after provision for credit losses			45,300			30,419

Noninterest income:
Service charges on deposit accounts			848			500
Other service charges, commissions and fees			1,581			1,596
Gain on sale of residential mortgage loans			—			399
Mortgage servicing income, net			306			618
Gain on sale of SBA loans			1,045			658
SBA servicing income, net			1,905			913
Other income			672			772
Total noninterest income			6,357			5,456

Noninterest expense:
Salaries and employee benefits			11,501			8,493
Occupancy and equipment			2,434			1,417
Data processing			682			345
Advertising			223			167
Merger-related expenses			1,676			262
Other expenses			4,922			3,115
Total noninterest expense			21,438			13,799

Income before provision for income taxes			30,219			22,076
Provision for income taxes			7,905			5,779
Net income available to common shareholders		$	22,314		$	16,297

Earnings per share:
Basic		$	0.78		$	0.64
Diluted		$	0.77		$	0.63

See accompanying notes to unaudited consolidated financial statements.

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METROCITY BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(Dollars in thousands)


		Three Months Ended
		March 31,
		2026			2025

Net income		$	22,314		$	16,297

Other comprehensive loss:

Unrealized holding gains on securities available for sale			(422)			41
Realized gain on sale of securities available for sale			(10)			—
Net changes in fair value of cash flow hedges			(1,064)			(5,634)
Tax effect			419			1,374

Other comprehensive loss			(1,077)			(4,219)

Comprehensive income		$	21,237		$	12,078

See accompanying notes to unaudited consolidated financial statements.

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METROCITY BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)

(Dollars in thousands, except per share data)


													Accumulated
		Common Stock					Additional						Other
		Number of					Paid-in			Retained			Comprehensive
		Shares		Amount			Capital			Earnings			Income (Loss)			Total
Three Months Ended:
Balance, January 1, 2026		28,817,967		$	1,159		$	138,675		$	402,684		$	1,666		$	544,184
Net income		—			—			—			22,314			—			22,314
Adjustment for shares issued related to the First IC acquisition		—			(871)			871			—			—			—
Stock based compensation expense		—			—			426			—			—			426
Repurchase of common stock		(157,925)			(2)			(4,441)			—			—			(4,443)
Other comprehensive loss		—			—			—			—			(1,077)			(1,077)
Dividends declared on common stock ($0.25 per share)		—			—			—			(7,248)			—			(7,248)
Balance, March 31, 2026		28,660,042		$	286		$	135,531		$	417,750		$	589		$	554,156

Balance, January 1, 2025		25,402,782		$	254		$	49,216		$	358,704		$	13,179		$	421,353
Net income		—			—			—			16,297			—			16,297
Stock based compensation expense		—			—			429			—			—			429
Other comprehensive loss		—			—			—			—			(4,219)			(4,219)
Dividends declared on common stock ($0.23 per share)		—			—			—			(5,891)			—			(5,891)
Balance, March 31, 2025		25,402,782		$	254		$	49,645		$	369,110		$	8,960		$	427,969

See accompanying notes to unaudited consolidated financial statements.

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METROCITY BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in thousands)


		Three Months Ended March 31,
		2026			2025
Cash flow from operating activities:
Net income		$	22,314		$	16,297
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion			686			832
Provision (recovery) for credit losses			(813)			135
Stock based compensation expense			426			429
Unrealized gains recognized on equity securities			82			(140)
Gain on sale of securities			(10)			—
Write-down of foreclosed real estate			30			—
Gain on sale of residential real estate loans			—			(399)
Origination of SBA loans held for sale			(8,947)			(8,154)
Proceeds from sales of SBA loans held for sale			19,733			10,113
Gain on sale of SBA loans			(1,045)			(658)
Increase in cash value of bank owned life insurance			(638)			(615)
Increase in accrued interest receivable			(1)			(640)
(Increase) decrease in SBA and USDA servicing rights			(666)			107
(Increase) decrease in mortgage servicing rights			176			(67)
Increase in state tax credits			—			(12,600)
(Increase) decrease in other assets			143			(928)
Decrease in accrued interest payable			(531)			(11)
Increase (decrease) in other liabilities			14,871			8,210
Net cash flow provided by operating activities			45,810			11,911

Cash flow from investing activities:
Purchases of equity securities			—			(8,000)
Proceeds from maturities, calls or paydowns of securities available for sale			909			1,991
Proceeds from sales of securities available for sale			19,328			—
Purchase of Federal Home Loan Bank stock			4,078			(2,442)
Proceeds from sales of residential real estate loans			—			40,450
Decrease (increase) in loans, net			49,040			(51,933)
Purchases of premises and equipment			733			(70)
Net cash flow (used) provided by investing activities			74,088			(20,004)

Cash flow from financing activities:
Dividends paid on common stock			(7,203)			(5,843)
Repurchases of common stock			(4,443)			—
(Decrease) increase in deposits, net			(19,327)			232
Premiums paid for interest rate caps			—			(1,116)
Proceeds from Federal Home Loan Bank advances			—			50,000
Repayments of Federal Home Loan Bank advances			(85,000)			—
Net cash flow (used) provided by financing activities			(115,973)			43,273

Continued to following page.

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METROCITY BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in thousands)


		Three Months Ended March 31,
		2026			2025

Net change in cash and cash equivalents			3,925			35,180
Cash and cash equivalents at beginning of period			383,676			249,875

Cash and cash equivalents at end of period		$	387,601		$	285,055

Supplemental schedule of noncash investing and financing activities:

Transfer of loans held for investment to loans held for sale		$	—		$	75,884
Transfer of loan principal to foreclosed real estate, net of write-downs		$	969		$	1,280

Supplemental disclosures of cash flow information - Cash paid during the year for:

Interest		$	27,034		$	21,976
Income taxes		$	557		$	1,063

See accompanying notes to unaudited consolidated financial statements.

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METROCITY BANKSHARES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2026

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements include the accounts of MetroCity Bankshares, Inc. (“Company”) and its wholly-owned subsidiary, Metro City Bank (the “Bank”). The Company owns 100% of the Bank. The “Company” or “our,” as used herein, includes Metro City Bank unless the context indicates that we refer only to MetroCity Bankshares, Inc.

These unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) followed within the financial services industry for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information or notes required for complete financial statements.

The Company principally operates in one business segment, which is community banking.

In the opinion of management, all adjustments, consisting of normal and recurring items, considered necessary for a fair presentation of the consolidated financial statements for the interim periods have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain amounts reported in prior periods have been reclassified to conform to current year presentation. These reclassifications did not have a material effect on previously reported net income, shareholders’ equity or cash flows.

Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2025.

The Company’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements for the year ended December 31, 2025, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025(the “Company’s 2025 Form 10-K”). There were no new accounting policies or changes to existing policies adopted during the first three months of 2026 which had a significant effect on the Company’s results of operations or statement of financial condition. For interim reporting purposes, the Company follows the same basic accounting policies and considers each interim period as an integral part of an annual period.

Contingencies

Due to the nature of their activities, the Company and its subsidiary are at times engaged in various legal proceedings that arise in the course of normal business, some of which were outstanding as of March 31, 2026. Although the ultimate outcome of all claims and lawsuits outstanding as of March 31, 2026 cannot be ascertained at this time, it is the opinion of management that these matters, when resolved, will not have a material adverse effect on the Company’s results of operations or financial condition.

Operating Segments

Our Chief Executive Officer is our designated chief operating decision maker. While the chief operating decision maker monitors the revenue streams of the various products and services, our operations are managed and financial performance is evaluated on a Company-wide basis. Operating segments are aggregated into one segment as operating results for all segments are similar. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

The chief operating decision maker uses income before income taxes as the measure of segment profit or loss to assess the performance of and allocate resources to the Company’s one reportable operating segment. Interest income and noninterest income generated from our residential real estate and SBA loans provide the primary revenue in the operating

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segment. Interest expense, provision for credit losses, salaries, commissions and employee benefits, as well as occupancy and equipment expenses, provide the significant expenses in the operating segment. These figures are regularly provided to the chief operating decision maker and are monitored through budget-to-actual variance review.

The Company has evaluated the Accounting Standards Updates issued during 2026 to date but does not expect those updates to have a material impact on the Company’s consolidated financial statements.

NOTE 2 – BUSINESS COMBINATIONS

After the close of business on December 1, 2025, the Company completed the acquisition of First IC Corporation. (“First IC”). For each share of First IC common stock, First IC stockholders had the right to receive 0.3729 shares of the Company's common stock and $12.00 in cash, with cash paid in lieu of fractional shares. Total consideration was $202.3 million and consisted of $90.5 million of equity (3,384,066 shares) in the form of MetroCity Bankshares, Inc. common stock, plus $111.9 million in cash, including cash paid for stock option cancellations and fractional shares. The transaction qualified as a tax-free reorganization for federal income tax purposes and provided a tax-free exchange for First IC stockholders for the portion of the transaction consideration consisting of the Company’s common stock. In addition to increasing its loan and deposit base, the Company believes it will be able to provide a deeper product set to First IC customers, as well as benefit from increased operating synergies, improving the long-term operating and financial results of the Company.

The Company accounted for the First IC acquisition using the acquisition method pursuant to the Business Combinations Topic of the FASB ASC. The acquisition method requires the acquirer to recognize the assets acquired and the liabilities assumed at their fair values as of the acquisition date. The excess of consideration paid over the estimated fair value of the net assets acquired totaled $56.0 million and was recorded to goodwill, none of which is anticipated to be deductible for tax purposes. The purchase consideration allocation is considered preliminary as certain estimates related to the assets acquired and liabilities assumed are subject to continuing refinement. Valuations subject to refinement include, but are not limited to, loans, certain deposits, certain other assets, and the core deposit intangible asset. The measurement period may not exceed one year from the acquisition date.

An adjustment was made in the first quarter of 2026 for $871,000 from common stock to additional paid in capital related to shares issued in the acquisition.

The following table summarizes the merger paid for First IC and the amounts of the estimated fair value of the assets acquired and liabilities assumed as of the date of the acquisition:


Consideration:
Cash	$	111,855
Equity		90,456
Fair value of total consideration transferred		202,311

Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents		121,008
Investment securities		31,931
Loans held for investment		1,026,049
Allowance for credit losses on PCD loans and PSLs		(9,885)
Premises and equipment		12,184
Operating lease right-of-use asset		7,421
Core deposit intangible		12,733
SBA servicing asset		3,851
Other assets		12,118
Total assets acquired		1,217,410

Deposits		960,976
Federal Home Loan Bank advances		85,000

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Operating lease liability		7,543
Other liabilities		17,628
Total liabilities assumed		1,071,147

Total identifiable net assets		146,263

Goodwill	$	56,048

The selected unaudited proforma financial information is presented as if the Company had acquired First IC on January 1, 2025 and is for illustrative purposes and is not necessarily indicative of the financial results of the combined company had the acquisition actually been completed at the beginning of the period presented, nor does it indicate future results for any other interim or full-year period. The net interest income, noninterest income, net income and net income attributable to First IC at March 31, 2025 would have been $45.7 million, $7.5 million, $20.3 million, and $3.2 million, respectively.

NOTE 3 – INVESTMENT SECURITIES

The amortized costs, gross unrealized gains and losses, and estimated fair values of securities available for sale as of March 31, 2026 and December 31, 2025 are summarized as follows:


	March 31, 2026
	Gross		Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Obligations of U.S. Government entities and agencies	$	2,438		94		—	$	2,532
States and political subdivisions		7,961		—		(1,506)		6,455
Mortgage-backed GSE residential		19,408		—		(1,779)		17,629
Total	$	29,807	$	94	$	(3,285)	$	26,616


	December 31, 2025
	Gross			Gross			Gross			Estimated
	Amortized			Unrealized			Unrealized			Fair
(Dollars in thousands)	Cost			Gains			Losses			Value
Obligations of U.S. Government entities and agencies	$	12,393		$	149		$	—		$	12,542
States and political subdivisions		11,574			15			(1,445)			10,144
Mortgage-backed GSE residential		25,971			20			(1,498)			24,493
Total	$	49,938		$	184		$	(2,943)		$	47,179

The amortized costs and estimated fair values of investment securities available for sale at March 31, 2026 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Securities Available for Sale
	Amortized			Estimated
(Dollars in thousands)	Cost			Fair Value
Due in one year or less	$	862		$	864
Due after one year but less than five years		375			375
Due after five years but less than ten years		—			—
Due in more than ten years		9,162			7,748
Mortgage-backed GSE residential		19,408			17,629
Total	$	29,807		$	26,616

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Accrued interest receivable for securities available for sale totaled $256,000 and $214,000 as of March 31, 2026 and December 31, 2025, respectively. This accrued interest receivable is included in the “accrued interest receivable” line item on the Company’s Consolidated Balance Sheets.

As of both March 31, 2026 and December 31, 2025, the Company had securities pledged to the Federal Reserve Bank Discount Window with a carrying amount of $12.4 million and $12.8 million, respectively. For the three months ended March 31, 2026, the Company had proceeds from the sale of investment securities of $19.3 million which resulted in gross gains of $10,000. There were no securities sold during the three months ended March 31, 2025.

Information pertaining to securities with gross unrealized losses at March 31, 2026 and December 31, 2025 aggregated by investment category and length of time that individual securities have been in a continuous loss position, are summarized in the table below.


	March 31, 2026
	Twelve Months or Less				Over Twelve Months
	Gross		Estimated		Gross		Estimated
	Unrealized		Fair		Unrealized		Fair
(Dollars in thousands)	Losses		Value		Losses		Value
States and political subdivisions		—		375		(1,505)		6,080
Mortgage-backed GSE residential		(274)		11,646		(1,506)		5,983
Total	$	(274)	$	12,021	$	(3,011)	$	12,063


	December 31, 2025
	Twelve Months or Less				Over Twelve Months
	Gross		Estimated		Gross		Estimated
	Unrealized		Fair		Unrealized		Fair
(Dollars in thousands)	Losses		Value		Losses		Value
States and political subdivisions	$	(23)	$	1,283	$	(1,422)	$	6,177
Mortgage-backed GSE residential		(48)		12,034		(1,450)		6,228
Total	$	(71)	$	13,317	$	(2,872)	$	12,405

At March 31, 2026 the thirty-one securities available for sale (11 municipal securities and 20 mortgage-backed securities) with an unrealized loss have depreciated 12.00% from the Company’s amortized cost basis. Eighteen of these securities have been in a loss position for greater than twelve months.

The Company does not believe that the securities available for sale that were in an unrealized loss position as of March 31, 2026 represent a credit loss impairment. As of March 31, 2026, there have been no payment defaults, nor do we currently expect any future payment defaults. Furthermore, the Company does not intend to sell these securities, and it is not more likely than not that the Company will be required to sell the investment securities before recovery of their amortized cost basis, which may be at maturity.

Equity Securities

As of March 31, 2026 and December 31, 2025, the Company had equity securities with carrying values totaling $18.6 million. The equity securities consist of our investment in a market-rate bond mutual fund that invests in high quality fixed income bonds, mainly government agency securities whose proceeds are designed to positively impact community development throughout the United States. The mutual fund focuses exclusively on providing affordable housing to low- and moderate-income borrowers and renters, including those in Majority Minority Census Tracts.

During the three months ended March 31, 2026 and 2025, we recognized unrealized losses of $82,000 and unrealized gains of $140,000, respectively, in net income on our equity securities. These unrealized gains and losses are recorded in “Other Income” on the Consolidated Statements of Income.

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NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

Major classifications of loans held for investment at March 31, 2026 and December 31, 2025 are summarized as follows:


		March 31,			December 31,
(Dollars in thousands)		2026			2025
Construction and development		$	52,452		$	41,796
Commercial real estate			1,492,703			1,560,728
Commercial and industrial			91,877			96,360
Residential real estate			2,392,444			2,378,311
Consumer and other			643			627
Total loans receivable		$	4,030,119		$	4,077,822
Unearned income			(10,093)			(6,621)
Loan discounts			(18,912)			(19,804)
Allowance for credit losses			(26,700)			(27,843)
Loans held for investment, net		$	3,974,414		$	4,023,554

The Company is not committed to lend additional funds to borrowers with nonaccrual or restructured loans.

In the normal course of business, the Company may sell and purchase loan participations to and from other financial institutions and related parties. Commercial loan participations are sold as needed to comply with the legal lending limits per borrower as imposed by regulatory authorities. The participations are sold without recourse and the Company imposes no transfer or ownership restrictions on the purchaser.

The Company elected to exclude accrued interest receivable from the amortized cost basis of loans disclosed throughout this note. As of March 31, 2026 and December 31, 2025, accrued interest receivable for loans totaled $20.0 million and $20.0 million, respectively, and is included in the “accrued interest receivable” line item on the Company’s Consolidated Balance Sheets.

Allowance for Credit Losses

A summary of changes in the allowance for credit losses by portfolio segment for the three months ended March 31, 2026 and 2025 is as follows:


		Three Months Ended March 31, 2026
		Construction
		and			Commercial			Commercial			Residential			Consumer
(Dollars in thousands)		Development			Real Estate			and Industrial			Real Estate			and Other			Total
Allowance for credit losses:
Beginning balance		$	65		$	15,716		$	1,586		$	10,472		$	4		$	27,843
Charge-offs			—			(190)			(92)			—			—			(282)
Recoveries			—			5			3			—			—			8
Provision for loan losses			(4)			(800)			(28)			(36)			(1)			(869)
Ending balance		$	61		$	14,731		$	1,469		$	10,436		$	3		$	26,700

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		Three Months Ended March 31, 2025
		Construction
		and			Commercial			Commercial			Residential			Consumer
(Dollars in thousands)		Development			Real Estate			and Industrial			Real Estate			and Other			Total
Allowance for credit losses:
Beginning balance		$	31		$	7,265		$	1,380		$	10,066		$	2		$	18,744
Charge-offs			—			—			(173)			—			—			(173)
Recoveries			—			1			3			—			—			4
Provision for loan losses			13			276			(8)			(263)			(1)			17
Ending balance		$	44		$	7,542		$	1,202		$	9,803		$	1		$	18,592

The allowance for credit losses was $26.7 million as of March 31, 2026 compared to $27.8 million as of December 31, 2025, a decrease of $1.1 million. The decrease was primarily driven by lower loan balances and reduced reserves on individually analyzed loans.

Allowance for Unfunded Commitments

The Company records an allowance for credit losses on unfunded loan commitments, unless the commitments to extend credit are unconditionally cancelable, through a charge to provision for unfunded commitments in the Company’s Consolidated Statements of Income. The allowance for credit losses on off-balance sheet credit exposures is estimated by loan segment using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur. The allowance for unfunded commitments totaled $345,000, $287,000 and $282,000 as of March 31, 2026, December 31, 2025 and March 31, 2025, respectively, and is included in “Other Liabilities” on the Company’s Consolidated Balance Sheets.

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Collateral-Dependent Loans

Collateral-dependent loans are loans for which foreclosure is probable or loans for which the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The estimated credit losses for these loans are based on the collateral’s fair value, less selling costs. In most cases, the Company records a partial charge-off to reduce the loan’s carrying value to the collateral’s fair value, less selling costs, at the time of foreclosure. As of March 31, 2026, there were $46.3 million, $8.5 million and $1.7 million of collateral-dependent loans which were secured by commercial real estate, commercial equipment, and residential real estate, respectively. As of December 31, 2025, there were $46.4 million, $10.3 million and $1.4 million of collateral-dependent loans which were secured by commercial real estate, commercial equipment, and residential real estate, respectively. The allowance for credit losses allocated to these loans as of March 31, 2026 and December 31, 2025 was $2.5 million and $2.3 million, respectively.

Past Due and Nonaccrual Loans

A primary credit quality indicator for financial institutions is delinquent balances. Delinquencies are updated on a daily basis and are continuously monitored. Loans are placed on nonaccrual status as needed based on repayment status and consideration of accounting and regulatory guidelines. Nonaccrual balances are updated and reported on a daily basis.

The following summarizes the Company’s past due and nonaccrual loans, by portfolio segment, as of March 31, 2026 and December 31, 2025:


											Accruing			Total						Total
(Dollars in thousands)											Greater than			Accruing						Financing
March 31, 2026		Current			30-59 Days			60-89 Days			90 Days			Past Due			Nonaccrual			Receivables
Construction and development		$	50,758		$	982		$	—		$	—		$	982		$	—		$	51,740
Commercial real estate			1,442,333			18,886			1,796			17			20,699			8,785			1,471,817
Commercial and industrial			88,933			668			—			—			668			1,179			90,780
Residential real estate			2,354,364			24,148			762			—			24,910			6,860			2,386,134
Consumer and other			493			150			—			—			150			—			643
Total		$	3,936,881		$	44,834		$	2,558		$	17		$	47,409		$	16,824		$	4,001,114


											Accruing			Total						Total
(Dollars in thousands)											Greater than			Accruing						Financing
December 31, 2025		Current			30-59 Days			60-89 Days			90 Days			Past Due			Nonaccrual			Receivables
Construction and development		$	40,319		$	800		$	—		$	—		$	800		$	—		$	41,119
Commercial real estate			1,520,769			5,446			1,485			—			6,931			14,776			1,542,476
Commercial and industrial			94,025			306			—			—			306			1,301			95,632
Residential real estate			2,341,189			17,736			3,490			—			21,226			9,136			2,371,551
Consumer and other			619			—			—			—			—			—			619
Total		$	3,996,921		$	24,288		$	4,975		$	—		$	29,263		$	25,213		$	4,051,397

The following table presents an analysis of nonaccrual loans with and without a related allowance for credit losses as of March 31, 2026 and December 31, 2025:


		Nonaccrual			Nonaccrual
(Dollars in thousands)		Loans With a			Loans Without a			Total
March 31, 2026		Related ACL			Related ACL			Nonaccrual Loans
Commercial real estate		$	1,159		$	7,626		$	8,785
Commercial and industrial			982			197			1,179
Residential real estate			—			6,860			6,860
Total		$	2,141		$	14,683		$	16,824

Table of Contents


		Nonaccrual			Nonaccrual
(Dollars in thousands)		Loans With a			Loans Without a			Total
December 31, 2025		Related ACL			Related ACL			Nonaccrual Loans
Commercial real estate		$	4,601		$	10,175		$	14,776
Commercial and industrial			858			443			1,301
Residential real estate			—			9,136			9,136
Total		$	5,459		$	19,754		$	25,213

All payments received while a loan is on nonaccrual status are applied against the principal balance of the loan. The Company does not recognize interest income while loans are on nonaccrual status.

Credit Quality Indicators

The Company utilizes a ten grade loan risk rating system for its loan portfolio as follows:

●

Loans rated Pass – Loans in this category have low to average risk. There are six loan risk ratings (grades 1-6) included in loans rated Pass.

●

Loans rated Special Mention (grade 7) – Loans do not presently expose the Company to a sufficient degree of risk to warrant adverse classification, but do possess deficiencies deserving close attention.

●

Loans rated Substandard (grade 8) – Loans are inadequately protected by the current credit-worthiness and paying capability of the obligor or of the collateral pledged, if any.

●

Loans rated Doubtful (grade 9) – Loans which have all the weaknesses inherent in loans classified Substandard, with the added characteristic that the weaknesses make collections or liquidation in full, or on the basis of currently known facts, conditions and values, highly questionable or improbable.

●

Loans rated Loss (grade 10) – Loans classified Loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted.

Loan grades are monitored regularly and updated as necessary based upon review of repayment status and consideration of periodic updates regarding the borrower’s financial condition and capacity to meet contractual requirements.

Table of Contents

The following tables present the loan portfolio’s amortized cost by loan type, risk rating and year of origination as of March 31, 2026 and December 31, 2025. There were no loans with a risk rating of Doubtful or Loss at March 31, 2026 and December 31, 2025.


(Dollars in thousands)		Term Loan by Origination Year																Revolving
March 31, 2026		2026			2025			2024			2023		2022		Prior			Loans			Total Loans
Construction and development
Pass		$	—		$	22,598		$	23,733		$	—	$	4,933	$	476		$	—		$	51,740
Special Mention			—			—			—			—		—		—			—			—
Substandard			—			—			—			—		—		—			—			—
Total construction and development		$	—		$	22,598		$	23,733		$	—	$	4,933	$	476		$	—		$	51,740
Commercial real estate
Pass		$	8,182		$	303,235		$	287,265		$	199,972	$	295,953	$	309,130		$	2,520		$	1,406,257
Special Mention			—			—			—			14,461		7,225		122			—			21,808
Substandard			—			—			—			1,193		30,329		12,230			—			43,752
Total commercial real estate		$	8,182		$	303,235		$	287,265		$	215,626	$	333,507	$	321,482		$	2,520		$	1,471,817

Commercial real estate:
Current period gross write offs		$	—		$	—		$	74		$	—	$	116	$	—		$	—		$	190

Commercial and industrial
Pass		$	1,925		$	13,992		$	8,609		$	19,604	$	8,794	$	9,265		$	26,406		$	88,595
Special Mention			—			—			—			—		—		484			—			484
Substandard			—			—			—			512		463		726			—			1,701
Total commercial and industrial		$	1,925		$	13,992		$	8,609		$	20,116	$	9,257	$	10,475		$	26,406		$	90,780

Commercial and industrial:
Current period gross write offs		$	—		$	—		$	—		$	—	$	—	$	92		$	—		$	92

Residential real estate
Pass		$	101,221		$	402,360		$	130,895		$	140,844	$	632,983	$	969,502		$	—		$	2,377,805
Special Mention			—			—			—			—		—		—			—			—
Substandard			—			—			863			354		1,377		5,735			—			8,329
Total residential real estate		$	101,221		$	402,360		$	131,758		$	141,198	$	634,360	$	975,237		$	—		$	2,386,134
Consumer and other
Pass		$	325		$	—		$	—		$	—	$	—	$	—		$	318		$	643
Special Mention			—			—			—			—		—		—			—			—
Substandard			—			—			—			—		—		—			—			—
Total consumer and other		$	325		$	—		$	—		$	—	$	—	$	—		$	318		$	643

Total loans		$	111,653		$	742,185		$	451,365		$	376,940	$	982,057	$	1,307,670		$	29,244		$	4,001,114

Table of Contents


(Dollars in thousands)		Term Loan by Origination Year															Revolving
December 31, 2025		2025		2024			2023			2022		2021		Prior			Loans			Total Loans
Construction and development
Pass		$	11,568	$	24,045		$	141		$	4,886	$	180	$	299		$	—		$	41,119
Special Mention			—		—			—			—		—		—			—			—
Substandard			—		—			—			—		—		—			—			—
Total construction and development		$	11,568	$	24,045		$	141		$	4,886	$	180	$	299		$	—		$	41,119
Commercial real estate
Pass		$	329,091	$	290,439		$	213,509		$	299,971	$	148,006	$	177,640		$	3,020		$	1,461,676
Special Mention			—		—			14,152			6,915		—		114			—			21,181
Substandard			—		—			1,121			31,544		12,396		14,558			—			59,619
Total commercial real estate		$	329,091	$	290,439		$	228,782		$	338,430	$	160,402	$	192,312		$	3,020		$	1,542,476
Commercial and industrial
Pass		$	9,527	$	8,481		$	20,771		$	11,244	$	4,824	$	7,356		$	31,095		$	93,298
Special Mention			—		—			—			—		—		484			—			484
Substandard			—		—			553			463		196		638			—			1,850
Total commercial and industrial		$	9,527	$	8,481		$	21,324		$	11,707	$	5,020	$	8,478		$	31,095		$	95,632

Commercial and industrial:
Current period gross write offs		$	—	$	—		$	—		$	—	$	196	$	98		$	—		$	294

Residential real estate
Pass		$	417,993	$	137,770		$	148,861		$	648,433	$	686,010	$	322,444		$	—		$	2,361,511
Special Mention			—		—			—			—		—		—			—			—
Substandard			—		837			1,098			2,067		425		5,613			—			10,040
Total residential real estate		$	417,993	$	138,607		$	149,959		$	650,500	$	686,435	$	328,057		$	—		$	2,371,551
Consumer and other
Pass		$	324	$	295		$	—		$	—	$	—	$	—		$	—		$	619
Special Mention			—		—			—			—		—		—			—			—
Substandard			—		—			—			—		—		—			—			—
Total consumer and other		$	324	$	295		$	—		$	—	$	—	$	—		$	—		$	619

MetroCity Bankshares, Inc. 10-Q