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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 June 30, 2025

☐ 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 August 1, 2025, the registrant had 25,537,746 shares of common stock, par value $0.01 per share, issued and outstanding.

¹²³

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METROCITY BANKSHARES, INC.

Quarterly Report on Form 10-Q

June 30, 2025

TABLE OF CONTENTS

		Page
Part I.	Financial Information

Item l.	Financial Statements:
	Consolidated Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024	3
	Consolidated Statements of Income (unaudited) for the Three and Six Months Ended June 30, 2025 and 2024	4
	Consolidated Statements of Comprehensive Income (unaudited) for the Three and Six Months Ended June 30, 2025 and 2024	5
	Consolidated Statements of Shareholders’ Equity (unaudited) for the Three and Six Months Ended June 30, 2025 and 2024	6
	Consolidated Statements of Cash Flows (unaudited) for the Three and Six Months Ended June 30, 2025 and 2024	7
	Notes to Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	56
Item 4.	Controls and Procedures	58

Part II.	Other Information

Item 1.	Legal Proceedings	58
Item 1A.	Risk Factors	58
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	59
Item 3.	Defaults Upon Senior Securities	59
Item 4.	Mine Safety Disclosures	59
Item 5.	Other Information	59
Item 6.	Exhibits	60
	Signatures	61

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

METROCITY BANKSHARES, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)


	June 30,		December 31,
	2025		2024
	(Unaudited)
Assets:
Cash and due from banks	$	273,596	$	236,338
Federal funds sold		12,415		13,537
Cash and cash equivalents		286,011		249,875
Equity securities		18,481		10,300
Securities available for sale		15,030		17,391
Loans held for sale		4,988		—
Loans, less allowance for credit losses of $18,748 and $18,744, respectively		3,102,786		3,139,191
Accrued interest receivable		16,528		15,858
Federal Home Loan Bank stock		22,693		20,251
Premises and equipment, net		17,872		18,276
Operating lease right-of-use asset		8,197		7,850
Foreclosed real estate, net		744		427
SBA and USDA servicing asset		6,823		7,274
Mortgage servicing asset, net		1,676		1,409
Bank owned life insurance		74,520		73,285
Interest rate derivatives		12,656		21,790
Other assets		26,683		10,868
Total assets	$	3,615,688	$	3,594,045

Liabilities:
Deposits:
Non-interest-bearing demand	$	548,906	$	536,276
Interest-bearing		2,140,587		2,200,522
Total deposits		2,689,493		2,736,798

Federal Home Loan Bank advances		425,000		375,000
Operating lease liability		8,222		7,940
Accrued interest payable		3,438		3,498
Other liabilities		53,435		49,456
Total liabilities	$	3,179,588	$	3,172,692

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, 25,537,746 and 25,402,782 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively		255		254
Additional paid-in capital		50,212		49,216
Retained earnings		380,046		358,704
Accumulated other comprehensive income		5,587		13,179
Total shareholders' equity		436,100		421,353
Total liabilities and shareholders' equity	$	3,615,688	$	3,594,045

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				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
Interest and dividend income:
Loans, including fees	$	50,936	$	50,527	$	101,189	$	100,644
Other investment income		2,970		3,547		5,096		5,758
Federal funds sold		143		34		283		64
Total interest income		54,049		54,108		106,568		106,466

Interest expense:
Deposits		17,496		19,735		35,473		41,840
FHLB advances and other borrowings		4,375		3,661		8,363		6,829
Total interest expense		21,871		23,396		43,836		48,669

Net interest income		32,178		30,712		62,732		57,797

Provision for credit losses:
Provision for loan losses		216		(105)		233		(239)
Provision for unfunded commitments		(87)		(23)		31		(29)
Provision for credit losses		129		(128)		264		(268)

Net interest income after provision for credit losses		32,049		30,840		62,468		58,065

Noninterest income:
Service charges on deposit accounts		505		532		1,005		979
Other service charges, commissions and fees		1,620		1,573		3,216		3,185
Gain on sale of residential mortgage loans		579		1,177		978		1,399
Mortgage servicing income, net		781		1,107		1,399		1,336
Gain on sale of SBA loans		643		—		1,301		1,051
SBA servicing income, net		642		560		1,555		2,056
Other income		963		610		1,735		1,121
Total noninterest income		5,733		5,559		11,189		11,127

Noninterest expense:
Salaries and employee benefits		8,554		8,048		17,047		15,418
Occupancy and equipment		1,380		1,334		2,797		2,688
Data processing		329		353		674		647
Advertising		149		157		316		329
Other expenses		3,701		3,140		7,078		6,311
Total noninterest expense		14,113		13,032		27,912		25,393

Income before provision for income taxes		23,669		23,367		45,745		43,799
Provision for income taxes		6,843		6,430		12,622		12,232
Net income available to common shareholders	$	16,826	$	16,937	$	33,123	$	31,567

Earnings per share:
Basic	$	0.66	$	0.67	$	1.30	$	1.25
Diluted	$	0.65	$	0.66	$	1.29	$	1.24

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				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024

Net income	$	16,826	$	16,937	$	33,123	$	31,567

Other comprehensive (loss) gain:

Unrealized holding (losses) gains on securities available for sale		(268)		16		(226)		(270)
Net changes in fair value of cash flow hedges		(4,417)		(2,454)		(10,052)		4,953
Tax effect		1,312		673		2,686		(1,311)

Other comprehensive (loss) gain		(3,373)		(1,765)		(7,592)		3,372

Comprehensive income	$	13,453	$	15,172	$	25,531	$	34,939

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, April 1, 2025	25,402,782	$	254	$	49,645	$	369,110	$	8,960	$	427,969
Net income	—		—		—		16,826		—		16,826
Stock based compensation expense	—		—		599		—		—		599
Vesting of restricted stock	136,238		1		(1)		—		—		—
Repurchase of common stock	(1,274)		—		(31)		—		—		(31)
Other comprehensive loss	—		—		—		—		(3,373)		(3,373)
Dividends declared on common stock ($0.23 per share)	—		—		—		(5,890)		—		(5,890)
Balance, June 30, 2025	25,537,746	$	255	$	50,212	$	380,046	$	5,587	$	436,100

Balance, April 1, 2024	25,205,506	$	252	$	46,105	$	324,900	$	25,347	$	396,604
Net income	—		—		—		16,937		—		16,937
Stock based compensation expense	—		—		550		—		—		550
Vesting of restricted stock	126,820		1		(1)		—		—		—
Repurchase of common stock	(410)		—		(10)		—		—		(10)
Other comprehensive loss	—		—		—		—		(1,765)		(1,765)
Dividends declared on common stock ($0.20 per share)	—		—		—		(5,088)		—		(5,088)
Balance, June 30, 2024	25,331,916	$	253	$	46,644	$	336,749	$	23,582	$	407,228

Six Months Ended:
Balance, January 1, 2025	25,402,782	$	254	$	49,216	$	358,704	$	13,179	$	421,353
Net income	—		—		—		33,123		—		33,123
Stock based compensation expense	—		—		1,028		—		—		1,028
Vesting of restricted stock	136,238		1		(1)		—		—		—
Repurchase of common stock	(1,274)		—		(31)		—		—		(31)
Other comprehensive loss	—		—		—		—		(7,592)		(7,592)
Dividends declared on common stock ($0.46 per share)	—		—		—		(11,781)		—		(11,781)
Balance, June 30, 2025	25,537,746	$	255	$	50,212	$	380,046	$	5,587	$	436,100

Balance, January 1, 2024	25,205,506	$	252	$	45,699	$	315,356	$	20,210	$	381,517
Net income	—		—		—		31,567		—		31,567
Stock based compensation expense	—		—		956		—		—		956
Vesting of restricted stock	126,820		1		(1)		—		—		—
Repurchase of common stock	(410)		—		(10)		—		—		(10)
Other comprehensive income	—		—		—		—		3,372		3,372
Dividends declared on common stock ($0.40 per share)	—		—		—		(10,174)		—		(10,174)
Balance, June 30, 2024	25,331,916	$	253	$	46,644	$	336,749	$	23,582	$	407,228

See accompanying notes to unaudited consolidated financial statements.

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METROCITY BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in thousands)


	Six Months Ended June 30,
	2025		2024
Cash flow from operating activities:
Net income	$	33,123	$	31,567
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion		1,682		1,474
Provision for credit losses		264		(268)
Stock based compensation expense		1,028		956
Unrealized (gains) losses recognized on equity securities		(181)		59
Gain on sale of foreclosed real estate		(28)		—
Write-down of foreclosed real estate		—		14
Gain on sale of residential real estate loans		(978)		(1,177)
Origination of SBA loans held for sale		(28,861)		(24,631)
Proceeds from sales of SBA loans held for sale		33,600		25,682
Gain on sale of SBA loans		(1,301)		(1,051)
Increase in cash value of bank owned life insurance		(1,235)		(1,104)
Increase in accrued interest receivable		(670)		(161)
Decrease in SBA and USDA servicing rights		451		143
Increase in mortgage servicing rights		(267)		(181)
Increase in state tax credits		(11,455)		—
(Increase) decrease in other assets		(1,674)		2,073
Decrease in accrued interest payable		(60)		(651)
Increase in other liabilities		2,924		22,976
Net cash flow provided by operating activities		26,362		55,720

Cash flow from investing activities:
Purchases of equity securities		(8,000)		—
Proceeds from maturities, calls or paydowns of securities available for sale		2,106		366
Purchase of Federal Home Loan Bank stock		(2,442)		(2,405)
Proceeds from sales of residential real estate loans		95,338		134,696
Increase in loans, net		(68,638)		(59,558)
Purchases of premises and equipment		(188)		(597)
Proceeds from sales of foreclosed real estate owned		1,735		—
Net cash flow used in investing activities		19,911		72,502

Cash flow from financing activities:
Dividends paid on common stock		(11,685)		(10,082)
Repurchases of common stock		(31)		(10)
(Decrease) Increase in deposits, net		(47,305)		14,924
Premiums paid for interest rate caps		(1,116)		—
Proceeds from Federal Home Loan Bank advances		100,000		450,000
Repayments of Federal Home Loan Bank advances		(50,000)		(400,000)
Net cash flow provided by financing activities		(10,137)		54,832

Continued to following page.

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METROCITY BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in thousands)


	Six Months Ended June 30,
	2025		2024

Net change in cash and cash equivalents		36,136		183,054
Cash and cash equivalents at beginning of period		249,875		144,805

Cash and cash equivalents at end of period	$	286,011	$	327,859

Supplemental schedule of noncash investing and financing activities:

Transfer of loans held for investment to loans held for sale	$	102,786	$	111,252

Transfer of loan principal to foreclosed real estate, net of write-downs	$	2,024	$	—

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

Interest	$	43,896	$	49,350

Income taxes	$	12,460	$	9,662

See accompanying notes to unaudited consolidated financial statements.

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METROCITY BANKSHARES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2025

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 and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2024.

The Company’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements for the year ended December 31, 2024, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “Company’s 2024 Form 10-K”). There were no new accounting policies or changes to existing policies adopted during the first six months of 2025 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 June 30, 2025. Although the ultimate outcome of all claims and lawsuits outstanding as of June 30, 2025 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 2025 to date but does not expect those updates to have a material impact on the Company’s consolidated financial statements.

NOTE 2 – INVESTMENT SECURITIES

The amortized costs, gross unrealized gains and losses, and estimated fair values of securities available for sale as of June 30, 2025 and December 31, 2024 are summarized as follows:


	June 30, 2025
	Gross		Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Obligations of U.S. Government entities and agencies	$	2,534	$	—	$	—	$	2,534
States and political subdivisions		7,997		—		(1,777)		6,220
Mortgage-backed GSE residential		8,009		—		(1,733)		6,276
Total	$	18,540	$	—	$	(3,510)	$	15,030


	December 31, 2024
	Gross		Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Obligations of U.S. Government entities and agencies	$	4,467	$	—	$	—	$	4,467
States and political subdivisions		8,022		—		(1,485)		6,537
Mortgage-backed GSE residential		8,186		—		(1,799)		6,387
Total	$	20,675	$	—	$	(3,284)	$	17,391

The amortized costs and estimated fair values of investment securities available for sale at June 30, 2025 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	$	—	$	—
Due after one year but less than five years		3,773		3,762
Due after five years but less than ten years		—		—
Due in more than ten years		6,758		4,992
Mortgage-backed GSE residential		8,009		6,276
Total	$	18,540	$	15,030

Accrued interest receivable for securities available for sale totaled $165,000 and $113,000 as of June 30, 2025 and December 31, 2024, respectively. This accrued interest receivable is included in the “accrued interest receivable” line item on the Company’s Consolidated Balance Sheets.

As of June 30, 2025 and December 31, 2024, the Company had securities pledged to the Federal Reserve Bank Discount Window with a carrying amount of $12.5 million and $12.9 million, respectively. There were no securities sold during the three and six months ended June 30, 2025 and 2024.

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Information pertaining to securities with gross unrealized losses at June 30, 2025 and December 31, 2024 aggregated by investment category and length of time that individual securities have been in a continuous loss position, are summarized in the table below.


	June 30, 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	$	—	$	—	$	1,777	$	6,220
Mortgage-backed GSE residential		—		—		1,733		6,276
Total	$	—	$	—	$	3,510	$	12,496


	December 31, 2024
	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	$	—	$	—	$	1,485	$	6,537
Mortgage-backed GSE residential		—		—		1,799		6,387
Total	$	—	$	—	$	3,284	$	12,924

At June 30, 2025, the twenty securities available for sale (11 municipal securities and 9 mortgage-backed securities) with an unrealized loss have depreciated 21.93% from the Company’s amortized cost basis. All 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 June 30, 2025 represent a credit loss impairment. As of June 30, 2025, 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 June 30, 2025 and December 31, 2024, the Company had equity securities with carrying values totaling $18.5 million and $10.3 million, respectively. 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 June 30, 2025 and 2024, we recognized an unrealized gain of $41,000 and an unrealized loss of $12,000, respectively, in net income on our equity securities. During the six months ended June 30, 2025 and 2024, we recognized an unrealized gain of $181,000 and an unrealized loss of $59,000, 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 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

Major classifications of loans at June 30, 2025 and December 31, 2024 are summarized as follows:


	June 30,		December 31,
(Dollars in thousands)	2025		2024
Construction and development	$	30,149	$	21,569
Commercial real estate		803,384		762,033
Commercial and industrial		73,832		78,220
Residential real estate		2,221,316		2,303,234
Consumer and other		200		260
Total loans receivable		3,128,881		3,165,316
Unearned income		(7,347)		(7,381)
Allowance for credit losses		(18,748)		(18,744)
Loans, net	$	3,102,786	$	3,139,191

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 June 30, 2025 and December 31, 2024, accrued interest receivable for loans totaled $16.4 million and $15.7 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 and six months ended June 30, 2025 and 2024 is as follows:


	Three Months Ended June 30, 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	$	44	$	7,542	$	1,202	$	9,803	$	1	$	18,592
Charge-offs		—		(62)		—		—		—		(62)
Recoveries		—		—		2		—		—		2
Provision for loan losses		3		122		199		(109)		1		216
Ending balance	$	47	$	7,602	$	1,403	$	9,694	$	2	$	18,748


	Three Months Ended June 30, 2024
	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	$	89	$	6,905	$	733	$	10,253	$	2	$	17,982
Charge-offs		—		—		—		—		—		—
Recoveries		—		82		1		—		—		83
Provision for loan losses		(64)		31		(36)		(36)		—		(105)
Ending balance	$	25	$	7,018	$	698	$	10,217	$	2	$	17,960

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	Six Months Ended June 30, 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		—		(62)		(173)		—		—		(235)
Recoveries		—		1		5		—		—		6
Provision for loan losses		16		398		191		(372)		—		233
Ending balance	$	47	$	7,602	$	1,403	$	9,694	$	2	$	18,748


	Six Months Ended June 30, 2024
	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	$	46	$	6,876	$	588	$	10,597	$	5	$	18,112
Charge-offs		—		—		—		—		—		—
Recoveries		—		83		4		—		—		87
Provision for loan losses		(21)		59		106		(380)		(3)		(239)
Ending balance	$	25	$	7,018	$	698	$	10,217	$	2	$	17,960

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 $195,000, $165,000 and $287,000 as of June 30, 2025, December 31, 2024 and June 30, 2024, respectively, and is included in “Other Liabilities” on the Company’s Consolidated Balance Sheets.

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 June 30, 2025, there were $11.4 million, $1.8 million and $232,000 of collateral-dependent loans which were secured by residential real estate, commercial real estate and equipment, respectively. As of December 31, 2024, there were $14.2 million, $4.3 million and $569,000 of collateral-dependent loans which were secured by residential real estate, commercial real estate and equipment, respectively. The allowance for credit losses allocated to these loans as of June 30, 2025 and December 31, 2024 was $487,000 and $748,000, respectively.

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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 June 30, 2025 and December 31, 2024:


							Accruing		Total				Total
(Dollars in thousands)							Greater than		Accruing				Financing
June 30, 2025	Current		30-59 Days		60-89 Days		90 Days		Past Due		Nonaccrual		Receivables
Construction and development	$	29,104	$	182	$	—	$	—	$	182	$	—	$	29,286
Commercial real estate		791,567		—		6,489		—		6,489		2,072		800,128
Commercial and industrial		72,469		—		1		—		1		970		73,440
Residential real estate		2,202,681		—		4,393		—		4,393		11,406		2,218,480
Consumer and other		200		—		—		—		—		—		200
Total	$	3,096,021	$	182	$	10,883	$	—	$	11,065	$	14,448	$	3,121,534


							Accruing		Total				Total
(Dollars in thousands)							Greater than		Accruing				Financing
December 31, 2024	Current		30-59 Days		60-89 Days		90 Days		Past Due		Nonaccrual		Receivables
Construction and development	$	21,390	$	—	$	—	$	—	$	—	$	—	$	21,390
Commercial real estate		752,686		1,705		1,257		—		2,962		3,316		758,964
Commercial and industrial		77,310		—		82		—		82		526		77,918
Residential real estate		2,271,175		10,777		3,283		—		14,060		14,168		2,299,403
Consumer and other		260		—		—		—		—		—		260
Total	$	3,122,821	$	12,482	$	4,622	$	—	$	17,104	$	18,010	$	3,157,935

The following table presents an analysis of nonaccrual loans with and without a related allowance for credit losses as of June 30, 2025 and December 31, 2024:


	Nonaccrual		Nonaccrual
(Dollars in thousands)	Loans With a		Loans Without a		Total
June 30, 2025	Related ACL		Related ACL		Nonaccrual Loans
Construction and development	$	—	$	—	$	—
Commercial real estate		2,072		—		2,072
Commercial and industrial		725		245		970
Residential real estate		—		11,406		11,406
Total	$	2,797	$	11,651	$	14,448

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	Nonaccrual		Nonaccrual
(Dollars in thousands)	Loans With a		Loans Without a		Total
December 31, 2024	Related ACL		Related ACL		Nonaccrual Loans
Construction and development	$	—	$	—	$	—
Commercial real estate		1,738		1,578		3,316
Commercial and industrial		329		197		526
Residential real estate		—		14,168		14,168
Total	$	2,067	$	15,943	$	18,010

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.

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The following tables present the loan portfolio's amortized cost by loan type, risk rating and year of origination as of June 30, 2025 and December 31, 2024. There were no loans with a risk rating of Doubtful or Loss at June 30, 2025 and December 31, 2024.


(Dollars in thousands)	Term Loan by Origination Year												Revolving
June 30, 2025	2025		2024		2023		2022		2021		Prior		Loans		Total Loans
Construction and development
Pass	$	442	$	22,644	$	620	$	4,258	$	182	$	1,140	$	—	$	29,286
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total construction and development	$	442	$	22,644	$	620	$	4,258	$	182	$	1,140	$	—	$	29,286
Commercial real estate
Pass	$	91,598	$	118,671	$	141,438	$	193,535	$	78,261	$	147,774	$	474	$	771,751
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		445		4,666		13,624		9,642		—		28,377
Total commercial real estate	$	91,598	$	118,671	$	141,883	$	198,201	$	91,885	$	157,416	$	474	$	800,128

Commercial real estate:
Current period gross write offs	$	—	$	—	$	—	$	—	$	—	$	62	$	—	$	62

Commercial and industrial
Pass	$	6,112	$	6,182	$	15,518	$	9,900	$	3,362	$	4,533	$	26,176	$	71,783
Special Mention		—		—		—		—		—		537		—		537
Substandard		—		—		—		193		228		699		—		1,120
Total commercial and industrial	$	6,112	$	6,182	$	15,518	$	10,093	$	3,590	$	5,769	$	26,176	$	73,440

Commercial and industrial:
Current period gross write offs	$	—	$	—	$	—	$	—	$	173	$	—	$	—	$	173

Residential real estate

MetroCity Bankshares, Inc. 10-Q