MetroCity Bankshares, Inc.

Previous wording

The purpose of this discussion and analysis is to focus on significant changes in the financial condition of MetroCity Bancshares, Inc. and our wholly owned subsidiary, Metro City Bank, from December 31, 2024 through September 30, 2025 and on our results of operations for the three and nine months ended September 30, 2025 and 2024. This discussion and analysis should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2024 included in our Annual Report on Form 10-K, and information presented elsewhere in this Quarterly Report on Form 10-Q, particularly the unaudited consolidated financial statements and related notes appearing in Item 1.

Current wording

The purpose of this discussion and analysis is to focus on significant changes in the financial condition of MetroCity Bancshares, Inc. and our wholly owned subsidiary, Metro City Bank, from December 31, 2025 through March 31, 2026 and on our results of operations for the three months ended March 31, 2026 and 2025. This discussion and analysis should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2025 included in our Annual Report on Form 10-K, and information presented elsewhere in this Quarterly Report on Form 10-Q, particularly the unaudited consolidated financial statements and related notes appearing in Item 1.

Previous wording

business disruptions, including, without limitation, as the result of difficulties in maintaining relationships with employees; and (viii) increased competitive pressures and solicitations of customers by competitors;

Current wording

in deposit mix; (vi) unexpected operating and other costs, which may differ or change from expectations; (vii) the risks of customer and employee loss and business disruptions, including, without limitation, as the result of difficulties in maintaining relationships with employees; and (viii) increased competitive pressures and solicitations of customers by competitors, and similar risks associated with any future acquisitions or business combinations;

Previous wording

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this Quarterly Report on Form 10-Q. Because of these risks and other uncertainties, our actual future results, performance or achievement, or industry results, may be materially different from the results indicated by the forward looking statements in this Quarterly Report on Form 10-Q. In addition, our past results of operations are not necessarily indicative of our future results. You should not rely on any forward looking statements, which represent our beliefs, assumptions and estimates only as of the dates on which they were made, as predictions of future events. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Current wording

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this Quarterly Report on Form 10-Q. Because of these risks and other uncertainties, our actual future results, performance or achievement, or industry results, may be materially different from the results indicated by the forward looking statements in this Quarterly Report on Form 10-Q. In addition, our past results of operations are not necessarily indicative of our future results. You are cautioned not to place undue reliance on these forward looking statements, which represent our beliefs, assumptions and estimates only as of the dates on which they were made. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, changes in assumptions or otherwise, except as required by law.

Previous wording

Directors. Actual results could differ from these estimates. For additional information regarding critical accounting policies, refer to “Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” and Note 1 of our consolidated financial statements as of December 31, 2024 in the Company’s 2024 Form 10-K. There have been no significant changes in the Company’s application of critical accounting policies since December 31, 2024.

Current wording

Critical accounting estimates include a high degree of uncertainty in the underlying assumptions. Management bases its estimates on historical experience, current information and other factors deemed relevant. The development, selection and disclosure of our critical accounting estimates are reviewed with the Audit Committee of the Company’s Board of Directors. Actual results could differ from these estimates. For additional information regarding critical accounting policies, refer to “Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” and Note 1 of our consolidated financial statements as of December 31, 2025 in the Company’s 2025 Form 10-K. There have been no significant changes in the Company’s application of critical accounting policies since December 31, 2025.

Previous wording

The reserve for credit losses consists of the allowance for credit losses (“ACL”) and the allowance for unfunded commitments. The estimate of expected credit losses under the current expected credit loss (“CECL”) methodology is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. We then consider whether the historical loss experience should be adjusted for loan-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience was used. Finally, we consider forecasts about future economic conditions that are reasonable and supportable. The allowance for unfunded commitments represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit. This allowance is estimated by loan segment at each balance sheet date under the CECL model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur.

Current wording

The reserve for credit losses consists of the allowance for credit losses (“ACL”) and the allowance for unfunded commitments. The estimate of expected credit losses under the current expected credit loss (“CECL”) methodology is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. We then consider whether the historical loss experience should be adjusted for loan-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience was used. Finally, we consider forecasts about future economic conditions that are reasonable and supportable. The

Previous wording

See Note 1 and Note 3 of our consolidated financial statements as of December 31, 2024 in the Company’s 2024 Form 10-K and as of September 30, 2025, included elsewhere in this Form 10-Q, for additional information on thereserve and allowance for credit losses.

Current wording

See Note 1 and Note 4 of our consolidated financial statements as of December 31, 2025 in the Company’s 2025 Form 10-K and Note 1 and Note 4 of our consolidated financial statements as of March 31, 2026, included elsewhere in this Form 10-Q, for additional information on thereserve and allowance for credit losses.

Previous wording

MetroCity Bankshares, Inc. is a bank holding company headquartered in the Atlanta metropolitan area. We operate through our wholly-owned banking subsidiary, Metro City Bank, a Georgia state-chartered commercial bank that was founded in 2006. We currently operate 20 full-service branch locations in multi-ethnic communities in Alabama, Florida, Georgia, New York, New Jersey, Texas and Virginia. As of September 30, 2025, we had total assets of $3.63 billion, total loans of $3.20 billion, total deposits of $2.69 billion and total shareholders’ equity of $445.9 million.

Current wording

MetroCity Bankshares, Inc. is a bank holding company headquartered in the Atlanta metropolitan area. We operate through our wholly-owned banking subsidiary, Metro City Bank, a Georgia state-chartered commercial bank that was founded in 2006. We currently operate 30 full-service branch locations in multi-ethnic communities in Alabama, Florida, Georgia, New York, New Jersey, Texas and Virginia. As of March 31, 2026, we had total assets of $4.69 billion, total loans of $3.97 billion, total deposits of $3.63 billion and total shareholders’ equity of $554.2 million.

Previous wording

The following table sets forth unaudited selected financial data for the most recent five quarters and for the nine months ended September 30, 2025 and 2024. This data should be read in conjunction with the unaudited consolidated financial statements and accompanying notes included in Item 1 and the information contained in this Item 2.

Current wording

The following table sets forth unaudited selected financial data for the most recent five quarters. This data should be read in conjunction with the unaudited consolidated financial statements and accompanying notes included in Item 1 and the information contained in this Item 2.

Previous wording

This Form 10-Q includes financial information determined by methods other than in accordance with generally accepted accounting principles (“GAAP”). This financial information includes “return on average equity”, which excludes average accumulated other comprehensive income and merger-related expenses. These measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies.

Current wording

noninterest expense. These measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP, and are not necessarily comparable to non-GAAP measures that may be presented by other companies.

Previous wording

The following table reconciles the non-GAAP financial measurement for return on average equity to the most directly comparable GAAP measurement for return on average equity for the three and nine months ended September 30, 2025 and 2024:

Current wording

The following table reconciles the non-GAAP financial measurement for return on average equity, tangible book value per share and efficiency ratio – operating to their respective most directly comparable GAAP measurements for the three months ended March 31, 2026 and 2025:

Previous wording

We recorded net income of $17.3 million for the three months ended September 30, 2025 compared to $16.7 million for the three months ended September 30, 2024, an increase of $569,000, or 3.4%. This increase was due to an increase in net interest income of $1.5 million and a decrease in provision for credit losses of $1.1 million, offset by increases in noninterest expense of $1.0 million and income tax expense of $608,000 and a decrease in noninterest income of $437,000.

Current wording

We recorded net income of $22.3 million for the three months ended March 31, 2026 compared to $16.3 million for the three months ended March 31, 2025, an increase of $6.0 million, or 36.9%. This increase was due to an increase in net interest income of $13.9 million, an increase in noninterest income of $901,000, and a decrease in provision for credit losses of $948,000, offset by increases in noninterest expense of $7.6 million and income tax expense of $2.1 million.

Previous wording

Basic and diluted earnings per common share for the three months ended September 30, 2025 was $0.68 and $0.67, respectively, compared to $0.66 and $0.65 for the basic and diluted earnings per common share for the three months ended September 30, 2024. For the nine months ended September 30, 2025, basic and diluted earnings per common share was $1.98 and $1.96, respectively, compared to $1.91 and $1.89 for the nine months ended September 30, 2024, respectively.

Current wording

Basic and diluted earnings per common share for the three months ended March 31, 2026 was $0.78 and $0.77, respectively, compared to $0.64 and $0.63 for the basic and diluted earnings per common share for the three months ended March 31, 2025.

Previous wording

Interest expense for the three months ended September 30, 2025 decreased $1.3 million, or 5.7%, to $22.2 million compared to interest expense of $23.5 million for the three months ended September 30, 2024, primarily due to a 33 basis points decrease in deposit costs coupled with a $10.4 million decrease in average deposit balances, offset by a $49.3 million increase in the average borrowings balance. The 33 basis points decrease in deposit costs was primarily driven by an 81 basis points decrease in the cost on average time deposits, offset by a 55 basis points increase in the cost on average interest-bearing demand deposits and savings accounts and a 15 basis points increase in the cost of average money market deposits. Average time deposits and money market deposits decreased by $71.2 million and $8.0 million, respectively, while average interest-bearing demand deposits and savings accounts increased by $68.8 million. Average borrowings for the three months ended September 30, 2025 increased by $49.3 million while borrowing costs decreased by five basis points compared to the three months ended September 30, 2024.

Current wording

Interest expense for the three months ended March 31, 2026 increased $4.5 million, or 20.7%, to $26.5 million compared to interest expense of $22.0 million for the three months ended March 31, 2025, primarily due to a $695.3 million increase in average deposit balances, coupled with a $46.3 million increase in the average borrowings balance offset by a 23 basis points decrease in interest bearing liabilities costs. Average time deposits and money market deposits increased by $410.9 million and $165.4 million, respectively, and average interest-bearing demand deposits and savings accounts increased by $118.9 million primarily from the First IC merger in fourth quarter of 2025.

Previous wording

The Company currently has effective interest rate derivative agreements totaling $950.0 million that are designated as cash flow hedges of our deposit accounts indexed to the Federal Funds Effective rate. The weighted average pay rate for these interest rate derivatives is 2.70%. During the three and nine months ended September 30, 2025, we recorded a credit to interest expense of $3.8 million and $12.2 million, respectively, from the benefit received on these interest rate derivatives compared to a credit to interest expense of $6.4 million and $17.0 million recorded during the three and nine month periods ended September 30, 2024, respectively. Based on the Federal Funds Effective rate as of September 30, 2025 (4.09%), the Company would estimate to record a credit to interest expense of approximately $3.2 million for the remainder of 2025 and $7.6 million in 2026 from the benefit received on these interest rate derivatives. See Note 8 of our consolidated financial statements as of September 30, 2025, included elsewhere in this Form 10-Q, for additional information on these interest rate derivatives.

Current wording

The Company currently has effective interest rate derivative agreements totaling $625.0 million that are designated as cash flow hedges of our deposit accounts indexed to the Federal Funds Effective rate. The weighted average pay rate for these interest rate derivatives is 3.16%. During the three months ended March 31, 2026, we recorded a credit to interest expense of $2.3 million, respectively, from the benefit received on these interest rate derivatives compared to a credit to interest expense of $4.1 million recorded during the three month periods ended March 31, 2025, respectively. Based on the Federal Funds Effective rate as of March 31, 2026 (3.64%), the Company would estimate to record a credit to interest expense of approximately $9.3 million for the remainder of 2026 from the benefit received on these interest rate derivatives, however actual results may vary based on changes in market and hedge performance. See Note 9 of our consolidated financial statements as of March 31, 2026 included elsewhere in this Form 10-Q, for additional information on these interest rate derivatives.

Previous wording

The net interest margin for the three months ended September 30, 2025 increased by 10 basis points to 3.68% from 3.58% for the three months ended September 30, 2024, primarily due to a 27 basis points decrease in the cost of average interest-bearing liabilities of $2.57 billion, offset by a 12 basis points decrease in the yield on average interest-earning assets of $3.43 billion. Average earning assets for the three months ended September 30, 2025 increased by $63.6 million from the three months ended September 30, 2024, due to a $59.5 million increase in average loans and a $4.1 million increase in average total investments. Average interest-bearing liabilities for the three months ended September 30, 2025 increased by $38.9 million from the three months ended September 30, 2024, driven by the increase in average borrowings of $49.3 million, offset by a $10.4 million decrease in average interest-bearing deposits.

Current wording

The net interest margin for the three months ended March 31, 2026 increased by 41 basis points to 4.08% from 3.67% for the three months ended March 31, 2025, primarily due to a 23 basis points decrease in the cost of average interest-bearing liabilities of $3.30 billion, and a 20 basis points increase in the yield on average interest-earning assets of $4.42 billion. Average earning assets for the three months ended March 31, 2026 increased by $1.04 billion from the three months ended March 31, 2025, due to a $856.2 million increase in average loans and a $188.0 million increase in average total investments. Average interest-bearing liabilities for the three months ended March 31, 2026 increased by $741.6 million from the three months ended March 31, 2025, driven by increases in average interest-bearing deposits of $695.3 million and average borrowings of $46.3 million.

Previous wording

Net interest margin and net interest income are influenced by internal and external factors. Internal factors include balance sheet changes on both volume and mix and pricing decisions, and external factors include changes in market interest rates, competition and the shape of the interest rate yield curve. The increase in our net interest margin is primarily the result of our decreasing deposit costs.

Current wording

Net interest margin and net interest income are influenced by internal and external factors. Internal factors include balance sheet changes on both volume and mix and pricing decisions, and external factors include changes in market interest rates, competition and the shape of the interest rate yield curve. The increase in our net interest margin is

Previous wording

The following tables present, for the three and nine months ended September 30, 2025 and 2024, information about: (i) weighted average balances, the total dollar amount of interest income from interest-earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin.

Current wording

The following tables present, for the three months ended March 31, 2026 and 2025, information about: (i) weighted average balances, the total dollar amount of interest income from interest-earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin.

Previous wording

We recorded a credit to the provision for credit losses of $543,000 and $279,000 during the three and nine months ended September 30, 2025 compared to a provision for credit losses of $582,000 and $314,000 recorded during the three and nine months ended September 30, 2024. The credit to provision expense recorded during the nine months ended September 30, 2025 was primarily due to the decrease in reserves allocated to our individually analyzed loans, as well as the decrease in general reserves allocated to our residential mortgage loan portfolio as a large amount of residential mortgage loans were moved from loans held for investment to loans held for sale during the three months ended September 30, 2025, partially offset by the increase in reserves allocated to our commercial real estate loan portfolio and unfunded loan commitments. Our ACL as a percentage of gross loans for the periods ended September 30, 2025, December 31, 2024 and September 30, 2024 was 0.60%, 0.59% and 0.60%, respectively. Our ACL as a percentage of gross loans is relatively lower than our peers due to our high percentage of residential mortgage loans, which tend to have lower allowance for credit loss ratios compared to other commercial or consumer loans due to their low LTVs.

Current wording

loans is relatively lower than our peers due to our high percentage of residential mortgage loans, which tend to have lower allowance for credit loss ratios compared to other commercial or consumer loans due to their low LTVs.

Previous wording

The following table sets forth the major components of our noninterest income for the three and nine months ended September 30, 2025 and 2024:

Current wording

The following table sets forth the major components of our noninterest income for the three months ended March 31, 2026 and 2025

Previous wording

Service charges on deposit accounts increased $20,000, or 3.8%, to $551,000 for the three months ended September 30, 2025 compared to $531,000 for the three months ended September 30, 2024. Service charges on deposit accounts were $1.6 million for the nine months ended September 30, 2025 compared to $1.5 million for the nine months ended September 30, 2024, an increase of $46,000, or 3.0%. These increases were primarily attributable to higher service charges on business checking accounts, analysis fees, overdraft fees and charge back fees.

Current wording

Service charges on deposit accounts increased $348,000, or 69.6%, to $848,000 for the three months ended March 31, 2026 compared to $500,000 for the three months ended March 31, 2025. These increases were primarily attributable to higher service charges on business checking accounts, analysis fees, overdraft fees and charge back fees as a result of the First IC acquisition that occurred in fourth quarter of 2025.

Previous wording

Gain on sale of residential mortgage loans totaled $166,000 and $1.1 million for the three and nine months ended September 30, 2025 as we sold $18.2 million and $112.6 million in residential mortgage loans during these periods with an average premium of 1.06% and 1.08%, respectively. Gain on sale of residential mortgage loans totaled $526,000 and $1.9 million for the three and nine months ended September 30, 2024 as we sold $54.2 million and $187.5 million in residential mortgage loans during these periods with an average premium of 1.05%.

Current wording

Gain on sale of residential mortgage loans totaled $0 for the three months ended March 31, 2026. Gain on sale of residential mortgage loans totaled $399,000 for the three months ended March 31, 2025, as we sold $40.1 million in residential mortgage loans during these periods with an average premium of 1.06%.

Previous wording

Gain on sale of SBA loans totaled $558,000 and $1.9 million for the three and nine months ended September 30, 2025 compared to $1.1 million and $2.1 million for the three and nine months ended September 30, 2024. We sold $13.4 million and $50.7 million in SBA loans during the three and nine months ended September 30, 2025 with average premiums of

Current wording

Gain on sale of SBA loans totaled $1.0 million for the three months ended March 31, 2026 compared to $658,000 for the three months ended March 31, 2025. We sold $19.7 million in SBA loans during the three ended March 31, 2026 with average premiums of 7.68%. We sold $16.6 million in SBA loans during the three months ended March 31, 2025 with average premiums of 5.97%.

Previous wording

Mortgage loan servicing income, net of amortization, increased by $94,000, or 22.3%, to $516,000 during the three months ended September 30, 2025 compared to $422,000 for the three months ended September 30, 2024. Mortgage loan servicing income increased by $157,000, or 8.9%, to $1.9 million during the nine months ended September 30, 2025 compared to $1.8 million for the nine months ended September 30, 2024. The changes in mortgage loan servicing income were primarily due to decreases in mortgage servicing amortization and fair value impairment on our mortgage servicing assets, offset by decreases in capitalized mortgage servicing assets and mortgage servicing fees. Included in mortgage loan servicing income for the three and nine months ended September 30, 2025 was $530,000 and $1.7 million in mortgage servicing fees compared to $580,000 and $1.7 million for the three and nine months ended September 30, 2024 and capitalized mortgage servicing assets of $126,000 and $663,000 for the three and nine months ended September 30, 2025 compared to $310,000 and $1.2 million for the three and nine months ended September 30, 2024. These amounts were offset by mortgage loan servicing asset amortization of $159,000 and $414,000 for the three and nine months ended September 30, 2025 compared to $216,000 and $957,000 during the three and nine months ended September 30, 2024. During the three and nine months ended September 30, 2025, we recorded a fair value impairment recovery of $19,000 and $4,000, respectively, on our mortgage servicing assets. During the three and nine months ended September 30, 2024, we recorded a fair value impairment of $252,000 on our mortgage servicing assets. Our total residential mortgage loan servicing portfolio was $538.7 million at September 30, 2025 compared to $556.4 million at September 30, 2024.

Current wording

Mortgage loan servicing income, net of amortization, decreased by $312,000, or 50.5%, to $306,000 during the three months ended March 31, 2026 compared to $618,000 for the three months ended March 31, 2025. The changes in mortgage loan servicing income were primarily due to decreases in servicing fees, increases in mortgage servicing amortization, and decreases in capitalized mortgage servicing assets. Included in mortgage loan servicing income for the three months ended March 31, 2026 was $482,000 in mortgage servicing fees compared to $566,000 for the three months ended March 31, 2025 and capitalized mortgage servicing assets of $126,000 for the three months ended March 31, 2026 compared to $310,000 for the three months ended March 31, 2025. These amounts were offset by mortgage loan servicing asset amortization of $176,000 for the three months ended March 31, 2026 compared to $118,000 during the three months ended March 31, 2025. Our total residential mortgage loan servicing portfolio was $496.6 million at March 31, 2026 compared to $537.6 million at March 31, 2025.

Previous wording

SBA servicing income decreased by $28,000, or 2.3%, to $1.2 million for the three months ended September 30, 2025 compared to $1.2 million for the three months ended September 30, 2024. SBA servicing income was $2.8 million for the nine months ended September 30, 2025 compared to $3.3 million for the nine months ended September 30, 2024, a decrease of $529,000, or 16.1%. Our total SBA and USDA loan servicing portfolio was $460.7 million as of September 30, 2025 compared to $487.4 million as of September 30, 2024. Included in SBA servicing income for the three and nine months ended September 30, 2025 was $1.0 million and $3.0 million in SBA servicing fees compared to $1.0 million and $3.2 million for the three and nine months ended September 30, 2024. Our SBA servicing rights are carried at fair value and the inputs used to calculate fair value change from period to period. During the three months ended September 30, 2025, we recorded a $165,000 fair value increase to our SBA servicing rights compared to a $201,000 fair value increase to our SBA servicing rights during the three months ended September 30, 2024. During the nine months ended September 30, 2025, we recorded a $286,000 fair value charge to our SBA servicing rights compared to a $58,000 fair value increase during the nine months ended September 30, 2024.

Current wording

SBA servicing income increased by $992,000, or 108.7%, to $1.9 million for the three months ended March 31, 2026 compared to $913,000 for the three months ended March 31, 2025. Our total SBA and USDA loan servicing portfolio was $699.0 million as of March 31, 2026 compared to $474.1 million as of March 31, 2025. Included in SBA servicing income for the three months ended March 31, 2026 was $1.2 million in SBA servicing fees compared to $1.0 million for the three months ended March 31, 2025. Our SBA servicing rights are carried at fair value and the inputs used to calculate fair value change from period to period. During the three months ended March 31, 2026, we recorded a $666,000 fair value increase to our SBA servicing rights compared to a $104,000 fair value charge to our SBA servicing rights during the three months ended March 31, 2025.

Previous wording

Other noninterest income decreased by $99,000, or 10.9%, to $808,000 for the three months ended September 30, 2025 compared to $907,000 for the three months ended September 30, 2024. Other noninterest income was $2.5 million for the nine months ended September 30, 2025 compared to $2.0 million for the nine months ended September 30, 2024, an increase of $515,000, or 25.4%. The increase for the nine months ended September 30, 2025 was mainly due to increases in bank owned life insurance income, gains on sale of foreclosed real estate and unrealized gains on our equity securities. The largest component of other noninterest income is the income on bank owned life insurance which totaled $628,000 and $1.9 million, respectively, for the three and nine months ended September 30, 2025 compared to $609,000 and $1.7 million, respectively for the three and nine months ended September 30, 2024. Also included in other noninterest income are fair value gains/losses on our equity securities, which totaled $124,000 (gain) and $305,000 (gain) for the three and nine months ended September 30, 2025, respectively, compared to $292,000 (gain) and $233,000 (gain) for the three and nine months ended September 30, 2024, respectively.

Current wording

Other noninterest income decreased by $100,000, or 13.0%, to $672,000 for the three months ended March 31, 2026 compared to $772,000 for the three months ended March 31, 2025. The largest component of other noninterest income is the income on bank owned life insurance which totaled $638,000 for the three months ended March 31, 2026 compared to $615,000 for the three months ended March 31, 2025. Also included in other noninterest income are fair value gains/losses on our equity securities, which totaled $82,000 (loss) for the three months ended March 31, 2026, respectively, compared to $140,000 (gain) for the three months ended March 31, 2025.

Previous wording

The following table sets forth the major components of our noninterest expense for the three and nine months ended September 30, 2025 and 2024:

Current wording

The following table sets forth the major components of our noninterest expense for the three months ended March 31, 2026 and 2025:

Previous wording

Occupancy and equipment expense for the three months ended September 30, 2025 was $1.4 million, a decrease of $20,000, or 1.4%, compared to the three months ended September 30, 2024. Occupancy and equipment expense for the nine months ended September 30, 2025 was $4.2 million compared to $4.1 million for the nine months ended September 30, 2024, an increase of $89,000, or 2.2%. These increases were primarily due to higher property taxes, utilities, maintenance expense, rent expense, and depreciation expense.

Current wording

Occupancy and equipment expense for the three months ended March 31, 2026 was $2.4 million, an increase of $1.0 million, or 71.8%, compared to the three months ended March 31, 2025. These increases were primarily due to higher property taxes, utilities, maintenance expense, rent expense, and depreciation expense from the acquisition of First IC that occurred in fourth quarter of 2025.

Previous wording

Data processing expense for the three months ended September 30, 2025 was $394,000 compared to $311,000 for the three months ended September 30, 2024, an increase of $83,000, or 26.7%. Data processing expense for the nine months ended September 30, 2025 was $1.1 million compared to $958,000 for the nine months ended September 30, 2024, an increase of $110,000, or 11.5%. These increases were primarily due to the continued growth in our loans and deposits, as well as enhancements to our existing systems.

Current wording

Data processing expense for the three months ended March 31, 2026 was $682,000 compared to $345,000 for the three months ended March 31, 2025, an increase of $337,000, or 97.7%. These increases were primarily due to the continued growth in our loans and deposits from the acquisition of First IC that occurred in fourth quarter of 2025, as well as enhancements to our existing systems.

Previous wording

Advertising expenses for the three and nine months ended September 30, 2025 remained relatively flat compared to the same periods in 2024.

Current wording

Advertising expenses for the three months ended March 31, 2026 remained relatively flat compared to the same periods in 2025.

Previous wording

Income tax expense for the three months ended September 30, 2025 and 2024 was $6.6 million and $6.0 million, respectively. The Company’s effective tax rates were 27.6% and 26.3% for the three months ended September 30, 2025 and 2024, respectively.

Current wording

Income tax expense for the three months ended March 31, 2026 and 2025 was $7.9 million and $5.8 million, respectively. The Company’s effective tax rates were 26.2% for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

Our investment securities portfolio made up 0.94% of our total assets at September 30, 2025 compared to 0.77% at December 31, 2024.

Current wording

Our investment securities portfolio made up 0.96% of our total assets at March 31, 2026 compared to 1.38% at December 31, 2025.

Previous wording

Gross loans held for investment decreased $197.8 million, or 6.2%, to $2.97 billion as of September 30, 2025 as compared to $3.17 billion as of December 31, 2024. Our loan decrease during the nine months ended September 30, 2025 was comprised of an increase of $10.9 million, or 50.3%, in construction and development loans, an increase of $52.4 million, or 6.9%, in commercial real estate loans, a decrease of $8.8 million, or 11.2%, in commercial and industrial loans, a decrease of $252.4 million, or 11.0%, in residential real estate loans and an increase of $65,000, or 25.0%, in consumer and other loans. We had loans held for sale of $237.7 million as of September 30, 2025 compared to no loans held for sale as of December 31, 2024.

Current wording

Gross loans held for investment decreased $50.3 million, or 1.2%, to $4.00 billion as of March 31, 2026 as compared to $4.05 billion as of December 31, 2025. Our loan decrease during the three months ended March 31, 2026 was comprised of an increase of $10.7 million, or 25.5%, in construction and development loans, an increase of $14.1 million, or 0.6%, in residential real estate loans, an increase of $16,000, or 2.6%, in consumer and other loans, offset by a decrease of $4.5 million, or 4.7%, in commercial and industrial loans, and a decrease of $68.0 million, or 4.4%, in commercial real estate loans. We had loans held for sale of $0 as of March 31, 2026 compared to $9.7 million in loans held for sale as of December 31, 2025.

Previous wording

As of September 30, 2025 and December 31, 2024, we serviced $460.7 million and $479.7 million, respectively, in SBA and USDA loans for others. We carried a servicing asset of $7.0 million and $7.3 million at September 30, 2025 and December 31, 2024, respectively. See Note 4 of our consolidated financial statements as of September 30, 2025, included elsewhere in this Form 10-Q, for additional information on the activity for SBA and USDA loan servicing rights for the three and nine months ended September 30, 2025 and 2024.

Current wording

As of March 31, 2026 and December 31, 2025, we serviced $699.0 million and $685.5 million, respectively, in SBA and USDA loans for others. We carried a servicing asset of $11.3 million and $10.6 million at March 31, 2026 and December 31, 2025, respectively. See Note 5 of our consolidated financial statements as of March 31, 2026, included elsewhere in this Form 10-Q, for additional information on the activity for SBA and USDA loan servicing rights for the three months ended March 31, 2026 and 2025.

Previous wording

As of September 30, 2025, we serviced $538.7 million in residential mortgage loans for others compared to $527.0 million as of December 31, 2024. We carried a servicing asset, net of amortization, of $1.7 million and $1.4 million at September 30, 2025 and December 31, 2024, respectively. Amortization relating to the mortgage loan servicing asset was $159,000 and $414,000 for the three and nine months ended September 30, 2025, respectively, compared to $216,000 and $957,000 for the three and nine months ended September 30, 2024, respectively. During the three and nine months ended September 30, 2025, we recorded fair value impairment recoveries of $19,000 and $4,000, respectively, on our mortgage servicing asset. During the three and nine months ended September 30, 2024, we recorded a fair value impairment of $252,000 on our mortgage servicing asset. See Note 5 of our consolidated financial statements as of September 30, 2025, included elsewhere in this Form 10-Q, for additional information on the activity for mortgage loans servicing rights for the three and nine months ended September 30, 2025 and 2024.

Current wording

As of March 31, 2026, we serviced $496.5 million in residential mortgage loans for others compared to $537.6 million as of December 31, 2025. We carried a servicing asset, net of amortization, of $1.5 million and $1.7 million at March 31, 2026 and December 31, 2025. Amortization relating to the mortgage loan servicing asset was $176,000 for the three months ended March 31, 2026 compared to $118,000 for the three months ended March 31, 2025, respectively. During the three months ended March 31, 2026 and March 31, 2025, we recorded fair value impairment recoveries of $0 and $42,000, respectively, on our mortgage servicing asset. See Note 6 of our consolidated financial statements as of March 31, 2026, included elsewhere in this Form 10-Q, for additional information on the activity for mortgage loans servicing rights for the three months ended March 31, 2026 and 2025.

Previous wording

Asset quality remained strong during the third quarter of 2025 as our nonperforming loans to total loans remained low at 0.44% as of September 30, 2025. Nonperforming loans were $13.0 million at September 30, 2025 compared to $18.0 million at December 31, 2024. The decrease from December 31, 2024 to September 30, 2025 was attributable to a $5.0 million decrease in nonaccrual loans. We did not recognize any interest income on nonaccrual loans during the three and nine months ended September 30, 2025 or the year ended December 31, 2024.

Current wording

Asset quality remained strong during the first quarter of 2026 as our nonperforming loans to total loans remained low at 0.42% as of March 31, 2026. Nonperforming loans were $16.8 million at March 31, 2026 compared to $25.2 million at December 31, 2025. The decrease from December 31, 2025 to March 31, 2026 was attributable to a $8.4 million decrease in nonaccrual loans. We did not recognize any interest income on nonaccrual loans during the three months ended March 31, 2026 and 2025.

Previous wording

The following table sets forth the allocation of our nonperforming assets among our different asset categories as of the dates indicated. Nonperforming loans include nonaccrual loans and loans past due 90 days or more and still accruing interest. Nonperforming assets consist of nonperforming loans plus foreclosed real estate. Nonaccrual loans at September 30, 2025 comprised of $1.6 million of commercial real estate loans, $848,000 of commercial and industrial loans and $10.6 million of residential real estate loans. Nonaccrual loans at December 31, 2024 comprised of $3.3 million of commercial real estate loans, $526,000 of commercial and industrial loans, and $14.2 million of residential real estate loans.

Current wording

The following table sets forth the allocation of our nonperforming assets among our different asset categories as of the dates indicated. Nonperforming loans include nonaccrual loans and loans past due 90 days or more and still accruing interest. Nonperforming assets consist of nonperforming loans plus foreclosed real estate. Nonaccrual loans at March 31, 2026 comprised of $8.8 million of commercial real estate loans, $1.2 million of commercial and industrial loans and $6.9 million of residential real estate loans. Nonaccrual loans at December 31, 2025 comprised of $14.8 million of commercial real estate loans, $1.3 million of commercial and industrial loans, and $9.1 million of residential real estate loans.

Previous wording

We maintain a reserve for credit losses that consists of two components, the allowance for credit losses and the allowance for unfunded commitments. The allowance for credit losses provides for the risk of credit losses expected in our loan portfolio and is based on loss estimates derived from a comprehensive quarterly evaluation. The evaluation reflects analyses of individual borrowers for impairment coupled with analysis of historical loss experience in various loan pools that have been grouped based on similar risk characteristics, supplemented as necessary by credit judgment that

Current wording

We maintain a reserve for credit losses that consists of two components, the allowance for credit losses and the allowance for unfunded commitments. The allowance for credit losses provides for the risk of credit losses expected in our loan portfolio and is based on loss estimates derived from a comprehensive quarterly evaluation. The evaluation reflects analyses of individual borrowers for impairment coupled with analysis of historical loss experience in various loan pools that have been grouped based on similar risk characteristics, supplemented as necessary by credit judgment that considers observable trends, conditions, reasonable and supportable forecasts, and other relevant environmental and economic factors. The level of the allowance for credit losses is adjusted by recording an expense or credit through the provision for credit losses. The level of the allowance for unfunded commitments is adjusted by recording an expense or credit in other noninterest expense. The allowance for unfunded commitments had a balance of $345,000 as of March 31, 2026 compared to $282,000 as of March 31, 2025.

Previous wording

The impact of utilizing the CECL approach to calculate the allowance for credit losses will be significantly influenced by the composition, characteristics and quality of our loan portfolio, as well as the prevailing economic conditions and forecasts utilized. Material changes to these and other relevant factors may result in greater volatility to the provision for credit losses, and therefore, greater volatility to our reported earnings. See Note 1 and Note 3 of our consolidated financial statements as of September 30, 2025, included elsewhere in this Form 10-Q, and as of December 31, 2024 in the Company’s 2024 Form 10-K, for additional information on theon the allowance for credit losses and the allowance for unfunded commitments.

Current wording

The impact of utilizing the CECL approach to calculate the allowance for credit losses will be significantly influenced by the composition, characteristics and quality of our loan portfolio, as well as the prevailing economic conditions and forecasts utilized. Material changes to these and other relevant factors may result in greater volatility to the provision for credit losses, and therefore, greater volatility to our reported earnings. See Note 1 and Note 4 of our consolidated financial statements as of March 31, 2026, included elsewhere in this Form 10-Q, and as of in the Company’s 2025 Form 10-K, for additional information on theon the allowance for credit losses and the allowance for unfunded commitments.

Previous wording

As of September 30, 2025 and December 31, 2024, the Company had estimated uninsured deposits of $712.7 million and $666.4 million, respectively. These estimates were derived using the same methodologies and assumptions used for the Bank’s regulatory reporting. Uninsured deposits were 26.1% of total deposits at September 30, 2025, compared to 24.1% and 23.6% at December 31, 2024 and September 30, 2024, respectively. As of September 30, 2025, we had $1.29 billion of available borrowing capacity at the Federal Home Loan Bank ($657.8 million), Federal Reserve Discount Window ($575.7 million) and various other financial institutions (fed fund lines totaling $52.5 million).

Current wording

As of March 31, 2026 and December 31, 2025, the Company had estimated uninsured deposits of $1.16 billion and $1.09 billion, respectively. These estimates were derived using the same methodologies and assumptions used for the Bank’s regulatory reporting. Uninsured deposits were 31.9% of total deposits at March 31, 2026, compared to 29.6% at December 31, 2025. As of March 31, 2026, we had $1.69 billion of available borrowing capacity at the Federal Home Loan Bank ($989.1 million), Federal Reserve Discount Window ($629.8 million) and various other financial institutions (fed fund lines totaling $67.5 million).

Previous wording

We had $672.5 million of brokered deposits, or 25.0% of total deposits, at September 30, 2025 compared to $721.8 million, or 26.4% of total deposits, at December 31, 2024. We use brokered deposits, subject to certain limitations and requirements, as a source of funding to support our asset growth and augment the deposits generated from our branch network, which are our principal source of funding. Our level of brokered deposits varies from time to time depending on competitive interest rate conditions and other factors and tends to increase as a percentage of total deposits when the brokered deposits are less costly than issuing internet certificates of deposit or borrowing from the Federal Home Loan Bank.

Current wording

We had $785.0 million of brokered deposits, or 21.6% of total deposits, at March 31, 2026 compared to $747.8 million, or 20.5% of total deposits, at December 31, 2025. We use brokered deposits, subject to certain limitations and requirements, as a source of funding to support our asset growth and augment the deposits generated from our branch network, which are our principal source of funding. Our level of brokered deposits varies from time to time depending on competitive interest rate conditions and other factors and tends to increase as a percentage of total deposits when the brokered deposits are less costly than issuing internet certificates of deposit or borrowing from the Federal Home Loan Bank.