SOUTHERN FIRST BANCSHARES INC
For the period ended Jun 30, 2026. Filed Aug 3, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 3, 2026
SFST$59.27+0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-01.
0001206774-26-000259
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-03.
0001206774-26-000404
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 104 previous paragraphs and 113 current paragraphs.
55 unchanged; 44 reworded; 8 added; 3 removed; 2 previous and 6 current paragraphs rearranged.
Tables are not compared: 56 previous and 67 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
During the first six months of 2026, our net interest margin (TE) increased by 41 basis points to 2.88%, compared to 2.47% for the first six months of 2025, driven primarily by an increase in our average interest-earning assets combined with a decrease in rates paid on our interest-bearing liabilities. Our average interest-earning assets grew by $414.6 million during the first half of 2026 from the prior year, while the average yield remained constant at 5.18%. In comparison, our average interest-bearing liabilities grew by $246.3 million from prior year, while the rate of these liabilities decreased by 46 basis points to 3.05%.
Current report
The increase in average interest-earning assets for the first half of 2026 related primarily to a $239.9 million increase in our average loan balances combined with a $154.7 million increase in the average balance of Federal funds sold and interest-bearing deposits with banks. While the yield on our interest-earning assets remained stable at 5.18%, the yield on our loan portfolio increased 10 basis points from the prior year to 5.34%. Offsetting this increase was a 67 basis point decrease in the yield on Federal Funds sold and interest-bearing deposits with banks as the Federal Reserve lowered the federal funds rate by 75 basis points during the fourth quarter of 2025.
Current report
The increase in average interest-bearing liabilities for the first half of 2026 was driven by an increase in interest-bearing deposits of $246.4 million. The primary driver of the 46 basis point decrease in the rate of our interest-bearing liabilities was a 48 basis point decrease in the cost of our interest-bearing deposits, which was driven by the 75 basis point decrease in the federal funds rate which has a strong correlation to the cost of our non-maturity deposits.
Current report
Net interest income for the first half of 2026 was $62.6 million compared to $48.7 million for 2025, a $14.0 million, or 28.7%, increase. The increase in net interest income during 2026 was driven by a $10.8 million increase in interest income, related primarily to an increase in average loan balances. In addition, interest expense decreased by $3.2 million driven by lower rates on our interest-bearing deposits.
Current report
Our provision expense was $2.3 million and $1.5 million for the six months ended June 30, 2026 and June 30, 2025, respectively. The $2.3 million provision expense for the first half of 2026 included a $2.1 million provision for credit losses and a $225,000 reserve for unfunded commitments. The increase in provision expense during the first six months of 2026 was primarily due to loan growth during the first half of the year. The $1.5 million provision expense for the first half of 2025 included $1.4 million provision for credit losses and a $50,000 reserve for unfunded commitments.
Current report
Noninterest income was $7.0 million for the first half of 2026, a $600,000, or 9.3%, increase from noninterest income of $6.4 million for the first half of 2025. The year over year increase was driven by a $515,000, or 46.6%, increase in service fees on deposit accounts and a $100,000, or 8.8%, increase in ATM and debit card income over the prior year. Partially offsetting these increases was a $177,000, or 5.9%, decrease in mortgage banking income from the first half of 2025.
Current report
Noninterest expense was $40.4 million for the first half of 2026, a $2.2 million, or 5.9%, increase from noninterest expense of $38.2 million for the first half of 2025. The increase in noninterest expense was driven primarily by the following:
Current report
Total shareholders’ equity was $452.3 million at June 30, 2026 and $368.7 million at December 31, 2025. The $83.6 million increase from December 31, 2025 is primarily related to the issuance of 1,207,500 shares of common stock on April 17, 2026 in a public offering. The common stock was issued at $54.00 per share for net proceeds of $61.3 million. Proceeds from the offering are being used for general corporate purposes, including supporting organic growth initiatives, providing capital to the Bank, repurchasing or redeeming outstanding indebtedness, and funding working capital needs. Consistent with this use, on June 30, 2026, in conjunction with the quarterly interest payment, we applied a portion of these proceeds to redeem the remaining $11.5 million of outstanding subordinated debt. The increase in shareholders’ equity was also driven by net income of $21.1 million for the first half of 2026.
Removed paragraphs (3)
Previous report
At March 31, 2026 and December 31, 2025 our cash and cash equivalents totaled $342.8 million and $269.6 million, respectively, or 7.5% and 6.1% of total assets, respectively. Subsequent to quarter-end, on April 17, 2026, we closed an underwritten public offering of 1,207,500 shares of our common stock, including 157,500 shares issued pursuant to the underwriters’ exercise in full of their option to purchase additional shares, at a public offering price of $54.00 per share. Aggregate gross proceeds were approximately $65.2 million, before underwriting discounts and commissions and offering expenses. We expect to use the net proceeds for general corporate purposes, including supporting organic growth initiatives, providing capital to the Bank, redeeming or repurchasing outstanding indebtedness, including subordinated debt, and for working capital purposes. This offering further enhanced our liquidity and capital position subsequent to March 31, 2026.
Previous report
We have $11.5 million of outstanding subordinated debt. The interest rate on the outstanding subordinated debt reset to an interest rate per annum equal to the Three-Month Term SOFR plus 340.8 basis points (7.37% at March 31, 2026), payable quarterly in arrears. The subordinated debt is intended to qualify as Tier 2 capital for regulatory capital purposes for the Company; however, the amount that is eligible to be included in Tier 2 capital will be reduced by 20% each year during the last five years before maturity date of the Notes beginning in the quarter ended December 31, 2024.
Previous report
Total shareholders’ equity was $379.4 million at March 31, 2026 and $368.7 million at December 31, 2025. The $10.8 million increase from December 31, 2025 is primarily related to net income of $9.9 million during the first three months of 2026, stock option exercises and equity compensation expenses of $1.3 million. Partially offsetting the increase was a $411,000 decrease in other comprehensive income related to our available for sale securities.
Reworded paragraphs (44)
Previous wording
The following discussion reviews our results of operations for the three-month period ended March 31, 2026 as compared to the three-month period ended March 31, 2025 and assesses our financial condition as of March 31, 2026 as compared to December 31, 2025. You should read the following discussion and analysis in conjunction with the accompanying consolidated financial statements and the related notes and the consolidated financial statements and the related notes for the year ended December 31, 2025 included in our Annual Report on Form 10-K for that period. Results for the three-month period ended March 31, 2026 are not necessarily indicative of the results for the year ending December 31, 2026 or any future period.
Current wording
The following discussion reviews our results of operations for the three and six month periods ended June 30, 2026 as compared to the three and six month periods ended June 30, 2025 and assesses our financial condition as of June 30, 2026 as compared to December 31, 2025. You should read the following discussion and analysis in conjunction with the accompanying consolidated financial statements and the related notes and the consolidated financial statements and the related notes for the year ended December 31, 2025 included in our Annual Report on
Previous wording
provide a consistent and superior level of professional service, and we believe it provides us with a distinct competitive advantage. We consider exceptional client service to be a critical part of our culture, which we refer to as "ClientFIRST."
Current wording
Our business model continues to be client-focused, utilizing relationship teams to provide our clients with a specific banker contact and support team responsible for all of their banking needs. The purpose of this structure is to provide a consistent and superior level of professional service, and we believe it provides us with a distinct competitive advantage. We consider exceptional client service to be a critical part of our culture, which we refer to as “ClientFIRST.”
Previous wording
At March 31, 2026, we had total assets of $4.58 billion, a 4.0% increase from total assets of $4.40 billion at December 31, 2025. The largest component of our total assets is loans which were $3.94 billion and $3.85 billion at March 31, 2026, and December 31, 2025, respectively. Our liabilities and shareholders’ equity at March 31, 2026 totaled $4.20 billion and $379.4 million, respectively, compared to liabilities of $4.03 billion and shareholders’ equity of $368.7 million at December 31, 2025. The principal component of our liabilities is deposits which were $3.87 billion and $3.72 billion at March 31, 2026 and December 31, 2025, respectively.
Current wording
At June 30, 2026, we had total assets of $4.70 billion, a 6.7% increase from total assets of $4.40 billion at December 31, 2025. The largest component of our total assets is loans which were $4.03 billion and $3.85 billion at June 30, 2026, and December 31, 2025, respectively. Our liabilities and shareholders’ equity at June 30, 2026 totaled $4.2 billion and $452.3 million, respectively, compared to liabilities of $4.03 billion and shareholders’ equity of $368.7 million at December 31, 2025. The principal component of our liabilities is deposits which were $3.94 billion and $3.72 billion at June 30, 2026 and December 31, 2025, respectively.
Previous wording
Our net income to common shareholders was $9.9 million and $5.3 million for the three months ended March 31, 2026, and 2025, respectively. Diluted earnings per share (“EPS”) was $1.19 for the first quarter of 2026 as compared to $0.65 for the same period in 2025. The increase in net income was primarily driven by an increase in net interest income.
Current wording
Our net income to common shareholders was $11.2 million and $6.6 million for the three months ended June 30, 2026, and 2025, respectively. Diluted earnings per share (“EPS”) was $1.20 for the second quarter of 2026 as compared to $0.81 for the same period in 2025. Our net income to common shareholders was $21.1 million and $11.8 million for the six months ended June 30, 2026 and 2025, respectively. Diluted EPS was $2.39 for the six months ended June 30, 2026 as compared to $1.46 for the same period of 2025. The increase in net income for the three and six months ended June 30, 2026 was primarily driven by an increase in net interest income.
Previous wording
Our level of net interest income is determined by the level of earning assets and the management of our net interest margin. Our net interest income was $30.3 million for the first quarter of 2026, a 29.4% increase over net interest income of $23.4 million for the first quarter of 2025, driven primarily by a $5.0 million increase in interest income on our interest-earning assets combined with a $1.9 million decrease in interest expense on our interest-bearing liabilities. In addition, our net interest margin, on a tax-equivalent (TE) basis, was 2.88% for the first quarter of 2026 compared to 2.41% for the same period in 2025.
Current wording
Our level of net interest income is determined by the level of earning assets and the management of our net interest margin. Our net interest income was $32.4 million for the second quarter of 2026, a 28.0% increase over net interest income of $25.3 million for the second quarter of 2025, driven primarily by a $5.8 million increase in interest income on our interest-earning assets combined with a $1.3 million decrease in interest expense on our interest-bearing liabilities. In addition, our net interest margin, on a tax-equivalent (TE) basis, was 2.87% for the second quarter of 2026 compared to 2.50% for the same period in 2025.
Previous wording
We have included a number of tables to assist in our description of various measures of our financial performance. For example, the “Average Balances, Income and Expenses, Yields and Rates” table reflects the average balance of each category of our assets and liabilities as well as the yield we earned or the rate we paid with respect to each category during the three-month periods ended March 31, 2026 and 2025. A review of this table shows that our loans typically provide higher interest yields than do other types of interest-earning assets, which is why we direct a substantial percentage of our earning assets into our loan portfolio. Similarly, the “Rate/Volume Analysis” tables demonstrate the effect of changing interest rates and changing volume of assets and liabilities on our financial condition during the periods shown. We also track the sensitivity of our various categories of assets and liabilities to changes in interest rates, and we have included tables to illustrate our interest rate sensitivity with respect to interest-earning accounts and interest-bearing accounts.
Current wording
We have included a number of tables to assist in our description of various measures of our financial performance. For example, the “Average Balances, Income and Expenses, Yields and Rates” table reflects the average balance of each category of our assets and liabilities as well as the yield we earned or the rate we paid with respect to each category during the three and six month periods ended June 30, 2026 and 2025. A review of this table shows that our loans typically provide higher interest yields than do other types of interest-earning assets, which is why we direct a substantial percentage of our earning assets into our loan portfolio. Similarly, the “Rate/Volume Analysis” tables demonstrate the effect of changing interest rates and changing volume of assets and liabilities on our financial condition during the periods shown. We also track the sensitivity of our various categories of assets and liabilities to changes in interest rates, and we have included tables to illustrate our interest rate sensitivity with respect to interest-earning accounts and interest-bearing accounts.
Previous wording
Our net interest margin (TE) increased by 47 basis points to 2.88% during the first quarter of 2026, compared to the first quarter of 2025, driven primarily by an increase in our average interest-earning assets combined with a decrease in rates paid on our interest-bearing liabilities. Our average interest-earning assets grew by $324.4 million during the first quarter of 2026 from the prior year, while the average yield on these assets increased by eight basis points to 5.20%. Our average interest-bearing liabilities grew by $208.3 million during the first quarter of 2026 from the prior year, while the rate on these liabilities decreased 46 basis points to 3.06%.
Current wording
Our net interest margin (TE) increased by 37 basis points to 2.87% during the second quarter of 2026, compared to the second quarter of 2025, driven primarily by an increase in our average interest-earning assets combined with a decrease in rates paid on our interest-bearing liabilities. Our average interest-earning assets grew by $464.7 million during the second quarter of 2026 from the prior year, while the average yield on these assets decreased by two basis points to 5.16%. In comparison, our average interest-bearing liabilities grew by $283.9 million during the second quarter of 2026 from the prior year, while the rate on these liabilities decreased 44 basis points to 3.05%.
Previous wording
The increase in average interest-earning assets for the first quarter of 2026 related primarily to an increase of $225.1 million in our average loan balances from the prior year. The eight-basis point increase in yield on our interest-earning assets was driven by a 13 basis point increase in the yield on our loan portfolio. The 13 basis point increase included a $543,000 repayment of interest on one large nonaccrual loan.
Current wording
The increase in average interest-earning assets for the second quarter of 2026 related primarily to an increase of $254.6 million in our average loan balances from the prior year combined with a $205.6 million increase in the average balance of Federal funds sold and interest-bearing deposits with banks. While the total yield on our interest-earning assets decreased two basis points, driven by a 71 basis point decrease in the yield on our Federal funds sold and interest-bearing deposits with banks, the yield on our loan portfolio increased seven basis points from the prior year.
Previous wording
The increase in average interest-bearing liabilities for the first quarter of 2026 related primarily to an increase of $208.3 million in our average interest-bearing deposits. The 46 basis point decrease in cost of our interest-bearing liabilities was driven by a 50 basis point decrease in the cost of our interest-bearing deposits.
Current wording
The increase in average interest-bearing liabilities for the second quarter of 2026 related primarily to an increase of $284.1 million in our average interest-bearing deposits. The 44 basis point decrease in cost of our interest-bearing liabilities was driven by a 47 basis point decrease in the cost of our interest-bearing deposits.
Previous wording
wholesale funding to fund shortfalls, if any, or provide additional liquidity. To the extent that our dependence on wholesale funding sources increases, our net interest margin would likely be negatively impacted as we may not be able to reduce the rates we pay on these deposits as quickly as we can on core deposits as rates have and may continue to decline. We continue to deploy various asset liability management strategies to manage our risk to interest rate fluctuations.
Current wording
with the 44 basis point decrease in the rate on our interest-bearing liabilities, resulted in a 42 basis point increase in our net interest spread for the 2026 period. We seek to fund increased loan volumes by growing our core deposits, but, subject to internal policy limits on the amount of wholesale funding we may maintain, will utilize wholesale funding to fund shortfalls, if any, or provide additional liquidity. To the extent that our dependence on wholesale funding sources increases, our net interest margin would likely be negatively impacted as we may not be able to reduce the rates we pay on these deposits as quickly as we can on core deposits as rates have and may continue to decline. We continue to deploy various asset liability management strategies to manage our risk to interest rate fluctuations.
Previous wording
Our net interest spread was 2.14% for the first quarter of 2026 compared to 1.60% for the same period in 2025. The net interest spread is the difference between the yield we earn on our interest-earning assets and the rate we pay on our interest-bearing liabilities. The eight-basis point increase in yield on our interest-earning assets, combined with the 46 basis point decrease in the rate on our interest-bearing liabilities, resulted in a 54 basis point increase in our net interest spread for the 2026 period. We seek to fund increased loan volumes by growing our core deposits, but, subject to internal policy limits on the amount of wholesale funding we may maintain, will utilize
Current wording
Our net interest spread was 2.13% for the first half of 2026 compared to 1.67% for the same period in 2025. The net interest spread is the difference between the yield we earn on our interest-earning assets and the rate we pay on our interest-bearing liabilities. The 46 basis point decrease in the rate on our interest-bearing liabilities resulted in a 46 basis point increase in our net interest spread for 2026.
Previous wording
Net interest income, the largest component of our income, was $30.3 million for the first quarter of 2026 and $23.4 million for the first quarter of 2025, a $6.9 million, representing a 29.4%, increase year over year. The increase during 2026 was driven by a $5.0 million increase in interest income primarily due to an increase in average loan balances and higher yields on our loan portfolio, as well as a $1.9 million decrease in interest expense primarily due to lower rates on our interest-bearing deposits.
Current wording
Net interest income, the largest component of our income, was $32.4 million for the second quarter of 2026 and $25.3 million for the second quarter of 2025, a $7.1 million, or 28.0%, increase year over year. The increase during 2026 was driven by a $5.8 million increase in interest income primarily due to an increase in average loan balances and average balances in Federal funds sold and interest-bearing deposits with banks, as well as a $1.3 million decrease in interest expense primarily due to lower rates on our interest-bearing deposits.
Previous wording
We recorded a provision for credit losses of $1.3 million during the first quarter of 2026, compared to a provision for credit losses of $750,000 in the first quarter of 2025. The provision during the first quarter of 2026 was driven primarily by growth in our loan portfolio. The $1.3 million provision during 2026 included a provision of $1.2 million for credit losses and a $150,000 provision for unfunded commitments. There was no provision for unfunded commitments recorded in the first quarter of 2025.
Current wording
We recorded a provision for credit losses of $1.0 million during the second quarter of 2026, compared to a provision for credit losses of $700,000 in the second quarter of 2025. The provision during the second quarter of 2026 was driven primarily by growth in our loan portfolio and included a provision of $950,000 for credit losses and a $75,000 provision for unfunded commitments. The $700,000 provision in 2025, which included a $650,000 provision for credit losses and a $50,000 reserve for unfunded commitments was also driven primarily by growth in our loan portfolio.
Previous wording
Noninterest income was $3.5 million for the first quarter of 2026, a $426,000, or 13.7%, increase from noninterest income of $3.1 million for the first quarter of 2025. The increase in noninterest income during 2026, compared to 2025, resulted primarily from an increase in mortgage banking income and service fees on deposit accounts. Mortgage banking income increased $69,000, or 4.8%, over the prior year due to higher mortgage volume. Service fees on deposit accounts increased $217,000, or 40.3%, over the prior year, driven by higher transaction volume, fee income on our commercial credit cards and additional wire fee income.
Current wording
Noninterest income was $3.5 million for the second quarter of 2026, a $174,000, or 5.2%, increase from noninterest income of $3.3 million for the second quarter of 2025. The increase in noninterest income during 2026, compared to 2025, resulted primarily from an increase in service fees on deposit accounts and ATM and debit card income. Service fees on deposit accounts increased $299,000, or 52.7% over the prior year driven by higher transaction volume, fee income on our commercial credit cards and additional wire fee income. Partially offsetting these increases, was a $246,000, or 15.7%, decrease in mortgage banking income which was driven by changes in the market rates from the time the loan was locked.
Previous wording
Noninterest expense was $20.0 million for the first quarter of 2026, a $1.2 million, or 6.3%, increase from noninterest expense of $18.8 million for the first quarter of 2025. The increase in noninterest expense was driven primarily by the following:
Current wording
Noninterest expense was $20.4 million for the second quarter of 2026, a $1.1 million, or 5.5%, increase from noninterest expense of $19.3 million for the second quarter of 2025. The increase in noninterest expense was driven primarily by the following:
Previous wording
Partially offsetting the above increases was a decrease in insurance expense of $118,000, or 11.7%, due to lower FDIC assessment expense during the first quarter of 2026.
Current wording
Partially offsetting the above increases was a decrease in insurance expense of $52,000, or 5.7%, due to lower FDIC assessment expense during the second quarter of 2026.
Previous wording
Our efficiency ratio was 59.2% for the first quarter of 2026, compared to 71.1% for the first quarter of 2025. The efficiency ratio represents the percentage of one dollar of expense required to be incurred to earn a full dollar of revenue and is computed by dividing noninterest expense by the sum of net interest income and noninterest income. The improvement during the 2026 period was driven primarily by the increase in net interest income.
Current wording
Our efficiency ratio was 56.8% for the second quarter of 2026, compared to 67.5% for the second quarter of 2025. The efficiency ratio represents the percentage of one dollar of expense required to be incurred to earn a full dollar of revenue and is computed by dividing noninterest expense by the sum of net interest income and noninterest income. The improvement during the 2026 period was driven primarily by the increase in net interest income.
Previous wording
We incurred income tax expense of $2.6 million and $1.6 million for the three months ended March 31, 2026 and 2025, respectively. Our effective tax rate was 20.8% and 23.8% for the three months ended March 31, 2026 and 2025, respectively. The decrease in the effective tax rate was driven by the effect of equity compensation transactions in comparison to our income before income tax expense.
Current wording
We incurred income tax expense of $3.3 million and $2.0 million for the three months ended June 30, 2026 and 2025, respectively, and $5.9 million and $3.7 million for the six months ended June 30, 2026 and 2025. Our effective tax rate was 21.8% and 23.6% for the six months ended June 30, 2026 and 2025, respectively. The decrease in the effective tax rate was driven by the effect of equity compensation transactions in comparison to our income before income tax expense.
Previous wording
At March 31, 2026, the $144.6 million in our investment securities portfolio represented approximately 3.2% of our total assets. Our available for sale investment portfolio included corporate bonds, US treasuries, US government agency securities, state and political subdivisions, asset-backed securities and mortgage-backed securities with a fair value of $124.2 million and an amortized cost of $134.2 million, resulting in an unrealized loss of $10.0 million. At December 31, 2025, the $147.8 million in our investment securities portfolio represented approximately 3.4% of our total assets, including investment securities with a fair value of $127.7 million and an amortized cost of $137.2 million for an unrealized loss of $9.4 million. In addition, other investments, which include FHLB Stock and other nonmarketable investments, increased $314,000 from December 31, 2025 to $20.4 million at March 31, 2026.
Current wording
At June 30, 2026, the $164.9 million in our investment securities portfolio represented approximately 3.5% of our total assets. Our available for sale investment portfolio included corporate bonds, US treasuries, US government agency securities, state and political subdivisions, asset-backed securities and mortgage-backed securities with a fair value of $144.4 million and an amortized cost of $155.0 million, resulting in an unrealized loss of $10.6 million. At December 31, 2025, the $147.8 million in our investment securities portfolio represented approximately 3.4% of our total assets, including investment securities with a fair value of $127.7 million and an amortized cost of $137.2 million for an unrealized loss of $9.4 million. In addition, other investments, which include FHLB Stock and other nonmarketable investments, increased $421,000 from December 31, 2025 to $20.5 million at June 30, 2026.
Previous wording
Since loans typically provide higher interest yields than other types of interest earning assets, a substantial percentage of our earning assets are invested in our loan portfolio. Average loans, excluding mortgage loans held for sale, for the three months ended March 31, 2026 and 2025 were $3.90 billion and $3.67 billion, respectively. Before the allowance for credit losses, total loans outstanding at March 31, 2026 and December 31, 2025 were $3.94 billion and $3.85 billion, respectively.
Current wording
Since loans typically provide higher interest yields than other types of interest earning assets, a substantial percentage of our earning assets are invested in our loan portfolio. Average loans, excluding mortgage loans held for sale, for the six months ended June 30, 2026 and 2025 were $3.93 billion and $3.69 billion, respectively (the average loan balances reflected in the “Average Balances, Income and Expenses, Yields and Rates” tables above include mortgage loans held for sale, as noted in footnote (3) to those tables, and therefore differ from the amounts presented here). Before the allowance for credit losses, total loans outstanding at June 30, 2026 and December 31, 2025 were $4.03 billion and $3.85 billion, respectively.
Previous wording
The principal component of our loan portfolio is loans secured by real estate mortgages. As of March 31, 2026, our loan portfolio included $3.22 billion, or 81.8%, of real estate loans, compared to $3.18 billion, or 82.8%, at December 31, 2025. Most of our real estate loans are secured by residential or commercial property. We obtain a security interest in real estate, in addition to any other available collateral, in order to increase the likelihood of the ultimate repayment of the loan. Generally, we limit the loan-to-value ratio on loans to coincide with the appropriate regulatory guidelines. We attempt to maintain a relatively diversified loan portfolio to help reduce the risk inherent in concentration in certain types of collateral and business types. Home equity lines of credit totaled $262.5 million as of March 31, 2026, of which approximately 49% were in a first lien position, while the remaining balance was second liens. At December 31, 2025, our home equity lines of credit totaled $248.7 million, of which approximately 47% were in first lien positions, while the remaining balance was in second liens. The average home equity loan had a balance of approximately $112,000 and a loan to value of 74% as of March 31, 2026, compared to an average loan balance of $108,000 and a loan to value of approximately 73% as of December 31, 2025. Further, 0.58% and 0.38% of our total home equity lines of credit were over 30 days past due as of March 31, 2026 and December 31, 2025, respectively.
Current wording
The principal component of our loan portfolio is loans secured by real estate mortgages. As of June 30, 2026, our loan portfolio included $3.27 billion, or 81.0%, of real estate loans, compared to $3.18 billion, or 82.8%, at December 31, 2025. Most of our real estate loans are secured by residential or commercial property. We obtain a security interest in real estate, in addition to any other available collateral, in order to increase the likelihood of the ultimate repayment of the loan. Generally, we limit the loan-to-value ratio on loans to coincide with the appropriate regulatory guidelines. We attempt to maintain a relatively diversified loan portfolio to help reduce the risk inherent in concentration in certain types of collateral and business types. Home equity lines of credit totaled $273.0 million as of June 30, 2026, of which approximately 49% were in a first lien position, while the remaining balance was in second liens. At December 31, 2025, our home equity lines of credit totaled $248.7 million, of which approximately 47% were in first lien positions, while the remaining balance was in second liens. The average home equity loan had a balance of approximately $115,000 and a loan to value of 75% as of June 30, 2026, compared to an average loan balance of $108,000 and a loan to value of approximately 73% as of December 31, 2025. Further, 0.18% and 0.38% of our total home equity lines of credit were over 30 days past due as of June 30, 2026 and December 31, 2025, respectively.
Previous wording
Following is a summary of our loan composition at March 31, 2026 and December 31, 2025. During the first three months of 2026, our loan portfolio increased by $97.1 million, or 10.2% annualized, primarily driven by a $58.1 million increase in commercial business loans and a $22.6 million increase in commercial owner occupied loans. In addition, home equity loans increased by $13.8 million during the first three months of 2026. Our consumer real estate portfolio, which decreased by $5.2 million includes high quality 1-4 family consumer real estate loans. Our average consumer real estate loan currently has a principal balance of $470,000, a term of 24 years, and an average rate of 4.57% as of March 31, 2026, compared to a principal balance of $472,000, a term of 24 years, and an average rate of 4.55% as of December 31, 2025.
Current wording
Following is a summary of our loan composition at June 30, 2026 and December 31, 2025. During the first six months of 2026, our loan portfolio increased by $185.1 million, or 9.7% annualized, primarily driven by a $125.1 million increase in commercial loans with $93.4 million of the increase being in commercial business loans. In addition, our consumer loans grew by $60.0 million with $24.3 million being in home equity loans. Our consumer real estate portfolio, which increased by $14.0 million during the first half of 2026 includes high quality 1-4 family consumer real estate loans. Our average consumer real estate loan currently has a principal balance of $469,000, a term of 24 years, and an average rate of 4.66% as of June 30, 2026, compared to a principal balance of $472,000, a term of 24 years, and an average rate of 4.55% as of December 31, 2025.
Previous wording
Our level of non-owner occupied commercial real estate loans represents 237.6% of the Bank’s total risk-based capital at March 31, 2026 compared to 236.5% at December 31, 2025.
Current wording
Our level of non-owner occupied commercial real estate loans represents 237.3% of the Bank’s total risk-based capital at June 30, 2026 compared to 236.5% at December 31, 2025.
Previous wording
Nonperforming assets include real estate acquired through foreclosure or deed taken in lieu of foreclosure and loans on nonaccrual status. Generally, a loan is placed on nonaccrual status when it becomes 90 days past due as to principal or interest, or when we believe, after considering economic and business conditions and collection efforts, that the borrower’s financial condition is such that collection of the contractual principal or interest on the loan is doubtful. A payment of interest on a loan that is classified as nonaccrual is recognized as a reduction in principal when received. Our policy with respect to nonperforming loans requires the borrower to make a minimum of six consecutive payments in accordance with the loan terms and to show capacity to continue performing into the future before that loan can be placed back on accrual status. As of March 31, 2026 and December 31, 2025 we had no loans that were 90 days past due and still accruing.
Current wording
Nonperforming assets include real estate acquired through foreclosure or deed taken in lieu of foreclosure and loans on nonaccrual status. Generally, a loan is placed on nonaccrual status when it becomes 90 days past due as to principal or interest, or when we believe, after considering economic and business conditions and collection efforts, that the borrower’s financial condition is such that collection of the contractual principal or interest on the loan is doubtful. A payment of interest on a loan that is classified as nonaccrual is recognized as a reduction in principal when received. Our policy with respect to nonperforming loans requires the borrower to make a minimum of six consecutive payments in accordance with the loan terms and to show capacity to continue performing into
Previous wording
At March 31, 2026, nonperforming assets were $11.9 million, or 0.26% of total assets and 0.30% of gross loans. Comparatively, nonperforming assets were $14.1 million, or 0.32% of total assets and 0.37% of gross loans at December 31, 2025. The increase in commercial owner occupied loans was due to one loan being moved to non-accrual status during the first quarter of 2026, while the decrease in commercial non-owner occupied loans was primarily driven by the payoff of one large non-residential loan. The amount of foregone interest income on nonaccrual loans in the first quarter of 2026 and 2025 was $68,000 and $74,000, respectively.
Current wording
At June 30, 2026, nonperforming assets were $12.6 million, or 0.27% of total assets and 0.31% of gross loans. Comparatively, nonperforming assets were $14.1 million, or 0.32% of total assets and 0.37% of gross loans at December 31, 2025. The increase in commercial owner occupied loans was primarily due to one loan being moved to non-accrual status during the first quarter of 2026, while the decrease in commercial non-owner occupied loans was primarily driven by the payoff of one large non-residential loan. The amount of foregone interest income on nonaccrual loans in the second quarter of 2026 and 2025 was $220,000 and $126,000, respectively.
Previous wording
At March 31, 2026 and December 31, 2025, the allowance for credit losses represented 378.22% and 305.65% of the total amount of nonperforming loans, respectively. A significant portion of the nonperforming loans at March 31, 2026 were secured by real estate. We have evaluated the underlying collateral on these loans and believe that the collateral on these loans is sufficient to minimize future losses.
Current wording
At June 30, 2026 and December 31, 2025, the allowance for credit losses represented 395.41% and 305.65% of the total amount of nonperforming loans, respectively. A significant portion of the nonperforming loans at June 30, 2026 were secured by real estate. We have evaluated the underlying collateral on these loans and believe that the collateral on these loans is sufficient to minimize future losses.
Previous wording
In addition, at March 31, 2026, 81.8% of our loans were collateralized by real estate and 92.2% of our individually evaluated loans were secured by real estate. We utilize third party appraisers to determine the fair value of collateral dependent loans. Our current loan and appraisal policies require us to obtain updated appraisals on an annual basis, either through a new external appraisal or an appraisal evaluation. Individually evaluated loans are reviewed on a quarterly basis to determine the level of credit loss. As of March 31, 2026, we did not have any individually evaluated real estate loans carried at a value in excess of the appraised value. We typically charge-off a portion or create a specific reserve for individually evaluated loans when we do not expect repayment to occur as agreed upon under the original terms of the loan agreement.
Current wording
In addition, at June 30, 2026, 81.0% of our loans were collateralized by real estate and 88.6% of our individually evaluated loans were secured by real estate. We utilize third party appraisers to determine the fair value of collateral dependent loans. Our current loan and appraisal policies require us to obtain updated appraisals on an annual basis, either through a new external appraisal or an appraisal evaluation. Individually evaluated loans are reviewed on a quarterly basis to determine the level of credit loss. As of June 30, 2026, we did not have any individually evaluated real estate loans carried at a value in excess of the appraised value. We typically charge-off a portion or create a specific reserve for individually evaluated loans when we do not expect repayment to occur as agreed upon under the original terms of the loan agreement.
Previous wording
At March 31, 2026, individually evaluated loans totaled $12.8 million, for which $5.7 million of these loans had a reserve of approximately $2.3 million allocated in the allowance for credit losses. Comparatively, individually evaluated loans totaled $15.1 million at December 31, 2025 for which $5.2 million of these loans had a reserve of approximately $1.5 million allocated in the allowance for credit losses.
Current wording
At June 30, 2026, individually evaluated loans totaled $12.5 million, for which $6.0 million of these loans had a reserve of approximately $2.6 million allocated in the allowance for credit losses. Comparatively, individually evaluated loans totaled $15.1 million at December 31, 2025 for which $5.2 million of these loans had a reserve of approximately $1.5 million allocated in the allowance for credit losses.
Previous wording
The allowance for credit losses was $43.4 million, representing 1.10% of outstanding loans and providing coverage of 378.22% of nonperforming loans at March 31, 2026, compared to $42.3 million, or 1.10% of outstanding loans
Current wording
The allowance for credit losses was $44.2 million, representing 1.10% of outstanding loans and providing coverage of 395.41% of nonperforming loans at June 30, 2026, compared to $42.3 million, or 1.10% of outstanding loans and 305.65% of nonperforming loans at December 31, 2025. At June 30, 2025, the ACL was $41.3 million, or 1.10% of outstanding loans and 362.35% of nonperforming loans.
Previous wording
Our retail deposits represented $3.37 billion, or 87.0% of total deposits, while our brokered deposits represented $501.7 million, or 13.0%, of total deposits at March 31, 2026. At December 31, 2025, retail deposits represented $3.16 billion, or 85.1%, of our total deposits and brokered deposits were $552.9 million, representing 14.9% of our total deposits. Our loan-to-deposit ratio was 102% at March 31, 2026 and 103% at December 31, 2025.
Current wording
Our retail deposits represented $3.56 billion, or 90.4% of total deposits, while our brokered deposits represented $379.4 million, or 9.6%, of total deposits at June 30, 2026. At December 31, 2025, retail deposits represented $3.16 billion, or 85.1%, of our total deposits, and brokered deposits were $552.9 million, representing 14.9% of our total deposits. The $392.1 million increase in retail deposits during the first six months of 2026 relates to our intense focus on growing client and core deposits and allowed us to reduce the balance of our brokered deposits by $173.5 million during the same period. Our loan-to-deposit ratio was 102% at June 30, 2026 and 103% at December 31, 2025.
Previous wording
Our primary focus is on increasing core deposits, which exclude out-of-market deposits and time deposits of $250,000 or more, in order to provide a relatively stable funding source for our loan portfolio and other earning assets. In addition, at March 31, 2026 and December 31, 2025, we estimate that we have approximately $1.6 billion and $1.5 billion, or 42.4% and 39.6% of total deposits, respectively, in uninsured deposits, including related interest accrued and unpaid. Since it is not reasonably practicable to provide a precise measure of uninsured deposits, the amounts above are estimates and are based on the same methodologies and assumptions used by the FDIC for the Bank’s regulatory reporting requirements.
Current wording
Our primary focus is on increasing core deposits, which exclude out-of-market deposits and time deposits of $250,000 or more, in order to provide a relatively stable funding source for our loan portfolio and other earning assets. In addition, at June 30, 2026 and December 31, 2025, we estimate that we have approximately $1.8 billion and $1.5 billion, or 46.8% and 39.6% of total deposits, respectively, in uninsured deposits, including related interest accrued and unpaid. Since it is not reasonably practicable to provide a precise measure of uninsured deposits, the amounts above are estimates and are based on the same methodologies and assumptions used by the FDIC for the Bank’s regulatory reporting requirements.
Previous wording
During the first three months of 2026, our average transaction account balances increased by $313.4 million, or 12.5%, from the prior year, while our average time deposit balances decreased by $35.2 million, or 3.8%. The increase in our average transaction account balances is the result of our focus on growing core deposits.
Current wording
During the first six months of 2026, our average transaction account balances increased by $488.8 million, or 19.1%, from the prior year, while our average time deposit balances decreased by $65.1 million, or 7.0%. The increase in our average transaction account balances is the result of our focus on growing core deposits.
Previous wording
All of our time deposits are certificates of deposits. The maturity distribution of our time deposits $250,000 or more at March 31, 2026 was as follows:
Current wording
All of our time deposits are certificates of deposits. The maturity distribution of our time deposits $250,000 or more at June 30, 2026 and December 31, 2025 was as follows:
Previous wording
Time deposits that meet or exceed the FDIC insurance limit of $250,000 at March 31, 2026 and December 31, 2025 were $725.2 million and $778.0 million, respectively. We have a relationship with IntraFi Promontory Network,
Current wording
Time deposits that meet or exceed the FDIC insurance limit of $250,000 at June 30, 2026 and December 31, 2025 were $626.6 million and $778.0 million, respectively. We have a relationship with IntraFi Promontory Network, allowing us to provide deposit customers with access to aggregate FDIC insurance in amounts exceeding $250,000.
Previous wording
allowing us to provide deposit customers with access to aggregate FDIC insurance in amounts exceeding $250,000. This gives us the ability, as and when needed, to attract and retain large deposits from insurance conscious customers. With IntraFi, we have the option to keep deposits on balance sheet or sell them to other members of the network.
Current wording
This gives us the ability, as and when needed, to attract and retain large deposits from insurance conscious customers. With IntraFi, we have the option to keep deposits on balance sheet or sell them to other members of the network.
Previous wording
At March 31, 2026 and December 31, 2025, we had $240.0 million of convertible fixed rate FHLB advances with a weighted average rate of 3.74%. At March 31, 2026, the $240.0 million was secured with approximately $1.37 billion of mortgage loans and $14.8 million of stock in the FHLB. At December 31, 2025, the $240.0 million was secured with approximately $1.38 billion of mortgage loans and $14.5 million of stock in the FHLB.
Current wording
At June 30, 2026 and December 31, 2025, we had $240.0 million of convertible fixed rate FHLB advances with a weighted average rate of 3.70% and 3.74%, respectively. At June 30, 2026, the $240.0 million was secured with approximately $1.40 billion of mortgage loans and $14.8 million of stock in the FHLB. At December 31, 2025, the $240.0 million was secured with approximately $1.38 billion of mortgage loans and $14.5 million of stock in the FHLB.
Previous wording
Our investment securities at March 31, 2026 and December 31, 2025 amounted to $144.6 million and $147.8 million, respectively, or 3.2% and 3.4% of total assets, respectively. Investment securities traditionally provide a secondary source of liquidity since they can be converted into cash in a timely manner.
Current wording
At June 30, 2026 and December 31, 2025 our cash and cash equivalents totaled $361.6 million and $269.6 million, respectively, or 7.7% and 6.1% of total assets, respectively. Our investment securities at June 30, 2026 and December 31, 2025 amounted to $164.9 million and $147.8 million, respectively, or 3.5% and 3.4% of total assets, respectively. Investment securities traditionally provide a secondary source of liquidity since they can be converted into cash in a timely manner.
Previous wording
Our ability to maintain and expand our deposit base and borrowing capabilities serves as our primary source of liquidity. We plan to meet our future cash needs through the liquidation of temporary investments, the generation of deposits, loan payoffs, and from additional borrowings. In addition, we will receive cash upon the maturity and sale of loans and the maturity of investment securities. We maintain six federal funds purchased lines of credit with correspondent banks totaling $128.5 million for which there were no borrowings against the lines of credit at March 31, 2026. We also had $178.6 million pledged and available with the Federal Reserve Discount Window at March 31, 2026. Comparatively, at December 31, 2025, we had $181.2 million pledged and available with the Federal Reserve Discount Window.
Current wording
Our ability to maintain and expand our deposit base and borrowing capabilities serves as our primary source of liquidity. We plan to meet our future cash needs through the liquidation of temporary investments, the generation of deposits, loan payoffs, and from additional borrowings. In addition, we will receive cash upon the maturity and sale of loans and the maturity of investment securities. We maintain five federal funds purchased lines of credit with correspondent banks totaling $113.5 million for which there were no borrowings against the lines of credit at June 30, 2026. We also had $145.9 million pledged and available with the Federal Reserve Discount Window at June 30, 2026. Comparatively, at December 31, 2025, we had $181.2 million pledged and available with the Federal Reserve Discount Window.
Previous wording
We are also a member of the FHLB, from which applications for borrowings can be made. The FHLB requires that securities, qualifying mortgage loans, and stock of the FHLB owned by the Bank be pledged to secure any advances from the FHLB. The unused borrowing capacity currently available from the FHLB at March 31, 2026 was $811.7 million, based primarily on the Bank’s qualifying mortgages available to secure any future borrowings. However, we are able to pledge additional securities to the FHLB in order to increase our available borrowing capacity. In addition, at March 31, 2026 and December 31, 2025 we had $270.3 million and $231.9 million, respectively, of letters of credit outstanding with the FHLB to secure client deposits.
Current wording
We are also a member of the FHLB, from which applications for borrowings can be made. The FHLB requires that securities, qualifying mortgage loans, and stock of the FHLB owned by the Bank be pledged to secure any advances from the FHLB. The unused borrowing capacity currently available from the FHLB at June 30, 2026 was $832.1 million, based primarily on the Bank’s qualifying mortgages available to secure any future borrowings. However, we are able to pledge additional securities to the FHLB in order to increase our available borrowing capacity. In addition, at June 30, 2026 and December 31, 2025 we had $302.4 million and $231.9 million, respectively, of letters of credit outstanding with the FHLB to secure client deposits.
Previous wording
The following table shows the return on average assets (net income divided by average total assets), return on average equity (net income divided by average equity), equity to assets ratio (average equity divided by average assets), and tangible common equity ratio (total equity less preferred stock divided by total assets) annualized for the three months ended March 31, 2026 and the year ended December 31, 2025.
Current wording
The following table shows the return on average assets (net income divided by average total assets), return on average equity (net income divided by average equity), equity to assets ratio (average equity divided by average assets), and tangible common equity ratio (total equity less preferred stock divided by total assets) annualized for the six months ended June 30, 2026 and the year ended December 31, 2025.
Showing the first 40 of 44 pairs. Open the source sections for the rest.
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Current report — wording carried from elsewhere
Form 10-K for that period. Results for the three and six month periods ended June 30, 2026 are not necessarily indicative of the results for the year ending December 31, 2026 or any future period.
Current report — wording carried from elsewhere
Our net interest spread was 2.11% for the second quarter of 2026 compared to 1.69% for the same period in 2025. The net interest spread is the difference between the yield we earn on our interest-earning assets and the rate we pay on our interest-bearing liabilities. The two-basis point decrease in yield on our interest-earning assets, combined
Current report — wording carried from elsewhere
Average Balances, Income and Expenses, Yields and Rates
Current report — wording carried from elsewhere
Partially offsetting the above increases was a decrease in insurance expense of $170,000, or 8.9%, due to lower FDIC assessment expense during the first half of 2026.
Current report — wording carried from elsewhere
the future before that loan can be placed back on accrual status. As of June 30, 2026 and December 31, 2025 we had no loans that were 90 days past due and still accruing.
Current report — wording carried from elsewhere
of asset. Tier 2 capital consists of Tier 1 capital plus the general reserve for credit losses, subject to certain limitations. We are also required to maintain capital at a minimum level based on total average assets, which is known as the Tier 1 leverage ratio.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Our business model continues to be client-focused, utilizing relationship teams to provide our clients with a specific banker contact and support team responsible for all of their banking needs. The purpose of this structure is to
Previous report — wording carried elsewhere
and 305.65% of nonperforming loans at December 31, 2025. At March 31, 2025, the ACL was $40.7 million, or 1.10% of outstanding loans and 378.09% of nonperforming loans.