FIRST COMMUNITY CORP /SC/

Previous wording

The following discussion describes our results of operations for the three and nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024 and analyzes our financial condition as of September 30, 2025 as compared to December 31, 2024. Like most community banks, we derive most of our income from interest we receive on our loans and investments. Our primary sources of funds for making these loans and investments are our deposits and borrowings, on which we pay interest. Consequently, one of the key measures of our success is our amount of net interest income, or the difference between the income on our interest-earning assets, such as loans and investments, and the expense on our interest-bearing liabilities, such as deposits and borrowings. Another key measure is the spread between the yield we earn on our interest-earning assets and the rate we pay on our interest-bearing liabilities. There are risks inherent in all loans, so we maintain an allowance for credit losses to absorb our estimate of expected credit losses on existing loans that may become uncollectible. We establish and maintain this allowance by recording a provision for or release of credit losses against our earnings. In the following section, we have included a detailed discussion of this process.

Current wording

The following discussion describes our results of operations for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, and analyzes our financial condition as of March 31, 2026 as compared to December 31, 2025. Like most community banks, we derive most of our income from interest we receive on our loans and investments. Our primary sources of funds for making these loans and investments are our deposits and borrowings, on which we pay interest. Consequently, one of the key measures of our success is our amount of net interest income, or the difference between the income on our interest-earning assets, such as loans and investments, and the expense on our interest-bearing liabilities, such as deposits and borrowings. Another key measure is the spread between the yield we earn on our interest-earning assets and the rate we pay on our interest-bearing liabilities. There are risks inherent in all loans, so we maintain an allowance for credit losses to absorb our estimate of expected credit losses on existing loans that may become uncollectible. We establish and maintain this allowance by recording a provision for or release of credit losses against our earnings. In the following section, we have included a detailed discussion of this process.

Previous wording

Proposed Merger with Signature Bank of Georgia

Current wording

Merger with Signature Bank of Georgia

Previous wording

On July 13, 2025, we entered into a merger agreement with Signature Bank, which provides that, subject to the terms and conditions set forth in the merger agreement, Signature Bank will merge with and into First Community Bank, with First Community Bank continuing as the surviving entity following the merger.

Current wording

On July 13, 2025, the Company and First Community Bank entered into an Agreement and Plan of Merger with Signature Bank of Georgia (“SGBG”), pursuant to which SGBG agreed to merge with and into First Community Bank, with First Community Bank continuing as the surviving bank. The merger was completed on January 8, 2026.

Previous wording

Upon consummation of the merger, each share of Signature Bank common stock will be converted into the right to receive 0.6410 shares of our common stock. Holders of Signature Bank common stock will receive a cash payment in lieu of any fractional shares. At the effective time of the merger, each outstanding stock option to acquire Signature Bank common stock, whether or not vested, will be converted into the right to receive a cash payment. The amount payable will equal the number of shares of Signature Bank common stock subject to the option multiplied by the excess, if any, of the fair market value per share of Signature Bank common stock (based on the value of the merger consideration) over the option’s exercise price. If the exercise price equals or exceeds the fair market value, a nominal payment of $0.01 per share will be made.

Current wording

At the effective time of the merger, each outstanding share of SGBG common stock was converted into the right to receive 0.6410 shares of Company common stock, with cash paid in lieu of any fractional shares. In addition, each outstanding option to acquire SGBG common stock, whether vested or unvested, was converted into the right to receive a cash payment equal to the number of shares of SGBG common stock subject to the option multiplied by the excess, if any, of the fair market value per share of SGBG common stock, based on the value of the merger consideration, over the applicable exercise price. If the applicable exercise price equaled or exceeded the fair market value per share of SGBG common stock, the holder received a nominal payment of $0.01 per share.

Previous wording

There have been no significant changes to our critical accounting estimates as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

Except for the estimates related to business combination described below, there have been no significant changes to our critical accounting estimates as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Previous wording

Our net income for the three months ended September 30, 2025 increased $1.3 million to $5.2 million, or $0.67 diluted earnings per common share, as compared to $3.9 million, or $0.50 diluted earnings per common share, for the three months ended September 30, 2024. The increase in net income between the two periods is primarily due to a $2.6 million increase in net interest income and an $899,000 increase in non-interest income, partially offset by a $217,000 increase in provision for credit losses, a $1.7 million increase in total non-interest expense, and a $250,000 increase in income tax expense.

Current wording

Our net income for the three months ended March 31, 2026 increased $1.5 million to $5.5 million, or $0.59 diluted earnings per common share, as compared to $4.0 million, or $0.51 diluted earnings per common share, for the three months ended March 31, 2025. The increase in net income between the two periods is primarily due to a $4.0 million increase in net interest income, a $244,000 decrease in provision for credit losses, a $808,000 increase in non-interest income, and a $747,000 decrease in income tax expense, partially offset by a $4.3 million increase in non-interest expense.

Previous wording

Net interest income increased $2.6 million, or 19.3%, to $16.0 million for the three months ended September 30, 2025 from $13.4 million for the three months ended September 30, 2024. Our net interest margin improved 0.31% to 3.26% during the three months ended September 30, 2025 compared to 2.95% during the three months ended September 30, 2024. Our net interest margin, on a taxable equivalent basis, was 3.27% for the three months ended September 30, 2025 compared to 2.96% for the three months ended September 30, 2024. Average earning assets were $1.9 billion for the three months ended September 30, 2025 and $1.8 billion in the same period of 2024.

Current wording

Net interest income increased $4.0 million, or 27.7%, to $18.4 million for the three months ended March 31, 2026 from $14.4 million for the three months ended March 31, 2025. Our net interest margin improved 23 basis points to 3.35% during the three months ended March 31, 2026 compared to 3.12% during the three months ended March 31, 2025. Our net interest margin, on a taxable equivalent basis, was 3.37% for the three months ended March 31, 2026 compared to 3.13% for the three months ended March 31, 2025. Average earning assets were $2.2 billion for the three months ended March 31, 2026 and $1.9 billion in the same period of 2025.

Previous wording

Average loans increased $80.7 million, or 6.7%, to $1.3 billion for the three months ended September 30, 2025 from $1.2 billion for the same period in 2024. Our loan (including loans held-for-sale) to deposit ratio on average during the three months ended September 30, 2025 was 73.0%, as compared to 74.0% during same period in 2024. The yield on loans increased 0.11% to 5.84% during the three months ended September 30, 2025 from 5.73% during the same period in 2024 due to higher rates on new and renewed loans during the period compared to interest rates on loans maturing during the period.

Current wording

Average loans increased $272.3 million, or 22.0%, to $1.5 billion for the three months ended March 31, 2026 from $1.2 billion for the same period in 2025. Our loan (including loans held-for-sale) to deposit ratio on average during the three months ended March 31, 2026 was 76.0%, as compared to 73.0% during the same period in 2025. The yield on loans increased 23 basis points to 5.94% during the three months ended March 31, 2026 from 5.71% during the same period in 2025 due to higher rates on new and renewed loans during the period compared to interest rates on loans maturing during the period.

Previous wording

Average securities for the three months ended September 30, 2025 increased $16.5 million, or 3.4%, to $504.1 million from $487.6 million during the same period in 2024. Interest-bearing deposits in other banks and fed funds sold increased $41.4 million to $159.4 million during the three months ended September 30, 2025 from $118.0 million during the same period in 2024. The increase in interest-bearing deposits in other banks and fed funds sold was due to our decision to hold excess liquidity in interest bearing deposits at the Federal Reserve Bank. The yield on our securities portfolio declined to 3.41% for the three months ended September 30, 2025 from 3.53% for the same period in 2024. The yield on our interest-bearing deposits in other banks and fed funds sold was 4.26% for the three months ended September 30, 2025 compared to 5.23% during the same period in 2024. There were no interest-bearing deposits in other banks and fed funds sold during the three months ended September 30, 2024.

Current wording

Average securities for the three months ended March 31, 2026 increased $11.4 million, or 2.3%, to $503.6 million from $492.2 million during the same period in 2025. Interest-bearing deposits in other banks and fed funds sold increased $65.4 million to $206.0 million during the three months ended March 31, 2026 from $140.5 million during the same period in 2025. The increase in interest-bearing deposits in other banks and fed funds sold was due to additional cash from our acquisition of SGBG and our decision to hold excess liquidity in interest bearing deposits at the Federal Reserve Bank. The yield on our securities portfolio declined to 3.32% for the three months ended March 31, 2026 from 3.42% for the same period in 2025. The yield on our interest-bearing deposits in other banks and fed funds sold was 3.51% for the three months ended March 31, 2026 compared to 4.29% during the same period in 2025. Average fed funds sold increased to $213,000 during the three months ended March 31, 2026 from $150,000 during the same period in 2025. The yield on fed funds sold declined to 3.81% during the three months ended March 31, 2026 from 6.44% during the same period in 2025.

Previous wording

The cost of interest-bearing liabilities was 2.53% during the three months ended September 30, 2025 compared to 2.96% during the same period in 2024. The cost of deposits, including demand deposits, was 1.81% during the three months ended September 30, 2025 compared to 2.03% during the same period in 2024. The cost of funds, including demand deposits, was 1.89% during the three months ended September 30, 2025 compared to 2.21% during the same period in 2024. This decline was driven by a decrease in the market interest rates for deposits during the period. We continue to focus on growing our pure deposits (demand deposits, interest-bearing transaction accounts, savings deposits, money market accounts, and IRAs) plus customer cash management repurchase agreements as these accounts tend to be low-cost funding and assist us in controlling our overall cost of funds. We had $1.6 billion, $1.5 billion, and $1.4 billion in pure deposits plus customer cash management repurchase agreements at September 30, 2025, December 31, 2024 and September 30, 2024, respectively. As of September 30, 2025, we had no brokered certificates of deposit. We had $10.4 million and $22.4 million in brokered certificates of deposit at December 31, 2024 and at September 30, 2024, respectively.

Current wording

The cost of interest-bearing liabilities was 2.45% during the three months ended March 31, 2026 compared to 2.58% during the same period in 2025. The cost of deposits, including demand deposits, was 1.80% during the three months ended March 31, 2026 compared to 1.85% during the same period in 2025. The cost of funds, including demand deposits, was 1.85% during the three months ended March 31, 2026 compared to 1.94% during the same period in 2025. This decline was driven by a decrease in the market interest rates for deposits during the period. We continue to focus on growing our pure deposits (demand deposits, interest-bearing transaction accounts, savings deposits, money market accounts, and IRAs) plus customer cash management repurchase agreements as these accounts tend to be low-cost funding and assist us in controlling our overall cost of funds. We had $1.8 billion, $1.5 billion, and $1.5 billion in pure deposits plus customer cash management repurchase agreements at March 31, 2026, December 31, 2025 and March 31, 2025, respectively. As of March 31, 2026, we had no brokered certificates of deposit.

Previous wording

Non-interest income during the three months ended September 30, 2025 increased $899,000 to $4.5 million from $3.6 million during the same period in 2024. The $899,000 increase in non-interest income was primarily related to increases of $359,000 in mortgage banking income, $267,000 in investment advisory fees and non-deposit commissions, $188,000 in other non-recurring income, and $75,000 in other non-interest income.

Current wording

Non-interest income during the three months ended March 31, 2026 increased $808,000 to $4.8 million from $4.0 million during the same period in 2025. The increase in non-interest income was primarily related to increases of $465,000 in investment advisory fees and non-deposit commissions and $395,000 in government guaranteed lending income, partially offset by a reduction of $78,000 in mortgage banking income.

Previous wording

Mortgage banking income increased $359,000 to $934,000 during the three months ended September 30, 2025 from $575,000 during the same period in 2024. Total production in the mortgage line of business in the three months ended September 30, 2025 was $51.6 million, which was comprised of $32.0 million in secondary market loans, $4.2 million in adjustable rate mortgages (ARMs), and $15.4 million in commitments for new construction residential real estate loans. Fee revenue from the mortgage line of business was $934,000 for the three months ended September 30, 2025, which includes $931,000 associated with the secondary market loans with a gain-on-sale margin of 2.91%. This compares to production year-over-year of $38.1 million which was comprised of $19.5 million in secondary market loans, $8.7 million in ARMs, and $9.9 million in commitments for new construction residential real estate loans during the three months ended September 30, 2024. Fee revenue from the mortgage line of business was $575,000, which includes $571,000 associated with the secondary market loans with a gain-on-sale margin of 2.92% during the three months ended September 30, 2024.

Current wording

Mortgage banking income decreased $78,000 to $681,000 during the three months ended March 31, 2026 from $759,000 during the same period in 2025. Total production in the mortgage line of business in the first quarter of 2026 was $42.0 million, which was comprised of $25.4 million in secondary market loans, $1.9 million in adjustable-rate mortgages (ARMs), and $14.7 million in construction loans. Total fee revenue in the mortgage line of business was $681,000 in the first quarter of 2026, which includes $673,000 associated with the secondary market loans, with a gain-on-sale margin of 2.65%. This compares to production year-over-year of $43.9 million, which was comprised of $25.8 million in secondary market loans, $4.0 million in ARMs, and $14.1 million in construction loans during the first quarter of 2025. Fee revenue associated with the secondary market loans in the first quarter of 2025 was $755,000 with a gain-on-sale margin of 2.93%.

Previous wording

Investment advisory fees rose $267,000 to $1.9 million during the three months ended September 30, 2025 from $1.6 million during the same period in 2024. Total assets under management increased to $1.1 billion at September 30, 2025 compared to $926.0 million at December 31, 2024 and $901.6 million at September 30, 2024. Our net new assets under management were $12.0 million during the three months ended September 30, 2025. Furthermore, our investment performance for the three months ended September 30, 2025 was 7.9% compared to 7.8% for the S&P 500. Our customers’ assets under management are allocated across a range of asset classes, including equities, bonds, and cash.

Current wording

Investment advisory fees rose $465,000 to $2.3 million during the three months ended March 31, 2026 from $1.8 million during the same period in 2025. Total assets under management declined to $1.1 billion at March 31, 2026 from $1.2 billion at December 31, 2025, but increased from $892.8 million at March 31, 2025. Our net new assets under management were $7.9 million during the three months ended March 31, 2026. Furthermore, our investment performance for the three months ended March 31, 2026 was negative 3.6% compared to negative 4.6% for the S&P 500. Our customers’ assets under management are allocated across a range of asset classes, including equities, bonds, and cash.

Previous wording

Other non-interest income increased $75,000 to $1.2 million during the three months ended September 30, 2025 from $1.2 million during the same period in 2024. The $75,000 increase was primarily due to a $25,000 increase in ATM debit card income and a $39,000 increase in rental income.

Current wording

Other non-interest income increased $24,000 to $1.2 million during the three months ended March 31, 2026 from $1.2 million during the same period in 2025. The $24,000 increase was primarily due to increases in wire transfer fees of $18,000 and rental income of $15,000, partially offset by a decline of $22,000 in ATM debit card income.

Previous wording

Non-interest expense increased $3.9 million during the nine months ended September 30, 2025 to $39.5 million compared to $35.6 million during the same period in 2024. This increase is primarily due to an increase of $2.0 million in salaries and employee benefits, $119,000 in equipment, $21,000 in other real estate expense, net, $809,000 in merger expenses, and $985,000 in other non-interest expense, partially offset by a decrease of $22,000 in marketing and public relations, and a decrease of $10,000 in FDIC assessments.

Current wording

Non-interest expense increased $4.3 million during the three months ended March 31, 2026 to $17.0 million compared to $12.8 million during the same period in 2025. The increase in non-interest expense was primarily due to increases of $1.8 million in salaries and employee benefits, $57,000 in amortization of intangibles, $1.6 million in merger expenses, and $765,000 in other expenses.

Previous wording

We incurred income tax expense of $1.4 million and $1.1 million for the three months ended September 30, 2025 and 2024, respectively. Our effective tax rate was 21.2% and 22.9% for the three months ended September 30, 2025 and 2024, respectively. The decrease in the effective tax rate was due to a non-recurring adjustment of $120,000 due to tax credits purchased during the three months ended September 30, 2025.

Current wording

We incurred income tax expense of $437,000 and $1.2 million for the three months ended March 31, 2026 and 2025, respectively. Our effective tax rate was 7.4% and 22.9% for the three months ended March 31, 2026 and 2025, respectively. The decrease in the effective tax rate was due to an adjustment of $878,000 due to tax credits purchased during the three months ended March 31, 2026.

Previous wording

The total allowance for credit losses (ACL) is composed of three parts: the ACL for loans, the ACL for unfunded commitments, and the ACL for HTM investments. The ACL for loans is further composed of the allowance for individually assessed loans, the allowance for collectively assessed expected losses, the allowance for collectively assessed qualitative adjustments, and the allowance for collectively assessed additional allowance. The allowance for collectively assessed qualitative adjustments is calculated using a set of qualitative factors, shown below:

Current wording

The total allowance for credit losses (ACL) is composed of three parts: the ACL for loans, the ACL for unfunded commitments, and the ACL for HTM investments. The ACL for loans is further composed of the allowance for individually assessed loans, the allowance for collectively assessed expected losses, the allowance for collectively assessed qualitative adjustments, and the allowance for collectively assessed additional allowance. The allowance for collectively assessed qualitative adjustments is calculated using a set of qualitative factors which as of March 31, 2026 and December 31, 2025 included changes in lending policies and procedures, changes in staff, markets, and products, change in total of 30-89 days past due and other loans especially mentioned, changes in the loan review system, changes in collateral value for non-collateral dependent loans, changes in concentration of credits, changes in the legal or regulatory requirements and competition, data limitations, model imprecision, and reasonable and supportable forecast alternative scenarios. The qualitative factors, combined with the allowance for individually assessed loans, the allowance for collectively assessed expected losses, and the collectively assessed additional allowance, are used to calculate the total allowance for credit losses on loans. The following table summarizes the activity related to our allowance for credit losses for loans:

Previous wording

We have a significant portion of our loan portfolio with real estate as the underlying collateral. As of September 30, 2025 and December 31, 2024, approximately 91.6% and 91.4%, respectively, of the loan portfolio had real estate collateral. When loans, whether commercial or personal, are granted, they are based on the borrower’s ability to generate repayment cash flows from income sources sufficient to service the debt. Real estate is generally taken to reinforce the likelihood of the ultimate repayment and as a secondary source of repayment. We work closely with all our borrowers that experience cash flow or other economic problems, and we believe that we have the appropriate processes in place to monitor and identify problem credits. There can be no assurance that charge-offs of loans in future periods will not exceed the allowance for credit losses as estimated at any point in time or that provisions for credit losses will not be significant to a particular accounting period. The allowance for credit losses is also subject to examination and testing for adequacy by regulatory agencies, which may consider such factors as the methodology used to determine adequacy for credit losses and the size of the allowance relative to that of peer institutions. Such regulatory agencies could require us to adjust our allowance for credit losses based on information available to them at the time of their examination.

Current wording

We have a significant portion of our loan portfolio with real estate as the underlying collateral. As of March 31, 2026 and December 31, 2025, approximately 92.4% and 91.5%, respectively, of the loan portfolio had real estate collateral. When loans, whether commercial or personal, are granted, they are based on the borrower’s ability to generate repayment cash flows from income sources sufficient to service the debt. Real estate is generally taken to reinforce the likelihood of the ultimate repayment and as a secondary source of repayment. We work closely with all our borrowers who experience cash flow or other economic problems, and we believe that we have the appropriate processes in place to monitor and identify problem credits. There can be no assurance that charge-offs of loans in future periods will not exceed the allowance for credit losses as estimated at any point in time or that provisions for credit losses will not be significant to a particular accounting period. The allowance for credit losses is also subject to examination and testing for adequacy by regulatory agencies, which may consider such factors as the methodology used to determine adequacy of the allowance and the size of the allowance relative to that of peer institutions. Such regulatory agencies could require us to adjust our allowance for credit losses based on information available to them at the time of their examination.

Previous wording

Accrual of interest is discontinued on loans when management believes, after considering economic and business conditions and collection efforts that a borrower’s financial condition is such that the collection of interest is doubtful. A delinquent loan is generally placed in non-accrual status when it becomes 90 days or more past due. At the time a loan is placed in non-accrual status all interest, which has been accrued on the loan but remains unpaid, is reversed and deducted from earnings as a reduction of reported interest income. No additional interest is accrued on the loan balance until the collection of both principal and interest becomes reasonably certain.

Current wording

Accrual of interest is discontinued on loans when management believes, after considering economic and business conditions and collection efforts that a borrower’s financial condition is such that the collection of interest is doubtful. A delinquent loan is generally placed in non-accrual status when it becomes 90 days or more past due. At the time a loan is placed in non-accrual status, all interest that has been accrued on the loan but remains unpaid, is reversed and deducted from earnings as a reduction of reported interest income. No additional interest is accrued on the loan balance until the collection of both principal and interest becomes reasonably certain.

Previous wording

The non-performing asset ratio was 0.04% of total assets with the nominal level of $881,000 in non-performing assets at September 30, 2025 compared to 0.04% and $810,000 at December 31, 2024. Non-accrual loans decreased to $205,000 at September 30, 2025 from $219,000 at December 31, 2024. We had one accruing loan past due 90 days or more totaling $482,000 at September 30, 2025 compared to $48,000 at December 31, 2024. Loans past due 30 days or more represented 0.07% of the loan portfolio at September 30, 2025 compared to 0.05% at December 31, 2024. The ratio of classified loans plus OREO and repossessed assets declined to 0.80% of total bank regulatory risk-based capital at September 30, 2025 from 1.06% at December 31, 2024.

Current wording

The non-performing asset ratio was 0.04% of total assets with the nominal level of $853,000 in non-performing assets at March 31, 2026 compared to 0.02% and $372,000 at December 31, 2025. Non-accrual loans increased to $311,000 at March 31, 2026 from $202,000 at December 31, 2025. We had one accruing loan past due 90 days or more totaling $374,000 at March 31, 2026 compared to $2,000 at December 31, 2025. Loans past due 30 days or more represented 0.14% of the loan portfolio at March 31, 2026 compared to 0.07% at December 31, 2025. The ratio of classified loans plus OREO and repossessed assets increased to 1.83% of total bank regulatory risk-based capital at March 31, 2026 from 0.76% at December 31, 2025.

Previous wording

There were three loans totaling $687,000 (0.02% of total loans) included on non-performing status (non-accrual loans and loans past due 90 days and still accruing) at September 30, 2025. Two of these loans were on non-accrual status. The largest loan of the two is $205,000 and is secured by real estate. The balance of the remaining loan on non-accrual status is $1,000. This loan is secured by a second mortgage lien. At September 30, 2025, we had one accruing loan that was past due 90 days or more. At both September 30, 2025 and December 31, 2024, we considered loan relationships exceeding $500,000 and on non-accrual status as individually assessed loans for the allowance for credit losses. At both September 30, 2025 and December 31, 2024, we had no individually assessed loans. The specific allowance for individually assessed loans is based on the fair value of collateral method or present value of expected cash flows method. For collateral dependent loans, the fair value of collateral method is used and the fair value is determined by an independent appraisal less estimated selling costs. There was no specific allowance for credit losses on our individually assessed loans at September 30, 2025 and December 31, 2024. At September 30, 2025, we had $436,000 in loans that were delinquent 30 days to 89 days representing 0.03% of total loans compared to $554,000 or 0.05% of total loans at December 31, 2024.

Current wording

There were five loans totaling $685,000 (0.04% of total loans) included on non-performing status (non-accrual loans and loans past due 90 days and still accruing) at March 31, 2026. Four of these loans were on non-accrual status. The largest loan of the four is $196,000 and is secured by real estate. The balance of the remaining loans on non-accrual status is $115,000. These loans are secured by business assets. At March 31, 2026, we had one accruing loan that was past due 90 days or more. At both March 31, 2026 and December 31, 2025, we considered loan relationships exceeding $500,000 and on non-accrual status as individually assessed loans for the allowance for credit losses. At March 31, 2026 we have one individually assessed loan for $2.4 million and at December 31, 2025, we had no individually assessed loans. The specific allowance for individually assessed loans is based on the fair value of collateral method or present value of expected cash flows method. For collateral dependent loans, the fair value of collateral method is used and the fair value is determined by an independent appraisal less estimated selling costs. There was $2.0 million allowance for credit losses on our individually assessed loans at March 31, 2026 and none at December 31, 2025. At March 31, 2026, we had $2.2 million in loans that were delinquent 30 days to 89 days representing 0.14% of total loans compared to $934,000 or 0.07% of total loans at December 31, 2025.

Previous wording

Assets increased $108.6 million, or 5.5% (7.4% annualized), to $2.1 billion at September 30, 2025 from $2.0 billion at December 31, 2024. The increase in assets was primarily due to increases in interest bearing bank balances of $39.8 million, investment securities available for sale of $19.9 million, and loans held for investment of $58.8 million, partially offset by a decrease in investment securities held-to-maturity of $10.6 million.

Current wording

Assets increased $333.8 million, or 16.2% (65.8% annualized), to $2.4 billion at March 31, 2026 from $2.1 billion at December 31, 2025. The increase in assets was primarily due to increases in cash and due from banks of $11.6 million, interest-bearing bank balances of $45.3 million, investment securities available for sale of $26.6 million, loans held-for-investment of $238.1 million, goodwill of $14.8 million, intangible assets of $2.5 million, and other assets of $8.7 million, partially offset by a decrease in investment securities held-to-maturity of $6.4 million.

Previous wording

Loans held-for-sale decreased to $9.0 million at September 30, 2025 from $9.7 million at December 31, 2024. Loans (excluding loans held-for-sale) increased $58.8 million, or 4.8% (6.4% annualized), to $1.3 billion at September 30, 2025 from $1.2 billion at December 31, 2024. Total loan production, excluding mortgage secondary market and new construction residential real estate, was $161.1 million during the nine months ended September 30, 2025 compared to $138.3 million during the same period in 2024. Advances from unfunded commercial construction loans available for draws were $34.5 million during the nine months ended September 30, 2025 compared to $71.3 million during the same period in 2024. Payoffs and paydowns totaled $92.4 million during the nine months ended September 30, 2025 compared to $84.4 million during the same period in 2024.

Current wording

Loans held-for-sale decreased to $6.9 million at March 31, 2026 from $10.7 million at December 31, 2025. Loans (excluding loans held-for-sale) increased $238.1 million, or 18.2% (73.7% annualized), to $1.5 billion at March 31, 2026 from $1.3 billion at December 31, 2025. Total loan production, excluding mortgage secondary market and new construction residential real estate, was $91.2 million during the three months ended March 31, 2026 compared to $53.6 million during the same period in 2025. Advances from unfunded commercial construction loans available for draws were $10.2 million during the three months ended March 31, 2026 compared to $9.0 million during the same period in 2025. Payoffs and paydowns totaled $43.7 million during the three months ended March 31, 2026 compared to $18.6 million during the same period in 2025.

Previous wording

The loan-to-deposit ratio (including loans held-for-sale) at September 30, 2025 and December 31, 2024 was 72.7% and 73.4%, respectively. The loan-to-deposit ratio (excluding loans held-for-sale) at September 30, 2025 and December 31, 2024 was 72.2% and 72.8%, respectively.

Current wording

The loan-to-deposit ratio (including loans held-for-sale) at March 31, 2026 and December 31, 2025 was 76.0% and 75.6%, respectively. The loan-to-deposit ratio (excluding loans held-for-sale) at March 31, 2026 and December 31, 2025 was 75.6% and 74.9%, respectively.

Previous wording

One of our goals as a community bank has been, and continues to be, to grow our assets through quality loan growth by providing credit to small and mid-size businesses and individuals within the markets we serve. We remain committed to meeting the credit needs of our local markets. Based on our loan portfolio as of September 30, 2025, the non-owner occupied commercial real estate loans and the construction and land development loans were approximately 304% and 71% of total risk-based capital, respectively compared to 305% and 82% at December 31, 2024. Furthermore, our three-year growth in non-owner occupied commercial real estate loans was 38% from September 30, 2022 to September 30, 2025. We have expertise and a long history in originating and managing commercial real estate loans. We have a strong credit underwriting process, which includes management and board oversight. We perform rigorous monitoring, stress testing, and reporting of these portfolios at the management and board levels, and we continue to monitor the level of the concentration in commercial real estate loans within our loan portfolio monthly.

Current wording

One of our goals as a community bank has been, and continues to be, to grow our assets through quality loan growth by providing credit to small and mid-size businesses and individuals within the markets we serve. We remain committed to meeting the credit needs of our local markets. Based on our loan portfolio as of March 31, 2026, the non-owner occupied commercial real estate loans and the construction and land development loans were approximately 314% and 67% of total risk-based capital, respectively compared to 307% and 71% at December 31, 2025. Furthermore, our three-year growth in non-owner occupied commercial real estate loans was 62% from March 31, 2023 to March 31, 2026. We have expertise and a long history in originating and managing commercial real estate loans. We have a strong credit underwriting process, which includes management and board oversight. We perform rigorous monitoring, stress testing, and reporting of these portfolios at the management and board levels, and we continue to monitor the level of the concentration in commercial real estate loans within our loan portfolio monthly.

Previous wording

Investment securities increased $9.6 million to $501.3 million, net of allowance for credit losses on investments of $19,000, at September 30, 2025 from $491.7 million, net of allowance for credit losses on investments of $23,000, at December 31, 2024. The increase was driven by increases in the fair value of available-for-sale securities, purchases of mortgage-backed securities in the available-for-sale portfolio, partially offset by normal principal cash flows.

Current wording

Investment securities increased $20.2 million to $512.6 million, net of allowance for credit losses on investments of $16,000, at March 31, 2026 from $492.2 million, net of allowance for credit losses on investments of $19,000, at December 31, 2025. The increase was driven primarily by purchases of mortgage-backed securities in the available-for-sale portfolio, partially offset by normal principal cash flows.

Previous wording

On June 1, 2022, we reclassified $224.5 million in investments to held-to-maturity (HTM) from available-for-sale (AFS). These securities were transferred at fair value at the time of the transfer, which became the new cost basis for the securities held to maturity. The pretax unrealized net holding loss on the available-for-sale securities on the date of transfer totaled approximately $16.7 million and continued to be reported as a component of accumulated other comprehensive loss. This net unrealized loss is being amortized to interest income over the remaining life of the securities as a yield adjustment. There were no gains or losses recognized as a result of this transfer. The remaining pretax unrealized net holding loss on these investments was $11.0 million ($8.7 million net of tax) at September 30, 2025.

Current wording

On June 1, 2022, we reclassified $224.5 million in investments to held-to-maturity (HTM) from available-for-sale (AFS). These securities were transferred at fair value at the time of the transfer, which became the new cost basis for the securities held to maturity. The pretax unrealized net holding loss on the available-for-sale securities on the date of transfer totaled approximately $16.7 million and continued to be reported as a component of accumulated other comprehensive loss. This net unrealized loss is being amortized to interest income over the remaining life of the securities as a yield adjustment. There were no gains or losses recognized as a result of this transfer. The remaining pretax unrealized net holding loss on these investments was $10.2 million ($8.0 million net of tax) at March 31, 2026.

Previous wording

Our HTM investments totaled $198.8 million and represented approximately 40% of our total investments at September 30, 2025. Our AFS investments totaled $299.5 million or approximately 59% of our total investments at September 30, 2025. Our investments at cost totaled $2.9 million or approximately 1% of our total investments at September 30, 2025. The unrealized losses on our investment securities are related to an increase in market interest rates, which has a temporary negative impact on the fair value of our investment securities portfolio and on accumulated other comprehensive loss, which is included in shareholders’ equity.

Current wording

Our HTM investments totaled $188.7 million and represented approximately 37% of our total investments at March 31, 2026. Our AFS investments totaled $320.7 million or approximately 62% of our total investments at March 31, 2026. Our investments at cost totaled $3.2 million or approximately 1% of our total investments at March 31, 2026. The unrealized losses on our investment securities are related to an increase in market interest rates, which has a temporary negative impact on the fair value of our investment securities portfolio and on accumulated other comprehensive loss, which is included in shareholders’ equity.

Previous wording

At September 30, 2025, the estimated weighted average life of our total investment portfolio was 5.3 years, the modified duration was 4.1, the effective duration was 3.2, and the weighted average tax equivalent book yield was 3.66%.

Current wording

At March 31, 2026, the estimated weighted average life of our total investment portfolio was 4.9 years, the modified duration was 4.1, the effective duration was 3.3, and the weighted average tax equivalent book yield was 3.66%.

Previous wording

Interest-bearing deposits in other banks and fed funds sold increased $39.7 million to $163.2 million at September 30, 2025 from $123.5 million at December 31, 2024 due to our decision to temporarily hold excess liquidity in interest-bearing bank deposits at the Federal Reserve Bank. This additional liquidity will be used to fund loan growth and/or reduce borrowings and brokered certificates of deposit.

Current wording

Interest bearing deposits in other banks and fed funds sold increased $45.3 million to $182.5 million at March 31, 2026 from $137.2 million at December 31, 2025 due to our decision to temporarily hold excess liquidity in interest-bearing bank deposits at the Federal Reserve Bank. This additional liquidity will be used to fund loan growth and/or reduce borrowings and brokered certificates of deposit.

Previous wording

Deposits increased $95.3 million, or 5.7% (7.6% annualized), to $1.8 billion at September 30, 2025 compared to $1.7 billion at December 31, 2024. Our pure deposits, which are defined as total deposits less certificates of deposits, increased $86.5 million, or 6.3% (8.4% annualized), to $1.46 billion at September 30, 2025 from $1.38 billion at December 31, 2024. We continue to focus on growing our pure deposits in order to better manage our overall cost of funds. Certificates of deposits increased $8.9 million to $309.0 million at September 30, 2025 from $300.2 million at December 31, 2024.

Current wording

Deposits increased $298.7 million, or 17.1% (69.2% annualized), to $2.05 billion at March 31, 2026 compared to $1.75 billion at December 31, 2025. Our pure deposits, which are defined as total deposits less certificates of deposit, increased $291 million, or 20.2% (82.1% annualized), to $1.73 billion at March 31, 2026 from $1.44 billion at December 31, 2025. We continue to focus on growing our pure deposits in order to better manage our overall cost of funds. Certificates of deposit increased $8 million to $322 million at March 31, 2026 from $314 million at December 31, 2025.

Previous wording

Total uninsured deposits were $584.9 million and $542.9 million at September 30, 2025 and December 31, 2024, respectively. Included in uninsured deposits at September 30, 2025 and December 31, 2024 were $88.7 million and $105.7 million of deposits of states or political subdivisions in the U.S., which are secured or collateralized, respectively. Total uninsured deposits, excluding these deposits that are secured or collateralized, totaled $496.2 million, or 28.0, of total deposits at September 30, 2025 and $437.1 million, or 26.1%, of total deposits at December 31, 2024. The average balance of all customer deposit accounts at September 30, 2025 was $30,401. The average balance for consumer accounts was $16,461 and the average balance for non-consumer accounts was $66,869.

Current wording

We had no brokered certificates of deposit at March 31, 2026 or December 31, 2025. Total uninsured deposits were $697.9 million and $581.3 million at March 31, 2026 and December 31, 2025, respectively. Included in uninsured deposits at March 31, 2026 and December 31, 2025 were $214.2 million and $187.5 million, respectively, of deposits of states or political subdivisions in the U.S., which are secured or collateralized, respectively. Total uninsured deposits, excluding these deposits that are secured or collateralized, totaled $483.7 million, or 23.6%, of total deposits at March 31, 2026 and $393.8 million, or 22.5%, of total deposits at December 31, 2025. The average balance of all customer deposit accounts at March 31, 2026 was $34,731. The average balance for consumer accounts was $18,525 and the average balance for non-consumer accounts was $74,558.

Previous wording

The uninsured amount of time deposits in the table above at September 30, 2025 and December 31, 2024 was $42.2 million and $40.8 million, respectively.

Current wording

The uninsured amount of time deposits in the table above at March 31, 2026 and December 31, 2025 was $49.1 million and $47.1 million, respectively.

Previous wording

Borrowed funds consist of federal funds purchased, securities sold under agreements to repurchase, FHLB advances and long-term debt. Our long-term debt is a result of issuing $15.0 million in trust preferred securities. Short-term borrowings in the form of securities sold under agreements to repurchase averaged $105.0 million, $83.9 million, and $69.1 million during the three months ended September 30, 2025, December 31, 2024, and September 30, 2024, respectively. The average rates paid during these periods were 2.41%, 2.71%, and 2.91%, respectively. The balances of securities sold under agreements to repurchase were $99.6 million, $103.1 million, and $66.9 million at September 30, 2025, December 31, 2024, and September 30, 2024, respectively. The repurchase agreements all mature within one to four days and are generally originated with customers that have other relationships with us and tend to provide a stable and predictable source of funding. Federal funds purchased averaged $39,000, zero, and $40,000 during the three months ended September 30, 2025, December 31, 2024, and September 30, 2024, respectively. The average rates paid during these periods were 10.17%, 0.00%, and 0.00%, respectively. Federal funds purchased were zero, zero, and $4,000 at September 30, 2025, December 2024, and September 30, 2024. As a member of the FHLB, the Bank has access to advances from the FHLB for various terms and amounts. FHLB advances averaged zero, $30.3 million, and $50.0 million during the three months ended September 30, 2025, December 31, 2024, and September 30, 2024, respectively. The average rates paid during these periods were zero, 5.15%, and 5.14%, respectively. The balances of FHLB advances were zero, zero, and $50.0 million at September 30, 2025, December 31, 2024, and September 30, 2024, respectively.

Current wording

Borrowed funds consist of federal funds purchased, securities sold under agreements to repurchase, FHLB advances and long-term debt. Our long-term debt is the result of issuing $15.0 million in trust preferred securities. Short-term borrowings in the form of securities sold under agreements to repurchase averaged $121.9 million, $101.9 million, and $130.8 million during the three months ended March 31, 2026, December 31, 2025, and March 31, 2025, respectively. The average rates paid during these periods were 2.21%, 2.26%, and 2.52%, respectively. The balances of securities sold under agreements to repurchase were $99.8 million, $107.2 million, and $129.8 million at March 31, 2026, December 31, 2025, and March 31, 2025, respectively. The repurchase agreements all mature within one to four days and are generally originated with customers that have other relationships with us and tend to provide a stable and predictable source of funding. Federal funds purchased averaged zero, zero, and $2,000 during the three months ended March 31, 2026, December 31, 2025, and March 31, 2025, respectively. The average rates paid during these periods were 0.00%. Federal funds purchased were zero at March 31, 2026, December 31, 2025, and March 31, 2025. As a member of the FHLB, the Bank has access to advances from the FHLB for various terms and amounts. FHLB advances averaged zero during the three months ended March 31, 2026, December 31, 2025, and March 31, 2025. The average rates paid during these periods were zero. The balances of FHLB advances were zero at March 31, 2026, December 31, 2025, and March 31, 2025.

Previous wording

We issued $15.5 million in trust preferred securities on September 16, 2004. During the fourth quarter of 2015, we redeemed $500,000 of these securities. The remaining debt may be redeemed in full anytime with notice and matures on September 16, 2034. The balances of trust preferred securities were $15.0 million as of September 30, 2025, December 31, 2024, and September 30, 2024. The securities accrue and pay distributions quarterly at a rate determined by an adjusted SOFR. Trust preferred securities averaged $15.0 million during the three months ended September 30, 2025, December 31, 2024, and September 30, 2024. The average rates during these periods were 7.24%, 7.71%, and 8.24%, respectively.

Current wording

We issued $15.5 million in trust preferred securities on March 16, 2004. During the fourth quarter of 2015, we redeemed $500,000 of these securities. The remaining debt may be redeemed in full anytime with notice, and matures on March 16, 2034. The balances of trust preferred securities were $15.0 million as of March 31, 2026, December 31, 2025, and March 31, 2025. The securities accrue and pay distributions quarterly at a rate determined by an adjusted SOFR. Trust preferred securities averaged $15.0 million during the three months ended March 31, 2026, December 31, 2025, and March 31, 2025. The average rates during these periods were 6.64%, 6.89%, and 7.29%, respectively.

Previous wording

Total shareholders’ equity increased $17.1 million, or 11.8%, to $161.6 million at September 30, 2025 from $144.5 million at December 31, 2024. Shareholders’ equity was 7.8% of total assets at September 30, 2025 and 7.4% at December 31, 2024. The $17.1 million increase in shareholders’ equity was due to a $10.9 million increase in retention of earnings resulting from $14.4 million in net income less $3.5 million in dividends, a $644,000 increase due to employee and director stock awards, a $292,000 increase due to dividend reinvestment plan (DRIP) purchases, and a $5.3 million improvement in accumulated other comprehensive loss. The improvement in other accumulated other comprehensive loss for the period was due to improvements in the accumulated other comprehensive loss on available-for-sale securities, net of tax expense, of $4.4 million and the reclassification adjustment for amortization of unrealized losses on securities transferred from available-for-sale to held-to-maturity, net of tax expense, of $991,000, partially offset by unrealized loss on investment hedge of $109,000.

Current wording

Total shareholders’ equity increased $53.3 million, or 31.8%, to $220.8 million at March 31, 2026 from $167.6 million at December 31, 2025. Shareholders’ equity was 9.2% of total assets at March 31, 2026 and 8.1% at December 31, 2025. The $53.3 million increase in shareholders’ equity was due to a $4.0 million increase in retained earnings resulting from $5.5 million in net income less $1.5 million in dividends, a $97,000 decrease due to employee and director stock awards, a $94,000 increase due to dividend reinvestment plan (DRIP) purchases, a $49.7 million increase due to the acquisition of SGBG, and a $433,000 increase in accumulated other comprehensive loss. The increase in accumulated other comprehensive loss of $433,000 during the period was due to $774,000 of comprehensive loss from unrealized losses on available-for-sale securities, partially offset by the $332,000 of comprehensive income from reclassification adjustment for amortization of unrealized losses on securities transferred from available-for-sale to held-to-maturity and the $9,000 of comprehensive income from unrealized gain on investment hedge.

Previous wording

On May 9, 2025, we announced that our Board of Directors approved a plan to utilize up to $7.5 million of capital to repurchase shares of our common stock (the “2025 Repurchase Plan”), which represented approximately 5.0% of total shareholders’ equity at the time of the announcement. No repurchases have been made under the 2025 Repurchase Plan. The 2025 Repurchase Plan expires at the market close on May 8, 2026.

Current wording

On May 9, 2025, we announced that our Board of Directors approved a plan to utilize up to $7.5 million of capital to repurchase shares of our common stock (the “2025 Repurchase Plan”), which represented approximately 5.0% of total shareholders’ equity at the time of the announcement. During the first quarter of 2026, a total of 1,483 shares of the Company’s common stock were repurchased at an average price of $27.77 and a total value of $41,180. The 2025 Repurchase Plan expires at market close on May 8, 2026.

Previous wording

Neither the “gap” analysis or asset/liability modeling are precise indicators of our interest sensitivity position due to the many factors that affect net interest income including the timing, magnitude, and frequency of interest rate changes as well as changes in the volume and mix of earning assets and interest-bearing liabilities.

Current wording

Neither the “gap” analysis nor asset/liability modeling is a precise indicator of our interest sensitivity position due to the many factors that affect net interest income including the timing, magnitude, and frequency of interest rate changes as well as changes in the volume and mix of earning assets and interest-bearing liabilities.

Previous wording

From time to time, we issue brokered certificates of deposit to supplement our funding mix. As of September 30, 2025 and December 31, 2024, we had zero and $10.4 million, respectively, in brokered certificates of deposit. We believe that we have ample liquidity to meet the needs of our customers through our low-cost deposits, the ability to borrow against approved lines of credit (federal funds purchased) from correspondent banks, the ability to borrow on a secured basis through the Federal Reserve Discount Window, and the ability to obtain advances secured by certain securities and loans from the FHLB.

Current wording

From time to time, we issue brokered certificates of deposit to supplement our funding mix. As of March 31, 2026 and December 31, 2025, we had no brokered certificates of deposit. We believe that we have ample liquidity to meet the needs of our customers through our low-cost deposits, the ability to borrow against approved lines of credit (federal funds purchased) from correspondent banks, the ability to borrow on a secured basis through the Federal Reserve Discount Window, and the ability to obtain advances secured by certain securities and loans from the FHLB.

Previous wording

The Bank maintains federal funds purchased lines in the total amount of $102.5 million with four financial institutions and $10.0 million through the Federal Reserve Discount Window. We utilized none of our federal funds purchased lines at September 30, 2025 and December 31, 2024. The FHLB of Atlanta has approved a line of credit of up to 25.00% of the Bank’s total assets, which, when utilized, is collateralized by a pledge against specific investment securities and/or eligible loans. We had no FHLB advances at September 30, 2025 and at December 31, 2024. At September 30, 2025, we had remaining credit availability under this facility in excess of $511.3 million, subject to collateral requirements. Combined, we have total remaining credit availability, subject to collateral requirements, in excess of $623.8 million as compared to uninsured deposits excluding deposits of states or political subdivisions in the U.S., which are secured or collateralized, of $496.2 million.

Current wording

The Bank maintains federal funds purchased lines in the total amount of $102.5 million with four financial institutions and $10.0 million through the Federal Reserve Discount Window. We utilized none of our federal funds purchased lines at March 31, 2026 and December 31, 2025. The FHLB of Atlanta has approved a line of credit of up to 25.00% of the Bank’s total assets, which, when utilized, is collateralized by a pledge against specific investment securities and/or eligible loans. We had no FHLB advances at March 31, 2026 and at December 31, 2025. At March 31, 2026, we had remaining credit availability under this facility in excess of $597.5 million, subject to collateral requirements. Combined, we have total remaining credit availability, subject to collateral requirements, in excess of $700.0 million as compared to uninsured deposits excluding deposits of states or political subdivisions in the U.S., which are secured or collateralized, of $483.7 million.