FIRST COMMUNITY CORP /SC/

Previous wording

This report, including information included or incorporated by reference in this report, contains statements which constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may relate to, among other matters, the financial condition, results of operations, plans, objectives, future performance, and business of our company, including statements regarding the anticipated timing and benefits of leadership transitions, consulting arrangements with former executives, and the expected roles and responsibilities of the company’s executive officers. Forward-looking statements are based on many assumptions and estimates and are not guarantees of future performance. Our actual results may differ materially from those anticipated in any forward-looking statements, as they will depend on many factors about which we are unsure, including many factors which are beyond our control. The words “may,” “approximately,” “is likely,” “would,” “could,” “should,” “will,” “expect,” “anticipate,” “predict,” “project,” “potential,” “continue,” “assume,” “believe,” “intend,” “plan,” “forecast,” “goal,” “positions,” “forward,” “future,” and “estimate,” as well as similar expressions, are meant to identify such forward-looking statements. Potential risks and uncertainties that could cause our actual results to differ materially from those anticipated in our forward-looking statements include, without limitation, those described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 16, 2026 and the following:

Current wording

This report, including information included or incorporated by reference in this report, contains statements which constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may relate to, among other matters, the financial condition, results of operations, plans, objectives, future performance, and business of our company, including statements regarding the anticipated timing and benefits of leadership transitions, consulting arrangements with former executives, and the expected roles and responsibilities of the company’s executive officers. Forward-looking statements are based on many assumptions and estimates and are not guarantees of future performance. Our actual results may differ materially from those anticipated in any forward-looking statements, as they will depend on many factors about which we are unsure, including many factors which are beyond our control. The words “may,” “approximately,” “is likely,” “would,” “could,” “should,” “will,” “expect,” “anticipate,” “predict,” “project,” “potential,” “continue,” “assume,” “believe,” “intend,” “plan,” “forecast,” “goal,” “positions,” “forward,” “future,” and “estimate,” as well as similar expressions, are meant to identify such forward-looking statements. Potential risks and uncertainties that could cause our actual results to differ materially from those anticipated in our forward-looking statements include, without limitation, those described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 16, 2026, and in subsequent filings we make with the SEC, and the following:

Previous wording

The following discussion describes our results of operations for the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025, and analyzes our financial condition as of June 30, 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.

Current wording

The following discussion describes our results of operations for the three and nine months ended September 30, 2026, as compared to the three and nine months ended September 30, 2025, and analyzes our financial condition as of September 30, 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

Our net income for the three months ended June 30, 2026 increased $2.4 million to $7.6 million, or $0.80 diluted earnings per common share, as compared to $5.2 million, or $0.67 diluted earnings per common share, for the three months ended June 30, 2025. The increase in net income between the two periods is primarily due to a $4.2 million increase in net interest income and a $1.4 million increase in non-interest income, partially offset by a $363,000 increase in provision for credit losses, $2.2 million increase in non-interest expense, and a $646,000 increase in income tax expense.

Current wording

Our net income for the three months ended September 30, 2026 increased $2.9 million to $8.0 million, or $0.85 diluted earnings per common share, as compared to $5.2 million, or $0.67 diluted earnings per common share, for the three months ended September 30, 2025. The increase in net income between the two periods is primarily due to a $4.2 million increase in net interest income, an $8,000 decline in provision for credit losses and a $1.5 million increase in non-interest income, partially offset by a $2.0 million increase in non-interest expense and a $963,000 increase in income tax expense.

Previous wording

Net interest income increased $4.2 million, or 27.3%, to $19.5 million for the three months ended June 30, 2026 from $15.3 million for the three months ended June 30, 2025. Our net interest margin improved 31 basis points to 3.50% during the three months ended June 30, 2026 compared to 3.19% during the three months ended June 30, 2025. Our net interest margin, on a taxable equivalent basis, was 3.51% for the three months ended June 30, 2026 compared to 3.21% for the three months ended June 30, 2025. Average earning assets were $2.2 billion for the three months ended June 30, 2026 and $1.9 billion in the same period of 2025.

Current wording

Net interest income increased $4.2 million, or 26.5%, to $20.2 million for the three months ended September 30, 2026 from $16.0 million for the three months ended September 30, 2025. Our net interest margin improved 32 basis points to 3.58% during the three months ended September 30, 2026 compared to 3.26% during the three months ended September 30, 2025. Our net interest margin, on a taxable equivalent basis, was 3.59% for the three months ended September 30, 2026 compared to 3.27% for the three months ended September 30, 2025. Average earning assets were $2.2 billion for the three months ended September 30, 2026 and $1.9 billion in the same period of 2025.

Previous wording

Average loans increased $309.5 million, or 24.5%, to $1.6 billion for the three months ended June 30, 2026 from $1.3 billion for the same period in 2025. Our loan (including loans held-for-sale) to deposit ratio on average during the three months ended June 30, 2026 was 77.9%, as compared to 72.7% during the same period in 2025. The yield on loans increased 25 basis points to 6.02% during the three months ended June 30, 2026 from 5.77% 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.

Current wording

Average loans increased $312.3 million, or 24.4%, to $1.6 billion for the three months ended September 30, 2026 from $1.3 billion for the same period in 2025. Our loan (including loans held-for-sale) to deposit ratio on average during the three months ended September 30, 2026 was 78.9%, as compared to 73.0% during the same period in 2025. The yield on loans increased 24 basis points to 6.08% during the three months ended September 30, 2026 from 5.84% 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 June 30, 2026 increased $4.6 million, or 0.9%, to $510.1 million from $505.5 million during the same period in 2025. Interest-bearing deposits in other banks and fed funds sold decreased $3.5 million to $152.4 million during the three months ended June 30, 2026 from $155.9 million during the same period in 2025. The decrease in interest-bearing deposits in other banks and fed funds sold was due to loan growth outpacing deposit growth. The yield on our securities portfolio declined to 3.33% for the three months ended June 30, 2026 from 3.43% for the same period in 2025. The yield on our interest-bearing deposits in other banks and fed funds sold was 3.54% for the three months ended June 30, 2026 compared to 4.32% during the same period in 2025.

Current wording

Average securities for the three months ended September 30, 2026 increased $4.4 million, or 0.9%, to $508.5 million from $504.1 million during the same period in 2025. Interest-bearing deposits in other banks and fed funds sold decreased $15.8 million to $143.5 million during the three months ended September 30, 2026 from $159.3 million during the same period in 2025. The decrease in interest-bearing deposits in other banks and fed funds sold was due to loan growth outpacing deposit growth. The yield on our securities portfolio declined to 3.36% for the three months ended September 30, 2026 from 3.41% for the same period in 2025. The yield on our interest-bearing deposits in other banks and fed funds sold was 3.58% for the three months ended September 30, 2026 compared to 4.26% during the same period in 2025.

Previous wording

The cost of interest-bearing liabilities was 2.42% during the three months ended June 30, 2026 compared to 2.56% during the same period in 2025. The cost of deposits, including demand deposits, was 1.76% during the three months ended June 30, 2026 compared to 1.82% during the same period in 2025. The cost of funds, including demand deposits, was 1.82% during the three months ended June 30, 2026 compared to 1.91% 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 June 30, 2026, December 31, 2025 and June 30, 2025, respectively.

Current wording

The cost of interest-bearing liabilities was 2.43% during the three months ended September 30, 2026 compared to 2.53% during the same period in 2025. The cost of deposits, including demand deposits, was 1.76% during the three months ended September 30, 2026 compared to 1.81% during the same period in 2025. The cost of funds, including demand deposits, was 1.82% during the three months ended September 30, 2026 compared to 1.89% 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 $1.6 billion in pure deposits plus customer cash management repurchase agreements at September 30, 2026, December 31, 2025 and September 30, 2025, respectively.

Previous wording

Non-interest income during the three months ended June 30, 2026 increased $1.4 million to $5.6 million from $4.2 million during the same period in 2025. The $1.4 million increase in non-interest income was primarily related to increases of $191,000 in mortgage banking income, $535,000 in investment advisory fees and non-deposit commissions, and $704,000 in government guaranteed lending income, partially offset by a decline of $127,000 in gain on sale of other assets. The government guaranteed lending income came from a new segment, government guaranteed lending, acquired from SGBG.

Current wording

Non-interest income during the three months ended September 30, 2026 increased $1.5 million to $6.0 million from $4.5 million during the same period in 2025. The $1.5 million increase in non-interest income was primarily related to increases of $743,000 in investment advisory fees and non-deposit commissions, $534,000 in government guaranteed lending, and $570,000 in other non-recurring non-interest income, partially offset by declines of $27,000 in deposit service charges and $320,000 in mortgage banking income. The government guaranteed lending income came from a new segment, government guaranteed lending, acquired from SGBG.

Previous wording

Investment advisory fees rose $535,000 to $2.3 million during the three months ended June 30, 2026 from $1.8 million during the same period in 2025. Total assets under management increased to $1.4 billion at June 30, 2026 from $1.2 billion at December 31, 2025. Our net new assets under management were $10.4 million during the three months ended June 30, 2026. Furthermore, our investment performance for the three months ended June 30, 2026 was 21.0% compared to 14.9% 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 $743,000 to $2.6 million during the three months ended September 30, 2026 from $1.9 million during the same period in 2025. Total assets under management increased to $1.4 billion at September 30, 2026 from $1.2 billion at December 31, 2025. Our net new assets under management were $22.2 million during the three months ended September 30, 2026. Furthermore, our investment performance for the three months ended September 30, 2026 was 0.3% compared to 2.0% 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

Fee revenue from the new Government Guaranteed Lending line of business was $704,000 during the three months ended June 30, 2026. Production in this line of business in the second quarter of 2026 included $16.1 million in SBA loans. During the quarter, we sold $8.9 million in loans, which resulted in a premium of $671,000 and a gain-on-sale margin of 9.59%.

Current wording

Fee revenue from the new Government Guaranteed Lending line of business was $534,000 during the three months ended September 30, 2026. Production in this line of business in the three months ended September 30, 2026 included $16.5 million in SBA loans. During the quarter, we sold $5.1 million in loans, which resulted in a premium of $426,000 and a gain-on-sale margin of 8.36%.

Previous wording

Non-interest expense increased $2.2 million during the three months ended June 30, 2026 to $15.3 million compared to $13.1 million during the same period in 2025. The increase in non-interest expense was primarily due to increases of $1.5 million in salaries and employee benefits, $121,000 in occupancy, $269,000 in merger, and $168,000 in other non-interest expense.

Current wording

Non-interest expense increased $2.0 million during the three months ended September 30, 2026 to $15.6 million compared to $13.7 million during the same period in 2025. The $2.0 million increase in non-interest expense is primarily due to increases of $1.5 million in salaries and employee benefits, $137,000 in occupancy, $78,000 in other real estate expense, $65,000 in amortization of intangibles, and $634,000 in other non-interest expense, partially offset by declines of $23,000 in marketing and public relations and $471,000 in merger expenses.

Previous wording

We incurred income tax expense of $2.1 million and $1.5 million for the three months ended June 30, 2026 and 2025, respectively. Our effective tax rate was 22.01% and 22.41% for the three months ended June 30, 2026 and 2025, respectively. During the second quarter of 2026, we purchased $900,000 in 2026 South Carolina Low-Income Housing Tax Credits, which resulted in an income tax benefit of $114,000.

Current wording

We incurred income tax expense of $2.4 million and $1.4 million for the three months ended September 30, 2026 and 2025, respectively. Our effective tax rate was 22.68% during the three months ended September 30, 2026 compared to 21.19% during the three months ended September 30, 2025. During the third quarter of 2025, we purchased state income tax credits which resulted in an income tax benefit of $120,000.

Previous wording

Comparison of Results of Operations for the Six Months Ended June 30, 2026 to the Six Months Ended June 30, 2025

Current wording

Comparison of Results of Operations for the Nine Months Ended September 30, 2026 to the Nine Months Ended September 30, 2025

Previous wording

Our net income for the six months ended June 30, 2026 increased $3.9 million to $13.1 million, or $1.39 diluted earnings per common share, from $9.2 million, or $1.18 diluted earnings per common share for the six months ended June 30, 2025. The increase in net income between the two periods is primarily due to an increase of $8.2 million in net interest income, an increase of $2.2 million in total non-interest income, and a decrease of $101,000 in income tax expense, partially offset by an increase of $119,000 in provision for credit losses and an increase of $6.5 million in total non-interest expense.

Current wording

Our net income for the nine months ended September 30, 2026 increased $6.8 million to $21.1 million, or $2.24 diluted earnings per common share, from $14.4 million, or $1.85 diluted earnings per common share for the nine months ended September 30, 2025. The increase in net income between the two periods is primarily due to an increase of $12.4 million in net interest income and an increase of $3.8 million in total non-interest income, partially offset by an increase of $111,000 in provision for credit losses, an increase of $8.4 million in total non-interest expense, and an increase of $862,000 in income tax expense.

Previous wording

Net interest income increased $8.2 million to $37.9 million for the six months ended June 30, 2026 from $29.7 million for the six months ended June 30, 2025. Our net interest margin increased by 0.27% to 3.43% during the six months ended June 30, 2026 from 3.16% during the six months ended June 30, 2025. Our net interest margin, on a taxable equivalent basis, was 3.44% for the six months ended June 30, 2026 compared to 3.17% for the six months ended June 30, 2025. Average earning assets increased $329.8 million, or 17.4%, to $2.2 billion for the six months ended June 30, 2026 compared to $1.9 billion in the same period of 2025.

Current wording

Net interest income increased $12.4 million to $58.1 million for the nine months ended September 30, 2026 from $45.7 million for the nine months ended September 30, 2025. Our net interest margin increased by 0.29% to 3.48% during the nine months ended September 30, 2026 from 3.19% during the nine months ended September 30, 2025. Our net interest margin, on a taxable equivalent basis, was 3.49% for the nine months ended September 30, 2026 compared to 3.20% for the nine months ended September 30, 2025. Average earning assets increased $320.1 million, or 16.7%, to $2.2 billion for the nine months ended September 30, 2026 compared to $1.9 billion in the same period of 2025.

Previous wording

Average loans increased $291.0 million, or 23.3%, to $1.5 billion for the six months ended June 30, 2026 from $1.3 billion for the same period in 2025. Our loan (including loans held-for-sale) to deposit ratio on average during the six months ended June 30, 2026 was 77.2%, as compared to 73.4% during the same period in 2025. The yield on loans increased 0.24% to 5.98% during the six months ended June 30, 2026 from 5.74% during the same period in 2025 due to higher new and renewed loan rates compared to rates on loans maturing during the period.

Current wording

Average loans increased $298.2 million, or 23.6%, to $1.6 billion for the nine months ended September 30, 2026 from $1.3 billion for the same period in 2025. Our loan (including loans held-for-sale) to deposit ratio on average during the nine months ended September 30, 2026 was 77.8%, as compared to 73.3% during the same period in 2025. The yield on loans increased 0.23% to 6.01% during the nine months ended September 30, 2026 from 5.78% during the same period in 2025 due to higher new and renewed loan rates compared to rates on loans maturing during the period.

Previous wording

Average securities for the six months ended June 30, 2026 increased $8.0 million, or 1.6%, to $506.8 million from $498.9 million during the same period in 2025. The increase in securities was due to the purchase of securities and a reduction in unrealized losses on our available-for-sale securities portfolio, partially offset by normal principal cash flows from the securities portfolio. Interest-bearing deposits in other banks increased $30.7 million to $179.0 million during the six months ended June 30, 2026 from $148.3 million during the same period in 2025. The increase in short-term investments 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 3.33% for the six months ended June 30, 2026 from 3.42% for the same period in 2025. The yield on our interest-bearing deposits in other banks decreased to 3.52% for the six months ended June 30, 2026 from 4.31% for the same period in 2025 due to lower market interest rates.

Current wording

Average securities for the nine months ended September 30, 2026 increased $6.8 million, or 1.4%, to $507.4 million from $500.6 million during the same period in 2025. The increase in securities was due to the purchase of securities, partially offset by normal principal cash flows from the securities portfolio and an increase in unrealized losses on our available-for-sale securities portfolio. Interest-bearing deposits in other banks increased $15.0 million to $167.0 million during the nine months ended September 30, 2026 from $152.0 million during the same period in 2025. The increase in short-term investments 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 3.34% for the nine months ended September 30, 2026 from 3.42% for the same period in 2025. The yield on our interest-bearing deposits in other banks decreased to 3.54% for the nine months ended September 30, 2026 from 4.29% for the same period in 2025 due to lower market interest rates.

Previous wording

The yields on earning assets for the six months ended June 30, 2026 and 2025 were 5.18% and 5.02%, respectively.

Current wording

The yields on earning assets for the nine months ended September 30, 2026 and 2025 were 5.22% and 5.04%, respectively.

Previous wording

The cost of interest-bearing liabilities was 2.43% during the six months ended June 30, 2026 compared to 2.57% during the same period in 2025. The cost of deposits, including demand deposits, was 1.78% during the six months ended June 30, 2026 compared to 1.84% during the same period in 2025. The cost of funds, including demand deposits, was 1.84% during the six months ended June 30, 2026 compared to 1.92% during the same period in 2025. 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. During the six months ended June 30, 2026, pure deposits plus customer cash management repurchase agreements averaged 84.8% of total deposits plus customer cash management repurchase agreements as compared to 83.0% during the same period of 2025.

Current wording

The cost of interest-bearing liabilities was 2.43% during the nine months ended September 30, 2026 compared to 2.56% during the same period in 2025. The cost of deposits, including demand deposits, was 1.77% during the nine months ended September 30, 2026 compared to 1.83% during the same period in 2025. The cost of funds, including demand deposits, was 1.83% during the nine months ended September 30, 2026 compared to 1.91% during the same period in 2025. 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. During the nine months ended September 30, 2026, pure deposits plus customer cash management repurchase agreements averaged 84.8% of total deposits plus customer cash management repurchase agreements as compared to 84.8% during the same period of 2025.

Previous wording

Non-interest income during the six months ended June 30, 2026 increased $2.2 million to $10.4 million from $8.2 million during the same period in 2025. The increase in non-interest income was primarily related to increases in mortgage banking income, investment advisory fees and non-deposit commissions, government guaranteed lending income, and other non-interest income, partially offset by a decline in gain on sale of other real estate owned. The government guaranteed lending income came from a new segment, government guaranteed lending, acquired from SGBG.

Current wording

Non-interest income during the nine months ended September 30, 2026 increased $3.8 million to $16.4 million from $12.7 million during the same period in 2025. The $3.8 million increase in non-interest income is primarily related to increases in investment advisory fees and non-deposit commissions of $1.7 million, government guaranteed lending income of $1.6 million, and other non-recurring income of $650,000, partially offset by declines in mortgage banking income of $207,000 and gain on sale of other assets of $129,000. The government guaranteed lending income came from a new segment, government guaranteed lending, acquired from SGBG.

Previous wording

Investment advisory fees and non-deposit commissions increased $1.0 million to $4.6 million during the six months ended June 30, 2026 from $3.6 million during the same period in 2025. Total assets under management increased to $1.4 billion at June 30, 2026 compared to $1.2 billion at December 31, 2025 and $1.0 billion at June 30, 2025. Our net new assets were $16.4 million during the six months ended June 30, 2026. Furthermore, our investment performance for the six-month period from December 31, 2025 to June 30, 2026 was 16.38% compared to 9.55% 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 and non-deposit commissions increased $1.7 million to $7.2 million during the nine months ended September 30, 2026 from $5.4 million during the same period in 2025. Total assets under management increased to $1.4 billion at September 30, 2026 compared to $1.2 billion at December 31, 2025 and $1.1 billion at September 30, 2025. Our net new assets were $38.4 million during the nine months ended September 30, 2026. Furthermore, our investment performance for the nine-month period from December 31, 2025 to September 30, 2026 was 16.7% compared to 11.8% 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

Fee revenue from the new Government Guaranteed Lending line of business was $1.1 million during the six months ended June 30, 2026. Production in this line of business in the first half of 2026 included $18.5 million in SBA loans. During the period, we sold $13.5 million in loans, which resulted in a premium of $865,000 and a gain-on-sale margin of 7.89%.

Current wording

Fee revenue from the new Government Guaranteed Lending line of business was $1.6 million during the nine months ended September 30, 2026. Production in this line of business in the nine months ended September 30, 2026 included $35.0 million in SBA loans. During the period, we sold $16.1 million in loans, which resulted in a premium of $1.3 million and a gain-on-sale margin of 8.03%.

Previous wording

Gain on sale of other real estate owned decreased $127,000 to zero during the six months ended June 30, 2026 from $127,000 during the same period in 2025 due to a sale of other real estate owned during the six months ended June 30, 2025.

Current wording

Gain (loss) on sale of other assets decreased $129,000 to a loss of $2,000 during the nine months ended September 30, 2026 from $127,000 during the same period in 2025 due to the loss on sale of repossessed assets during the nine months ended September 30, 2026 compared to a gain on a sale of other assets owned during the nine months ended September 30, 2025.

Previous wording

Non-interest expense increased $6.5 million during the six months ended June 30, 2026 to $32.3 million compared to $25.8 million during the same period in 2025. This increase is primarily due to an increase of $3.3 million in salaries and employee benefits, an increase of $161,000 in occupancy, an increase of $127,000 in marketing and public relations, an increase of $118,000 in amortization of intangible, an increase of $1.9 million in merger expense, and an increase of $925,000 in other non-interest expense.

Current wording

Non-interest expense increased $8.4 million during the nine months ended September 30, 2026 to $47.9 million compared to $39.5 million during the same period in 2025. This increase is primarily due to increases of $4.8 million in salaries and employee benefits, $298,000 in occupancy, $104,000 in marketing and public relations, $183,000 in amortization of intangibles, $1.4 million in merger, and $1.7 million in other.

Previous wording

The following table shows the components of non-interest expense for the six-month periods ended June 30, 2026 and June 30, 2025.

Current wording

The following table shows the components of non-interest expense for the nine month periods ended September 30, 2026 and September 30, 2025.

Previous wording

We have a significant portion of our loan portfolio with real estate as the underlying collateral. As of June 30, 2026 and December 31, 2025, approximately 91.7% 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.

Current wording

We have a significant portion of our loan portfolio with real estate as the underlying collateral. As of September 30, 2026 and December 31, 2025, approximately 91.4% 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

The non-performing asset ratio was 0.04% of total assets with the nominal level of $887,000 in non-performing assets at June 30, 2026 compared to 0.02% and $372,000 at December 31, 2025. Non-accrual loans increased to $300,000 at June 30, 2026 from $202,000 at December 31, 2025. We had four accruing loans past due 90 days or more totaling $419,000 at June 30, 2026 compared to $2,000 at December 31, 2025. Loans past due 30 days or more represented 0.26% of the loan portfolio at June 30, 2026 compared to 0.07% at December 31, 2025. The ratio of classified loans plus OREO and repossessed assets increased to 2.55% of total bank regulatory risk-based capital at June 30, 2026 from 0.76% at December 31, 2025.

Current wording

The non-performing asset ratio was 0.04% of total assets with the nominal level of $990,000 in non-performing assets at September 30, 2026 compared to 0.02% and $372,000 at December 31, 2025. Non-accrual loans increased to $291,000 at September 30, 2026 from $202,000 at December 31, 2025. We had two accruing loans past due 90 days or more totaling $616,000 at September 30, 2026 compared to $2,000 at December 31, 2025. Loans past due 30 days or more represented 0.27% of the loan portfolio at September 30, 2026 compared to 0.07% at December 31, 2025. The ratio of classified loans plus OREO and repossessed assets increased to 2.45% of total bank regulatory risk-based capital at September 30, 2026 from 0.76% at December 31, 2025.

Previous wording

During the six months ended June 30, 2026, we experienced net charge-offs, including overdrafts, of $26,000 and net loan recoveries, excluding overdrafts, of $3,000. In comparison, during the six months ended June 30, 2025, we experienced net recoveries, including overdrafts, of $1,000 and net loan recoveries, excluding overdrafts, of $19,000.

Current wording

During the nine months ended September 30, 2026, we experienced net charge-offs, including overdrafts, of $35,000 and net loan recoveries, excluding overdrafts, of $12,000. In comparison, during the nine months ended September 30, 2025, we experienced net charge-offs, including overdrafts, of $12,000 and net loan recoveries, excluding overdrafts, of $27,000.

Previous wording

There were eight loans totaling $719,000 (0.05% of total loans) included on non-performing status (non-accrual loans and loans past due 90 days and still accruing) at June 30, 2026. Four of these loans were on non-accrual status. The largest loan of the four is $193,000 and is secured by real estate. The balance of the remaining loans on non-accrual status is $107,000. These loans are secured by business assets. At June 30, 2026, we had four accruing loans that were past due 90 days or more. At both June 30, 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. In addition to the loans meeting the criteria above, purchased loans with a specific credit mark are also individually assessed. At June 30, 2026 we have five individually assessed loans totaling $2.8 million. 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 $2.4 million allowance for credit losses on our individually assessed loans at June 30, 2026 and none at December 31, 2025. At June 30, 2026, we had $3.7 million in loans that were delinquent 30 days to 89 days representing 0.24% of total loans compared to $934,000 or 0.07% of total loans at December 31, 2025.

Current wording

There were seven loans totaling $907,000 (0.06% of total loans) included on non-performing status (non-accrual loans and loans past due 90 days and still accruing) at September 30, 2026. Five of these loans were on non-accrual status. The largest loan of the five is $189,000 and is secured by real estate. The balance of the remaining loans on non-accrual status is $102,000. These loans are secured by business assets. At September 30, 2026, we had two accruing loans that were past due 90 days or more. At both September 30, 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. In addition to the loans meeting the criteria above, purchased loans with a specific credit mark are also individually assessed. At September 30, 2026 we have six individually assessed loans totaling $2.8 million. 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 $2.3 million allowance for credit losses on our individually assessed loans at September 30, 2026 and none at December 31, 2025. At September 30, 2026, we had $3.8 million in loans that were delinquent 30 days to 89 days representing 0.24% of total loans compared to $934,000 or 0.07% of total loans at December 31, 2025.

Previous wording

Assets increased $314.6 million, or 15.3% (30.8% annualized), to $2.4 billion at June 30, 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 $7.8 million, investment securities available for sale of $28.5 million, loans held-for-investment of $267.3 million, goodwill of $14.8 million, intangible assets of $2.4 million, and other assets of $13.3 million, partially offset by a decrease in interest-bearing bank balances of $6.7 million and investment securities held-to-maturity of $10.2 million, and an increase in allowance for credit losses of $4.7 million. As discussed elsewhere, $195.7 million of the growth in loans held-for-investment and all of the growth in goodwill and intangible assets came from the acquisition of Signature Bank of Georgia.

Current wording

Assets increased $305.6 million, or 14.8% (19.9% annualized), to $2.4 billion at September 30, 2026 from $2.1 billion at December 31, 2025. The increase in assets was primarily due to increases in investment securities available-for-sale of $35.2 million, loans held-for-investment of $299.4 million, goodwill of $14.8 million, and other assets of $10.2 million, partially offset by declines in interest-bearing bank balances of $29.7 million, investment securities held-to-maturity of $11.6 million, loans held-for-sale of $6.0 million, and allowance for credit losses – loans of $4.9 million. As discussed elsewhere, $195.7 million of the growth in loans held-for-investment and all of the growth in goodwill and intangible assets came from the acquisition of SGBG.

Previous wording

Loans held-for-sale increased to $11.9 million at June 30, 2026 from $10.7 million at December 31, 2025. Loans (excluding loans held-for-sale) increased $267.3 million, or 20.4% (41.1% annualized), to $1.6 billion at June 30, 2026 from $1.3 billion at December 31, 2025. Total loan production, excluding mortgage secondary market and new construction residential real estate, was $151.5 million during the six months ended June 30, 2026 compared to $99.9 million during the same period in 2025. Advances from unfunded commercial construction loans available for draws were $35.1 million during the six months ended June 30, 2026 compared to $23.8 million during the same period in 2025. Payoffs and paydowns totaled $95.1 million during the six months ended June 30, 2026 compared to $60.7 million during the same period in 2025.

Current wording

Loans held-for-sale decreased to $4.8 million at September 30, 2026 from $10.7 million at December 31, 2025. Loans (excluding loans held-for-sale) increased $299.4 million, or 22.8% (30.5% annualized), to $1.6 billion at September 30, 2026 from $1.3 billion at December 31, 2025. Total loan production, excluding mortgage secondary market and new construction residential real estate, was $216.6 million during the nine months ended September 30, 2026 compared to $161.1 million during the same period in 2025. Advances from unfunded commercial construction loans available for draws were $53.0 million during the nine months ended September 30, 2026 compared to $34.5 million during the same period in 2025. Payoffs and paydowns totaled $137.8 million during the nine months ended September 30, 2026, compared to $92.4 million during the same period in 2025.

Previous wording

Total production in the mortgage line of business in the six months ended June 30, 2026 was $95.8 million which was comprised of $63.7 million in secondary market loans, $4.2 million in adjustable rate mortgages (ARMs), and $27.9 million in construction loans. Total mortgage production during the six months ended June 30, 2025 was $106.7 million, $57.7 million of the production was originated to be sold in the secondary market, $9.6 million of the loan production was originated as ARM loans for our loans held-for-investment portfolio, and $39.4 million of the loan production was commitments for new construction residential real estate loans. As these ARM and new construction residential real estate loans are being held on our balance sheet as loans held-for-investment, the result is additive to loan growth and interest income but results in less gain on sale fee income, which is reported in noninterest income as mortgage banking income.

Current wording

Total production in the mortgage line of business in the nine months ended September 30, 2026 was $141.6 million, which was comprised of $86.6 million in secondary market loans, $11.8 million in adjustable rate mortgages (ARMs), and $43.2 million in construction loans. Total mortgage production during the nine months ended September 30, 2025 was $158.3 million. Of this production, $89.7 million was originated to be sold in the secondary market, $13.8 million was originated as ARM loans for our loans held-for-investment portfolio, and $54.8 million was commitments for new construction residential real estate loans. As these ARM and new construction residential real estate loans are being held on our balance sheet as loans held-for-investment, the result is additive to loan growth and interest income but results in less gain on sale fee income, which is reported in noninterest income as mortgage banking income.

Previous wording

The loan-to-deposit ratio (including loans held-for-sale) at June 30, 2026 and December 31, 2025 was 78.5% and 75.6%, respectively. The loan-to-deposit ratio (excluding loans held-for-sale) at June 30, 2026 and December 31, 2025 was 77.9% and 74.9%, respectively.

Current wording

The loan-to-deposit ratio (including loans held-for-sale) at September 30, 2026 and December 31, 2025 was 80.6% and 75.6%, respectively. The loan-to-deposit ratio (excluding loans held-for-sale) at September 30, 2026 and December 31, 2025 was 80.3% 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 June 30, 2026, the non-owner occupied commercial real estate loans and the construction and land development loans were approximately 314% and 70% 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 55% from June 30, 2023 to June 30, 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.

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 September 30, 2026, the non-owner occupied commercial real estate loans and the construction and land development loans were approximately 305% and 63% 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 25% from September 30, 2023 to September 30, 2026. We have expertise and a long history in originating and managing commercial real estate loans. Our credit underwriting process 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 $18.6 million to $510.8 million, net of allowance for credit losses on investments of $14,000, at June 30, 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 securities in the available-for-sale portfolio, and a reduction in unrealized losses on our available-for-sale securities portfolio, partially offset by normal principal cash flows.

Current wording

Investment securities increased $23.9 million to $516.0 million, net of allowance for credit losses on investments of $13,000, at September 30, 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 securities in the available-for-sale portfolio, partially offset by normal principal cash flows and an increase in unrealized losses on our available-for-sale securities portfolio.

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 $9.8 million ($7.7 million net of tax) at June 30, 2026.

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 $9.4 million ($7.4 million net of tax) at September 30, 2026.

Previous wording

Our HTM investments totaled $185.0 million and represented approximately 36% of our total investments at June 30, 2026. Our AFS investments totaled $322.6 million or approximately 63% of our total investments at June 30, 2026. Our investments at cost totaled $3.3 million or approximately 1% of our total investments at June 30, 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.

Current wording

Our HTM investments totaled $183.5 million and represented approximately 35% of our total investments at September 30, 2026. Our AFS investments totaled $329.3 million or approximately 64% of our total investments at September 30, 2026. Our investments at cost totaled $3.2 million or approximately 1% of our total investments at September 30, 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 June 30, 2026, the estimated weighted average life of our total investment portfolio was 5.1 years, the modified duration was 4.2, the effective duration was 3.4, and the weighted average tax equivalent book yield was 3.66%.

Current wording

At September 30, 2026, the estimated weighted average life of our total investment portfolio was 5.3 years, the modified duration was 4.2, the effective duration was 3.5, and the weighted average tax equivalent book yield was 3.78%.

Previous wording

Interest-bearing deposits in other banks and fed funds sold decreased $6.7 million to $130.5 million at June 30, 2026 from $137.2 million at December 31, 2025 due to loan growth outpacing deposit growth.

Current wording

Interest-bearing deposits in other banks and fed funds sold decreased $29.7 million to $107.5 million at September 30, 2026 from $137.2 million at December 31, 2025 due to loan growth outpacing deposit growth.

Previous wording

Deposits increased $275.3 million, or 15.7% (31.7% annualized), to $2.02 billion at June 30, 2026 compared to $1.75 billion at December 31, 2025. Our pure deposits, which are defined as total deposits less certificates of deposit, increased $267 million, or 18.6% (37.4% annualized), to $1.73 billion at June 30, 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 $8.7 million to $322 million at June 30, 2026 from $314 million at December 31, 2025.

Current wording

Deposits increased $255.0 million, or 14.6% (19.5% annualized), to $2.0 billion at September 30, 2026 compared to $1.7 billion at December 31, 2025. Our pure deposits, which are defined as total deposits less certificates of deposit, increased $259.3 million, or 18.1% (24.1% annualized), to $1.7 billion at September 30, 2026 from $1.4 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 decreased $4.4 million to $309.4 million at September 30, 2026 from $313.8 million at December 31, 2025.