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What changed in MetroCity Bankshares, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MetroCity Bankshares, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+351 added−353 removedSource: 10-K (2025-03-10) vs 10-K (2024-03-11)

Top changes in MetroCity Bankshares, Inc.'s 2024 10-K

351 paragraphs added · 353 removed · 307 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

90 edited+9 added−12 removed157 unchanged
Biggest changeHealth and Welfare As part of our effort to attract and retain employees, we offer a broad range of benefits, including health, dental and vision insurance, life and disability insurance, cell phone reimbursement, educational tuition reimbursement, 401(k) retirement plan, and generous paid time off. We believe our compensation package and benefits are competitive with others in our industry.
Biggest changeThe board of directors annually reviews our succession plans for senior leadership roles, with the goal of ensuring we will continue to have the right leadership talent in place to execute the organization's long-term strategic plans. 13 Table of Contents Health and Welfare As part of our effort to attract and retain employees, we offer a broad range of benefits, including health, dental and vision insurance, life and disability insurance, cell phone reimbursement, educational tuition reimbursement, 401(k) retirement plan, and generous paid time off.
Commercial Real Estate Loans. We offer commercial real estate loans collateralized by real estate, which may be owner occupied or non-owner occupied real estate.
We offer commercial real estate loans collateralized by real estate, which may be owner occupied or non-owner occupied real estate.
Loans collateralized by single-family residential real estate generally are originated in amounts of no more than 65% of appraised value. In connection with such loans, we retain a valid first lien on real estate, obtain a title insurance policy that insures that the property is free from material encumbrances and require hazard insurance.
Loans collateralized by single-family residential real estate generally are originated in amounts of no more than 70% of appraised value. In connection with such loans, we retain a valid first lien on real estate, obtain a title insurance policy that insures that the property is free from material encumbrances and require hazard insurance.
During 2023, our primary loan products offered were 15-year and 30-year fixed rate products, as well as a three-year, five-year and ten-year hybrid adjustable rate mortgages which reprice annually after the initial term based on the weekly average of the one year constant maturity treasury (CMT) plus a fixed spread.
During 2024, our primary loan products offered were a three-year, five-year and ten-year hybrid adjustable rate mortgages which reprice annually after the initial term based on the weekly average of the one year constant maturity treasury (CMT) plus a fixed spread, as well as 15-year and 30-year fixed rate products.
Loan fees, interest rates and other provisions of mortgage loans are determined by us on the basis of our own pricing criteria and competitive market conditions. We take a comprehensive and conservative approach to our mortgage underwriting, allowing a maximum LTV ratio of 65%.
Loan fees, interest rates and other provisions of mortgage loans are determined by us on the basis of our own pricing criteria and competitive market conditions. We take a comprehensive and conservative approach to our mortgage underwriting, allowing a maximum LTV ratio of 70%.
If the Federal Reserve were to apply the same or a similar well-capitalized standard to bank holding companies as that applicable to the Bank, the Company’s capital ratios as of December 31, 2023 would exceed such revised well-capitalized standard.
If the Federal Reserve were to apply the same or a similar well-capitalized standard to bank holding companies as that applicable to the Bank, the Company’s capital ratios as of December 31, 2024 would exceed such revised well-capitalized standard.
These consumer protections under the CARES Act continued during the COVID 19 pandemic 22 Table of Contents emergency, and while most of these protections expired in 2022, on January 18, 2023, in its revised Mortgage Servicing Examination Procedures, the CFPB stated it expected servicers to continue to utilize these safeguards, regardless of their expiration. Non-Discrimination Policies.
These consumer protections under the CARES Act continued during the COVID 19 pandemic emergency, and while most of these protections expired in 2022, on January 18, 2023, in its revised Mortgage Servicing Examination Procedures, the CFPB stated it expected servicers to continue to utilize these safeguards, regardless of their expiration. Non-Discrimination Policies.
We consider a deposit relationship to be core by considering the following factors: (i) relationships with us (as a director or shareholder); (ii) deposits within our market area; (iii) additional non-deposit services with us; (iv) electronic banking services with us; (v) active demand deposit account with us; (vi) loans; and (vii) longevity of the relationship with us.
We consider a deposit relationship to be core by considering the following factors: (i) relationships with us (as a director or shareholder); (ii) deposits within our market area; (iii) additional non-deposit services with us; (iv) electronic banking services with us; (v) active demand deposit account with us; (vi) loans; and (vii) longevity of the relationship with 11 Table of Contents us.
On December 21, 2018, federal banking agencies issued a joint final rule to revise their regulatory capital rules to (i) address the upcoming implementation of the “current expected credit losses” (“CECL”) accounting standard under GAAP; (ii) provide an optional three-year phase-in period for the day-one adverse regulatory capital effects that banking organizations are expected to experience upon adopting CECL (the Company did not elect to utilze this phase-in period); and (iii) require the use of CECL in stress tests beginning with the 2020 capital planning and stress testing cycle for certain 17 Table of Contents banking organizations.
On December 21, 2018, federal banking agencies issued a joint final rule to revise their regulatory capital rules to (i) address the upcoming implementation of the “current expected credit losses” (“CECL”) accounting standard under GAAP; (ii) provide an optional three-year phase-in period for the day-one adverse regulatory capital effects that banking organizations are expected to experience upon adopting CECL (the Company did not elect to utilize this phase-in period); and (iii) require the use of CECL in stress tests beginning with the 2020 capital planning and stress testing cycle for certain banking organizations.
The BHC Act requires that a bank holding company obtain the prior approval of the Federal Reserve before (i) acquiring direct or indirect ownership or control of more than 5% of the voting shares of any additional bank or bank holding company, (ii) taking any action that causes an additional bank or bank holding company to become a subsidiary of the bank holding company, or (iii) merging 14 Table of Contents or consolidating with any other bank holding company.
The BHC Act requires that a bank holding company obtain the prior approval of the Federal Reserve before (i) acquiring direct or indirect ownership or control of more than 5% of the voting shares of any additional bank or bank holding company, (ii) taking any action that causes an additional bank or bank holding company to become a subsidiary of the bank holding company, or (iii) merging or consolidating with any other bank holding company.
As of December 31, 2023 and 2022, the Bank’s regulatory capital ratios were above the applicable well-capitalized standards and met the then-applicable capital conservation buffer. The Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Economic Growth Act”) signed into law in May 2018 scaled back certain requirements of the Dodd-Frank Act and provided other regulatory relief.
As of December 31, 2024 and 2023, the Bank’s regulatory capital ratios were above the applicable well-capitalized standards and met the capital conservation buffer. The Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Economic Growth Act”) signed into law in May 2018 scaled back certain requirements of the Dodd-Frank Act and provided other regulatory relief.
The say-on-pay, the 15 Table of Contents say-on-parachute and the say-on-frequency votes are explicitly nonbinding and cannot override a decision of our board of directors. Other Regulatory Matters. We and our subsidiaries are subject to oversight by the SEC, the Financial Industry Regulatory Authority (“FINRA”), the PCAOB, the Nasdaq Stock Market and various state securities regulators.
The say-on-pay, the say-on-parachute and the say-on-frequency votes are explicitly nonbinding and cannot override a decision of our board of directors. Other Regulatory Matters. We and our subsidiaries are subject to oversight by the SEC, the Financial Industry Regulatory Authority (“FINRA”), the PCAOB, the Nasdaq Stock Market and various state securities regulators.
Failure of a financial institution to comply with the USA PATRIOT Act’s requirements could have serious legal and reputational consequences for the institution. The Bank has augmented its systems and procedures to meet the requirements of these regulations and will continue to revise and update its policies, procedures and controls to reflect changes required by law.
Failure of a financial institution to comply with the USA PATRIOT Act’s requirements could have serious legal and reputational consequences for the institution. The Bank has augmented its systems and procedures to 20 Table of Contents meet the requirements of these regulations and will continue to revise and update its policies, procedures and controls to reflect changes required by law.
The FDIC and the Federal Reserve have indicated that paying dividends that deplete a bank’s capital base to an inadequate level would be an unsafe and unsound banking practice. The FDIC and the Federal Reserve have each indicated that depository institutions and their holding companies should generally pay dividends only out of current operating earnings.
The FDIC and the Federal Reserve 18 Table of Contents have indicated that paying dividends that deplete a bank’s capital base to an inadequate level would be an unsafe and unsound banking practice. The FDIC and the Federal Reserve have each indicated that depository institutions and their holding companies should generally pay dividends only out of current operating earnings.
We offer a suite of loan and deposit products tailored to meet the needs of the businesses and individuals already established in our communities, as well as first generation immigrants 6 Table of Contents who desire to establish and grow their own businesses, purchase a home, or educate their children in the United States.
We offer a suite of loan and deposit products tailored to meet the needs of the businesses and individuals already established in our communities, as well as first generation immigrants who desire to establish and grow their own businesses, purchase a home, or educate their children in the United States.
Under this rule, banking organizations that are SEC registrants must generally disclose information about a material cybersecurity incident within four business days of determining it is material with periodic updates as to the status of the incident in subsequent filings as necessary. ​ Under a final rule adopted by federal banking agencies in 2021, banking organizations are required to notify their primary banking regulator within 36 hours of determining that a “computer-security incident” has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the banking organization’s ability to carry out banking operations or deliver banking products and services to a material portion of its customer base, its businesses and operations that would result in material loss, or its operations that would impact the stability of the United States. ​ State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations.
Under this rule, banking organizations that are SEC registrants must generally disclose information about a material cybersecurity incident within four business days of determining it is material with periodic updates as to the status of the incident in subsequent filings as necessary. ​ Federal banking agencies additionally require banking organizations to notify their primary banking regulator within 36 hours of determining that a “computer-security incident” has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the banking organization’s ability to carry out banking operations or deliver banking products and services to a material portion of its customer base, its businesses and operations that would result in material loss, or its operations that would impact the stability of the United States. ​ State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations.
Our SBA loans are typically made to retail businesses including, car wash stations, grocery stores, poultry farms, warehouses, convenience stores, hospitality and service businesses, car dealers, beauty supplies, restaurants, and beer, wine, and liquor stores for acquisition of business properties, working capital needs and business expansions.
Our SBA loans are typically made to retail businesses including, car wash stations, grocery stores, poultry farms, warehouses, 9 Table of Contents convenience stores, hospitality and service businesses, car dealers, beauty supplies, restaurants, and beer, wine, and liquor stores for acquisition of business properties, working capital needs and business expansions.
As a result of the Economic Growth Act, the federal banking agencies were also required to develop a “Community Bank Leverage Ratio” (the ratio of a bank’s Tier 1 capital to average total consolidated assets) for financial institutions with assets of less than $10 billion.
As a result of the Economic Growth Act, the federal banking agencies were also required to develop a “Community Bank Leverage Ratio” (the ratio of a bank’s Tier 1 capital to average total consolidated assets) for financial institutions 17 Table of Contents with assets of less than $10 billion.
As of December 31, 2023, these rules have not been implemented, although the SEC did adopt final rules implementing the clawback provisions of the Dodd-Frank Act in 2022.
As of December 31, 2024, these rules have not been implemented, although the SEC did adopt final rules implementing the clawback provisions of the Dodd-Frank Act in 2022.
Consumer and Other Loans. These loans represent a very small portion of our overall portfolio and primarily consists of overdrafts and consumer lines of credit. Consumer loans carry a greater amount of risk and collections are dependent on the borrower’s continuing financial stability and thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy.
These loans represent a very small portion of our overall portfolio and primarily consists of overdrafts and consumer lines of credit. Consumer loans carry a greater amount of risk and collections are dependent on the borrower’s continuing financial stability and thus are more likely to be adversely affected by job loss, divorce, 10 Table of Contents illness or personal bankruptcy.
Lending activities primarily originate from the relationships and efforts of our bankers, with an emphasis on providing banking solutions tailored to meet our customers’ needs while maintaining our underwriting standards. The sections below discuss our general loan categories.
Lending activities primarily originate from the relationships and efforts of our bankers, with an emphasis on providing banking solutions tailored to meet our customers’ needs while maintaining our underwriting standards. 7 Table of Contents The sections below discuss our general loan categories.
We are willing to maintain higher LTVs on our SBA portfolio than the remainder of our commercial loans because the effect of the SBA guarantee is to lower overall risk. 9 Table of Contents We retain the servicing rights on the sold portions of the SBA and USDA loans we originate.
We are willing to maintain higher LTVs on our SBA portfolio than the remainder of our commercial loans because the effect of the SBA guarantee is to lower overall risk. We retain the servicing rights on the sold portions of the SBA and USDA loans we originate.
In addition, as part of our commercial and industrial loan product offering, we originate SBA loans to provide working capital and to finance inventory, equipment and machinery purchases and acquisitions. As of December 31, 2023 and 2022, the outstanding balance of our commercial and industrial SBA loans was $32.7 million and $34.5 million respectively.
In addition, as part of our commercial and industrial loan product offering, we originate SBA loans to provide working capital and to finance inventory, equipment and machinery purchases and acquisitions. As of December 31, 2024 and 2023, the outstanding balance of our commercial and industrial SBA loans was $28.5 million and $32.7 million respectively.
We had approximately $1.3 million and $136,000 of commercial and industrial loans on nonaccrual status as of December 31, 2023 and 2022, respectively. Our commercial and industrial loans are typically made to small and medium-sized businesses for working capital needs, business expansions and for trade financing.
We had approximately $526,000 and $1.3 million of commercial and industrial loans on nonaccrual status as of December 31, 2024 and 2023, respectively. Our commercial and industrial loans are typically made to small and medium-sized businesses for working capital needs, business expansions and for trade financing.
Bank regulators are focusing their 20 Table of Contents examinations on anti-money laundering compliance, and we continue to monitor and augment, where necessary, our anti-money laundering compliance programs. Banking regulators will consider compliance with the Act’s money laundering provisions in acting upon acquisition and merger proposals.
Bank regulators are focusing their examinations on anti-money laundering compliance, and we continue to monitor and augment, where necessary, our anti-money laundering compliance programs. Banking regulators will consider compliance with the Act’s money laundering provisions in acting upon acquisition and merger proposals.
Our LTV policy limits are 85% for commercial real estate loans. In addition, we limit our lending on non-owner occupied commercial real estate to 100% of total bank capital. The total balance of commercial real estate loans on nonaccrual status was $991,000 and $4.9 million as of December 31, 2023 and 2022, respectively. Commercial and Industrial Loans.
Our LTV policy limits are 85% for commercial real estate loans. In addition, we limit our lending on non-owner occupied commercial real estate to 100% of total bank capital. The total balance of commercial real estate loans on nonaccrual status was $3.3 million and $991,000 as of December 31, 2024 and 2023, respectively. Commercial and Industrial Loans.
The FDIC, as required under the Federal Deposit Insurance Act, established a plan on September 15, 2020 to restore the DIF reserve ratio to meet or exceed the statutory minimum of 1.35% within eight years.
As of June 30, 2020, the DIF reserve ratio fell to 1.30%, below the statutory minimum of 1.35%. The FDIC, as required under the Federal Deposit Insurance Act, established a plan on September 15, 2020 to restore the DIF reserve ratio to meet or exceed the statutory minimum of 1.35% within eight years.
In addition, these institutions may be able to better afford and make broader use of media advertising, support services, and electronic and other technology.
In addition, these institutions 12 Table of Contents may be able to better afford and make broader use of media advertising, support services, and electronic and other technology.
The leverage capital ratio, which serves as a minimum capital standard, is the ratio of Tier 1 capital to quarterly average total consolidated assets net of goodwill, certain other intangible assets, and certain required deduction items. The required minimum leverage ratio for all banks is 4%.
The leverage capital ratio, which serves as a minimum capital standard, is the ratio of Tier 1 capital to quarterly average total consolidated assets net of goodwill, certain other intangible assets, and certain required deduction items.
Effective March 26, 2020, reserve requirement ratios were reduced to zero percent. These reserve requirements are subject to annual adjustment by the Federal Reserve. FDIC Insurance Assessments and Depositor Preference.
Effective March 26, 2020, 19 Table of Contents reserve requirement ratios were reduced to zero percent. These reserve requirements are subject to annual adjustment by the Federal Reserve. FDIC Insurance Assessments and Depositor Preference.
Our conventional commercial real estate loans, or non-SBA guaranteed commercial real estate loans, carried a weighted average maturity of 5.52 years as of December 31, 2023. Non-SBA commercial real estate loan amounts generally do not exceed 65% of the lesser of the appraised value or the purchase price depending on the property appraisals we utilize.
Our conventional commercial real estate loans, or non-SBA guaranteed commercial real estate loans, carried a weighted average maturity of 4.88 years as of December 31, 2024. Non-SBA commercial real estate loan amounts generally do not exceed 65% of the lesser of the appraised value or the purchase price depending on the property appraisals we utilize.
Adjustable-rate loans are generally based on the Wall Street Journal Prime Rate (“WSJPR”) or the Secured Overnight Financing Rate (“SOFR”), and as of December 31, 2023, most of our loans were based on WSJPR. At December 31, 2023, approximately 28.9% of the commercial real estate loan portfolio consisted of fixed rate loans.
Adjustable-rate loans are generally based on the Wall Street Journal Prime Rate (“WSJPR”) or the Secured Overnight Financing Rate (“SOFR”), and as of December 31, 2024, most of our loans were based on WSJPR. At December 31, 2024, approximately 12.0% of the commercial real estate loan portfolio consisted of fixed rate loans.
Our level of brokered deposits varies from time to time depending on competitive interest rate conditions and other factors and tends to increase as a percentage of total deposits when the brokered deposits are less costly than issuing internet certificates of deposit or borrowing from the Federal Home Loan Bank.
Our level of brokered deposits varies from time to time depending on competitive interest rate conditions and other factors and tends to increase as a percentage of total deposits when funding is needed to support strong loan demand or when they are less costly than issuing internet certificates of deposit or borrowing from the Federal Home Loan Bank.
Our ability to gather deposits, particularly core deposits, is an important aspect of our business and we believe core deposits are a significant driver of value as a cost efficient and stable source of funding to support our growth. As of December 31, 2023, we had $2.73 billion of total deposits with a total weighted average deposit cost of 3.04%.
Our ability to gather deposits, particularly core deposits, is an important aspect of our business and we believe core deposits are a significant driver of value as a cost efficient and stable source of funding to support our growth. As of December 31, 2024, we had $2.74 billion of total deposits with a total weighted average deposit cost of 2.94%.
We provide a mix of variable and fixed rate commercial and industrial loans. Commercial and industrial loans represented $65.9 million, or 2.1%, of our total loan portfolio held for investment as of December 31, 2023, compared to $53.2 million, or 1.7%, of our total loan portfolio held for investment at December 31, 2022.
We provide a mix of variable and fixed rate commercial and industrial loans. Commercial and industrial loans represented $78.2 million, or 2.5%, of our total loan portfolio held for investment as of December 31, 2024, compared to $65.9 million, or 2.1%, of our total loan portfolio held for investment at December 31, 2023.
Advances on construction loans are made relative to the overall percentage of completion on the project in an effort to remain adequately secured. We had approximately $548,000 of construction and development loans on nonaccrual status as of December 31, 2023. We had no construction and development loans that were classified as nonaccrual as of December 31, 2022.
Advances on construction loans are made relative to the overall percentage of completion on the project in an effort to remain adequately secured. We had no construction and development loans that were classified as nonaccrual as of December 31, 2024. We had construction and development loans totaling $548,000 on nonaccrual status as of December 31, 2023. Commercial Real Estate Loans.
As of December 31, 2023, 67.3%, or $1.84 billion, of our deposits were considered core deposits. While we are focused on growing our low-cost deposits, we also utilize brokered deposits, subject to certain limitations and requirements, as a source of funding to support our asset growth and augment the deposits generated from our branch network.
As of December 31, 2024, 69.4%, or $1.90 billion, of our deposits were considered core deposits. While we are focused on growing our low-cost deposits, we also utilize brokered deposits, subject to certain limitations and requirements, as a source of funding to support our asset growth and augment the deposits generated from our branch network.
As of December 31, 2023, the outstanding balance of our construction and development loans was $23.3 million, or 0.7%, of our total loan portfolio held for investment, compared to $47.8 million, or 1.6%, of our total loan portfolio held for investment at December 31, 2022.
As of December 31, 2024, the outstanding balance of our construction and development loans was $21.6 million, or 0.7%, of our total loan portfolio held for investment, compared to $23.3 million, or 0.7%, of our total loan portfolio held for investment at December 31, 2023.
Financial institutions are further required to disclose their privacy policies to customers annually. Financial institutions, however, will be required to comply with state law if it is more protective of consumer privacy than the GLB. The GLB also directed federal regulators, including the FDIC, to prescribe standards for the security of consumer information.
Financial institutions, however, will be required to comply with state law if it is more protective of consumer privacy than the GLB. The GLB also directed federal regulators, including the FDIC, to prescribe standards for the security of consumer information.
We make available, free of charge, on or through our website, https://www.metrocitybank.bank/investor-relations/sec-filings, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and amendments to such filings, as soon as reasonably practicable after each is electronically filed with, or furnished to, the SEC. 13 Table of Contents Regulation and Supervision General We are extensively regulated under federal and state law.
We make available, free of charge, on or through our website, https://www.metrocitybank.bank/investor-relations/sec-filings, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and amendments to such filings, as soon as reasonably practicable after each is electronically filed with, or furnished to, the SEC.
Our Markets We are located primarily in the Atlanta metropolitan area with our headquarters in Doraville, Georgia. Our 20 full-service branch locations in Alabama, Florida, Georgia, New York, New Jersey, Texas and Virginia are located in growing multi-ethnic communities. Additionally, we continue to monitor attractive markets where we would like to expand our presence.
Our 20 full-service branch locations in Alabama, Florida, Georgia, New York, New Jersey, Texas and Virginia are located in growing multi-ethnic communities. Additionally, we continue to monitor attractive markets where we would like to expand our presence.
In addition, as of January 1, 2019, the capital rules require a capital conservation buffer of 2.5%, constituted of CET1, above each of the minimum capital ratio requirements (CET1, Tier 1, and total risk-based capital), which is designed to absorb losses during periods of economic stress.
The required minimum leverage ratio for all banks is 4%. 16 Table of Contents In addition, as of January 1, 2019, the capital rules require a capital conservation buffer of 2.5%, constituted of CET1, above each of the minimum risk-based capital ratio requirements (CET1, Tier 1, and total risk-based capital), which is designed to absorb losses during periods of economic stress.
Of our total deposits as of December 31, 2023, $639.5 million, or 23.4%, of total deposits were held in demand deposit accounts. As a bank focusing on successful businesses and their owners, many of our depositors choose to leave large deposits with us.
Of our total deposits as of December 31, 2024, $663.5 million, or 24.2%, of total deposits were held in demand deposit accounts. As a bank focusing on successful businesses and their owners, many of our depositors choose to leave large deposits with us.
Talent Acquisition, Development, and Retention Our culture emphasizes our longstanding dedication to being respectful to others and having a workforce that is representative of the communities we serve. Diversity and inclusion are fundamental to our culture. Our future success depends on our ability to attract, retain and develop employees.
All of our employees are chosen on the basis of their qualifications and merit. Talent Acquisition, Development, and Retention Our culture emphasizes our longstanding dedication to being respectful to others and having a workforce that is representative of the communities we serve. Our future success depends on our ability to attract, retain and develop employees.
As of December 31, 2023, our commercial real estate SBA and USDA portfolio, net of any sold portions, totaled $254.2 million. This represents a decrease of $15.6 million when compared to the December 31, 2022 balance of $269.8 million.
As of December 31, 2024, our commercial real estate SBA and USDA portfolio, net of any sold portions, totaled $248.6 million. This represents a decrease of $5.6 million, or 2.2%, when compared to the December 31, 2023 balance of $254.2 million.
We recognized servicing income on residential mortgage loans of $193,000 (expense balance), $561,000 (expense balance), and $564,000 (expense balance) for the years ended December 31, 2023, 2022 and 2021, respectively. The servicing income recognized is net of amortization of our mortgage servicing rights which caused the expense balance for the years ended December 31, 2023, 2022 and 2021.
We recognized servicing income on residential mortgage loans of $2.4 million, $193,000 (expense balance) and $561,000 (expense balance) for the years ended December 31, 2024, 2023 and 2022, respectively. The servicing income recognized is net of amortization of our mortgage servicing rights which caused the expense balance for the years ended December 31, 2023 and 2022. Consumer and Other Loans.
The loans are sold with no representation or warranties if the loan pays off early. During 2023, we originated $337.0 million of non-conforming residential mortgage loans, but did not sell any loans to investors during this period. During 2022, we originated $833.6 million of non-conforming residential mortgage loans and sold $94.9 million to our investors.
The loans are sold with no representation or warranties if the loan pays off early. During 2024, we originated $413.7 million of non-conforming residential mortgage loans and sold $187.5 million residential mortgage loans to investors during this period. During 2023, we originated $337.0 million of non-conforming residential mortgage loans, but did not sell any loans to investors during this period.
We currently operate 20 full-service branch locations in multi-ethnic communities in Alabama, Florida, Georgia, New York, New Jersey, Texas and Virginia. As of December 31, 2023, we had total assets of $3.50 billion, total loans held for investment of $3.14 billion, total deposits of $2.73 billion and total shareholders’ equity of $381.5 million.
We currently operate 20 full-service branch locations in multi-ethnic communities in Alabama, Florida, Georgia, New York, New Jersey, Texas and Virginia. As of December 31, 2024, we had total assets of $3.59 billion, total loans held for investment of $3.16 billion, total deposits of $2.74 billion and total shareholders’ equity of $421.4 million.
FinCEN is required to implement regulations to specify how covered financial institutions, such as the Company, should incorporate these national priorities into their AML programs. As of December 31, 2023, no such regulations have been proposed. Economic Sanctions.
FinCEN is required to implement regulations to specify how covered financial institutions, such as the Company, should incorporate these national priorities into their AML programs. Economic Sanctions.
As of December 31, 2023, we had approximately 220 full-time equivalent employees. None of our employees are represented by any collective bargaining unit or is a party to a collective bargaining agreement. We consider our relationship with our employees to be good and have not experienced interruptions of operations due to labor disagreements.
None of our employees are represented by any collective bargaining unit or is a party to a collective bargaining agreement. We consider our relationship with our employees to be good and have not experienced interruptions of operations due to labor disagreements.
Commercial real estate loans made up $711.2 million, or 22.6%, of our total loan portfolio held for investment at December 31, 2023, compared to $657.2 million, or 21.4%, of our total loan portfolio held for investment as of December 31, 2022.
Commercial real estate loans made up $762.0 million, or 24.1%, of our total loan portfolio held for investment at December 31, 2024, compared to $711.2 million, or 22.6%, of our total loan portfolio held for investment as of December 31, 2023.
We had no residential mortgage loans held for sale as of December 31, 2022. Nonaccrual residential mortgage loans were $11.9 million and $5.0 million at December 31, 2023 and 2022, respectively. On occasion, we sell a portion of our non-conforming residential mortgage loans to third party investors.
Residential mortgage loans held for sale totaled $22.3 million as of December 31, 2023. Nonaccrual residential mortgage loans were $14.2 million and $11.9 million at December 31, 2024 and 2023, respectively. On occasion, we sell a portion of our non-conforming residential mortgage loans to third party investors.
Federal CRA regulations require, among other things, that evidence of discrimination against applicants on a prohibited basis, and illegal or abusive lending practices be considered in the CRA evaluation.
Federal CRA regulations require, among other things, that evidence of discrimination against 21 Table of Contents applicants on a prohibited basis, and illegal or abusive lending practices be considered in the CRA evaluation. The Bank has a rating of “Satisfactory” in its most recent CRA evaluation.
The FDIC calculates quarterly deposit insurance assessments based on an institution’s average total consolidated assets less its average tangible equity, 19 Table of Contents and applies one of four risk categories determined by reference to its capital levels, supervisory ratings, and certain other factors.
The FDIC calculates quarterly deposit insurance assessments based on an institution’s average total consolidated assets less its average tangible equity, and applies one of four risk categories determined by reference to its capital levels, supervisory ratings, and certain other factors. The assessment rate schedule can change from time to time, at the discretion of the FDIC, subject to certain limits.
Among other things, the revised rules evaluate lending outside traditional assessment areas generated by the growth of non-branch delivery systems, such as online and mobile banking, apply a metrics-based benchmarking approach to assessment, and clarify eligible CRA activities.
Among other things, the revised rules evaluate lending outside traditional assessment areas generated by the growth of non-branch delivery systems, such as online and mobile banking, apply a metrics-based benchmarking approach to assessment, and clarify eligible CRA activities. The final rules were challenged in federal court and a preliminary injunction was granted in March 2024 enjoining implementation of the rules.
As of December 7 Table of Contents 31, 2023, $14.3 million, or 61.7%, of construction and development loans were for the construction of office buildings and commercial rental properties; $3.5 million, or 15.0%, were for the construction of physician’s offices and nursing homes; $1.9 million, or 8.2%, were for the construction of liquor stores; $1.7 million, or 7.2%, were for the construction of hardware stores; and the remaining $1.9 million, or 7.9%, were loans distributed amongst various industries and sectors.
As of December 31, 2024, $9.0 million, or 41.8%, of construction and development loans were for the construction of office buildings and commercial rental properties; $3.5 million, or 16.1%, were for the construction of physician’s offices and nursing homes; $3.4 million, or 15.9%, were for the construction of gas stations; $2.5 million, or 11.5%, were for the construction of hotels; and the remaining $3.2 million, or 14.7%, were loans distributed amongst various industries and sectors.
As of December 31, 2023, we had $2.35 billion of residential real estate loans, representing 74.6% of our total loan portfolio held for investement compared to $2.31 billion, or 75.3%, of our total loan portfolio held for investment at December 31, 2022. Residential mortgage loans held for sale totaled $22.3 million as of December 31, 2023.
As of December 31, 2024, we had $2.30 billion of residential real estate loans, representing 72.7% of our total loan portfolio held for investment compared to $2.35 billion, or 74.6%, of our total loan portfolio held for investment at December 31, 2023. We had no residential mortgage loans held for sale as of December 31, 2024.
As of December 31, 2023, our net loans were 12 Table of Contents 89.2% of total assets and net loans were 114.4% of total deposits. As of December 31, 2022, our net loans were 88.8% of total assets and net loans were 114.1% of total deposits. We were in compliance with both limits for each period presented.
As of December 31, 2024, our net loans were 87.3% of total assets and net loans were 114.7% of total deposits. As of December 31, 2023, our net loans were 89.2% of total assets and net loans were 114.4% of total deposits. We were in compliance with both limits for each period presented.
As of December 31, 2023, we serviced $508.0 million in SBA/USDA loans for others, an increase of $42.9 million, or 9.2%, when compared to December 31, 2022. We recognized servicing income on SBA loans of $4.8 million, $1.8 million, and $5.9 million for the years ended December 31, 2023, 2022 and 2021, respectively. Residential Real Estate Loans.
As of December 31, 2024, we serviced $479.7 million in SBA/USDA loans for others, a decrease of $28.3 million, or 5.6%, when compared to December 31, 2023. We recognized servicing income on SBA loans of $4.2 million, $4.8 million, and $1.8 million for the years ended December 31, 2024, 2023 and 2022, respectively. Residential Real Estate Loans.
In addition, the CFPB has issued rules that require servicers to comply with new standards and practices with regard to: error correction; information disclosure; force-placement of insurance; information management policies and procedures; requiring information about mortgage loss mitigation options be provided to delinquent borrowers; providing delinquent borrowers access to servicer personnel with continuity of contact about the borrower’s mortgage loan account; and evaluating borrowers’ applications for available loss mitigation options.
In addition, the CFPB has issued rules that require servicers to comply with new standards and practices with regard to: error correction; information disclosure; force-placement of insurance; information management policies and procedures; requiring information about mortgage loss mitigation options be provided to delinquent borrowers; providing delinquent borrowers access to servicer personnel with continuity of contact about the borrower’s mortgage loan account; and evaluating borrowers’ applications for available loss mitigation options. 22 Table of Contents These rules also address initial rate adjustment notices for adjustable-rate mortgages (ARMs), periodic statements for residential mortgage loans, and prompt crediting of mortgage payments and response to requests for payoff amounts.
As of December 31, 2023, $656.9 million, or 92.4%, of our commercial real estate loans were secured by owner occupied properties and the remaining $54.3 million, or 7.6%, of loans in this category were secured by non-owner occupied properties.
As of December 31, 2024, $700.9 million, or 92.0%, of our commercial real estate loans were secured by owner occupied properties and the remaining $61.1 million, or 8.0%, of loans in this category were secured by non-owner occupied properties.
Treasury management services include balance reporting (including current day and previous day activity), transfers between accounts, wire transfer initiation, ACH origination and stop payments.
Treasury management services include balance reporting (including current day and previous day activity), transfers between accounts, wire transfer initiation, ACH origination and stop payments. Cash management deposit products consist of remote deposit capture, positive pay, zero balance accounts and sweep accounts.
Prior approval by the FDIC is required if the total of all dividends declared by a bank in any calendar year exceeds the bank’s profits for that year combined with its retained net profits for the preceding two calendar years. 18 Table of Contents Under a Federal Reserve policy adopted in 2009, the board of directors of a bank holding company must consider different factors to ensure that its dividend level is prudent relative to maintaining a strong financial position, and is not based on overly optimistic earnings scenarios, such as potential events that could affect its ability to pay, while still maintaining a strong financial position.
Under a Federal Reserve policy adopted in 2009, the board of directors of a bank holding company must consider different factors to ensure that its dividend level is prudent relative to maintaining a strong financial position, and is not based on overly optimistic earnings scenarios, such as potential events that could affect its ability to pay, while still maintaining a strong financial position.
As of December 31, 2023, we had brokered deposits of $766.3 million compared to $523.7 million of brokered deposits at December 31, 2022. We use interest rate swap and cap agreements to hedge our deposit accounts that are indexed to the Federal Funds Effective rate (includes all of our brokered deposits). These swap agreements are designated as cash flow hedges.
We use interest rate swap and cap agreements to hedge our deposit accounts that are indexed to the Federal Funds Effective rate (includes all of our brokered deposits). These swap agreements are designated as cash flow hedges. As of December 31, 2024, the total amount of deposits tied to the Federal Funds Effective rate was $1.03 billion.
The following is a brief summary that does not purport to be a complete description of all regulations that affect us or all aspects of those regulations.
Regulation and Supervision General We are extensively regulated under federal and state law. The following is a brief summary that does not purport to be a complete description of all regulations that affect us or all aspects of those regulations.
Of the balance outstanding at December 31, 2023, $99.3 million, or 39.1%, of the loans in this portfolio carried an SBA guarantee while the remaining $154.9 million, or 60.9%, of the portfolio was unguaranteed.
Of the balance outstanding at December 31, 2024, $96.7 million, or 38.9%, of the loans in this portfolio carried an SBA guarantee while the remaining $151.8 million, or 61.1%, of the portfolio was unguaranteed.
We require our commercial real estate loans to be secured by what we believe to be well-managed property with adequate margins and we generally obtain a personal guarantee from responsible parties. Our commercial real estate loans are secured by a wide variety of property types, such as retail operations, hospitality, specialty service operations and warehouses for wholesale distribution.
We require our commercial real estate loans to be secured by what we believe to be well-managed property with adequate margins and we generally obtain a personal guarantee from responsible parties.
As of December 31, 2023, $27.0 million, or 41.0%, of our commercial and industrial loans were extended to businesses in warehousing, wholesale and retail trade; $11.2 million, or 17.0%, were loans made to hotels and restaurants; 8 Table of Contents and the remaining $27.7 million, or 42.0%, of loans were distributed across various industries and sectors.
As of December 31, 2024, $30.7 million, or 39.2%, of our commercial and industrial loans were extended to businesses in financial services; $22.9 million, or 29.3%, were loans extended to businesses in warehousing, wholesale and retail trade; $9.2 million, or 11.8%, were loans made to hotels and restaurants; and the remaining $15.4 million, or 19.7%, of loans were distributed across various industries and sectors.
As of December 31, 2023 and 2022 our loan portfolio held for investment consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ December 31, 2022 (Dollars in thousands) Amount % of Total Amount % of Total Construction and Development ​ $ 23,262 0.7 % $ 47,779 1.6 % Commercial Real Estate ​ 711,177 22.6 ​ 657,246 21.4 ​ Commercial and Industrial ​ 65,904 2.1 ​ 53,173 1.7 ​ Residential Real Estate ​ 2,350,299 74.6 ​ 2,306,915 75.3 ​ Consumer and other ​ 319 — ​ 216 — ​ Gross loans ​ $ 3,150,961 100.0 ​ $ 3,065,329 100.0 ​ Less unearned income ​ (8,856) ​ (9,640) ​ Total loans held for investment ​ $ 3,142,105 ​ $ 3,055,689 ​ ​ Construction and Development Loans.
As of December 31, 2024 and 2023 our loan portfolio held for investment consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ December 31, 2023 (Dollars in thousands) Amount % of Total Amount % of Total Construction and Development ​ $ 21,569 0.7 % $ 23,262 0.7 % Commercial Real Estate ​ 762,033 24.1 ​ 711,177 22.6 ​ Commercial and Industrial ​ 78,220 2.5 ​ 65,904 2.1 ​ Residential Real Estate ​ 2,303,234 72.7 ​ 2,350,299 74.6 ​ Consumer and other ​ 260 — ​ 319 — ​ Gross loans ​ $ 3,165,316 100.0 ​ $ 3,150,961 100.0 ​ Less unearned income ​ (7,381) ​ (8,856) ​ Total loans held for investment ​ $ 3,157,935 ​ $ 3,142,105 ​ ​ Construction and Development Loans.
Residential mortgage loans held for sale are sold with the servicing rights retained by the Bank. As of December 31, 2023, the amount of residential mortgage loans serviced for others fell to $443.1 million representing a decrease of $83.6 million, or 15.9%, when compared to December 31, 2022.
Residential mortgage loans held for sale are sold with the servicing rights retained by the Bank. As of December 31, 2024, the amount of residential mortgage loans serviced for others rose to $527.0 million representing an increase of $84.0 million, or 19.0%, when compared to December 31, 2023.
See Note 10 of our consolidated financial statements as of December 31, 2023, included elsewhere in this Annual Report on Form 10-K, for additional information. 11 Table of Contents As of December 31, 2023, our fifteen largest depositor relationships, excluding brokered deposits, totaled $314.3 million, or 11.5%, of total deposits.
See Note 10 of our consolidated financial statements as of December 31, 2024, included elsewhere in this Annual Report on Form 10-K, for additional information. As of December 31, 2024, our fifteen largest depositor relationships, excluding brokered deposits, totaled $330.0 million, or 12.1%, of total deposits. Our deposits with directors and affiliated entities totaled $14.4 million for the same period.
Within our commercial real estate loans, $310.7 million, or 43.7%, were to hotels and restaurants; $149.7 million, or 21.1%, were made to wholesalers or retailers; $113.0 million, or 15.9%, were to general service business; $69.8 million, or 9.8%, were to commercial rental properties; and the remaining $68.0 million, or 9.5%, were distributed amongst various sectors and industries.
Within our commercial real estate loans, $332.4 million, or 43.6%, were to hotels; $154.4 million, or 20.3%, were made to wholesalers or retailers; $83.6 million, or 11.0%, were to car washes; $70.3 million, or 9.2%, were to commercial rental properties; $31.9 million, or 4.2%, were to restaurants; $19.1 million, or 2.5%, were to general service business; and the remaining $70.3 million, or 9.2%, were distributed amongst various sectors and industries.
Our deposits with directors and affiliated entities totaled $10.2 million for the same period. Competition We operate in a highly competitive market. Competitors include other banks, credit unions, mortgage companies, personal and commercial financing companies, investment brokerage and advisory firms, mutual fund companies and insurance companies. Competitors range in both size and geographic footprint.
Competition We operate in a highly competitive market. Competitors include other banks, credit unions, mortgage companies, personal and commercial financing companies, investment brokerage and advisory firms, mutual fund companies and insurance companies. Competitors range in both size and geographic footprint. We operate throughout Georgia and the Southeast, as well as New York, New Jersey, Texas, and Virginia.
Violations of laws and regulations, or other unsafe and unsound practices, may result in regulatory agencies imposing fines or penalties, cease and desist orders, or taking other enforcement actions. Under certain circumstances, these agencies may enforce these remedies directly against officers, directors, employees and other parties participating in the affairs of a bank or bank holding company. Activity Limitations.
Under certain circumstances, these agencies may enforce these remedies directly against officers, directors, employees and other parties participating in the affairs of a bank or bank holding company. 14 Table of Contents Activity Limitations.
Payment of Dividends We are a legal entity separate and distinct from the Bank and our other subsidiaries. Our primary source of cash, other than securities offerings, is dividends from the Bank.
Our primary source of cash, other than securities offerings, is dividends from the Bank.
Of the balance outstanding as of December 31, 2023, $17.1 million, or 52.3%, of our commercial and industrial SBA portfolio carried a guarantee from the SBA while the remaining $15.6 million, or 47.7%, of the portfolio was unguaranteed.
Of the balance outstanding as of December 31, 2024, $13.9 million, or 49.0%, of our commercial and industrial SBA portfolio carried a guarantee from the SBA while the remaining $14.5 million, or 51.0%, of the portfolio was unguaranteed.
Public Information Persons interested in obtaining information on the Company may read and copy any materials that we file with the U.S. Securities and Exchange Commission ("SEC"). The Commission maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.
The Commission maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.
Human Capital Resources We recognize that our most valuable asset is our people. One of our top strategic priorities is the retention and development of our talent. This includes providing career development opportunities for all associates; increasing our diversity and inclusion; training our next generation of leaders; and succession planning.
Human Capital Resources We recognize that our most valuable asset is our people. One of our top strategic priorities is the retention and development of our talent.
Of the 220 full-time equivalent employees as of December 31, 2023, 80.5% identify as a female and 95.9% are persons of color. Included in the 220 full-time equivalent employees are 49 employees who have management roles. Of these 49 management roles, 67.3% of the managers identify as a female and 91.8% are persons of color.
Of the 240 full-time equivalent employees as of December 31, 2024, 81.7% identify as a female and 93.8% are persons of color. Included in the 240 full-time equivalent employees are 55 employees who have management roles. Of these 55 management roles, 63.6% of the managers identify as a female and 89.1% are persons of color.
The revised rules substantially alter the methodology for assessing compliance with the CRA, with material aspects taking effect January 1, 2026 and revised data reporting requirements taking effect January 1, 2027.
On October 24, 2023, the Office of the Comptroller of the Currency (“OCC”), Federal Reserve, and FDIC issued a final rule to modernize their respective CRA regulations. The revised rules substantially alter the methodology for assessing compliance with the CRA, with material aspects taking effect January 1, 2026, and revised data reporting requirements taking effect January 1, 2027.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe focus on marketing our services to a limited segment of the population and any adverse change impacting such segment is likely to have an adverse impact on us. Our marketing focuses primarily on the banking needs of small- and medium-sized businesses, professionals and residents in the markets that we serve, primarily communities with large Asian-American populations.
Biggest changeOur marketing focuses primarily on the banking needs of small- and medium-sized businesses, professionals and residents in the markets that we serve, primarily communities with large Asian-American populations. This demographic concentration makes us more prone to circumstances that particularly affect this segment of the population.
Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business, financial condition and results of operations . System failure or breaches of our network security could subject us to increased operating costs as well as litigation and other liabilities.
Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business, financial condition and results of operations . System failure or compromises of our network security could subject us to increased operating costs as well as litigation and other liabilities.
We risk damage to our brand and reputation if we fail to act responsibly in a number of areas, such as diversity, equity, 36 Table of Contents inclusion, environmental stewardship, human capital management, support for our local communities, corporate governance and transparency, or fail to consider ESG factors in our business operations. ​ Furthermore, as a result of our diverse base of clients and business partners, we may face potential negative publicity based on the identity of our clients or business partners and the public’s (or certain segments of the public’s) view of those entities.
We risk damage to our brand and reputation if we fail to act responsibly in a number of areas, such as diversity, equity, inclusion, environmental stewardship, human capital management, support for our local communities, corporate governance and transparency, or fail to consider ESG factors in our business operations. ​ Furthermore, as a result of our diverse base of clients and business partners, we may face potential negative publicity based on the identity of our clients or business partners and the public’s (or certain segments of the public’s) view of those entities.
Threats to our reputation can come from many sources, including adverse sentiment about financial institutions generally, unethical practices, employee misconduct, failure to deliver minimum standards of service or quality, compliance deficiencies, security breaches, litigation, investigations and other preceedings, and questionable or fraudulent activities of our customers.
Threats to our reputation can come from many sources, including adverse sentiment about financial institutions generally, unethical practices, employee misconduct, failure to deliver minimum standards of service or quality, compliance deficiencies, security breaches, litigation, investigations and other proceedings, and questionable or fraudulent activities of our customers.
If we were required to raise additional capital in the current environment, any such capital raise may be on unfavorable terms, thereby negatively 25 Table of Contents impacting book value and profitability. While we have taken actions to improve our funding, there is no guarantee that such actions will be successful or sufficient in the event of sudden liquidity needs.
If we were required to raise additional capital in the current environment, any such capital raise may be on unfavorable terms, thereby negatively impacting book value and profitability. While we have taken actions to improve our funding, there is no guarantee that such actions will be successful or sufficient in the event of sudden liquidity needs.
When we take collateral in foreclosure and similar proceedings, we are required to mark the collateral to its then-fair market value, which may result in a loss. These nonperforming loans and OREO also increase our risk profile 29 Table of Contents and the level of capital our regulators believe is appropriate for us to maintain in light of such risks.
When we take collateral in foreclosure and similar proceedings, we are required to mark the collateral to its then-fair market value, which may result in a loss. These nonperforming loans and OREO also increase our risk profile and the level of capital our regulators believe is appropriate for us to maintain in light of such risks.
We attempt to address this enhanced risk through our underwriting process, including requiring larger down payments and, in some cases, six months principal, interest, taxes and insurance reserves for individuals with no credit score. Small Business Administration lending is an important part of our business.
We attempt to address this enhanced risk through our underwriting process, including requiring larger down payments and, in some cases, six months principal, interest, taxes and insurance reserves for individuals with no credit score. 27 Table of Contents Small Business Administration lending is an important part of our business.
Our risk management framework is comprised of various processes, systems and strategies, and is designed to manage the types of risk to which we are subject, including, among others, credit, market, liquidity, operational, interest rate and compliance. Our framework also includes financial or other modeling methodologies that involve management assumptions and judgment.
Our risk management framework is comprised of various processes, systems and strategies, and is designed to manage the types of risk to which we are subject, including, among others, credit, market, liquidity, operational, interest rate and 31 Table of Contents compliance. Our framework also includes financial or other modeling methodologies that involve management assumptions and judgment.
Further, ineffective internal controls could cause our investors to lose confidence in our financial information, which could affect the trading price of our common stock. We may be adversely affected by the soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships.
Further, ineffective internal controls could cause our investors to lose confidence in our financial information, which could affect the trading price of our common stock. 34 Table of Contents We may be adversely affected by the soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships.
We also rely on representations of customers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. Such information could turn out to be inaccurate, including as a result of fraud on behalf of our customers, counterparties or other third parties.
We also rely on representations of customers and counterparties as to the accuracy and completeness 33 Table of Contents of that information and, with respect to financial statements, on reports of independent auditors. Such information could turn out to be inaccurate, including as a result of fraud on behalf of our customers, counterparties or other third parties.
External factors, such as regulatory compliance obligations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. Furthermore, any new line of business 30 Table of Contents and/or new product or service could have a significant impact on the effectiveness of our system of internal controls.
External factors, such as regulatory compliance obligations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. Furthermore, any new line of business and/or new product or service could have a significant impact on the effectiveness of our system of internal controls.
We have paid quarterly dividends to our shareholders for the past nine years. We have no obligation to pay dividends and we may change our dividend policy at any time without notice to our shareholders.
We have paid quarterly dividends to our shareholders for the past eleven years. We have no obligation to pay dividends and we may change our dividend policy at any time without notice to our shareholders.
These activities strongly influence our rate of return on certain investments, our hedge effectiveness for mortgage servicing and our mortgage origination pipeline, as well as our costs of funds for lending and investing, all of which may adversely impact our liquidity, results of operations, financial condition and capital position.
These activities strongly influence our rate of return on certain investments, our hedge effectiveness for mortgage servicing and our mortgage origination pipeline, as well as our costs of funds for lending and investing, all of which may adversely impact our liquidity, 35 Table of Contents results of operations, financial condition and capital position.
If we were required to sell a portion of our securities portfolio to address liquidity needs, we may incur losses, including as a result of the negative impact of rising interest rates on the value of our securities portfolio, which could negatively affect our earnings and our capital.
If we were required to sell a portion of our securities portfolio to address liquidity needs, we may incur losses, including as a result of the negative impact of rising 25 Table of Contents interest rates on the value of our securities portfolio, which could negatively affect our earnings and our capital.
A commitment to extend credit is a formal agreement to lend funds to a client as long as there is no violation of any condition established under the agreement. The actual borrowing needs of our customers under these credit commitments have historically been lower than the contractual amount of the commitments.
A commitment to extend credit is a formal agreement to lend funds to a client as long as there is no violation of any condition established under the agreement. The actual borrowing needs of our customers under these credit commitments 28 Table of Contents have historically been lower than the contractual amount of the commitments.
See the discussion above at Supervision and Regulation for an additional discussion of the extensive regulation and supervision that the Company and the Bank are subject to. 34 Table of Contents Federal and state regulators periodically examine our business, and we may be required to remediate adverse examination findings.
See Supervision and Regulation above at for an additional discussion of the extensive regulation and supervision that the Company and the Bank are subject to. Federal and state regulators periodically examine our business, and we may be required to remediate adverse examination findings.
Our access to funding sources could also be affected by a decrease in the level of our business activity as a result of a downturn in our primary market area or by one or more adverse regulatory actions against us.
Our access to funding sources could also be affected 26 Table of Contents by a decrease in the level of our business activity as a result of a downturn in our primary market area or by one or more adverse regulatory actions against us.
The amount of a particular institution’s deposit insurance assessment is based on that institution’s risk classification under an FDIC risk-based assessment system. An institution’s risk classification is assigned based on its capital levels and the level of supervisory concern the institution poses to its regulators.
The amount of a particular institution’s deposit insurance assessment is based on that institution’s risk classification under an FDIC risk-based assessment system. An institution’s risk classification is assigned based on its capital levels and the level 36 Table of Contents of supervisory concern the institution poses to its regulators.
These developments have negatively impacted customer confidence in regional banks, which could prompt customers to maintain their deposits with larger financial institutions. Further, competition for deposits has increased in recent periods, and the cost of funding has similarly increased, putting pressure on our net interest margin.
These developments have and may continue to negatively impact customer confidence in regional banks, which could prompt customers to maintain their deposits with larger financial institutions. Further, competition for deposits has increased in recent periods, and the cost of funding has similarly increased, putting pressure on our net interest margin.
If the national, regional and local economies experience worsening economic conditions (including inflation), elevated levels of unemployment, adverse effects of the U.S. government’s failure to raise its debt ceiling (including defaulting on its debt obligations or experiencing credit downgrades), fluctuations in debt and equity capital markets, increased delinquencies on mortgage, commercial and consumer loans, residential and commercial real estate price declines, and lower home sales and commercial activity, our growth and profitability could be constrained.
If the national, regional and local economies experience worsening economic conditions (including inflation), elevated levels of unemployment, adverse effects of the U.S. government’s failure to raise its debt ceiling (including defaulting on its debt obligations or experiencing credit downgrades) or as a result of trade wars and/or tariffs, fluctuations in debt and equity capital markets, increased delinquencies on mortgage, commercial and consumer loans, residential and commercial real estate price declines, and lower home sales and commercial activity, our growth and profitability could be constrained.
Under these agreements, we may be required to repurchase the guaranteed portion of the SBA loan if we have breached any of 28 Table of Contents these representations or warranties, in which case we may record a loss.
Under these agreements, we may be required to repurchase the guaranteed portion of the SBA loan if we have breached any of these representations or warranties, in which case we may record a loss.
At December 31, 2023, approximately 97.9% of our loan portfolio was comprised of loans with real estate as a primary or secondary component of collateral. As a result, adverse developments affecting real estate values in our market areas could increase the credit risk associated with our real estate loan portfolio.
At December 31, 2024, approximately 97.4% of our loan portfolio was comprised of loans with real estate as a primary or secondary component of collateral. As a result, adverse developments affecting real estate values in our market areas could increase the credit risk associated with our real estate loan portfolio.
The residential mortgage loans that we originate consist primarily of non-conforming residential mortgage loans, which are typically considered to have a higher degree of risk and are less liquid than conforming residential mortgage loans.
The residential mortgage loans that we originate consist primarily of non-conforming residential mortgage loans which may be considered less liquid and riskier. The residential mortgage loans that we originate consist primarily of non-conforming residential mortgage loans, which are typically considered to have a higher degree of risk and are less liquid than conforming residential mortgage loans.
These cyber risks include greater phishing, malware, and other cybersecurity attacks, vulnerability to disruptions of our and our third-party vendors’ information technology infrastructure and telecommunications systems for remote operations, increased risk of unauthorized dissemination of confidential information, limited ability to restore the systems in the event of a systems failure or interruption, greater risk of a security breach resulting in destruction or misuse of valuable information, and potential impairment of our ability to perform critical functions, including wiring funds, all of which could expose us to risks of data or financial loss, litigation and liability and could seriously disrupt our operations and the operations of any impacted customers.
These cyber risks include increased phishing, malware, and other cybersecurity attacks described above, vulnerability to disruptions of our 32 Table of Contents and our third-party vendors’ information technology infrastructure and telecommunications systems for remote operations, increased risk of unauthorized dissemination of confidential information, limited ability to restore the systems in the event of a systems failure or interruption, greater risk of a cybersecurity incident resulting in destruction or misuse of valuable information, and potential impairment of our ability to perform critical functions, including wiring funds, all of which could expose us to risks of data or financial loss, litigation and liability and could seriously disrupt our operations and the operations of any impacted customers.
We may also be subject to potentially adverse regulatory consequences. 31 Table of Contents We have a continuing need for technological change, and we may not have the resources to effectively implement new technology or we may experience operational challenges when implementing new technology.
We may also be subject to potentially adverse regulatory consequences. We have a continuing need for technological change, and we may not have the resources to effectively implement new technology or we may experience operational challenges when implementing new technology.
Negative developments in the banking industry could adversely affect our current and projected business operations and our financial condition and results of operations. ​ The bank failures in 2023 and related negative media attention have generated significant market trading volatility among publicly traded bank holding companies and, in particular, regional banks like the Company.
Negative developments in the banking industry could adversely affect our current and projected business operations and our financial condition and results of operations. ​ Bank failures and related negative media attention may generate significant market trading volatility among publicly traded bank holding companies and, in particular, regional banks like the Company.
The computer systems and network infrastructure we use could be vulnerable to hardware and cyber security issues. Our operations are dependent upon our ability to protect our computer equipment against damage from fire, power loss, telecommunications failure, natural disasters such as earthquakes, tornadoes and hurricanes, or a similar catastrophic event.
The computer systems and network infrastructure we use, including those we maintain with our service providers and vendors, could be vulnerable to hardware and cyber security issues. Our operations are dependent upon our ability to protect our computer equipment against damage from fire, power loss, telecommunications failure, natural disasters such as earthquakes, tornadoes and hurricanes, or a similar catastrophic event.
For example, 37 Table of Contents interest must be paid to the lender before dividends can be paid to the shareholders, and loans must be paid off before any assets can be distributed to shareholders if we were to liquidate.
For example, interest must be paid to the lender before dividends can be paid to the shareholders, and loans must be paid off before any assets can be distributed to shareholders if we were to liquidate.
Such computer break-ins, breaches and other disruptions would jeopardize the security of information stored in and transmitted through our computer systems and network infrastructure, which may result in significant liability, reputational damage and inhibit the use of our internet banking services by current and potential customers, any of which may result in a material adverse impact on our financial condition, results of operations or the market price of our common stock.
Such cyberattacks and other technology disruptions would jeopardize the security of information stored in and transmitted through our computer systems and network infrastructure, and those maintained by our service providers and vendors, which may result in significant liability, reputational damage and inhibit the use of our internet banking services by current and potential customers, any of which may result in a material adverse impact on our financial condition, results of operations or the market price of our common stock.
As of December 31, 2023, our directors and their families and affiliated entities collectively had a 31.9% ownership interest in the Company.
As of December 31, 2024, our directors and their families and affiliated entities collectively had a 27.3% ownership interest in the Company.
In addition, our operations are dependent upon our ability to protect the computer systems and network infrastructure utilized by us, including our internet banking activities, against damage from physical break-ins, cyber security breaches and other disruptive problems caused by the internet or other users.
In addition, our operations are dependent upon our ability to protect the computer systems and network infrastructure utilized by us, including our internet banking activities, against damage from physical break-ins, cyberattacks and other disruptive problems caused by criminal threat actors.
Our provision and allowance for credit losses may prove to be insufficient to absorb potential losses in our loan portfolio. We make various assumptions and judgments about the collectability of our loan and lease portfolio and utilize these assumptions and judgments when determining the provision and allowance for credit losses.
We make various assumptions and judgments about the collectability of our loan and lease portfolio and utilize these assumptions and judgments when determining the provision and allowance for credit losses.
ESG risks could adversely affect our reputation and shareholder, employee, client and third party relationships and may negatively affect our stock price. ​ Our business faces increasing public scrutiny related to environmental, social and governance (“ESG”) activities.
Environmental, social and governance (“ESG”) and diversity, euity and inclusion (“DEI”) risks could adversely affect our reputation and shareholder, employee, client and third party relationships and may negatively affect our stock price. ​ Our business faces increasing public investor, activist, legislative and regulatory scrutiny related to ESG, anti-ESG, DEI and anti-DEI activities and developments.
This demographic concentration makes us more prone to circumstances that particularly affect this segment of the population. As a result, our financial condition and results of operations are subject to changes in the economic conditions affecting these communities. Our success depends upon the business activity, population, income levels, deposits and real estate activity in these communities.
As a result, our financial condition and results of operations are subject to changes in the economic conditions affecting these communities. Our success depends upon the business activity, population, income levels, deposits and real estate activity in these communities.
If we experience increases in nonperforming loans and nonperforming assets, our net interest income may be negatively impacted and our loan administration costs could increase, each of which would have an adverse effect on our net income and related ratios, such as return on assets and equity.
If we experience increases in nonperforming loans and nonperforming assets, our net interest income may be negatively impacted and our loan administration costs could increase, each of which would have an adverse effect on our net income and related ratios, such as return on assets and equity. 29 Table of Contents Our provision and allowance for credit losses may prove to be insufficient to absorb potential losses in our loan portfolio.
A prolonged period of volatile and unstable market conditions would likely increase our funding costs and negatively affect market risk mitigation strategies. Inflation could negatively impact our business, our profitability and our stock price. Inflation over the past two years were at levels not seen for over 40 years.
A prolonged period of volatile and unstable market conditions would likely increase our funding costs and negatively affect market risk mitigation strategies. Inflation could negatively impact our business, our profitability and our stock price.
Interest rates are highly sensitive to many factors including, without limitation: the rate of inflation; economic conditions; federal monetary policies; and stability of domestic and foreign markets. Interest rates increased significantly in 2022 and 2023 as the Federal Reserve attempted to slow economic growth and counteract rising inflation.
Interest rates are highly sensitive to many factors including, without limitation: the rate of inflation; economic conditions; federal monetary policies; and stability of domestic and foreign markets.
In addition, in a rising interest rate environment we may have to offer more attractive interest rates to depositors to compete for deposits, or pursue other sources of liquidity, such as wholesale funds.
In addition, in a rising interest rate environment we may have to offer more attractive interest rates to depositors to compete for deposits, or pursue other sources of liquidity, such as wholesale funds. Conversely, decreasing interest rates reduce our yield on our variable rate loans and on our new loans, which reduces our net interest income.
These requirements, and any other new regulations, could adversely affect our ability to pay dividends, or could require us to reduce business levels or to raise capital, including in ways that may adversely affect our financial condition or results of operations. 35 Table of Contents We could face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.
These requirements, and any other new regulations, could adversely affect our ability to pay dividends, or could require us to reduce business levels or to raise capital, including in ways that may adversely affect our financial condition or results of operations.
Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on our business, results of operations and financial condition.
Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on our business, results of operations and financial condition. 30 Table of Contents We focus on marketing our services to a limited segment of the population and any adverse change impacting such segment is likely to have an adverse impact on us.
In addition, our access to deposits may be affected by the liquidity and/or cash flow needs of depositors, which may be exacerbated in an inflationary, recessionary, or elevated rate environment.
In addition, our access to deposits may be affected by the liquidity and/or cash flow needs of depositors, which may be exacerbated in an inflationary, recessionary, or elevated rate environment. This may cause our deposit accounts to decrease in the future, and any such decrease could have a material adverse impact on our sources of funding.
Even if we are able to replace our service providers, it may be at a higher cost to us, which could adversely affect our business, financial condition and results of operations. We depend on the accuracy and completeness of information provided by customers and counterparties and any misrepresented information could adversely affect our business, financial condition and results of operations.
Even if we are able to replace our service providers, it may be at a higher cost to us, which could adversely affect our business, financial condition and results of operations. The developments and use of artificial intelligent (AI) presents risks and challenges that may adversely impact our business.
In addition, the bodies that interpret the accounting standards (such as banking regulators or outside auditors) may change their interpretations or positions on how these 33 Table of Contents standards should be applied.
In addition, the bodies that interpret the accounting standards (such as banking regulators or outside auditors) may change their interpretations or positions on how these standards should be applied. These changes may be beyond our control, can be hard to predict and can materially impact how we record and report our financial condition and results of operations.
Furthermore, we would have to make principal and interest payments on our indebtedness, which could reduce our profitability or result in net losses on a consolidated basis even if the Bank were profitable. We are an “emerging growth company,” and the reduced regulatory and reporting requirements applicable to emerging growth companies may make our common stock less attractive to investors.
Furthermore, we would have to make principal and interest payments on our indebtedness, which could reduce our profitability or result in net losses on a consolidated basis even if the Bank were profitable. Item 1B. Unresolved Staff Comments None.
However, no assurances can be provided that we (or our third-party 32 Table of Contents vendors) may not suffer from such an attack in the future that may cause us material harm, especially in light of the risks being posed by changing technologies as well as criminal intent on committing cyber-crime.
However, no assurances can be provided that we (or our third-party vendors) may not suffer from such an attack in the future that may cause us material harm, especially in light of the risks being posed by the proliferation of new technologies, the use of the Internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of cybercriminals and other external parties..
Additional liquidity is provided by our ability to borrow from the Federal Reserve Bank of Atlanta and the Federal Home Loan Bank of Atlanta. Recently proposed change to the Federal Home Loan Bank system could adversely impact the Company’s access to Federal Home Loan Bank borrowings or increase the cost of such borrowings.
Recently proposed changes to the Federal Home Loan Bank system could adversely impact the Company’s access to Federal Home Loan Bank borrowings or increase the cost of such borrowings. We also may borrow from third-party lenders from time to time.
If we foreclose on and take title to such properties, we may be liable for remediation costs, as well as for personal injury and property damage.
If we foreclose on and take title to such properties, we may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws may also require us to incur substantial expenses to address unknown liabilities and may materially reduce the affected property’s value or limit our ability to use or sell the affected property.
We could also experience a breach by intentional or negligent conduct on the part of employees or other internal or external sources, including our third-party vendors and cyber criminals. Any damage or failure that causes an interruption in our operations could have an adverse effect on our financial condition and results of operations.
Any damage or failure that causes an interruption in our operations could have an adverse effect on our financial condition and results of operations.
We also face competition from many other types of financial institutions, including fintech companies, savings associations, finance companies, brokerage firms, insurance companies, credit unions, mortgage banks and other financial intermediaries. In addition, a number of out-of-state financial intermediaries have opened production offices or otherwise solicit deposits in our market areas.
In addition, a number of out-of-state financial intermediaries have opened production offices or otherwise solicit deposits in our market areas.
In addition, ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices may result in higher regulatory, compliance, credit and reputational risks and costs. ​ Our dividend policy may change, and consequently, your only opportunity to achieve a return on your investment may be if the price of our common stock appreciates.
If legislatures in the states in which we operate adopt legislation intended to protect certain industries by limiting or prohibiting consideration of business and industry factors in lending activities, certain portions of our lending operations may be impacted. 37 Table of Contents ​ Our dividend policy may change, and consequently, your only opportunity to achieve a return on your investment may be if the price of our common stock appreciates.
Removed
We also anticipate increased regulatory scrutiny – in the course of routine examinations and otherwise – and new regulations directed towards banks of similar size to the Bank, designed to address the negative developments in the banking industry, all of which may increase the Company’s costs of doing business and reduce its profitability.
Added
We also face competition from many other types of financial institutions, including fintech companies, savings associations, finance companies, brokerage firms, insurance companies, credit unions, mortgage banks and other financial intermediaries. Further, our credit union competitors benefit from competitive advantages, including the credit union exemption from paying federal income tax and can, therefore, more aggressively price many products and services.
Removed
Among other things, there may be an increased focus by both regulators and investors on deposit composition, the level of uninsured deposits, losses embedded in the held-to-maturity portion of our securities portfolio, contingent liquidity, CRE composition and concentration, capital position and our general oversight and internal control structures regarding the foregoing.
Added
Interest rates increased significantly in 2022 and 2023 as the Federal Reserve attempted to slow economic growth and counteract rising inflation, and remained elevated during 2024, with the Federal Reserve slowly decreasing interest rates in the fourth quarter of 2024.
Removed
As primarily a commercial bank, the Bank has an elevated degree of uninsured deposits compared to larger national banks or smaller community banks with a stronger focus on retail deposits, and also maintains a robust CRE portfolio. As a result, the Bank could face increased scrutiny or be viewed as higher risk by regulators and the investor community.
Added
In addition, lower interest rates may reduce our realized yields on investment securities which would reduce our net interest income and cause downward pressure on net interest margin in future periods.
Removed
This may cause our deposit accounts to decrease in the future, and any such decrease could have a material adverse impact on our sources of funding. 26 Table of Contents Other primary sources of funds consist of cash from operations, investment maturities and sales, sale of loans and proceeds from the issuance and sale of our equity securities to investors.
Added
Other primary sources of funds consist of cash from operations, paydown of our existing loan portfolio and sale of loans to investors. Additional liquidity is provided by our ability to borrow from the Federal Reserve Bank of Atlanta and the Federal Home Loan Bank of Atlanta.
Removed
We also may borrow from third-party lenders from time to time.
Added
In addition, in recent years, a number of judicial decisions have upheld the right of borrowers to sue lending institutions on the basis of various evolving legal theories, collectively termed “lender liability.” Generally, lender liability is founded on the premise that a lender has either violated a duty, whether implied or contractual, of good faith and fair dealing owed to the borrower or has assumed a degree of control over the borrower resulting in the creation of a fiduciary duty owed to the borrower or its other creditors or shareholders.
Removed
Environmental laws may also require us to incur substantial expenses to address unknown liabilities and may materially reduce the affected property’s value or limit our ability to use or sell the affected property. 27 Table of Contents The residential mortgage loans that we originate consist primarily of non-conforming residential mortgage loans which may be considered less liquid and riskier.
Added
We in the future could become subject to claims based on this or other evolving legal theories. Further, banking institutions are also increasingly the target of class action lawsuits, including claims alleging deceptive practices or violations of account terms in connection with non-sufficient funds or overdraft charges and violations of the Fair Labor Standards Act (FLSA).
Removed
These changes may be beyond our control, can be hard to predict and can materially impact how we record and report our financial condition and results of operations.
Added
We manage these risks through internal controls, personnel training, insurance, litigation management, our compliance and ethics processes, and other means. However, the commencement, outcome, and magnitude of litigation cannot be predicted or controlled with any certainty.
Removed
We may incur meaningful costs with respect to our ESG efforts and if such efforts are negatively perceived, our reputation and stock price may suffer.
Added
We could also experience a cybersecurity incident by intentional or negligent conduct on the part of employees or other internal or external sources, including our third-party vendors and cyber criminals through, for example, phishing attempts, brute force attacks, denial of service attacks, viruses or other malicious code, exploiting software vulnerabilities (including “zero-day attacks”), ransomware or other malware and supply chain attacks and other disruptive problems caused by criminal threat actors.
Removed
We are an “emerging growth company,” as described in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of reduced regulatory and reporting requirements that are otherwise generally applicable to public companies.
Added
The Company or its third-party (or fourth party) vendors, clients or counterparties may develop or incorporate AI technology in certain business processes, services, or products. The development and use of AI presents a number of risks and challenges to the Company’s business.
Removed
These include, without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced financial reporting requirements, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments.
Added
The legal and regulatory environment relating to AI is uncertain and rapidly evolving, both in the U.S. and internationally, and includes regulatory schemes targeted specifically at AI as well as provisions in intellectual property, privacy, consumer protection, employment, and other laws applicable to the use of AI.
Removed
In addition, even if we comply with the greater obligations of public companies that are not emerging growth companies, we may avail ourselves of the reduced requirements applicable to emerging growth companies from time to time in the future, so long as we are an emerging growth company.
Added
These evolving laws and regulations could require changes in the Company’s implementation of AI technology and increase the Company’s compliance costs and the risk of non-compliance.
Removed
Our eligibility as an emerging growth company is expected to expire on December 31, 2024, which is the last day of the fisal year following the five year anniversary from the date of our initial public offering. Item 1B. Unresolved Staff Comments None.
Added
AI models, particularly generative AI models, may produce output or take action that is incorrect, that reflects biases included in the data on which they are trained, that results in the release of private, confidential, or proprietary information, that infringes on the intellectual property rights of others, or that is otherwise harmful.
Added
In addition, the complexity of many AI models makes it difficult to understand why they are generating particular outputs.
Added
This limited transparency increases the challenges associated with assessing the proper operation of AI models, understanding and monitoring the capabilities of the AI models, reducing erroneous output, eliminating bias, and complying with regulations that require documentation or explanation of the basis on which decisions are made.
Added
Further, the Company may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, matters over which the Company may have limited visibility.
Added
Any of these risks could expose the Company to liability or adverse legal or regulatory consequences and harm the Company’s reputation and the public perception of its business or the effectiveness of its security measures.
Added
We depend on the accuracy and completeness of information provided by customers and counterparties and any misrepresented information could adversely affect our business, financial condition and results of operations.
Added
We could face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe information security program is periodically reviewed by such personnel with the goal of addressing changing threats and conditions. ​ We have established processes and systems designed to assess, identify, manage, and mitigate cybersecurity risk and threats, including regular and on-going education and training for employees, including information security awareness training, preparedness simulations and tabletop exercises, and recovery and resilience tests.
Biggest changeThe information security program is periodically reviewed by the Informaiton Security Program, as well as the Information Technology Committee, with the goal of addressing changing threats and conditions. ​ We have established processes and systems designed to assess, identify, manage, and mitigate cybersecurity risk and threats, including regular and on-going education and training for employees, including information security awareness training, preparedness simulations and tabletop exercises, and recovery and resilience tests.
We leverage internal and external auditors and independent external partners to periodically review our processes, systems, and controls, including with respect to our information security program, to assess their design and operating effectiveness and make recommendations to strengthen our risk management program. ​ We maintain an Incident Response Plan that provides a documented framework for responding to actual or potential cybersecurity incidents, including timely notification of and escalation to senior management and the Technology Committee of our board of directors, as well as the full board of directors.
We leverage internal and external auditors and independent external partners to periodically review our processes, systems, and controls, including with respect to our information security program, to assess their design and operating effectiveness and make recommendations to strengthen our risk management program. ​ We maintain an Incident Response Plan that provides a documented framework for responding to actual or potential cybersecurity incidents, including timely notification of and escalation to senior management and the Information Technology Committee of our board of directors, as well as the full board of directors.
Our Information Security Officer provides quarterly reports to the Technology Committee of our board of directors regarding the information security program and the technology program, key enterprise cybersecurity initiatives, and other matters relating to cybersecurity risks and incidents. The Technology Committee also reviews our cyber security risk profile on a quarterly basis.
Our Information Security Officer provides quarterly reports to the Information Technology Committee of our board of directors regarding the information security program and the technology program, key enterprise cybersecurity initiatives, and other matters relating to cybersecurity risks and incidents. The Technology Committee also reviews our cyber security risk profile on a quarterly basis.
The Technology Committee, as well as the full board of directors, reviews and approves our information security and technology budgets and strategies annually. The Technology Committee provides a report of their activities to the full board of directors on a quarterly basis. ​
The Information Technology Committee, as well as the full board of directors, reviews and approves our information security and technology budgets and strategies annually. The Information Technology Committee provides a report of their activities to the full board of directors on a quarterly basis. ​
We engage in regular assessments of our infrastructure, software systems, and network architecture, using internal cybersecurity professionals and third-party specialists. We also engage a third-party to perform penetration testing and ongoing analysis to identifty potential vulnerabilities and areas for additional enhancement.
We engage in regular assessments of our infrastructure, software systems, and network architecture, using internal cybersecurity professionals and third-party specialists. We also engage a third-party to perform penetration testing and ongoing analysis to identify potential vulnerabilities and areas for additional enhancement.
Our Information Security Officer is primarily responsible for the cybersecurity component of our risk management program and is a key member of the risk management organization, reporting directly to the Chief Executive Officer and, as discussed below, periodically to the Technology Committee of our board of directors. ​ Our objective for managing cybersecurity risk is to avoid or minimize the impacts of external threat events or other efforts to penetrate, disrupt or misuse our systems or information.
Our Information Security Officer is primarily responsible for the cybersecurity component of our risk management program and is a key member of the risk 38 Table of Contents management organization, reporting directly to the Chief Executive Officer and, as discussed below, periodically to the Information Technology Committee of our board of directors. ​ Our objective for managing cybersecurity risk is to avoid or minimize the impacts of external threat events or other efforts to penetrate, disrupt or misuse our systems or information.
Our Information Security Officer has over ten years of relevant expertise and formal training in the areas of information security and cybersecurity risk management in the financial institutions industry. ​ The Technology Committee of our board of directors has primary responsibility for overseeing our information security and technology programs, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks.
Our Information Security Officer has over ten years of relevant expertise and formal training in the areas of information security and cybersecurity risk management in the financial institutions industry. ​ 39 Table of Contents The Information Technology Committee of our board of directors has primary responsibility for overseeing our information security and technology programs, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks.
The responsibilities of enterprise information security department include cybersecurity risk assessment and defense, vulnerability assessment, incidend prevention, mitigation, response, and remediation, data access governance, third-party risk management, and business resilience.
The responsibilities of enterprise information security department include cybersecurity risk assessment and defense, vulnerability assessment, incident prevention, mitigation, response, and remediation, data access governance, third-party risk management, and business resilience.
Our Information Security Officer, who reports directly to our Chief Executive Officer, along with key members of their team, regularly collaborate with peer banks, industry groups, and policymakers to discuss cybersecurity trends and issues and identify best practices.
Our Information Security Officer, who reports directly to our Chief Executive Officer, along with key members of the Information Security Officer’s team, regularly collaborate with peer banks, industry groups, and policymakers to discuss cybersecurity trends and issues and identify best practices.
We also maintain a third-party risk management program designed to identify, assess, and manage risks, including cybersecurity risks, associated with third-party service providers. We also monitor our email gateways for 38 Table of Contents malicious phishing campaigns and monitor remote connections for cybersecurity threats.
We also maintain a third-party risk management program designed to identify, assess, and manage risks, including cybersecurity risks, associated with third-party service providers. We also monitor our email gateways for malicious phishing campaigns and monitor remote connections for cybersecurity threats.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeHowever, one or more unfavorable outcomes in any legal action against us could have a material adverse effect for the period in which they are resolved.
Biggest changeHowever, one or more unfavorable outcomes in any legal action against us could have a material adverse effect for the period in which they are resolved. In addition, regardless of their merits or their ultimate outcomes, such matters are costly, divert management’s attention and may materially adversely affect our reputation, even if resolved in our favor. Item 4.
Removed
In addition, regardless of their merits or their ultimate outcomes, such matters are costly, divert management’s attention and may materially adversely affect our reputation, even if resolved in our favor. 39 Table of Contents Item 4. Mine Safety Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities On April 23, 2021, the Company announced that its Board of Directors approved a share repurchase program under which the Company may repurchase up to 1,000,000 shares of its common stock. The share repurchase program began on April 27, 2021 and ended on December 31, 2021.
Biggest changeIssuer Purchases of Equity Securities On October 16, 2024, the Company announced the continuation of its share repurchase program that expired on September 30, 2024 (“Prior Share Repurchase Plan”), and authorized the Company to repurchase up to 925,250 shares of the Company’s outstanding shares of common stock, which is the number of remaining shares authorized for repurchase from the Prior Share Repurchase Plan.
Dividends It has been our policy to pay quarterly dividends to holders of our common stock. We have paid quarterly dividends to our shareholders in amounts up to 40% of our net income over the past ten years. We have no obligation to pay dividends and we may change our dividend policy at any time without notice to our shareholders.
Dividends It has been our policy to pay quarterly dividends to holders of our common stock. We have paid quarterly dividends to our shareholders in amounts up to 40% of our net income over the past eleven years. We have no obligation to pay dividends and we may change our dividend policy at any time without notice to our shareholders.
Business - Regulation and Supervision - Regulation of the Company - Payment of Dividends.” Equity Compensation Plan Information Please see Item 12 of this Annual Report for information with respect to shares of common stock that are authorized for issuance under the Company’s equity compensation plans as of December 31, 2023.
Business - Regulation and Supervision - Regulation of the Company - Payment of Dividends.” Equity Compensation Plan Information Please see Item 12 of this Annual Report for information with respect to shares of common stock that are authorized for issuance under the Company’s equity compensation plans as of December 31, 2024.
Any future determination to pay dividends to holders of our common stock will depend on our results of operations, financial condition, capital requirements, banking regulations, contractual restrictions and any other factors that our board of directors may deem relevant. As a Georgia corporation, the Company is subject to certain restrictions on dividends under the Georgia Business Corporation Code.
Any future determination to pay dividends to holders of our common stock will depend on our results of operations, financial condition, capital requirements, banking regulations, contractual restrictions and any other factors that our board of directors may deem relevant. 40 Table of Contents As a Georgia corporation, the Company is subject to certain restrictions on dividends under the Georgia Business Corporation Code.
Small Cap Bank Index for the period beginning on December 31, 2019 through December 31, 2023. The following reflects index values as of close of trading, assumes $100.00 invested on December 31, 2019, in our common stock, the Nasdaq Composite Index and the S&P U.S. Small Cap Bank Index, and assumes the reinvestment of dividends, if any.
Small Cap Bank Index for the period beginning on December 31, 2020 through December 31, 2024. The following reflects index values as of close of trading, assumes $100.00 invested on December 31, 2020, in our common stock, the Nasdaq Composite Index and the S&P U.S. Small Cap Bank Index, and assumes the reinvestment of dividends, if any.
The following table summarizes the repurchases of our common shares for the three months ended December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ ​ ​ ​ ​ ​ ​ ​ Shares Repurchased ​ Maximum Number of ​ ​ ​ ​ ​ ​ ​ as Part of Publicly ​ Shares That May Yet Be ​ ​ Total Number of ​ Average Price Paid ​ Announced ​ Purchased Under ​ Shares Repurchased Per Share Plans or Programs the Plans or Programs October 1, 2023 to October 31, 2023 31,822 $ 19.76 31,822 ​ 929,489 November 1, 2023 to November 30, 2023 ​ 3,829 ​ $ 19.99 ​ 3,829 ​ 925,660 December 1, 2023 to December 31, 2023 — $ — — ​ 925,660 Total 35,651 ​ $ 19.78 ​ 35,651 ​ 925,660 ​ Stock Performance Graph The following graph compares the cumulative total return on our common stock with the cumulative total return of the Nasdaq Composite Index and the S&P U.S.
The following table summarizes the repurchases of our common shares for the three months ended December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ ​ ​ ​ ​ ​ ​ ​ Shares Repurchased ​ Maximum Number of ​ ​ ​ ​ ​ ​ ​ as Part of Publicly ​ Shares That May Yet Be ​ ​ Total Number of ​ Average Price Paid ​ Announced ​ Purchased Under ​ Shares Repurchased Per Share Plans or Programs the Plans or Programs October 1, 2024 to October 31, 2024 — $ — — ​ 925,250 November 1, 2024 to November 30, 2024 ​ — ​ $ — ​ — ​ 925,250 December 1, 2024 to December 31, 2024 — $ — — ​ 925,250 Total — ​ $ — ​ — ​ 925,250 41 Table of Contents Stock Performance Graph The following graph compares the cumulative total return on our common stock with the cumulative total return of the Nasdaq Composite Index and the S&P U.S.
Prior to that date, our common stock was traded on the OTCQX Market under the same symbol. As of March 4, 2023, there were 25,205,506 shares of common stock outstanding held by approximately 175 shareholders of record of our common stock as reported by our transfer agent.
Prior to that date, our common stock was traded on the OTCQX Market under the same symbol. As of March 5, 2025, there were 25,402,782 shares of common stock outstanding held by approximately 166 shareholders of record of our common stock as reported by our transfer agent.
Repurchases can be made from time-to-time in the open market or through privately negotiated transactions depending on market and/or other conditions. The repurchase program may be modified, suspended or discontinued at any time.
Repurchases can be made from time-to-time in the open market or through privately negotiated transactions depending on market and/or other conditions. The repurchase program may be modified, suspended or discontinued at any time and does not obligate the Company to purchase any shares of its common stock.
The repurchases are made in compliance with all SEC rules, including Rule 10b-18, and other legal requirements and may be made in part under Rule 10b5-1 plans, which permits share repurchases when the Company might otherwise be 40 Table of Contents precluded from doing so.
The share repurchase program began on October 17, 2024 and will end on September 30, 2025. The repurchases are made in compliance with all SEC rules, including Rule 10b-18, and other legal requirements and may be made in part under Rule 10b5-1 plans, which permits share repurchases when the Company might otherwise be precluded from doing so.
The historical price of our common stock represented in this graph represents past performance and is not necessarily indicative of future performance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Index 2019 2020 2021 2022 2023 MetroCity Bankshares, Inc. ​ $ 100.00 ​ $ 84.82 ​ $ 166.02 ​ $ 134.07 ​ $ 154.66 Nasdaq Composite Index ​ 100.00 ​ 143.64 ​ 174.36 ​ 116.65 ​ 167.30 S&P U.S.
The historical price of our common stock represented in this graph represents past performance and is not necessarily indicative of future performance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Index 2020 2021 2022 2023 2024 MetroCity Bankshares, Inc. ​ $ 100.00 ​ $ 195.73 ​ $ 158.06 ​ $ 182.34 ​ $ 250.03 Nasdaq Composite Index ​ 100.00 ​ 121.39 ​ 81.21 ​ 116.47 ​ 149.83 S&P U.S.
Small Cap Bank Index ​ 100.00 ​ 90.82 ​ 126.43 ​ 111.47 ​ 112.03 ​ ​ Item 6. [Reserved] ​ 41 Table of Contents
Small Cap Bank Index ​ 100.00 ​ 139.21 ​ 122.74 ​ 123.35 ​ 145.82 ​ ​ Item 6. [Reserved] ​
Removed
On May 5, 2022, the Company announced that the Board of Directors of the Company approved the re-adoption of the share repurchase program authorizing the Company to repurchase up to 689,191 shares of the Company’s outstanding shares of common stock. The share repurchase program began on May 6, 2022 and ended on January 9, 2023.
Removed
On September 5, 2023, the Company announced that the Board of Directors of the Company approved the adoption of a share repurchase program authorizing the Company to repurchase up to 1,000,000 shares of the Company’s outstanding shares of common stock. The share repurchase program began on September 6, 2023 and will end on September 30, 2024.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. ​ [Reserved] ​ 41 Item 7. ​ Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 42 Item 7A. ​ Quantitative and Qualitative Disclosures About Market Risk ​ 65 Item 8. ​ Financial Statements and Supplementary Data ​ 68
Biggest changeItem 6. ​ [Reserved] ​ 42 Item 7. ​ Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 42 Item 7A. ​ Quantitative and Qualitative Disclosures About Market Risk ​ 65 Item 8. ​ Financial Statements and Supplementary Data ​ 68

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAverage interest-bearing liabilities increased by $641.5 million as average interest-bearing deposits increased by $491.3 million and average borrowings increased by $150.2 million. 45 Table of Contents Average Balances, Interest and Yields The following tables present, for the years ended December 31, 2023, 2021 and 2021, information about: (i) weighted average balances, the total dollar amount of interest income from interest-earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2022 2021 ​ ​ Average ​ Interest and ​ Yield / ​ Average ​ Interest and ​ Yield / Average ​ Interest and ​ Yield / (Dollars in thousands) Balance Fees Rate Balance Fees Rate Balance Fees Rate Earning Assets: ​ ​ ​ ​ ​ ​ ​ ​ Federal funds sold and other investments (1) ​ $ 167,024 ​ $ 9,995 5.98 % $ 225,154 ​ $ 3,524 1.57 % $ 207,771 ​ $ 500 0.24 % Investment securities ​ 32,330 ​ 949 2.94 ​ 35,188 ​ 881 2.50 ​ 21,573 ​ 390 1.81 ​ Total investments ​ 199,354 ​ 10,944 5.49 ​ 260,342 ​ 4,405 1.69 ​ 229,344 ​ 890 0.39 ​ Construction and development ​ 31,955 ​ 1,864 5.83 ​ 35,562 ​ 1,898 5.34 ​ 48,076 ​ 2,513 5.23 ​ Commercial real estate ​ 659,432 ​ 57,710 8.75 ​ 589,017 ​ 38,582 6.55 ​ 503,968 ​ 29,750 5.90 ​ Commercial and industrial ​ 54,100 ​ 5,110 9.45 ​ 55,516 ​ 3,920 7.06 ​ 119,640 ​ 8,407 7.03 ​ Residential real estate ​ 2,299,246 ​ 117,071 5.09 ​ 2,090,389 ​ 98,277 4.70 ​ 1,437,377 ​ 67,058 4.67 ​ Consumer and Other ​ 195 ​ 128 65.64 ​ 193 ​ 138 71.50 ​ 188 ​ 123 65.43 ​ Gross loans (2) ​ 3,044,928 ​ 181,883 5.97 ​ 2,770,677 ​ 142,815 5.15 ​ 2,109,249 ​ 107,851 5.11 ​ Total earning assets ​ 3,244,282 ​ 192,827 5.94 ​ 3,031,019 ​ 147,220 4.86 ​ 2,338,593 ​ 108,741 4.65 ​ Noninterest-earning assets ​ 198,938 ​ ​ ​ 156,185 ​ ​ ​ 122,038 ​ ​ ​ Total assets ​ 3,443,220 ​ ​ ​ 3,187,204 ​ ​ ​ 2,460,631 ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NOW and savings deposits ​ 146,543 ​ ​ 2,264 1.54 ​ 186,061 ​ ​ 1,046 0.56 ​ 112,943 ​ 222 0.20 ​ Money market deposits ​ 1,006,360 ​ ​ 42,347 4.21 ​ 1,130,439 ​ ​ 16,067 1.42 ​ 726,268 ​ 1,693 0.23 ​ Time deposits ​ 940,911 ​ ​ 35,996 3.83 ​ 513,867 ​ ​ 6,445 1.25 ​ 499,856 ​ 2,033 0.41 ​ Total interest-bearing deposits ​ 2,093,814 ​ 80,607 3.85 ​ 1,830,367 ​ 23,558 1.29 ​ 1,339,067 ​ 3,948 0.29 ​ Borrowings ​ 353,149 ​ ​ 10,741 3.04 ​ 373,238 ​ ​ 4,051 1.09 ​ 223,027 ​ 624 0.28 ​ Total interest-bearing liabilities ​ 2,446,963 ​ 91,348 3.73 ​ 2,203,605 ​ 27,609 1.25 ​ 1,562,094 ​ 4,572 0.29 ​ Noninterest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest-bearing deposits ​ 555,840 ​ ​ ​ 599,340 ​ ​ ​ 559,797 ​ ​ ​ Other noninterest-bearing liabilities ​ 74,254 ​ ​ ​ 63,997 ​ ​ ​ 76,727 ​ ​ ​ Total noninterest-bearing liabilities ​ 630,094 ​ ​ ​ 663,337 ​ ​ ​ 636,524 ​ ​ ​ Shareholders' equity ​ 366,163 ​ ​ ​ 320,262 ​ ​ ​ 262,013 ​ ​ ​ Total liabilities and shareholders' equity ​ $ 3,443,220 ​ ​ ​ $ 3,187,204 ​ ​ ​ $ 2,460,631 ​ ​ ​ Net interest income ​ ​ $ 101,479 ​ ​ ​ $ 119,611 ​ ​ ​ $ 104,169 ​ ​ Net interest spread ​ ​ 2.21 ​ ​ 3.61 ​ ​ 4.36 ​ Net interest margin ​ ​ 3.13 ​ ​ 3.95 ​ ​ 4.45 ​ (1) Includes income and average balances for term federal funds, interest-earning cash accounts, and other miscellaneous earning assets.
Biggest changeAverage Balances, Interest and Yields The following tables present, for the years ended December 31, 2024, 2023 and 2022, information about: (i) weighted average balances, the total dollar amount of interest income from interest-earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 ​ 2023 2022 ​ ​ Average ​ Interest and ​ Yield / ​ Average ​ Interest and ​ Yield / Average ​ Interest and ​ Yield / (Dollars in thousands) Balance Fees Rate Balance Fees Rate Balance Fees Rate Earning Assets: ​ ​ ​ ​ ​ ​ ​ ​ Federal funds sold and other investments (1) ​ $ 185,696 ​ $ 11,289 6.08 % $ 167,024 ​ $ 9,995 5.98 % $ 225,154 ​ $ 3,524 1.57 % Investment securities ​ 31,373 ​ 854 2.72 ​ 32,330 ​ 949 2.94 ​ 35,188 ​ 881 2.50 ​ Total investments ​ 217,069 ​ 12,143 5.59 ​ 199,354 ​ 10,944 5.49 ​ 260,342 ​ 4,405 1.69 ​ Construction and development ​ 17,148 ​ 1,511 8.81 ​ 31,955 ​ 1,864 5.83 ​ 35,562 ​ 1,898 5.34 ​ Commercial real estate ​ 738,200 ​ 66,751 9.04 ​ 659,432 ​ 57,710 8.75 ​ 589,017 ​ 38,582 6.55 ​ Commercial and industrial ​ 67,964 ​ 6,597 9.71 ​ 54,100 ​ 5,110 9.45 ​ 55,516 ​ 3,920 7.06 ​ Residential real estate ​ 2,321,075 ​ 125,737 5.42 ​ 2,299,246 ​ 117,071 5.09 ​ 2,090,389 ​ 98,277 4.70 ​ Consumer and Other ​ 304 ​ 174 57.24 ​ 195 ​ 128 65.64 ​ 193 ​ 138 71.50 ​ Gross loans (2) ​ 3,144,691 ​ 200,770 6.38 ​ 3,044,928 ​ 181,883 5.97 ​ 2,770,677 ​ 142,815 5.15 ​ Total earning assets ​ 3,361,760 ​ 212,913 6.33 ​ 3,244,282 ​ 192,827 5.94 ​ 3,031,019 ​ 147,220 4.86 ​ Noninterest-earning assets ​ 209,058 ​ ​ ​ 198,938 ​ ​ ​ 156,185 ​ ​ ​ Total assets ​ 3,570,818 ​ ​ ​ 3,443,220 ​ ​ ​ 3,187,204 ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NOW and savings deposits ​ 138,827 ​ ​ 3,537 2.55 ​ 146,543 ​ ​ 2,264 1.54 ​ 186,061 ​ ​ 1,046 0.56 ​ Money market deposits ​ 1,012,309 ​ ​ 28,331 2.80 ​ 1,006,360 ​ ​ 42,347 4.21 ​ 1,130,439 ​ ​ 16,067 1.42 ​ Time deposits ​ 1,031,942 ​ ​ 48,192 4.67 ​ 940,911 ​ ​ 35,996 3.83 ​ 513,867 ​ ​ 6,445 1.25 ​ Total interest-bearing deposits ​ 2,183,078 ​ 80,060 3.67 ​ 2,093,814 ​ 80,607 3.85 ​ 1,830,367 ​ 23,558 1.29 ​ Borrowings ​ 365,990 ​ ​ 14,707 4.02 ​ 353,149 ​ ​ 10,741 3.04 ​ 373,238 ​ ​ 4,051 1.09 ​ Total interest-bearing liabilities ​ 2,549,068 ​ 94,767 3.72 ​ 2,446,963 ​ 91,348 3.73 ​ 2,203,605 ​ 27,609 1.25 ​ Noninterest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest-bearing deposits ​ 536,084 ​ ​ ​ 555,840 ​ ​ ​ 599,340 ​ ​ ​ Other noninterest-bearing liabilities ​ 86,496 ​ ​ ​ ​ 74,254 ​ ​ ​ 63,997 ​ ​ ​ Total noninterest-bearing liabilities ​ 622,580 ​ ​ ​ 630,094 ​ ​ ​ 663,337 ​ ​ ​ Shareholders' equity ​ 399,170 ​ ​ ​ 366,163 ​ ​ ​ 320,262 ​ ​ ​ Total liabilities and shareholders' equity ​ $ 3,570,818 ​ ​ ​ $ 3,443,220 ​ ​ ​ $ 3,187,204 ​ ​ ​ Net interest income ​ ​ $ 118,146 ​ ​ ​ $ 101,479 ​ ​ ​ $ 119,611 ​ ​ Net interest spread ​ ​ 2.61 ​ ​ 2.21 ​ ​ 3.61 ​ Net interest margin ​ ​ 3.51 ​ ​ 3.13 ​ ​ 3.95 ​ (1) Includes income and average balances for term federal funds, interest-earning cash accounts, and other miscellaneous earning assets.
SBA servicing income was $4.8 million for the year ended December 31, 2023 compared to $1.8 million for the year ended December 31, 2022, an increase of $3.0 million, or 162.8%. Our total SBA and USDA loan servicing portfolio was $508.0 million as of December 31, 2023 compared to $465.1 million as of December 31, 2023.
SBA servicing income was $4.8 million for the year ended December 31, 2023 compared to $1.8 million for the year ended December 31, 2022, an increase of $3.0 million, or 162.8%. Our total SBA and USDA loan servicing portfolio was $508.0 million as of December 31, 2023 compared to $465.1 million as of December 31, 2022.
Average borrowings outstanding for the year ended December 31, 2023 decreased by $20.1 million with an increase in rate of 195 basis points compared to the year ended December 31, 2022. The Company currently has interest rate derivative agreements totaling $850.0 million that are designated as cash flow hedges of our deposit accounts indexed to the Federal Funds Effective rate.
Average borrowings outstanding for the year ended December 31, 2023 decreased by $20.1 million with an increase in rate of 195 basis points compared to the year ended December 31, 2022. The Company has interest rate derivative agreements totaling $850.0 million that are designated as cash flow hedges of our deposit accounts indexed to the Federal Funds Effective rate.
This increase is primarily attributable to a $263.4 million increase in average deposit balances and a 256 basis points increase in deposit costs, which includes a 279 basis points increase in the average yield on money market deposits and an 258 basis points increase in the average yield on time deposits.
This increase is primarily attributable to a $263.4 million increase in average deposit balances and a 256 basis points increase in deposit costs, which includes a 279 basis points increase in the average yield on money market deposits and a 258 basis points increase in the average yield on time deposits.
We sold $72.9 million in SBA loans during the year ended December 31, 2023 with average premiums of 6.09% compared to the sale of $31.5 million in SBA loans with an average premium of 8.45% in the year ended Decemer 31, 2022.
We sold $72.9 million in SBA loans during the year ended December 31, 2023 with average premiums of 6.09% compared to the sale of $31.5 million in SBA loans with an average premium of 8.45% in the year ended December 31, 2022.
Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2023 ​ ​ ​ One Year or Less ​ More Than One Year Through Five Years ​ More Than Five Years Through Ten Years ​ More Than Ten Years ​ Total ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ (Dollars in thousands) Fair Value Average Yield Fair Value Average Yield Fair Value Average Yield Fair Value Average Yield Fair Value Average Yield ​ Obligations of U.S.
Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2024 ​ ​ ​ One Year or Less ​ More Than One Year Through Five Years ​ More Than Five Years Through Ten Years ​ More Than Ten Years ​ Total ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ (Dollars in thousands) Fair Value Average Yield Fair Value Average Yield Fair Value Average Yield Fair Value Average Yield Fair Value Average Yield ​ Obligations of U.S.
The Bank exceeded all regulatory capital requirements and was considered to be “well-capitalized” as of December 31, 2023 and 2022. As of December 31, 2023, the FDIC categorized the Bank as well-capitalized under the prompt corrective action framework. There have been no conditions or events since December 31, 2023 that management believes would change this classification.
The Bank exceeded all regulatory capital requirements and was considered to be “well-capitalized” as of December 31, 2024 and 2023. As of December 31, 2024, the FDIC categorized the Bank as well-capitalized under the prompt corrective action framework. There have been no conditions or events since December 31, 2024 that management believes would change this classification.
Additional information about these policies can be found in Note 1 of our consolidated financial statements as of December 31, 2023, included elsewhere in this Annual Report on Form 10-K. Reserve for Credit Losses A consequence of lending activities is that we may incur credit losses.
Additional information about these policies can be found in Note 1 of our consolidated financial statements as of December 31, 2024, included elsewhere in this Annual Report on Form 10-K. Reserve for Credit Losses A consequence of lending activities is that we may incur credit losses.
The Company does not believe that the securities available for sale that were in an unrealized loss position as of December 31, 2023 represent a credit loss impairment. As of December 31, 2023, there have been no payment defaults nor do we currently expect any future payment defaults.
The Company does not believe that the securities available for sale that were in an unrealized loss position as of December 31, 2024 represent a credit loss impairment. As of December 31, 2024, there have been no payment defaults nor do we currently expect any future payment defaults.
All of the debt securities in our investment portfolio were classified as available-for-sale as of December 31, 2023. All available-for-sale securities are carried at fair value. Securities available-for-sale consist primarily of U.S. government-sponsored agency securities, home mortgage-backed securities and state and municipal bonds.
All of the debt securities in our investment portfolio were classified as available-for-sale as of December 31, 2024. All available-for-sale securities are carried at fair value. Securities available-for-sale consist primarily of U.S. government-sponsored agency securities, home mortgage-backed securities and state and municipal bonds.
Business – Regulation and Supervision – Regulation of the Company – Capital Requirements.” 63 Table of Contents The table below summarizes the capital requirements applicable to the Company and the Bank in order to be considered “well-capitalized” from a regulatory perspective, as well as the Company’s and the Bank’s capital ratios as of December 31, 2023 and 2022.
Business – Regulation and Supervision – Regulation of the Company – Capital Requirements.” 63 Table of Contents The table below summarizes the capital requirements applicable to the Company and the Bank in order to be considered “well-capitalized” from a regulatory perspective, as well as the Company’s and the Bank’s capital ratios as of December 31, 2024 and 2023.
See Note 1 and Note 3 of our consolidated financial statements as of December 31, 2023, included elsewhere in this Annual Report on Form 10-K, for additional information on the on the allowance for credit losses and the allowance for unfunded commitments.
See Note 1 and Note 3 of our consolidated financial statements as of December 31, 2024, included elsewhere in this Annual Report on Form 10-K, for additional information on the on the allowance for credit losses and the allowance for unfunded commitments.
See Note 1 and Note 3 of our consolidated financial statements as of December 31, 2023, included elsewhere in this Annual Report on Form 10-K, for additional information on the reserve and allowance for credit losses.
See Note 1 and Note 3 of our consolidated financial statements as of December 31, 2024, included elsewhere in this Annual Report on Form 10-K, for additional information on the reserve and allowance for credit losses.
The following table presents the amortized cost and fair value of our available-for-sale securities portfolio as of the dates presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2022 ​ 2021 (Dollars in thousands) Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Obligations of U.S.
The following table presents the amortized cost and fair value of our available-for-sale securities portfolio as of the dates presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 ​ 2023 ​ 2022 (Dollars in thousands) Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Obligations of U.S.
The evaluation reflects analyses of individual borrowers coupled with analysis of historical loss experience in various loan pools that have been grouped based on similar risk characteristics, supplemented as necessary by credit judgment that considers observable trends, conditions, reasonable and supportable forecasts, and other relevant environmental and economic factors.
The evaluation reflects analyses of individual borrowers coupled with analysis of historical loss experience in various loan 56 Table of Contents pools that have been grouped based on similar risk characteristics, supplemented as necessary by credit judgment that considers observable trends, conditions, reasonable and supportable forecasts, and other relevant environmental and economic factors.
No discount window borrowings were outstanding as of December 31, 2023 and 2022. We also maintain relationships in the capital markets with brokers to issue certificates of deposit and money market accounts.
No discount window borrowings were outstanding as of December 31, 2024 and 2023. We also maintain relationships in the capital markets with brokers to issue certificates of deposit and money market accounts.
It removes the incurred loss approach’s threshold that delayed the recognition of a credit loss until it was “probable” a loss event was “incurred.” 42 Table of Contents The estimate of expected credit losses under the CECL approach is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts.
It removes the incurred loss approach’s threshold that delayed the recognition of a credit loss until it was “probable” a loss event was “incurred.” The estimate of expected credit losses under the CECL approach is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts.
Financial and performance covenants are used in commercial lending agreements to allow us to react to a borrower’s deteriorating financial condition, should that occur. For more information, see “Item 1 – Business – Lending Activities.” The principal categories of our loan portfolios are discussed below: Construction and development loans.
Financial and performance covenants are used in commercial lending agreements to allow us to react to a borrower’s deteriorating financial condition, should that occur. For more information, see “Item 1 – Business – Lending Activities.” 53 Table of Contents The principal categories of our loan portfolios are discussed below: Construction and development loans.
Results of Operations Net Income Year ended December 31, 2023 compared to year ended December 31, 2022 We recorded net income of $51.6 million for the year ended December 31, 2023 compared to $62.6 million for the year ended December 31, 2022, a decrease of $11.0 million, or 17.6%.
Year ended December 31, 2023 compared to year ended December 31, 2022 We recorded net income of $51.6 million for the year ended December 31, 2023 compared to $62.6 million for the year ended December 31, 2022, a decrease of $11.0 million, or 17.6%.
Mortgage loan originations totaled $337.0 million during the year ended December 31, 2023 compared to $833.6 million during the year ended December 31, 2022. Total gain on sale of loans was $3.3 million for the year ended December 31, 2023 compared to $4.1 million for the year ended December 31, 2022, a decrease of $786,000, or 19.2%.
Mortgage loan originations totaled $337.0 million during the year ended December 31, 2023 compared to $833.6 million during the year ended December 31, 2022. 49 Table of Contents Total gain on sale of loans was $3.3 million for the year ended December 31, 2023 compared to $4.1 million for the year ended December 31, 2022, a decrease of $786,000, or 19.2%.
The allowance for unfunded commitments was created upon adoption of CECL on January 1, 2023 and had a balance of $315,000 as of December 31, 2023. Loans that do not share risk characteristics are evaluated on an individual basis.
The allowance for unfunded commitments was created upon adoption of CECL on January 1, 2023 and had a balance of $165,000 and $315,000 as of December 31, 2024 and 2023, respectively. Loans that do not share risk characteristics are evaluated on an individual basis.
The following table sets forth certain information regarding contractual maturities and the weighted average yields of our investment securities available for sale as of the dates presented.
The following table sets forth certain information regarding contractual maturities and the weighted average tax-equivalent yields of our investment securities available for sale as of the dates presented.
Our allowance for credit losses as a percentage of gross loans for the periods ended December 31, 2023 and 2022 was 0.58% and 0.45%, respectively.
Our allowance for credit losses as a percentage of gross loans for the periods ended December 31, 2023 and 2022 was 0.57% and 0.45%, respectively.
See Note 10 of our consolidated financial statements as of December 31, 2023, included elsewhere in this Annual Report on Form 10-K, for additional information.
See Note 10 of our consolidated financial statements as of December 31, 2024, included elsewhere in this Annual Report on Form 10-K, for additional information.
Relevant factors include, but are not limited to, concentrations of credit risk (geographic, large borrower, and industry), changes in underwriting standards, changes in collateral values, experience and depth of lending staff, trends in delinquencies, and the volume and terms of loans.
Relevant factors include, but are not limited to, concentrations of credit risk (geographic, large borrower, and industry), 43 Table of Contents changes in underwriting standards, changes in collateral values, experience and depth of lending staff, trends in delinquencies, and the volume and terms of loans.
We did not recognize any interest income on nonaccrual loans during the years ended December 31, 2023, 2022 and 2021. The following table sets forth the allocation of our nonperforming assets among our different asset categories as of the dates indicated. Nonperforming loans include nonaccrual loans, loans past due 90 days or more and still accruing interest, and loan modifications.
We did not recognize any interest income on nonaccrual loans during the years ended December 31, 2024, 2023 and 2022. The following table sets forth the allocation of our nonperforming assets among our different asset categories as of the dates indicated. Nonperforming loans include nonaccrual loans and loans past due 90 days or more and still accruing interest.
No issuer of the available-for-sale securities comprised more than ten percent of our shareholders’ equity as of December 31, 2023, 2022 or 2021.
No issuer of the available-for-sale securities comprised more than ten percent of our shareholders’ equity as of December 31, 2024, 2023 or 2022.
The cost of interest-bearing liabilities increased by 248 basis points to 3.73% from 1.25%, while the yield on interest-earning assets increased by 108 basis points to 5.94% from 4.86% for the previous year.
The cost of interest-bearing liabilities increased by 248 basis points to 45 Table of Contents 3.73% from 1.25%, while the yield on interest-earning assets increased by 108 basis points to 5.94% from 4.86% for the previous year.
The decrease is mainly attributable 48 Table of Contents to lower underwriting, processing and origination fees earned from our origination of residential mortgage loans as mortgage volume declined during the year ended December 31, 2023 compared to the year ended December 31, 2022.
The decrease is mainly attributable to lower underwriting, processing and origination fees earned from our origination of residential mortgage loans as mortgage volume declined during the year ended December 31, 2023 compared to the year ended December 31, 2022.
Our level of brokered deposits varies from time to time depending on competitive interest rate conditions and other factors and tends to increase as a percentage of total deposits when the brokered deposits are less costly than issuing internet certificates of deposit or borrowing from the Federal Home Loan Bank.
Our level of brokered deposits varies from time to time depending on competitive interest rate conditions and other factors and tends to increase as a percentage of total deposits when the brokered deposits are less costly than issuing internet certificates of deposit or borrowing from the Federal Home Loan Bank, or to help fund our loan demand when necessary.
The loans are typically made to small and medium-sized businesses for working capital needs, business expansions and for trade financing. We extend commercial business loans on an unsecured and secured basis for working capital, accounts 54 Table of Contents receivable and inventory financing, machinery and equipment purchases, and other business purposes.
The loans are typically made to small and medium-sized businesses for working capital needs, business expansions and for trade financing. We extend commercial business loans on an unsecured and secured basis for working capital, accounts receivable and inventory financing, machinery and equipment purchases, and other business purposes.
Non-owner occupied commercial real estate loans were 7.6%, 10.4%, and 12.4%, as a percentage of commercial real estate loans for the years ending December 31, 2023, 2022, and 2021, respectively. We originate both fixed and adjustable rate loans. Adjustable rate loans are based on SOFR, prime rate or constant maturity treasury (“CMT”).
Non-owner occupied commercial real estate loans were 8.0%, 7.6%, and 10.4%, as a percentage of commercial real estate loans for the years ending December 31, 2024, 2023, and 2022, respectively. We originate both fixed and adjustable rate loans. Adjustable rate loans are based on the prime rate, SOFR or constant maturity treasury (“CMT”).
At December 31, 2023, included in nonaccrual loans were $548,000 of construction and development loans, $991,000 of commercial real estate loans, $1.3 million in commercial and industrial loans and $11.9 million in residential real estate loans.
Nonaccrual loans at December 31, 2023 comprised of $548,000 of construction and development loans, $991,000 of commercial real estate loans, $1.3 million in commercial and industrial loans and $11.9 million in residential real estate loans.
The advances from the FHLB are collateralized by our residential real estate loans. At December 31, 2023 and December 31, 2022, we had available borrowing capacity from the FHLB of $721.1 million and $633.6 million, respectively. At December 31, 2023 and 2022, we had $325.0 million and $375.0 million, respectively, of outstanding advances from the FHLB.
The advances from the FHLB are collateralized by our residential real estate loans. At December 31, 2024 and December 31, 2023, we had available borrowing capacity from the FHLB of $692.6 million and $721.1 million, respectively. At December 31, 2024 and 2023, we had $375.0 million and $325.0 million, respectively, of outstanding advances from the FHLB.
During 2023, our primary loan products were 15-year and 30-year fixed rate products and a three-year, five-year or ten-year hybrid adjustable rate mortgage which reprice after three, five or ten years to the one-year CMT plus certain spreads.
During 2024, our primary loan products were a three-year, five-year or ten-year hybrid adjustable rate mortgage which reprice after three, five or ten years to the one-year CMT plus certain spreads, as well as 15-year and 30-year fixed rate products.
Our ACL as a percent of gross loans is relatively lower than our peers due to our high percentage of residential mortgage loans, which tend to have lower allowance for credit loss ratios compared to other commercial or consumer loans. Noninterest Income Noninterest income is an important component of our total revenues.
Our allowance for credit losses as a percent of gross loans is relatively lower than our peers due to our high percentage of residential mortgage loans, which tend to have lower allowance for credit loss ratios compared to other commercial or consumer loans due to their low LTVs. Noninterest Income Noninterest income is an important component of our total revenues.
As of December 31, 2023, our construction and development loans comprised $23.3 million, or 0.7%, of total loans held for investment, compared to $47.8 million, or 1.6%, of total loans held for investment as of December 31, 2022. This compares to $38.9 million, or 1.6%, of total loans held for investment as of December 31, 2021. Commercial real estate loans.
As of December 31, 2024, our construction and development loans comprised $21.6 million, or 0.7%, of total loans held for investment, compared to $23.3 million, or 0.7%, of total loans held for investment as of December 31, 2023. This compares to $47.8 million, or 1.6%, of total loans held for investment as of December 31, 2022. Commercial real estate loans.
Our available borrowings under these agreements were $47.5 million at December 31, 2023 and 2022. We did not have any advances outstanding under these agreements for any of the periods presented. We also have access to the Federal Reserve’s discount window in the amount of $446.3 million and $28.0 million at December 31, 2023 and 2022, respectively.
Our available borrowings under these agreements were $47.5 million at December 31, 2024 and 2023. We did not have any advances outstanding under these agreements for any of the periods presented. We also have access to the Federal Reserve’s discount window in the amount of $551.6 million and $446.3 million at December 31, 2024 and 2023, respectively.
The following table provides information related to our FHLB Advances for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of or for the Year Ended December 31, ​ (Dollars in thousands) 2023 2022 2021 ​ Maximum amount outstanding at any month-end during the period ​ $ 425,000 ​ $ 500,000 ​ $ 500,000 ​ Balance outstanding at end of period ​ ​ 325,000 ​ ​ 375,000 ​ ​ 500,000 ​ Average outstanding balance during the period ​ ​ 350,000 ​ ​ 368,333 ​ ​ 237,500 ​ Weighted average interest rate during the period ​ ​ 3.06 % ​ 1.16 % ​ 0.26 % Weighted average interest rate at end of period ​ 3.66 ​ 1.94 ​ 0.12 ​ ​ In addition to our advances with the FHLB, we maintain federal funds agreements with our correspondent banks.
The following table provides information related to our FHLB Advances for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of or for the Year Ended December 31, ​ (Dollars in thousands) 2024 2023 2022 ​ Maximum amount outstanding at any month-end during the period ​ $ 375,000 ​ $ 425,000 ​ $ 500,000 ​ Balance outstanding at end of period ​ ​ 375,000 ​ ​ 325,000 ​ ​ 375,000 ​ Average outstanding balance during the period ​ ​ 368,750 ​ ​ 350,000 ​ ​ 368,333 ​ Weighted average interest rate during the period ​ ​ 3.97 % ​ 3.06 % ​ 1.16 % Weighted average interest rate at end of period ​ 4.11 ​ 3.66 ​ 1.94 ​ ​ In addition to our advances with the FHLB, we maintain federal funds agreements with our correspondent banks.
See the section captioned “Allowance for Credit Losses” elsewhere in this document for further analysis of our provision for credit losses. 47 Table of Contents Year ended December 31, 2023 compared to year ended December 31, 2022 We recorded a credit provision for credit losses of $15,000 during the year ended December 31, 2023 compared to a credit provision of $2.8 million recorded during the year ended December 31, 2022.
See the section captioned “Allowance for Credit Losses” elsewhere in this document for further analysis of our provision for credit losses. 47 Table of Contents Year ended December 31, 2024 compared to year ended December 31, 2023 We recorded a provision for credit losses of $516,000 during the year ended December 31, 2024 compared to a credit provision of $15,000 recorded during the year ended December 31, 2023.
Collateral may also include inventory, accounts receivable and equipment, and may include personal guarantees. Our unguaranteed SBA loans collateralized by real estate are monitored by collateral type and included in our CRE Concentration Guidance. As of December 31, 2023, our SBA portfolio totaled $286.9 million compared to $304.3 million as of December 31, 2022.
Collateral may also include inventory, accounts receivable and equipment, and may include personal guarantees. Our unguaranteed SBA loans collateralized by real estate are monitored by collateral type and included in our CRE Concentration Guidance. As of December 31, 2024, our SBA and USDA portfolio totaled $277.0 million compared to $286.9 million as of December 31, 2023.
Newly originated and renewed non-SBA commercial real estate loans for the years ending December 31, 2023 and 2022 carried a weighted average LTV of 46.4% and 57.7%, respectively. Commercial and industrial loans. We provide a mix of variable and fixed rate commercial and industrial loans.
Newly originated and renewed non-SBA commercial real estate loans for the years ending December 31, 2024 and 2023 carried a weighted average LTV of 53.5% and 46.4%, respectively. Commercial and industrial loans. We provide a mix of variable and fixed rate commercial and industrial loans.
This amount includes unrealized losses on our available for sale securities portfolio and significant unrealized gains on our interest rate derivatives. Excluding the average accumulated other comprehensive income balance, the return on average equity was 15.00% and 20.02% for the years ended December 31, 2023 and 2022, respectively.
These amounts includes unrealized losses on our available for sale securities portfolio and significant unrealized gains on our interest rate derivatives. Excluding the average accumulated other comprehensive income balance, the return on average equity was 16.71%, 15.00% and 20.02% for the years ended December 31, 2024, 2023 and 2022, respectively.
These estimates were derived using the same methodologies and assumptions used for the Bank's regulatory reporting. Uninsured deposits were 26.5% of total deposits at December 31, 2023 compared to 32.5% at December 31, 2022.
These estimates were derived using the same methodologies and assumptions used for the Bank's regulatory reporting. Uninsured deposits were 24.1% of total deposits at December 31, 2024 compared to 26.5% at December 31, 2023.
Basic and diluted earnings per common share for the year ended December 31, 2022 was $2.46 and $2.44, respectively, compared to $2.41 and $2.39 for the basic and diluted earnings per common share for the year ended December 31, 2021. Net Interest Income The management of interest income and expense is fundamental to our financial performance.
Basic and diluted earnings per common share for the year ended December 31, 2023 was $2.05 and $2.02, respectively, compared to $2.46 and $2.44 for the basic and diluted earnings per common share for the year ended December 31, 2022. Net Interest Income The management of interest income and expense is fundamental to our financial performance.
At December 31, 2023 and 2022, approximately 28.9% and 25.2% of the commercial real estate portfolio consisted of fixed-rate loans, respectively. Our policy maximum LTV is 85% for commercial real estate loans. However, our weighted average LTV is well below this policy maximum.
At December 31, 2024 and 2023, approximately 12.0% and 28.9% of the commercial real estate portfolio consisted of fixed-rate loans, respectively. Our policy maximum LTV is 85% for commercial real estate loans. However, our weighted average LTV is well below this policy maximum.
These estimates, assumptions and judgments affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements and, as this information changes, actual results could differ from the estimates, assumptions and judgments reflected in the financial statement.
These estimates, assumptions, and judgments are based on information available as of the date of the financial statements and, as this information changes, actual results could differ from the estimates, assumptions and judgments reflected in the financial statement.
This compares to $73.1 million, or 2.9%, of total loans held for investment as of December 31, 2021. A large portion of both our commercial real estate and commercial and industrial loans are SBA loans. We are designated an SBA Preferred Lender under the SBA Preferred Lender Program. We offer mostly SBA 7(a) variable-rate loans.
This compares to $53.2 million, or 1.7%, of total loans held for investment as of December 31, 2022. 54 Table of Contents A large portion of both our commercial real estate and commercial and industrial loans are SBA loans. We are designated an SBA Preferred Lender under the SBA Preferred Lender Program. We offer mostly SBA 7(a) variable-rate loans.
As of December 31, 2023, our commercial and industrial loans comprised $65.9 million, or 2.1%, of total loans held for investement, compared to $53.2 million, or 1.7% of total loans held for investment as of December 31, 2022. This increase was due to consistent loan production and market demand for these types of loans.
As of December 31, 2024, our commercial and industrial loans comprised $78.2 million, or 2.5%, of total loans held for investment, compared to $65.9 million, or 2.1% of total loans held for investment as of December 31, 2023. This increase was due to consistent loan production and market demand for these types of loans.
As of December 31, 2023, our consumer and other loans totaled $319,000 compared to $216,000 as of December 31, 2022. This compares to $79,000 as of December 31, 2021. 55 Table of Contents Nonperforming Assets Loans are considered delinquent when principal or interest payments are past due 30 days or more.
As of December 31, 2024, our consumer and other loans totaled $260,000 compared to $319,000 as of December 31, 2023. This compares to $216,000 as of December 31, 2022. Nonperforming Assets Loans are considered delinquent when principal or interest payments are past due 30 days or more.
The following table provides an analysis of the allowance for credit losses, provision for loan losses and net charge-offs for the periods presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (Dollars in thousands) 2023 2022 2021 2020 2019 ​ Balance, beginning of period ​ $ 13,888 ​ $ 16,952 ​ $ 10,135 ​ $ 6,839 ​ $ 6,645 ​ CECL adoption (Day 1) impact ​ ​ 5,055 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ Charge-offs: ​ ​ ​ ​ ​ ​ Construction and development ​ — ​ — ​ — ​ — ​ — ​ Commercial real estate ​ 455 ​ — ​ 67 ​ 109 ​ 237 ​ Commercial and industrial ​ 309 ​ 390 ​ 64 ​ 51 ​ 14 ​ Residential real estate ​ — ​ — ​ — ​ — ​ — ​ Consumer and other ​ — ​ — ​ — ​ 97 ​ 525 ​ Total charge-offs ​ 764 ​ 390 ​ 131 ​ 257 ​ 776 ​ Recoveries: ​ ​ ​ ​ ​ ​ Construction and development ​ — ​ — ​ — ​ — ​ — ​ Commercial real estate ​ 5 ​ 7 ​ 12 ​ 10 ​ 752 ​ Commercial and industrial ​ 20 ​ 81 ​ — ​ 25 ​ — ​ Residential real estate ​ — ​ — ​ — ​ — ​ — ​ Consumer and other ​ — ​ 5 ​ 7 ​ 51 ​ 218 ​ Total recoveries ​ 25 ​ 93 ​ 19 ​ 86 ​ 970 ​ Net charge-offs/(recoveries) ​ 739 ​ 297 ​ 112 ​ 171 ​ (194) ​ Provision for credit losses ​ (92) ​ (2,767) ​ 6,929 ​ 3,467 ​ — ​ Balance, end of period ​ $ 18,112 ​ $ 13,888 ​ $ 16,952 ​ $ 10,135 ​ $ 6,839 ​ Total loans at end of period ​ $ 3,150,961 ​ $ 3,065,329 ​ $ 2,511,508 ​ $ 1,634,939 ​ $ 1,163,207 ​ Average loans (1) ​ 3,039,361 ​ 2,761,195 ​ 2,109,249 ​ 1,365,129 ​ 1,218,219 ​ Net charge-offs to average loans ​ 0.02 % 0.01 % 0.01 % 0.01 % (0.02) % Allowance for credit losses to total loans ​ 0.57 % 0.45 % 0.67 % 0.62 % 0.59 % (1) Excludes loans held for sale. ​ Management believes the allowance for credit losses is adequate to provide for losses inherent in the loan portfolio as of December 31, 2023. 58 Table of Contents The following table presents a summary of the allocation of the allowance for credit losses by loan portfolio segment for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ ​ ​ Allowance for ​ % of Loans to ​ Allowance for ​ % of Loans to ​ Allowance for ​ % of Loans to ​ Allowance for ​ % of Loans to ​ Allowance for ​ % of Loans to ​ (Dollars in thousands) Credit Losses Total Loans Credit Losses Total Loans Credit Losses Total Loans Credit Losses Total Loans Credit Losses Total Loans ​ Construction and Development ​ $ 46 0.7 % $ 124 1.6 % $ 100 1.6 % $ 178 2.8 % $ 131 2.7 % Commercial Real Estate ​ 6,876 22.6 ​ 2,811 21.4 ​ 4,146 20.7 ​ 5,161 29.2 ​ 2,320 36.5 ​ Commercial and Industrial ​ 588 2.1 ​ 1,326 1.7 ​ 4,989 2.9 ​ 438 8.4 ​ 448 4.6 ​ Residential Real Estate ​ 10,597 74.6 ​ 9,626 75.3 ​ 7,717 74.8 ​ 4,350 59.6 ​ 3,457 56.0 ​ Consumer and other ​ ​ 5 ​ — ​ ​ 1 ​ — ​ ​ — ​ — ​ ​ 8 ​ — ​ ​ 91 ​ 0.2 ​ Unallocated ​ — — ​ — — ​ — — ​ — — ​ 392 — ​ Total allowance for credit losses ​ $ 18,112 100.0 % $ 13,888 100.0 % $ 16,952 100.0 % $ 10,135 100.0 % $ 6,839 100.0 % ​ Investment Securities Our securities portfolio is the third largest component of our interest earning assets.
The following table provides an analysis of the allowance for credit losses, provision for loan losses and net charge-offs for the periods presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (Dollars in thousands) 2024 2023 2022 2021 2020 ​ Balance, beginning of period ​ $ 18,112 ​ $ 13,888 ​ $ 16,952 ​ $ 10,135 ​ $ 6,839 ​ CECL adoption (Day 1) impact ​ ​ — ​ ​ 5,055 ​ ​ — ​ ​ — ​ ​ — ​ Charge-offs: ​ ​ ​ ​ ​ ​ Construction and development ​ — ​ — ​ — ​ — ​ — ​ Commercial real estate ​ — ​ 455 ​ — ​ 67 ​ 109 ​ Commercial and industrial ​ 130 ​ 309 ​ 390 ​ 64 ​ 51 ​ Residential real estate ​ — ​ — ​ — ​ — ​ — ​ Consumer and other ​ — ​ — ​ — ​ — ​ 97 ​ Total charge-offs ​ 130 ​ 764 ​ 390 ​ 131 ​ 257 ​ Recoveries: ​ ​ ​ ​ ​ ​ Construction and development ​ — ​ — ​ — ​ — ​ — ​ Commercial real estate ​ 83 ​ 5 ​ 7 ​ 12 ​ 10 ​ Commercial and industrial ​ 11 ​ 20 ​ 81 ​ — ​ 25 ​ Residential real estate ​ — ​ — ​ — ​ — ​ — ​ Consumer and other ​ — ​ — ​ 5 ​ 7 ​ 51 ​ Total recoveries ​ 94 ​ 25 ​ 93 ​ 19 ​ 86 ​ Net charge-offs/(recoveries) ​ 36 ​ 739 ​ 297 ​ 112 ​ 171 ​ Provision for credit losses ​ 668 ​ (92) ​ (2,767) ​ 6,929 ​ 3,467 ​ Balance, end of period ​ $ 18,744 ​ $ 18,112 ​ $ 13,888 ​ $ 16,952 ​ $ 10,135 ​ Total loans at end of period ​ $ 3,165,316 ​ $ 3,150,961 ​ $ 3,065,329 ​ $ 2,511,508 ​ $ 1,634,939 ​ Average loans (1) ​ 3,125,389 ​ 3,039,361 ​ 2,761,195 ​ 2,109,249 ​ 1,365,129 ​ Net charge-offs to average loans ​ 0.00 % 0.02 % 0.01 % 0.01 % 0.01 % Allowance for credit losses to total loans ​ 0.59 % 0.57 % 0.45 % 0.67 % 0.62 % (1) Excludes loans held for sale. ​ Management believes the allowance for credit losses is adequate to provide for losses inherent in the loan portfolio as of December 31, 2024. 58 Table of Contents The following table presents a summary of the allocation of the allowance for credit losses by loan portfolio segment for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ 2024 ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ ​ ​ Allowance for ​ % of Loans to ​ Allowance for ​ % of Loans to ​ Allowance for ​ % of Loans to ​ Allowance for ​ % of Loans to ​ Allowance for ​ % of Loans to ​ (Dollars in thousands) Credit Losses Total Loans Credit Losses Total Loans Credit Losses Total Loans Credit Losses Total Loans Credit Losses Total Loans ​ Construction and Development ​ $ 31 0.7 % $ 46 0.7 % $ 124 1.6 % $ 100 1.6 % $ 178 2.8 % Commercial Real Estate ​ 7,265 24.1 ​ 6,876 22.6 ​ 2,811 21.4 ​ 4,146 20.7 ​ 5,161 29.2 ​ Commercial and Industrial ​ 1,380 2.5 ​ 588 2.1 ​ 1,326 1.7 ​ 4,989 2.9 ​ 438 8.4 ​ Residential Real Estate ​ 10,066 72.7 ​ 10,597 74.6 ​ 9,626 75.3 ​ 7,717 74.8 ​ 4,350 59.6 ​ Consumer and other ​ ​ 2 ​ — ​ ​ 5 ​ — ​ ​ 1 ​ — ​ ​ — ​ — ​ ​ 8 ​ — ​ Unallocated ​ — — ​ — — ​ — — ​ — — ​ — — ​ Total allowance for credit losses ​ $ 18,744 100.0 % $ 18,112 100.0 % $ 13,888 100.0 % $ 16,952 100.0 % $ 10,135 100.0 % ​ Investment Securities Our securities portfolio is the third largest component of our interest earning assets.
We use interest rate swap and cap agreements to hedge our deposit accounts that are indexed to the Federal Funds Effective rate. These swap agreements are designated as cash flow hedges. As of December 31, 2023, the total amount of deposits tied to the Federal Funds Effective rate was $929.2 million.
We use interest rate swap and cap agreements to hedge our deposit accounts that are indexed to the Federal Funds Effective rate. These swap agreements are designated as cash flow hedges. As of December 31, 2024, the total amount of deposits tied to the Federal Funds Effective rate was $1.03 billion.
See Note 10 of our consolidated financial statements as of December 31, 2023, included elsewhere in this Annual Report on Form 10-K, for additional information on these interest rate derivatives. The net interest margin for the year ended December 31, 2023 was 3.13% compared to 3.95% for the year ended December 31, 2022, a decrease of 82 basis points.
See Note 10 of our consolidated financial statements as of December 31, 2024, included elsewhere in this Annual Report on Form 10-K, for additional information on these interest rate derivatives. The net interest margin for the year ended December 31, 2024 was 3.51% compared to 3.13% for the year ended December 31, 2023, an increase of 38 basis points.
Return on Equity and Assets The following table sets forth our return on average assets, return on average equity, dividend payout ratio and average shareholders’ equity to average assets ratio for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2023 ​ 2022 ​ 2021 Return on average assets ​ 1.50 % ​ 1.96 % ​ 2.51 % Return on average equity ​ 14.10 % ​ 19.55 % ​ 23.55 % Dividend payout ratio ​ 35.43 % ​ 24.52 % ​ 19.17 % Average shareholders' equity to average assets ​ 10.63 % ​ 10.05 % ​ 10.65 % ​ For the year ended December 31, 2023 and 2022, our average equity includes $22.1 million and $7.6 million, respectively, of average accumulated other comprehensive income.
Return on Equity and Assets The following table sets forth our return on average assets, return on average equity, dividend payout ratio and average shareholders’ equity to average assets ratio for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 ​ 2023 ​ 2022 Return on average assets ​ 1.81 % ​ 1.50 % ​ 1.96 % Return on average equity ​ 16.16 % ​ 14.10 % ​ 19.55 % Dividend payout ratio ​ 32.80 % ​ 35.43 % ​ 24.52 % Average shareholders' equity to average assets ​ 11.18 % ​ 10.63 % ​ 10.05 % ​ For the year ended December 31, 2024, 2023 and 2022, our average equity includes $13.2 million, $22.1 million and $7.6 million, respectively, of average accumulated other comprehensive income.
We put continued effort into gathering noninterest-bearing demand deposits accounts through marketing to our existing and new loan customers, customer referrals, and expansion into new markets. 60 Table of Contents Total deposits increased $64.1 million, or 2.4%, to $2.73 billion at December 31, 2023 compared to $2.67 billion at December 31, 2022.
We put continued effort into gathering 60 Table of Contents noninterest-bearing demand deposits accounts through marketing to our existing and new loan customers, customer referrals, and expansion into new markets. Total deposits increased $5.9 million, or 0.2%, to $2.74 billion at December 31, 2024 compared to $2.73 billion at December 31, 2023.
At December 31, 2023, approximately 92.4% of our commercial real estate loans were owner-occupied. As of December 31, 2023, our loans secured by commercial real estate were $711.2 million, or 22.6%, of total loans held for investment compared to $657.2 million, or 21.4%, as of December 31, 2022.
At December 31, 2024, approximately 92.0% of our commercial real estate loans were owner-occupied compared to 92.4% at December 31, 2023. As of December 31, 2024, our loans secured by commercial real estate were $762.0 million, or 24.1%, of total loans held for investment compared to $711.2 million, or 22.6%, as of December 31, 2023.
Based on the Federal Funds Effective rate as of December 31, 2023 (5.33%), the Company would estimate to record a credit to interest expense of $22.9 million during 2024 from the benefit received on these interest rate derivatives.
Based on the Federal Funds Effective rate as of December 31, 2024 (4.33%), the Company would estimate to record a credit to interest expense of $16.2 million during 2025 from the benefit received on these interest rate derivatives.
This increase was due to consistent loan production and market demand for these types of loans. Commercial real estate loans were $520.5 million, or 20.7%, of our portfolio as of December 31, 2021. Our non-owner occupied commercial real estate loans make up a small percentage of our overall commercial real estate loan portfolio.
This increase was due to consistent loan production and market demand for these types of loans. Commercial real estate loans were $657.2 million, or 21.4%, of our portfolio as of December 31, 2022. Our non-owner occupied commercial real estate loans make up a small percentage of our overall commercial real estate loan portfolio.
We had brokered deposits of $766.3 million, or 28.1% of total deposits, at December 31, 2023 compared to $523.7 million, or 19.6% of total deposits, at December 31, 2022 and $425.1 million, or 18.8% of total deposits, at December 31, 2021.
We had brokered deposits of $721.8 million, or 26.4% of total deposits, at December 31, 2024 compared to $766.3 million, or 28.1% of total deposits, at December 31, 2023 and $523.7 million, or 19.6% of total deposits, at December 31, 2022.
Basic and diluted earnings per common share for the year ended December 31, 2023 was $2.05 and $2.02, respectively, compared to $2.46 and $2.44 for the basic and diluted earnings per common share for the year ended December 31, 2022.
Basic and diluted earnings per common share for the year ended December 31, 2024 was $2.55 and $2.52, respectively, compared to $2.05 and $2.02 for the basic and diluted earnings per common share for the year ended December 31, 2023.
As of December 31, 2023, our residential real estate loans comprised $2.35 billion, or 74.6%, of total loans held for investment, compared to $2.31 billion, or 75.3%, of total loans held for investment as of December 31, 2022. This compares to $1.88 billion, or 74.8%, of total loans held for investment as of December 31, 2021.
As of December 31, 2024, our residential real estate loans comprised $2.30 billion, or 72.7%, of total loans held for investment, compared to $2.35 billion, or 74.6%, of total loans held for investment as of December 31, 2023. This compares to $2.31 billion, or 75.3%, of total loans held for investment as of December 31, 2022.
The following table presents the ending balance of each major category in our loan portfolio held for investment as of the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ (Dollars in thousands) Amount % of Total Amount % of Total Amount % of Total Amount % of Total Amount % of Total ​ Construction and Development ​ $ 23,262 ​ 0.7 % $ 47,779 ​ 1.6 % $ 38,857 ​ 1.6 % $ 45,653 2.8 % $ 31,739 2.7 % Commercial Real Estate ​ 711,177 ​ 22.6 ​ 657,246 ​ 21.4 ​ 520,488 ​ 20.7 ​ 477,419 29.2 ​ 424,950 36.5 ​ Commercial and Industrial ​ 65,904 ​ 2.1 ​ 53,173 ​ 1.7 ​ 73,072 ​ 2.9 ​ 137,239 8.4 ​ 53,105 4.6 ​ Residential Real Estate ​ 2,350,299 ​ 74.6 ​ 2,306,915 ​ 75.3 ​ 1,879,012 ​ 74.8 ​ 974,445 59.6 ​ 651,645 56.0 ​ Consumer and other ​ 319 ​ 0.0 ​ 216 ​ 0.0 ​ 79 ​ 0.0 ​ 183 0.0 ​ 1,768 0.2 ​ Total gross loans ​ ​ 3,150,961 100.0 % ​ 3,065,329 100.0 % ​ 2,511,508 100.0 % ​ 1,634,939 100.0 % ​ 1,163,207 100.0 % Unearned income ​ (8,856) ​ (9,640) ​ (6,438) ​ (4,595) ​ (2,045) ​ Allowance for credit losses ​ ​ (18,112) ​ ​ ​ ​ (13,888) ​ ​ ​ ​ (16,952) ​ ​ ​ ​ (10,135) ​ ​ ​ ​ (6,839) ​ ​ ​ Total loans, net ​ $ 3,123,993 ​ $ 3,041,801 ​ $ 2,488,118 ​ $ 1,620,209 ​ $ 1,154,323 ​ ​ The following table presents the maturity distribution of our loans held for investment as of December 31, 2023.
Loans classified as held for sale totaled $22.3 million as of December 31, 2023. 52 Table of Contents The following table presents the ending balance of each major category in our loan portfolio held for investment as of the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ 2024 ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ (Dollars in thousands) Amount % of Total Amount % of Total Amount % of Total Amount % of Total Amount % of Total ​ Construction and Development ​ $ 21,569 ​ 0.7 % $ 23,262 ​ 0.7 % $ 47,779 ​ 1.6 % $ 38,857 ​ 1.6 % $ 45,653 2.8 % Commercial Real Estate ​ 762,033 ​ 24.1 ​ 711,177 ​ 22.6 ​ 657,246 ​ 21.4 ​ 520,488 ​ 20.7 ​ 477,419 29.2 ​ Commercial and Industrial ​ 78,220 ​ 2.5 ​ 65,904 ​ 2.1 ​ 53,173 ​ 1.7 ​ 73,072 ​ 2.9 ​ 137,239 8.4 ​ Residential Real Estate ​ 2,303,234 ​ 72.7 ​ 2,350,299 ​ 74.6 ​ 2,306,915 ​ 75.3 ​ 1,879,012 ​ 74.8 ​ 974,445 59.6 ​ Consumer and other ​ 260 ​ 0.0 ​ 319 ​ 0.0 ​ 216 ​ 0.0 ​ 79 ​ 0.0 ​ 183 0.0 ​ Total gross loans ​ ​ 3,165,316 100.0 % ​ 3,150,961 100.0 % ​ 3,065,329 100.0 % ​ 2,511,508 100.0 % ​ 1,634,939 100.0 % Unearned income ​ (7,381) ​ (8,856) ​ (9,640) ​ (6,438) ​ (4,595) ​ Allowance for credit losses ​ ​ (18,744) ​ ​ ​ ​ (18,112) ​ ​ ​ ​ (13,888) ​ ​ ​ ​ (16,952) ​ ​ ​ ​ (10,135) ​ ​ ​ Total loans, net ​ $ 3,139,191 ​ $ 3,123,993 ​ $ 3,041,801 ​ $ 2,488,118 ​ $ 1,620,209 ​ ​ The following table presents the maturity distribution of our loans held for investment as of December 31, 2024.
The decrease was primarily attributable to decreased overdraft fees, analysis fees and wire transfer fees. Other service charges, commissions and fees decreased $4.1 million, or 41.8%, to $5.7 million for the year ended December 31, 2023 compared to $9.7 million for the year ended December 31, 2022.
Other service charges, commissions and fees decreased $4.1 million, or 41.8%, to $5.7 million for the year ended December 31, 2023 compared to $9.7 million for the year ended December 31, 2022.
As of December 31, 2023, we had $1.21 billion of available borrowing capacity at the Federal Home Loan Bank ($721.1 million), Federal Reserve Discount Window ($446.3 million) and various other financial institutions (fed fund lines totaling $47.5 million).
As of December 31, 2024, we had $1.29 billion of available borrowing capacity at the Federal Home Loan Bank ($692.6 million), Federal Reserve Discount Window ($551.6 million) and various other financial institutions (fed fund lines totaling $47.5 million).
Government entities and agencies ​ $ 4,637 ​ $ 4,637 ​ $ 5,059 ​ $ 5,059 ​ $ 6,949 ​ $ 6,949 States and political subdivisions ​ ​ 8,072 ​ 6,782 ​ ​ 8,121 ​ 6,403 ​ ​ 8,169 ​ 8,361 Mortgage-backed GSE residential ​ 8,669 7,074 ​ 9,540 7,783 ​ 10,562 10,423 Total securities available for sale ​ $ 21,378 $ 18,493 ​ $ 22,720 $ 19,245 ​ $ 25,680 $ 25,733 ​ 59 Table of Contents Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses.
Government entities and agencies ​ $ 4,467 ​ $ 4,467 ​ $ 4,637 ​ $ 4,637 ​ $ 5,059 ​ $ 5,059 States and political subdivisions ​ ​ 8,022 ​ 6,537 ​ ​ 8,072 ​ 6,782 ​ ​ 8,121 ​ 6,403 Mortgage-backed GSE residential ​ 8,186 6,387 ​ 8,669 7,074 ​ 9,540 7,783 Total securities available for sale ​ $ 20,675 $ 17,391 ​ $ 21,378 $ 18,493 ​ $ 22,720 $ 19,245 ​ 59 Table of Contents Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses.
The largest component of other noninterest income is the income on bank owned life insurance, which totaled $1.7 million and $1.1 million, respectively, for the years ended December 31, 2022 and 2021.
The largest component of other noninterest income is the income on bank owned life insurance, which totaled $2.3 million and $1.8 million, respectively, for the years ended December 31, 2024 and 2023.
The FRB discount window line is collateralized by a pool of construction and development, commercial real estate and commercial and industrial loans with carrying balances totaling $604.0 million as of December 31, 2023, as well as all of the Company’s municipal and mortgage backed securities.
The FRB discount window line is collateralized by a pool of construction and development, commercial real estate and commercial and industrial loans with carrying balances totaling $667.6 million as of December 31, 2024, as well as all of the Company’s municipal and mortgage backed securities. There were no outstanding borrowings on this line as of December 31, 2024 and 2023.
The following table presents outstanding financial commitments whose contractual amount represents credit risks as of the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (Dollars in thousands) 2023 2022 Commitments to extend credit $ 68,083 ​ $ 62,334 Standby letters of credit ​ ​ 4,908 ​ ​ 6,303 Total off-balance sheet commitments ​ $ 72,991 ​ $ 68,637 ​ ​
The following table presents outstanding financial commitments whose contractual amount represents credit risks as of the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (Dollars in thousands) 2024 2023 Commitments to extend credit $ 47,369 ​ $ 68,083 Standby letters of credit ​ ​ 5,782 ​ ​ 4,908 Total off-balance sheet commitments ​ $ 53,151 ​ $ 72,991 ​ ​
Our loan growth during the year ended December 31, 2023 was comprised of a decrease of $24.5 million, or 51.3%, in construction and development loans, an increase of $53.9 million, or 8.2%, in commercial real estate loans, an increase of $12.7 million, or 23.9%, in commercial and industrial loans, an increase of $43.4 million, or 1.9%, in residential real estate loans and an increase of $103,000, or 47.7%, in consumer and other loans.
Our loan growth during the year ended December 31, 2024 was comprised of a decrease of $1.7 million, or 7.3%, in construction and development loans, an increase of $50.9 million, or 7.2%, in commercial real estate loans, an increase of $12.3 million, or 18.7%, in commercial and industrial loans, a decrease of $47.1 million, or 2.0%, in residential real estate loans and a decrease of $59,000, or 18.5%, in consumer and other loans.
During the year ended December 31, 2021, we originated $1.20 billion and sold $0 in residential mortgage loans. Consumer and other loans. These loans represent a small portion of our overall portfolio and primarily consists of overdrafts and consumer lines of credit.
During the year ended December 31, 2022, we originated $833.6 million and sold $94.9 in residential mortgage loans. Consumer and other loans. These loans represent a small portion of our overall portfolio and primarily consists of overdrafts and consumer lines of credit.
Year ended December 31, 2022 compared to year ended December 31, 2021 We recorded a credit provision for loan losses of $2.8 million during the year ended December 31, 2022 compared to $6.9 million provision expense recorded during the year ended December 31, 2021.
Year ended December 31, 2023 compared to year ended December 31, 2022 We recorded a credit provision for credit losses of $15,000 during the year ended December 31, 2023 compared to a credit provision of $2.8 million recorded during the year ended December 31, 2022.
Gain on sale of residential loans totaled $2.0 million for the year ended December 31, 2022 compared to no gain on sale of residential mortgage loans recorded for the year ended December 31, 2021 as no mortgage loans were sold during 2021.
We recorded no gain on sale of residential mortgage loans during the year ended December 31, 2023 as no residential mortgage loans were sold during the period. Gain on sale of SBA loans totaled $2.9 million for the year ended December 31, 2024 compared to $3.3 million for the year ended December 31, 2023.
Included in mortgage loan servicing income for the year ended December 31, 2022 was $3.2 million in mortgage servicing fees compared to $4.7 million for 2021, and capitalized mortgage servicing assets of $761,000 for the year ended December 31, 2022 compared to $0 for 2021.
Included in mortgage loan servicing income for the year ended December 31, 2024 was $2.3 million in mortgage servicing fees compared to $2.5 million for 2023, and capitalized mortgage servicing assets of $1.2 million for the year ended December 31, 2024 compared to $0 for 2023.
The increase from December 31, 2022 to December 31, 2023 was primarily attributable to a $6.8 million increase in nonaccrual residential real estate loans and a $12.3 million increase in accruing restructured loans, offset by a $3.9 million decrease in commercial real estate loans and a $2.9 million decrease in other real estate owned.
The increase from December 31, 2022 to December 31, 2023 was attributable to a $6.8 million increase in nonaccrual residential real estate loans, a $1.2 million increase in nonaccrual commercial and industrial loans and a $548,000 increase in nonaccrual construction and development loans, offset by a $3.9 million decrease in commercial real estate loans.
As of December 31, 2023, 18.7% of total deposits were comprised of noninterest-bearing demand accounts and 81.3% of interest-bearing deposit accounts compared to 22.9% and 77.1% as of December 31, 2022, respectively. Total deposits increased $403.8 million, or 17.8%, to $2.67 billion at December 31, 2022 compared to $2.26 billion at December 31, 2021.
As of December 31, 2024, 19.6% of total deposits were comprised of noninterest-bearing demand accounts and 80.4% of interest-bearing deposit accounts compared to 18.7% and 81.3% as of December 31, 2023, respectively. Total deposits increased $64.1 million, or 2.4%, to $2.73 billion at December 31, 2023 compared to $2.67 billion at December 31, 2022.
The following table summarizes our average deposit balances and weighted average rates for the years ended December 31, 2023, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2023 ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ Average ​ Average ​ Average ​ Average ​ Average ​ Average ​ (Dollars in thousands) Balance Rate Balance Rate Balance Rate ​ Noninterest-bearing demand deposits ​ $ 555,840 ​ — % $ 599,340 ​ — % $ 559,797 ​ — % Interest-bearing demand deposits ​ ​ 132,033 1.70 ​ ​ 159,277 0.62 ​ ​ 84,502 0.19 ​ Savings and money market deposits ​ 509,443 ​ 2.82 ​ 695,758 ​ 1.21 ​ 394,553 ​ 0.34 ​ Brokered money market deposits ​ ​ 511,427 ​ 5.47 ​ ​ 461,465 ​ 1.66 ​ ​ 360,156 ​ 0.11 ​ Time deposits ​ 940,911 ​ 3.83 ​ 513,867 ​ 1.25 ​ 499,856 ​ 0.41 ​ Total interest-bearing deposits ​ ​ 2,093,814 ​ 3.85 ​ ​ 1,830,367 ​ 1.29 ​ ​ 1,339,067 ​ 0.29 ​ Total deposits ​ $ 2,649,654 3.04 % $ 2,429,707 0.97 % $ 1,898,864 0.21 % ​ The following table sets forth the scheduled maturities of time deposits of $250,000 or greater as of December 31, 2023: ​ ​ ​ ​ ​ (Dollars in thousands) December 31, 2023 Remaining maturity: ​ ​ Three months or less ​ $ 148,923 Over three through six months ​ 95,782 Over six through twelve months ​ 227,496 Over twelve months ​ 14,697 Total time deposits $250,000 or greater ​ $ 486,898 ​ 61 Table of Contents Borrowed Funds Other than deposits, the Company utilizes FHLB advances as a supplementary funding source to finance our operations.
The following table summarizes our average deposit balances and weighted average rates for the years ended December 31, 2024, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2024 ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ Average ​ Average ​ Average ​ Average ​ Average ​ Average ​ (Dollars in thousands) Balance Rate Balance Rate Balance Rate ​ Noninterest-bearing demand deposits ​ $ 536,084 ​ — % $ 555,840 ​ — % $ 599,340 ​ — % Interest-bearing demand deposits ​ ​ 127,882 2.74 ​ ​ 132,033 1.70 ​ ​ 159,277 0.62 ​ Savings and money market deposits ​ 315,721 ​ 3.91 ​ 509,443 ​ 2.82 ​ 695,758 ​ 1.21 ​ Brokered money market deposits ​ ​ 707,533 ​ 2.26 ​ ​ 511,427 ​ 5.47 ​ ​ 461,465 ​ 1.66 ​ Time deposits ​ 1,031,942 ​ 4.67 ​ 940,911 ​ 3.83 ​ 513,867 ​ 1.25 ​ Total interest-bearing deposits ​ ​ 2,183,078 ​ 3.67 ​ ​ 2,093,814 ​ 3.85 ​ ​ 1,830,367 ​ 1.29 ​ Total deposits ​ $ 2,719,162 2.94 % $ 2,649,654 3.04 % $ 2,429,707 0.97 % ​ 61 Table of Contents The following table sets forth the scheduled maturities of time deposits of $250,000 or greater as of December 31, 2024: ​ ​ ​ ​ ​ (Dollars in thousands) December 31, 2024 Remaining maturity: ​ ​ Three months or less ​ $ 291,401 Over three through six months ​ 180,338 Over six through twelve months ​ 36,219 Over twelve months ​ 11,871 Total time deposits $250,000 or greater ​ $ 519,829 ​ Borrowed Funds Other than deposits, the Company utilizes FHLB advances as a supplementary funding source to finance our operations.
The decrease was primarily due to lower loan related expenses, communications expense, security expense and business taxes, offset by higher FDIC deposit insurance premiums, professional fees, mobile and internet banking expenses, and other real estate owned expenses. Included in other expenses were directors’ fees of $617,000 and $565,000 for the years ended December 31, 2023 and 2022, respectively.
The decrease was primarily due to lower loan related expenses, communications expense, security expense and business taxes, offset by higher FDIC deposit insurance premiums, professional fees, mobile and internet banking expenses, and other real estate owned expenses.
Year ended December 31, 2022 compared to year ended December 31, 2021 Salaries and employee benefits expense for the year ended December 31, 2022 was $30.5 million compared to $30.1 million for the year ended December 31, 2021, an increase of $390,000, or 1.3%.
Year ended December 31, 2023 compared to year ended December 31, 2022 Salaries and employee benefits expense for the year ended December 31, 2023 was $29.3 million compared to $30.5 million for the year ended December 31, 2022, a decrease of $1.2 million, or 3.9%.
The increase was due to the CECL adoption during the first quarter of 2023, offset by a decrease in reserves allocated to individually analyzed loans and $764,000 in charge-offs recorded during the year ended December 31, 2023. The CECL appr oach requires an estimate of the credit losses expected over the life of an exposure (or pool of exposures).
The increase from December 31, 2022 to December 31, 2023 was due to the CECL adoption during the first quarter of 2023, offset by a decrease in reserves allocated to individually analyzed loans and $764,000 in charge-offs recorded during the year ended December 31, 2023.
Our noninterest-bearing demand accounts were 26.2% of total deposits and our interest-bearing deposits accounted for the remaining 73.8% of our deposits as of December 31, 2021. As of December 31, 2023 and 2022, the Company had estimated uninsured deposits of $730.5 million and $874.7 million, respectively.
Our noninterest-bearing demand accounts were 22.9% of total deposits and our interest-bearing deposits accounted for the remaining 77.1% of our deposits as of December 31, 2022. As of December 31, 2024 and 2023, the Company had estimated uninsured deposits of $666.4 million and $730.5 million, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe results of the model for rate shakes of +/- 100 and 200 basis points are presented in the table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Economic Value of Equity Sensitivity (Shock in basis points) +200 +100 -100 -200 December 31, 2023 ​ (15.00) % (7.50) % 9.40 % 18.60 % December 31, 2022 (11.90) % (5.90) % 6.90 % 13.10 % December 31, 2021 ​ (3.60) % (0.20) % (11.90) % (11.90) % ​ Our simulation model incorporates various assumptions, which we believe are reasonable but which may have a significant impact on results such as: (i) the timing of changes in interest rates; (ii) shifts or rotations in the yield curve; (iii) re-pricing characteristics for market-rate-sensitive instruments; (iv) varying loan prepayment speeds for different interest rate scenarios; and (v) the overall growth and mix of assets and liabilities.
Biggest changeThe results of the model for rate shakes of +/- 100, 200, 300 and 400 basis points are presented in the table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Economic Value of Equity Sensitivity (Shock in basis points) +400 ​ +300 ​ +200 +100 -100 ​ -200 -300 -400 December 31, 2024 ​ (26.30) % (19.40) % (12.50) % (5.80) % 4.30 % 7.10 % 6.20 % 4.30 % December 31, 2023 (28.90) % (22.20) % (15.00) % (7.50) % 9.40 % 18.60 % 26.10 % 22.20 % December 31, 2022 ​ (23.10) % (17.80) % (11.90) % (5.90) % 6.90 % 13.10 % 18.50 % 13.90 % ​ Our simulation model incorporates various assumptions, which we believe are reasonable but which may have a significant impact on results such as: (i) the timing of changes in interest rates; (ii) shifts or rotations in the yield curve; (iii) re-pricing characteristics for market-rate-sensitive instruments; (iv) varying loan prepayment speeds for different interest rate scenarios; and (v) the overall growth and mix of assets and liabilities.
Potential changes to our net interest income in hypothetical rising and declining rate scenarios calculated as of December 31, 2023, 2022 and 2021 are presented in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income Sensitivity ​ ​ 12 Month Projection ​ 24 Month Projection ​ (Ramp in basis points) +200 -200 +200 -200 December 31, 2023 (0.90) % 0.00 % 1.50 % 7.80 % December 31, 2022 (1.60) % 2.50 % 21.60 % 12.90 % December 31, 2021 (3.60) % (1.20) % (8.70) % (10.30) % ​ We also model the impact of rate changes on our Economic Value of Equity, or EVE.
Potential changes to our net interest income in hypothetical rising and declining rate scenarios calculated as of December 31, 2024, 2023 and 2022 are presented in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income Sensitivity ​ ​ 12 Month Projection ​ 24 Month Projection ​ (Ramp in basis points) +200 -200 +200 -200 December 31, 2024 (0.20) % (1.30) % (7.00) % 2.50 % December 31, 2023 (0.90) % 0.00 % 1.50 % 7.80 % December 31, 2022 (1.60) % 2.50 % 21.60 % 12.90 % ​ We also model the impact of rate changes on our Economic Value of Equity, or EVE.
Treasuries and LIBOR (basis risk). Our board of directors establishes broad policy limits with respect to interest rate risk. As part of this policy the asset liability committee, or ALCO, establishes specific operating guidelines within the parameters of the board of directors’ policies.
Treasuries and Federal funds effective (basis risk). Our board of directors establishes broad policy limits with respect to interest rate risk. As part of this policy the asset liability committee, or ALCO, establishes specific operating guidelines within the parameters of the board of directors’ policies.
The impact of interest rate derivatives, such as interest rate swaps and caps, is included in the model.
This analysis also provides the foundation for historical tracking of interest rate risk. The impact of interest rate derivatives, such as interest rate swaps and caps, is included in the model.
We run three standard and plausible comparing current or flat rates with a +/- 200 basis point ramp in rates over 12 months.
We run three standard and plausible simulations comparing current or flat rates with a +/- 200 basis point ramp in rates over 12 and 24 months. These rate scenarios are considered appropriate as we believe they represent a more realistic range 66 Table of Contents of rate movements that could occur in the near to medium term.
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These rate scenarios are considered appropriate as they are neither too modest (e.g. +/- 100 basis points) or too extreme (e.g. +/- 400 basis points) given the economic and rate cycles which have unfolded in the last 25 years. This 66 Table of Contents analysis also provides the foundation for historical tracking of interest rate risk.

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