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What changed in MetroCity Bankshares, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of MetroCity Bankshares, Inc.'s 2024 and 2025 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 2025 report.

+436 added−400 removedSource: 10-K (2026-03-16) vs 10-K (2025-03-10)

Top changes in MetroCity Bankshares, Inc.'s 2025 10-K

436 paragraphs added · 400 removed · 338 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

91 edited+15 added−18 removed147 unchanged
Biggest changeAs 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.
Biggest changeAs of December 31, 2025 and 2024 our loan portfolio held for investment consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2025 ​ December 31, 2024 (Dollars in thousands) ​ ​ ​ Amount ​ ​ ​ % of Total ​ ​ ​ Amount ​ ​ ​ % of Total Construction and Development ​ $ 41,796 1.0 % $ 21,569 0.7 % Commercial Real Estate ​ 1,560,728 38.3 ​ 762,033 24.1 ​ Commercial and Industrial ​ 96,360 2.4 ​ 78,220 2.5 ​ Residential Real Estate ​ 2,378,311 58.3 ​ 2,303,234 72.7 ​ Consumer and other ​ 627 — ​ 260 — ​ Gross loans ​ $ 4,077,822 100.0 ​ $ 3,165,316 100.0 ​ Less unearned income ​ ​ (6,621) ​ ​ ​ ​ (7,381) ​ ​ ​ Less loan discounts ​ (19,804) ​ ​ — ​ ​ Total loans held for investment ​ $ 4,051,397 ​ ​ $ 3,157,935 ​ ​ ​ Construction and Development Loans.
Interest reserves are generally established on real estate construction loans. These loans typically carry a fixed interest rate and have maturities of less than 18 months. Our loan-to-value, or LTV, policy limit for our construction and development loans is 65%. The risks inherent in construction lending may affect adversely our results of operations.
Interest reserves are generally established on real estate construction loans. These loans typically carry a fixed interest rate and have maturities of less than 18 months. Our loan-to-value, or LTV, policy limit for our construction and development loans is 65%. The risks inherent in construction lending may adversely affect our results of operations.
We also review our securities for potential other-than-temporary impairment at least quarterly. Deposits We offer traditional depository products, including checking, savings, money market and certificates of deposits, to individuals, businesses, municipalities and other entities through our branch network throughout our market areas. Deposits at the Bank are insured by the FDIC up to statutory limits.
We also review our securities for potential other-than-temporary impairment at least quarterly. Deposits We offer traditional depository products, including checking, savings, money market and certificates of deposits, to individuals, businesses and other entities through our branch network throughout our market areas. Deposits at the Bank are insured by the FDIC up to statutory limits.
The Dodd-Frank Act required the banking agencies and the SEC to establish joint rules or guidelines for financial institutions with more than $1 billion in assets, such as us and the Bank, which prohibit incentive compensation arrangements that the agencies determine to encourage inappropriate risks by the institution.
The Dodd-Frank Act required the banking agencies and the SEC to establish joint rules or guidelines for financial institutions with more than $1.0 billion in assets, such as us and the Bank, which prohibit incentive compensation arrangements that the agencies determine to encourage inappropriate risks by the institution.
Our SBA loans are typically secured by commercial real estate and can have any maturity up to 25 years. Depending on the loan amount, each loan is typically guaranteed 75% to 90% by the SBA, with a maximum gross loan amount to any one small business borrower of $5 million and a maximum SBA guaranteed amount of $3.75 million.
Our SBA loans are typically secured by commercial real estate and can have any maturity up to 25 years. Depending on the loan amount, each loan is typically guaranteed 75% by the SBA, with a maximum gross loan amount to any one small business borrower of $5 million and a maximum SBA guaranteed amount of $3.75 million.
Among the provisions of the Economic Growth Act was a requirement that the Federal Reserve raise the asset threshold for those bank holding companies subject to the Federal Reserve’s Small Bank Holding Company Policy Statement (“Policy Statement”) to $3 billion.
Among the provisions of the Economic Growth Act was a requirement that the Federal Reserve raise the asset threshold for those bank holding companies subject to the Federal Reserve’s Small Bank Holding Company Policy Statement (“Policy Statement”) to $3.0 billion.
These laws and regulations include, among numerous other things, provisions that: ● limit the interest and other charges collected or contracted for by the Bank, including new rules respecting the terms of credit cards and of debit card overdrafts; ● govern the Bank’s disclosures of credit terms to consumer borrowers; ● require the Bank to provide information to enable the public and public officials to determine whether it is fulfilling its obligation to help meet the housing needs of the community it serves; ● prohibit the Bank from discriminating on the basis of race, creed or other prohibited factors when it makes decisions to extend credit; ● govern the manner in which the Bank may collect consumer debts; and ● prohibit unfair, deceptive or abusive acts or practices in the provision of consumer financial products and services.
These laws and regulations include, among numerous other things, provisions that: ● limit the interest and other charges collected or contracted for by the Bank, including new rules respecting the terms of credit cards and of debit card overdrafts; ● govern the Bank’s disclosures of credit terms to consumer borrowers; ● require the Bank to provide information to enable the public and public officials to determine whether it is fulfilling its obligation to help meet the housing needs of the community it serves; 22 Table of Contents ● prohibit the Bank from discriminating on the basis of race, creed or other prohibited factors when it makes decisions to extend credit; ● govern the manner in which the Bank may collect consumer debts; and ● prohibit unfair, deceptive or abusive acts or practices in the provision of consumer financial products and services.
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.
As of December 31, 2025 and 2024, 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.
We expect this trend of state-level activity in those areas to continue and are continually monitoring developments in the states in which our customers are located. ​ Risks and exposures related to cybersecurity attacks, including litigation and enforcement risks, are expected to be elevated for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of Internet banking, mobile banking and other technology-based products and services by us and our customers. ​ See Item 1A.
We expect this trend of state-level activity in those areas to continue and are continually monitoring developments in the states in which our customers are located. 23 Table of Contents ​ Risks and exposures related to cybersecurity attacks, including litigation and enforcement risks, are expected to be elevated for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of Internet banking, mobile banking and other technology-based products and services by us and our customers. ​ See Item 1A.
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.
During 2025, 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.
Item 1. Business Our Company We are MetroCity Bankshares, Inc. (the “Company”), a bank holding company incorporated in 2014 and headquartered in the Atlanta metropolitan area. We operate through our wholly-owned banking subsidiary, Metro City Bank, a Georgia state-chartered commercial bank that was founded in 2006 (the “Bank”).
Item 1. Business Our Company MetroCity Bankshares, Inc. (the “Company”), a bank holding company incorporated in 2014 and headquartered in the Atlanta metropolitan area. We primarily operate through our wholly-owned banking subsidiary, Metro City Bank, a Georgia state-chartered commercial bank that was founded in 2006 (the “Bank”).
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.
We had approximately $1.3 million and $526,000 of commercial and industrial loans on nonaccrual status as of December 31, 2025 and 2024, 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 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.
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, 14 Table of Contents 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.
Under the laws of the State of Georgia, we, as a business corporation, may declare and pay dividends in cash or property unless the payment or declaration would be contrary to restrictions contained in our Articles of Incorporation, or unless, after payment of the dividend, we would not be able to pay our debts when they become due in the usual course of our business or our total assets would be less than the sum of our total liabilities.
Under the laws of the State of Georgia, we, as a business corporation, may declare and pay dividends in cash or property unless the payment or declaration would be contrary to restrictions contained in our Articles of Incorporation, or unless, after payment of the dividend, we would not be able to pay our debts when they become due in the usual course of our business or our total assets would be less than the sum of our total 18 Table of Contents liabilities.
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.
Loans collateralized by single- 10 Table of Contents 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.
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.
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.
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.
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, 2025 would exceed such revised well-capitalized standard.
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.
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.
If we were to enter bankruptcy or become subject to the orderly liquidation process established by the Dodd-Frank Act, any commitment by us to a federal bank regulatory agency to maintain the capital of the Bank would be assumed by the bankruptcy trustee or the FDIC, as appropriate, and entitled to a priority of payment. Acquisitions.
If we were to enter bankruptcy or become subject to the orderly liquidation process established by the Dodd-Frank Act, any commitment by us to a federal bank regulatory agency to maintain the capital of the Bank would be assumed by the bankruptcy trustee or the FDIC, as appropriate, and entitled to a priority of payment. 15 Table of Contents Acquisitions.
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.
The say-on-pay, the 16 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.
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.
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.
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.
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.
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.
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.
Securities We manage our securities portfolio to balance the market and credit risks of our other assets and the Bank’s liability structure, with a secondary focus of profitably deploying funds which are not needed to fulfill current loan demand, deposit redemptions or other liquidity purposes.
Securities We manage our securities portfolio to balance the market and credit risks of our other assets and the Bank’s liability structure, with a secondary focus of profitably deploying funds which are not needed to fulfill current loan demand, deposit 11 Table of Contents redemptions or other liquidity purposes.
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 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.
However, the CFPB may participate in examinations on a “sampling basis” and may refer potential enforcement actions against such institutions to their primary regulators. The CFPB also may participate in examinations of our other direct or indirect subsidiaries that offer consumer financial products or services.
However, 19 Table of Contents the CFPB may participate in examinations on a “sampling basis” and may refer potential enforcement actions against such institutions to their primary regulators. The CFPB also may participate in examinations of our other direct or indirect subsidiaries that offer consumer financial products or services.
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.
As of December 31, 2025, these rules have not been implemented, although the SEC did adopt final rules implementing the clawback provisions of the Dodd-Frank Act in 2022.
The Guidance is triggered when CRE loan concentrations exceed either: ● Total reported loans for construction, land development, and other land of 100% or more of a bank’s total risk based capital; or ● Total reported loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land development, and other land of 300% or more of a bank’s total risk based capital.
The Guidance is triggered when CRE loan concentrations exceed either: ● Total reported loans for construction, land development, and other land of 100% or more of a bank’s total risk based capital; or 21 Table of Contents ● Total reported loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land development, and other land of 300% or more of a bank’s total risk based capital.
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.
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.
This includes providing career development opportunities for all associates; increasing our inclusivity and recognizing that diverse perspectives, backgrounds, and experiences strengthen our ability to meet the needs of our associates, communities, clients and shareholders; training our next generation of leaders; and succession planning. As of December 31, 2024, we had approximately 240 full-time equivalent employees.
This includes providing career development opportunities for all associates; increasing our inclusivity and recognizing that diverse perspectives, backgrounds, and experiences strengthen our ability to meet the needs of our associates, communities, clients and shareholders; training our next generation of leaders; and succession planning. As of December 31, 2025, we had approximately 317 full-time equivalent employees.
Repayment of secured and unsecured commercial loans depends substantially on the borrower’s underlying business, financial condition and cash flows, as well as the sufficiency of the collateral. Compared to real estate, the collateral may be more difficult to monitor, evaluate and sell.
Repayment of secured and unsecured commercial loans 9 Table of Contents depends substantially on the borrower’s underlying business, financial condition and cash flows, as well as the sufficiency of the collateral. Compared to real estate, the collateral may be more difficult to monitor, evaluate and sell.
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.
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, 2025, the total amount of deposits tied to the Federal Funds Effective rate was $1.07 billion.
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.
We recognized servicing income on residential mortgage loans of $2.4 million, $2.4 million and $193,000 (expense balance) for the years ended December 31, 2025, 2024 and 2023, respectively. The servicing income recognized is net of amortization of our mortgage servicing rights which caused the expense balance for the year ended December 31, 2023. Consumer and Other Loans.
The federal banking agencies have adopted regulations and Interagency Guidelines Establishing Standards for Safety and Soundness to implement these required standards. These guidelines set forth the safety and soundness standards used to identify and address problems at insured depository institutions before capital becomes impaired.
The federal banking agencies have adopted regulations and Interagency 20 Table of Contents Guidelines Establishing Standards for Safety and Soundness to implement these required standards. These guidelines set forth the safety and soundness standards used to identify and address problems at insured depository institutions before capital becomes impaired.
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.
In addition, these institutions 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 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%.
However, in the 4 th quarter of 2021, the Company’s assets exceeded $3 billion for the first time, such that the Company started being subject to consolidated risk-based capital requirements beginning in 2022.
However, in the fourth quarter of 2021, the Company’s assets exceeded $3.0 billion for the first time, such that the Company started being subject to consolidated risk-based capital requirements beginning in 2022.
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.
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.
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.
Our conventional commercial real estate loans, or non-SBA guaranteed commercial real estate loans, carried a weighted average maturity of 5.16 years as of December 31, 2025. 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.
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.
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, 2025 and 2024, the outstanding balance of our commercial and industrial SBA loans was $42.4 million and $28.5 million respectively.
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.
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, 2025, most of our loans were based on WSJPR. At December 31, 2025, approximately 21.6% of the commercial real estate loan portfolio consisted of fixed rate loans.
Risk Factors for a further discussion of risks related to cybersecurity and Item 1C. Cybersecurity for a further discussion of risk management strategies and governance processes related to cybersecurity. ​ 23 Table of Contents
Risk Factors for a further discussion of risks related to cybersecurity and Item 1C. Cybersecurity for a further discussion of risk management strategies and governance processes related to cybersecurity. ​
Our policies and procedures are designed to comply with the requirements of the Sarbanes-Oxley Act. 15 Table of Contents Incentive Compensation.
Our policies and procedures are designed to comply with the requirements of the Sarbanes-Oxley Act. Incentive Compensation.
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%.
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, 2025, we had $3.65 billion of total deposits with a total weighted average deposit cost of 2.63%.
As of December 31, 2024, we had brokered deposits of $721.8 million compared to $766.3 million of brokered deposits at December 31, 2023. All of our brokered deposits have interest rates tied to the Federal Funds Effective rate.
As of December 31, 2025, we had brokered deposits of $747.8 million compared to $721.8 million of brokered deposits at December 31, 2024. All of our brokered deposits have interest rates tied to the Federal Funds Effective rate.
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.
As of September 30, 2025, the DIF reserve ratio reached 1.40%, exceeding 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.
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, 2025, 75.2%, or $2.74 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.
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 29 full-service branch locations in Alabama, California 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 consider expanding our presence.
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.
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.
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.
As of December 31, 2025, the outstanding balance of our construction and development loans was $41.8 million, or 1.0%, of our total loan portfolio held for investment, compared to $21.6 million, or 0.7%, of our total loan portfolio held for investment at December 31, 2024.
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.
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, 2025 and 2024. 8 Table of Contents Commercial Real Estate Loans.
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.
Of our total deposits as of December 31, 2025, $911.0 million, or 25.0%, 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.
Through our diverse and experienced management team and talented employees, we are able to speak the language of our customers and provide them with services and products in a culturally competent manner.
We offer a suite of loan and deposit products tailored to meet the needs of the businesses of our customers. Through our diverse and experienced management team and talented employees, we are able to speak the language of our customers and provide them with services and products in a culturally competent manner.
We are a full-service commercial bank focused on delivering personalized service in an efficient and reliable manner to the small- to medium-sized businesses and individuals in our markets, predominantly Asian-American communities in growing metropolitan markets in the Eastern U.S. and Texas.
We are a full-service commercial bank focused on delivering personalized service in an efficient and reliable manner to the small-to medium-sized businesses and individuals in our markets, including many customers in diverse and multi-ethnic communities in growing metropolitan markets in the Eastern U.S., Texas and California.
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.
We currently operate 29 full-service branch locations in multi-ethnic communities in Alabama, California, Florida, Georgia, New York, New Jersey, Texas and Virginia. As of December 31, 2025, we had total assets of $4.77 billion, total loans held for investment of $4.08 billion, total deposits of $3.65 billion and total shareholders’ equity of $544.2 million.
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, 2025, $19.9 million, or 47.5%, of construction and development loans were for the construction of hotels; $9.6 million, or 23.0%, were for the construction of office buildings and commercial rental properties; $3.4 million, or 8.2%, were for the construction of physician’s offices and nursing homes; $2.6 million, or 6.3%, were for the construction of car washes; $2.2 million, or 5.1%, were for the construction of gas stations; and the remaining $4.1 million, or 9.9%, were loans distributed amongst various industries and sectors.
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.
Commercial real estate loans made up $1.56 billion, or 38.3%, of our total loan portfolio held for investment at December 31, 2025, compared to $762.0 million, or 24.1%, of our total loan portfolio held for investment as of December 31, 2024.
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.
Residential mortgage loans held for sale are sold with the servicing rights retained by the Bank. As of December 31, 2025, the amount of residential mortgage loans serviced for others rose to $702.6 million representing an increase of $175.5 million, or 33.3%, when compared to December 31, 2024.
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.
Of the balance outstanding as of December 31, 2025, $20.8 million, or 49.0%, of our commercial and industrial SBA portfolio carried a guarantee from the SBA while the remaining $21.6 million, or 51.0%, of the portfolio was unguaranteed.
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, 2025, we had $2.38 billion of residential real estate loans, representing 58.3% of our total loan portfolio held for investment compared to $2.30 billion, or 72.7%, of our total loan portfolio held for investment at December 31, 2024.
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.
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. The Bank has a rating of “Satisfactory” in its most recent CRA evaluation. In 2023 the Federal Reserve, OCC, and FDIC issued a final rule to modernize their respective CRA regulations.
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.
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.
We believe that our culturally familiar approach to banking, our tailored lending products, our branch network located in attractive Asian-American communities, and our highly replicable growth model have laid the foundation for achieving sustainable, profitable growth.
We believe that our culturally familiar approach to banking, our tailored lending products, our branch network located in attractive multi-ethnic communities, and our highly replicable growth model have laid the foundation for achieving sustainable, profitable growth. Our common stock is listed on the Nasdaq Global Select Market under the symbol “MCBS”.
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.
See Note 11 of our consolidated financial statements as of December 31, 2025, included elsewhere in this Annual Report on Form 10-K, for additional information. As of December 31, 2025, our fifteen largest depositor relationships, excluding brokered deposits, totaled $475.2 million, or 13.0%, of total deposits.
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.
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.
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.
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.
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.
We were in compliance with both limits for each period presented. 13 Table of Contents 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.
Our consistent expansion efforts have given us the know-how and expertise to lower the cost of opening and operating de novo branches, allowing each of these branches to quickly become profitable.
We have a proven track record of opening these new branches in a disciplined, cost efficient manner, without compromising the quality of our customer service or our profitability. Our consistent expansion efforts have given us the know-how and expertise to lower the cost of opening and operating de novo branches, allowing each of these branches to quickly become profitable.
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.
Of the 317 full-time equivalent employees as of December 31, 2025, 80.8% identify as a female and 95.0% are persons of color. Included in the 317 full-time equivalent employees are 71 employees who have management roles. Of these 71 management roles, 64.8% of the managers identify as a female and 88.7% are persons of color.
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.
Our LTV policy limits are 85% for commercial real estate loans. The total balance of commercial real estate loans on nonaccrual status was $14.8 million and $3.3 million as of December 31, 2025 and 2024, respectively.
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.
As of December 31, 2025, $769.6 million, or 49.3%, of our commercial real estate loans were secured by owner occupied properties and the remaining $791.2 million, or 50.7%, of loans in this category were secured by non-owner occupied properties.
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.
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.
Our primary source of cash, other than securities offerings, is dividends from the Bank.
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.
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.
As of December 31, 2025, our commercial real estate SBA and USDA portfolio, net of any sold portions, totaled $439.8 million. This represents an increase of $191.2 million, or 76.9%, when compared to the December 31, 2024 balance of $248.6 million. This large increase is mainly due to the SBA loan portfolio acquired from First IC.
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.
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.
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, 2025, $27.1 million, or 28.1%, of our commercial and industrial loans were extended to businesses in financial services; $14.1 million, or 14.6%, were made to restaurants, $11.8 million, or 12.2%, were made to medical and other health services; $8.3 million, or 8.6%, were loans extended to wholesalers or retailers; $5.5 million, or 5.7%, were loans made to supermarkets and other groceries; and the remaining $29.6 million, or 30.8%, of loans were distributed across various industries and sectors.
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.
Our deposits with directors and affiliated entities totaled $16.2 million for the same period. 12 Table of Contents 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.
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.
Within our commercial real estate loans, $600.3 million, or 38.5%, were to hotels (attributable to 78.0% of non-owner occupied properties); $199.2 million, or 12.8%, were made to wholesalers or retailers; $197.4 million, or 12.6%, were to commercial rental properties; $118.3, or 7.6%, were to gas stations and convenience stores; $86.3 million, or 5.5%, were to car washes; $49.5 million, or 3.2%, were to restaurants; $26.9 million, or 1.7%, were to general service business; and the remaining $282.8 million, or 18.1%, were distributed amongst various sectors and industries.
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.
Of the balance outstanding at December 31, 2025, $190.6 million, or 43.3%, of the loans in this portfolio carried an SBA guarantee while the remaining $249.1 million, or 56.7%, of the portfolio not guaranteed.
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.
Nonaccrual residential mortgage loans were $9.1 million and $14.2 million at December 31, 2025 and 2024, respectively. On occasion, we sell a portion of our non-conforming residential mortgage loans to third party investors. The loans are sold with no representation or warranties if the loan is paid off early.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFurther, such additional capital could result in dilution to our existing shareholders. If we or the Bank fail to maintain capital to meet regulatory requirements, our financial condition, liquidity and results of operations, as well as our ability to maintain compliance with regulatory capital requirements, would be materially and adversely affected.
Biggest changeIf we or the Bank fail to maintain capital at levels required by regulators, or at levels deemed appropriate by supervisory authorities, our financial condition, liquidity and results of operations could be materially and adversely affected, and we could be subject to restrictions on growth, capital distributions or other aspects of our business. 38 Table of Contents We have the ability to incur debt and pledge our assets, including our stock in the Bank, to secure that debt.
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.
If the national, regional and local economies experience worsening economic conditions (including persistent 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.
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.
These cyber risks include increased phishing, malware, and other cybersecurity attacks described above, 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 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 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.
We could also experience a cybersecurity incident 32 Table of Contents 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.
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..
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, including artificial intelligence, the use of the Internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of cybercriminals and other external parties..
The Company cannot predict the nature or timing of future changes in monetary, economic, or other policies or the effect that they may have on the Company's business activities, financial condition and results of operations. We are subject to federal and state fair lending laws, and failure to comply with these laws could lead to material penalties.
We cannot predict the nature or timing of future changes in monetary, economic or other policies or the effect that they may have on our business activities, financial condition or results of operations. We are subject to federal and state fair lending laws, and failure to comply with these laws could lead to material penalties.
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.
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.
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.
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.
In addition, if repurchase and indemnity demands increase on loans that we sell from our portfolio, our liquidity, results of operations and financial condition could be adversely affected. We may not be able to meet our unfunded credit commitments, or adequately reserve for losses associated with our unfunded credit commitments.
In addition, if repurchase and indemnity demands increase on loans that we sell from our portfolio, our liquidity, results of operations and financial condition could be adversely affected. 28 Table of Contents We may not be able to meet our unfunded credit commitments, or adequately reserve for losses associated with our unfunded credit commitments.
Negative publicity regarding our business, employees, or customers, with or without merit, may result in the loss of customers, investors and employees, costly litigation, a decline in revenues and increased governmental regulation.
Negative publicity regarding our business, employees, or customers, with or without merit, may result in the loss of customers, investors and employees, costly litigation, a decline in revenues and increased government regulation.
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.
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.
Investment in our common stock is inherently risky for the reasons described herein, and is subject to the same market forces that affect the price of common stock in any company. As a result, if you acquire our common stock, you could lose some or all of your investment.
Investment in our common stock is inherently 37 Table of Contents risky for the reasons described herein, and is subject to the same market forces that affect the price of common stock in any company. As a result, if you acquire our common stock, you could lose some or all of your investment.
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.
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.
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.
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.
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.
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..
We have the ability to incur debt and pledge our assets, including our stock in the Bank, to secure that debt. We have the ability to incur debt and pledge our assets to secure that debt. Absent special and unusual circumstances, a holder of indebtedness for borrowed money has rights that are superior to those of holders of common stock.
We have the ability to incur debt and pledge our assets to secure that debt. Absent special and unusual circumstances, a holder of indebtedness for borrowed money has rights that are superior to those of holders of common stock.
If we are unable to attract and retain 24 Table of Contents banking and mortgage loan customers and expand our sales market for such loans, we may be unable to continue to grow our business, and our financial condition and results of operations may be adversely affected.
If we are unable to attract and retain banking and mortgage loan customers and expand our sales market for such loans, we may be unable to continue to grow our business, and our financial condition and results of operations may be adversely affected.
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.
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.
Any such failure in management’s analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations. Changes in accounting standards could materially impact our financial statements.
Any such failure in management’s analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations. 34 Table of Contents Changes in accounting standards could materially impact our financial statements.
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.
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 intelligence (“AI”) presents risks and challenges that may adversely impact our business.
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.
At December 31, 2025, approximately 97.6% 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 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.
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 33 Table of Contents provisions in intellectual property, privacy, security, consumer protection, employment, and other laws applicable to the use of AI.
If the Bank fails to meet these minimum capital guidelines and other regulatory requirements, our financial condition would be materially and adversely affected. We may also be required to satisfy additional capital adequacy standards as determined by the Federal Reserve.
If the Bank fails to meet these 36 Table of Contents minimum capital guidelines and other regulatory requirements, our financial condition would be materially and adversely affected. We may also be required to satisfy additional capital adequacy standards as determined by the Federal Reserve.
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.
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.
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.
See Supervision and Regulation above for an additional discussion of the extensive regulation and supervision that the Company and the Bank are subject to. 35 Table of Contents Federal and state regulators periodically examine our business, and we may be required to remediate adverse examination findings.
Prolonged periods of inflation may impact our profitability by negatively impacting our fixed costs and expenses, including increasing funding costs and expense related to talent acquisition and retention, and negatively impacting the demand for our products and services.
Inflation could negatively impact our business, our profitability and our stock price. Prolonged periods of inflation may impact our profitability by negatively impacting our fixed costs and expenses, including increasing funding costs and expense related to talent acquisition and retention, and negatively impacting the demand for our products and services.
The costs and effects of litigation, investigations or similar matters, or adverse facts and developments related thereto, could materially affect our business, operating results and financial condition. We may be involved from time to time in a variety of litigation, investigations or similar matters arising out of our business.
The costs and effects of litigation, investigations or similar matters, or adverse facts and developments related thereto, could materially affect our business, operating results and financial condition. We may be involved from time to time in a variety of litigation, investigations or similar matters arising out of our business, including regulatory, supervisory and civil proceedings.
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.
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 generally unable to control the amount of premiums that we are required to pay for FDIC insurance. Any future additional assessments, increases or required prepayments in FDIC insurance premiums could reduce our profitability, may limit our ability to pursue certain business opportunities or otherwise negatively impact our operations.
We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance. Any future additional assessments, increases or required prepayments in FDIC insurance premiums could reduce our profitability, place additional pressure on pricing of loans and deposits, limit our ability to pursue certain business opportunities, or otherwise negatively impact our operations.
In addition, bank failures have and could in the future prompt the FDIC to increase deposit insurance costs. Increases in funding, deposit insurance, or other costs as a result of these types of events have and could in the future materially adversely affect our financial condition and results of operations.
Increases in funding, deposit insurance, or other costs as a result of these types of events have and could in the future materially adversely affect our financial condition and results of operations.
Our nonperforming assets adversely affect our net income in various ways. We do not record interest income on nonaccrual loans or OREO, thereby adversely affecting our net interest income, net income and returns on assets and equity, and our loan administration costs increase, which together with reduced interest income adversely affects our efficiency ratio.
We do not record interest income on nonaccrual loans or OREO, thereby adversely affecting our net interest income, net income and returns on assets and equity, and our loan administration costs increase, which together with reduced interest income adversely affects our 29 Table of Contents efficiency ratio.
In developing and marketing new lines of business and new products and services we may invest significant time and resources. We may not achieve target timetables for the introduction and development of new lines of business and new products or services and price and profitability goals may not prove feasible.
We may not achieve target timetables for the introduction and development of new lines of business and new products or services and price and profitability goals may not prove feasible.
As of December 31, 2024, our directors and their families and affiliated entities collectively had a 27.3% ownership interest in the Company.
As of December 31, 2025, our directors and their families and affiliated entities collectively had a 24.6% ownership interest in the Company.
Because of our geographic concentration, we are less able than regional or national financial institutions to diversify our credit risks across multiple markets. In addition, larger institutions with similar focuses are targeting our market areas. As we grow, we face entrenched multi-ethnic-oriented banks with larger resources in our new markets.
Because of our geographic concentration, we are less able than regional or national financial institutions to diversify our credit risks across multiple markets. In addition, larger institutions with similar focuses are targeting our market areas.
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.
Conversely, decreasing interest rates reduce our yield on our variable rate loans and on our new loans, which reduces our net interest income. 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.
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.
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.
These bank regulators possess broad authority to prevent or remedy unsafe or unsound practices or violations of law. The laws and regulations applicable to the banking industry could change at any time and we cannot predict the effects of these changes on our business, profitability or growth strategy. Increased regulation could increase our cost of compliance and adversely affect profitability.
The laws and regulations applicable to the banking industry could change at any time and we cannot predict the effects of these changes on our business, profitability or growth strategy. Increased regulation could increase our cost of compliance and adversely affect profitability.
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.
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.
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.
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.
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.
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.
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.
Additionally, the timing and magnitude of inflation’s effects may be difficult to predict and could persist or intensify depending on economic conditions and policy responses 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.
These competitors include national banks, regional banks and other community banks, including banks similar to us that primarily serve distinct or multi-ethnic communities. In many instances these national and regional banks have greater resources than we do, and the smaller community banks may have stronger ties in local markets than we do, which may put us at a competitive disadvantage.
In many instances these national and regional banks have greater resources than we do, and the smaller community banks may have stronger ties in local markets than we do, which may put us at a competitive disadvantage.
Further, the disruption following these types of events have and could in the future generate significant market trading volatility among publicly traded bank holdings companies and, in particular, regional banks like the Company. Our future success is largely dependent upon our ability to successfully execute our business strategy.
Further, the disruption following these types of events have and could in the future generate significant market trading volatility among publicly traded bank holdings companies and, in particular, regional banks like the Company. Liquidity risks could affect operations and jeopardize our business, financial condition, and results of operations. Liquidity is essential to our business.
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 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 remained elevated during 2024, with the Federal Reserve slowly decreasing interest rates beginning in the fourth quarter of 2024 through the fourth quarter of 2025.
Risks Related to Legislative and Regulatory Events We are subject to extensive government regulation that could limit or restrict our activities, which in turn may adversely impact our ability to increase our assets and earnings.
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. Risks Related to Legislative and Regulatory Events We are subject to extensive government regulation that could limit or restrict our activities, which in turn may adversely impact our ability to increase our assets and earnings.
Any increases in the provision or allowance for credit losses will result in a decrease in our net income and, potentially, capital, and may have a material adverse effect on our financial condition or results of operations. Decreased residential mortgage origination, volume and pricing decisions of competitors may adversely affect our profitability.
Any increases in the provision or allowance for credit losses will result in a decrease in our net income and, potentially, capital, and could increase earnings volatility or constrain our ability to deploy capital, and may have a material adverse effect on our financial condition or results of operations.
Generally, we do not maintain reserves or loss allowances for such potential claims and any such claims could materially and adversely affect our business, financial condition or results of operations. The laws, regulations and standard operating procedures that are applicable to SBA loan products may change in the future.
Generally, we do not maintain reserves or loss allowances for such potential claims and any such claims could materially and adversely affect our business, financial condition or results of operations.
Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, the sale of loans and/or investment securities and through other sources could have a substantial negative effect on our liquidity. Our most important source of funds consists of our customer deposits.
An inability to raise funds through deposits, borrowings, the sale of loans and/or investment securities and through other sources could have a substantial negative effect on our liquidity. Our most important source of funds consists of our customer deposits. Such deposit balances can decrease when customers perceive alternative investments, such as the stock market, as providing a better risk/return tradeoff.
Increased competition in our markets may result in reduced loans, deposits and commissions and brokers’ fees, gains on sales, servicing fees, as well as reduced net interest margin and profitability.
Increased competition in our markets may result in reduced loans, deposits and commissions and brokers’ fees, gains on sales, servicing fees, as well as reduced net interest margin and profitability. Competition may also increase pressure on compensation and make it more difficult to attract and retain experienced banking and mortgage lending personnel.
Increasing interest rates can have a negative impact on our business by reducing the amount of money our customers borrow or by adversely affecting their ability to repay outstanding loan balances that may increase due to adjustments in their variable rates which may lead to an increase in nonperforming assets and a reduction of income recognized, which could have a material adverse effect on our results of operations and cash flows.
Increasing interest rates can have a negative impact on our business by reducing the amount of money our customers borrow or by adversely affecting their ability to repay outstanding loan balances that may increase due to adjustments in their variable rates which may lead to an increase in nonperforming assets and a reduction of income recognized, which could compress our net interest margin and adversely affect liquidity 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.
Further, such losses could be realized into earnings should liquidity and/or business strategy necessitate the sales of securities in a loss position.
Further, such losses could be realized into earnings should liquidity and/or business strategy necessitate the sales of securities in a loss position. Periods of market stress or deposit outflows could increase the likelihood that we would need to sell securities at unfavorable prices.
Our future success may depend, in part, on our ability to use technology competitively to offer products and services that provide convenience to customers and create additional efficiencies in our operations.
In addition, some competitors may offer banking and payment services through embedded or platform-based models that reduce the need for customers to maintain traditional banking relationships. Our future success may depend, in part, on our ability to use technology competitively to offer products and services that provide convenience to customers and create additional efficiencies in our operations.
Fluctuations in interest rates impacts both the level of income and expense recorded on most of our assets and liabilities and the market value of all interest-earning assets and interest-bearing liabilities, which in turn could have a material adverse effect on our net income, operating results, or financial condition.
Fluctuations in interest rates impact both the level of income and expense recorded on most of our assets and liabilities and the market value of all interest-earning assets and interest-bearing liabilities, which in turn could have a material adverse effect on our net income, operating results, or financial condition. 25 Table of Contents Although we have implemented procedures we believe will reduce the potential effects of changes in interest rates on our net interest income, these procedures may not always be successful as some of these effects are outside of our control.
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.
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 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.
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.
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.
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. This demographic concentration makes us more prone to circumstances that particularly affect this segment of the population.
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. 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.
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.
However, past payment of dividends is not a guarantee of future dividend payments. We have no obligation to pay dividends and we may change our dividend policy at any time without notice to our shareholders.
We cannot predict the size of future issuances of our common stock or the effect, if any, that future issuances and sales of our common stock will have on the market price of our common stock. Accordingly, we may be unable to raise additional capital if needed or on terms acceptable to us.
We cannot predict the size, timing or terms of future issuances of our common stock or other capital instruments, or the effect that any such issuances may have on the market price of our common stock.
The inability to utilize brokered deposits as a source of funding could have an adverse effect on our financial position, results of operations and liquidity.
The inability to utilize brokered deposits as a source of funding could have an adverse effect on our financial position, results of operations and liquidity. In addition, significant reliance on brokered deposits could be perceived negatively by customers, counterparties or investors, which could further affect our funding costs or access to alternative sources of liquidity.
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.
Environmental, social and governance (“ESG”) and diversity, equity and inclusion (“DEI”) risks could adversely affect our reputation and shareholder, employee, client and third party relationships and may negatively affect our stock price. ​ Public expectations, investor preferences, regulatory developments and stakeholder views regarding environmental, social and governance related matters continue to evolve and may be inconsistent or conflicting.
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.
Any of these risks could expose the Company to liability or adverse legal or regulatory consequences, harm the Company’s reputation and the public perception of its business or the effectiveness of its security measures and risk‑management practices, or place us at a competitive disadvantage if we are unable to adopt or govern AI technologies effectively relative to our peers.
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.
These actions strongly influence our rate of return on certain investments, our hedge effectiveness for mortgage servicing and our mortgage origination pipeline, as well as our cost of funds for lending and investing.
These occurrences could have a material adverse effect on our net interest income or our results of operations. New lines of business or new products and services may subject us to additional risks. From time to time, we may implement or may acquire new lines of business or offer new products and services within existing lines of business.
In a rising‑rate environment, slower prepayments or extensions of expected maturities could increase interest rate sensitivity and reduce portfolio liquidity. These occurrences could have a material adverse effect on our net interest income or our results of operations. 30 Table of Contents New lines of business or new products and services may subject us to additional risks.
The Federal Reserve is responsible for regulating the supply of money in the United States, including open market operations used to stabilize prices in times of economic stress, as well as setting monetary policies.
Changes to monetary policy by the Federal Reserve could adversely impact our results of operations. The Federal Reserve is responsible for regulating the supply of money in the United States, including through open market operations and other tools used to influence economic activity and price stability, as well as setting monetary policy.
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.
We also face competition from many other types of financial institutions, including fintech companies, savings associations, finance companies, brokerage firms, insurance companies, 24 Table of Contents credit unions, mortgage banks and other financial intermediaries.
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.
Although we seek to manage litigation risk through internal controls, compliance programs, training, insurance and active litigation 31 Table of Contents management, the commencement, outcome and magnitude of litigation or investigations cannot be predicted with certainty.
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.
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. In addition, unsuccessful product launches or new business initiatives could adversely affect our reputation and divert management attention from existing operations.
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.
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.
Although we have employment agreements with certain of our executive officers, there is no guarantee that these officers and other key personnel will remain employed with the Company. Nonperforming assets take significant time to resolve and adversely affect our results of operations and financial condition, and could result in further losses in the future.
Although we have employment agreements with certain of our executive officers, there is no guarantee that these officers and other key personnel will remain employed with the Company. If we are unable to successfully plan for and execute the transition or replacement of key members of our management team, our operations and strategic initiatives could be adversely affected.
In addition, a number of out-of-state financial intermediaries have opened production offices or otherwise solicit deposits in our market areas.
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. In addition, a number of out-of-state financial intermediaries have opened production offices or otherwise solicit deposits in our market areas.
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.
These requirements, and any other new regulations, could adversely affect our ability to pay dividends, service holding‑company obligations, pursue growth initiatives or return capital to shareholders, and could require us to raise additional capital or reallocate resources in ways that may not be favorable to our shareholders, including at times when market conditions are adverse.
Our mortgage operation originates and sells residential mortgage loans and services residential mortgage loans.
Decreased residential mortgage origination, volume and pricing decisions of competitors may adversely affect our profitability. Our mortgage operation originates and sells residential mortgage loans and services residential mortgage loans.
We face strong competition from financial services companies and other companies that offer commercial and retail banking services, which could harm our business. Many of our competitors offer the same, or a wider variety of, the banking and related financial services we offer within our market areas.
Many of our competitors offer the same, or a wider variety of, the banking and related financial services we offer within our market areas. These competitors include national banks, regional banks and other community banks, including banks similar to us that primarily serve distinct or multi-ethnic communities.
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.
Our interest rate risk management models and assumptions may not accurately predict or fully mitigate the impact of future interest rate changes, particularly during periods of elevated volatility, and a prolonged period of volatile and unstable market conditions would likely increase our funding costs and negatively affect market risk mitigation strategies.
Because a significant portion of our loan portfolio is comprised of commercial and residential real estate loans, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses.
Additionally, potential future actions such as the proposed consumer credit card interest rate cap may lead to unprofitable products, especially for riskier borrowers, and could lead to cutting credit lines or eliminating cards, increased reliance on fees and increased debt burdens for those needing credit the most, thereby having the potential to negatively impact bank asset quality Because a significant portion of our loan portfolio is comprised of commercial and residential real estate loans, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses.
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.
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, paydown of our existing loan portfolio and sale of loans to investors.
Failure to achieve these strategic goals could adversely affect our ability to successfully implement our business strategies and could negatively impact our business, growth prospects, financial condition and results of operations.
Failure to achieve these objectives could impair our ability to execute our strategy and adversely affect our business, growth prospects, financial condition and results of operations. In addition, ineffective growth management, technology implementation challenges, cost overruns or service disruptions involving third‑party providers could hinder our ability to achieve our strategic objectives.
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.
Any of these factors could adversely affect our business, reputation and the market price of our common stock. ​ 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. We have paid quarterly dividends to our shareholders for the past twelve years.
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.
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 or otherwise relocate funds. Rapid changes in customer behavior, including accelerated deposit withdrawals facilitated by digital banking channels, could increase liquidity pressures.
It is inherently difficult to assess the outcome of these matters, and we may not prevail in any proceedings or litigation.
The outcome of such matters is inherently difficult to predict, and we may not prevail in any particular matter. Any claims asserted against us, regardless of merit or ultimate outcome, may require significant management time and financial resources and could harm our reputation.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor further discussion of risks from cybersecurity threats, see the section captioned “System failures or breaches of our network security could subject us to increased operating costs as well as litigation and other liabilities” in Item 1A. Risk Factors. ​ Cybersecurity Governance ​ Our Information Security Officer directs our enterprise information security department and manages our information security program.
Biggest changeFor further discussion of risks from cybersecurity threats, 40 Table of Contents see the section captioned “System failures or breaches of our network security could subject us to increased operating costs as well as litigation and other liabilities” in Item 1A.
The Incident Response Plan is coordinated through the Information Security Officer and key members of management are embedded into the Plan by its design.
The Incident Response Plan is coordinated through the Information Security Officer and key members of management are embedded into the Incident Response Plan by its design.
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.
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 Information Technology Committee also reviews our cybersecurity risk profile on a quarterly basis.
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 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 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. ​ 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.
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 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 Incident Response Plan facilitates coordination across multiple parts of our organization and is evaluated at least annually. ​ We have not experienced a cybersecurity incident or identified risks from known cybersecurity threats or prior cybersecurity incidents that has materially impacted our business strategy, results of operations, or financial condition.
The Incident Response Plan facilitates coordination across multiple parts of our organization and is evaluated at least annually. ​ We have not experienced a cybersecurity incident or identified risks from known cybersecurity threats or prior cybersecurity incidents that has, or is reasonably likely to have, materially impacted our business strategy, results of operations, or financial condition.
The 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.
The information security program is periodically reviewed by the Informaiton Security Officer, as well as the Information Technology Committee of our board of directors, 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.
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.
Risk Factors. ​ Cybersecurity Governance ​ Our Information Security Officer directs our enterprise information security department and manages our information security program. The responsibilities of our 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.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties The Company’s corporate headquarters and Metro City Bank’s main office is located at 5114 Buford Highway NE, Atlanta, GA 30340. Metro City Bank owns this property. We also currently operate 19 additional full service-branches, which are all leased, located in multi-ethnic communities in Alabama, Florida, Georgia, New York, New Jersey, Texas and Virginia.
Biggest changeItem 2. Properties The Company’s corporate headquarters and Metro City Bank’s main office is located at 5114 Buford Highway NE, Atlanta, GA 30340. Metro City Bank owns this property. We also currently operate 29 additional full service-branches, which are all leased, located in multi-ethnic communities in Alabama, California, Florida, Georgia, New York, New Jersey, Texas and Virginia.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePrior 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.
Biggest changeAs of March 9, 2026, there were 28,755,228 shares of common stock outstanding held by approximately 399 shareholders of record of our common stock as reported by our transfer agent. 41 Table of Contents Dividends It has been our policy to pay quarterly dividends to holders of our common stock.
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.
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, 2025.
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.
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.
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.
Small Cap Bank Index for the period beginning on December 31, 2021 through December 31, 2025. The following reflects index values as of close of trading, assumes $100.00 invested on December 31, 2021, 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 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 continuation of the share repurchase program began on October 1, 2025 and will end on September 30, 2026. 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.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market Information and Holders of Record Our common stock is listed on the Nasdaq Global Select Market under the symbol “MCBS”. Our common stock began trading on Nasdaq Global Select Market on October 3, 2019.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market Information and Holders of Record Our common stock is listed on the Nasdaq Global Select Market under the symbol “MCBS”.
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.
We have paid quarterly dividends to our shareholders in amounts up to 40% of our net income over the past twelve years. We have no obligation to pay dividends and we may change our dividend policy at any time without notice to our shareholders.
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.
The following table summarizes the repurchases of our common shares for the three months ended December 31, 2025. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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, 2025 to October 31, 2025 46,621 $ 25.95 46,621 ​ 877,355 November 1, 2025 to November 30, 2025 ​ 57,224 ​ $ 26.02 ​ 57,224 ​ 820,131 December 1, 2025 to December 31, 2025 — $ — — ​ 820,131 Total 103,845 ​ $ 25.98 ​ 103,845 ​ 820,131 42 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.
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.
The historical price of our common stock represented in this graph represents past performance and is not necessarily indicative of future performance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Index ​ ​ ​ 2021 ​ ​ ​ 2022 ​ ​ ​ 2023 ​ ​ ​ 2024 ​ ​ ​ 2025 MetroCity Bankshares, Inc. ​ $ 100.00 ​ $ 80.75 ​ $ 93.16 ​ $ 127.74 ​ $ 109.81 Nasdaq Composite Index ​ 100.00 ​ 66.90 ​ 95.95 ​ 123.43 ​ 148.56 S&P U.S.
Small Cap Bank Index ​ 100.00 ​ 139.21 ​ 122.74 ​ 123.35 ​ 145.82 ​ ​ Item 6. [Reserved] ​
Small Cap Bank Index ​ 100.00 ​ 88.17 ​ 88.61 ​ 104.75 ​ 115.20 ​ ​ Item 6. [Reserved] ​
Added
The share repurchase program began on October 17, 2024 and ended on September 30, 2025.
Added
On September 17, 2025, the Company announced the continuation of its share repurchase program that expired on September 30, 2025 (“2025 Prior Share Repurchase Plan”), and authorized the Company to repurchase up to 923,976 shares of the Company’s outstanding shares of common stock, which is the number of remaining shares authorized for repurchase from the 2025 Prior Share Repurchase Plan.

Item 6. [Reserved]

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

1 edited+0 added−0 removed0 unchanged
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
Biggest changeItem 6. ​ [Reserved] ​ 43 Item 7. ​ Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 43 Item 7A. ​ Quantitative and Qualitative Disclosures About Market Risk ​ 69 Item 8. ​ Financial Statements and Supplementary Data ​ 72

Item 7. Management's Discussion & Analysis

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

139 edited+44 added−23 removed82 unchanged
Biggest changeThe 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.
Biggest changeThe 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) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 ​ ​ ​ 2022 ​ ​ ​ 2021 ​ Balance, beginning of period ​ $ 18,744 ​ $ 18,112 ​ $ 13,888 ​ $ 16,952 ​ $ 10,135 ​ Initial allowance on First IC acquired loans ​ ​ 9,885 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ CECL adoption (Day 1) impact ​ ​ — ​ ​ — ​ ​ 5,055 ​ ​ — ​ ​ — ​ Charge-offs: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Construction and development ​ — ​ — ​ — ​ — ​ — ​ Commercial real estate ​ 172 ​ — ​ 455 ​ — ​ 67 ​ Commercial and industrial ​ 294 ​ 130 ​ 309 ​ 390 ​ 64 ​ Residential real estate ​ — ​ — ​ — ​ — ​ — ​ Consumer and other ​ — ​ — ​ — ​ — ​ — ​ Total charge-offs ​ 466 ​ 130 ​ 764 ​ 390 ​ 131 ​ Recoveries: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Construction and development ​ — ​ — ​ — ​ — ​ — ​ Commercial real estate ​ 2 ​ 83 ​ 5 ​ 7 ​ 12 ​ Commercial and industrial ​ 14 ​ 11 ​ 20 ​ 81 ​ — ​ Residential real estate ​ — ​ — ​ — ​ — ​ — ​ Consumer and other ​ — ​ — ​ — ​ 5 ​ 7 ​ Total recoveries ​ 16 ​ 94 ​ 25 ​ 93 ​ 19 ​ Net charge-offs/(recoveries) ​ 450 ​ 36 ​ 739 ​ 297 ​ 112 ​ Provision for credit losses ​ (336) ​ 668 ​ (92) ​ (2,767) ​ 6,929 ​ Balance, end of period ​ $ 27,843 ​ $ 18,744 ​ $ 18,112 ​ $ 13,888 ​ $ 16,952 ​ Total loans at end of period ​ $ 4,077,822 ​ $ 3,165,316 ​ $ 3,150,961 ​ $ 3,065,329 ​ $ 2,511,508 ​ Average loans (1) ​ 3,202,087 ​ 3,125,389 ​ 3,039,361 ​ 2,761,195 ​ 2,109,249 ​ Net charge-offs to average loans ​ 0.01 % 0.00 % 0.02 % 0.01 % 0.01 % Allowance for credit losses to total loans ​ 0.68 % 0.59 % 0.57 % 0.45 % 0.67 % (1) Excludes loans held for sale.
We have historically sold the guaranteed portion (75%-90%) of the SBA loans that we originate. Our SBA loans are typically made to small-sized retail, hotel/motel, service and distribution businesses for working capital needs or business expansions. SBA loans have maturities up to 25 years. Typically, non-real estate secured loans mature in less than 10 years.
We have historically sold the guaranteed portion (typically 75%) of the SBA loans that we originate. Our SBA loans are typically made to small-sized retail, hotel/motel, service and distribution businesses for working capital needs or business expansions. SBA loans have maturities up to 25 years. Typically, non-real estate secured loans mature in less than 10 years.
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.
We did not recognize any interest income on nonaccrual loans during the years ended December 31, 2025, 2024 and 2023. 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.
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.
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, 2025 ​ ​ ​ 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 effect of such events, although uncertain at this time, could result in an increase in the level of nonperforming loans and increased credit losses, which could adversely affect our future growth and profitability. No assurance of the ultimate level of credit losses can be given with any certainty. 57 Table of Contents Analysis of the Allowance for Credit Losses.
The effect of such events, although uncertain at this time, could result in an increase in the level of nonperforming loans and increased credit losses, which could adversely affect our future growth and profitability. No assurance of the ultimate level of credit losses can be given with any certainty. 61 Table of Contents Analysis of the Allowance for Credit Losses.
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.
The Bank exceeded all regulatory capital requirements and was considered to be “well-capitalized” as of December 31, 2025 and 2024. As of December 31, 2025, the FDIC categorized the Bank as well-capitalized under the prompt corrective action framework. There have been no conditions or events since December 31, 2025 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, 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.
Additional information about these policies can be found in Note 1 of our consolidated financial statements as of December 31, 2025, 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 increase is mainly attributable to higher underwriting, processing and origination fees earned from our origination of residential mortgage loans as mortgage volume increased during the year ended December 31, 2024 compared to the year ended December 31, 2023. 48 Table of Contents Mortgage loan originations totaled $413.7 million during the year ended December 31, 2024 compared to $337.0 million during the year ended December 31, 2023.
The increase is mainly attributable to higher underwriting, processing and origination fees earned from our origination of residential mortgage loans as mortgage volume increased during the year ended December 31, 2024 compared to the year ended December 31, 2023. 53 Table of Contents Mortgage loan originations totaled $413.7 million during the year ended December 31, 2024 compared to $337.0 million during the year ended December 31, 2023.
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.
The Company does not believe that the securities available for sale that were in an unrealized loss position as of December 31, 2025 represent a credit loss impairment. As of December 31, 2025, 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, 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.
All of the debt securities in our investment portfolio were classified as available-for-sale as of December 31, 2025. 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.
(2) Average loan balances include nonaccrual loans and loans held for sale. 46 Table of Contents Rate/Volume Analysis Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates.
(2) Average loan balances include nonaccrual loans and loans held for sale. 50 Table of Contents Rate/Volume Analysis Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates.
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.
During 2025, 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.
Deposits Deposits represent the Bank’s primary source of funds, and we gather deposits primarily through our branch locations, as well as the use of wholesale and brokered deposits. We offer a variety of deposit products including demand deposit accounts, interest-bearing products, savings accounts and certificate of deposits.
Deposits Deposits represent the Bank’s primary source of funds, and we gather deposits primarily through our branch locations, as well as the use of wholesale and brokered deposits. We offer a variety of deposit products including demand deposit accounts, interest-bearing products, money market and savings accounts and certificate of deposits.
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 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, ​ ​ 2025 ​ 2024 ​ 2023 (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 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.
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.
Our determination of the amount of the reserve for credit losses is a critical accounting estimate as it requires the use of estimates and significant judgment as to the amount and timing of expected future cash flows, reliance on historical loss rates on homogenous portfolios, consideration of our quantitative and qualitative evaluation of economic factors, and the reliance on our reasonable and supportable forecasts.
Our determination of the amount of the reserve for credit losses is a critical accounting 44 Table of Contents estimate as it requires the use of estimates and significant judgment as to the amount and timing of expected future cash flows, reliance on historical loss rates on homogenous portfolios, consideration of our quantitative and qualitative evaluation of economic factors, and the reliance on our reasonable and supportable forecasts.
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.
No discount window borrowings were outstanding as of December 31, 2025 and 2024. We also maintain relationships in the capital markets with brokers to issue certificates of deposit and money market accounts.
Our short-term and long-term liquidity requirements are primarily met through cash flow from operations, redeployment of prepaying and maturing balances in our loan and investment portfolios, and increases in customer 62 Table of Contents deposits.
Our short-term and long-term liquidity requirements are primarily met through cash flow from operations, redeployment of prepaying and maturing balances in our loan and investment portfolios, and increases in customer 66 Table of Contents deposits.
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 allowance for unfunded commitments was created upon adoption of CECL on January 1, 2023 and had a balance of $287,000 and $165,000 as of December 31, 2025 and 2024, respectively. Loans that do not share risk characteristics are evaluated on an individual basis.
The weighted average pay rate for these interest rate derivatives is 2.29%. During the year ended December 31, 2024, we recorded a credit to interest expense of $22.1 million from the benefit received on these interest rate derivatives compared to a credit to interest expense of $5.4 million recorded during the year ended December 31, 2023.
The weighted average pay rate for these interest rate derivatives is 2.29%. During the year ended December 31, 2024, we recorded a credit to interest expense of 48 Table of Contents $22.1 million from the benefit received on these interest rate derivatives compared to a credit to interest expense of $5.4 million recorded during the year ended December 31, 2023.
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.
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.
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.
No issuer of the available-for-sale securities comprised more than ten percent of our shareholders’ equity as of December 31, 2025, 2024 or 2023.
The average number of full-time equivalent employees was 240 for the year ended December 31, 2024 compared to 220 for the year ended December 31, 2023. Occupancy expense for the year ended December 31, 2024 was $5.5 million compared to $4.9 million for the year ended December 31, 2023, an increase of $631,000, or 12.9%.
The average number of full-time equivalent employees was 240 for the year ended December 31, 2024 compared to 220 for the year ended December 31, 2023. 55 Table of Contents Occupancy expense for the year ended December 31, 2024 was $5.5 million compared to $4.9 million for the year ended December 31, 2023, an increase of $631,000, or 12.9%.
Also included in other noninterest income are fair value gains/losses on our equity securities, which totaled $35,000 (loss) and $35,000 (gain), respectively, for the years ended December 31, 2024 and 2023.
Also included in other noninterest income are fair value gains/losses on our equity securities, which totaled $346,000 (gain) and $35,000 (loss), respectively, for the years ended December 31, 2025 and 2024.
Results of Operations Net Income Year ended December 31, 2024 compared to year ended December 31, 2023 We recorded net income of $64.5 million for the year ended December 31, 2025 compared to $51.6 million for the year ended December 31, 2023, an increase of $12.9 million, or 25.0%.
Year ended December 31, 2024 compared to year ended December 31, 2023 We recorded net income of $64.5 million for the year ended December 31, 2024 compared to $51.6 million for the year ended December 31, 2023, an increase of $12.9 million, or 25.0%.
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.
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, 2025, the total amount of deposits tied to the Federal Funds Effective rate was $1.07 billion.
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.
The loans are typically made to small and medium-sized businesses for working capital needs, business expansions and for 58 Table of Contents 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.
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.
Business – Regulation and Supervision – Regulation of the Company – Capital Requirements.” 67 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, 2025 and 2024.
Nonperforming loans include nonaccrual loans and loans 90 days or more past due and still accruing. Nonperforming assets consist of nonperforming loans plus foreclosed real estate. Nonperforming loans were $18.0 million at December 31, 2024 compared to $14.7 million at December 31, 2023 and $10.2 million at December 31, 2022.
Nonperforming loans include nonaccrual loans and loans 90 days or more past due and still accruing. Nonperforming assets consist of nonperforming loans plus foreclosed real estate. Nonperforming loans were $25.2 million at December 31, 2025 compared to $18.0 million at December 31, 2024 and $14.7 million at December 31, 2023.
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.
As of December 31, 2025, our construction and development loans comprised $41.8 million, or 1.0%, of total loans held for investment, compared to $21.6 million, or 0.7%, of total loans held for investment as of December 31, 2024. This compares to $23.3 million, or 0.7%, of total loans held for investment as of December 31, 2023. Commercial real estate loans.
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 4 of our consolidated financial statements as of December 31, 2025, 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 10 of our consolidated financial statements as of December 31, 2024, included elsewhere in this Annual Report on Form 10-K, for additional information.
See Note 11 of our consolidated financial statements as of December 31, 2025, included elsewhere in this Annual Report on Form 10-K, for additional information.
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.
See Note 1 and Note 4 of our consolidated financial statements as of December 31, 2025, included elsewhere in this Annual Report on Form 10-K, for additional information on the reserve and allowance for credit losses.
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 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 $765.7 million as of December 31, 2025, 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, 2025 and 2024.
The amount of such losses will vary depending upon the risk characteristics of the loan lease portfolio as affected by economic conditions such as rising interest rates and the financial performance of borrowers. The reserve for credit losses consists of the allowance for credit losses (“ACL”) and the allowance for unfunded commitments.
The amount of such losses will vary depending upon the risk characteristics of the loan lease portfolio as affected by economic conditions including, among others, volatility in rising interest rates and the financial performance of borrowers. The reserve for credit losses consists of the allowance for credit losses (“ACL”) and the allowance for unfunded commitments.
We currently operate 20 full-service branch locations in multi-ethnic communities in Alabama, Florida, Georgia, New York, New Jersey, Texas and Virginia.
We currently operate 29 full-service branch locations in multi-ethnic communities in Alabama, California, Florida, Georgia, New York, New Jersey, Texas and Virginia.
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.
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, 2025, our SBA and USDA portfolio totaled $482.2 million, compared to $277.0 million as of December 31, 2024.
Typically, the accrual of interest on loans is discontinued when principal and interest payments are past due 90 days or more or when, in the opinion of management, there is a reasonable doubt as to collectability in the normal course of business.
Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. Typically, the accrual of interest on loans is discontinued when principal and interest payments are past due 90 days or more or when, in the opinion of management, there is a reasonable doubt as to collectability in the normal course of business.
Mortgage loan servicing income was $2.4 million for the year ended December 31, 2024 compared to an expense balance of $193,000 for the year ended December 31, 2023, an increase of $2.6 million, or 1368.4%.
Mortgage loan servicing income was $2.4 million for the year ended December 31, 2024 compared to mortgage loan servicing expense of $193,000 for the year ended December 31, 2023, an increase of $2.6 million year over year.
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.
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) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 ​ Maximum amount outstanding at any month-end during the period ​ $ 510,000 ​ $ 375,000 ​ $ 425,000 ​ Balance outstanding at end of period ​ ​ 510,000 ​ ​ 375,000 ​ ​ 325,000 ​ Average outstanding balance during the period ​ ​ 423,750 ​ ​ 368,750 ​ ​ 350,000 ​ Weighted average interest rate during the period ​ ​ 4.06 % ​ 3.97 % ​ 3.06 % Weighted average interest rate at end of period ​ 4.03 ​ 4.11 ​ 3.66 ​ ​ In addition to our advances with the FHLB, we maintain federal funds agreements with our correspondent banks.
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.
See Note 11 of our consolidated financial statements as of December 31, 2025, 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, 2025 was 3.72% compared to 3.51% for the year ended December 31, 2024, an increase of 21 basis points.
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.
As of December 31, 2025, our residential real estate loans comprised $2.38 billion, or 58.3%, of total loans held for investment, compared to $2.30 billion, or 72.7%, of total loans held for investment as of December 31, 2024. This compares to $2.35 billion, or 74.6%, of total loans held for investment as of December 31, 2023.
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.
Our available borrowings under these agreements were $52.5 and $47.5 million at December 31, 2025 and 2024, respectively. 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 $600.4 million and $551.6 million at December 31, 2025 and 2024, respectively.
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.
Newly originated and renewed non-SBA commercial real estate loans for the years ending December 31, 2025 and 2024 carried a weighted average LTV of 51.8% and 53.5%, respectively. Commercial and industrial loans. We provide a mix of variable and fixed rate commercial and industrial loans.
On December 31, 2014, MetroCity Bankshares, Inc. acquired all of the outstanding common stock of Metro City Bank as a part of the holding company formation transaction. We are a bank holding company and we conduct all of our material business operations through the Bank.
In December 2014, the Bank formed MetroCity Bankshares, Inc. as its holding company, and on, December 31, 2014, MetroCity Bankshares, Inc. acquired all of the outstanding common stock of Metro City Bank in connection with the holding company formation transaction. We are a bank holding company and we conduct all of our material business operations through the Bank.
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.
This compares to $65.9 million, or 2.1%, of total loans held for investment as of December 31, 2023. 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.
Included in other expenses were directors’ fees of $645,000 and $617,000 for the years ended December 31, 2024 and 2023, respectively.
Included in other expenses were directors’ fees of $761,000 and $645,000 for the years ended December 31, 2025 and 2024, respectively.
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.
See the section captioned “Allowance for Credit Losses” elsewhere in this document for further analysis of our provision for credit losses. 51 Table of Contents Year ended December 31, 2025 compared to year ended December 31, 2024 We recorded a credit to the provision for credit losses of $318,000 during the year ended December 31, 2025 compared to provision expense of $516,000 recorded during the year ended December 31, 2024.
As of December 31, 2024 and 2023, we had $47.5 million of unsecured federal funds lines with no amounts advanced. In addition, the Company had Federal Reserve Discount Window funds available of approximately $551.6 million and $446.3 million at December 31, 2024 and 2023, respectively.
As of December 31, 2025 and 2024, we had $52.5 million and $47.5 million, respectively, of unsecured federal funds lines with no amounts advanced. In addition, the Company had Federal Reserve Discount Window funds available of approximately $600.4 million and $551.6 million at December 31, 2025 and 2024, respectively.
At December 31, 2024 and 2023, we had $375.0 million and $325.0 million, respectively, of outstanding advances from the FHLB. Based on the values of residential mortgage loans pledged as collateral, we had $692.6 million and $721.1 million of additional borrowing availability with the FHLB as of December 31, 2024 and 2023, respectively.
At December 31, 2025 and 2024, we had $510.0 million and $375.0 million, respectively, of outstanding advances from the FHLB. Based on the values of residential mortgage loans pledged as collateral, we had $577.9 million and $692.6 million of additional borrowing availability with the FHLB as of December 31, 2025 and 2024, respectively.
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.
The advances from the FHLB are collateralized by our residential real estate loans. At December 31, 2025 and December 31, 2024, we had available borrowing capacity from the FHLB of $577.9 million and $692.6 million, respectively. At December 31, 2025 and 2024, we had $510.0 million and $375.0 million, respectively, of outstanding advances from the FHLB.
The increase was primarily attributable to increased overdraft fees and wire transfer fees. Other service charges, commissions and fees increased $1.2 million, or 21.1%, to $6.9 million for the year ended December 31, 2024 compared to $5.7 million for the year ended December 31, 2023.
Other service charges, commissions and fees increased $1.2 million, or 21.1%, to $6.9 million for the year ended December 31, 2024 compared to $5.7 million for the year ended December 31, 2023.
The weighted average LTV of nonaccrual residential real estate loans was approximately 52.8% at December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ (Dollars in thousands) 2024 2023 2022 2021 2020 Nonaccrual loans ​ $ 18,010 ​ $ 14,682 ​ $ 10,065 ​ $ 8,759 ​ $ 10,203 ​ Past due loans 90 days or more and still accruing ​ — ​ — ​ 180 ​ 342 ​ — ​ Total nonperforming loans ​ 18,010 ​ 14,682 ​ 10,245 ​ 9,101 ​ 10,203 ​ Foreclosed real estate ​ 427 ​ 1,466 ​ 4,328 ​ 3,618 ​ 3,844 ​ Total nonperforming assets ​ $ 18,437 ​ $ 16,148 ​ $ 14,573 ​ $ 12,719 ​ $ 14,047 ​ Nonperforming loans to gross loans ​ 0.57 % 0.47 % 0.33 % 0.36 % 0.62 % Nonperforming assets to total assets ​ 0.51 % 0.46 % 0.43 % 0.41 % 0.74 % Allowance for credit losses to nonperforming loans ​ 104.08 % 123.36 % 135.56 % 186.27 % 99.33 % ​ Allowance for credit losses The allowance for credit losses was $18.7 million at December 31, 2024 compared to $18.1 million at December 31, 2023, an increase of $632,000, or 3.5%.
Nonaccrual loans at December 31, 2024 consisted of $3.3 million of commercial real estate loans, $526,000 in commercial and industrial loans and $14.2 million in residential real estate loans. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ (Dollars in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 ​ ​ ​ 2022 ​ ​ ​ 2021 Nonaccrual loans ​ $ 25,213 ​ $ 18,010 ​ $ 14,682 ​ $ 10,065 ​ $ 8,759 ​ Past due loans 90 days or more and still accruing ​ — ​ — ​ — ​ 180 ​ 342 ​ Total nonperforming loans ​ 25,213 ​ 18,010 ​ 14,682 ​ 10,245 ​ 9,101 ​ Foreclosed real estate ​ 208 ​ 427 ​ 1,466 ​ 4,328 ​ 3,618 ​ Total nonperforming assets ​ $ 25,421 ​ $ 18,437 ​ $ 16,148 ​ $ 14,573 ​ $ 12,719 ​ Nonperforming loans to gross loans ​ 0.62 % 0.57 % 0.47 % 0.33 % 0.36 % Nonperforming assets to total assets ​ 0.53 % 0.51 % 0.46 % 0.43 % 0.41 % Allowance for credit losses to nonperforming loans ​ 110.43 % 104.08 % 123.36 % 135.56 % 186.27 % ​ Allowance for credit losses The allowance for credit losses was $27.8 million at December 31, 2025 compared to $18.7 million at December 31, 2024, an increase of $9.1 million, or 48.5%.
The adoption of ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments” or “CECL” has significantly changed the methodology of how we measure credit losses (see Note 1 to the Consolidated Financial Statements for more information).
The adoption of ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments” or “CECL” and most recently ASU No. 2025-08, “ Purchased Loans ” significantly changed the methodology of how we measure credit losses (see Note 1 to the Consolidated Financial Statements for more information).
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.
We put continued 64 Table of Contents effort into gathering noninterest-bearing demand deposits accounts through marketing to our existing and new loan customers, customer referrals, and expansion into new markets. Total deposits increased $909.2 million, or 33.2%, to $3.65 billion at December 31, 2025 compared to $2.74 billion at December 31, 2024.
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.
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.
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.
Average borrowings outstanding for the year ended December 31, 2025 increased by $57.9 million with an increase in rate of 10 basis points compared to the year ended December 31, 2024. The Company has interest rate derivative agreements totaling $825.0 million that are designated as cash flow hedges of our deposit accounts indexed to the Federal Funds Effective rate.
Gain on sale of SBA loans totaled $3.3 million for the year ended December 31, 2023 compared to $2.1 million for the year ended December 31, 2022.
Gain on sale of SBA loans totaled $2.3 million for the year ended December 31, 2025 compared to $2.9 million for the year ended December 31, 2024.
Loans Our loans represent the largest portion of our earning assets, substantially greater than the securities portfolio or any other asset category, and the quality and diversification of the loan portfolio is an important consideration when reviewing our financial condition.
The increase in our securities portfolio during 2025 was due to the securities acquired from First IC. Loans Our loans represent the largest portion of our earning assets, substantially greater than the securities portfolio or any other asset category, and the quality and diversification of the loan portfolio is an important consideration when reviewing our financial condition.
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 following table presents the ending balance of each major category in our loan portfolio held for investment as of the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ 2025 ​ 2024 ​ 2023 ​ 2022 ​ 2021 ​ (Dollars in thousands) ​ ​ ​ Amount ​ ​ ​ % of Total ​ ​ ​ Amount ​ ​ ​ % of Total ​ ​ ​ Amount ​ ​ ​ % of Total ​ ​ ​ Amount ​ ​ ​ % of Total ​ ​ ​ Amount ​ ​ ​ % of Total ​ Construction and Development ​ $ 41,796 ​ 1.0 % $ 21,569 ​ 0.7 % $ 23,262 ​ 0.7 % $ 47,779 ​ 1.6 % $ 38,857 ​ 1.6 % Commercial Real Estate ​ 1,560,728 ​ 38.3 ​ 762,033 ​ 24.1 ​ 711,177 ​ 22.6 ​ 657,246 ​ 21.4 ​ 520,488 ​ 20.7 ​ Commercial and Industrial ​ 96,360 ​ 2.4 ​ 78,220 ​ 2.5 ​ 65,904 ​ 2.1 ​ 53,173 ​ 1.7 ​ 73,072 ​ 2.9 ​ Residential Real Estate ​ 2,378,311 ​ 58.3 ​ 2,303,234 ​ 72.7 ​ 2,350,299 ​ 74.6 ​ 2,306,915 ​ 75.3 ​ 1,879,012 ​ 74.8 ​ Consumer and other ​ 627 ​ 0.0 ​ 260 ​ 0.0 ​ 319 ​ 0.0 ​ 216 ​ 0.0 ​ 79 ​ 0.0 ​ Total gross loans ​ ​ 4,077,822 100.0 % ​ 3,165,316 100.0 % ​ 3,150,961 100.0 % ​ 3,065,329 100.0 % ​ 2,511,508 100.0 % Unearned income ​ (6,621) ​ ​ (7,381) ​ ​ (8,856) ​ ​ (9,640) ​ ​ (6,438) ​ ​ Loan Discounts ​ ​ (19,804) ​ ​ ​ ​ — ​ ​ ​ ​ — ​ ​ ​ ​ — ​ ​ ​ ​ — ​ ​ ​ Allowance for credit losses ​ ​ (27,843) ​ ​ ​ ​ (18,744) ​ ​ ​ ​ (18,112) ​ ​ ​ ​ (13,888) ​ ​ ​ ​ (16,952) ​ ​ ​ Total loans, net ​ $ 4,023,554 ​ ​ $ 3,139,191 ​ ​ $ 3,123,993 ​ ​ $ 3,041,801 ​ ​ $ 2,488,118 ​ ​ ​ The following table presents the maturity distribution of our loans held for investment as of December 31, 2025.
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.
Based on the Federal Funds Effective rate as of December 31, 2025 (3.64%), the Company would estimate to record a credit to interest expense of $5.9 million during 2026 from the benefit received on these interest rate derivatives.
Included in mortgage loan servicing income for the year ended December 31, 2023 was $2.5 million in mortgage servicing fees compared to $3.2 million for 2022, and capitalized mortgage servicing assets of $0 for the year ended December 31, 2023 compared to $761,000 for 2022.
Included in mortgage loan servicing income for the year ended December 31, 2025 was $2.2 million in mortgage servicing fees compared to $2.3 million for 2024, and capitalized mortgage servicing assets of $812,000 for the year ended December 31, 2025 compared to $1.2 million for 2024.
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.
We had brokered deposits of $747.8 million, or 20.5% of total deposits, at December 31, 2025 compared to $721.8 million, or 26.4% of total deposits, at December 31, 2024 and $766.3 million, or 28.1% of total deposits, at December 31, 2023.
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 ​ ​
The following table presents outstanding financial commitments whose contractual amount represents credit risks as of the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (Dollars in thousands) 2025 2024 Commitments to extend credit $ 120,078 ​ $ 47,369 Standby letters of credit ​ ​ 14,490 ​ ​ 5,782 Total off-balance sheet commitments ​ $ 134,568 ​ $ 53,151 ​ ​
Included in other expenses were directors’ fees of $617,000 and $565,000 for the years ended December 31, 2023 and 2022, respectively. 51 Table of Contents Income Tax Expense Income tax expense for the years ended December 31, 2024, 2023 and 2022 was $22.8 million, $20.4 million and $28.6 million, respectively.
Included in other expenses were directors’ fees of $645,000 and $617,000 for the years ended December 31, 2024 and 2023, respectively. Income Tax Expense Income tax expense for the years ended December 31, 2025, 2024 and 2023 was $24.2 million, $22.8 million and $20.4 million, respectively.
We are focused on delivering full-service banking services in markets, predominantly Asian-American communities in growing metropolitan markets in the Eastern U.S. and Texas. 42 Table of Contents Prior to December 2014, we operated without a holding company, and in December 2014, the Bank formed MetroCity Bankshares, Inc. as its holding company.
We are focused on delivering full-service banking services in diverse multi-ethnic markets, including Asian-American communities in growing metropolitan markets in the Eastern U.S. and Texas 43 Table of Contents Prior to December 2014, the Bank operated without a holding company structure.
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.
Our allowance for credit losses as a percentage of gross loans for the periods ended December 31, 2025 and 2024 was 0.68% and 0.59%, respectively.
The largest component of other noninterest income is the income on bank owned life insurance, which totaled $1.8 million and $1.7 million, respectively, for the years ended December 31, 2023 and 2022.
The largest component of other noninterest income is the income on bank owned life insurance, which totaled $2.5 million and $2.3 million, respectively, for the years ended December 31, 2025 and 2024.
Off-Balance Sheet Arrangements We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit and standby letters of credit.
We have in place various borrowing mechanisms for both short-term and long-term liquidity needs. 68 Table of Contents Off-Balance Sheet Arrangements We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit and standby letters of credit.
At December 31, 2024, included in nonaccrual loans were $3.3 million of commercial real estate loans, $526,000 in commercial and industrial loans and $14.2 million in residential real estate loans.
At December 31, 2025, included in nonaccrual loans were $14.8 million of commercial real estate loans, $1.3 million in commercial and industrial loans and $9.1 million in residential real estate loans.
The weighted average pay rate for these interest rate derivatives is 2.29%. During the year ended December 31, 2023, we recorded a credit to interest expense of $5.4 million from the benefit received on these interest rate derivatives compared to $287,000 of interest expense recorded during the year ended December 31, 2022.
The weighted average pay rate for these interest rate derivatives is 2.62%. During the year ended December 31, 2025, we recorded a credit to interest expense of $15.1 million from the benefit received on these interest rate derivatives compared to a credit to interest expense of $22.1 million recorded during the year ended December 31, 2024.
Average 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.
Average interest-bearing liabilities increased by $102.1 million as average interest-bearing deposits increased by $89.3 million and average borrowings increased by $12.8 million. 49 Table of Contents Average Balances, Interest and Yields The following tables present, for the years ended December 31, 2025, 2024 and 2023, 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, ​ ​ 2025 ​ 2024 2023 ​ ​ 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) ​ $ 208,059 ​ $ 10,257 4.93 % $ 185,696 ​ $ 11,289 6.08 % $ 167,024 ​ $ 9,995 5.98 % Investment securities ​ 38,826 ​ 1,072 2.76 ​ 31,373 ​ 854 2.72 ​ 32,330 ​ 949 2.94 ​ Total investments ​ 246,885 ​ 11,329 4.59 ​ 217,069 ​ 12,143 5.59 ​ 199,354 ​ 10,944 5.49 ​ Construction and development ​ 29,061 ​ 2,365 8.14 ​ 17,148 ​ 1,511 8.81 ​ 31,955 ​ 1,864 5.83 ​ Commercial real estate ​ 865,860 ​ 73,725 8.51 ​ 738,200 ​ 66,751 9.04 ​ 659,432 ​ 57,710 8.75 ​ Commercial and industrial ​ 73,896 ​ 6,462 8.74 ​ 67,964 ​ 6,597 9.71 ​ 54,100 ​ 5,110 9.45 ​ Residential real estate ​ 2,294,620 ​ 126,744 5.52 ​ 2,321,075 ​ 125,737 5.42 ​ 2,299,246 ​ 117,071 5.09 ​ Consumer and Other ​ 353 ​ 203 57.51 ​ 304 ​ 174 57.24 ​ 195 ​ 128 65.64 ​ Gross loans (2) ​ 3,263,790 ​ 209,499 6.42 ​ 3,144,691 ​ 200,770 6.38 ​ 3,044,928 ​ 181,883 5.97 ​ Total earning assets ​ 3,510,675 ​ 220,828 6.29 ​ 3,361,760 ​ 212,913 6.33 ​ 3,244,282 ​ 192,827 5.94 ​ Noninterest-earning assets ​ 199,348 ​ ​ ​ ​ 209,058 ​ ​ ​ ​ 198,938 ​ ​ ​ ​ Total assets ​ 3,710,023 ​ ​ ​ ​ 3,570,818 ​ ​ ​ ​ 3,443,220 ​ ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NOW and savings deposits ​ 186,114 ​ ​ 5,119 2.75 ​ 138,827 ​ ​ 3,537 2.55 ​ 146,543 ​ ​ 2,264 1.54 ​ Money market deposits ​ 1,011,090 ​ ​ 26,512 2.62 ​ 1,012,309 ​ ​ 28,331 2.80 ​ 1,006,360 ​ ​ 42,347 4.21 ​ Time deposits ​ 1,027,849 ​ ​ 41,264 4.01 ​ 1,031,942 ​ ​ 48,192 4.67 ​ 940,911 ​ ​ 35,996 3.83 ​ Total interest-bearing deposits ​ 2,225,053 ​ 72,895 3.28 ​ 2,183,078 ​ 80,060 3.67 ​ 2,093,814 ​ 80,607 3.85 ​ Borrowings ​ 423,883 ​ ​ 17,484 4.12 ​ 365,990 ​ ​ 14,707 4.02 ​ 353,149 ​ ​ 10,741 3.04 ​ Total interest-bearing liabilities ​ 2,648,936 ​ 90,379 3.41 ​ 2,549,068 ​ 94,767 3.72 ​ 2,446,963 ​ 91,348 3.73 ​ Noninterest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest-bearing deposits ​ 549,337 ​ ​ ​ ​ 536,084 ​ ​ ​ ​ 555,840 ​ ​ ​ ​ Other noninterest-bearing liabilities ​ 72,314 ​ ​ ​ ​ 86,496 ​ ​ ​ ​ 74,254 ​ ​ ​ ​ Total noninterest-bearing liabilities ​ 621,651 ​ ​ ​ ​ 622,580 ​ ​ ​ ​ 630,094 ​ ​ ​ ​ Shareholders' equity ​ 439,436 ​ ​ ​ ​ 399,170 ​ ​ ​ ​ 366,163 ​ ​ ​ ​ Total liabilities and shareholders' equity ​ $ 3,710,023 ​ ​ ​ ​ $ 3,570,818 ​ ​ ​ ​ $ 3,443,220 ​ ​ ​ ​ Net interest income ​ ​ ​ $ 130,449 ​ ​ ​ ​ $ 118,146 ​ ​ ​ ​ $ 101,479 ​ ​ Net interest spread ​ ​ ​ ​ 2.88 ​ ​ ​ ​ 2.61 ​ ​ ​ ​ 2.21 ​ Net interest margin ​ ​ ​ ​ 3.72 ​ ​ ​ ​ 3.51 ​ ​ ​ ​ 3.13 ​ (1) Includes income and average balances for term federal funds, interest-earning cash accounts, and other miscellaneous earning assets.
The following table sets forth the major components of our noninterest income for the years ended December 31, 2024, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 vs. 2023 ​ 2023 vs. 2022 ​ (Dollars in thousands) 2024 2023 2022 $ Change % Change $ Change % Change ​ Noninterest Income: ​ ​ ​ ​ ​ ​ ​ ​ Service charges on deposit accounts ​ $ 2,073 ​ $ 1,918 ​ $ 1,991 $ 155 8.1 % $ (73) (3.7) % Other service charges, commissions and fees ​ 6,848 ​ 5,657 ​ 9,725 1,191 21.1 ​ (4,068) (41.8) ​ Gain on sale of residential mortgage loans ​ 1,914 ​ — ​ 2,017 1,914 100.0 ​ (2,017) (100.0) ​ Mortgage servicing income, net ​ 2,448 ​ (193) ​ (561) 2,641 1368.4 ​ 368 65.6 ​ Gain on sale of SBA loans ​ ​ 2,945 ​ ​ 3,299 ​ ​ 2,068 ​ ​ (354) ​ (10.7) ​ ​ 1,231 ​ 59.5 ​ SBA servicing income, net ​ ​ 4,243 ​ ​ 4,796 ​ ​ 1,825 ​ ​ (553) ​ (11.5) ​ ​ 2,971 ​ 162.8 ​ Other income ​ ​ 2,592 ​ ​ 2,727 ​ ​ 1,053 ​ ​ (135) ​ (5.0) ​ ​ 1,674 ​ 159.0 ​ Total noninterest income ​ $ 23,063 ​ $ 18,204 ​ $ 18,118 $ 4,859 26.7 % $ 86 0.5 % ​ Year ended December 31, 2024 compared to year ended December 31, 2023 Service charges on deposit accounts were $2.1 million for the year ended December 31, 2024 compared to $1.9 million for the year ended December 31, 2023, an increase of $155,000, or 8.1%.
The following table sets forth the major components of our noninterest income for the years ended December 31, 2025, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2025 vs. 2024 ​ 2024 vs. 2023 ​ (Dollars in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 ​ ​ ​ $ Change ​ ​ ​ % Change ​ ​ ​ $ Change ​ ​ ​ % Change ​ Noninterest Income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service charges on deposit accounts ​ $ 2,328 ​ $ 2,073 ​ $ 1,918 $ 255 12.3 % $ 155 8.1 % Other service charges, commissions and fees ​ 7,340 ​ 6,848 ​ 5,657 492 7.2 ​ 1,191 21.1 ​ Gain on sale of residential mortgage loans ​ 3,952 ​ 1,914 ​ — 2,038 106.5 ​ 1,914 100.0 ​ Mortgage servicing income, net ​ 2,419 ​ 2,448 ​ (193) (29) 1.2 ​ 2,641 1368.4 ​ Gain on sale of SBA loans ​ ​ 2,322 ​ ​ 2,945 ​ ​ 3,299 ​ ​ (623) ​ (21.2) ​ ​ (354) ​ (10.7) ​ SBA servicing income, net ​ ​ 3,558 ​ ​ 4,243 ​ ​ 4,796 ​ ​ (685) ​ (16.1) ​ ​ (553) ​ (11.5) ​ Other income ​ ​ 3,265 ​ ​ 2,592 ​ ​ 2,727 ​ ​ 673 ​ 26.0 ​ ​ (135) ​ (5.0) ​ Total noninterest income ​ $ 25,184 ​ $ 23,063 ​ $ 18,204 $ 2,121 9.2 % $ 4,859 26.7 % ​ Year ended December 31, 2025 compared to year ended December 31, 2024 Service charges on deposit accounts were $2.3 million for the year ended December 31, 2025 compared to $2.1 million for the year ended December 31, 2024, an increase of $255,000, or 12.3%.
Average earning assets increased by $117.5 million, primarily due to an increase of $99.8 million in average loans and an increase of $17.7 million in average total investments. Average interest-bearing liabilities increased by $102.1 million as average interest-bearing deposits increased by $89.3 million and average borrowings increased by $12.8 million.
Average earning assets increased by $117.5 million, primarily due to an increase of $99.8 million in average loans and an increase of $17.7 million in average total investments.
Year ended December 31, 2023 compared to year ended December 31, 2022 Service charges on deposit accounts were $1.9 million for the year ended December 31, 2023 compared to $2.0 million for the year ended December 31, 2022, a decrease of $73,000, or 3.7%. The decrease was primarily attributable to decreased overdraft fees, analysis fees and wire transfer fees.
Year ended December 31, 2024 compared to year ended December 31, 2023 Service charges on deposit accounts were $2.1 million for the year ended December 31, 2024 compared to $1.9 million for the year ended December 31, 2023, an increase of $155,000, or 8.1%. The increase was primarily attributable to increased overdraft fees and wire transfer fees.
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%.
Year ended December 31, 2024 compared to year ended December 31, 2023 Salaries and employee benefits expense for the year ended December 31, 2024 was $33.2 million compared to $29.3 million for the year ended December 31, 2023, an increase of $3.9 million, or 13.3%.
There were no loans classified as held for sale as of December 31, 2024 or 2022.
There were no loans classified as held for sale as of December 31, 2025 or 2024. Loans classified as held for sale totaled $22.3 million as of December 31, 2023.
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.
Government entities and agencies ​ $ 12,393 ​ $ 12,542 ​ $ 4,467 ​ $ 4,467 ​ $ 4,637 ​ $ 4,637 States and political subdivisions ​ ​ 11,574 ​ 10,144 ​ ​ 8,022 ​ 6,537 ​ ​ 8,072 ​ 6,782 Mortgage-backed GSE residential ​ 25,971 24,493 ​ 8,186 6,387 ​ 8,669 7,074 Total securities available for sale ​ $ 49,938 $ 47,179 ​ $ 20,675 $ 17,391 ​ $ 21,378 $ 18,493 ​ 63 Table of Contents Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses.
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.
The increase is mainly attributable to higher underwriting, processing and origination fees earned from our origination of residential mortgage loans as 52 Table of Contents mortgage volume increased during the year ended December 31, 2025 compared to the year ended December 31, 2024.
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.
Adjustable rate loans are based on the prime rate, SOFR or constant maturity treasury (“CMT”). At December 31, 2025 and 2024, approximately 21.6% and 12.0% 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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−1 removed15 unchanged
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.
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, 2025 ​ (28.20) % (21.10) % (14.00) % (6.70) % 6.40 % 12.30 % 15.90 % 13.20 % 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 % ​ 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.
Because of limitations inherent in any approach used to measure interest rate risk, simulation results are not intended as a forecast of the actual effect of a change in market interest rates on our results but rather as a means to better plan and execute appropriate asset-liability management strategies and manage our interest rate risk. ​ 67 Table of Contents
Because of limitations inherent in any approach used to measure interest rate risk, simulation results are not intended as a forecast of the actual effect of a change in market interest rates on our results but rather as a means to better plan and execute appropriate asset-liability management strategies and manage our interest rate risk. ​ 71 Table of Contents
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.
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 of rate movements that could occur in the near to medium term.
We base the modeling of EVE based on interest rate shocks as shocks are considered more appropriate for EVE, which accelerates future interest rate risk into current capital via a present value calculation of all future cashflows from the bank’s existing inventory of assets and liabilities.
We base the modeling of EVE based on interest rate shocks as shocks are considered more appropriate for EVE, which accelerates future interest rate risk into current capital via a present value calculation of all future cashflows from the Bank’s existing inventory of assets 70 Table of Contents and liabilities.
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.
Potential changes to our net interest income in hypothetical rising and declining rate scenarios calculated as of December 31, 2025, 2024 and 2023 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, 2025 (1.70) % 1.20 % (6.60) % 6.50 % December 31, 2024 (0.20) % (1.30) % (7.00) % 2.50 % December 31, 2023 (0.90) % 0.00 % 1.50 % 7.80 % ​ We also model the impact of rate changes on our Economic Value of Equity, or EVE.
We have identified interest rate risk as our primary source of market risk. 65 Table of Contents Interest Rate Risk Interest rate risk is the risk to earnings and value arising from changes in market interest rates.
We have identified interest rate risk as our primary source of market risk. Interest Rate Risk Interest rate risk is the risk to earnings and value arising from changes in market interest rates.
An asset sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate higher net interest income, as rates earned on our interest-earning assets would reprice upward more quickly than rates paid on our interest-bearing liabilities, thus expanding our net interest margin.
Effective management of interest rate risk begins with understanding the dynamic characteristics of assets and liabilities and determining the appropriate interest rate risk posture given business forecasts, management objectives, market expectations, and policy constraints. 69 Table of Contents An asset sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate higher net interest income, as rates earned on our interest-earning assets would reprice upward more quickly than rates paid on our interest-bearing liabilities, thus expanding our net interest margin.
Removed
Effective management of interest rate risk begins with understanding the dynamic characteristics of assets and liabilities and determining the appropriate interest rate risk posture given business forecasts, management objectives, market expectations, and policy constraints.

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