株探米国株
英語
エドガーで原本を確認する
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
Commission File Number 0-15572
FIRST BANCORP
(Exact Name of Registrant as Specified in its Charter)
North Carolina 56-1421916
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification Number)
300 SW Broad St., Southern Pines , North Carolina 28387
(Address of Principal Executive Offices) (Zip Code)
(Registrant's telephone number, including area code) (910) 246-2500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered:
Common Stock, No Par Value FBNC The Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)
Large Accelerated Filer Accelerated Filer
Non-Accelerated Filer Smaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
The number of shares of the registrant's Common Stock outstanding on October 31, 2024 was 41,341,919.



INDEX
FIRST BANCORP AND SUBSIDIARIES
Page
 
 

Page 2

Index
FORWARD-LOOKING STATEMENTS
Part I of this report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, which statements are inherently subject to risks and uncertainties. Forward-looking statements are statements that include projections, predictions, expectations or beliefs about future events or results or otherwise are not statements of historical fact. Further, forward-looking statements are intended to speak only as of the date made. Such statements are often characterized by the use of qualifying words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” or other statements concerning our opinions or judgment about future events. Our actual results may differ materially from those anticipated in any forward-looking statements, as they will depend on many factors about which we are unsure, including many factors which are beyond our control. Factors that could influence the accuracy of such forward-looking statements include, but are not limited to, the financial success or changing strategies of our customers, our level of success in integrating acquisitions, actions of government regulators, the level of market interest rates, geopolitical influences and general economic conditions. For additional information about factors that could affect the matters discussed in this paragraph, see the “Risk Factors” section of our 2023 Annual Report on Form 10-K ("2023 Annual Report") and Item 1A of Part II of this report.

Page 3

Index
Part I. Financial Information
Item 1 - Financial Statements
First Bancorp and Subsidiaries
Consolidated Balance Sheets
($ in thousands - unaudited) September 30,
2024
December 31,
2023
Assets    
Cash and due from banks, noninterest-bearing $ 74,034  $ 100,891 
Due from banks, interest-bearing 670,407  136,964 
Total cash and cash equivalents 744,441  237,855 
Securities available for sale (amortized cost of $2,238,996 and $2,590,099, respectively)
1,907,458  2,189,379 
Securities held to maturity (fair values of $448,300 and $449,623, respectively)
521,801  533,678 
Presold mortgages in process of settlement 9,888  2,667 
Loans 8,013,538  8,150,102 
Allowance for credit losses on loans (122,718) (109,853)
Net loans 7,890,820  8,040,249 
Premises and equipment, net 144,868  150,957 
Accrued interest receivable 32,890  37,351 
Goodwill 478,750  478,750 
Other intangible assets, net 24,466  29,507 
Bank-owned life insurance 187,236  183,897 
Other assets 210,812  230,652 
Total assets $ 12,153,430  $ 12,114,942 
Liabilities
Deposits
Noninterest-bearing deposits $ 3,350,237  $ 3,379,876 
Interest-bearing deposits 7,154,692  6,651,723 
Total deposits 10,504,929  10,031,599 
Borrowings 91,694  630,158 
Accrued interest payable 5,566  5,699 
Other liabilities 73,716  75,106 
Total liabilities 10,675,905  10,742,562 
Commitments and contingencies
Shareholders' Equity
Preferred stock, no par value per share.  Authorized: 5,000,000 shares
Issued & outstanding:  none and none, respectively
—  — 
Common stock, no par value per share.  Authorized: 60,000,000 shares
Issued & outstanding:  41,340,099 shares and 41,109,987 shares, respectively
970,450  963,990 
Retained earnings 761,881  716,420 
Stock in rabbi trust assumed in acquisition (1,148) (1,385)
Rabbi trust obligation 1,148  1,385 
Accumulated other comprehensive loss (254,806) (308,030)
Total shareholders’ equity 1,477,525  1,372,380 
Total liabilities and shareholders’ equity $ 12,153,430  $ 12,114,942 
See accompanying notes to unaudited consolidated financial statements.

Page 4

Index
First Bancorp and Subsidiaries
Consolidated Statements of Income
Three Months Ended September 30, Nine Months Ended September 30,
($ in thousands, except share data - unaudited) 2024 2023 2024 2023
Interest Income
Interest and fees on loans $ 111,076  $ 106,514  $ 331,346  $ 308,857 
Interest on investment securities:
Taxable interest income 10,779  12,936  34,798  39,415 
Tax-exempt interest income 1,116  1,118  3,350  3,368 
Other, principally overnight investments 8,438  3,283  17,351  10,546 
Total interest income 131,409  123,851  386,845  362,186 
Interest Expense
Interest on deposits 46,420  32,641  130,299  78,887 
Interest on borrowings 1,946  6,508  13,114  19,125 
Total interest expense 48,366  39,149  143,413  98,012 
Net interest income 83,043  84,702  243,432  264,174 
Provision for credit losses 14,200  —  15,941  14,864 
Net interest income after provision for credit losses 68,843  84,702  227,491  249,310 
Noninterest Income
Service charges on deposit accounts 4,320  4,661  12,327  13,012 
Other service charges and fees 5,555  5,450  16,439  16,677 
Presold mortgage loan fees and gains on sale 690  325  1,616  1,288 
Commissions from sales of financial products 1,371  1,207  4,068  3,926 
SBA loan sale gains 1,108  1,101  3,339  2,052 
Bank-owned life insurance income 1,205  1,104  3,548  3,216 
Securities losses, net —  —  (1,161) — 
Other income, net (670) 1,329  900  2,777 
Total noninterest income 13,579  15,177  41,076  42,948 
Noninterest Expense
Salaries incentives and commissions expense 29,955  29,394  85,406  87,391 
Employee benefit expense 6,495  6,539  19,467  19,097 
Total personnel expense 36,450  35,933  104,873  106,488 
Occupancy and equipment expense 4,856  5,003  15,294  15,042 
Merger and acquisition expenses —  —  —  13,506 
Intangibles amortization expense 1,613  1,953  5,041  6,147 
Other operating expenses 16,931  19,335  52,120  56,809 
Total noninterest expenses 59,850  62,224  177,328  197,992 
Income before income taxes 22,572  37,655  91,239  94,266 
Income tax expense 3,892  7,762  18,575  19,809 
Net income $ 18,680  $ 29,893  $ 72,664  $ 74,457 
Earnings per common share:
Basic $ 0.45  $ 0.73  $ 1.76  $ 1.82 
Diluted 0.45  0.73  1.76  1.81 
Weighted average common shares outstanding:
Basic 40,971,520  40,744,042  40,924,822  40,691,751 
Diluted 41,366,743  41,199,058  41,294,137  41,149,990 
See accompanying notes to unaudited consolidated financial statements.

Page 5

Index
First Bancorp and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
    
Three Months Ended
September 30,
Nine Months Ended September 30,
($ in thousands - unaudited) 2024 2023 2024 2023
Net income $ 18,680  $ 29,893  $ 72,664  $ 74,457 
Other comprehensive income (loss):
Unrealized gains (losses) on securities available for sale:
Unrealized holding gains (losses) arising during the period, pretax 78,550  (81,515) 68,021  (77,597)
Tax (expense) benefit (18,184) 18,871  (15,747) 18,719 
Reclassification to realized losses —  —  1,161  — 
Tax expense —  —  (269) — 
Postretirement Plans:
Amortization of unrecognized net actuarial losses 25  44  75  132 
Tax benefit (6) (10) (17) (31)
Other comprehensive income (loss) 60,385  (62,610) 53,224  (58,777)
Comprehensive income (loss) $ 79,065  $ (32,717) $ 125,888  $ 15,680 
See accompanying notes to unaudited consolidated financial statements.

Page 6

Index
First Bancorp and Subsidiaries
Consolidated Statements of Shareholders’ Equity

($ and share data in thousands - unaudited) Common Stock Retained
Earnings
Stock in
Rabbi
Trust
Assumed
in
Acquisition
Rabbi
Trust
Obligation
Accumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
Shares Amount
Three Months Ended September 30, 2023
Balances, July 1, 2023 41,083  $ 960,851  $ 674,933  $ (1,365) $ 1,365  $ (338,142) $ 1,297,642 
Net income 29,893  29,893 
Cash dividends declared ($0.22 per common share)
(9,035) (9,035)
Change in Rabbi Trust Obligation (10) 10  — 
Stock options exercised 66  66 
Stock-based compensation —  1,727  1,727 
Other comprehensive loss (62,610) (62,610)
Balances, September 30, 2023 41,085  $ 962,644  $ 695,791  $ (1,375) $ 1,375  $ (400,752) $ 1,257,683 
Three Months Ended September 30, 2024
Balances, July 1, 2024 41,188  $ 967,239  $ 752,294  $ (1,139) $ 1,139  $ (315,191) $ 1,404,342 
Net income 18,680  18,680 
Cash dividends declared ($0.22 per common share)
(9,093) (9,093)
Change in Rabbi Trust Obligation (9) — 
Stock options exercised 111  2,324  2,324 
Stock withheld for payment of taxes (11) (478) (478)
Stock-based compensation 52  1,365  1,365 
Other comprehensive income 60,385  60,385 
Balances, September 30, 2024 41,340  $ 970,450  $ 761,881  $ (1,148) $ 1,148  $ (254,806) $ 1,477,525 
See accompanying notes to unaudited consolidated financial statements.

























Page 7

Index
First Bancorp and Subsidiaries
Consolidated Statements of Shareholders’ Equity

($ and share data in thousands - unaudited) Common Stock Retained
Earnings
Stock in
Rabbi
Trust
Assumed
in
Acquisition
Rabbi
Trust
Obligation
Accumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
Shares Amount
Nine Months Ended September 30, 2023
Balances, January 1, 2023 35,704  $ 725,153  $ 648,418  $ (1,585) $ 1,585  $ (341,975) $ 1,031,596 
Net income 74,457  74,457 
Cash dividends declared ($0.66 per common share)
(27,084) (27,084)
Change in Rabbi Trust Obligation 210  (210) — 
Equity issued related to acquisition 5,033  229,489  229,489 
Stock options exercised 195  3,769  3,769 
Stock withheld for payment of taxes (6) (186) (186)
Stock-based compensation 159  4,419  4,419 
Other comprehensive loss (58,777) (58,777)
Balances, September 30, 2023 41,085  $ 962,644  $ 695,791  $ (1,375) $ 1,375  $ (400,752) $ 1,257,683 
Nine Months Ended September 30, 2024
Balances, January 1, 2024 41,110  $ 963,990  $ 716,420  $ (1,385) $ 1,385  $ (308,030) $ 1,372,380 
Net income 72,664  72,664 
Cash dividends declared ($0.66 per common share)
(27,203) (27,203)
Change in Rabbi Trust Obligation 237  (237) — 
Stock options exercised 163  3,429  3,429 
Stock withheld for payment of taxes (15) (604) (604)
Stock-based compensation 82  3,635  3,635 
Other comprehensive income 53,224  53,224 
Balances, September 30, 2024 41,340  $ 970,450  $ 761,881  $ (1,148) $ 1,148  $ (254,806) $ 1,477,525 
See accompanying notes to unaudited consolidated financial statements.


Page 8

Index
First Bancorp and Subsidiaries
Consolidated Statements of Cash Flows
Nine Months Ended September 30,
($ in thousands-unaudited) 2024 2023
Cash Flows From Operating Activities
Net income $ 72,664  $ 74,457 
Reconciliation of net income to net cash provided by operating activities:
Provision for credit losses 15,941  14,864 
Net security premium amortization 6,700  7,082 
Deferred income taxes, net (5,814) (2,839)
Loan discount accretion (8,060) (10,354)
Deposit and debt discount accretion, net 1,253  3,241 
Foreclosed property gains, net (214) (131)
Securities losses, net 1,161  — 
Other (gains) losses, net (504) (1,402)
Bank-owned life insurance income (3,548) (3,216)
Net amortization of deferred loan costs/(fees) (975) (1,087)
Depreciation of premises and equipment 5,884  5,583 
Amortization of operating lease right-of-use assets 1,420  1,559 
Repayments of lease obligations (1,360) (1,473)
Stock-based compensation expense 3,458  3,972 
Amortization of intangible assets 5,041  6,147 
Amortization and impairment of SBA servicing assets 1,248  952 
Gains on sale of loans (4,955) (3,340)
Origination of presold mortgage loans and SBA loans held for sale (120,281) (107,878)
Proceeds from sales of presold mortgage loans and SBA loans 131,430  92,162 
Decrease (increase) in accrued interest receivable 4,461  1,033 
(Increase) decrease in other assets (2,527) 10,713 
(Decrease) increase in accrued interest payable (133) 2,391 
Increase (decrease) in other liabilities 3,762  793 
Net cash provided by (used in) operating activities 106,052  93,229 
Cash Flows From Investing Activities
Proceeds from maturities, calls and principal repayments of securities available for sale 204,848  133,341 
Proceeds from maturities, calls and principal repayments of securities held to maturity 7,567  2,807 
Proceeds from sales of securities available for sale 138,182  111,863 
Proceeds from sale of VISA B shares 4,522  — 
Purchases of Federal Reserve and FHLB stock (39,553) (61,162)
Redemptions of Federal Reserve and FHLB stock 52,810  45,372 
Proceeds from bank owned life insurance death benefits 209  136 
Purchases of other investments (1,858) (7,460)
Net decrease (increase) in loans 125,241  (347,419)
Proceeds from sales of foreclosed properties 687  554 
Purchases of premises and equipment (2,159) (3,201)
Proceeds from sales of premises and equipment 754  59 
Net cash received in acquisition activities —  22,610 
Net cash provided by (used in) investing activities 491,250  (102,500)
Cash Flows From Financing Activities
Net increase (decrease) in deposits 472,649  (40,040)
Proceeds from the issuance of other borrowings 986,000  1,665,000 
Repayment of other borrowings (1,515,036) (1,590,099)
Repayment of subordinated debentures (10,000) — 
Cash dividends paid – common stock (27,154) (25,902)
Proceeds from stock option exercises 3,429  3,769 
Payment of taxes related to stock withheld (604) (186)
Net cash (used) provided by financing activities (90,716) 12,542 
Increase (decrease) in cash and cash equivalents 506,586  3,271 
Cash and cash equivalents, beginning of period 237,855  270,318 
Cash and cash equivalents, end of period $ 744,441  $ 273,589 
(Continued)





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Index

First Bancorp and Subsidiaries
Consolidated Statements of Cash Flows



Nine Months Ended September 30,
($ in thousands-unaudited) 2024 2023
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest $ 142,610  $ 92,383 
Cash paid during the period for income taxes 26,084  21,856 
Non-cash: Unrealized gain (loss) on securities available for sale, net of taxes 53,166  (58,878)
Non-cash: Foreclosed loans transferred to other real estate 1,066  1,000 
Non-cash: Accrued dividends at end of period 9,093  9,039 
Non-cash: Cancellation of operating lease right-of-use assets and operating lease liabilities (1,497) — 
Non-cash: Initial recognition of operating lease right-of-use assets and operating lease liabilities —  260 
Non-cash: Revision of operating lease right-of-use assets and operating lease liabilities —  (562)
Acquisition of GrandSouth Bancorporation —  See Note 2

See accompanying notes to consolidated financial statements.

Page 10

Index
First Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(unaudited)

Note 1. Organization and Basis of Presentation

The consolidated financial statements include the accounts of First Bancorp (the “Company”) and its wholly owned subsidiary First Bank (the “Bank”). The Bank has three wholly owned subsidiaries that are fully consolidated, SBA Complete, Inc. (“SBA Complete”), Magnolia Financial, Inc. ("Magnolia Financial"), and First Troy SPE, LLC. All significant intercompany accounts and transactions have been eliminated. During the second quarter of 2024, SBA Complete became inactive with certain activities transitioning to the Bank.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and notes necessary for complete financial statements in accordance with GAAP. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the consolidated financial position of the Company as of September 30, 2024, the consolidated results of income, comprehensive income and shareholders' equity for the three and nine months ended September 30, 2024 and 2023, and the consolidated cash flows for the nine months ended September 30, 2024 and 2023. Any such adjustments were of a normal, recurring nature. These interim financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes in the 2023 Annual Report for the year ended December 31, 2023. Operating results for interim period are not necessarily indicative of the results that may be expected for the full year.
In certain instances, amounts reported in prior years’ consolidated financial statements have been reclassified to conform to the current presentation. Such reclassifications had no effect on previously reported shareholders’ equity or net income.
Refer to Note 1 of the 2023 Annual Report filed with the Securities and Exchange Commission (“SEC”) for a discussion of accounting policies and other relevant information with respect to the consolidated financial statements.
The Company has evaluated all subsequent events through the date the consolidated financial statements were issued.
Accounting Standards Adopted in 2024
Accounting Standards Update ("ASU") 2023-02, “Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method” permits reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. This update is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The adoption of ASU 2023-02 did not have a significant impact on the Company's consolidated financial statements.
Accounting Standards Pending Adoption
ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" amended existing guidance to improve disclosures about a public entity’s reportable segments and provide more detailed information about a reportable segment’s expenses. ASU 2023-07 clarifies that an entity which has a single reportable segment is to provide all the disclosures required by Topic 280 and ASU 2023-07. The amendment is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The adoption of ASU 2023-07 is not expected to have a significant impact on the Company's consolidated financial statements.
ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” amends existing guidance to improve the transparency of income tax disclosures, including disclosure of specific categories in the rate reconciliation, providing additional information for certain reconciling items, and providing details on income taxes paid.

Page 11

Index
The amendments are effective for annual periods beginning after December 15, 2024. The adoption of ASU 2023-09 is not expected to have a significant impact on the Company's consolidated financial statements.
Other accounting standards that have been issued or proposed by the Financial Accounting Standards Board ("FASB") or other standards-setting bodies are not expected to have a material impact on the Company’s consolidated financial statements.

Note 2. Acquisitions
On January 1, 2023, the Company completed its acquisition of GrandSouth Bancorporation ("GrandSouth"), in an all-stock transaction. The results of GrandSouth are included beginning on the January 1, 2023 acquisition date. This transaction was accounted for using the acquisition method of accounting for business combinations, and accordingly, the assets acquired, intangible assets identified, and liabilities assumed of GrandSouth were recorded based on estimates of fair values as of January 1, 2023. The operations of GrandSouth have been integrated into existing First Bank operations and therefore separate results of operations or balance sheet information is not presented.

Note 3. Securities

The book values and approximate fair values of investment securities at September 30, 2024 and December 31, 2023 are summarized as follows:
($ in thousands) September 30, 2024 December 31, 2023
Amortized
Cost
Fair
Value
Unrealized Amortized
Cost
Fair
Value
Unrealized
Gains (Losses) Gains (Losses)
Securities available for sale:
U.S. Treasuries $ —  $ —  $ —  $ —  $ 174,785  $ 172,570  $ —  $ (2,215)
Government-sponsored enterprise securities 71,968  62,872  —  (9,096) 71,964  60,266  —  (11,698)
Mortgage-backed securities 2,150,849  1,828,802  39  (322,086) 2,323,674  1,937,784  30  (385,920)
Corporate bonds 16,179  15,784  —  (395) 19,676  18,759  —  (917)
Total available for sale $ 2,238,996  $ 1,907,458  $ 39  $ (331,577) $ 2,590,099  $ 2,189,379  $ 30  $ (400,750)
Securities held to maturity:
Mortgage-backed securities $ 9,923  $ 9,564  $ —  $ (359) $ 12,085  $ 11,447  $ —  $ (638)
State and local governments 511,878  438,736  29  (73,171) 521,593  438,176  39  (83,456)
Total held to maturity $ 521,801  $ 448,300  $ 29  $ (73,530) $ 533,678  $ 449,623  $ 39  $ (84,094)

All of the Company’s mortgage-backed securities were issued by government-sponsored enterprises ("GSEs"), except for private mortgage-backed securities with a fair value of $0.7 million as of September 30, 2024 and December 31, 2023.

The following table presents information regarding all securities with unrealized losses at September 30, 2024:
Securities in an Unrealized
Loss Position for
Less than Twelve Months
Securities in an Unrealized
Loss Position for
More than Twelve Months
Total
($ in thousands) Fair Value Unrealized
Losses
Fair Value Unrealized
Losses
Fair Value Unrealized
Losses
Government-sponsored enterprise securities $ —  $ —  $ 62,872  $ 9,096  $ 62,872  $ 9,096 
Mortgage-backed securities 318  —  1,835,466  322,445  1,835,784  322,445 
Corporate bonds 380  49  13,654  346  14,034  395 
State and local governments 520  —  433,118  73,171  433,638  73,171 
Total unrealized loss position $ 1,218  $ 49  $ 2,345,110  $ 405,058  $ 2,346,328  $ 405,107 


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Index
The following table presents information regarding all securities with unrealized losses at December 31, 2023:
Securities in an Unrealized
Loss Position for
Less than Twelve Months
Securities in an Unrealized
Loss Position for
More than Twelve Months
Total
($ in thousands) Fair Value Unrealized
Losses
Fair Value Unrealized
Losses
Fair Value Unrealized
Losses
U.S. Treasuries $ —  $ —  $ 172,570  $ 2,215  $ 172,570  $ 2,215 
Government-sponsored enterprise securities —  —  60,266  11,698  60,266  11,698 
Mortgage-backed securities 1,117  1,945,830  386,553  1,946,947  386,558 
Corporate bonds —  —  17,008  917  17,008  917 
State and local governments —  —  432,476  83,456  432,476  83,456 
Total unrealized loss position $ 1,117  $ $ 2,628,150  $ 484,839  $ 2,629,267  $ 484,844 
As of September 30, 2024, the Company's securities portfolio included 620 securities of which 586 securities were in an unrealized loss position. As of December 31, 2023, the Company's securities portfolio included 657 securities of which 632 securities were in an unrealized loss position.
In the above tables, all of the securities that were in an unrealized loss position at September 30, 2024 and December 31, 2023 are bonds that the Company has determined are in a loss position due primarily to interest rate factors and not credit quality concerns. In arriving at this conclusion, the Company reviewed third-party credit ratings and considered the severity of the impairment. The state and local government investments are comprised almost entirely of highly-rated municipal bonds issued by state and local governments throughout the nation. The Company has no significant concentrations of bond holdings from one state or local government entity. Nearly all of our mortgage-backed securities were issued by Federal Home Loan Mortgage Corporation ("FHLMC"), Federal National Mortgage Association ("FNMA"), Government National Mortgage Association ("GNMA"), or the Small Business Administration ("SBA"), each of which is a government agency or GSE and guarantees the repayment of the securities.
At September 30, 2024 and December 31, 2023, the Company determined that expected credit losses associated with held to maturity securities and available for sale debt securities were insignificant.
The book values and fair values of investment securities at September 30, 2024, by contractual maturity, are summarized in the table below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
  Securities Available for Sale Securities Held to Maturity
($ in thousands) Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Due after one year but within five years $ 39,996  $ 35,320  $ 5,394  $ 5,289 
Due after five years but within ten years 48,151  43,336  183,914  159,345 
Due after ten years —  —  322,570  274,102 
Mortgage-backed securities 2,150,849  1,828,802  9,923  9,564 
Total securities $ 2,238,996  $ 1,907,458  $ 521,801  $ 448,300 
At September 30, 2024 and December 31, 2023, investment securities with carrying values of $924.8 million and $971.3 million, respectively, were pledged as collateral for public deposits. In addition, at September 30, 2024 and December 31, 2023, investment securities with carrying values of $582.6 million and $679.0 million, respectively, were pledged as collateral for Federal Reserve Bank ("Federal Reserve") borrowings.
At September 30, 2024 and December 31, 2023, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies or GSEs, in an amount greater than 10% of shareholders' equity.
There were no sales of investment securities during the three months ended September 30, 2024.

Page 13

Index
During the second quarter of 2024, the Company sold all of its holdings of Class B shares of Visa, Inc. (“Visa”) stock that were received upon Visa’s initial public offering and recognized a gain of $4.5 million. As the Class B stock did not initially have a readily determinable fair value, it was carried at $0 prior to the sale.
During the second quarter of 2024, the Company received proceeds from sales of securities of $138.2 million and recorded $4.7 million in gross losses from the sales. This loss was partially offset by the $4.5 million gain on the sale of the Visa stock discussed above. Included in "Securities losses, net" in the consolidated statements of income, during the first quarter of 2024, the Company received proceeds from the call of a security of $5.2 million and recorded a $975 thousand loss related to the unamortized premium balance at the time of the call. During the first quarter of 2023, the Company sold substantially all of the securities acquired from GrandSouth at their initially recorded fair values. Accordingly, there was no gain or loss recorded on the sale of acquired securities.
Included in “Other assets” in the consolidated balance sheets are investments in Federal Home Loan Bank (“FHLB”) and Federal Reserve stock totaling $41.2 million and $54.5 million at September 30, 2024 and December 31, 2023, respectively. These investments do not have readily determinable fair values. The FHLB stock had a cost of $8.5 million and $21.7 million at September 30, 2024 and December 31, 2023, respectively, and serves as part of the collateral for the Company’s line of credit with the FHLB and is also a requirement for membership in the FHLB system. The Federal Reserve stock had a cost and fair value of $32.7 million and $32.8 million at September 30, 2024 and December 31, 2023, respectively, and is a requirement for Federal Reserve member bank qualification. Periodically, both the FHLB and Federal Reserve recalculate the Company’s required level of holdings, and the Company either buys more stock or redeems a portion of the stock at cost. The Company determined that neither stock was impaired at either period end.

Note 4. Loans, Allowance for Credit Losses, and Asset Quality Information

The following is a summary of the major categories of total loans outstanding:
($ in thousands) September 30, 2024 December 31, 2023
  Amount Percentage Amount Percentage
Commercial and industrial $ 847,284  11  % $ 905,862  11  %
Construction, development & other land loans 760,949  % 992,980  12  %
Commercial real estate - owner occupied 1,226,050  15  % 1,259,022  16  %
Commercial real estate - non owner occupied 2,572,901  32  % 2,528,060  31  %
Multi-family real estate 460,565  % 421,376  %
Residential 1-4 family real estate 1,737,133  22  % 1,639,469  20  %
Home equity loans/lines of credit 331,072  % 335,068  %
Consumer loans 76,787  % 68,443  %
Subtotal 8,012,741  100  % 8,150,280  100  %
Unamortized net deferred loan costs/(fees) 797  (178)
Total loans $ 8,013,538  $ 8,150,102 

Also included in the table above are various SBA loans, generally originated under the SBA 7A program, with additional information on these loans presented in the table below.
($ in thousands) September 30, 2024 December 31, 2023
Guaranteed portions of SBA loans included in table above $ 36,131  $ 35,462 
Unguaranteed portions of SBA loans included in table above 104,472  107,784 
Total SBA loans included in the table above $ 140,603  $ 143,246 
Sold portions of SBA loans with servicing retained - not included in tables above $ 341,517  $ 349,275 

At September 30, 2024 and December 31, 2023, there were remaining unaccreted discounts on the retained portion of sold SBA loans amounting to $3.3 million and $3.5 million, respectively.


Page 14

Index
At September 30, 2024 and December 31, 2023, loans in the amount of $6.6 billion and $6.5 billion, respectively, were pledged as collateral for certain borrowings.

At September 30, 2024 and December 31, 2023, total loans included loans to executive officers and directors of the Company, and their associates, totaling approximately $63.3 million and $63.7 million, respectively. While there was one new loan, advances on existing loans totaled approximately $1.3 million for the nine months ended September 30, 2024, and repayments amounted to $1.6 million for that period. Available credit on related party loans totaled $1.0 million and $2.7 million at September 30, 2024 and December 31, 2023, respectively.
As of September 30, 2024 and December 31, 2023, unamortized discounts on all acquired loans totaled $17.3 million and $24.0 million, respectively. Loan discounts are generally amortized as yield adjustments over the respective lives of the loans, so long as the loans perform. There was no impairment of acquired loans during the three and nine months ended September 30, 2024 that would require acceleration of amortization or charge off of unamortized discount.
Nonperforming assets ("NPAs") are defined as nonaccrual loans, modifications to borrowers in financial distress, loans past due 90 or more days and still accruing interest, and foreclosed real estate.
The following table summarizes the NPAs for each date presented.
($ in thousands) September 30,
2024
December 31,
2023
Nonaccrual loans $ 34,125  $ 32,208 
Modifications to borrowers in financial distress 10,262  11,719 
Total nonperforming loans 44,387  43,927 
Foreclosed real estate 1,519  862 
Total nonperforming assets $ 45,906  $ 44,789 
At September 30, 2024 and December 31, 2023, the Company had $0.8 million and $1.0 million, respectively, in residential mortgage loans in the process of foreclosure.
At September 30, 2024 and December 31, 2023, there were two and one loans, respectively, with commitments to lend an immaterial amount of additional funds to a borrower whose loan was nonperforming.
The following table is a summary of the Company’s nonaccrual loans by major categories as of September 30, 2024:
($ in thousands) Nonaccrual Loans with No Allowance Nonaccrual Loans with an Allowance Total Nonaccrual Loans
Commercial and industrial $ —  $ 10,310  $ 10,310 
Construction, development & other land loans —  17  17 
Commercial real estate - owner occupied 879  9,211  10,090 
Commercial real estate - non owner occupied —  6,067  6,067 
Residential 1-4 family real estate —  5,578  5,578 
Home equity loans/lines of credit —  1,925  1,925 
Consumer loans —  138  138 
Total $ 879  $ 33,246  $ 34,125 


Page 15

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The following table is a summary of the Company’s nonaccrual loans by major categories as of December 31, 2023:
($ in thousands) Nonaccrual Loans with No Allowance Nonaccrual Loans with an Allowance Total Nonaccrual Loans
Commercial and industrial $ 944  $ 8,932  $ 9,876 
Construction, development & other land loans —  399  399 
Commercial real estate - owner occupied 960  6,082  7,042 
Commercial real estate - non owner occupied 6,121  1,082  7,203 
Residential 1-4 family real estate —  4,843  4,843 
Home equity loans/lines of credit 534  2,169  2,703 
Consumer loans —  142  142 
Total $ 8,559  $ 23,649  $ 32,208 

There was no interest income recognized during the periods presented on nonaccrual loans. In the period that the Company places a loan on nonaccrual status, contractual interest income is reversed in the consolidated income statement.

The following table represents the accrued interest receivables written off by reversing interest income during each period indicated:
($ in thousands) Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023
Commercial and industrial $ 360  $ 182 
Construction, development & other land loans — 
Commercial real estate - owner occupied 238  105 
Commercial real estate - non owner occupied 55 
Residential 1-4 family real estate 45  29 
Home equity loans/lines of credit 26  39 
Consumer loans
Total $ 725  $ 367 

The following table presents an analysis of the payment status of the Company’s loans as of September 30, 2024:
($ in thousands) Accruing
Current
Accruing
30-59
Days Past
Due
Accruing
60-89
Days
Past
Due
Nonaccrual
Loans
Total Loans
Receivable
Commercial and industrial $ 834,306  $ 2,468  $ 200  $ 10,310  $ 847,284 
Construction, development & other land loans 759,957  910  65  17  760,949 
Commercial real estate - owner occupied 1,215,472  279  209  10,090  1,226,050 
Commercial real estate - non owner occupied 2,566,325  287  222  6,067  2,572,901 
Multi-family real estate 460,419  146  —  —  460,565 
Residential 1-4 family real estate 1,725,659  1,794  4,102  5,578  1,737,133 
Home equity loans/lines of credit 327,772  1,278  97  1,925  331,072 
Consumer loans 76,095  322  232  138  76,787 
Total $ 7,966,005  $ 7,484  $ 5,127  $ 34,125  8,012,741 
Unamortized net deferred loan costs/(fees) 797 
Total loans $ 8,013,538 


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Index
The following table presents an analysis of the payment status of the Company’s loans as of December 31, 2023:
($ in thousands) Accruing
Current
Accruing
30-59
Days
Past
Due
Accruing
60-89
Days
Past
Due
Nonaccrual
Loans
Total Loans
Receivable
Commercial and industrial $ 892,003  $ 3,726  $ 257  $ 9,876  $ 905,862 
Construction, development & other land loans 992,084  241  256  399  992,980 
Commercial real estate - owner occupied 1,250,670  906  404  7,042  1,259,022 
Commercial real estate - non owner occupied 2,520,496  361  —  7,203  2,528,060 
Multi-family real estate 421,376  —  —  —  421,376 
Residential 1-4 family real estate 1,612,357  18,868  3,401  4,843  1,639,469 
Home equity loans/lines of credit 331,413  603  349  2,703  335,068 
Consumer loans 67,900  270  131  142  68,443 
Total $ 8,088,299  $ 24,975  $ 4,798  $ 32,208  8,150,280 
Unamortized net deferred loan costs/(fees) (178)
Total loans $ 8,150,102 
Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. The Company reviews individually evaluated loans on nonaccrual with a net book balance of $500,000 or greater for designation as collateral dependent loans, as well as certain other loans that may still be accruing interest and/or are less than $500,000 in size that management of the Company designates as having higher risk. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the Allowance for Credit Losses ("ACL").
The following table presents an analysis of collateral dependent loans of the Company as of September 30, 2024:
($ in thousands) Residential Property Business Assets Commercial Property Total Collateral-Dependent Loans
Commercial real estate - owner occupied $ —  $ —  $ 879  $ 879 
Commercial real estate - non owner occupied —  —  5,050  5,050 
Total $ —  $ —  $ 5,929  $ 5,929 

The following table presents an analysis of collateral dependent loans of the Company as of December 31, 2023:
($ in thousands) Residential Property Business Assets Commercial Property Total Collateral-Dependent Loans
Commercial and industrial $ —  $ 2,385  $ —  $ 2,385 
Commercial real estate - owner occupied —  —  1,142  1,142 
Commercial real estate - non owner occupied —  —  6,121  6,121 
Home equity loans/lines of credit 534  —  —  534 
Total $ 534  $ 2,385  $ 7,263  $ 10,182 

There have been no material changes from the treatment of collateral dependent loans under CECL as discussed in Note 4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

The following tables presents the activity in the ACL on loans for each of the periods indicated to include Purchase Credit Deterioration (“PCD”) activity in applicable periods. Fluctuations in the ACL each period are based on loan mix and growth, changes in the levels of nonperforming loans, economic forecasts impacting loss drivers, other assumptions and inputs to the current expected credit loss ("CECL") model, and as occurred in 2023, adjustments for acquired loan portfolios. The change to the level of ACL during the nine months ended September 30, 2024 was determined based primarily on updated economic forecasts, which are a key assumption in the CECL model and which indicated improvement in certain economic forecasts along with reductions in loan balances during the period, partially offset by a continued reduction of the commercial real estate pricing index. Other than the impact from Hurricane Helene, there was little change to the ACL for the quarter or year to date.


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($ in thousands) Beginning balance Charge-offs Recoveries Provisions / (Reversals) Ending balance
As of and for the three months ended September 30, 2024
Commercial and industrial $ 19,837  $ (1,913) $ 246  $ (27) $ 18,143 
Construction, development & other land loans 9,996  —  35  1,394  11,425 
Commercial real estate - owner occupied 17,859  (21) 657  18,499 
Commercial real estate - non owner occupied 25,876  —  2,754  28,633 
Multi-family real estate 5,129  —  —  161  5,290 
Residential 1-4 family real estate 24,855  —  28  9,183  34,066 
Home equity loans/lines of credit 3,177  —  232  165  3,574 
Consumer loans 3,329  (754) 17  496  3,088 
Total $ 110,058  $ (2,688) $ 565  $ 14,783  $ 122,718 
As of and for the nine months ended September 30, 2024
Commercial and industrial $ 21,227  $ (5,976) $ 1,346  $ 1,546  $ 18,143 
Construction, development & other land loans 13,940  (79) 182  (2,618) 11,425 
Commercial real estate - owner occupied 18,218  (109) 12  378  18,499 
Commercial real estate - non owner occupied 24,916  (158) 46  3,829  28,633 
Multi-family real estate 3,825  —  —  1,465  5,290 
Residential 1-4 family real estate 21,396  (6) 255  12,421  34,066 
Home equity loans/lines of credit 3,339  (2) 254  (17) 3,574 
Consumer loans 2,992  (1,130) 197  1,029  3,088 
Total $ 109,853  $ (7,460) $ 2,292  $ 18,033  $ 122,718 
($ in thousands) Beginning balance Initial ACL for acquired PCD loans Charge-offs Recoveries Provisions / (Reversals) Ending balance
As of and for the three months ended September 30, 2023
Commercial and industrial $ 23,442  $ —  $ (2,650) $ 450  $ 1,202  $ 22,444 
Construction, development & other land loans 18,477  —  (120) 54  (4,761) 13,650 
Commercial real estate - owner occupied 16,381  —  (24) 34  1,873  18,264 
Commercial real estate - non owner occupied 26,274  —  —  302  (1,240) 25,336 
Multi-family real estate 3,946  —  —  (481) 3,468 
Residential 1-4 family real estate 14,305  —  —  50  4,374  18,729 
Home equity loans/lines of credit 3,717  —  —  11  (431) 3,297 
Consumer loans 2,688  —  (409) 67  664  3,010 
Total $ 109,230  $ —  $ (3,203) $ 971  $ 1,200  $ 108,198 
As of and for the nine months ended September 30, 2023
Commercial and industrial $ 17,718  $ 5,197  $ (6,361) $ 1,216  $ 4,674  $ 22,444 
Construction, development & other land loans 15,128  49  (120) 277  (1,684) 13,650 
Commercial real estate - owner occupied 14,972  191  (24) 104  3,021  18,264 
Commercial real estate - non owner occupied 22,780  51  (235) 734  2,006  25,336 
Multi-family real estate 2,957  —  —  10  501  3,468 
Residential 1-4 family real estate 11,354  113  —  275  6,987  18,729 
Home equity loans/lines of credit 3,158  (2) 85  48  3,297 
Consumer loans 2,900  (833) 144  798  3,010 
Total $ 90,967  $ 5,610  $ (7,575) $ 2,845  $ 16,351  $ 108,198 
Credit Quality Indicators
There have been no material changes from the treatment of credit quality tracking and risk grade descriptions as discussed in Note 4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

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In the tables that follow, substantially all of the "Classified" loans have grades of 7 or Fail, with those categories having similar levels of risk.
The tables below present the Company’s recorded investment in loans by credit quality indicators by year of origination or renewal as of the periods indicated. Acquired loans are presented in the year originated, not in the year of acquisition.

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Term Loans by Year of Origination
($ in thousands) 2024 2023 2022 2021 2020 Prior Revolving Total
As of September 30, 2024
Commercial and industrial
Pass $ 91,552  $ 88,620  $ 128,666  $ 88,256  $ 61,355  $ 73,296  $ 299,188  $ 830,933 
Special Mention 944  361  174  207  347  794  1,890  4,717 
Classified 160  1,817  3,440  486  1,009  4,181  541  11,634 
Total commercial and industrial 92,656  90,798  132,280  88,949  62,711  78,271  301,619  847,284 
Gross charge-offs, YTD 126  460  800  195  134  752  3,509  5,976 
Construction, development & other land loans
Pass 321,727  192,331  114,704  32,788  14,857  9,801  70,195  756,403 
Special Mention 2,497  612  164  —  265  13  3,560 
Classified 910  —  —  —  67  —  986 
Total construction, development & other land loans 325,134  192,943  114,868  32,797  14,924  10,075  70,208  760,949 
Gross charge-offs, YTD —  79  —  —  —  —  —  79 
Commercial real estate - owner occupied
Pass 120,529  229,996  272,334  261,248  158,253  127,257  16,711  1,186,328 
Special Mention 13,218  1,940  3,515  187  147  7,654  —  26,661 
Classified 957  179  1,977  1,268  1,572  7,108  —  13,061 
Total commercial real estate - owner occupied 134,704  232,115  277,826  262,703  159,972  142,019  16,711  1,226,050 
Gross charge-offs, YTD —  25  —  19  —  65  —  109 
Commercial real estate - non owner occupied
Pass 345,170  435,235  683,731  638,235  263,275  149,114  29,739  2,544,499 
Special Mention 14,968  268  189  13  337  5,890  —  21,665 
Classified 234  401  570  11  4,233  1,288  —  6,737 
Total commercial real estate - non owner occupied 360,372  435,904  684,490  638,259  267,845  156,292  29,739  2,572,901 
Gross charge-offs, YTD —  —  —  —  —  158  —  158 
Multi-family real estate
Pass 55,518  41,990  115,324  161,142  41,642  14,628  29,379  459,623 
Special Mention —  146  —  —  —  796  —  942 
Classified —  —  —  —  —  —  —  — 
Total multi-family real estate 55,518  42,136  115,324  161,142  41,642  15,424  29,379  460,565 
Gross charge-offs, YTD —  —  —  —  —  —  —  — 
Residential 1-4 family real estate
Pass 181,377  333,878  416,275  301,453  176,169  311,209  3,298  1,723,659 
Special Mention 215  —  11  139  62  910  —  1,337 
Classified 1,892  245  2,257  549  1,198  5,996  —  12,137 
Total residential 1-4 family real estate 183,484  334,123  418,543  302,141  177,429  318,115  3,298  1,737,133 
Gross charge-offs, YTD —  —  —  —  —  — 
Home equity loans/lines of credit
Pass 2,128  2,679  661  377  175  943  317,182  324,145 
Special Mention 121  152  —  —  —  —  16  289 
Classified 175  54  —  137  89  6,175  6,638 
Total home equity loans/lines of credit 2,424  2,885  661  514  264  951  323,373  331,072 
Gross charge-offs, YTD —  —  —  —  —  — 
Consumer loans
Pass 13,328  11,137  8,076  2,757  1,252  373  39,517  76,440 
Special Mention —  —  —  —  —  —  23  23 
Classified 72  46  21  —  28  151  324 
Total consumer loans 13,334  11,209  8,122  2,778  1,252  401  39,691  76,787 
Gross charge-offs, YTD 53  24  33  —  —  1,014  1,130 
Total loans $ 1,167,626  $ 1,342,113  $ 1,752,114  $ 1,489,283  $ 726,039  $ 721,548  $ 814,018  8,012,741 
Unamortized net deferred loan costs/(fees) 797 
Total loans, net of deferred loan costs/(fees) $ 8,013,538 
Total gross charge-offs, year to date $ 132  $ 617  $ 824  $ 247  $ 134  $ 981  $ 4,525  $ 7,460 

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Term Loans by Year of Origination
($ in thousands) 2023 2022 2021 2020 2019 Prior Revolving Total
As of December 31, 2023
Commercial and industrial
Pass $ 136,735  $ 161,131  $ 111,069  $ 75,312  $ 38,495  $ 60,626  $ 302,684  $ 886,052 
Special Mention 2,832  2,547  167  185  448  672  1,135  7,986 
Classified 1,626  1,152  720  1,389  1,647  4,487  803  11,824 
Total commercial and industrial 141,193  164,830  111,956  76,886  40,590  65,785  304,622  905,862 
Gross charge-offs, YTD 171  1,036  713  537  821  1,547  3,533  8,358 
Construction, development & other land loans
Pass 563,998  231,450  90,374  16,662  11,598  5,816  70,852  990,750 
Special Mention 489  273  59  —  19  846 
Classified 657  708  —  —  11  —  1,384 
Total construction, development & other land loans 565,144  232,431  90,433  16,662  11,608  5,831  70,871  992,980 
Gross charge-offs, YTD —  —  —  —  —  120  —  120 
Commercial real estate - owner occupied
Pass 210,449  323,852  299,135  196,343  92,452  86,784  23,198  1,232,213 
Special Mention 338  2,533  271  817  5,755  2,253  —  11,967 
Classified 4,456  1,505  1,721  895  2,288  3,904  73  14,842 
Total commercial real estate - owner occupied 215,243  327,890  301,127  198,055  100,495  92,941  23,271  1,259,022 
Gross charge-offs, YTD —  —  49  —  —  92  144 
Commercial real estate - non owner occupied
Pass 509,596  748,854  722,472  287,235  119,515  84,690  29,001  2,501,363 
Special Mention 11,353  199  36  393  1,183  5,942  342  19,448 
Classified 871  32  14  4,214  634  1,484  —  7,249 
Total commercial real estate - non owner occupied 521,820  749,085  722,522  291,842  121,332  92,116  29,343  2,528,060 
Gross charge-offs, YTD —  —  235  —  —  —  —  235 
Multi-family real estate
Pass 57,378  137,533  139,879  43,881  12,231  10,323  20,151  421,376 
Special Mention —  —  —  —  —  —  —  — 
Classified —  —  —  —  —  —  —  — 
Total multi-family real estate 57,378  137,533  139,879  43,881  12,231  10,323  20,151  421,376 
Gross charge-offs, YTD —  —  —  —  —  —  —  — 
Residential 1-4 family real estate
Pass 363,410  400,483  317,515  186,459  94,567  260,102  3,247  1,625,783 
Special Mention 681  41  202  64  587  1,987  —  3,562 
Classified 1,848  50  474  741  472  6,539  —  10,124 
Total residential 1-4 family real estate 365,939  400,574  318,191  187,264  95,626  268,628  3,247  1,639,469 
Gross charge-offs, YTD —  —  —  —  —  — 
Home equity loans/lines of credit
Pass 2,830  1,136  1,141  223  499  1,233  319,199  326,261 
Special Mention 163  —  122  —  —  —  18  303 
Classified 255  —  146  91  112  10  7,890  8,504 
Total home equity loans/lines of credit 3,248  1,136  1,409  314  611  1,243  327,107  335,068 
Gross charge-offs, YTD —  —  —  —  —  —  309  309 
Consumer loans
Pass 16,497  12,906  4,999  2,173  432  429  30,757  68,193 
Special Mention —  —  —  —  —  —  —  — 
Classified 130  45  —  34  31  250 
Total consumer loans 16,627  12,913  5,044  2,173  435  463  30,788  68,443 
Gross charge-offs, YTD 34  79  73  23  —  795  1,005 
Total loans $ 1,886,592  $ 2,026,392  $ 1,690,561  $ 817,077  $ 382,928  $ 537,330  $ 809,400  8,150,280 
Unamortized net deferred loan costs/(fees) (178)
Total loans, net of deferred loan costs/(fees) $ 8,150,102 
Total gross charge-offs, year to date $ 205  $ 1,115  $ 1,070  $ 560  $ 821  $ 1,764  $ 4,640  $ 10,175 

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Loan Modifications to Borrowers Experiencing Financial Difficulty
Occasionally, the Company modifies loans to borrowers in financial distress as a part of our loss mitigation activities. Various types of modification may be offered including principal forgiveness, term extension, payment delays, or interest rate reductions. In some cases, the Company will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession may be granted. For loans included in the “combination” columns below, multiple types of modifications have been made on the same loan within the current reporting period.

The followings tables present the amortized cost basis at September 30, 2024 and September 30, 2023 of the loans modified during the three and nine months then ended for borrowers experiencing financial difficulty, by loan category and type of concession granted.

($ in thousands) Payment Delay Term Extension Combination - Term Extension and Payment Delay Combination - Interest Rate Reduction and Term Extension Total Percent of Total Class of Loans
As of and for the three months ended September 30, 2024
Construction, development & other land loans $ —  $ 143  $ —  $ —  $ 143  0.02  %
Home equity loans/lines of credit —  96  —  —  96  0.03  %
Total $ —  $ 239  $ —  $ —  $ 239  —  %
As of and for the nine months ended September 30, 2024
Commercial and industrial $ 114  $ $ 878  $ 92  $ 1,085  0.13  %
Construction, development & other land loans —  208  —  —  208  0.03  %
Commercial real estate - non owner occupied —  107  —  —  107  —  %
Residential 1-4 family real estate —  199  —  —  199  0.01  %
Home equity loans/lines of credit —  417  —  173  590  0.18  %
Total $ 114  $ 932  $ 878  $ 265  $ 2,189  0.03  %

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($ in thousands) Payment Delay Term Extension Combination - Interest Rate Reduction and Term Extension Total Percent of Total Class of Loans
As of and for the three months ended September 30, 2023
Commercial and industrial $ 1,142  $ 117  $ —  $ 1,259  0.14  %
Construction, development & other land loans —  594  —  594  0.06  %
Commercial real estate - owner occupied —  4,023  —  4,023  0.32  %
Commercial real estate - non owner occupied —  131  —  131  0.01  %
Residential 1-4 family real estate —  245  —  245  0.02  %
Home equity loans/lines of credit 24  401  99  524  0.16  %
Consumer loans —  —  0.01  %
Total $ 1,166  $ 5,520  $ 99  $ 6,785  0.08  %
As of and for the nine months ended September 30, 2023
Commercial and industrial $ 2,589  $ 216  $ —  $ 2,805  0.31  %
Construction, development & other land loans —  594  10  604  0.06  %
Commercial real estate - owner occupied 185  4,302  —  4,487  0.36  %
Commercial real estate - non owner occupied —  219  —  219  0.01  %
Residential 1-4 family real estate —  750  —  750  0.05  %
Home equity loans/lines of credit 24  1,669  99  1,792  0.54  %
Consumer loans —  66  —  66  0.10  %
Total $ 2,798  $ 7,816  $ 109  $ 10,723  0.13  %
For the three and nine months ended September 30, 2024 and September 30, 2023, there were no modifications for borrowers experiencing financial difficulty with principal forgiveness concessions.
The following table describes the financial effect for the three and nine months ended September 30, 2024 of the modifications made for borrowers experiencing financial difficulty:
Financial Effect of Modification to Borrowers Experiencing Financial Difficulty
Weighted Average Interest Rate Reduction Weighted Average Payment Delay
(in months)
Weighted Average Term Extension
(in months)
For the three months ended September 30, 2024
Construction, development & other land loans —% 0 8
Home equity loans/lines of credit —% 0 40
For the nine months ended September 30, 2024
Commercial and industrial 0.75% 36 13
Construction, development & other land loans —% 0 6
Commercial real estate - non owner occupied —% 0 13
Residential 1-4 family real estate —% 0 103
Home equity loans/lines of credit 2.13% 0 65

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The following table describes the financial effect for the three and nine months ended September 30, 2023 of the modifications made for borrowers experiencing financial difficulty:
Financial Effect of Modification to Borrowers Experiencing Financial Difficulty
Weighted Average Interest Rate Reduction Weighted Average Payment Delay
(in months)
Weighted Average Term Extension
(in months)
For the three months ended September 30, 2023
Commercial and industrial —% 6 26
Construction, development & other land loans —% 0 8
Commercial real estate - owner occupied —% 0 32
Commercial real estate - non owner occupied —% 0 11
Residential 1-4 family real estate —% 0 23
Home equity loans/lines of credit 2.61% 24 84
Consumer loans —% 0 24
For the nine months ended September 30, 2023
Commercial and industrial —% 4 20
Construction, development & other land loans 1.53% 0 9
Commercial real estate - owner occupied —% 12 34
Commercial real estate - non owner occupied —% 0 13
Residential 1-4 family real estate —% 0 24
Home equity loans/lines of credit 2.61% 24 55
Consumer loans —% 0 9
The Company closely monitors the performance of the loans that are modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table depicts the performance of loans that were modified in the last twelve months as of September 30, 2024:
Payment Status (Amortized Cost Basis)
($ in thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due
Commercial and industrial $ 1,086  $ —  $ —  $ — 
Construction, development & other land loans 250  —  —  — 
Commercial real estate - non owner occupied 107  —  —  — 
Residential 1-4 family real estate 134  —  65  — 
Home equity loans/lines of credit 1,278  —  —  — 
$ 2,855  $ —  $ 65  $ — 
The following table depicts the performance of loans that were modified in the last twelve months as of December 31, 2023:
Payment Status (Amortized Cost Basis)
($ in thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due
Commercial and industrial $ 2,841  $ —  $ —  $ — 
Construction, development & other land loans 362  —  —  — 
Commercial real estate - owner occupied 4,455  —  —  — 
Commercial real estate - non owner occupied 206  —  —  — 
Residential 1-4 family real estate 656  79  —  — 
Home equity loans/lines of credit 3,114  —  —  — 
Consumer loans —  —  — 
$ 11,640  $ 79  $ —  $ — 

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None of the modifications made for borrowers experiencing financial difficulty during the three and nine months ended September 30, 2024 and September 30, 2023 are considered to have had a payment default.
Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is adjusted by the same amount.
Concentration of Credit Risk
Most of the Company's business activity is with customers located within the markets where it has banking operations. Therefore, the Company’s exposure to credit risk is significantly affected by changes in the economy within its markets. Approximately 88% of the Company's loan portfolio is secured by real estate and is therefore susceptible to changes in real estate valuations. There have been no material changes to the primary loan markets (as identified by counties) from year end.
Impact of Hurricane Helene
Within the portions of Western North and South Carolina that were significantly impacted by Hurricane Helene, the Company identified borrowers with approximately $755 million of loans outstanding. The following is a summary of the categories of those loans outstanding as of September 30, 2024:
($ in thousands) Balance
Commercial and industrial $ 10,481 
Construction, development & other land loans 29,429 
Commercial real estate - owner occupied 98,958 
Commercial real estate - non owner occupied 284,825 
Multi-family real estate 25,677 
Residential 1-4 family real estate 266,554 
Home equity loans/lines of credit 39,470 
Consumer loans — 
Total $ 755,394 
Given that the storm impacted the area just prior to September 30, 2024 and recovery continues in many communities, the Company performed analyses to identify possible impacts from the storm and has reserved accordingly based upon the information available at this time. The Company applied increased reserve rates based upon severe economic factors to the approximately $755 million of loans in the most impacted path of Hurricane Helene. Additionally, the Company performed an initial evaluation of the largest commercial loans in that area and applied incremental reserves to those loans that were suspected of having higher potential property damage or economic impact from the storm. Due to the potential exposure from Hurricane Helene, the ACL on these impacted loans increased by $13.0 million, expanding the ACL as a percent of loans in the impacted geography from 1.29% to 3.01% as of September 30, 2024 and adding 16 basis points to the overall ACL as a percent of total loans, which was 1.53% as of September 30, 2024.
Allowance for Unfunded Loan Commitments
In addition to the ACL on loans, the Company maintains an allowance for lending-related commitments such as unfunded loan commitments and letters of credit. The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for lending-related commitments on off-balance sheet credit exposures is adjusted as a provision for unfunded commitments expense. The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the ACL on loans. The allowance for unfunded loan commitments of $9.3 million and $11.4 million at September 30, 2024 and December 31, 2023, respectively, were separately classified on the consolidated balance sheets within "Other liabilities."

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The following table presents the balance and activity in the allowance for unfunded loan commitments for the three and nine months ended September 30, 2024 and 2023:
Three months ended September 30, Nine months ended September 30,
($ in thousands) 2024 2023 2024 2023
Beginning balance $ 9,860  $ 13,019  $ 11,369  $ 13,306 
Initial provision for credit losses on unfunded commitments acquired from GrandSouth —  —  —  1,921 
Charge-offs —  —  —  — 
Recoveries —  —  —  — 
Reversal of provision for unfunded commitments (583) (1,200) (2,092) (3,408)
Ending balance $ 9,277  $ 11,819  $ 9,277  $ 11,819 

Allowance for Credit Losses - Securities Held to Maturity
The ACL for securities held to maturity was insignificant at September 30, 2024 and December 31, 2023.

Note 5. Goodwill, Other Intangible Assets and Servicing Assets
The following is a summary of the gross carrying amount and accumulated amortization of amortizable intangible assets and the carrying amount of unamortized intangible assets as of the periods presented.
September 30, 2024 December 31, 2023
($ in thousands) Gross Carrying
Amount
Accumulated
Amortization
Net Amount Gross Carrying
Amount
Accumulated
Amortization
Net Amount
Amortizable intangible assets:
Customer lists $ 1,600  $ 1,307  $ 293  $ 2,700  $ 2,167  $ 533 
Core deposit intangibles 57,890  33,717  24,173  57,890  28,933  28,957 
Other intangibles 100  100  —  100  83  17 
Total amortizable intangible assets $ 59,590  $ 35,124  $ 24,466  $ 60,690  $ 31,183  $ 29,507 
Unamortizable intangible assets:
Goodwill $ 478,750  $ 478,750 
Customer lists are generally amortized over five years and core deposit intangibles are generally amortized over 10 years, both at an accelerated rate.
Amortization expense of all amortizable intangible assets totaled $1.6 million and $2.0 million for the three months ended September 30, 2024 and 2023, respectively, and $5.0 million and $6.1 million for the nine months ended September 30, 2024 and 2023, respectively.
Goodwill is evaluated for impairment on at least an annual basis, with the annual evaluation occurring as of October 31 of each year. Goodwill is also evaluated for impairment any time there is a triggering event indicating that impairment may have occurred. No triggering events were identified during 2024 to date and, therefore, the Company did not perform interim impairment evaluations. The Company's most recent evaluation of goodwill, which occurred in the fourth quarter of 2023, indicated that there was no goodwill impairment. There was no change to carrying amounts of goodwill during 2024.
The following table presents the estimated amortization expense schedule related to acquisition-related amortizable intangible assets. These amounts will be recorded as "Intangibles amortization expense" within the noninterest expense section of the consolidated statements of income. These estimates are subject to change in future periods to the extent management determines it is necessary to make adjustments to the carrying value or estimated useful lives of amortizable intangible assets.

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($ in thousands) Estimated Amortization
Expense
October 1, 2024 to December 31, 2024 $ 1,562 
2025 5,672 
2026 4,704 
2027 3,951 
2028 3,197 
Thereafter 5,380 
Total $ 24,466 
The Company recorded SBA guaranteed servicing fee income of $0.8 million for the three months ended September 30, 2024 and 2023, and $2.3 million and $2.7 million for the nine months ended September 30, 2024 and 2023, respectively. There was no impairment of SBA servicing assets at September 30, 2024 and December 31, 2023 and no significant methodology changes have been made since year end.
The following table presents the changes in the SBA servicing assets (included in "Other assets" in the Company's consolidated balance sheet) for the three and nine months ended September 30, 2024 and 2023:
Three months ended September 30, Nine months ended September 30,
($ in thousands) 2024 2023 2024 2023
Beginning balance, net $ 3,003  $ 3,781  $ 3,350  $ 4,004 
Add: New servicing assets 315  191  858  464 
Less: Amortization expense and impairment charges 358  457  1,248  953 
Ending balance, net $ 2,960  $ 3,515  $ 2,960  $ 3,515 

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Note 6. Borrowings
The following tables present information regarding the Company’s outstanding borrowings at September 30, 2024 ($ in thousands):
Description Due date Call Feature Balance at September 30, 2024 Interest Rate
FHLB Principal Reducing Credit
6/26/2028 to 12/20/2028
None $ 814 
0.00% to 1.00% fixed
Trust Preferred Securities 1/23/2034 Quarterly by Company
beginning 1/23/2009
10,310 
8.17% at 9/30/24 adjustable rate 3 month CME Term SOFR+ 2.91%
Trust Preferred Securities 1/23/2034 Quarterly by Company
beginning 1/23/2009
10,310 
 8.27% at 9/30/24 adjustable rate 3 month CME Term SOFR + 3.01%
Trust Preferred Securities 9/20/2034 Quarterly by Company
beginning 9/20/2009
12,372 
7.23% at 9/30/24 adjustable rate 3 month CME Term SOFR + 2.41%
Trust Preferred Securities 1/7/2035 Quarterly by Company
beginning 1/7/2010
10,310 
7.56% at 9/30/24 adjustable rate 3 month CME Term SOFR + 2.00%
Trust Preferred Securities 6/15/2036 Quarterly by Company
beginning 6/15/2011
25,774 
6.60% at 9/30/24 adjustable rate 3 month CME Term SOFR + 1.65%
Trust Preferred Securities 6/23/2036 Quarterly by the Company beginning 6/23/2011 8,248 
6.86% at 9/30/24 adjustable rate 3 month CME Term SOFR + 2.11%
Subordinated Debentures 11/15/2030 Continuous by Company beginning 11/15/2025 18,000 
4.38% fixed
Total borrowings / weighted average rate as of September 30, 2024
96,138  6.69%
Unamortized discount on acquired borrowings (4,444)
Total borrowings $ 91,694 




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The following tables present information regarding the Company’s outstanding borrowings at December 31, 2023 ($ in thousands):
Description Due date Call Feature Balance at December 31, 2023 Interest Rate
FHLB Principal Reducing Credit
6/26/2028 to 12/20/2028
None $ 851 
0.00% to 1.00% fixed
FHLB Fixed Rate Credit 1/16/2024 None 80,000 
5.59% fixed
FHLB Fixed Rate Credit 2/27/2024 None 100,000 
5.61% fixed
FHLB Fixed Rate Credit 3/20/2024 None 100,000 
5.61% fixed
FRB Bank Term Funding Program 12/20/2024 None 224,000 
4.85% fixed
FRB Bank Term Funding Program 12/27/2024 None 25,000 
4.83% fixed
Trust Preferred Securities 1/23/2034 Quarterly by Company
beginning 1/23/2009
10,310 
8.30% at 12/31/23 adjustable rate 3 month CME Term SOFR + 2.91%
Trust Preferred Securities 1/23/2034 Quarterly by Company
beginning 1/23/2009
10,310 
 8.40% at 12/31/23 adjustable rate 3 month CME Term SOFR + 3.01%
Trust Preferred Securities 9/20/2034 Quarterly by Company
beginning 9/20/2009
12,372 
7.78% at 12/31/23 adjustable rate 3 month CME Term SOFR + 2.41%
Trust Preferred Securities 1/7/2035 Quarterly by Company
beginning 1/7/2010
10,310 
7.66% at 12/31/23 adjustable rate 3 month CME Term SOFR + 2.00%
Trust Preferred Securities 6/15/2036 Quarterly by Company
beginning 6/15/2011
25,774 
7.04% at 12/31/23 adjustable rate 3 month CME Term SOFR + 1.65%
Trust Preferred Securities 6/23/2036 Quarterly by Company beginning 6/23/2011 8,248 
7.47% at 12/31/23 adjustable rate 3 month CME Term SOFR + 2.11%
Subordinated Debentures 11/30/2028 Continuous by Company beginning 11/30/2023 10,000 
9.09% at 12/31/23 adjustable rate 3 month CME Term SOFR + 3.69%
Subordinated Debentures 11/15/2030 Continuous by Company beginning 11/15/2025 18,000 
4.38% fixed
Total borrowings / weighted average rate as of December 31, 2023
635,175  5.57%
Unamortized discount on acquired borrowings (5,017)
Total borrowings $ 630,158 

Note 7. Leases
The Company enters into leases in the normal course of business. As of September 30, 2024, the Company leased 14 bank branch offices for which the land and buildings are leased and ten branch offices for which the land is leased but the buildings are owned. The Company also leases office space for several operational departments. The lease agreements have maturity dates ranging from November 2024 through May 2076, some of which include options for multiple five- and ten-year extensions. The weighted average remaining life of the lease term for these leases was 21.1 years as of September 30, 2024. Certain of the Company's lease agreements include variable lease payments based on changes in inflation, with the impact of that factor being insignificant to the Company's total lease expense. As permitted by applicable accounting standards, the Company has elected not to recognize leases with original lease terms of twelve months or less (short-term leases) on the Company's consolidated balance sheets. The short-term lease cost for each period presented was insignificant.
Leases are classified as either operating or finance leases at the lease commencement date and all of the Company's leases have been determined to be operating leases. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the applicable lease term. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

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The Company uses its incremental borrowing rate, on a collateralized basis, at lease commencement to calculate the present value of lease payments when the rate implicit in the lease is not known. The weighted average discount rates for leases were 3.32% and 3.19% as of September 30, 2024 and December 31, 2023, respectively.
The right-of-use assets, included in "Other assets" on the Company's consolidated balance sheet, and lease liabilities, included in "Other liabilities" on the Company's consolidated balance sheet, were $14.1 million and $14.9 million as of September 30, 2024, respectively, and were $17.1 million and $17.8 million as of December 31, 2023, respectively.
Total operating lease expenses, included in "Other operating expenses" in the Company's consolidated statement of income, were $0.6 million and $0.8 million for the three months ended September 30, 2024 and 2023, respectively, and $1.8 million and $2.3 million for the nine months ended September 30, 2024 and 2023, respectively.
Future undiscounted lease payments for operating leases with initial terms of greater than one year as of September 30, 2024 are as follows:
($ in thousands)
October 1, 2024 to December 31, 2024 $ 550 
2025 1,800 
2026 1,517 
2027 1,236 
2028 1,145 
Thereafter 16,120 
Total undiscounted lease payments 22,368 
Less effect of discounting (7,436)
Present value of estimated lease payments (lease liability) $ 14,932 

Note 8. Pension Plans
The Company recorded periodic pension cost totaling $63,000 and $51,000 for the three months ended September 30, 2024 and 2023, respectively, and $189,000 and $152,000 for the nine months ended September 30, 2024 and 2023, respectively.
Note 9. Fair Value of Financial Instruments
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal and most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:
Level 1: Quoted prices (unadjusted) of identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

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The following table summarizes the Company’s financial instruments that were measured at fair value on a recurring and nonrecurring basis at September 30, 2024:
($ in thousands)

Description of Financial Instruments
Fair Value at September 30, 2024 Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable Inputs
(Level 3)
Recurring
Securities available for sale:
Government-sponsored enterprise securities $ 62,872  $ —  $ 62,872  $ — 
Mortgage-backed securities 1,828,802  —  1,828,802  — 
Corporate bonds 15,784  —  15,784  — 
Total available for sale securities $ 1,907,458  $ —  $ 1,907,458  $ — 
Derivative financial assets $ 551  $ —  $ 551  $ — 
Presold mortgages in process of settlement $ 9,888  $ —  $ 9,888  $ — 
Derivative financial liabilities $ 553  $ —  $ 553  $ — 
Nonrecurring
Individually evaluated loans $ 4,746  $ —  $ —  $ 4,746 

The following table summarizes the Company’s financial instruments that were measured at fair value on a recurring and nonrecurring basis at December 31, 2023:
($ in thousands)

Description of Financial Instruments
Fair Value at December 31, 2023 Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Recurring
Securities available for sale:
US Treasury securities $ 172,570  $ —  $ 172,570  $ — 
Government-sponsored enterprise securities 60,266  —  60,266  — 
Mortgage-backed securities 1,937,784  —  1,937,784  — 
Corporate bonds 18,759  —  18,759  — 
Total available for sale securities $ 2,189,379  $ —  $ 2,189,379  $ — 
Derivative financial assets $ 295  $ —  $ 295  $ — 
Presold mortgages in process of settlement $ 2,667  $ —  $ 2,667  $ — 
Derivative financial liabilities $ 349  $ —  $ 349  $ — 
Nonrecurring
Individually evaluated loans $ 1,953  $ —  $ —  $ 1,953 
The following is a description of the valuation methodologies used for financial instruments measured at fair value.
Securities Available for Sale — When quoted market prices are available in an active market, the securities are classified as Level 1 in the valuation hierarchy. If quoted market prices are not available, but fair values can be estimated by observing quoted prices of securities with similar characteristics, the securities are classified as Level 2 on the valuation hierarchy. Most of the fair values for the Company’s Level 2 securities are determined by the Company's third-party bond accounting provider using matrix pricing. Matrix pricing is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities. For the Company, Level 2 securities include U.S Treasury bonds, mortgage-backed securities, commercial mortgage-backed obligations, government-sponsored enterprise securities, and corporate bonds. In cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.

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The Company reviews the pricing methodologies utilized by the bond accounting provider to ensure the fair value determination is consistent with the applicable accounting guidance and that the investments are properly classified in the fair value hierarchy.
Presold Mortgages in Process of Settlement - The fair value is based on the committed price that an investor has agreed to pay for the loan which is considered a Level 2 input.
Derivative financial assets and liabilities - The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. These are considered a Level 2 input.
Individually evaluated loans — Fair values for individually evaluated loans are measured on a non-recurring basis and are based on the underlying collateral values securing the loans, adjusted for estimated selling costs, or the net present value of the cash flows expected to be received for such loans. Collateral may be in the form of real estate or business assets including equipment, inventory and accounts receivable. The vast majority of the collateral is real estate. The value of real estate collateral is generally determined by third-party appraisers using an income or market valuation approach based on an appraisal conducted by an independent, licensed third party appraiser (Level 3). The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable borrower’s financial statements if not considered significant. Likewise, values for inventory and accounts receivable collateral are based on borrower financial statement balances or aging reports on a discounted basis as appropriate (Level 3). Appraisals used in this analysis are generally obtained at least annually based on when the loans first became impaired, and thus the appraisals are not necessarily as of the period ends presented. Any fair value adjustments are recorded in the period incurred as provision for credit losses on the consolidated statements of income.
There were no significant changes in the reported amount of Level 3 assets and liabilities measured at fair value on either a recurring or a non-recurring basis as of September 30, 2024.
The carrying amounts and estimated fair values of financial instruments not carried at fair value at September 30, 2024 and December 31, 2023 were as follows:
    September 30, 2024 December 31, 2023
($ in thousands) Level in Fair
Value
Hierarchy
Carrying
Amount
Estimated
Fair Value
Carrying
Amount
Estimated
Fair Value
Cash and due from banks, noninterest-bearing Level 1 $ 74,034  $ 74,034  $ 100,891  $ 100,891 
Due from banks, interest-bearing Level 1 670,407  670,407  136,964  136,964 
Securities held to maturity Level 2 521,801  448,300  533,678  449,623 
Total loans, net of allowance Level 3 7,890,820  7,232,306  8,040,249  7,379,079 
SBA Servicing Asset Level 3 2,960  3,946  3,351  4,049 
Demand deposits, money market and savings Level 1 9,507,268  9,507,268  9,052,905  9,052,905 
Time deposits Level 2 997,661  994,002  978,694  972,513 
Borrowings Level 2 91,694  80,268  630,158  615,614 
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no highly liquid market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial assets or liabilities include net premises and equipment, intangible and other assets such as deferred income taxes, prepaid expense accounts, income taxes currently payable, and other various accrued expenses.

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In addition, the income tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.

Note 10. Stock-Based Compensation
The Company recorded total stock-based compensation expense of $1.4 million and $1.2 million for the three months ended September 30, 2024 and 2023, respectively, and $3.0 million and $3.4 million for the nine months ended September 30, 2024 and 2023, respectively. These amounts are included in "Total personnel expense" on the accompanying consolidated statements of income.
The Company recognized income tax benefits related to stock-based compensation expense in its income statement of $304,000 and $278,000 for the three months ended September 30, 2024 and 2023, respectively, and $675,000 and $798,000 for the nine months ended September 30, 2024 and 2023, respectively.
At September 30, 2024, the sole equity-based compensation plan of the Company was the First Bancorp 2024 Equity Plan (the "Equity Plan"), which was approved by shareholders on May 31, 2024. As of September 30, 2024, the Equity Plan had 1,929,731 shares remaining available for grant. During the second quarter, the First Bancorp 2014 Equity Plan expired and was replaced by the Equity Plan.
The Equity Plan is intended to serve as a means to attract, retain, and motivate key employees and directors and to associate the interests of the Equity Plan's participants with those of the Company and its shareholders. The Equity Plan allows for both grants of stock options and other types of equity-based compensation, including stock appreciation rights, restricted and unrestricted stock, restricted performance stock, and performance units. For the last several years, the only equity-based compensation granted by the Company has been shares of restricted stock, as it relates to employees, and unrestricted stock as it relates to non-employee directors.
There have been no material changes to the treatment of stock awards and equity grants as discussed in Note 15 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.
In addition to employee equity awards, the Company's practice is to grant unrestricted common shares to each non-employee director (currently twelve in total) in June of each year. The grants were valued at approximately $37,500 in 2024. Compensation expense associated with these director awards is fully recognized by the date of the award since there are no vesting conditions.
The following table presents information regarding the activity for the first nine months of 2024 related to the Company’s outstanding restricted stock awards:
Long-Term Restricted Stock Awards
Number of Units Weighted-Average
Grant-Date Fair Value
Nonvested at January 1, 2024 291,291  $ 38.01 
Granted during the period 67,080  38.09 
Vested during the period (50,501) 39.29 
Forfeited or expired during the period —  — 
Nonvested at September 30, 2024 307,870  $ 37.42 
Total unrecognized compensation expense as of September 30, 2024 amounted to $4.4 million with a weighted average remaining term of 1.9 years. For the nonvested awards that were outstanding at September 30, 2024, the Company expects to record $2.9 million in compensation expense in the next twelve months, $1.3 million of which is expected to be recorded in the remaining quarter of 2024.


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Note 11. Earnings Per Share
The following is a reconciliation of the numerators and denominators used in computing Basic and Diluted Earnings Per Common Share ("EPS"):
  For the Three Months Ended September 30,
  2024 2023
($ in thousands except per share amounts) Income
(Numerator)
Shares
(Denominator)
Per Share
Amount
Income
(Numerator)
Shares
(Denominator)
Per Share
Amount
Basic EPS:
Net income $ 18,680  $ 29,893 
Less: income allocated to restricted stock (134) (247)
Basic EPS per common share $ 18,546  40,971,520  $ 0.45  $ 29,646  40,744,042  $ 0.73 
Diluted EPS:
Net income $ 18,680  40,971,520  $ 29,893  40,744,042 
Effect of dilutive securities —  395,223  —  455,016 
Diluted EPS per common share $ 18,680  41,366,743  $ 0.45  $ 29,893  41,199,058  $ 0.73 
  For the Nine Months Ended September 30,
  2024 2023
($ in thousands except per share amounts) Income
(Numerator)
Shares
(Denominator)
Per Share
Amount
Income
(Numerator)
Shares
(Denominator)
Per Share
Amount
Basic EPS:
Net income $ 72,664  $ 74,457 
Less: income allocated to restricted stock (471) (539)
Basic EPS per common share $ 72,193  40,924,822  $ 1.76  $ 73,918  40,691,751  $ 1.82 
Diluted EPS:
Net income $ 72,664  40,924,822  $ 74,457  40,691,751 
Effect of dilutive securities —  369,315  —  458,239 
Diluted EPS per common share $ 72,664  41,294,137  $ 1.76  $ 74,457  41,149,990  $ 1.81 


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Note 12. Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive income (loss) ("AOCI") for the Company for the periods shown were as follows:
($ in thousands) September 30, 2024 December 31, 2023
Unrealized loss on securities available for sale $ (331,538) $ (400,720)
Deferred tax asset 76,751  92,767 
Net unrealized loss on securities available for sale (254,787) (307,953)
Postretirement plans liability (25) (100)
Deferred tax asset 23 
Net postretirement plans liability (19) (77)
Total accumulated other comprehensive loss $ (254,806) $ (308,030)
The following tables disclose the changes in AOCI for the three and nine months ended September 30, 2024 and 2023 (all amounts are net of tax):
For the Three Months Ended September 30, 2024
($ in thousands) Unrealized Loss on
Securities
Available for Sale
Postretirement Plans Asset
(Liability)
Total
Beginning balance $ (315,153) $ (38) $ (315,191)
Other comprehensive income before reclassifications 60,366  —  60,366 
Amounts reclassified from accumulated other comprehensive income
—  19  19 
Net current period other comprehensive income 60,366  19  60,385 
Ending balance $ (254,787) $ (19) $ (254,806)
For the Three Months Ended September 30, 2023
($ in thousands) Unrealized Loss on
Securities
Available for Sale
Postretirement Plans Asset
(Liability)
Total
Beginning balance $ (338,251) $ 109  $ (338,142)
Other comprehensive loss before reclassifications (62,644) —  (62,644)
Amounts reclassified from accumulated other comprehensive income
—  34  34 
Net current period other comprehensive (loss) income (62,644) 34  (62,610)
Ending balance $ (400,895) $ 143  $ (400,752)

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For the Nine Months Ended September 30, 2024
($ in thousands) Unrealized Loss on
Securities
Available for Sale
Postretirement Plans Asset
(Liability)
Total
Beginning balance $ (307,953) $ (77) $ (308,030)
Other comprehensive income before reclassifications 52,274  —  52,274 
Amounts reclassified from accumulated other comprehensive income
892  58  950 
Net current-period other comprehensive income 53,166  58  53,224 
Ending balance $ (254,787) $ (19) $ (254,806)
For the Nine Months Ended September 30, 2023
($ in thousands) Unrealized Loss on
Securities
Available for Sale
Postretirement Plans Asset
(Liability)
Total
Beginning balance $ (342,017) $ 42  $ (341,975)
Other comprehensive loss before reclassifications (58,878) —  (58,878)
Amounts reclassified from accumulated other comprehensive income
—  101  101 
Net current-period other comprehensive (loss) income (58,878) 101  (58,777)
Ending balance $ (400,895) $ 143  $ (400,752)
Amounts reclassified from AOCI for unrealized gain (loss) on securities available for sale represent realized securities gains or losses, net of tax effects. Amounts reclassified from AOCI for postretirement plans asset (liability) represent amortization of amounts included in AOCI, net of taxes, and are recorded in the "Other operating expenses" line item of the consolidated statements of income.


Note 13. Revenue from Contracts with Customers

All of the Company’s revenues that are in the scope of the “Revenue from Contracts with Customers” accounting standard (“ASC 606”) are recognized within noninterest income. The following table presents the Company’s sources of noninterest income for the three and nine months ended September 30, 2024 and 2023. Items outside the scope of ASC 606 are noted as such.
For the Three Months Ended For the Nine Months Ended
($ in thousands) September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023
Noninterest Income in-scope of ASC 606:
Service charges on deposit accounts $ 4,320  $ 4,661  $ 12,327  $ 13,012 
Other service charges and fees:
Bankcard interchange income, net 2,372  2,239  7,045  7,190 
Other service charges and fees 1,710  1,354  5,208  4,184 
Commissions from sales of financial products 1,371  1,207  4,068  3,926 
Portion of other income in-scope of ASC 606 —  478  312  1,408 
Noninterest income (in-scope of ASC 606) 9,773  9,939  28,960  29,720 
Noninterest income (out-of-scope of ASC 606) 3,806  5,238  12,116  13,228 
Total noninterest income $ 13,579  $ 15,177  $ 41,076  $ 42,948 
There have been no material changes from the Company's revenue streams accounted for under ASC 606 as discussed in Note 20 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

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Item 2 - Management's Discussion and Analysis of Consolidated Results of Operations and Financial Condition

Highlights of the results for the quarter and year-to-date period are presented below (refer also to additional discussion in the "Results of Operations" and "Financial Condition" sections following). Comparisons for the financial periods presented are impacted by the GrandSouth acquisition which was completed on January 1, 2023 with the related core system conversion occurring in March 2023.

Overview and Highlights at and for Three Months Ended September 30, 2024

We earned net income of $18.7 million, or $0.45 diluted EPS, during the three months ended September 30, 2024 compared to net income of $29.9 million, or $0.73 diluted EPS, for the three months ended September 30, 2023. The decrease in net income in the current year period as compared to the prior year period was driven primarily by a $14.2 million increase in provision for credit losses, $13.0 million of which was related to anticipated impact from Hurricane Helene and a higher cost of funds, partially offset by a higher yield on interest earning assets, both of which were driven by the overall interest rate environment for the past year. Adjusting for the impact from Hurricane Helene, our adjusted net income was $29.0 million, or $0.70 per diluted share, for the third quarter.
•Net interest income for the third quarter of 2024 was $83.0 million, a 2.0% decrease from the $84.7 million recorded in the third quarter of 2023. The decrease in net interest income from the prior year period was driven by higher cost of funds, partially offset by higher yield on earning assets.
•Net interest margin ("NIM") on a tax-equivalent basis decreased in the third quarter of 2024 to 2.90% from 2.97% for the third quarter of 2023 as a result of the higher cost of funds and decreased loan accretion, partially offset by increases in market interest rates driving higher yields on loans and other earning assets.
•We remained well-capitalized by all regulatory standards. Capital grew during the quarter with a total common equity Tier 1 ratio of 14.37%, Tier 1 risk-based capital ratio of 15.19% and total risk-based capital ratio of 16.65% at September 30, 2024, all growing for the quarter and from September 30, 2023.
•The provision for credit losses for the third quarter of 2024 was $14.2 million, driven by an incremental provision of $13.0 million related to the potential exposure from Hurricane Helene and $2.1 million of net charge-off activity, partially offset by generally improving economic forecasts that lead to a reduction in the reserves required for unfunded commitments. See the "Allowance for Credit Losses, Allowance for Unfunded Commitments, and Loan Loss Experience" discussion in the Financial Condition section of Management's Discussion and Analysis.
•Noninterest income for the three months ended September 30, 2024 totaled $13.6 million which was a decrease of $1.6 million, or 10.5%, from the comparable period of 2023 and was primarily related to an decrease in Other income, net, related to the timing of the recognition of gain and loss from other investment activity, which does not include available for sale or held to maturity securities.
•Noninterest expense of $59.9 million for the quarter ended September 30, 2024 decreased $2.4 million, or 3.8%, from the three months ended September 30, 2023. This decrease is attributable to a $2.4 million decrease in other operating expenses.
•These third quarter results include the potential impact of Hurricane Helene of $13.4 million, comprised of $13.0 million of provision for potential credit loss exposure in our footprint hardest hit by Helene, $0.3 million of estimated property damages and an additional $0.1 million of other impacts. After considering the tax effect of these items, our net income was reduced by $10.3 million.

Overview and Highlights at and for Nine Months Ended September 30, 2024

We earned net income of $72.7 million, or $1.76 diluted EPS, during the nine months ended September 30, 2024 compared to net income of $74.5 million, or $1.81 diluted EPS, for the nine months ended September 30, 2023. Adjusting for the potential impact from Hurricane Helene, our adjusted net income was $83.0 million, or $2.01 per diluted share, for the nine months ended September 30, 2024.

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•Net interest income for the nine months ended September 30, 2024 was $243.4 million, a 7.9% decrease from the $264.2 million recorded for the comparable period of 2023. The decrease in net interest income was driven by higher cost of funds, partially offset by higher yields on interest earning assets.
•NIM on a tax-equivalent basis decreased to 2.86% for the nine months ended September 30, 2024 from 3.12% for the nine months ended September 30, 2023 related to higher cost of funds driven by increases in market rates and competition for deposits. Higher rates on interest-bearing liabilities and lower purchase accounting loan discount accretion were partially offset by increased loan yields from market rate increases and pricing on new loans.
•For the nine months ended September 30, 2024, the Company recorded $15.9 million in provision for credit losses as compared to $14.9 million for the nine months ended September 30, 2023. The higher provision in 2024 was significantly impacted by the $13.0 million provision related to Hurricane Helene. The 2023 provision was primarily driven by the GrandSouth acquisition as follows: (1) a one-time provision of $12.2 million for non-credit deteriorated loans; and (2) a one-time initial provision for unfunded commitments of $1.9 million.
•Noninterest income for the nine months ended September 30, 2024 totaled $41.1 million, a decrease of $1.9 million, or 4.4%, from the comparable period of 2023 primarily related to decreased Other income, net of $1.9 million and increased securities losses of $1.2 million, partially offset by an increase in SBA loan sale gains of $1.3 million.
•Noninterest expense decreased $20.7 million, or 10.4%, to $177.3 million for the nine months ended September 30, 2024 as compared to the prior year period, primarily driven by a $13.5 million decrease in merger expenses resulting from the GrandSouth acquisition along with a $4.7 million decrease in other operating expenses and a $1.6 million decrease in personnel expense.
•These 2024 year to date results include the potential impact of Hurricane Helene of $13.4 million. This comprised of $13.0 million of provision for potential credit loss exposure in our footprint hardest hit by Helene, $0.3 million of estimated property damages and an additional $0.1 million of other impacts. After considering the tax effect of these items, our net income was reduced by $10.3 million.


Total assets at September 30, 2024 amounted to $12.2 billion, a 0.3% increase from December 31, 2023, and was driven primarily by higher interest-bearing cash balances, partially offset by a short term strategy to intentional reduce investment securities and loan balances. The primary balance sheet changes are presented below.
•Total loans amounted to $8.0 billion at September 30, 2024, reflecting a contraction of $136.6 million from December 31, 2023.
•Total deposits were $10.5 billion at September 30, 2024, an increase of $473.3 million, or 4.72%, from December 31, 2023.
•Credit quality continued to be strong at September 30, 2024, with NPAs of 0.38% of total assets as of September 30, 2024, up slightly from 0.37% at December 31, 2023.
•On-balance sheet liquidity ratio was 17.7% at September 30, 2024. Available off-balance sheet sources totaled $2.4 billion at quarter end, resulting in a total liquidity ratio of 35.2%.
•Capital grew during the quarter, keeping us well-capitalized by all regulatory standards. At September 30, 2024, our total common equity Tier 1 ratio was 14.37%, our Tier 1 risk-based capital ratio was 15.19% and our total risk-based capital ratio was 16.65%. All capital ratios grew during the quarter and from September 30, 2023.
Critical Accounting Estimates
The accounting principles we follow and our methods of applying these principles conform with GAAP and with general practices followed by the banking industry. Certain policies inherently have a greater reliance on the use of estimates, assumptions, or judgments and as such, have a greater possibility of producing results that could be materially different than originally reported. We have identified the determination of our ACL and related Allowance for Unfunded Commitments, as well as business combinations, related fair value measurements and goodwill determination to be the accounting areas that require the most subjective or complex judgments, estimates, and assumptions, and where changes in those judgments, estimates, and assumptions (based on new or additional information, changes in the economic climate and/or market interest rates, etc.) could have a significant effect on our financial statements.

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See the "Allowance for Credit Losses, Allowance for Unfunded Commitments, and Loan Loss Experience" discussion in the Financial Condition section of Management's Discussion and Analysis.
There have been no material changes to the Company's significant accounting policies as discussed in Note 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.
Current Accounting Matters
See Note 1 to the consolidated financial statements for information about recently announced or adopted accounting standards.


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RESULTS OF OPERATIONS
Net Interest Income
Net interest income is our largest source of revenue and is the difference between the interest earned on interest-earning assets (generally loans and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (generally deposits and borrowed funds). Changes in the net interest income are the result of changes in volume and the net interest spread which affects NIM. Volume refers to the average dollar levels of interest-earning assets and interest-bearing liabilities. Net interest spread refers to the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. NIM refers to net interest income divided by average interest-earning assets and is influenced by the level and relative mix of interest-earning assets and interest-bearing liabilities. Net interest income is also influenced by external factors such as local economic conditions, competition for loans and deposits, and market interest rates.
Net interest income for the three months ended September 30, 2024 amounted to $83.0 million, a decrease of $1.7 million, or 2.0%, from the $84.7 million recorded in the third quarter of 2023. The decrease was primarily driven by higher cost of funds, partially offset by higher yields on earning assets. While average interest-earning assets for the third quarter of 2024 increased $83.9 million, or 0.7%, from the comparable period of the prior year, the mix of assets shifted to higher earning assets, with average loans growing $79.9 million and short term investments growing $400.0 million, while taxable securities decreased $391.5 million. The increase in the cost of interest bearing deposits of 64 basis points between the third quarter of 2023 and the third quarter of 2024 more than offset improvements from earning asset mix changes and higher yields. This resulted in the reduction in our tax-equivalent NIM (see discussion below) from 2.97% for the third quarter of 2023 to 2.90% for the third quarter of 2024.
For internal purposes, we evaluate our NIM on a tax-equivalent basis by adding the tax benefit realized from tax-exempt loans and securities to reported interest income then dividing by total average earning assets. We believe that analysis of tax-equivalent NIM is useful and appropriate because it allows a comparison of net interest income in different periods without taking into account the different mix of taxable versus non-taxable loans and investments that may have existed during those periods.The following is a reconciliation of reported net interest income to tax-equivalent net interest income and the resulting NIM as reported and on a tax-equivalent basis.
For the Three Months Ended September 30,
($ in thousands) 2024 2023
Net interest income, as reported $ 83,043  $ 84,702 
Tax-equivalent adjustment 722  740 
Net interest income, tax-equivalent $ 83,765  $ 85,442 
Net interest margin, as reported 2.88  % 2.95  %
Net interest margin, tax-equivalent 2.90  % 2.97  %


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The following table presents an analysis of net interest income for the three months ended September 30, 2024 and 2023:
Average Balances and Net Interest Income Analysis
  Three Months Ended September 30,
  2024 2023


($ in thousands)
Average
Volume
Interest
Earned
or Paid
Average
Rate
Average
Volume
Interest
Earned
or Paid
Average
Rate
Assets            
Loans (1) (2) $ 8,019,730  $ 111,076  5.51  % $ 7,939,783  $ 106,514  5.32  %
Taxable securities 2,493,924  10,779  1.72  % 2,885,443  12,936  1.78  %
Non-taxable securities 290,939  1,116  1.53  % 295,403  1,118  1.50  %
Short-term investments, primarily interest-bearing cash 684,634  8,438  4.90  % 284,678  3,283  4.58  %
Total interest-earning assets 11,489,227  131,409  4.55  % 11,405,307  123,851  4.31  %
Cash and due from banks 84,060  94,963 
Premises and equipment 146,448  152,415 
Other assets 406,878  353,093 
Total assets $ 12,126,613  $ 12,005,778 
Liabilities
Interest-bearing checking $ 1,393,611  $ 2,688  0.77  % $ 1,448,603  $ 2,007  0.55  %
Money market deposits 4,173,884  34,878  3.32  % 3,530,532  23,397  2.63  %
Savings deposits 549,132  317  0.23  % 646,782  307  0.19  %
Other time deposits 626,341  4,726  3.00  % 646,798  4,037  2.48  %
Time deposits >$250,000 390,208  3,811  3.89  % 359,884  2,893  3.19  %
Total interest-bearing deposits 7,133,176  46,420  2.59  % 6,632,599  32,641  1.95  %
Borrowings 97,150  1,946  7.97  % 438,808  6,508  5.88  %
Total interest-bearing liabilities 7,230,326  48,366  2.66  % 7,071,407  39,149  2.20  %
Noninterest-bearing checking 3,376,061  3,547,447 
Other liabilities 75,197  83,675 
Shareholders’ equity 1,445,029  1,303,249 
Total liabilities and
shareholders’ equity
$ 12,126,613  $ 12,005,778 
Net yield on interest-earning assets and net interest income $ 83,043  2.88  % $ 84,702  2.95  %
Net yield on interest-earning assets and net interest income – tax-equivalent (3) $ 83,765  2.90  % $ 85,442  2.97  %
Interest rate spread 1.89  % 2.11  %
Average prime rate 8.43  % 8.43  %
(1)   Average loans include nonaccruing loans, the effect of which is to lower the average rate shown. Interest earned includes recognized net loan fees, including late fees, prepayment fees, and net deferred loan (cost)/fee amortization in the amounts of $(342,000), and $52,000 for three months ended September 30, 2024 and 2023, respectively.
(2)   Includes accretion of discount on acquired loans of $2.0 million and $2.8 million for three months ended September 30, 2024 and 2023, respectively.
(3)   Includes tax-equivalent adjustments of $722,000 and $740,000 for three months ended September 30, 2024 and 2023, respectively, to reflect the tax benefit that we receive related to tax-exempt securities and tax-exempt loans, which carry interest rates lower than similar taxable investments/loans due to their tax-exempt status. This amount has been computed assuming a 23% tax rate and is reduced by the related nondeductible portion of interest expense.



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Overall, as demonstrated in the table above, despite the change in the mix of earning assets to higher yielding assets, the compression in NIM drove the decrease in net interest income.
•During 2023, the Federal Reserve increased the fed funds rate four times for a total of 100 basis points, in addition to the substantial increases made during 2022. During 2024, the Federal Reserve did not change rates until mid September at which point the fed funds rate was reduced 50 basis points. These changes resulted in a decrease of 50 basis points in fed funds rates between September 2023 and September 2024, with an average prime rate of 8.43% for three months ended September 30, 2024, a slight decrease from the prior year period. During much of 2024, the market yield curve was inverted.
•Average loan volumes for the three months ended September 30, 2024 were $79.9 million higher than the same period in 2023. In addition, interest rates on loans increased 19 basis points to 5.51% for the third quarter of 2024, resulting in an increase in interest income on loans of $4.6 million.
•Due to the impact of the aforementioned fed funds increases in 2022 and 2023 and the resulting increased market rates along with higher average balances, deposit interest expense for the three months ended September 30, 2024 increased $13.8 million compared to the same period in 2023. Average interest-bearing deposit balances increased $500.6 million while rates on those deposits increased 64 basis points as compared to the same period in the prior year.
•Average borrowings were $341.7 million lower in the third quarter of 2024 as compared to the third quarter of 2023 due in large part to the decreased utilization of short-term borrowings to fund loan growth and manage fluctuations in deposit balances. This decrease in volume of borrowings between periods was partially offset by higher rates on the remaining borrowings, with overall rates increasing 209 basis points in the third quarter of 2024 from the third quarter of 2023. These changes resulted in the $4.6 million decrease in interest expense on borrowings.
•The decrease in NIM was directly related to higher rates on interest-bearing liabilities driven by the aforementioned short-term Federal Reserve rate increases in 2022 and 2023, the inverted yield curve in 2024 and the repricing of our deposits during the last year occurring at a more rapid pace than the increase in yields on interest-earning assets.
Net interest income for the nine months ended September 30, 2024 amounted to $243.4 million, a decrease of $20.7 million, or 7.9%, from the $264.2 million recorded in the nine months ended September 30, 2023. As described above, the Federal Reserve actions from 2022 through 2024 affected market rates which had resulting impacts on the rates we paid or received in 2023 and 2024. Similar to the impact during the three months ended September 30, 2024, the decrease for the nine months ended September 30, 2024 was also driven by higher cost of funds, partially offset by increased yields on interest-earning assets. Our tax-equivalent NIM fell to 2.86% for the nine months ended September 30, 2024 from 3.12% for the nine months ended September 30, 2023 as discussed further below.
The following is a reconciliation of reported net interest income to tax-equivalent net interest income and the resulting NIM as reported and on a tax-equivalent basis.
For the Nine Months Ended September 30,
($ in thousands) 2024 2023
Net interest income, as reported $ 243,432  $ 264,174 
Tax-equivalent adjustment 2,186  2,139 
Net interest income, tax-equivalent $ 245,618  $ 266,313 
Net interest margin, as reported 2.83  % 3.09  %
Net interest margin, tax-equivalent 2.86  % 3.12  %


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The following table presents an analysis of net interest income for the nine months ended September 30, 2024 and 2023.
Average Balances and Net Interest Income Analysis
  Nine Months Ended September 30,
  2024 2023
($ in thousands) Average
Volume
Interest
Earned
or Paid
Average
Rate
Average
Volume
Interest
Earned
or Paid
Average
Rate
Assets
Loans (1) (2) $ 8,064,480  $ 331,346  5.49  % $ 7,840,344  $ 308,857  5.27  %
Taxable securities 2,633,093  34,798  1.77  % 2,943,798  39,415  1.79  %
Non-taxable securities 292,056  3,350  1.53  % 296,985  3,368  1.52  %
Short-term investments, primarily interest-bearing cash 490,782  17,351  4.72  % 337,701  10,546  4.18  %
Total interest-earning assets 11,480,411  $ 386,845  4.50  % 11,418,828  362,186  4.24  %
Cash and due from banks 86,514  94,483 
Premises and equipment 149,073  152,058 
Other assets 381,806  369,968 
Total assets $ 12,097,804  $ 12,035,337 
Liabilities
Interest bearing checking $ 1,398,137  $ 7,472  0.71  % $ 1,476,979  $ 4,205  0.38  %
Money market deposits 3,961,707  95,102  3.21  % 3,253,840  52,263  2.15  %
Savings deposits 567,202  942  0.22  % 683,741  705  0.14  %
Other time deposits 694,469  16,235  3.12  % 773,755  14,807  2.56  %
Time deposits >$250,000 372,561  10,548  3.78  % 338,797  6,907  2.73  %
Total interest-bearing deposits 6,994,076  130,299  2.49  % 6,527,112  78,887  1.62  %
Borrowings 280,370  13,114  6.25  % 453,694  19,125  5.64  %
Total interest-bearing liabilities 7,274,446  143,413  2.63  % 6,980,806  98,012  1.88  %
Noninterest bearing checking 3,346,669  3,665,313 
Other liabilities 76,922  91,997 
Shareholders’ equity 1,399,767  1,297,221 
Total liabilities and
shareholders’ equity
$ 12,097,804  $ 12,035,337 
Net yield on interest-earning assets and net interest income $ 243,432  2.83  % $ 264,174  3.09  %
Net yield on interest-earning assets and net interest income – tax-equivalent (3) $ 245,618  2.86  % $ 266,313  3.12  %
Interest rate spread 1.87  % 2.36  %
Average prime rate 8.48  % 8.09  %
(1)   Average loans include nonaccruing loans, the effect of which is to lower the average rate shown. Interest earned includes recognized net loan fees, including late fees, prepayment fees, and deferred loan (cost)/fee amortization (including deferred PPP fees), in the amounts of $(716,000), and $458,000 for nine months ended September 30, 2024 and 2023, respectively.
(2) Includes accretion of discount on acquired loans of $6.7 million and $9.0 million for nine months ended September 30, 2024 and 2023, respectively.
(3) Includes tax-equivalent adjustments of $2.2 million and $2.1 million for nine months ended September 30, 2024 and 2023, respectively, to reflect the tax benefit that we receive related to tax-exempt securities and tax-exempt loans, which carry interest rates lower than similar taxable investments/loans due to their tax exempt status. This amount has been computed assuming a 23% tax rate and is reduced by the related nondeductible portion of interest expense Overall, as demonstrated in the table above, the reduction in NIM, partially offset by higher earning asset volumes, drove the decrease in net interest income.



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•During 2023, the Federal Reserve increased the fed funds rate four times for a total of 100 basis points, in addition to the substantial increases made during 2022. During 2024, the Federal Reserve did not change rates until mid September at which point the fed funds rate was reduced 50 basis points. These changes resulted in a decrease of 50 basis points in fed funds rates between September 2023 and September 2024, with an average prime rate of 8.48% for nine months ended September 30, 2024, compared to 8.09% for the prior year period. During much of 2024, the market yield curve was inverted.
•Average loan volumes for the nine months ended September 30, 2024 were $224.1 million higher than the same period in 2023 due to organic loan growth. In addition, interest rates on loans increased 22 basis points to 5.49% for the nine months ended September 30, 2024, resulting in an increase in loan interest income of $22.5 million.
•Primarily due to higher market rates as well as the increase in average balances, deposit interest expense for the nine months ended September 30, 2024 increased $51.4 million compared to the same period in 2023. Average interest-bearing deposit balances increased $467.0 million while rates on those deposits increased 87 basis points as compared to the same period in the prior year.
•Interest expense on borrowings decreased $6.0 million for the nine months ended September 30, 2024 as compared to the same period in 2023 due to the $173.3 million decrease in the average volume of borrowings between periods, partially offset by a 61 basis point increase in the rates on those borrowings. The lower balances were due in large part to a decreased reliance on short-term borrowings during 2024 as deposit growth provided additional liquidity. The remaining borrowings are longer term in nature and carry higher interest rates than those that were paid off.
•NIM decreased 26 basis points between the comparable periods as higher loan yields and reduced cost of borrowings were more than offset by the higher cost of deposits, also driven by the increases in Fed funds rates during 2022 and 2023 and competition for deposits.

Our NIM for all periods presented benefited from the net accretion income arising from purchase accounting premiums/discounts associated with acquisitions. Presented in the table below is the amount of accretion which increased net interest income in each time period presented.
For the Three Months Ended September 30, For the Nine Months Ended September 30,
($ in thousands) 2024 2023 2024 2023
Interest income – increased by accretion of loan discount on acquired loans $ 2,003  $ 2,766  $ 6,743  $ 9,043 
Total interest income impact 2,003  2,766  6,743  9,043 
Interest expense – increased by discount accretion of deposits (174) (709) (681) (2,606)
Interest expense – increased by discount accretion of borrowings (193) (215) (572) (635)
Total net interest expense impact (367) (924) (1,253) (3,241)
Total impact on net interest income $ 1,636  $ 1,842  $ 5,490  $ 5,802 
The most significant component of the purchase accounting adjustments in each year was loan discount accretion on purchased loans. Generally, the level of loan discount accretion will decline each year due to the natural reduction in outstanding balance of acquired loans.
At September 30, 2024 and 2023, unaccreted loan discounts on purchased loans amounted to $17.3 million and $26.5 million, respectively. The GrandSouth acquired portfolio comprised the majority of the remaining unaccreted loan discount at September 30, 2024.
In addition to the loan discount accretion recorded on acquired loans, we recorded accretion on the discounts associated with the retained unguaranteed portions of SBA loans sold in the secondary market. The level of SBA loan discount accretion will fluctuate relative to the SBA loan portfolio balances.

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At September 30, 2024 and 2023, the unaccreted loan discounts on SBA loans amounted to $3.3 million and $4.0 million, respectively.
Provision for Credit Losses and Provision for Unfunded Commitments
The provision for credit losses is comprised of the provision for loan losses and the provision for unfunded commitments. The provision recorded in each period represents the amount required such that the total ACL reflects the current estimate of life of loan credit losses in the loan portfolio and the allowance for unfunded commitments reflects the current expected losses on unfunded loan commitments that are expected to result in outstanding loan balances. Our estimate of credit losses is determined using a complex model that relies on reasonable and supportable forecasts and historical loss information to determine the balance of the ACL and allowance for unfunded commitments. Refer also to “Critical Accounting Estimates” in Item 7 of the 2023 Annual Report on Form 10-K filed with the SEC for more information.
The provision for credit losses was $14.2 million and zero for the three months ended September 30, 2024 and 2023, respectively, and $15.9 million and $14.9 million for the nine months ended September 30, 2024 and 2023, respectively.
For the three months ended September 30, 2024 as compared to the same period in 2023, the higher provision was primarily due to the $13.0 million provision specifically attributed to Hurricane Helene. Generally improving economic forecasts that lead to a reduction in the reserves required for unfunded commitments during the three months ended September 30, 2024, but the effect was not as impactful as was the case in the three months ended September 30, 2023 by $0.6 million.
For the nine months ended September 30, 2024 as compared to the same period in 2023, the higher provision was primarily due to the $13.0 million provision specifically attributed to Hurricane Helene and a $0.4 million increase in net charge off activity for the period, partially offset by generally improving economic forecasts that lead to a reduction in the reserves required for unfunded commitments. The provision for the nine months ended September 30, 2023 was directly related to the GrandSouth acquisition, which consisted of: (1) a one-time provision of $12.2 million for non-credit deteriorated loans; and (2) a one-time initial provision for unfunded commitments of $1.9 million.
Within the portions of Western North and South Carolina that were significantly impacted by Hurricane Helene, the Company identified borrowers with approximately $755 million of loans outstanding. Given that the storm impacted the area just prior to September 30, 2024 and recovery continues in many communities, the Company performed analyses to identify possible impacts from the storm and has reserved accordingly based upon the information available at this time. The Company applied increased reserve rates based upon severe economic factors to the approximately $755 million of loans in the path of Helene. Additionally, the Company performed an initial evaluation of the largest commercial loans in its impacted markets and applied incremental reserves to those loans that were suspected of having higher potential property damage or economic impact from the storm The incremental provision related to the potential exposure from Hurricane Helene added 0.16% to the ACL as of September 30, 2024.
Additional discussion of the CECL method and our asset quality and credit metrics, which impact our provision for credit losses, is provided in the "Nonperforming Assets" and "Allowance for Credit Losses, Allowance for Unfunded Commitments, and Loan Loss Experience" sections following.

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Noninterest Income
Our noninterest income amounted to $13.6 million and $15.2 million for the three months ended September 30, 2024 and 2023, respectively, and $41.1 million and $42.9 million for the nine months ended September 30, 2024 and 2023, respectively. The lower noninterest income in the current quarter as compared to the same prior year period is primarily the result of lower "Other income, net," partially offset by an increase in "Presold mortgage loan fees and gains on sale." The decreased noninterest income for the nine months ended September 30, 2024 as compared to the same period in 2023 is a result of "Securities losses, net" in 2024 and lower "Other income, net," partially offset by increased "SBA loan sale gains." Details of the more significant components of noninterest income are presented in the table below. For the three and nine months ended September 30, 2024, the change in "Other income, net" was related to the timing of the recognition of gain and loss from other investment activity, which does not include available for sale or held to maturity securities.
 
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
($ in thousands) 2024 2023 2024 2023
Service charges on deposit accounts
$ 4,320  $ 4,661  $ 12,327  $ 13,012 
Other service charges and fees - bankcard interchange income, net 2,372  2,239  7,045  7,190 
Other service charges and fees - other 3,183  3,211  9,394  9,487 
Presold mortgage loan fees and gains on sale 690  325  1,616  1,288 
Commissions from sales of financial products 1,371  1,207  4,068  3,926 
SBA loan sale gains
1,108  1,101  3,339  2,052 
Bank-owned life insurance income 1,205  1,104  3,548  3,216 
Securities losses, net —  —  (1,161) — 
Other income, net (670) 1,329  900  2,777 
Total noninterest income $ 13,579  $ 15,177  $ 41,076  $ 42,948 
Noninterest Expenses
Total noninterest expenses totaled $59.9 million and $62.2 million for the three months ended September 30, 2024 and 2023, respectively, and $177.3 million and $198.0 million for the nine months ended September 30, 2024 and 2023, respectively. The primary contributors to the $2.4 million, or 3.8%, decrease in noninterest expense for the third quarter of 2024 as compared to the same period of 2023 were the $1.4 million decrease in "Other operating expenses", the $0.6 million decrease in "Non-credit losses," and the $0.5 million decrease in "Equipment related expenses," partially offset by an increase in "Total personnel expense" of $0.5 million. The primary contributors to the $20.7 million decrease for the nine months ended September 30, 2024 as compared to the same period in 2023 were the $13.5 million decrease in "Merger and acquisition expenses," the $2.7 million decrease in "Other operating expenses," the $1.7 million decrease in "Non-credit losses," and the $1.6 million decrease in "Total personnel expenses." The decline in "Other operating expenses" was primarily related to a $2.4 million charge in 2023 for the estimated termination costs associated with the Company's pension plan. For the three and nine months ended September 30, 2024, there was an overall effort my management to cut costs and control expenses.

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The following table presents the primary components of noninterest expenses.
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
($ in thousands) 2024 2023 2024 2023
Salaries $ 29,955  $ 29,394  $ 85,406  $ 87,391 
Employee benefits 6,495  6,539  19,467  19,097 
Total personnel expense 36,450  35,933  104,873  106,488 
Occupancy expense 3,738  3,409  10,910  10,644 
Equipment related expenses 1,118  1,594  4,384  4,398 
Credit card rewards and other bankcard expenses 1,813  1,397  4,670  3,840 
Telephone and data lines 727  996  2,557  2,973 
Software licenses and other software costs 1,942  1,860  5,928  6,163 
Data processing expense 2,275  2,098  6,580  6,370 
Professional fees 1,479  1,765  4,694  4,631 
Advertising and marketing 755  997  2,685  3,207 
Non-credit losses 953  1,564  2,264  4,000 
FDIC insurance costs 1,442  1,729  5,099  5,286 
Corporate insurance costs 558  579  1,728  1,687 
Other operating expenses 5,048  6,446  16,129  18,783 
Merger and acquisition expenses —  —  —  13,506 
Amortization of intangible assets 1,613  1,953  5,041  6,147 
Foreclosed property gains, net (61) (96) (214) (131)
Total noninterest expense $ 59,850  $ 62,224  $ 177,328  $ 197,992 
Income Taxes
We recorded income tax expense of $3.9 million and $7.8 million for the three months ended September 30, 2024 and 2023, respectively. Our effective tax rate was 17.2% and 20.6% for the three months ended September 30, 2024 and 2023, respectively. The lower effective tax rate for 2024 was attributable primarily to decreased pretax income driven by the potential impact of Hurricane Helene. For the nine months ended September 30, 2024 and 2023, we recorded tax expense of $18.6 million and $19.8 million, respectively. Our effective tax rate was 20.4% and 21.0% for the nine months ended September 30, 2024 and 2023, respectively.

FINANCIAL CONDITION
Total assets at September 30, 2024 amounted to $12.2 billion, a $38.5 million, or 0.3%, increase from December 31, 2023 and was primarily related to higher interest-bearing cash balances, partially offset by reductions in investment securities and loan balances.
Total loans at September 30, 2024 amounted to $8.0 billion, a decrease of $136.6 million, or 1.7%, from December 31, 2023. The mix of our loan portfolio remained substantially the same at September 30, 2024 as compared to December 31, 2023, with the exception of "Construction, development & other land loans," which, as a percentage of the loan portfolio, fell from 12% at December 31, 2023 to 9% at September 30, 2024. The majority of our real estate loans were personal mortgages and commercial loans where real estate provides additional security for the loan. Note 4 to the consolidated financial statements presents additional detail regarding our mix of loans. At September 30, 2024, we had no notable concentrations in geographies or industries, including in office or hospitality categories. The Company's exposure to non-owner occupied commercial office loans represented approximately 5.7% of the total portfolio at September 30, 2024, with the largest loan being $26.6 million and the average loan outstanding balance being $1.3 million. Non-owner occupied office loans were generally in non-metro markets and the 10 largest loans in this category represented less than 2% of the total loan portfolio at September 30, 2024.
Total investment securities were $2.4 billion at September 30, 2024, a decrease of $293.8 million from December 31, 2023. During the three and nine months ended September 30, 2024, the Company made no purchases of investment securities. There were no sales of investment securities during the third quarter of 2024.

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During the second quarter of 2024, the Company sold $142.9 million of available for sale investment securities at a $4.7 million loss that was substantially offset by the $4.5 million gain on sale of the VISA B shares during that quarter. The call of a security during the first quarter of 2024 resulted in a loss of $975 thousand related to the unamortized premium balance. In addition, the Company continues to utilize cash flows from investment securities to fund earning assets and repay borrowings and brokered deposits.
The composition of our investment portfolio remained substantially the same at September 30, 2024 as at December 31, 2023, with the exception of U.S. Treasuries, of which $175.9 million was sold or matured during the first nine months of 2024 and Mortgage-backed securities, of which $34.6 million and $169.3 million were sold, matured or were paid down during the three and nine months ended September 30, 2024, respectively. The composition of the investment portfolio continued to reflect our investment strategy of maintaining an appropriate level of liquidity while providing a stable source of income. The investment portfolio also provides a balance to interest rate risk and credit risk in other categories of the balance sheet while providing a vehicle for the investment of available funds, furnishing liquidity, and supplying securities to pledge as required collateral for certain deposits.
The unrealized loss on available for sale securities totaled $331.5 million at September 30, 2024. Refer to Note 3 to the consolidated financial statements for additional detailed information regarding our mix of investments and the unrealized losses for each category. We evaluated the unrealized losses on individual securities at September 30, 2024 and determined them to be of a temporary nature due primarily to interest rate factors and not credit quality concerns. In arriving at this conclusion, we reviewed third-party credit ratings and considered the severity of the impairment.
Total deposits amounted to $10.5 billion at September 30, 2024, an increase of $473.3 million, or 4.7%, from December 31, 2023. Brokered deposits decreased $3.1 million from year end, while organic growth from customer deposits totaled $476.4 million.
We continue to have a diversified and granular deposit base which has remained stable with continued growth in customer deposits, primarily money market accounts. Our deposit mix has remained relatively consistent and has not changed significantly and there has been no notable shift in deposits from noninterest-bearing to interest-bearing.
September 30, 2024 December 31, 2023
($ in thousands) Amount Percentage Amount Percentage
Noninterest-bearing checking accounts $ 3,350,237  32  % $ 3,379,876  34  %
Interest-bearing checking accounts 1,426,356  13  % 1,411,142  14  %
Money market accounts 4,189,174  40  % 3,653,506  36  %
Savings accounts 541,501  % 608,380  %
Other time deposits 602,148  % 610,887  %
Time deposits >$250,000 385,995  % 355,209  %
Total customer deposits 10,495,411  100  % 10,019,000  100  %
Brokered deposits 9,518  —  % 12,599  —  %
Total deposits $ 10,504,929  100  % $ 10,031,599  100  %
As of September 30, 2024, the estimated insured deposits totaled $6.5 billion or 61.8% of total deposits. In addition, we had collateralized deposits at that date of $730.8 million such that approximately 68.7% of our total deposits were insured or collateralized at September 30, 2024.

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Nonperforming Assets
NPAs are defined as nonaccrual loans, modifications to borrowers in financial distress, loans past due 90 or more days and still accruing interest, and foreclosed real estate. NPAs are summarized as follows:
($ in thousands)
September 30, 2024 December 31, 2023
Nonperforming assets
Nonaccrual loans $ 34,125  $ 32,208 
Modifications to borrowers in financial distress 10,262  11,719 
Total nonperforming loans 44,387  43,927 
Foreclosed real estate 1,519  862 
Total nonperforming assets $ 45,906  $ 44,789 
Asset Quality Ratios
Nonaccrual loans to total loans 0.43  % 0.40  %
Nonperforming loans to total loans 0.55  % 0.54  %
Nonperforming assets to total loans and foreclosed properties 0.57  % 0.55  %
Nonperforming assets to total assets 0.38  % 0.37  %
Allowance for credit losses to total loans 1.53  % 1.35  %
Allowance for credit losses to nonaccrual loans 359.61  % 341.07  %
Allowance for credit losses to nonperforming loans 276.47  % 250.08  %
As shown in the table above, total NPAs at September 30, 2024 increased slightly to $45.9 million from year end and related primarily to the $1.9 million increase in nonaccrual loans, partially offset by the $1.5 million decrease in modifications to borrowers in financial distress.
"Commercial and industrial" is the largest category of nonaccrual loans, at $10.3 million, or 30.2%, of total nonaccrual loans, followed by "Commercial real estate - owner occupied" at $10.1 million, or 29.6%, of total nonaccrual loans. Included in various loan categories are nonaccrual SBA loans totaling $21.7 million at September 30, 2024, or 63.5% of total nonaccrual loans, and which have $11.8 million in guarantees from the SBA.
As reflected in Note 4 to the accompanying consolidated financial statements, total classified loans decreased 4.9% to $51.5 million at September 30, 2024 compared to $54.2 million at December 31, 2023. The decrease resulted primarily from improvements in "Home equity loans/lines of credit" loans of $1.9 million and "Commercial real estate - owner occupied" loans of $1.8 million, partially offset by an increase in "Residential 1-4 family real estate" of $2.0 million. Special mention loans increased 34.2% from $44.1 million at December 31, 2023 to $59.2 million at September 30, 2024. The majority of the increase was attributable to "Commercial real estate - owner occupied" loans, which increased $14.7 million.
Allowance for Credit Losses, Allowance for Unfunded Commitments, and Loan Loss Experience
The total allowance for credit losses amounted to $122.7 million at September 30, 2024 compared to $109.9 million at December 31, 2023. Fluctuations in the ACL are based on loan mix and growth, changes in the levels of
nonperforming loans, economic forecasts impacting loss drivers, other assumptions and inputs to the CECL model,
and as occurred in 2023, adjustments for acquired loan portfolios. As discussed previously in the "Provision for Credit Losses and Provision for Unfunded Commitments" section, much of the change to the level of ACL during the period ended September 30, 2024 was primarily related to the provision of $13.0 million related to potential impact from Hurricane Helene, slower prepayment assumptions and updated economic forecasts which are a key assumption in the CECL model and which indicated improvement in some factors, but also to a continued reduction of the commercial real estate pricing index, thus projecting a higher allowance for credit losses balance, partially offset by reductions in loan balances during the period. The ACL as a percent of loans at September 30, 2024 was 1.53%, 16 basis points of which was attributable to the potential impact from Hurricane Helene.
Within the portions of Western North and South Carolina that were significantly impacted by Hurricane Helene, the Company identified borrowers with approximately $755 million of loans outstanding. The following is a summary of the categories of those loans outstanding as of September 30, 2024:

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($ in thousands) Balance
Commercial and industrial 10,481 
Construction, development & other land loans 29,429 
Commercial real estate - owner occupied 98,958 
Commercial real estate - non owner occupied 284,825 
Multi-family real estate 25,677 
Residential 1-4 family real estate 266,554 
Home equity loans/lines of credit 39,470 
Consumer loans — 
Total 755,394 
Given that the storm impacted the area just prior to September 30, 2024 and recovery continues in many communities, the Company performed analyses to identify possible impacts from the storm and has reserved accordingly based upon the information available at this time. The Company applied increased reserve rates based upon severe economic factors to the approximately $755 million of loans in the most impacted path of Helene. Additionally, the Company performed an initial evaluation of the largest commercial loans in that area and applied incremental reserves to those loans that were suspected of having higher potential property damage or economic impact from the storm. Due to the impact from from Hurricane Helene, the ACL on these impacted loans increased by $13.0 million, expanding the ACL as a percent of loans in the impacted markets from 1.29% to 3.01% as of September 30, 2024 and adding 0.16% to the overall ACL as a percent of total loans as of September 30, 2024.
The ACL reflects our estimate of life of loan expected credit losses that will result from the inability of our borrowers to make required loan payments. We use systematic methodologies to determine the ACL for loans and the allowance for certain off-balance-sheet credit exposures. We consider the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan portfolio. The ACL is calculated using collectively evaluated pools for loans with similar risk characteristics applying the discounted cash flow ("DCF") method. When a loan no longer shares similar risk characteristics with its segment, the loan is evaluated on an individual basis applying a DCF or asset approach for collateral-dependent loans.
For the periods indicated, the following table summarizes our balances of loans outstanding, average loans outstanding, ACL, charge-offs and recoveries, and key ratios:
($ in thousands) Nine Months Ended September 30, 2024 Twelve Months Ended December 31, 2023 Nine Months Ended September 30, 2023
Loans outstanding at end of period $ 8,013,538  $ 8,150,102  $ 8,027,037 
Average amount of loans outstanding 8,064,480  7,902,628  7,840,344 
Allowance for credit losses, at period end 122,718  109,853  108,198 
Total charge-offs (7,460) (10,175) (7,575)
Total recoveries 2,292  3,701  2,845 
Net charge-offs $ (5,168) $ (6,474) $ (4,730)
Ratios:
Net charge-offs as a percent of average loans (annualized) 0.09  % 0.08  % 0.08  %
Allowance for credit losses as a percent of loans at end of period 1.53  % 1.35  % 1.35  %
While our estimate of the ACL involves a high degree of judgment, we believe the ACL was adequate at each period end presented. Our assessment of the ACL involves uncertainty and judgment and is subject to change in future periods. The amount of any changes could be significant if the assessment of loan quality or collateral values changes substantially with respect to one or more loan relationships or portfolios or if there is a significant change in the reasonable and supportable forecast or assumptions used to model our expected credit losses. No assurance can be given that we will not in any particular period sustain loan losses that are sizable in relation to the amounts reserved or that subsequent evaluations of the loan portfolio, in light of conditions and factors then prevailing, will not require significant changes in the ACL or future charges to earnings. In addition, various regulatory agencies, as an integral part of their examination process, periodically review our ACL and the value of our collateral-dependent loans.

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Such agencies may require us to recognize adjustments to the ACL based on their judgments about information available at the time of their examinations. Refer also to “Critical Accounting Policies – Allowance for Credit Losses on Loans and Allowance for Unfunded Commitments” in Note 1 to the 2023 Annual Report on Form 10-K filed with the SEC for more information.
In addition to the ACL on loans, we maintain an allowance for lending-related commitments such as unfunded loan commitments. We estimate expected credit losses associated with these commitments over the contractual period in which we are exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable. The allowance for lending-related commitments on off-balance sheet credit exposures is adjusted as a component of the provision for credit losses expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The allowance for unfunded commitments of $9.3 million and $11.4 million at September 30, 2024 and December 31, 2023, respectively, is classified on the consolidated balance sheets within "Other liabilities." The decline in the level of the allowance between periods was driven by the reduction in reserve rates and balances of available lines of credit during the nine months ended September 30, 2024.
Liquidity, Commitments, and Contingencies
Our liquidity is determined by our ability to convert assets to cash or acquire alternative sources of funds to meet the needs of our customers who are withdrawing or borrowing funds, and to maintain required reserve levels, pay expenses and operate the Company on an ongoing basis. Our primary liquidity sources are net income from operations, cash and due from banks, federal funds sold and other short-term investments. Our securities portfolio has a high percentage of amortizing mortgage-backed securities generating monthly cash flows. In addition, the portfolio is comprised almost entirely of readily marketable securities, which could also be sold to provide cash. We also maintain available lines of credit from the FHLB and the Federal Reserve, as well as federal funds lines from several correspondent banks which are summarized below.
At September 30, 2024, the Company had the following sources of readily available borrowing capacity:
•An existing borrowing capacity with the FHLB of approximately $1.3 billion which can be structured as either short-term or long-term borrowings, depending on the particular funding or liquidity need, and is secured by a blanket lien on most of our real estate loan portfolio, select securities from our investment portfolio, and our FHLB stock (of which $0.8 million and $280.9 million were outstanding at September 30, 2024 and December 31, 2023, respectively);
•Federal funds lines with several correspondent banks totaling $265.0 million, which provide for overnight unsecured federal funds purchased (of which none were outstanding at September 30, 2024 or December 31, 2023); and,
•A line of credit with the Federal Reserve through its discount window borrowing program of approximately $799.6 million which is secured by a blanket lien on a portion of our commercial and consumer loan portfolio (excluding real estate loans) and specific investment securities. All of this line was available at both September 30, 2024 and December 31, 2023.
Our overall on-balance sheet liquidity ratio was 17.7% at September 30, 2024 compared to 14.6% at December 31, 2023. We define our liquidity ratio as net liquid assets (cash, unpledged securities and other marketable assets) as a percentage of our net liabilities (unpledged deposits and borrowings). Our total liquidity ratio, including the $2.4 billion in available lines of credit at quarter end, was 35.2% as of September 30, 2024. Not included in these ratios are the readily available sources of funds through brokered deposits. As of September 30, 2024, our brokered deposits availability was $1.8 billion per our internal policy.
The amount and timing of our contractual obligations and commercial commitments have not changed materially since December 31, 2023, the detail of which is presented in the "Contractual Obligations and Other Commercial Commitments" table of our 2023 Annual Report on Form 10-K. In addition, we are not involved in any legal proceedings that, in our opinion, could have a material effect on our consolidated financial position.
Off-Balance Sheet Arrangements and Derivative Financial Instruments
Off-balance sheet arrangements include transactions, agreements, or other contractual arrangements pursuant to which we have obligations or provide guarantees on behalf of an unconsolidated entity. We have no off-balance sheet arrangements of this kind other than letters of credit and repayment guarantees associated with our trust preferred securities and subordinated debentures.

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In the normal course of business, we are exposed to certain risks arising from both our business operations and economic conditions. As an element of our risk management strategies, we may enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Derivative financial instruments include futures, forwards, interest rate swaps, options contracts, and other financial instruments with similar characteristics.
We do not engage in significant derivatives activities. However, in 2023 to accommodate customers, we implemented a program whereby we enter into interest rate swaps with certain commercial loan customers, with offsetting positions to dealers under a back-to-back swap program. At September 30, 2024, the Company's derivative financial instruments consisted entirely of customer back-to-back interest rate swaps which are not designated as hedges. Under this program, the Company executes interest rate swaps with commercial banking customers to facilitate their risk management strategies. Those interest rate swaps are simultaneously economically hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate derivatives associated with this program are not designated as hedging instruments, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings. There have been no material changes from the derivative positions discussed in Note 13 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.
Capital Resources
The Company is regulated by the Federal Reserve and is subject to the securities registration and public reporting regulations of the SEC. Our Bank is also regulated by the Federal Reserve and the North Carolina Office of the Commissioner of Banks ("NCCOB"). We must comply with regulatory capital requirements established by the Federal Reserve and the NCCOB. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on our financial statements. We are not aware of any recommendations of regulatory authorities or otherwise which, if they were to be implemented, would have a material effect on our liquidity, capital resources, or operations.
Under Basel III standards and capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Our capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
The Federal Reserve's capital standards require us to maintain minimum ratios of “common equity tier 1” capital to total risk-weighted assets, “tier 1” capital to total risk-weighted assets, and total capital to risk-weighted assets of 4.50%, 6.00% and 8.00%, respectively. Common equity tier 1 capital is comprised of common stock and related surplus, plus retained earnings, and is reduced by goodwill and other intangible assets, net of associated deferred tax liabilities. Tier 1 capital is comprised of common equity tier 1 capital plus "additional tier 1 capital", which includes non-cumulative perpetual preferred stock and trust preferred securities. Total risk-based capital is comprised of tier 1 capital plus qualifying subordinated debentures, and certain adjustments, the largest of which is our ACL and allowance for unfunded commitments. The Company has elected to exclude AOCI related primarily to available for sale securities from common equity tier 1 capital. Risk-weighted assets refer to our on- and off-balance sheet exposures, adjusted for their related risk levels using formulas set forth in Federal Reserve regulations.
In addition to the risk-based capital requirements described above, we are subject to a leverage capital requirement, which calls for a minimum ratio of Tier 1 capital (as defined above) to quarterly average total assets of 3.00% to 5.00%, depending upon the institution’s composite ratings as determined by its regulators. The Federal Reserve has not advised us of any requirement specifically applicable to us.
At September 30, 2024, our capital ratios exceeded the regulatory minimum ratios discussed above. The capital ratios at September 30, 2024 increased as compared to 2023 year end ratios related primarily to retention of earnings increasing capital, combined with loan reductions and shifts in asset mix to lower risk-weighted assets.

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The following table presents the capital ratios for the Company and the regulatory minimums discussed above for the periods indicated:
September 30, 2024 December 31, 2023 Minimum required
Risk-based capital ratios:    
Common equity Tier 1 to Tier 1 risk weighted assets 14.37  % 13.20  % 7.00  %
Tier I capital to Tier 1 risk weighted assets 15.19  % 13.99  % 8.50  %
Total risk-based capital to Tier II risk weighted assets 16.65  % 15.54  % 10.50  %
Leverage capital ratio:
Tier 1 capital to quarterly average total assets 11.29  % 10.91  % 4.00  %
The Bank is also subject to capital requirements that do not vary materially from the Company’s capital ratios presented above. At September 30, 2024, the Bank exceeded the minimum ratios established by the regulatory authorities.
In addition to regulatory capital ratios, we also closely monitor our ratio of tangible common equity ("TCE") to tangible assets, which is a non-GAAP financial measure. The TCE ratio was 8.47% at September 30, 2024 compared to 7.56% at December 31, 2023.
The following table reconciles common equity to TCE and provides the calculation of the TCE ratio:
($ in thousands) September 30, 2024 December 31, 2023
Reconciliation of Common Equity to TCE
Total shareholders' common equity $ 1,477,525  $ 1,372,380 
Less: Goodwill and other intangibles, net of related taxes (489,139) (493,211)
Tangible common equity $ 988,386  $ 879,169 
Reconciliation of Total Assets to Tangible Assets
Total assets $ 12,153,430  $ 12,114,942 
Less: Goodwill and other intangibles, net of related taxes (489,139) (493,211)
Tangible assets $ 11,664,291  $ 11,621,731 
TCE divided by Tangible Assets 8.47  % 7.56  %
Stock Repurchase Plans
On January 30, 2024, the Board of Directors of the Company authorized the repurchase of up to $40 million in shares of the Company’s common stock. Any such repurchases would be made pursuant to a plan approved by and containing provisions about the timing, purchase prices and quantities purchased determined by management in its discretion. During the quarter ended September 30, 2024, the Company did not make any such purchases.

Item 3 – Quantitative and Qualitative Disclosures About Market Risk
Market Risk
Market risk is the risk of loss arising from adverse changes in the fair value of financial instruments due to changes in interest rates, exchange rates, and equity prices. The Company’s market risk is composed primarily of interest rate risk inherent in the normal course of lending and deposit-taking activities. We are also exposed to market risk in our investing activities. We do not have any trading assets or activities.
Interest Rate Risk
Net interest income is our most significant component of earnings and we consider interest rate risk to be our most significant market risk. Our net interest income results from the difference between the yields we earn on our interest-earning assets, primarily loans and investments, and the rates that we pay on our interest-bearing liabilities, primarily deposits and borrowings. When interest rates change, the yields we earn on our interest-earning assets and the rates we pay on our interest-bearing liabilities do not necessarily move in tandem with each other because of the difference between their maturities and repricing characteristics and which can negatively impact net interest income.

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Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Federal Reserve. Changes in monetary policy, including changes in interest rates, influence not only the interest we receive on loans and investments and the amount of interest we pay on deposits and borrowings, but such changes could also affect the average duration of our mortgage portfolio, investment securities and other interest-earning assets.
Our goal is to structure our asset/liability composition to maximize net interest income while managing interest rate risk so as to minimize the adverse impact of changes in interest rates on net interest income and capital in either a rising or declining interest rate environment. Profitability is affected by fluctuations in interest rates. A sudden and substantial change in interest rates may impact our earnings adversely because the interest rates of the underlying assets and liabilities do not change at the same speed, to the same extent or on the same basis.
Interest rate risk is monitored through the use of several complementary modeling tools, primarily earnings simulation modeling, and economic value simulation (net present value estimation). These models measure changes in a variety of interest rate scenarios. While interest rate risk models have limitations, taken together they represent a reasonably comprehensive view of the magnitude of our interest rate risk, the level of risk through time, and the amount of exposure to changes in certain interest rate relationships. Earnings simulation and economic value models are utilized by management on a regular basis as they more effectively measure the cash flow and optionality impacts than does a static gap analysis. From the various model results and our expectations regarding future interest rate movements, the national, regional and local economies, and other financial and business risk factors, we quantify the overall magnitude of interest sensitivity risk and then determine appropriate strategies and practices governing asset growth and pricing, funding sources and pricing, and off-balance sheet commitments.
Earnings Simulation Analysis
We use net interest income simulations which measure the short-term earnings exposure from changes in market rates of interest. The model calculates an earnings estimate based on current and projected balances and rates, incorporating our current financial position with assumptions regarding future business to calculate net interest income under varying hypothetical rate scenarios. This method is subject to the accuracy of the assumptions that underlie the process, but it provides a better analysis of the sensitivity of earnings to changes in interest rates than other analyses, such as the static gap analysis.
Assumptions used in the model are derived from historical trends and management’s outlook. The model assumes a static balance sheet with cash flows reinvested in similar instruments to maintain the balance sheet levels and current composition. Actual cash flows and repricing characteristics for our balance sheet instruments are input to the model. The model incorporates market-based assumptions regarding the impact of changing interest rates on the prepayment rate of certain assets and liabilities. Because these assumptions are inherently uncertain, actual results may differ from simulated results.
Different interest rate scenarios and yield curves are used to measure the sensitivity of earnings to changing interest rates in both a "shocked" instantaneous move and a "ramped" move of rates. Interest rates on different asset and liability accounts move differently when the Federal Reserve changes rates and such assumptions are reflected in the different rate scenarios. The model does not take into account any future actions that management may take to mitigate the impact of interest rate changes, and it is our strategy to proactively change the volume and mix of our balance sheet in order to mitigate our interest rate risk.
There has been no significant change in the Company's estimated net interest income sensitivity position from December 31, 2023. From a net interest income perspective, the Company generally has a fairly neutral interest sensitivity position in the short-term (within a twelve-month period) and within the lower ranges (+ - 100 to 200 basis points) of interest rate changes. With the current inverted interest rate yield curve, modeling of net interest income in changing rate environments presents particular challenges. As of September 30, 2024, the net interest income sensitivity indicates a slight asset sensitive position in both rising and falling rates over a one year period; however, a steepening of the yield curve reduces the impact of a 200 basis point reduction in rates to less than 2% of net interest income over a one year period and less than a 1% reduction over a two year period. The interest rate yield curve remains flat/inverted as of September 30, 2024. A flat or inverted interest rate yield curve is an unfavorable interest rate environment for many financial institutions, including the Bank, as short-term interest rates generally drive our deposit pricing and longer-term interest rates generally drive loan pricing. When these rates converge or invert, the profit spread we realize between loan yields and deposit rates narrows, which pressures our NIM, as was the case in 2022 and 2023.

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With regard to rising rates, with an immediate increase or shock of 200 basis points in market rates we would expect to realize an increase in net interest income of approximately 3% over both a one-year and two-year horizon. As previously noted, these assumptions are inherently uncertain, and actual results may differ from simulated results. Subsequent to September 30, 2024 market indications indicate that the yield curve may begin to normalize and steepen. In addition to the 50 basis points reduction in September 2024, the market consensus is that the Federal Reserve will continue to reduce short-term rates through late 2024 and into 2025. With reductions by the Federal Reserve, we are actively managing the cost of funds. Further, variable rate interest-earning assets will likely reprice to lower rates. Our ability to reduce cost of funds may be impacted by market competition for deposits.
Economic Value Simulation
Economic value simulation is used to calculate the estimated fair value of assets and liabilities over different interest rate environments. Economic values are calculated based on discounted cash flow analysis. The net economic value of equity is the economic value of all assets minus the economic value of all liabilities assuming a liquidation of the current balance sheet. The change in net economic value over different rate environments is an indication of the longer-term earnings capability of the balance sheet. The same assumptions are generally used in the economic value simulation as in the earnings simulation, including immediate and parallel rate shocks and static assumptions for deposit average decay rate and average lives.
As of December 31, 2023, the Company’s economic value of equity ("EVE") was generally liability sensitive in both a rising and falling interest rate environment, which continues to be the case as of September 30, 2024. In the rising rate scenarios, EVE declines and in the falling rate scenarios, EVE improves. The decline in EVE under a rising rate environment is driven by the composition of the loans and investment portfolios, primarily related to fixed rate loans and fixed rate mortgage-backed securities as compared to a higher proportion of deposits having variable rates. In a rising rate environment, the fixed rate loan and securities portfolios tend to extend due to slower prepayments, thus lowering their relative valuation in the EVE calculation. In declining rate environments, these same loan and securities portfolios tend to prepay. As of September 30, 2024, the impact of increasing rates on EVE are less severe than at December 31, 2023. Further, at the same date, the benefit from declining rates on EVE remains positive in most declining rate scenarios, but at a lower level than at December 31, 2023.
Additional discussion concerning our exposure to interest rate risk is presented in Item 7A of the 2023 Annual Report on Form 10-K filed with the SEC.
Inflation
Our financial statements have been prepared in accordance with GAAP, which requires the financial position and operating results to be measured principally in terms of historic dollars without considering the change in the relative purchasing power of money over time due to inflation.
Nearly all of the Company’s assets and liabilities are monetary in nature, and as such, changes in interest rates (as discussed above) generally affect the financial condition of the Company to a greater degree than changes in the rate of inflation. Although interest rates are influenced by changes in the inflation rate, they do not necessarily change at the same rate or in the same magnitude as the inflation rate. Inflation affects the Company’s results of operations mainly through increased operating costs, and the impact of inflation on banks in general is normally not as significant as its influence on those businesses that have large investments in plant and inventories. We review pricing of our products and services, as well as our controllable operating and labor costs in light of current and expected costs due to inflation, to mitigate the inflationary impact on financial performance to the extent possible.

Item 4 – Controls and Procedures
Management, under the supervision of and with the participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the design and operation of the Company’s disclosure controls and procedures, which are our controls and other procedures that are designed to ensure that information required to be disclosed in our periodic reports with the SEC is recorded, processed, summarized and reported within the required time periods. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed is communicated to our management to allow timely decisions regarding required disclosure.

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Index
Based on this assessment, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of September 30, 2024 are effective in allowing timely decisions regarding disclosure to be made about material information required to be included in our periodic reports with the SEC. In addition, there has been no change in our internal control over financial reporting which has occurred during, or subsequent to, the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information
Item 1 – Legal Proceedings
Various legal proceedings may arise in the ordinary course of business and may be pending or threatened against the Company and its subsidiaries. Neither the Company nor any of its subsidiaries are involved in any pending legal proceedings that management believes are material to the Company or its consolidated financial position.  If an exposure were to be identified, it is the Company’s policy to establish and accrue appropriate reserves during the accounting period in which a loss is deemed to be probable and the amount is determinable.
Item 1A – Risk Factors
Investing in shares of our common stock involves certain risks, including those identified and described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as well as cautionary statements contained in this Form 10-Q, including those under the caption “Forward-Looking Statements” set forth in the forepart of this Form 10-Q, risks and matters described elsewhere in this Form 10-Q and in our other filings with the SEC. There are no material changes from the risk factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Item 5 – Other Information
5(c) Trading Arrangements of Section 16 Reporting Persons.
During the quarter ended September 30, 2024, no person who is required to file reports pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, with respect to holdings of, and transactions in, the Company’s common shares (i.e. directors and certain officers of the Company) maintained, adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1(c) arrangement”, as those terms are defined in Section 229.408 of the regulations of the SEC.

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Item 6 - Exhibits
The following exhibits are filed with this report or, as noted, are incorporated by reference. Except as noted below the exhibits identified have Securities and Exchange Commission File No. 000-15572. Management contracts, compensatory plans and arrangements are marked with an asterisk (*).
3.a
Articles of Incorporation of the Company and amendments thereto were filed as Exhibits 3.a.i through 3.a.v to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, and are incorporated herein by reference. Articles of Amendment to the Articles of Incorporation were filed as Exhibits 3.1 and 3.2 to the Company’s Current Report on Form 8-K filed on January 13, 2009, and are incorporated herein by reference. Articles of Amendment to the Articles of Incorporation were filed as Exhibit 3.1.b to the Company’s Registration Statement on Form S-3D filed on June 29, 2010 (Commission File No. 333-167856), and are incorporated herein by reference. Articles of Amendment to the Articles of Incorporation were filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on September 6, 2011, and are incorporated herein by reference. Articles of Amendment to the Articles of Incorporation were filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on December 26, 2012, and are incorporated herein by reference. Articles of Amendment to the Articles of Incorporation were filed as Exhibit 99.1 to the Company's Current Report on Form 8-K filed June 14, 2022, and are incorporated herein by reference.
3.b
4.a
31.1
31.2
32.1
32.2
101
The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in eXtensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.
Copies of exhibits are available upon written request to: First Bancorp, Investor Relations, 300 SW Broad Street, Southern Pines, North Carolina, 28387

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
  FIRST BANCORP
   
November 6, 2024 BY:/s/  Richard H. Moore
  Richard H. Moore
Chief Executive Officer
(Principal Executive Officer),
and Director
 
November 6, 2024 BY:/s/  Elizabeth B. Bostian
  Elizabeth B. Bostian
Executive Vice President
and Chief Financial Officer
November 6, 2024 BY:/s/  T. Brent Hicks
T. Brent Hicks
Executive Vice President
and Chief Accounting Officer

Page 58
EX-31.1 2 fbnc2024-09exx311.htm EX-31.1 Document

Exhibit 31.1
Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
I, Richard H. Moore, certify that:
1.I have reviewed this Form 10-Q of First Bancorp.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
November 6, 2024 /s/ Richard H. Moore
  Richard H. Moore
  Chief Executive Officer

EX-31.2 3 fbnc2024-09exx312.htm EX-31.2 Document

Exhibit 31.2
Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
I, Elizabeth B. Bostian, certify that:
1.I have reviewed this Form 10-Q of First Bancorp.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
November 6, 2024 /s/ Elizabeth B. Bostian
  Elizabeth B. Bostian
  Chief Financial Officer

EX-32.1 4 fbnc2024-09exx321.htm EX-32.1 Document

Exhibit 32.1
Chief Executive Officer
Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of First Bancorp (the "Company") on Form 10-Q for the period ended September 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Richard H. Moore, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Richard H. Moore
Richard H. Moore
Chief Executive Officer
November 6, 2024
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to First Bancorp and will be retained by First Bancorp and furnished to the Securities and Exchange Commission or its staff upon request.


EX-32.2 5 fbnc2024-09exx322.htm EX-32.2 Document

Exhibit 32.2
Chief Financial Officer
Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of First Bancorp (the "Company") on Form 10-Q for the period ended September 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Elizabeth B. Bostian, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Elizabeth B. Bostian
Elizabeth B. Bostian
Chief Financial Officer
November 6, 2024
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to First Bancorp and will be retained by First Bancorp and furnished to the Securities and Exchange Commission or its staff upon request.