MCBS 10-K & 10-Q changes, risk factors and insider trading

Our business and operations are sensitive to general business and economic conditions in the United States, generally, and particularly in the states of Alabama, Florida, Georgia, New Jersey, New York, Texas and Virginia. Unfavorable or uncertain economic and market conditions could lead to credit quality concerns related to borrower repayment ability and collateral protection as well as reduced demand for the products and services we offer. If the national, regional and local economies experience worsening economic conditions (including persistent inflation), elevated levels of unemployment, adverse effects of the U.S. government’s failure to raise its debt ceiling (including defaulting on its debt obligations or experiencing credit downgrades) or as a result of trade wars and/or tariffs, fluctuations in debt and equity capital markets, increased delinquencies on mortgage, commercial and consumer loans, residential and commercial real estate price declines, and lower home sales and commercial activity, our growth and profitability could be constrained. In addition, economic stress may result in heightened regulatory and supervisory scrutiny or more conservative regulatory expectations, which could limit our ability to grow, deploy capital or return capital to shareholders.

Many of our competitors offer the same, or a wider variety of, the banking and related financial services we offer within our market areas. These competitors include national banks, regional banks and other community banks, including banks similar to us that primarily serve distinct or multi-ethnic communities. In many instances these national and regional banks have greater resources than we do, and the smaller community banks may have stronger ties in local markets than we do, which may put us at a competitive disadvantage. We also face competition from many other types of financial institutions, including fintech companies, savings associations, finance companies, brokerage firms, insurance companies, credit unions, mortgage banks and other financial intermediaries. Further, our credit union competitors benefit from competitive advantages, including the credit union exemption from paying federal income tax and can, therefore, more aggressively price many products and services. In addition, a number of out-of-state financial intermediaries have opened production offices or otherwise solicit deposits in our market areas. We also compete with many forms of payments offered by both bank and non-bank providers, including a variety of new and evolving alternative payment mechanisms, systems and products, such as aggregators and web-based and wireless payment platforms or technologies, digital or “crypto” currencies, prepaid systems and payment services targeting users of social networks, communications platforms and online gaming. Competition is increasingly focused on digital capabilities, customer experience, speed, and convenience, and failure to meet evolving customer expectations may adversely affect our competitive position. Some competitors may be willing to accept lower returns, assume greater risk, or offer more favorable pricing and terms than we are willing or able to provide, which could place downward pressure on our margins. In addition, some competitors may offer banking and payment services through embedded or platform-based models that reduce the need for customers to maintain traditional banking relationships. Our future success may depend, in part, on our ability to use technology competitively to offer products and services that provide convenience to customers and create additional efficiencies in our operations. If we are unable to match the pace of technological change or the level of investment made by larger or more technologically advanced competitors, we may experience customer attrition or reduced growth opportunities. Further, as a result of the GENIUS Act, passed in 2025 to provide a regulatory framework for stablecoins in the U.S., increased competition may emerge from issuers of stablecoins and providers of related technology.

Increased competition in our markets may result in reduced loans, deposits and commissions and brokers’ fees, gains on sales, servicing fees, as well as reduced net interest margin and profitability. Competition may also increase pressure on compensation and make it more difficult to attract and retain experienced banking and mortgage lending personnel. If we are unable to attract and retain banking and mortgage loan customers and expand our sales market for such loans, we may be unable to continue to grow our business, and our financial condition and results of operations may be adversely affected.

Interest rates are highly sensitive to many factors including, without limitation: the rate of inflation; economic conditions; federal monetary policies; and stability of domestic and foreign markets. Interest rates increased significantly in 2022 and 2023 as the Federal Reserve attempted to slow economic growth and counteract rising inflation, and remained elevated during 2024, with the Federal Reserve slowly decreasing interest rates beginning in the fourth quarter of 2024.2024 through the fourth quarter of 2025. Further changes in interest rates and monetary policy reportedly are dependent upon the Federal Reserve’s assessment of economic data as it becomes available. Increasing interest rates can have a negative impact on our business by reducing the amount of money our customers borrow or by adversely affecting their ability to repay outstanding loan balances that may increase due to adjustments in their variable rates which may lead to an increase in nonperforming assets and a reduction of income recognized, which could have a material adverse effect oncompress our resultsnet ofinterest operationsmargin and cashadversely flows.affect liquidity In addition, in a rising interest rate environment we may have to offer more attractive interest rates to depositors to compete for deposits, or pursue other sources of liquidity, such as wholesale funds. Conversely, decreasing interest rates reduce our yield on our variable rate loans and on our new loans, which reduces our net interest income. In addition, lower interest rates may reduce our realized yields on investment securities which would reduce our net interest income and cause downward pressure on net interest margin in future periods. Higher income volatility from changes in interest rates and spreads to benchmark indices could result in a decrease in net interest income and a decrease in current fair market values of our assets. Fluctuations in interest rates impactsimpact both the level of income and expense recorded on most of our assets and liabilities and the market value of all interest-earning assets and interest-bearing liabilities, which in turn could have a material adverse effect on our net income, operating results, or financial condition. Although we have implemented procedures we believe will reduce the potential effects of changes in interest rates on our net interest income, these procedures may not always be successful as some of these effects are outside of our control. A prolonged period of volatile and unstable market conditions would likely increase our funding costs and negatively affect market risk mitigation strategies.

Prolonged periods of inflation may impact our profitability by negatively impacting our fixed costs and expenses, including increasing funding costs and expense related to talent acquisition and retention, and negatively impacting the demand for our products and services. Additionally, inflation may lead to a decrease in consumer and clients purchasing power and negatively affect the need or demand for our products and services. If significant inflation continues, our business could be negatively affected by, among other things, increased default rates leading to credit losses which could decrease our appetite for new credit extensions. These inflationary pressures could result in missed earnings and budgetary projections causing our stock price to suffer. Additionally, the timing and magnitude of inflation’s effects may be difficult to predict and could persist or intensify depending on economic conditions and policy responses

Bank failures and related negative media attention may generate significant market trading volatility among publicly traded bank holding companies and, in particular, regional banks like the Company. These developments have and may continue to negatively impact customer confidence in regional banks, which could prompt customers to maintain their deposits with larger financial institutions.institutions Further,or competitionotherwise forrelocate depositsfunds. hasRapid increasedchanges in recentcustomer periods,behavior, andincluding theaccelerated costdeposit ofwithdrawals fundingfacilitated hasby similarlydigital increased,banking puttingchannels, pressurecould onincrease ourliquidity net interest margin.pressures. If we were required to sell a portion of our securities portfolio to address liquidity needs, we may incur losses, including as a result of the negative impact of rising interest rates on the value of our securities portfolio, which could negatively affect our earnings and our capital. If we were required to raise additional capital in the current environment, any such capital raise may be on unfavorable terms, thereby negatively impacting book value and profitability. While we have taken actions to improve our funding, there is no guarantee that such actions will be successful or sufficient in the event of sudden liquidity needs. In addition, bank failures have and could in the future prompt the FDIC to increase deposit insurance costs. Increases in funding, deposit insurance, or other costs as a result of these types of events have and could in the future materially adversely affect our financial condition and results of operations. Further, the disruption following these types of events have and could in the future generate significant market trading volatility among publicly traded bank holdings companies and, in particular, regional banks like the Company.

Other primary sources of funds consist of cash from operations, paydown of our existing loan portfolio and sale of loans to investors. Additional liquidity is provided by our ability to borrow from the Federal Reserve Bank of Atlanta and the Federal Home Loan Bank of Atlanta. Recently proposed changes to the Federal Home Loan Bank system could adversely impact the Company’s access to Federal Home Loan Bank borrowings or increase the cost of such borrowings. We also may borrow from third-party lenders from time to time. Our access to funding sources in amounts adequate to finance or capitalize our activities or on terms that are acceptable to us could be impaired by factors that affect us directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry. Our access to funding sources could also be affected by a decrease in the level of our business activity as a result of a downturn in our primary market area or by one or more adverse regulatory actions against us. In addition, our access to deposits may be affected by the liquidity and/or cash flow needs of depositors, which may be exacerbated in an inflationary, recessionary, or elevated rate environment.us..

We are subject to the risk of losses resulting from the failure of borrowers, guarantors and related parties to pay us the interest and principal amounts due on their loans. Although we maintain well-defined credit policies and credit underwriting and monitoring and collection procedures, these policies and procedures may not prevent losses, as some of these risks are outside of our control, particularly during periods in which the local, regional or national economy suffers a general decline. The future effects of the continued elevated inflationary and interest rate environment on economic activity could negatively affect the collateral values associated with our existing loans, the ability to liquidate the real estate collateral securing our residential and commercial real estate loans, our ability to maintain loan origination volume and to obtain additional financing, the future demand for or profitability of our lending and services, and the financial condition and credit risk of our customers. Further, in the event of delinquencies, regulatory changes and policies designed to protect borrowers may slow or prevent us from making our business decisions or may result in a delay in our taking certain remediation actions, such as foreclosure. If borrowers fail to repay their loans, our financial condition and results of operations would be adversely affected. Additionally, potential future actions such as the proposed consumer credit card interest rate cap may lead to unprofitable products, especially for riskier borrowers, and could lead to cutting credit lines or eliminating cards, increased reliance on fees and increased debt burdens for those needing credit the most, thereby having the potential to negatively impact bank asset quality

Our SBA lending program is dependent upon the U.S. federal government. As an approved participant in the SBA Preferred Lender’s Program (an “SBA Preferred Lender”), we enable our clients to obtain SBA loans more efficiently. The SBA periodically reviews the lending operations of participating lenders to assess, among other things, whether the lender exhibits prudent risk management. When weaknesses are identified, the SBA may request corrective actions or impose enforcement actions, including revocation of the lender’s SBA Preferred Lender status. If we lose our status as an SBA Preferred Lender, we may lose some or all of our customers to lenders who are SBA Preferred Lenders, and as a result we could experience a material adverse effect to our financial results. Any changes to the SBA program, including but not limited to changes to the level of guarantee provided by the federal government on SBA loans, changes to program specific rules impacting volume eligibility under the guaranty program, as well as changes to the program amounts authorized by Congress or funding for the SBA program may also have a material adverse effect on our business. Because a significant portion of our SBA lending activity depends on government guarantees and program support, changes in policy, funding priorities or political conditions could disproportionately affect this line of business. In addition, any default by the U.S. government on its obligations or any prolonged government shutdown could, among other things, impede our ability to originate SBA loans or sell such loans in the secondary market, which could materially and adversely affect our business, results of operations and financial condition.

A commitment to extend credit is a formal agreement to lend funds to a client as long as there is no violation of any condition established under the agreement. The actual borrowing needs of our customers under these credit commitments have historically been lower than the contractual amount of the commitments. A significant portion of these commitments expire without being drawn upon. Because of the credit profile of our customers, we typically have a substantial amount of total unfunded credit commitments, which is not reflected on our balance sheet. Actual borrowing needs of our customers may exceed our expected funding requirements, especially during a challenging economic environment when our client companies may be more dependent on our credit commitments due to the lack of available credit elsewhere, the increasing costs of credit, or the limited availability of financings from other sources. Such conditions could result in multiple borrowers drawing on their commitments at the same time, increasing our funding needs and placing additional pressure on our liquidity. The timing and amount of draws on unfunded commitments are difficult to predict and may be correlated with periods of economic stress, when our access to funding sources may also be constrained. Any failure to meet our unfunded credit commitments in accordance with the actual borrowing needs of our customers may have a material adverse effect on our business, financial condition, results of operations or reputation.

We use brokered deposits, as a source of funding to support our asset growth and augment deposits generated from our branch network, which are our principal source of funding. We have established policies and procedures with respect to the use of brokered deposits, which require, among other things, that (i) we limit the amount of brokered deposits as a percentage of total assets, and (ii) our asset liability committee monitors our use of brokered deposits on a regular basis, including interest rates and the total volume of such deposits in relation to our total assets. In the event that our funding strategies call for the use of brokered deposits, there can be no assurance that such sources will be available, or will remain available, or that the cost of such funding sources will be reasonable. Additionally, if the Bank is no longer considered well-capitalized, our ability to access new brokered deposits or retain existing brokered deposits could be affected by market conditions, regulatory requirements or a combination thereof, which could result in most, if not all, brokered deposit sources being unavailable. The inability to utilize brokered deposits as a source of funding could have an adverse effect on our financial position, results of operations and liquidity. In addition, significant reliance on brokered deposits could be perceived negatively by customers, counterparties or investors, which could further affect our funding costs or access to alternative sources of liquidity.

Our success depends, in large part, on our ability to attract and retain key personnel. Competition for the best personnel in most activities we engage in can be intense, as we compete with both smaller banks that may be able to offer bankers with more responsibility and autonomy and larger banks that may be able to offer bankers with higher compensation, resources and support, and we may not be able to hire personnel or to retain them. The unexpected loss of services of one or more of our key personnel could have a material adverse impact on our business because of their skills, knowledge of our market, relationships in the communities we serve, years of industry experience and the difficulty of promptly finding qualified replacement personnel. Although we have employment agreements with certain of our executive officers, there is no guarantee that these officers and other key personnel will remain employed with the Company. If we are unable to successfully plan for and execute the transition or replacement of key members of our management team, our operations and strategic initiatives could be adversely affected.

We make various assumptions and judgments about the collectability of our loan and lease portfolio and utilize these assumptions and judgments when determining the provision and allowance for credit losses. The determination of the appropriate level of the provision for credit losses inherently involves a high degree of subjectivity and requires us to make significant estimates of current credit risks and future trends, all of which may undergo material changes, as we have experienced. Deterioration in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors both within and outside of our control, may require an increase in the amount reserved in the allowance for credit losses. In addition, bank regulatory agencies periodically review our provision and the total allowance for credit losses and may require an increase in the allowance for credit losses or future provisions for credit losses, based on judgments different than those of management. Any increases in the provision or allowance for credit losses will result in a decrease in our net income and, potentially, capital, and could increase earnings volatility or constrain our ability to deploy capital, and may have a material adverse effect on our financial condition or results of operations.

Changes in interest rates may negatively affect both the returns on and market value of our investment securities. Interest rate volatility can reduce unrealized gains or increase unrealized losses in our portfolio. Interest rates are highly sensitive to many factors including monetary policies, domestic and international economic and political issues, and other factors beyond our control. These changes can negatively impact our other comprehensive income and equity levels through accumulated other comprehensive income, which includes net unrealized gains and losses on our investment securities. Further, such losses could be realized into earnings should liquidity and/or business strategy necessitate the sales of securities in a loss position. Periods of market stress or deposit outflows could increase the likelihood that we would need to sell securities at unfavorable prices. Additionally, actual investment income and cash flows from investment securities that carry prepayment risk, such as mortgage-backed securities and callable securities, may materially differ from those anticipated at the time of investment or subsequently as a result of changes in interest rates and market conditions. In a rising‑rate environment, slower prepayments or extensions of expected maturities could increase interest rate sensitivity and reduce portfolio liquidity. These occurrences could have a material adverse effect on our net interest income or our results of operations.

From time to time, we may implement or may acquire new lines of business or offer new products and services within existing lines of business. In developing and marketing new lines of business and new products and services we may invest significant time and resources. We may not achieve target timetables for the introduction and development of new lines of business and new products or services and price and profitability goals may not prove feasible. External factors, such as regulatory compliance obligations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. Furthermore, any new line of business and/or new product or service could have a significant impact on the effectiveness of our system of internal controls. Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on our business, results of operations and financial condition.

Our marketing focuses primarily on the banking needs of small- and medium-sized businesses, professionals and residents in the markets that we serve, primarily communities with large Asian-American populations. This demographic concentration makes us more prone to circumstances that particularly affect this segment of the population. As a result, our financial condition and results of operations are subject to changes in the economic conditions affecting these communities. Our success depends upon the business activity, population, income levels, deposits and real estate activity in these communities. Although our customers’ business and financial interests may extend well beyond these communities, adverse economic conditions that affect these communities could reduce our growth rate, affect the ability of our customers to repay their loans to us and generally affect our financial condition and results of operations. Because of our geographic concentration, we are less able than regional or national financial institutions to diversify our credit risks across multiple markets. In addition, larger institutions with similar focuses are targeting our market areas. As we grow, we face entrenched multi-ethnic-oriented banks with larger resources in our new markets.markets, which may be able to offer broader product offerings, more aggressive pricing or greater technological capabilities, placing us at a competitive disadvantage.

We are a community bank, and our reputation is one of the most valuable components of our business. Threats to our reputation can come from many sources, including adverse sentiment about financial institutions generally, unethical practices, employee misconduct, failure to deliver minimum standards of service or quality, compliance deficiencies, security breaches, litigation, investigations and other proceedings, and questionable or fraudulent activities of our customers. Negative publicity regarding our business, employees, or customers, with or without merit, may result in the loss of customers, investors and employees, costly litigation, a decline in revenues and increased governmentalgovernment regulation. If our reputation is negatively affected, by the actions of our employees or otherwise, our business and, therefore, our operating results and the value of our common stock may be materially adversely affected.

Many of our larger competitors have substantially greater resources to invest in technological improvements. As a result, they may be able to offer additional or more convenient products compared to those that we will be able to provide, which would put us at a competitive disadvantage. We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers, and even if we implement such products and services, we may incur substantial costs in doing so. The implementation of new technologies may also require changes to existing systems, processes and controls and may increase our reliance on third‑party vendors, which could expose us to additional operational, regulatory or compliance risks. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business, financial condition and results of operations.

To date, none of foregoing types of attacks have had a material effect on our business or operations and we maintain a system of internal controls and insurance coverage to mitigate against operational risks, including data processing system failures and errors and customer or employee fraud. However, no assurances can be provided that we (or our third-party vendors) may not suffer from such an attack in the future that may cause us material harm, especially in light of the risks being posed by the proliferation of new technologies, including artificial intelligence, the use of the Internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of cybercriminals and other external parties..

The developments and use of artificial intelligentintelligence (“AI”) presents risks and challenges that may adversely impact our business.

The Company or its third-party (or fourth party) vendors, clients or counterparties may develop or incorporate AI technology in certain business processes, services, or products. The development and use of AI presents a number of risks and challenges to the Company’s business. The legal and regulatory environment relating to AI is uncertain and rapidly evolving, both in the U.S. and internationally, and includes regulatory schemes targeted specifically at AI as well as provisions in intellectual property, privacy, security, consumer protection, employment, and other laws applicable to the use of AI. These evolving laws and regulations could require changes in the Company’s implementation of AI technology and increase the Company’s compliance costs and the risk of non-compliance. AI models, particularly generative AI models, may produce output or take action that is incorrect, that reflects biases included in the data on which they are trained, that results in the release of private, confidential, or proprietary information, that infringes on the intellectual property rights of others, or that is otherwise harmful. In addition, the complexity of many AI models makes it difficult to understand why they are generating particular outputs. This limited transparency increases the challenges associated with assessing the proper operation of AI models, understanding and monitoring the capabilities of the AI models, reducing erroneous output, eliminating bias, and complying with regulations that require documentation or explanation of the basis on which decisions are made. Further, the Company may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, matters over which the Company may have limited visibility. Any of these risks could expose the Company to liability or adverse legal or regulatory consequences andconsequences, harm the Company’s reputation and the public perception of its business or the effectiveness of its security measures.measures and risk‑management practices, or place us at a competitive disadvantage if we are unable to adopt or govern AI technologies effectively relative to our peers.

Management regularly monitors, reviews and updates our disclosure controls and procedures, including our internal control over financial reporting. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable assurances that the controls will be effective. The effectiveness of our internal controls also depends on the performance of individuals, and human error, misconduct or changes in personnel could compromise the effectiveness of our controls. Any failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, results of operations and financial condition. Failure to achieve and maintain an effective internal control environment could prevent us from accurately reporting our financial results, preventing or detecting fraud or providing timely and reliable financial information pursuant to our reporting obligations, which could result in a material weakness in our internal controls over financial reporting and the restatement of previously filed financial statements and could have a material adverse effect on our business, financial condition and results of operations. Further, ineffective internal controls could cause our investors to lose confidence in our financial information, which could affect the trading price of our common stock.

We operate in a highly regulated environment and are subject to supervision and regulation by a number of governmental regulatory agencies, including the Federal Reserve, the DBF and the FDIC. Regulations adopted by these agencies, which are generally intended to provide protection for depositors and customers rather than for the benefit of shareholders, govern a comprehensive range of matters relating to ownership and control of our shares, our acquisition of other companies and businesses, permissible activities for us to engage in, maintenance of adequate capital levels, and other aspects of our operations. These bank regulators possess broad authority to prevent or remedy unsafe or unsound practices or violations of law. Regulatory authorities also have significant discretion in the interpretation, application and enforcement of laws and regulations, and may impose supervisory expectations or informal actions that are not codified in statute or regulation. The laws and regulations applicable to the banking industry could change at any time and we cannot predict the effects of these changes on our business, profitability or growth strategy. Increased regulation could increase our cost of compliance and adversely affect profitability. Moreover, certain of these regulations contain significant punitive sanctions for violations, including monetary penalties and limitations on a bank’s ability to implement components of its business plan, such as expansion through mergers and acquisitions or the opening of new branch offices. In addition, changes in regulatory requirements may add costs associated with compliance efforts. Furthermore, government policy and regulation, particularly as implemented through the Federal Reserve System, significantly affect credit conditions. Negative developments in the financial industry and the impact of new legislation and regulation in response to those developments could negatively impact our business operations and adversely impact our financial performance. In addition, the potential erosion of Federal Reserve independence could negatively impact financial markets and impact our profitability. See Supervision and Regulation above at for an additional discussion of the extensive regulation and supervision that the Company and the Bank are subject to.

The Federal Reserve, the FDIC, and the DBF periodically examine our business, including our compliance with laws and regulations. If, as a result of an examination, a banking agency were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity, interest rate sensitivity or other aspects of any of our operations had become unsatisfactory, or that we were in violation of any law or regulation, they may take a number of different remedial actions as they deem appropriate. These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative action to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, to assess civil money penalties, to fine or remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate our deposit insurance and place us into receivership or conservatorship. Any regulatory action against us could have an adverse effect on our business, financial condition and results of operations. Additionally, significant transactions, such as the recently-completed transaction with First IC Corporation, may result in heightened regulatory or supervisory scrutiny, increased examination activity or additional remediation expectations, which could increase compliance costs or limit management flexibility during the integration period.

The Federal Reserve is responsible for regulating the supply of money in the United States, including through open market operations and other tools used to stabilize prices in times ofinfluence economic stress,activity and price stability, as well as setting monetary policies.policy. Changes in monetary policy, including the pace, timing and magnitude of interest rate increases or decreases, as well as changes in liquidity conditions, may be volatile and difficult to predict. These activitiesactions strongly influence our rate of return on certain investments, our hedge effectiveness for mortgage servicing and our mortgage origination pipeline, as well as our costscost of funds for lending and investing,investing. Monetary policy actions may also affect asset valuations, deposit pricing and availability, borrower behavior and overall credit conditions, all of which maycould adversely impact our liquidity, results of operations, financial condition and capital position. TheIn Companyaddition, changes in monetary policy may negatively affect the financial condition of our customers by increasing borrowing costs or reducing access to credit, which could result in increased delinquencies, reduced loan demand or lower profitability. We cannot predict the nature or timing of future changes in monetary, economic,economic or other policies or the effect that they may have on the Company'sour business activities, financial condition andor results of operations.

The Federal Reserve, which examines us and the Bank, requires a bank holding company to act as a source of financial and managerial strength to a subsidiary bank and to commit resources to support such subsidiary bank. Under the “source of strength” doctrine, the Federal Reserve may require a bank holding company to make capital injections into a troubled subsidiary bank and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to such a subsidiary bank. In addition, The Bank is subject to capital adequacy guidelines and other regulatory requirements specifying minimum amounts and types of capital which the Bank must maintain. From time to time, the regulators implement changes to these regulatory capital adequacy guidelines. If the Bank fails to meet these minimum capital guidelines and other regulatory requirements, our financial condition would be materially and adversely affected. We may also be required to satisfy additional capital adequacy standards as determined by the Federal Reserve. These requirements, and any other new regulations, could adversely affect our ability to pay dividends, service holding‑company obligations, pursue growth initiatives or return capital to shareholders, and could require us to reduceraise businessadditional levelscapital or toreallocate raise capital, includingresources in ways that may adverselynot affectbe favorable to our financialshareholders, conditionincluding orat resultstimes ofwhen operations.market conditions are adverse.

The FDIC insures deposits at FDIC-insured depository institutions, such as the Bank, up to applicable limits. The amount of a particular institution’s deposit insurance assessment is based on that institution’s risk classification under an FDIC risk-based assessment system. An institution’s risk classification is assigned based on its capital levels and the level of supervisory concern the institution poses to its regulators. We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance. Any future additional assessments, increases or required prepayments in FDIC insurance premiums could reduce our profitability, mayplace additional pressure on pricing of loans and deposits, limit our ability to pursue certain business opportunitiesopportunities, or otherwise negatively impact our operations. The timing and magnitude of any such assessments may be difficult to predict and could adversely affect our earnings in the periods in which they are imposed.

Environmental, social and governance (“ESG”) and diversity, euityequity and inclusion (“DEI”) risks could adversely affect our reputation and shareholder, employee, client and third party relationships and may negatively affect our stock price.

We have paid quarterly dividends to our shareholders for the past eleventwelve years. However, past payment of dividends is not a guarantee of future dividend payments. We have no obligation to pay dividends and we may change our dividend policy at any time without notice to our shareholders. Holders of our common stock are only entitled to receive such cash dividends as our board of directors, in its discretion, may declare out of funds legally available for such payments. Furthermore, consistent with our strategic plans, growth initiatives, capital availability and requirements, projected liquidity needs, financial condition, and other factors, we have made, and will continue to make, capital management decisions and policies that could adversely impact the amount of dividends paid to our shareholders.

We are required to meet certain regulatory capital requirements and maintain sufficient liquidity. We are generally not restricted from issuing additional shares of our common stock up to the authorized number of shares set forth in our charter. We may need to raise additional capital in the future to provide us with sufficient capital resources and liquidity to meet our commitments and business needs, which could include the possibility of financing acquisitions. Our ability to raise additional capital depends on conditions in the capital markets, economic conditions and a number of other factors, including investor perceptions regarding the banking industry, market conditions and governmental activities, and on our financial condition and performance. We cannot predict the sizesize, timing or terms of future issuances of our common stock or other capital instruments, or the effect, if any,effect that futureany such issuances and sales of our common stock willmay have on the market price of our common stock. Any issuance of additional equity securities could result in dilution to existing shareholders, and the issuance of debt or other capital instruments could increase our leverage and interest expense. Accordingly, we may be unable to raise additional capital if neededneeded, or on terms acceptable to us. Further, such additional capital could result in dilution to our existing shareholders. If we or the Bank fail to maintain capital toat meetlevels regulatoryrequired requirements,by regulators, or at levels deemed appropriate by supervisory authorities, our financial condition, liquidity and results of operations,operations as well as our ability to maintain compliance with regulatory capital requirements, wouldcould be materially and adversely affected.affected, and we could be subject to restrictions on growth, capital distributions or other aspects of our business.

We are MetroCity Bankshares, Inc., a bank holding company headquartered in the Atlanta, Georgia metropolitan area. We operate through our wholly-owned banking subsidiary, Metro City Bank, a Georgia state-chartered commercial bank that was founded in 2006. We currently operate 2029 full-service branch locations in multi-ethnic communities in Alabama, California, Florida, Georgia, New York, New Jersey, Texas and Virginia. We are focused on delivering full-service banking services in diverse multi-ethnic markets, predominantlyincluding Asian-American communities in growing metropolitan markets in the Eastern U.S. and Texas.Texas Prior to December 2014, the Bank operated without a holding company structure. In December 2014, the Bank formed MetroCity Bankshares, Inc. as its holding company, and on, December 31, 2014, MetroCity Bankshares, Inc. acquired all of the outstanding common stock of Metro City Bank in connection with the holding company formation transaction.

We are a bank holding company and we conduct all of our material business operations through the Bank. As a result,Accordingly, the discussion and analysis herein relates primarily to activities primarily conducted at the Bank level.

A consequence of lending activities is that we may incur credit losses. The amount of such losses will vary depending upon the risk characteristics of the loan lease portfolio as affected by economic conditions suchincluding, asamong others, volatility in rising interest rates and the financial performance of borrowers.

The reserve for credit losses consists of the allowance for credit losses (“ACL”) and the allowance for unfunded commitments. We estimate the reserve for credit losses using the Current Expected Credit Losses (“CECL”) model, which is based on an expected loss methodology. The estimate of expected credit losses under the CECL approach is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. We then consider whether the historical loss experience should be adjusted for loan-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience was used. Finally, we consider forecasts about future economic conditions that are reasonable and supportable. The allowance for unfunded commitments represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit. This allowance is estimated by loan segment at each balance sheet date under the CECL model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur.

We recorded net income of $64.5$68.5 million for the year ended December 31, 2025 compared to $51.6$64.5 million for the year ended December 31, 2023,2024, an increase of $12.9$4.0 million, or 25.0%.6.2%. The increase was due to an increase in net interest income of $16.7$12.3 million andmillion, an increase in noninterest income of $4.9$2.1 million,million and a decrease in provision for credit losses of $834,000, offset by an increase in noninterest expense of $5.7$9.9 million,million and an increase in income tax expense of $2.5$1.4 million and an increase in provision for credit losses of $531,000.million.

The Company currently has interest rate derivative agreements totaling $850.0 million that are designated as cash flow hedges of our deposit accounts indexed to the Federal Funds Effective rate. The weighted average pay rate for these interest rate derivatives is 2.29%. During the year ended December 31, 2024, we recorded a credit to interest expense of $22.1 million from the benefit received on these interest rate derivatives compared to a credit to interest expense of $5.4 million recorded during the year ended December 31, 2023. Based on the Federal Funds Effective rate as of December 31, 2024 (4.33%), the Company would estimate to record a credit to interest expense of $16.2 million during 2025 from the benefit received on these interest rate derivatives. See Note 10 of our consolidated financial statements as of December 31, 2024, included elsewhere in this Annual Report on Form 10-K, for additional information on these interest rate derivatives.

The provision for credit losses reflects our internal calculation and judgment of the appropriate amount of the allowance for credit losses. The adoption of ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments” or “CECL” hasand most recently ASU No. 2025-08, “Purchased Loans” significantly changed the methodology of how we measure credit losses (see Note 1 to the Consolidated Financial Statements for more information). We maintain the allowance for credit losses at levels we believe are appropriate to cover our estimate of expected credit losses over the life of loans in the portfolio as of the end of the reporting period. The allowance for credit losses is determined through detailed quarterly analyses of our loan portfolio. The allowance for credit losses is based on our loss experience, changes in the economic environment, reasonable and supportable forecasts, as well as an ongoing assessment of credit quality and environmental factors not reflective in historical loss rates. Additional qualitative factors that are considered in determining the amount of the allowance for credit losses are concentrations of credit risk (geographic, large borrower, and industry), changes in underwriting standards, changes in collateral value, experience and depth of lending staff, trends in delinquencies, and the volume and terms of loans.

Mortgage loan servicing income was $2.4 million for the year ended December 31, 2024 compared to anmortgage loan servicing expense balance of $193,000 for the year ended December 31, 2023, an increase of $2.6 million,million oryear 1368.4%.over year. The change in mortgage loan servicing income was primarily due to the decrease in mortgage servicing amortization and an increase in capitalized mortgage servicing assets, partially offset by the decrease in mortgage servicing fees. Included in mortgage loan servicing income for the year ended December 31, 2024 was $2.3 million in mortgage servicing fees compared to $2.5 million for 2023, and capitalized mortgage servicing assets of $1.2 million for the year ended December 31, 2024 compared to $0 for 2023. These amounts were offset by mortgage loan servicing asset amortization of $1.1 million for the year ended December 31, 2024 compared to $2.7 million for the year ended December 31, 2023. During the year ended December 31, 2024, we recorded a fair value impairment of $20,000 on our mortgage servicing assets compared to no fair value impairment recorded during 2023. Our total residential mortgage loan servicing portfolio was $527.0 million at December 31, 2024 compared to $443.1 million at December 31, 2023.

The purpose of this discussion and analysis is to focus on significant changes in the financial condition of MetroCity Bancshares, Inc. and our wholly owned subsidiary, Metro City Bank, from December 31, 2025 through MarchJune 31,30, 2026 and on our results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025. This discussion and analysis should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2025 included in our Annual Report on Form 10-K, and information presented elsewhere in this Quarterly Report on Form 10-Q, particularly the unaudited consolidated financial statements and related notes appearing in Item 1.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements reflect our current views with respect to, among other things, future eventsevents, and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “strive,” “projection,” “goal,” “target,” “outlook,” “aim,” “would,” “annualized” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimatesestimates, and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

See Note 1 and Note 4 of our consolidated financial statements as of December 31, 2025 in the Company’s 2025 Form 10-K and Note 1 and Note 4 of our consolidated financial statements as of MarchJune 31,30, 2026, included elsewhere in this Form 10-Q, for additional information on the reserve and allowance for credit losses.

MetroCity Bankshares, Inc. is a bank holding company headquartered in the Atlanta metropolitan area. We operate through our wholly-owned banking subsidiary, Metro City Bank, a Georgia state-chartered commercial bank that was founded in 2006. We currently operate 3027 full-service branch locations and two loan production offices in multi-ethnic communities in Alabama, Florida, Georgia, New York, New Jersey, TexasTexas, California, and Virginia. As of MarchJune 31,30, 2026, we had total assets of $4.69$4.52 billion, total loans of $3.97$3.93 billion, total deposits of $3.63$3.49 billion and total shareholders’ equity of $554.2$567.9 million.

This Form 10-Q includes financial information determined by methods other than in accordance with generally accepted accounting principles (“GAAP”). This financial information includes “return on average equity”, which excludes average accumulated other comprehensive income and merger-related expenses and tangible book value per sharesshare , which excludes goodwill and core deposit intangibleintangibles and “operating efficiency ratio - operation” which excludes merger expenses from noninterest expense. These measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP,GAAP and are not necessarily comparable to non-GAAP measures that may be presented by other companies.

The following table reconciles the non-GAAP financial measurement for return on average equity, tangible book value per share and operating efficiency ratio – operating to their respective most directly comparable GAAP measurements for thethree threeand six months ended MarchJune 31,30, 2026 and 2025:

We recorded net income of $22.3$22.1 million for the three months ended MarchJune 31,30, 2026 compared to $16.3$16.8 million for the three months ended MarchJune 31,30, 2025, an increase of $6.0$5.3 million, or 36.9%.31.5%. This increase was due to an increase in net interest income of $13.9$11.9 million, an increase in noninterest income of $901,000, and a decrease in provision for credit losses of $948,000,$921,000, offset by increases in noninterest expense of $7.6$5.8 million and income tax expense of $2.1$1.7 million.

Basic and diluted earnings per common share for the three months ended MarchJune 31,30, 2026 was $0.78$0.77 and $0.77,$0.76, respectively, compared to $0.64$0.66 and $0.63$0.65 for the basic and diluted earnings per common share for the three months ended MarchJune 31,30, 2025. For the six months ended June 30, 2026, basic and diluted earnings per common share was $1.55 and $1.53, respectively, compared to $1.30 and $1.29 for the same period in 2025, respectively.

Interest income totaled $71.0$70.4 million for the three months ended MarchJune 31,30, 2026, an increase of $18.5$16.4 million, or 35.2%,30.3%, from the three months ended MarchJune 31,30, 2025, primarily due to an increase in average balance of gross loans of $856.2$847.8 million, and an increase in average balance of investments of $188.0$30.1 million, and a 3426 basis pointspoint increase in the loan yield, along with $892,000$1.4 million in accretion income on purchase credit deteriorated loans from the First IC merger that occurred in fourth quarter of 2025. The increase in average loans is due to an increase of $510.4$646.3 million in average commercial real estate loans, and an increase of $311.7$153.4 million in average residential real estate loans.

Interest expense for the three months ended MarchJune 31,30, 2026 increased $4.5 million, or 20.7%,20.5%, to $26.5$26.4 million compared to interest expense of $22.0$21.9 million for the three months ended MarchJune 31,30, 2025, primarily due to a $695.3$578.2 million increase in average deposit balances,balances coupledand offset with a $46.3$16.0 million increasedecrease in the average borrowings balance offset by a 23 basis points decrease in interest bearing liabilities costs.balance. Average time deposits and money market deposits increased by $410.9$383.3 million and $165.4$79.6 million, respectively, and average interest-bearing demand deposits and savings accounts increased by $118.9$115.4 million primarily from the First IC merger in fourth quarter of 2025.

The Company currently has effective interest rate derivative agreements totaling $625.0$750.0 million that are designated as cash flow hedges of our deposit accounts indexed to the Federal Funds Effective rate. The weighted average pay rate for these interest rate derivatives is 3.16%.1.70%. At June 30, 2026, the Company had interest rate swap agreements with aggregate notional amounts of $300.0 million and interest rate cap agreements with aggregate notional amounts of $450.0 million, all designated as cash flow hedges of deposit accounts indexed to the Federal Funds Effective Rate. The Company has determined these hedging relationships to be highly effective since inception. During the three months ended MarchJune 31,30, 2026, we recorded a $1.5 million credit to interest expense of $2.3 million, respectively, from the benefit received on these interestinterest-rate rate derivativesderivatives, compared to a credit to interest expense of $4.1$4.2 million recordedcredit during the three month periodsmonths ended MarchJune 31,30, 2025, respectively.2025. Based on the Federal Funds Effective rate as of MarchJune 31,30, 2026 (3.64%3.63%), the Company would estimate to record a credit to interest expense of approximately $9.3$1.9 million for the remainder of 2026 from the benefit received on these interest rate derivatives, however actual results may vary based on changes in market and hedge performance. See Note 9 of our consolidated financial statements as of MarchJune 31,30, 2026 included elsewhere in this Form 10-Q, for additional information on these interest rate derivatives.

The net interest margin for the three months ended MarchJune 31,30, 2026 increased by 4134 basis points to 4.08%4.11% from 3.67%3.77% for the three months ended MarchJune 31,30, 2025, primarily due to a 23 basis points increase in the yield on average interest-bearing assets of $4.30 billion, offset by three basis point decrease in the cost of average interest-bearinginterest-earning liabilities of $3.30 billion, and a 20 basis points increase in the yield on average interest-earning assets of $4.42$3.2 billion. Average earning assets for the three months ended MarchJune 31,30, 2026 increased by $1.04$877.9 billionmillion from the three months ended MarchJune 31,30, 2025, due to a $856.2$847.8 million increase in average loans and a $188.0$30.1 million increase in average total investments. Average interest-bearing liabilities for the three months ended MarchJune 31,30, 2026 increased by $741.6$562.2 million from the three months ended MarchJune 31,30, 2025, driven by increases in average interest-bearing deposits of $695.3$578.3 million andoffset by a decrease in average borrowings of $46.3$16.0 million The net interest margin for the six months ended June 30, 2026 increased by 38 basis points to 4.10% from 3.72% for the six months ended June 30, 2025, primarily due to a 21 basis point increase in the yield on average interest-bearing assets of $4.4 billion, and a 14 basis point decrease in the cost of average interest-bearing liabilities of $3.2 billion. Average earning assets increased by $961.6 million, due to a $108.6 million increase in average total investments and a $853.0 million increase in average loans. Average interest-bearing liabilities increased by $651.4 million, primarily driven by a $636.4 million increase in average interest-bearing deposit balances and an increase in average borrowings of $15.0 million.

Net interest margin and net interest income are influenced by internal and external factors. Internal factors include balance sheet changes on both volume and mix and pricing decisions, and external factors include changes in market interest rates, competitioncompetition, and the shape of the interest rate yield curve. The increase in our net interest margin is primarily driven by a reduction of funding cost, reflecting improved deposit pricing and the benefit of interest rate derivative hedges, partially offset by modest compression in asset yields.

The following tables present, for the three and six months ended MarchJune 31,30, 2026 and 2025, information about: (i) weighted average balances, the total dollar amount of interest income from interest-earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin.

We recorded a recovery for credit losses of $813,000$792,000 during the three months ended MarchJune 31,30, 2026 compared to a provision for credit losses of $135,000$129,000 recorded during the three months ended MarchJune 31,30, 2025. The recovery for credit loss recorded during the three months ended MarchJune 31,30, 2026 was primarily driven by lower loan balances and reduced reserves on individually analyzed loans. Our ACL as a percentage of gross loans for the periods ended MarchJune 31,30, 2026, December 31, 2025 and MarchJune 31,30, 2025 was 0.66%, 0.68% and 0.59%,0.60%, respectively. Our ACL as a percentage of gross loans is relatively lower than our peers due to our high percentage of residential mortgage loans, which tend to have lower allowance for credit loss ratios compared to other commercial or consumer loans due to their low LTVs.

Service charges on deposit accounts increased $348,000,$453,000, or 69.6%,89.7%, to $848,000$958,000 for the three months ended MarchJune 31,30, 2026 compared to $500,000$505,000 for the three months ended MarchJune 31,30, 2025. Service charges on deposit accounts were $1.8 million for the six months ended June 30, 2026 compared to $1.0 million for the same period in 2025, an increase of $801,000, or 79.7%. These increases were primarily attributable to higher service charges on business checking accounts, analysis fees, overdraft feesfees, and charge back fees as a result of the First IC acquisition that occurred in fourth quarter of 2025.

Other noninterestservice incomecharges, commissions, and fees decreased by $100,000,$192,000, or 13.0%,11.9%, to $672,000$1.4 million for the three months ended MarchJune 31,30, 2026 compared to $772,000$1.6 million for the three months ended MarchJune 31,30, 2025. TheOther largestservice componentcharges, ofcommissions, otherand noninterestfees incomedecreased is207,000, theor income6.4%, onto bank$3.0 owned life insurance which totaled $638,000million for the threesix months ended MarchJune 31,30, 2026 compared to $615,000$3.2 million for the threesix months ended MarchJune 31,30, 2025. AlsoThese includedincreases inwere otherattributable noninterestto incomehigher areorigination fairand valueprocessing gains/lossesfees onearned from our equityorigination securities,of whichresidential mortgage loans. Mortgage loan originations totaled $82,000$75.4 (loss)million forand $177.3 million during the three and six months ended MarchJune 31,30, 2026, respectively, compared to $140,000$93.2 (gain)million forand $184.3 million during the threesame monthsperiods ended March 31,in 2025.

Noninterest expense for the three months ended MarchJune 31,30, 2026 was $21.4$20.0 million compared to $13.8$14.1 million for the three months ended MarchJune 31,30, 2025, an increase of $7.6$5.8 million, or 55.4%.41.4%.

OtherNoninterest expensesexpense for the threesix months ended MarchJune 31,30, 2026 werewas $4.9$41.4 million compared to $3.1$27.9 million for the threesix months ended MarchJune 31,30, 2025, an increase of $1.8$13.5 million,million or 58.0%. This increase was primarily due to core deposit amortization, additional banking costs from First IC merger quarter merger, FDIC insurance premiums, security expenses, loan-related expenses.48.3%.

Income tax expense for the three months ended MarchJune 31,30, 2026 and 2025 was $7.9$8.5 million and $5.8$6.8 million, respectively. The Company’s effective tax rates were 26.2%27.7% and 28.9% for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Total assets decreased $80.0$248.4 million, or 1.7%,5.2%, to $4.69$4.52 billion at MarchJune 31,30, 2026 as compared to $4.77 billion at December 31, 2025. The decrease in total assets was primarily attributable to decreases of $20.6$117.0 million in cash and cash equivalents, $21.0 million in securities, $50.3$93.1 million in loans, $9.7net, $8.4 million in loans held for sale, and $4.1$6.5 million in Federal Home Loan Bank stock offset by an increase in cash and cash equivalents of $3.9 million.stock.

Our investment securities portfolio made up 0.96%0.99% of our total assets at MarchJune 31,30, 2026 compared to 1.38% at December 31, 2025.

Gross loans held for investment decreased $50.3$94.3 million, or 1.2%,2.3%, to $4.00$3.98 billion as of MarchJune 31,30, 2026 as compared to $4.05$4.08 billion as of December 31, 2025. Our loan decrease during the threesix months ended MarchJune 31,30, 2026 was comprised of ana increasedecrease of $10.7$97.3 million, or 25.5%,6.2%, in constructioncommercial real estate loans, a decrease of $11.4 million , or 11.8% in commercial and developmentindustrial loans, ana increasedecrease of $14.1$13.2 million, or 0.6%,0.6% in residential real estate loans, offset by an increase of $16,000, or 2.6%, in consumer and other loans, offset by a decrease of $4.5$27.6 million, or 4.7%,65.9% in commercialconstruction and industrial loans, and a decrease of $68.0 million, or 4.4%, in commercial real estatedevelopment loans. We had loans held for sale of $0$1.4 million as of MarchJune 31,30, 2026 compared to $9.7 million in loans held for sale as of December 31, 2025.

As of MarchJune 31,30, 2026 and December 31, 2025, we serviced $699.0$682.2 million and $685.5 million, respectively, in SBA and USDA loans for others. We carried a servicing asset of $11.3$11.2 million and $10.6 million at MarchJune 31,30, 2026 and December 31, 2025, respectively. See Note 5 of our consolidated financial statements as of MarchJune 31,30, 2026, included elsewhere in this Form 10-Q, for additional information on the activity for SBA and USDA loan servicing rights for the three and six months ended MarchJune 31,30, 2026 and 2025.

As of MarchJune 31,30, 2026, we serviced $496.5$463.5 million in residential mortgage loans for others compared to $537.6$702.6 million as of December 31, 2025. We carried a servicing asset, net of amortization, of $1.5$1.3 million and $1.7 million at MarchJune 31,30, 2026 and December 31, 2025. Amortization relating to the mortgage loan servicing asset was $176,000 and $352, 000 for the three and six months ended MarchJune 31,30, 2026 compared to $118,000$137,000 and $255,000 three and six months ended June 30, 2025, respectively. During three and six months ended June 30, 2026 we recorded no fair value adjustments compared to fair-value adjustments for the three monthsand ended March 31, 2025, respectively. During the threesix months ended MarchJune 31,30, 20262025 of $28,000 and Marchnegative 31, 2025, we recorded fair value impairment recoveries of $0 and $42,000,$15,000, respectively, on our mortgage servicing asset. See Note 6 of our consolidated financial statements as of MarchJune 31,30, 2026, included elsewhere in this Form 10-Q, for additional information on the activity for mortgage loansloan servicing rights for the three and six months ended MarchJune 31,30, 2026 and 2025.