MetroCity Bankshares MCBS Form 10-Q filing Q3 FY2025

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

METROCITY BANKSHARES, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

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See accompanying notes to unaudited consolidated financial statements.

METROCITY BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollars in thousands, except per share data)

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See accompanying notes to unaudited consolidated financial statements.

METROCITY BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(Dollars in thousands)

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See accompanying notes to unaudited consolidated financial statements.

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METROCITY BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)

(Dollars in thousands, except per share data)

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See accompanying notes to unaudited consolidated financial statements.

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METROCITY BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in thousands)

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Continued to following page.

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METROCITY BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in thousands)

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See accompanying notes to unaudited consolidated financial statements.

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METROCITY BANKSHARES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements include the accounts of MetroCity Bankshares, Inc. (“Company”) and its wholly-owned subsidiary, Metro City Bank (the “Bank”). The Company owns 100% of the Bank. The “Company” or “our,” as used herein, includes Metro City Bank unless the context indicates that we refer only to MetroCity Bankshares, Inc.

These unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) followed within the financial services industry for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information or notes required for complete financial statements.

The Company principally operates in one business segment, which is community banking.

In the opinion of management, all adjustments, consisting of normal and recurring items, considered necessary for a fair presentation of the consolidated financial statements for the interim periods have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain amounts reported in prior periods have been reclassified to conform to current year presentation. These reclassifications did not have a material effect on previously reported net income, shareholders’ equity or cash flows.

Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2024.

The Company’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements for the year ended December 31, 2024, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “Company’s 2024 Form 10-K”). There were no new accounting policies or changes to existing policies adopted during the first nine months of 2025 which had a significant effect on the Company’s results of operations or statement of financial condition. For interim reporting purposes, the Company follows the same basic accounting policies and considers each interim period as an integral part of an annual period.

Contingencies

Due to the nature of their activities, the Company and its subsidiary are at times engaged in various legal proceedings that arise in the course of normal business, some of which were outstanding as of September 30, 2025. Although the ultimate outcome of all claims and lawsuits outstanding as of September 30, 2025 cannot be ascertained at this time, it is the opinion of management that these matters, when resolved, will not have a material adverse effect on the Company’s results of operations or financial condition.

Operating Segments

Our Chief Executive Officer is our designated chief operating decision maker. While the chief operating decision maker monitors the revenue streams of the various products and services, our operations are managed and financial performance is evaluated on a Company-wide basis. Operating segments are aggregated into one segment as operating results for all segments are similar. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

The chief operating decision maker uses income before income taxes as the measure of segment profit or loss to assess the performance of and allocate resources to the Company’s one reportable operating segment. Interest income and noninterest income generated from our residential real estate and SBA loans provide the primary revenue in the operating

segment. Interest expense, provision for credit losses, salaries, commissions and employee benefits, as well as occupancy and equipment expenses, provide the significant expenses in the operating segment. These figures are regularly provided to the chief operating decision maker and are monitored through budget-to-actual variance review

The Company has evaluated the Accounting Standards Updates issued during 2025 to date but does not expect those updates to have a material impact on the Company’s consolidated financial statements.

NOTE 2 – INVESTMENT SECURITIES

The amortized costs, gross unrealized gains and losses, and estimated fair values of securities available for sale as of September 30, 2025 and December 31, 2024 are summarized as follows:

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The amortized costs and estimated fair values of investment securities available for sale at September 30, 2025 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

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Accrued interest receivable for securities available for sale totaled $69,000 and $113,000 as of September 30, 2025 and December 31, 2024, respectively. This accrued interest receivable is included in the “accrued interest receivable” line item on the Company’s Consolidated Balance Sheets.

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As of both September 30, 2025 and December 31, 2024, the Company had securities pledged to the Federal Reserve Bank Discount Window with a carrying amount of $12.9 million. There were no securities sold during the three and nine months ended September 30, 2025 and 2024.

Information pertaining to securities with gross unrealized losses at September 30, 2025 and December 31, 2024 aggregated by investment category and length of time that individual securities have been in a continuous loss position, are summarized in the table below.

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At September 30, 2025, the nineteen securities available for sale (10 municipal securities and 9 mortgage-backed securities) with an unrealized loss have depreciated 19.64% from the Company’s amortized cost basis. All of these securities have been in a loss position for greater than twelve months.

The Company does not believe that the securities available for sale that were in an unrealized loss position as of September 30, 2025 represent a credit loss impairment. As of September 30, 2025, there have been no payment defaults nor do we currently expect any future payment defaults. Furthermore, the Company does not intend to sell these securities, and it is not more likely than not that the Company will be required to sell the investment securities before recovery of their amortized cost basis, which may be at maturity.

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Equity Securities

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As of September 30, 2025 and December 31, 2024, the Company had equity securities with carrying values totaling $18.6 million and $10.3 million, respectively. The equity securities consist of our investment in a market-rate bond mutual fund that invests in high quality fixed income bonds, mainly government agency securities whose proceeds are designed to positively impact community development throughout the United States. The mutual fund focuses exclusively on providing affordable housing to low- and moderate-income borrowers and renters, including those in Majority Minority Census Tracts.

During the three months ended September 30, 2025 and 2024, we recognized unrealized gains of $124,000 and $292,000, respectively, in net income on our equity securities. During the nine months ended September 30, 2025 and 2024, we recognized unrealized gains of $305,000 and $233,000, respectively, in net income on our equity securities. These unrealized gains and losses are recorded in “Other Income” on the Consolidated Statements of Income.

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NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

Major classifications of loans held for investment at September 30, 2025 and December 31, 2024 are summarized as follows:

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The Company is not committed to lend additional funds to borrowers with nonaccrual or restructured loans.

In the normal course of business, the Company may sell and purchase loan participations to and from other financial institutions and related parties. Commercial loan participations are sold as needed to comply with the legal lending limits per borrower as imposed by regulatory authorities. The participations are sold without recourse and the Company imposes no transfer or ownership restrictions on the purchaser.

The Company elected to exclude accrued interest receivable from the amortized cost basis of loans disclosed throughout this note. As of September 30, 2025 and December 31, 2024, accrued interest receivable for loans totaled $16.7 million and $15.7 million, respectively, and is included in the “accrued interest receivable” line item on the Company’s Consolidated Balance Sheets.

Allowance for Credit Losses

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A summary of changes in the allowance for credit losses by portfolio segment for the three and nine months ended September 30, 2025 and 2024 is as follows:

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The allowance for credit losses was $17.9 million as of September 30, 2025 compared to $18.7 million as of December 31, 2024, a decrease of $804,000. The decrease was primarily due to the decrease in reserves allocated to our individually analyzed loans and commercial and industrial loan portfolio due to charge-offs and decrease in loan balances, as well as the decrease in general reserves allocated to our residential real estate loan portfolio as a large amount of residential mortgage loans were moved from loans held for investment to loans held for sale during the nine months ended September 30, 2025. These decreases were offset by the increase in the general reserves allocated to our commercial real estate and construction and development loan portfolios due to loan growth.

Allowance for Unfunded Commitments

The Company records an allowance for credit losses on unfunded loan commitments, unless the commitments to extend credit are unconditionally cancelable, through a charge to provision for unfunded commitments in the Company’s Consolidated Statements of Income. The allowance for credit losses on off-balance sheet credit exposures is estimated by loan segment using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur. The allowance for unfunded commitments totaled $233,000, $165,000 and $216,000 as of September 30, 2025, December 31, 2024 and September 30, 2024, respectively, and is included in “Other Liabilities” on the Company’s Consolidated Balance Sheets.

Collateral-Dependent Loans

Collateral-dependent loans are loans for which foreclosure is probable or loans for which the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The estimated credit losses for these loans are based on the collateral’s fair value, less selling costs. In most cases, the Company records a partial charge-off to reduce the loan’s carrying value to the collateral’s fair value, less selling costs, at the time of foreclosure. As of September 30, 2025, there were $10.6 million, $1.3 million and $199,000 of collateral-dependent loans which were secured by residential real estate, commercial real estate and equipment, respectively. As of December 31, 2024, there were $14.2 million, $4.3 million and $569,000 of collateral-dependent loans which were secured by residential real estate, commercial real estate and equipment, respectively. The allowance for credit losses allocated to these loans as of September 30, 2025 and December 31, 2024 was $243,000 and $748,000, respectively.

Past Due and Nonaccrual Loans

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A primary credit quality indicator for financial institutions is delinquent balances. Delinquencies are updated on a daily basis and are continuously monitored. Loans are placed on nonaccrual status as needed based on repayment status and consideration of accounting and regulatory guidelines. Nonaccrual balances are updated and reported on a daily basis.

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The following summarizes the Company’s past due and nonaccrual loans, by portfolio segment, as of September 30, 2025 and December 31, 2024:

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The following table presents an analysis of nonaccrual loans with and without a related allowance for credit losses as of September 30, 2025 and December 31, 2024:

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All payments received while a loan is on nonaccrual status are applied against the principal balance of the loan. The Company does not recognize interest income while loans are on nonaccrual status.

Credit Quality Indicators

The Company utilizes a ten grade loan risk rating system for its loan portfolio as follows:

• Loans rated Pass – Loans in this category have low to average risk. There are six loan risk ratings (grades 1-6) included in loans rated Pass.
• Loans rated Special Mention (grade 7) – Loans do not presently expose the Company to a sufficient degree of risk to warrant adverse classification, but do possess deficiencies deserving close attention.
• Loans rated Substandard (grade 8) – Loans are inadequately protected by the current credit-worthiness and paying capability of the obligor or of the collateral pledged, if any.
• Loans rated Doubtful (grade 9) – Loans which have all the weaknesses inherent in loans classified Substandard, with the added characteristic that the weaknesses make collections or liquidation in full, or on the basis of currently known facts, conditions and values, highly questionable or improbable.
• Loans rated Loss (grade 10) – Loans classified Loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted.

Loan grades are monitored regularly and updated as necessary based upon review of repayment status and consideration of periodic updates regarding the borrower’s financial condition and capacity to meet contractual requirements.

The following tables present the loan portfolio’s amortized cost by loan type, risk rating and year of origination as of September 30, 2025 and December 31, 2024. There were no loans with a risk rating of Doubtful or Loss at September 30, 2025 and December 31, 2024.

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During the nine months ended September 30, 2025, two construction and development revolving loans totaling $2.7 million were converted to a commercial real estate term loan. During the year ended December 31, 2024, four construction and development revolving loans totaling $16.2 million were converted to commercial real estate term loans.

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Loan Modifications to Borrowers Experiencing Financial Difficulty.

Modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, payment deferrals, term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral.

During the nine months ended September 30, 2025, there was one commercial real estate loan modification totaling $12.2 million made to a borrower experiencing financial difficulty. The borrower of this loan modification was granted P&I payment deferrals totaling $324,000 so no payments were required to be made during the deferral period, which ended in May 2025. No loan modifications were made to borrowers experiencing financial difficulty during the three months ended September 30, 2025.

The following table presents the amortized cost basis of loan modifications made to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2024.

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The following table presents the financial effect of the loan modifications made to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2024.

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No loan modifications previously made to borrowers experiencing financial difficulty defaulted during the three and nine months ended September 30, 2025. There was one commercial and industrial loan modification totaling $147,000 made to a borrower experiencing financial difficulty that defaulted during the three and nine months ended September 30, 2024. No charge-offs of previously modified loans were recorded during the three and nine months ended September 30, 2025 and 2024.

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NOTE 4 – SBA AND USDA LOAN SERVICING

The Company sells the guaranteed portion of certain SBA and USDA loans it originates and continues to service the sold portion of the loan. The portion of the loans sold are not included in the financial statements of the Company. As of September 30, 2025 and December 31, 2024, the unpaid principal balances of serviced loans totaled $460.7 million and $479.7 million, respectively.

Activity for SBA and USDA loan servicing rights are as follows:

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Fair value at September 30, 2025 and December 31, 2024 was determined using discount rates ranging from 5.97% to 11.30% and 5.22% to 10.78%, respectively, and prepayment speeds ranging from 6.72% to 21.02% and 9.82% to 21.47%, respectively, depending on the stratification of the specific right. Average default rates are based on the industry average for the applicable NAICS/SIC code.

Comparable market values and a valuation model that calculates the present value of future cash flows were used to estimate fair value. For purposes of fair value measurement, risk characteristics including product type and interest rate, were used to stratify the originated loan servicing rights.

NOTE 5 – RESIDENTIAL MORTGAGE LOAN SERVICING

Residential mortgage loans serviced for others are not reported as assets. The outstanding principal of these loans at September 30, 2025 and December 31, 2024 was $538.7 million and $527.0 million, respectively.

Activity for mortgage loan servicing rights and the related valuation allowance are as follows:

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The fair value of servicing rights was $6.1 million and $6.8 million at September 30, 2025 and December 31, 2024, respectively. Fair value at September 30, 2025 was determined by using a discount rate of 12.61%, prepayment speeds of 18.58%, and a weighted average default rate of 1.66%. Fair value at December 31, 2024 was determined by using a discount rate of 13.07%, prepayment speeds of 16.82%, and a weighted average default rate of 1.52%.

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NOTE 6 – FEDERAL HOME LOAN BANK ADVANCES & OTHER BORROWINGS

Advances from the Federal Home Loan Bank (“FHLB”) at September 30, 2025 and December 31, 2024 are summarized as follows:

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The FHLB advances outstanding at September 30, 2025 all have a conversion feature that allows the FHLB to call the advances every three months. At September 30, 2025 and December 31, 2024, the Company had a line of credit with the FHLB, set as a percentage of total assets, with maximum borrowing capacity of $1.08 billion and $1.07 billion, respectively. The available borrowing amounts are collateralized by the Company’s FHLB stock and pledged residential real estate loans, which totaled $2.03 billion and $2.27 billion at September 30, 2025 and December 31, 2024, respectively.

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At September 30, 2025, the Company had unsecured federal funds lines available with correspondent banks of approximately $52.5 million. There were no advances outstanding on these lines at September 30, 2025.

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At September 30, 2025 and December 31, 2024, the Company had Federal Reserve Discount Window funds available of approximately $575.7 million and $539.3 million, respectively. The funds are collateralized by a pool of construction and development, commercial real estate and commercial and industrial loans with carrying balances totaling $720.2 million and $667.6 million as of September 30, 2025 and December 31, 2024, respectively, as well as all of the Company’s municipal and mortgage backed securities. There were no outstanding borrowings on this line as of September 30, 2025.

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NOTE 7 – OPERATING LEASES

The Company has entered into various operating leases for certain branch locations with terms extending through December 2034. Generally, these leases have initial lease terms of ten years or less. Many of the leases have one or more renewal options which typically are for five years at the then fair market rental rates. We assessed these renewal options using a threshold of reasonably certain. For leases where we were reasonably certain to renew, those option periods were included within the lease term, and therefore, the measurement of the right-of-use (“ROU”) asset and lease liability. None of our leases include options to terminate the lease and none have initial terms of 12 months or less (i.e. short-term leases). Operating leases in which the Company is the lessee are recorded as operating lease ROU assets and operating lease liabilities on the Consolidated Balance Sheets. The Company currently does not have any finance leases.

Operating lease ROU assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Company’s incremental collateralized borrowing rate provided by the FHLB at the lease commencement date. ROU assets are further adjusted for lease incentives, if any. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in “Occupancy and Equipment” expense in the Consolidated Statements of Income.

The components of lease cost for the three and nine months ended September 30, 2025 and 2024 were as follows:

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Future maturities of the Company’s operating lease liabilities are summarized as follows:

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Supplemental Lease Information September 30, 2025

Weighted-average remaining lease term (years) 5.8 ​

Weighted-average discount rate 3.83%

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NOTE 8 – INTEREST RATE DERIVATIVES

During 2021 and 2022, the Company entered into fourteen separate interest rate swap agreements with notional amounts totaling $800.0 million. Six of the interest rate swaps are two-year forward three-year term swaps (five-year total term) where cash settlements began in October 2023, January 2024 or April 2024. Four of the interest rate swaps are two-year forward two-year term swaps (four-year total term) where cash settlements began in November 2023 or April 2024. Two of the interest rate swaps are a one-year forward two-year term swap (three-year total term) and a one-year forward three-year term swap (four-year term total) where cash settlements began in May 2023 or July 2023. The two remaining interest rate swaps are 3-year spot swaps where cash settlements began in June 2022 and December 2022. The swap agreements were designated as cash flow hedges of our deposit accounts that are indexed to the Federal Funds Effective rate. The swaps are determined to be highly effective since inception and therefore no amount of ineffectiveness has been included in net income. The aggregate fair value of the swaps amounted to an unrealized gain of $8.4 million and $20.4 million and an unrealized loss of $55,000 and $243,000 at September 30, 2025 and December 31, 2024, respectively. These unrealized gains and losses are recorded in “Interest Rate Derivatives” and “Other Liabilities” on the Consolidated Balance Sheets. The Company expects the hedges to remain highly effective during the remaining terms of the swaps.

During January 2025, the Company entered into three interest rate cap agreements with notional amounts totaling $200.0 million, all with a cap rate of 4.50%. One of these interest rate caps is a two-year spot cap where cash settlements began in February 2025. The other two interest rate caps are forward starting two-year term caps where cash settlements began in June 2025 or July 2025. During October 2021, the Company entered into an interest rate cap agreement with a notional amount of $50.0 million at a cap rate of 2.50%. This interest rate cap is a two-year forward three-year term (five-year total term) where cash settlements began in November 2023. The interest rate cap agreements were designated as cash flow hedges of our deposit accounts that are indexed to the Federal Funds Effective rate. The rate cap premium paid by the Company at inception will be amortized on a straight line basis to deposit interest expense over the total term of the interest rate cap agreement. The aggregate fair value of the interest rate caps, inclusive of unamortized interest rate cap premiums, amounted to an unrealized gain of $1.0 million and $1.4 million and an unrealized loss of $459,000 and $0 at September 30, 2025 and December 31, 2024, respectively. These unrealized gains and losses are recorded in “Interest Rate Derivatives” and “Other Liabilities” on the Consolidated Balance Sheets.

The Company is exposed to credit related losses in the event of the nonperformance by the counterparties to the interest rate swaps. The Company performs an initial credit evaluation and ongoing monitoring procedures for all counterparties and currently anticipates that all counterparties will be able to fully satisfy their obligation under the contracts. In addition, the Company may require collateral from counterparties in the form of cash deposits in the event that the fair value of the contracts are positive and such fair value for all positions with the counterparty exceeds the credit support thresholds specified by the underlying agreement. Conversely, the Company is required to post cash deposits as collateral in the event the fair value of the contracts are negative and are below the credit support thresholds. At September 30, 2025, there were no cash deposits pledged as collateral by the Company. At September 30, 2025, the Company had $9.4 million of restricted cash obtained from the counterparties as collateral for the significant unrealized gains on our interest rate derivatives.

Summary information for the interest rate swaps designated as cash flow hedges is as follows:

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Summary information for the interest rate caps designated as cash flow hedges is as follows:

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NOTE 9 – LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit written is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. Financial instruments where contract amounts represent credit risk as of September 30, 2025 and December 31, 2024 include:

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Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments to extend credit includes $107.9 million of unused lines of credit and $10.0 million for standby letters of credit as of September 30, 2025. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company upon extension of credit is based on management’s credit evaluation of the counterparty.

Standby letters of credit written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan commitments to customers.

The Company maintains cash deposits with a financial institution that during the year are in excess of the insured limitation of the Federal Deposit Insurance Corporation. If the financial institution were not to honor its contractual liability, the Company could incur losses. Management is of the opinion that there is not material risk because of the financial strength of the institution.

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NOTE 10 – FAIR VALUE

Financial Instruments Measured at Fair Value

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or 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 values:

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

The following presents the assets and liabilities as of September 30, 2025 and December 31, 2024 which are measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fall, and the financial instruments carried on the consolidated balance sheet by caption and by level in the fair value hierarchy, for which a nonrecurring change in fair value has been recorded:

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The Company used the following methods and significant assumptions to estimate fair value:

Securities, Available for Sale*:* The Company carries securities available for sale at fair value. For securities where quoted prices are not available (Level 2), the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. The investments in the Company’s portfolio are generally not quoted on an exchange but are actively traded in the secondary institutional markets.

The Company owns certain SBA investments for which the fair value is determined using Level 3 hierarchy inputs and assumptions as the trading market for such securities was determined to be “not active.” This determination was based on the limited number of trades or, in certain cases, the existence of no reported trades. Discounted cash flows are calculated by a third party using interest rate curves that are updated to incorporate current market conditions, including prepayment vectors and credit risk. During time when trading is more liquid, broker quotes are used to validate the model.

Equity Securities*:* The Company carries equity securities at fair value. Equity securities are measured at fair value using quoted market prices on nationally recognized and foreign securities exchanges (Level 1).

SBA and USDA Servicing Assets*:* The fair values of the Company’s servicing assets are determined using Level 3 inputs. All separately recognized servicing assets and servicing liabilities are initially measured at fair value and at each reporting date and changes in fair value are reported in earnings in the period in which they occur.

Interest Rate Derivatives*:* Exchange-traded derivatives are valued using quoted prices and are classified within Level 1 of the valuation hierarchy. However, few classes of derivative contracts are listed on an exchange; thus, the Company’s derivative positions are valued by third parties using their valuation models and confirmed by the Company. Since the model inputs can be observed in a liquid market and the models do not require significant judgement, such derivative contracts are classified within Level 2 of the fair value hierarchy. The Company’s interest rate derivatives contracts (designated as cash flow hedges) are classified within Level 2.

Under certain circumstances we make adjustments to fair value for our assets and liabilities although they are not measured at fair value on an ongoing basis.

Collateral-dependent loans*:* Collateral-dependent loans are loans where repayment is expected to be provided solely by the sale of the underlying collateral and there are no other available and reliable sources of repayment. Fair value for both collateral-dependent loans are measured based on the value of the collateral securing these loans and are classified at a Level 3 in the fair value hierarchy. Collateral may include real estate, or business assets including equipment, inventory and accounts receivable. The value of real estate collateral is determined based on an appraisal by qualified licensed appraisers hired by the Company. The value of business equipment is based on an appraisal by qualified licensed appraisers hired by the Company if significant, or the equipment’s net book value on the business’ financial statements. Inventory and accounts receivable collateral are valued based on independent field examiner review or aging reports. Appraisals may utilize a single valuation approach or a combination or approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available for similar loans and collateral underlying such loans. Appraised values are reviewed by management using historical knowledge, market considerations, and knowledge of the client and client’s business.

Changes in level 3 fair value measurements

The table below presents a reconciliation of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2025 and 2024:

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There were no gains or losses included in earnings for securities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the periods presented above. The only activity for these securities were prepayments. There were no purchases, sales, or transfers into and out of Level 3. The following table presents quantitative information about recurring Level 3 fair value measures at September 30, 2025 and December 31, 2024:

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The carrying amounts and estimated fair values of the Company’s financial instruments at September 30, 2025 and December 31, 2024 are as follows:

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NOTE 11 – REGULATORY MATTERS

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Under the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (“Basel III rules”), the Bank must hold a capital conservation buffer of 2.50% above the adequately capitalized risk-based capital ratios. The net unrealized gain or loss on available for sale securities, if any, is not included in computing regulatory capital. Management believes as of September 30, 2025 the Company and Bank meet all capital adequacy requirements to which they are subject.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At September 30, 2025 and December 31, 2024, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.

The table below summarizes the capital requirements applicable to the Company and the Bank in order to be considered “well-capitalized” from a regulatory perspective, as well as the Company’s and the Bank’s capital ratios as of September 30, 2025 and December 31, 2024. The Bank exceeded all regulatory capital requirements and was considered to be “well-capitalized” as of September 30, 2025 and December 31, 2024.

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NOTE 12 – STOCK BASED COMPENSATION

The Company adopted the MetroCity Bankshares, Inc. 2018 Stock Option Plan (the “Prior Option Plan”) effective as of April 18, 2018, and the Prior Option Plan was approved by the Company’s shareholders on May 30, 2018. The Prior Option Plan provided for awards of stock options to officers, employees and directors of the Company. The Board of Directors of the Company determined that it was in the best interests of the Company and its shareholders to amend and restate the Prior Option Plan to provide for the grant of additional types of awards. Acting pursuant to its authority under the Prior Option Plan, the Board of Directors approved and adopted the MetroCity Bankshares, Inc. 2018 Omnibus Incentive Plan (the “2018 Incentive Plan”), which constitutes the amended and restated version of the Prior Option Plan. The Board of Directors has reserved 2,400,000 shares of Company common stock for issuance pursuant to awards granted under the 2018 Incentive Plan, any or all of which may be granted as nonqualified stock options, incentive stock options, restricted stock, restricted stock units, performance awards and other stock-based awards. In the event all or a portion of a stock award is forfeited, cancelled, expires, or is terminated before becoming vested, paid, exercised, converted, or otherwise settled in full, any unissued or forfeited shares again become available for issuance pursuant to awards granted under the 2018 Incentive Plan and do not count against the maximum number of reserved shares. In addition, shares of common stock deducted or withheld to satisfy tax withholding obligations will be added back to the share reserve and will again be available for issuance pursuant to awards granted under the plan. The 2018 Incentive Plan is administered by the Compensation Committee of our Board of Directors (the “Committee”). The determination of award recipients under the

2018 Incentive Plan, and the terms of those awards, will be made by the Committee. At September 30, 2025, 240,000 stock options had been granted and 985,783 shares of restricted stock had been issued under the 2018 Incentive Plan.

Stock Options

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A summary of stock option activity for the nine months ended September 30, 2025 is presented below:

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The Company recognized no compensation expense for stock options during the three and nine months ended September 30, 2025 and 2024. As of September 30, 2025 and December 31, 2024, all of the cost related to the outstanding stock options had been recognized.

Restricted Stock Units

The Company has periodically issued restricted stock units to its directors, executive officers and certain employees under the 2018 Incentive Plan. Compensation expense for restricted stock is based upon the grant date fair value of the shares and is recognized over the vesting period of the units. Shares of restricted stock units issued to officers and employees vest in equal annual installments on the first three anniversaries of the grant date. Shares of restricted stock units issued to directors vest 25% on the grant date and 25% on each of the first three anniversaries of the grant date.

A summary of restricted stock activity for the nine months ended September 30, 2025 is presented below:

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During the three months ended September 30, 2025 and 2024, the Company recognized compensation expense for restricted stock of $939,000 and $837,000, respectively. During the nine months ended September 30, 2025 and 2024, the Company recognized compensation expense for restricted stock of $2.0 million and $1.8 million, respectively. As of September 30, 2025 and December 31, 2024, there was $3.7 million and $2.9 million, respectively, of total unrecognized compensation cost related to nonvested shares granted under the 2018 Incentive Plan. As of September 30, 2025, the cost is expected to be recognized over a weighted-average period of 2.2 years.

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NOTE 13 – EARNINGS PER SHARE

The following table presents the calculation of basic and diluted earnings per common share for the periods indicated:

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There were no stock options or restricted stock excluded from the computation of diluted earnings per common share since they were antidilutive for the three and nine months ended September 30, 2025 and 2024.

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NOTE 14 – BUSINESS COMBINATION

First IC Corporation

On March 16, 2025, the Company and the Bank entered into an Agreement and Plan of Reorganization (the “Reorganization Agreement”) with First IC Corporation, a Georgia corporation (“First IC”), and First IC Bank, a Georgia-state chartered bank and the wholly-owned subsidiary of First IC (“First IC Bank”), whereby First IC will be merged with and into the Company and First IC Bank will be merged with and into the Bank. Each share of First IC common stock will, at the effective time of the transaction, be converted into the right to receive the pro-rata share of (1) $111,965,213 in cash and (2) 3,384,588 shares of Company common stock, each as may be adjusted in accordance with the terms of the Reorganization Agreement. At September 30, 2025, First IC had approximately $1.2 billion in total assets, $1.1 billion in total loans and $916.1 million in total deposits. The pro forma company is projected to have approximately $4.8 billion in total assets, $3.6 billion in total deposits and $4.2 billion in total loans.

On July 15, 2025, the Company and the Bank announced their receipt of all required regulatory approvals and non-objections to complete the transactions contemplated by the Reorganization Agreement. In addition, on July 15, 2025, First IC’s shareholders voted to approve the Reorganization Agreement and the transactions contemplated thereby, including the merger.

The merger is expected to be completed later in the fourth quarter of 2025, and remains subject to the satisfaction of customary closing conditions.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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, 2024 through September 30, 2025 and on our results of operations for the three and nine months ended September 30, 2025 and 2024. This discussion and analysis should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2024 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.

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Critical Accounting Policies and Estimates

Our accounting and reporting estimates conform with U.S. GAAP and general practices within the financial services industry. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We consider accounting estimates that can (1) be replaced by other reasonable estimates and/or (2) changes to an estimate from period to period that have a material impact on the presentation of our financial condition, changes in financial condition or results of operations as well as (3) those estimates that require significant and complex assumptions about matters that are highly uncertain to be critical accounting estimates. We consider our critical accounting policies to include the allowance for credit losses, servicing assets, fair value of financial instruments and income taxes.

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Critical accounting estimates include a high degree of uncertainty in the underlying assumptions. Management bases its estimates on historical experience, current information and other factors deemed relevant. The development, selection and disclosure of our critical accounting estimates are reviewed with the Audit Committee of the Company’s Board of

Directors. Actual results could differ from these estimates. For additional information regarding critical accounting policies, refer to “Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” and Note 1 of our consolidated financial statements as of December 31, 2024 in the Company’s 2024 Form 10-K. There have been no significant changes in the Company’s application of critical accounting policies since December 31, 2024.

Reserve for Credit Losses

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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 such as rising interest rates and the financial performance of borrowers.

The reserve for credit losses consists of the allowance for credit losses (“ACL”) and the allowance for unfunded commitments. The estimate of expected credit losses under the current expected credit loss (“CECL”) methodology 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.

Management’s evaluation of the appropriateness of the reserve for credit losses is often the most critical of accounting estimates for a financial institution. Our determination of the amount of the reserve for credit losses is a critical accounting estimate as it requires significant reliance on the credit risk rating we assign to individual borrowers, the use of estimates and significant judgment as to the amount and timing of expected future cash flows, reliance on historical loss rates on homogenous portfolios, consideration of our quantitative and qualitative evaluation of economic factors, and the reliance on our reasonable and supportable forecasts. The reserve for credit losses attributable to each portfolio segment also includes an amount for inherent risks not reflected in the historical analyses. Relevant factors include, but are not limited to, concentrations of credit risk (geographic, large borrower, and industry), changes in underwriting standards, changes in collateral values, experience and depth of lending staff, trends in delinquencies, and the volume and terms of loans.

See Note 1 and Note 3 of our consolidated financial statements as of December 31, 2024 in the Company’s 2024 Form 10-K and as of September 30, 2025, included elsewhere in this Form 10-Q, for additional information on the reserve and allowance for credit losses.

Overview

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 20 full-service branch locations in multi-ethnic communities in Alabama, Florida, Georgia, New York, New Jersey, Texas and Virginia. As of September 30, 2025, we had total assets of $3.63 billion, total loans of $3.20 billion, total deposits of $2.69 billion and total shareholders’ equity of $445.9 million.

We are a full-service commercial bank focused on delivering personalized service in an efficient and reliable manner to the small to medium-sized businesses and individuals in our markets, predominantly Asian-American communities in growing metropolitan markets in the Eastern U.S. and Texas. We offer a suite of loan and deposit products tailored to meet the needs of the businesses and individuals already established in our communities, as well as first generation immigrants who desire to establish and grow their own businesses, purchase a home, or educate their children in the United States. Through our diverse and experienced management team and talented employees, we are able to speak the language of our customers and provide them with services and products in a culturally competent manner.

Selected Financial Data

The following table sets forth unaudited selected financial data for the most recent five quarters and for the nine months ended September 30, 2025 and 2024. This data should be read in conjunction with the unaudited consolidated financial statements and accompanying notes included in Item 1 and the information contained in this Item 2.

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(1) Our return on average equity, excluding average accumulated other comprehensive income and merger-related expenses (non-GAAP financial measurement), for the three months ended September 30, 2025 and 2024 was 16.10% and 17.25%, respectively. Our return on average equity, excluding average accumulated other comprehensive income and merger-related expenses (non-GAAP financial measurement), for the nine months ended September 30, 2025 and 2024 was 16.25% and 17.27%, respectively.

(2) Represents noninterest expense divided by total revenue (net interest income and total noninterest income).

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Non-GAAP Financial Measures

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. These measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with 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 to the most directly comparable GAAP measurement for return on average equity for the three and nine months ended September 30, 2025 and 2024:

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Results of Operations

We recorded net income of $17.3 million for the three months ended September 30, 2025 compared to $16.7 million for the three months ended September 30, 2024, an increase of $569,000, or 3.4%. This increase was due to an increase in net interest income of $1.5 million and a decrease in provision for credit losses of $1.1 million, offset by increases in noninterest expense of $1.0 million and income tax expense of $608,000 and a decrease in noninterest income of $437,000.

For the nine months ended September 30, 2025, we recorded net income of $50.4 million compared to $48.3 million for the nine months ended September 30, 2024, an increase of $2.1 million, or 4.4%. This increase was due to an increase in net interest income of $6.4 million and a decrease in provision for credit losses of $593,000, offset by increases in noninterest expense $3.5 million and income tax expense of $1.0 million and a decrease in noninterest income of $375,000.

Basic and diluted earnings per common share for the three months ended September 30, 2025 was $0.68 and $0.67, respectively, compared to $0.66 and $0.65 for the basic and diluted earnings per common share for the three months ended September 30, 2024. For the nine months ended September 30, 2025, basic and diluted earnings per common share was $1.98 and $1.96, respectively, compared to $1.91 and $1.89 for the nine months ended September 30, 2024, respectively.

Interest Income

Interest income totaled $54.0 million for the three months ended September 30, 2025, an increase of $170,000, or 0.3%, from the three months ended September 30, 2024, primarily due to a $59.5 million increase in average loan balances and a $4.1 million increase in the average total investments balance, offset by an 83 basis points decrease in the total investments yield and a six basis points decrease in the loan yield. The increase in average loans is due to an increase of $72.0 million in average commercial real estate loans, an increase of $15.0 million in average construction and development loans and an increase of $7.1 million in commercial and industrial loans, offset by a decrease of $34.5 million in average residential real estate loans. As compared to the three months ended September 30, 2024, the yield on average interest-earning assets decreased by 12 basis points to 6.24% from 6.36% with the yield on average loans decreasing by six basis points and the yield on average total investments decreasing by 83 basis points.

Interest income totaled $160.6 million for the nine months ended September 30, 2025 compared to $160.3 million for the same period in 2024, an increase of $272,000, or 0.2%, primarily due to a $22.7 million increase in average loan balances and a $20.3 million increase in the average total investments balance, offset by a 99 basis point decrease in the

total investments yield. The increase in average loans is due to an increase of $68.7 million in average commercial real estate loans, an increase of $10.1 million in average construction and development loans and an increase of $5.8 million in average commercial and industrial loans, offset by a $61.9 million decrease in average residential mortgage loans. As compared to the nine months ended September 30, 2024, the yield on average interest-earning assets decreased by six basis points to 6.30% from 6.36% with the yield on average loans increasing by one basis point and the yield on average total investments decreasing by 99 basis points.

Interest Expense

Interest expense for the three months ended September 30, 2025 decreased $1.3 million, or 5.7%, to $22.2 million compared to interest expense of $23.5 million for the three months ended September 30, 2024, primarily due to a 33 basis points decrease in deposit costs coupled with a $10.4 million decrease in average deposit balances, offset by a $49.3 million increase in the average borrowings balance. The 33 basis points decrease in deposit costs was primarily driven by an 81 basis points decrease in the cost on average time deposits, offset by a 55 basis points increase in the cost on average interest-bearing demand deposits and savings accounts and a 15 basis points increase in the cost of average money market deposits. Average time deposits and money market deposits decreased by $71.2 million and $8.0 million, respectively, while average interest-bearing demand deposits and savings accounts increased by $68.8 million. Average borrowings for the three months ended September 30, 2025 increased by $49.3 million while borrowing costs decreased by five basis points compared to the three months ended September 30, 2024.

Interest expense totaled $66.0 million for the nine months ended September 30, 2025, a decrease of $6.2 million, or 8.5%, compared to the same period in 2024, primarily due to a 44 basis points decrease in deposit costs coupled with a $33.3 million decrease in average interest-bearing deposit balances. Average borrowings outstanding for the nine months ended September 30, 2025 increased by $50.9 million with an increase in rate of 17 basis points compared to the same period in 2024.

The Company currently has effective interest rate derivative agreements totaling $950.0 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 2.70%. During the three and nine months ended September 30, 2025, we recorded a credit to interest expense of $3.8 million and $12.2 million, respectively, from the benefit received on these interest rate derivatives compared to a credit to interest expense of $6.4 million and $17.0 million recorded during the three and nine month periods ended September 30, 2024, respectively. Based on the Federal Funds Effective rate as of September 30, 2025 (4.09%), the Company would estimate to record a credit to interest expense of approximately $3.2 million for the remainder of 2025 and $7.6 million in 2026 from the benefit received on these interest rate derivatives. See Note 8 of our consolidated financial statements as of September 30, 2025, included elsewhere in this Form 10-Q, for additional information on these interest rate derivatives.

Net Interest Margin

The net interest margin for the three months ended September 30, 2025 increased by 10 basis points to 3.68% from 3.58% for the three months ended September 30, 2024, primarily due to a 27 basis points decrease in the cost of average interest-bearing liabilities of $2.57 billion, offset by a 12 basis points decrease in the yield on average interest-earning assets of $3.43 billion. Average earning assets for the three months ended September 30, 2025 increased by $63.6 million from the three months ended September 30, 2024, due to a $59.5 million increase in average loans and a $4.1 million increase in average total investments. Average interest-bearing liabilities for the three months ended September 30, 2025 increased by $38.9 million from the three months ended September 30, 2024, driven by the increase in average borrowings of $49.3 million, offset by a $10.4 million decrease in average interest-bearing deposits.

The net interest margin for the nine months ended September 30, 2025 increased by 21 basis points to 3.71% from 3.50% for the nine months ended September 30, 2024, primarily due to a 34 basis points decrease in the cost of average interest-bearing liabilities of $2.57 billion, offset by a six basis points decrease in the yield on average interest-earning assets of $3.41 billion. Average earning assets increased by $43.0 million, due to a $22.7 million increase in average loans and a $20.3 million increase in average total investments. Average interest-bearing liabilities increased by $17.6 million,

primarily driven by an increase in average borrowings of $50.9 million, offset by a $33.3 million decrease in average interest-bearing deposit balances.

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, competition and the shape of the interest rate yield curve. The increase in our net interest margin is primarily the result of our decreasing deposit costs.

Average Balances, Interest and Yields

The following tables present, for the three and nine months ended September 30, 2025 and 2024, 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.

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(1) Includes income and average balances for term federal funds, interest-earning cash accounts, and other miscellaneous earning assets.

(2) Average loan balances include nonaccrual loans and loans held for sale.

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(1) Includes income and average balances for term federal funds, interest-earning cash accounts, and other miscellaneous earning assets.

(2) Average loan balances include nonaccrual loans and loans held for sale.

Rate/Volume Analysis

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. The following table sets forth the effects of changing rates and volumes on our net interest income during the period shown. Information is provided with respect to (i) effects on interest income attributable to changes in volume (change in volume multiplied by prior rate) and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume). Change applicable to both volumes and rate have been allocated to volume.

(1) Includes income and average balances for term federal funds, interest-earning cash accounts, and other miscellaneous earning assets.

(2) Average loan balances include nonaccrual loans and loans held for sale.

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(1) Includes income and average balances for term federal funds, interest-earning cash accounts, and other miscellaneous earning assets.

(2) Average loan balances include nonaccrual loans and loans held for sale.

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Provision for Credit Losses

The provision for credit losses reflects our internal calculation and judgment of the appropriate amount of the allowance for credit losses. 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.

We recorded a credit to the provision for credit losses of $543,000 and $279,000 during the three and nine months ended September 30, 2025 compared to a provision for credit losses of $582,000 and $314,000 recorded during the three and nine months ended September 30, 2024. The credit to provision expense recorded during the nine months ended September 30, 2025 was primarily due to the decrease in reserves allocated to our individually analyzed loans, as well as the decrease in general reserves allocated to our residential mortgage loan portfolio as a large amount of residential mortgage loans were moved from loans held for investment to loans held for sale during the three months ended September 30, 2025, partially offset by the increase in reserves allocated to our commercial real estate loan portfolio and unfunded loan commitments. Our ACL as a percentage of gross loans for the periods ended September 30, 2025, December 31, 2024 and September 30, 2024 was 0.60%, 0.59% and 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.

See the section captioned “Allowance for Credit Losses” elsewhere in this document for further analysis of our provision for credit losses.

Noninterest Income

Noninterest income for the three months ended September 30, 2025 was $6.2 million, a decrease of $437,000, or 6.6%, compared to $6.6 million for the three months ended September 30, 2024. Noninterest income for the nine months ended September 30, 2025 was $17.4 million, a decrease of $375,000, or 2.1%, compared to $17.7 million for the nine months ended September 30, 2024.

The following table sets forth the major components of our noninterest income for the three and nine months ended September 30, 2025 and 2024:

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Service charges on deposit accounts increased $20,000, or 3.8%, to $551,000 for the three months ended September 30, 2025 compared to $531,000 for the three months ended September 30, 2024. Service charges on deposit accounts were $1.6 million for the nine months ended September 30, 2025 compared to $1.5 million for the nine months ended September 30, 2024, an increase of $46,000, or 3.0%. These increases were primarily attributable to higher service charges on business checking accounts, analysis fees, overdraft fees and charge back fees.

Other service charges, commissions and fees increased $461,000, or 24.1%, to $2.4 million for the three months ended September 30, 2025 compared to $1.9 million for the three months ended September 30, 2024. Other service charges, commissions and fees increased $492,000, or 9.6%, to $5.6 million for the nine months ended September 30, 2025 compared to $5.1 million for the nine months ended September 30, 2024. These increases were mainly attributable to higher origination, underwriting and processing fees earned from our origination of residential mortgage loans. Mortgage loan originations totaled $168.6 million and $352.8 million during the three and nine months ended September 30, 2025, compared to $122.4 million and $310.4 million during the three and nine months ended September 30, 2024.

Total gain on sale of loans was $724,000 for the three months ended September 30, 2025 compared to $1.6 million for the three months ended September 30, 2024, a decrease of $885,000, or 55.0%. Total gain on sale of loans was $3.0 million for the nine months ended September 30, 2025 compared to $4.1 million for the nine months ended September 30, 2024, a decrease of $1.1 million, or 26.0%.

Gain on sale of residential mortgage loans totaled $166,000 and $1.1 million for the three and nine months ended September 30, 2025 as we sold $18.2 million and $112.6 million in residential mortgage loans during these periods with an average premium of 1.06% and 1.08%, respectively. Gain on sale of residential mortgage loans totaled $526,000 and $1.9 million for the three and nine months ended September 30, 2024 as we sold $54.2 million and $187.5 million in residential mortgage loans during these periods with an average premium of 1.05%.

Gain on sale of SBA loans totaled $558,000 and $1.9 million for the three and nine months ended September 30, 2025 compared to $1.1 million and $2.1 million for the three and nine months ended September 30, 2024. We sold $13.4 million and $50.7 million in SBA loans during the three and nine months ended September 30, 2025 with average premiums of

6.13% and 5.89%, respectively. We sold $28.9 million and $52.9 million in SBA loans during the three and nine months ended September 30, 2024 with average premiums of 6.67% and 6.69%, respectively.

Mortgage loan servicing income, net of amortization, increased by $94,000, or 22.3%, to $516,000 during the three months ended September 30, 2025 compared to $422,000 for the three months ended September 30, 2024. Mortgage loan servicing income increased by $157,000, or 8.9%, to $1.9 million during the nine months ended September 30, 2025 compared to $1.8 million for the nine months ended September 30, 2024. The changes in mortgage loan servicing income were primarily due to decreases in mortgage servicing amortization and fair value impairment on our mortgage servicing assets, offset by decreases in capitalized mortgage servicing assets and mortgage servicing fees. Included in mortgage loan servicing income for the three and nine months ended September 30, 2025 was $530,000 and $1.7 million in mortgage servicing fees compared to $580,000 and $1.7 million for the three and nine months ended September 30, 2024 and capitalized mortgage servicing assets of $126,000 and $663,000 for the three and nine months ended September 30, 2025 compared to $310,000 and $1.2 million for the three and nine months ended September 30, 2024. These amounts were offset by mortgage loan servicing asset amortization of $159,000 and $414,000 for the three and nine months ended September 30, 2025 compared to $216,000 and $957,000 during the three and nine months ended September 30, 2024. During the three and nine months ended September 30, 2025, we recorded a fair value impairment recovery of $19,000 and $4,000, respectively, on our mortgage servicing assets. During the three and nine months ended September 30, 2024, we recorded a fair value impairment of $252,000 on our mortgage servicing assets. Our total residential mortgage loan servicing portfolio was $538.7 million at September 30, 2025 compared to $556.4 million at September 30, 2024.

SBA servicing income decreased by $28,000, or 2.3%, to $1.2 million for the three months ended September 30, 2025 compared to $1.2 million for the three months ended September 30, 2024. SBA servicing income was $2.8 million for the nine months ended September 30, 2025 compared to $3.3 million for the nine months ended September 30, 2024, a decrease of $529,000, or 16.1%. Our total SBA and USDA loan servicing portfolio was $460.7 million as of September 30, 2025 compared to $487.4 million as of September 30, 2024. Included in SBA servicing income for the three and nine months ended September 30, 2025 was $1.0 million and $3.0 million in SBA servicing fees compared to $1.0 million and $3.2 million for the three and nine months ended September 30, 2024. Our SBA servicing rights are carried at fair value and the inputs used to calculate fair value change from period to period. During the three months ended September 30, 2025, we recorded a $165,000 fair value increase to our SBA servicing rights compared to a $201,000 fair value increase to our SBA servicing rights during the three months ended September 30, 2024. During the nine months ended September 30, 2025, we recorded a $286,000 fair value charge to our SBA servicing rights compared to a $58,000 fair value increase during the nine months ended September 30, 2024.

Other noninterest income decreased by $99,000, or 10.9%, to $808,000 for the three months ended September 30, 2025 compared to $907,000 for the three months ended September 30, 2024. Other noninterest income was $2.5 million for the nine months ended September 30, 2025 compared to $2.0 million for the nine months ended September 30, 2024, an increase of $515,000, or 25.4%. The increase for the nine months ended September 30, 2025 was mainly due to increases in bank owned life insurance income, gains on sale of foreclosed real estate and unrealized gains on our equity securities. The largest component of other noninterest income is the income on bank owned life insurance which totaled $628,000 and $1.9 million, respectively, for the three and nine months ended September 30, 2025 compared to $609,000 and $1.7 million, respectively for the three and nine months ended September 30, 2024. Also included in other noninterest income are fair value gains/losses on our equity securities, which totaled $124,000 (gain) and $305,000 (gain) for the three and nine months ended September 30, 2025, respectively, compared to $292,000 (gain) and $233,000 (gain) for the three and nine months ended September 30, 2024, respectively.

Noninterest Expense

Noninterest expense for the three months ended September 30, 2025 was $14.5 million compared to $13.7 million for the three months ended September 30, 2024, an increase of $1.0 million, or 7.4%. Noninterest expense for the nine months

ended September 30, 2025 was $42.6 million compared to $39.1 million for the nine months ended September 30, 2024, an increase of $3.5 million, or 9.0%.

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The following table sets forth the major components of our noninterest expense for the three and nine months ended September 30, 2025 and 2024:

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Salaries and employee benefits expense for the three months ended September 30, 2025 was $9.0 million compared to $8.5 million for the three months ended September 30, 2024, an increase of $441,000, or 5.2%. Salaries and employee benefits expense for the nine months ended September 30, 2025 was $26.0 million compared to $23.9 million for the nine months ended September 30, 2024, an increase of $2.1 million, or 8.7%. These increases were primarily attributable to higher employee salaries and incentives, loan officer commissions, stock-based compensation expense and employee insurance.

Occupancy and equipment expense for the three months ended September 30, 2025 was $1.4 million, a decrease of $20,000, or 1.4%, compared to the three months ended September 30, 2024. Occupancy and equipment expense for the nine months ended September 30, 2025 was $4.2 million compared to $4.1 million for the nine months ended September 30, 2024, an increase of $89,000, or 2.2%. These increases were primarily due to higher property taxes, utilities, maintenance expense, rent expense, and depreciation expense.

Data processing expense for the three months ended September 30, 2025 was $394,000 compared to $311,000 for the three months ended September 30, 2024, an increase of $83,000, or 26.7%. Data processing expense for the nine months ended September 30, 2025 was $1.1 million compared to $958,000 for the nine months ended September 30, 2024, an increase of $110,000, or 11.5%. These increases were primarily due to the continued growth in our loans and deposits, as well as enhancements to our existing systems.

Advertising expenses for the three and nine months ended September 30, 2025 remained relatively flat compared to the same periods in 2024.

Other expenses for the three months ended September 30, 2025 were $3.8 million compared to $3.3 million for the three months ended September 30, 2024, an increase of $494,000, or 15.1%. This increase was primarily due to higher FDIC insurance premiums, professional fees, security expenses, loan related expenses and First IC merger-related expenses, offset by lower foreclosed real estate related expenses. Other operating expenses for the nine months ended September 30, 2025 were $10.8 million compared to $9.6 million for the nine months ended September 30, 2024, an increase of $1.3 million, or 13.2%. This increase was primarily due to higher security expenses, professional fees, loan related expenses and First IC merger-related expenses, partially offset by lower FDIC insurance premiums and foreclosed real estate related expenses. First IC merger related expenses were $301,000 and $897,000 for the three and nine months ended September 30, 2025, respectively. We had no merger-related expenses during the three and nine month periods ended September 30, 2024. Included in other expenses for the nine months ended September 30, 2025 and 2024 were directors’ fees of approximately $551,000 and $477,000, respectively.

Income Tax Expense

Income tax expense for the three months ended September 30, 2025 and 2024 was $6.6 million and $6.0 million, respectively. The Company’s effective tax rates were 27.6% and 26.3% for the three months ended September 30, 2025 and 2024, respectively.

Income tax expense for the nine months ended September 30, 2025 and 2024 was $19.2 million and $18.2 million, respectively. The Company’s effective tax rates were 27.6% and 27.4% for the nine months ended September 30, 2025 and 2024, respectively.

Financial Condition

Total assets increased $35.4 million, or 1.0%, to $3.63 billion at September 30, 2025 as compared to $3.59 billion at December 31, 2024. The increase in total assets was primarily attributable to increases in loans held for sale of $237.7 million, other assets of $18.0 million, equity securities of $8.3 million, Federal Home Loan Bank stock of $2.4 million, bank owned life insurance of $1.9 million and accrued interest receivable of $1.1 million, partially offset by decreases in loans held for investment of $197.5 million, cash and due from banks of $22.4 million, interest rate derivatives of $12.4 million and securities available for sale of $2.0 million.

Our investment securities portfolio made up 0.94% of our total assets at September 30, 2025 compared to 0.77% at December 31, 2024.

Loans

Gross loans held for investment decreased $197.8 million, or 6.2%, to $2.97 billion as of September 30, 2025 as compared to $3.17 billion as of December 31, 2024. Our loan decrease during the nine months ended September 30, 2025 was comprised of an increase of $10.9 million, or 50.3%, in construction and development loans, an increase of $52.4 million, or 6.9%, in commercial real estate loans, a decrease of $8.8 million, or 11.2%, in commercial and industrial loans, a decrease of $252.4 million, or 11.0%, in residential real estate loans and an increase of $65,000, or 25.0%, in consumer and other loans. We had loans held for sale of $237.7 million as of September 30, 2025 compared to no loans held for sale as of December 31, 2024.

The following table presents the ending balance of each major category in our loan portfolio held for investment at the dates indicated.

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SBA and USDA Loan Servicing

As of September 30, 2025 and December 31, 2024, we serviced $460.7 million and $479.7 million, respectively, in SBA and USDA loans for others. We carried a servicing asset of $7.0 million and $7.3 million at September 30, 2025 and December 31, 2024, respectively. See Note 4 of our consolidated financial statements as of September 30, 2025, included elsewhere in this Form 10-Q, for additional information on the activity for SBA and USDA loan servicing rights for the three and nine months ended September 30, 2025 and 2024.

Residential Mortgage Loan Servicing

As of September 30, 2025, we serviced $538.7 million in residential mortgage loans for others compared to $527.0 million as of December 31, 2024. We carried a servicing asset, net of amortization, of $1.7 million and $1.4 million at September 30, 2025 and December 31, 2024, respectively. Amortization relating to the mortgage loan servicing asset was $159,000 and $414,000 for the three and nine months ended September 30, 2025, respectively, compared to $216,000 and $957,000 for the three and nine months ended September 30, 2024, respectively. During the three and nine months ended September 30, 2025, we recorded fair value impairment recoveries of $19,000 and $4,000, respectively, on our mortgage servicing asset. During the three and nine months ended September 30, 2024, we recorded a fair value impairment of $252,000 on our mortgage servicing asset. See Note 5 of our consolidated financial statements as of September 30, 2025, included elsewhere in this Form 10-Q, for additional information on the activity for mortgage loans servicing rights for the three and nine months ended September 30, 2025 and 2024.

Asset Quality

Nonperforming Loans

Asset quality remained strong during the third quarter of 2025 as our nonperforming loans to total loans remained low at 0.44% as of September 30, 2025. Nonperforming loans were $13.0 million at September 30, 2025 compared to $18.0 million at December 31, 2024. The decrease from December 31, 2024 to September 30, 2025 was attributable to a $5.0 million decrease in nonaccrual loans. We did not recognize any interest income on nonaccrual loans during the three and nine months ended September 30, 2025 or the year ended December 31, 2024.

The following table sets forth the allocation of our nonperforming assets among our different asset categories as of the dates indicated. Nonperforming loans include nonaccrual loans and loans past due 90 days or more and still accruing interest. Nonperforming assets consist of nonperforming loans plus foreclosed real estate. Nonaccrual loans at September 30, 2025 comprised of $1.6 million of commercial real estate loans, $848,000 of commercial and industrial loans and $10.6 million of residential real estate loans. Nonaccrual loans at December 31, 2024 comprised of $3.3 million of commercial real estate loans, $526,000 of commercial and industrial loans, and $14.2 million of residential real estate loans.

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Allowance for Credit Losses

The allowance for credit losses was $17.9 million at September 30, 2025 compared to $18.7 million at December 31, 2024, a decrease of $804,000. The decrease was primarily due to the decrease in reserves allocated to our residential real estate and commercial and industrial loan portfolios and individually analyzed loans, as well as $467,000 of charge-offs recorded on three loans during the nine months ended September 30, 2025, partially offset by the increase in the general reserves allocated to our commercial real estate and construction and development loan portfolios.

We maintain a reserve for credit losses that consists of two components, the allowance for credit losses and the allowance for unfunded commitments. The allowance for credit losses provides for the risk of credit losses expected in our loan portfolio and is based on loss estimates derived from a comprehensive quarterly evaluation. The evaluation reflects analyses of individual borrowers for impairment coupled with analysis of historical loss experience in various loan pools that have been grouped based on similar risk characteristics, supplemented as necessary by credit judgment that

considers observable trends, conditions, reasonable and supportable forecasts, and other relevant environmental and economic factors. The level of the allowance for credit losses is adjusted by recording an expense or credit through the provision for credit losses. The level of the allowance for unfunded commitments is adjusted by recording an expense or credit in other noninterest expense. The allowance for unfunded commitments was created upon adoption of CECL on January 1, 2023 and had a balance of $233,000 as of September 30, 2025 compared to $216,000 as of September 30, 2024.

Loans that do not share risk characteristics are evaluated on an individual basis. For collateral dependent loans where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the loan to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. When repayment is expected to be from the operation of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the present value of expected cash flows from the operation of the collateral. When repayment is expected to be from the sale of the collateral, expected credit losses are calculated as the amount by which the amortized costs basis of the loan exceeds the fair value of the underlying collateral less estimated cost to sell. The ACL may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the loan.

The impact of utilizing the CECL approach to calculate the allowance for credit losses will be significantly influenced by the composition, characteristics and quality of our loan portfolio, as well as the prevailing economic conditions and forecasts utilized. Material changes to these and other relevant factors may result in greater volatility to the provision for credit losses, and therefore, greater volatility to our reported earnings. See Note 1 and Note 3 of our consolidated financial statements as of September 30, 2025, included elsewhere in this Form 10-Q, and as of December 31, 2024 in the Company’s 2024 Form 10-K, for additional information on the on the allowance for credit losses and the allowance for unfunded commitments.

It is the policy of management to maintain the allowance for credit losses at a level adequate for risks inherent in the loan portfolio. The FDIC and GA DBF also review the allowance for credit losses as an integral part of their examination process. Based on information currently available, management believes that our allowance for credit losses is adequate. However, the loan portfolio can be adversely affected if economic conditions and the real estate market in our market areas were to weaken. The effect of such events, although uncertain at this time, could result in an increase in the level of nonperforming loans and increased credit losses, which could adversely affect our future growth and profitability. No assurance of the ultimate level of credit losses can be given with any certainty.

Analysis of the Allowance for Credit Losses. The following table provides an analysis of the allowance for credit losses, provision for credit losses and net charge-offs for the periods presented below:

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(1) Excludes loans held for sale.

Management believes the allowance for credit losses is adequate to provide for losses expected in the loan portfolio as of September 30, 2025.

Deposits

Total deposits decreased $43.7 million to $2.69 billion at September 30, 2025 compared to $2.74 billion at December 31, 2024. The decrease was due to a $55.9 million decrease in money market accounts (includes a $128.4 million decrease in brokered money market accounts, offset by a $72.5 million increase in retail money market accounts), a $26.8 million decrease in time deposits and a $773,000 decrease in savings accounts, offset by a $31.6 million increase in interest-bearing demand deposits (includes a $79.0 million increase in brokered interest-bearing demand deposits, offset by a $47.4 million decrease in retail interest-bearing demand deposits) and a $8.2 million increase in noninterest-bearing deposits. As of September 30, 2025 and December 31, 2024, 20.2% and 19.6% of total deposits, respectively, were comprised of noninterest-bearing demand accounts and 79.8% and 80.4%, respectively, of interest-bearing deposit accounts.

As of September 30, 2025 and December 31, 2024, the Company had estimated uninsured deposits of $712.7 million and $666.4 million, respectively. These estimates were derived using the same methodologies and assumptions used for the Bank’s regulatory reporting. Uninsured deposits were 26.1% of total deposits at September 30, 2025, compared to 24.1% and 23.6% at December 31, 2024 and September 30, 2024, respectively. As of September 30, 2025, we had $1.29 billion of available borrowing capacity at the Federal Home Loan Bank ($657.8 million), Federal Reserve Discount Window ($575.7 million) and various other financial institutions (fed fund lines totaling $52.5 million).

We had $672.5 million of brokered deposits, or 25.0% of total deposits, at September 30, 2025 compared to $721.8 million, or 26.4% of total deposits, at December 31, 2024. We use brokered deposits, subject to certain limitations and requirements, as a source of funding to support our asset growth and augment the deposits generated from our branch network, which are our principal source of funding. Our level of brokered deposits varies from time to time depending on competitive interest rate conditions and other factors and tends to increase as a percentage of total deposits when the brokered deposits are less costly than issuing internet certificates of deposit or borrowing from the Federal Home Loan Bank.

We use interest rate swap and cap agreements to hedge our deposit accounts that are indexed to the Federal Funds Effective Rate. These swap agreements are designated as cash flow hedges. As of September 30, 2025, the total amount of deposits tied to the Federal Funds Effective Rate was $970.4 million. See Note 8 of our consolidated financial statements as of September 30, 2025, included elsewhere in this Form 10-Q, for additional information.

The following tables summarize our average deposit balances and weighted average rates for the three and nine months ended September 30, 2025 and 2024.

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The weighted average rates shown in the tables above are inclusive of the benefit received from the interest rate derivatives that hedge our deposit accounts tied to the Federal Funds Effective Rate. During the three and nine months ended September 30, 2025, we recorded a credit to interest expense of $3.8 million and $12.2 million, respectively, from the benefit received on these interest rate derivatives compared to a credit to interest expense of $6.4 million and $17.0 million recorded during the three and nine months ended September 30, 2024, respectively. These benefits resulted in a 56 basis points and 61 basis points reduction to the total deposits weighted average rate for the three and nine months ended September 30, 2025, respectively, compared to a 95 basis points and 83 basis points reduction for the three and nine months ended September 30, 2024, respectively.

Borrowed Funds

Other than deposits, we also utilized FHLB advances as a supplementary funding source to finance our operations. The advances from the FHLB are collateralized by residential real estate loans. At September 30, 2025 and December 31, 2024, we had available borrowing capacity from the FHLB of $657.8 million and $692.6 million, respectively. At

September 30, 2025 and December 31, 2024, we had $425.0 million and $375.0 million, respectively, of outstanding advances from the FHLB.

In addition to our advances with the FHLB, we maintain federal funds agreements with our correspondent banks. Our available borrowings under these agreements were $52.5 million and $47.5 million at September 30, 2025 and December 31, 2024, respectively. We did not have any advances outstanding under these agreements as of September 30, 2025 and December 31, 2024. We also have access to the Federal Reserve’s discount window in the amount of $575.7 million and $551.6 million at September 30, 2025 and December 31, 2024, respectively. No discount window borrowings were outstanding as of September 30, 2025 and December 31, 2024. We also maintain relationships in the capital markets with brokers to issue certificates of deposit and money market accounts, if necessary.

Liquidity and Capital Resources

Liquidity

Liquidity refers to the measure of our ability to meet the cash flow requirements of depositors and borrowers, while at the same time meeting our operating, capital and strategic cash flow needs, all at a reasonable cost. We continuously monitor our liquidity position to ensure that assets and liabilities are managed in a manner that will meet all short-term and long-term cash requirements. We manage our liquidity position to meet the daily cash flow needs of customers, while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of our shareholders.

Our liquidity position is supported by management of liquid assets and access to alternative sources of funds. Our liquid assets include cash, interest-bearing deposits in correspondent banks, federal funds sold, and fair value of unpledged investment securities. Other available sources of liquidity include wholesale/brokered deposits, and additional borrowings from correspondent banks, FHLB advances, and the Federal Reserve discount window.

Our short-term and long-term liquidity requirements are primarily met through cash flow from operations, redeployment of prepaying and maturing balances in our loan and investment portfolios, and increases in customer deposits. Other alternative sources of funds will supplement these primary sources to the extent necessary to meet additional liquidity requirements on either a short-term or long-term basis.

As part of our liquidity management strategy, we open federal funds lines with our correspondent banks. As of September 30, 2025 and December 31, 2024, we had $52.5 million and $47.5 million, respectively, of unsecured federal funds lines with no amounts advanced. In addition, the Company had Federal Reserve Discount Window funds available of approximately $575.7 million and $551.6 million at September 30, 2025 and December 31, 2024, respectively. The FRB discount window line is collateralized by a pool of construction and development, commercial real estate and commercial and industrial loans with carrying balances totaling $720.2 million as of September 30, 2025, as well as all of the Company’s municipal and mortgage backed securities. There were no outstanding borrowings on this line as of September 30, 2025 and December 31, 2024.

At September 30, 2025 and December 31, 2024, we had $425.0 million and $375.0 million, respectively, of outstanding advances from the FHLB. Based on the values of loans pledged as collateral, we had $657.8 million and $692.6 million of additional borrowing availability with the FHLB as of September 30, 2025 and December 31, 2024, respectively. We also maintain relationships in the capital markets with brokers to issue certificates of deposit and money market accounts, if necessary.

Capital Requirements

The Company and the Bank are required under federal law to maintain certain minimum capital levels based on ratios of capital to total assets and capital to risk-weighted assets. The required capital ratios are minimums, and the federal banking agencies may determine that a banking organization, based on its size, complexity or risk profile, must maintain a higher level of capital in order to operate in a safe and sound manner. Risks such as concentration of credit risks and the risk arising from non-traditional activities, as well as the institution’s exposure to a decline in the economic value of its

capital due to changes in interest rates, and an institution’s ability to manage those risks are important factors that are to be taken into account by the federal banking agencies in assessing an institution’s overall capital adequacy.

The table below summarizes the capital requirements applicable to the Company and the Bank in order to be considered “well-capitalized” from a regulatory perspective, as well as the Company’s and the Bank’s capital ratios as of September 30, 2025 and December 31, 2024. The Bank exceeded all regulatory capital requirements and was considered to be “well-capitalized” as of September 30, 2025 and December 31, 2024. As of December 31, 2024, the FDIC categorized the Bank as well-capitalized under the prompt corrective action framework. There have been no conditions or events since December 31, 2024 that management believes would change this classification. While the Company believes that it has sufficient capital to withstand an extended economic recession, its reported and regulatory capital ratios could be adversely impacted in future periods.

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Dividends

On October 15, 2025, the Company declared a cash dividend of $0.25 per share, payable on November 7, 2025, to common shareholders of record as of October 29, 2025. Any future determination to pay dividends to holders of our common stock will depend on our results of operations, financial condition, capital requirements, banking regulations, contractual restrictions and any other factors that our board of directors may deem relevant.

Off-Balance Sheet Arrangements

We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in our consolidated balance sheet. The contractual or notional amounts of those instruments reflect the extent of involvement we have in particular classes of financial instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if we deem collateral is necessary upon extension of credit, is based on management’s credit evaluation of the counterparty.

Standby letters of credit are conditional commitments issued by us to guarantee the performance of a customer to a third party. They are intended to be disbursed, subject to certain condition, upon request of the borrower.

See Note 9 of our consolidated financial statements as of September 30, 2025, included elsewhere in this Form 10-Q, for more information regarding our off-balance sheet arrangements as of September 30, 2025 and December 31, 2024.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Risk

Market risk represents the risk of loss due to changes in market values of assets and liabilities. We incur market risk in the normal course of business through exposures to market interest rates, equity prices, and credit spreads. We have identified interest rate risk as our primary source of market risk.

Interest Rate Risk

Interest rate risk is the risk to earnings and value arising from changes in market interest rates. Interest rate risk arises from timing differences in the repricings and maturities of interest-earning assets and interest-bearing liabilities (repricing risk), changes in the expected maturities of assets and liabilities arising from embedded options, such as borrowers’ ability to prepay home mortgage loans at any time and depositors’ ability to redeem certificates of deposit before maturity (option risk), changes in the shape of the yield curve where interest rates increase or decrease in a nonparallel fashion (yield curve risk), and changes in spread relationships between different yield curves, such as U.S. Treasuries and Federal funds effective (basis risk).

Our board of directors establishes broad policy limits with respect to interest rate risk. As part of this policy, the asset liability committee, or ALCO, establishes specific operating guidelines within the parameters of the board of directors’ policies. In general, the ALCO focuses on ensuring a stable and steadily increasing flow of net interest income through managing the size and mix of the balance sheet. The management of interest rate risk is an active process which encompasses monitoring loan and deposit flows complemented by investment and funding activities. Effective management of interest rate risk begins with understanding the dynamic characteristics of assets and liabilities and determining the appropriate interest rate risk posture given business forecasts, management objectives, market expectations, and policy constraints.

An asset sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate higher net interest income, as rates earned on our interest-earning assets would reprice upward more quickly than rates paid on our interest-bearing liabilities, thus expanding our net interest margin. Conversely, a liability sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate lower net interest income, as rates paid on our interest-bearing liabilities would reprice upward more quickly than rates earned on our interest-earning assets, thus compressing our net interest margin.

Interest rate risk measurement is calculated and reported to the ALCO at least quarterly. The information reported includes period-end results and identifies any policy limits exceeded, along with an assessment of the policy limit breach and the action plan and timeline for resolution, mitigation, or assumption of the risk.

Evaluation of Interest Rate Risk

We use income simulations, an analysis of core funding utilization, and economic value of equity (EVE) simulations as our primary tools in measuring and managing interest rate risk. These tools are utilized to quantify the potential earnings impact of changing interest rates over a two year simulation horizon (income simulations) as well as identify expected earnings trends given longer term rate cycles (long term simulations, core funding utilizations, and EVE simulation). A standard gap report and funding matrix will also be utilized to provide supporting detailed information on the expected timing of cashflow and repricing opportunities.

There are an infinite number of potential interest rate scenarios, each of which can be accompanied by differing economic/political/regulatory climates; can generate multiple differing behavior patterns by markets, borrowers, depositors, etc.; and can last for varying degrees of time. Therefore, by definition, interest rate risk sensitivity cannot be predicted with certainty. Accordingly, the Bank’s interest rate risk measurement philosophy focuses on maintaining an appropriate balance between theoretical and practical scenarios; especially given the primary objective of the Bank’s overall asset/liability management process is to facilitate meaningful strategy development and implementation.

Therefore, we model a set of interest rate scenarios capturing the financial effects of a range of plausible rate scenarios, the collective impact of which will enable the Bank to clearly understand the nature and extent of its sensitivity to interest rate changes. Doing so necessitates an assessment of rate changes over varying time horizons and of varying/sufficient degrees such that the impact of embedded options within the balance sheet are sufficiently examined.

We use a net interest income simulation model to measure and evaluate potential changes in our net interest income. We run three standard and plausible simulations comparing current or flat rates with a +/- 200 basis point ramp in rates over 12 and 24 months. These rate scenarios are considered appropriate as we believe they represent a more realistic range of rate movements that could occur in the near to medium term. This analysis also provides the foundation for historical tracking of interest rate risk. The impact of interest rate derivatives, such as interest rate swaps and caps, is included in the model.

Potential changes to our net interest income in hypothetical rising and declining rate scenarios calculated as of September 30, 2025 and December 31, 2024 are presented in the following table:

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We also model the impact of rate changes on our Economic Value of Equity, or EVE. We base the modeling of EVE based on interest rate shocks as shocks are considered more appropriate for EVE, which accelerates future interest rate risk into current capital via a present value calculation of all future cashflows from the bank’s existing inventory of assets and liabilities. Our simulation model incorporates interest rate shocks of +/- 100, 200, 300, and 400 basis points. The results of the model are presented in the table below:

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Our simulation model incorporates various assumptions, which we believe are reasonable but which may have a significant impact on results such as: (i) the timing of changes in interest rates; (ii) shifts or rotations in the yield curve; (iii) re-pricing characteristics for market-rate-sensitive instruments; (iv) varying loan prepayment speeds for different interest rate scenarios; and (v) the overall growth and mix of assets and liabilities. Because of limitations inherent in any approach used to measure interest rate risk, simulation results are not intended as a forecast of the actual effect of a change in market interest rates on our results but rather as a means to better plan and execute appropriate asset-liability management strategies and manage our interest rate risk.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2025. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2025.

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Changes in Internal Control over Financial Reporting

During the quarter ended September 30, 2025, there was no change in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 of the Exchange Act that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company is continually monitoring and assessing changes in processes and activities to determine any potential impact on the design and operating effectiveness of internal controls over financial reporting.

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PART II – OTHER INFORMATION

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Item 1. Legal Proceedings

We are a party to various legal proceedings such as claims and lawsuits arising in the course of our normal business activities. Although the ultimate outcome of all claims and lawsuits outstanding as of September 30, 2025 cannot be ascertained at this time, it is the opinion of management that these matters, when resolved, will not have a material adverse effect on our business, results of operations or financial condition.

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Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in “Part I – Item 1A – Risk Factors” of the Company’s 2024 Form 10-K, which could materially affect its business, financial position, results of operations, cash flows, or future results. Please be aware that these risks may change over time and other risks may prove to be important in the future. New risks may emerge at any time, and we cannot predict such risks or estimate the extent to which they may affect our business, financial condition or results of operations, or the trading price of our securities.

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There are no material changes during the period covered by this Report to the risk factors previously disclosed in the Company’s 2024 Form 10-K.

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Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

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On October 16, 2024, the Company announced the continuation of its share repurchase program that expired on September 30, 2024 (“2024 Prior Share Repurchase Plan”), and authorized the Company to repurchase up to 925,250 shares of the Company’s outstanding shares of common stock, which is the number of remaining shares authorized for repurchase from the 2024 Prior Share Repurchase Plan. The share repurchase program began on October 17, 2024 and ended on September 30, 2025. The repurchases are made in compliance with all Securities and Exchange Commission rules, including Rule 10b-18, and other legal requirements and may be made in part under Rule 10b5-1 plans, which permits stock repurchases when the Company might otherwise be precluded from doing so. Repurchases can be made from time-to-time in the open market or through privately negotiated transactions depending on market and/or other

conditions. The repurchase program may be modified, suspended or discontinued at any time and does not obligate the Company to purchase any shares of its common stock.

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The following table summarizes the repurchases of our common shares for the three months ended September 30, 2025.

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On September 17, 2025, the Company announced the continuation of its share repurchase program that expired on September 30, 2025 (“2025 Prior Share Repurchase Plan”), and authorized the Company to repurchase up to 923,976 shares of the Company’s outstanding shares of common stock, which is the number of remaining shares authorized for repurchase from the 2025 Prior Share Repurchase Plan. The continuation of the share repurchase program began on October 1, 2025 and will end on September 30, 2026. The repurchases will be made in compliance with all Securities and Exchange Commission rules, including Rule 10b-18, and other legal requirements and may be made in part under Rule 10b5-1 plans, which permits stock repurchases when the Company might otherwise be precluded from doing so. Repurchases can be made from time-to-time in the open market or through privately negotiated transactions depending on market and/or other conditions. The repurchase program may be modified, suspended or discontinued at any time and does not obligate the Company to purchase any shares of its common stock.

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Item 3. Defaults Upon Senior Securities

Not applicable.

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Item 4. Mine Safety Disclosures

Not applicable

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Item 5. Other Information

During the third quarter of 2025, none of our other executive officers or directors adopted Rule 10b5-1 trading plans and none of our directors or executive officers terminated a Rule 10b5-1 trading plan or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).

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Item 6. Exhibits

Exhibit No. Description of Exhibit

2.1 Agreement and Plan of Reorganization, by and among MetroCity Bankshares, Inc., Metro City Bank, First IC Corporation, and First IC Bank, dated as of March 16, 2025 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed March 17, 2025) 3.1 Restated Articles of Incorporation of MetroCity Bankshares, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 filed September 4, 2019 (File No. 333-233625) 3.2 Amended and Restated Bylaws of MetroCity Bankshares, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 filed September 4, 2019 (File No. 333-233625) 31.1 Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document (104) Cover Page Interactive Data File - the cover page has been formatted in Inline XBRL and contained within the Inline XBRL Instance Document in Exhibit 101

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Date: November 7, 2025 By: /s/ Nack Y. Paek

​ ​ Nack Y. Paek

​ ​ Chief Executive Officer

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Date: November 7, 2025 By: /s/ Lucas Stewart

​ ​ Lucas Stewart

​ ​ Chief Financial Officer

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