SEC Filing Document

Company: Forbright, Inc.
Ticker: 
CIK: 1925062
Filing Type: S-1
Document Type: S-1
Date Filed: 2026-05-15
Accession Number: 0001628280-26-035713
Exchange: 
SIC Code: 6022
SIC Description: State Commercial Banks
URL: https://www.sec.gov/Archives/edgar/data/1925062/000162828026035713/forbright-sx1publicflip.htm

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of internally developed software, primarily related to our digital deposit platform, and the addition of software costs related to the solar servicing acquisition. Professional fees were $15.9 million and $20.8 million for the years ended December 31, 2025 and 2024, respectively. The decrease of $4.9 million, or 23.6%, was primarily due to higher consulting costs incurred during 2024 related to implementation of the digital deposit platform. The decrease in consulting expense was partially offset by an increase in legal fees during 2025 related to the solar servicing acquisition and subsequent legal fees associated with its related administration, which are largely reimbursed by counterparties to the loans and recognized in other non-interest income. Loan administration and servicing expenses were $8.5 million and $6.2 million for the years ended December 31, 2025 and 2024, respectively. The increase of $2.3 million, or 38.1%, was due to sub-servicer fees following the solar servicing acquisition.

Advertising and marketing expenses were $6.2 million and $9.9 million for the years ended December 31, 2025 and 2024, respectively. The decrease of $3.7 million, or 37.0%, primarily due to a reduction in advertising of the growth savings product offered on the digital deposit platform.

FDIC insurance expenses were $5.0 million and $10.0 million for the years ended December 31, 2025 and 2024, respectively. The decrease of $4.9 million, or 49.5%, was primarily due to a decrease in the assessment rate at the beginning of 2025.

Other non-interest expense, which consists of occupancy expense, referral fees, travel and meals, dues and subscriptions, directors’ compensation, and other miscellaneous expenses, were $18.9 million and $20.5 million for the years ended December 31, 2025 and 2024, respectively. The decrease of $1.6 million, or 7.8%, was primarily due to decreases in travel and meals expenses, director compensation, and occupancy expense.

Efficiency Ratio

The efficiency ratio for the year ended December 31, 2025 improved to 62.50% compared to 79.15% for the year ended December 31, 2024, primarily related to an increase in interest on loans, net gains recognized on loan sales, and a decrease in interest expense on deposits, offset in part by an increase in non-interest expense.

Income Taxes

For the year ended December 31, 2025, income tax expense and the effective tax rate were $13.2 million and 13.1%, respectively, compared to $11.0 million and 20.2%, respectively, for the year ended December 31, 2024. The increase in income tax expense for the year ended December 31, 2025, was primarily due to a $46.8 million increase in pretax income, offset largely by a benefit of $11.2 million from accretion of the deferred credit associated with the solar servicing acquisition, which is released in proportion to the use of deferred tax assets obtained through the acquisition of the solar servicing business that closed in the third quarter of 2025.

Excluding the benefit of the deferred credit accretion, income tax expense and the effective tax rate for the year ended December 31, 2025 were $24.4 million and 24.2%, respectively, compared to $11.0 million and 20.2%, respectively, for the year ended December 31, 2024. For the year ended December 31, 2025, income tax expense increased primarily due to a reduction in research and development tax credits.

We have recorded gross deferred tax assets primarily related to federal and state net operating loss carryforwards. In accordance with ASC 740 - Income Taxes, we assess the realizability of these deferred tax assets each reporting period by evaluating all available positive and negative evidence to determine whether it is more likely than not that some or all of the deferred tax assets will be realized.

Our realizability analysis relies on several critical assumptions and management judgments:

•Profitable Earnings History: Positive three years of cumulative pre-tax income and an established loan portfolio.

•Future Taxable Income Projections: Realizability is based on using a weighted forecast based on our historical results and near-term outlook.

•Federal Utilization Limits: We assume that federal net operating losses generated after 2017 are subject to an 80% limitation against annual taxable income, as required by current tax law.

•No Ownership Change: Our projections assume no "ownership change" as defined by Section 382 of the Code occurs with respect to the Company, which would significantly limit the annual utilization of our net operating loss carryforwards.

Based on this weighted evidence, management concluded that it is more likely than not that the net operating loss carryforwards, net of valuation allowances, recorded as of December 31, 2025 will be realized. As of December 31, 2025, we maintain a valuation allowance only for the portion of state net operating loss carryforwards likely to expire unused due to shorter carryforward periods. We will continue to monitor these assumptions going forward; any significant decline in actual results versus our projections may require an increase to the valuation allowance.

The amount of net operating loss carryforwards reflected on the balance sheet as of December 31, 2025, which are related to the acquisition of the solar servicing business, remain subject to change upon completion of acquisition accounting, which is expected to occur prior to the end of the third quarter of 2026 when the final tax return of the acquired entity is completed.

Results of Operations for the Three Months Ended March 31, 2026 and 2025

Average Balance Sheets

The following table shows the average outstanding balance of each major category of asset, liability and stockholders’ equity, along with the associated interest income or expense and the yield on average earning-asset or rate on interest-bearing liability. The associated yield or cost is calculated by dividing the interest income or interest expense by the corresponding daily average balance over the same period.

Three Months Ended March 31, 2026 Three Months Ended March 31, 2025
(dollars in thousands) Average balance Interest income/expense Average yields earned/rates paid Average balance Interest income/expense Average yields earned/rates paid
Assets:
Total loans held for investment $	5,214,460 $	93,164 7.25	% $	4,053,601 $	86,158 8.62	%
Total loans held-for-sale 401,269 8,194 8.28	% 316,438 9,438 12.10	%
Total loans 5,615,729 101,358 7.32	% 4,370,039 95,596 8.87	%
Total investment securities 1,291,428 14,099 4.43	% 1,451,219 16,999 4.75	%
Interest-bearing deposits with banks 836,173 7,582 3.68	% 674,233 7,329 4.41	%
Other earnings assets 55,017 716 5.28	% 58,610 972 6.73	%
Total interest-earning assets 7,798,347 123,755 6.44	% 6,554,101 120,896 7.48	%
ACL (52,686) (40,461)
Other assets 276,876 243,626
Total assets $	8,022,537 $	6,757,266
Liabilities and stockholders’ equity
Interest-bearing demand deposits $	280,987 $	2,433 3.51	% $	283,727 $	2,420 3.46	%
Money market deposits 1,322,061 12,189 3.74	% 864,737 7,369 3.46	%
Savings deposits 3,538,759 33,108 3.79	% 2,398,505 25,111 4.25	%
Time deposits 1,398,063 14,565 4.23	% 1,893,898 21,586 4.62	%
Total interest-bearing deposits 6,539,870 62,295 3.86	% 5,440,867 56,486 4.21	%
Subordinated debt, net 151,034 1,902 5.11	% 174,573 2,501 5.81	%
Other borrowings — — —	% 71,119 849 4.84	%
Total interest-bearing liabilities 6,690,904 64,197 3.89	% 5,686,559 59,836 4.27	%
Non-interest-bearing demand deposits 372,965 239,776
Other liabilities 119,506 84,762
Total liabilities 7,183,375 6,011,097
Stockholders’ equity 839,162 746,169
Total liabilities and stockholders’ equity $	8,022,537 $	6,757,266
Net interest income and spread $	59,558 2.55	% $	61,060 3.21	%
Net interest margin 3.10	% 3.78	%

Net interest margin for the three months ended March 31, 2026 was 3.10%, a decrease of 68 basis points compared with 3.78% for the three months ended March 31, 2025, primarily related to a 155 basis point decrease in yield on loan balances, offset by a 35 basis point decrease in rate on interest-bearing deposit balances. The 155 basis point decrease in loan yields was primarily driven by a 67 basis point decrease in average SOFR, lower average

spreads, reflecting changes in market pricing and a mix shift in the loan portfolio towards lower yielding categories, and higher relative levels of amortization of deferred fees during the three months ended March 31, 2025, which included $2.1 million for restructured loans. The 35 basis point decrease in the cost of interest-bearing deposits was primarily driven by a 75 basis point decline in the average Fed Funds rate, with the relative decline reflecting competitive positioning of digital growth savings deposits, timing of fixed rate time deposits maturities, as well as maturing balances of fixed institutional sweep deposits during 2025 that were originated during periods of lower interest rates.

Average loans increased for the three months ended March 31, 2026, primarily due to originations net of sales, paydowns, and pay-offs in healthcare finance, lender finance, and real estate finance. Average deposits increased during the three months ended March 31, 2026, primarily related to an increase in growth savings deposits and money market deposits, partially offset by reductions in the level of time deposits related to our efforts to increase the proportion of funding from variable rate sources.