SEC Filing Document

Company: Forbright, Inc.
Ticker: 
CIK: 1925062
Filing Type: DRS
Document Type: DRS
Date Filed: 2026-02-13
Accession Number: 0001628279-26-000183
Exchange: 
SIC Code: 6022
SIC Description: State Commercial Banks
URL: https://www.sec.gov/Archives/edgar/data/1925062/000162827926000183/filename1.htm

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may differ significantly from the amounts presented herein. Financial assets measured at fair value on a recurring basis include securities available-for-sale, certain loans held-for-sale, and certain loans held for investment. Descriptions of assets and liabilities measured at fair value are as follows: •U.S. Treasury and government agencies - The U.S. Treasury and government agency investment portfolio includes U.S. Treasury Notes, U.S. Treasury Bills and FHLB bullet advances. The Company obtains fair value measurements for these securities from independent pricing services. The fair value measurements for U.S. Treasury Note and U.S. Treasury Bill securities consider observable trades and market data. These securities are categorized as Level 1. The fair value measurements for FHLB bullet advances consider observable data that may include dealer quotes, market spreads, cash flows, live trading levels, trade execution data, credit information and the bond’s terms and conditions, among other things. These securities are categorized as Level 2.

•Mortgage-backed and asset-backed securities, and Municipal bonds - The mortgage- and asset-backed securities include both commercial and residential mortgage-backed securities, collateralized loan obligations, and Small Business Administration loan securities. The municipal bonds portfolio contains securities that are comprised of state and local government bonds. For these securities, 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, prepayment speeds, cash flows, live trading levels, trade execution data, credit information and the security’s terms and conditions, among other things. These securities are categorized as Level 2.

•Corporate bonds - The corporate bonds portfolio is valued using a discounted cash flow model that uses a yield derived from a benchmark constant maturity spot rate plus maturity spread, to discount coupon and principal cash flows. The benchmark is the treasury or swap constant maturity curve updated throughout the day. The valuation methodology is maintained and employed by a third-party valuation specialist. The securities are categorized as Level 2.

•CPACE - CPACE investment securities, which are fixed rate investments, are fair valued using a discounted cash flow model. The Company determines the fair value by calculating the present value of contractual principal and interest cash flows using a market interest rate as of the valuation period. The method estimates the value of a similar asset that would be issued in the current period. Due to the assets being secured by tax liens on the associated properties, the Company does not expect there to be a significant credit impact on fair value. The securities are categorized as Level 3.

•Loans held-for-sale and held for investment at fair value - The fair value of loans held-for-sale and held-for-investment is determined by using actual observable market transactions when available. In situations when market transactions are not available, the fair value of loans is estimated using bid-ask quotes on the loan in question from market sources such as third-party aggregators, agent banks, or others. Due to the illiquid nature of the market for most of the loans, there is generally no readily available Level 1 or Level 2 quotes or prices on which it can rely. The Company seeks market price indications from a variety of sources, where available. If quotes are not available, an evaluation is made to determine if there are material market or loan-specific factors that impact the estimated fair value. Market factors include market indices and conditions for similar financial assets and loan-specific factors include non-standard original terms to the loan or changes in credit quality of the borrower. To the extent any material market or loan-specific factors are evident, the information is utilized to determine the best estimated fair value, typically applying observable discounts or premiums for the most logically comparable loans to those in the portfolio . If the Company is unable to use market-based premiums or discounts to estimate a fair value, then the Company will estimate fair value using a discounted cash flow analysis, key inputs include the discount for risk of non-payment as well as a discount rate. This requires the use of significant judgment surrounding current market conditions and the credit quality of the borrowers. The Company also has acquired homogeneous consumer and commercial loan pools that are carried at fair value. These loan pools are fair valued by a third-party firm using inputs such as market yield, default rate, or cumulative loss estimates, and prepayment speeds in a discounted cash flow model to estimate fair values of the loan pools. The loans are categorized as Level 3.

The following table summarizes financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2024, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

December 31, 2024

(in thousands) Quoted Prices in Active Markets for Identical Assets/ Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total
Assets
Investment securities available-for-sale:
U.S. Treasury and government agencies $	1,340,622 $	50,059 $	— $	1,390,681
Mortgage-backed and asset-backed — 57,490 — 57,490
Municipal bonds — 8,292 — 8,292
Corporate bonds — 9,540 — 9,540
CPACE — — 5,465 5,465
Total investment securities available-for-sale 1,340,622 125,381 5,465 1,471,468
Loans held-for-sale at fair value — — 108,575 108,575
Loans held for investment at fair value — — 7,081 7,081
Total assets $	1,340,622 $	125,381 $	121,121 $	1,587,124
Liabilities
Total liabilities $	— $	— $	— $	—

The following table presents a reconciliation of the assets and liabilities that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2024:

December 31, 2024

Additions Sales Pay-downs/ Maturities/ Calls Transfers Realized and Unrealized Gain/(Loss) included in:

(in thousands) Balance as of December 31, 2023 Earnings Other Comprehensive Loss Balance as of December 31, 2024
Assets
Investment securities available-for-sale - CPACE $	5,632 $	— $	— $	— $	— $	— $	(167) $	5,465
Loans held-for-sale at fair value 172,296 — (37,243) (40,321) 8,338 5,505 — 108,575
Loans held for investment at fair value 26,947 — — (11,088) (8,338) (440) — 7,081
Total Level 3 assets $	204,875 $	— $	(37,243) $	(51,409) $	— $	5,065 $	(167) $	121,121
Liabilities
Total Level 3 liabilities $	— $	— $	— $	— $	— $	— $	— $	—

See Note 4 – Loans for more information regarding realized and unrealized gains and losses on loans. Unrealized losses on investment securities available-for-sale are included in Net change in unrealized gain on investments available-for-sale in the Consolidated Statement of Comprehensive Income.

The following table presents the quantitative inputs used in determining the fair value of the Company’s Level 3 assets measured on a recurring basis as of December 31, 2024:

(dollars in thousands) Fair value as of December 31, 2024 Valuation Technique Unobservable Input Range (Weighted Average) 1

Investment securities available-for-sale - CPACE $	5,465 Discounted Cash Flow Discount Rate 7.3% - 7.8% (7.6%)

Loans held-for-sale at fair value $	107,080 Market Observations Market (Premium)/Discount (1.4)% - 16.9% (2.9%)

Loans held-for-sale at fair value 1,495 Discounted Cash Flow Discount for Risk of Non-Payment 10.0% - 84.3% (52.2%)

Discount Rate 8.9% - 11.8% (11.3%)
Total loans held-for-sale $	108,575

Loans held for investment at fair value $	6,565 Market Observations Market (Premium)/Discount (1.4)% - 16.9% (1.0%)

Loans held for investment at fair value 516 Discounted Cash Flow Discount for Risk of Non-Payment 10.0% - 84.3% (33.4%)

Discount Rate 8.9% - 11.8% (10.7%)
Total loans held for investment at fair value $	7,081

(1)Weighted averages are calculated by using the product of the inputs multiplied by the relative fair values of the instruments.

For the year ended December 31, 2024, the Company did not transfer any assets to or from Level 3.

Certain assets are measured at fair value on a nonrecurring basis; that is, not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence

of impairment). Financial assets measured at fair value on a non-recurring basis as of December 31, 2024, are presented in the following table:

December 31, 2024

(in thousands) Quoted Prices in Active Markets for Identical Assets/ Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total
Collateral-dependent loans $	— $	— $	55,298 $	55,298
Impaired loans — — 1,519 1,519
Other real estate owned — — 25,476 25,476
Total $	— $	— $	82,293 $	82,293

As of December 31, 2024, the Company’s investment in collateral-dependent loans does not include individual credit loss allowances. As of December 31, 2024, the Company’s investment in impaired loans includes individual credit loss allowances of $922 thousand. As of December 31, 2024, the Company’s investment in other real estate owned assets includes unrealized fair value adjustment losses of $2.2 million, which is recognized in Other non-interest income in the Consolidated Statement of Income.