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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calculation. See Note 14 – Stock-based Compensation and Note 18 – Earnings Per Common Share for more information. NOTE 12 – ACCUMULATED OTHER COMPREHENSIVE LOSS The Company’s accumulated other comprehensive loss is comprised of unrealized gains and losses associated with investment securities available for-sale. Gains and losses on investment securities available-for-sale are reclassified to earnings as the gains or losses are realized. Provisions for and recoveries of credit-related losses associated with investment securities available-for-sale are reclassified to and realized in income. The following table presents the activity in accumulated other comprehensive loss for the year ended December 31, 2024: (in thousands) Total Tax Effect Net Investment securities available-for-sale: Balance as of December 31, 2023 $ (2,463) $ 622 $ (1,841) Unrealized gains, net 2,103 (528) 1,575 Reclassification of net gains on investments available-for-sale to earnings (236) 59 (177) Balance as of December 31, 2024 $ (596) $ 153 $ (443)

NOTE 13 – FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK, COMMITMENTS AND CONTINGENCIES

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. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of amounts recorded in the balance sheet. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained is based on management’s credit evaluation of the customer. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the commitment contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Generally, commitments to extend credit are subject to annual renewal. 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 reports commitments at the lower of the amount eligible to be advanced based on the available collateral value, as of its most recent assessment date, and the contracted maximum commitment. The reported commitment amount may also be lower than the maximum contracted commitment as of the reporting date based on other contractually based limits to available funds.

As of December 31, 2024, the Company had future commitments to fund capital to investees in the amount of $15.3 million.

A summary of financial instruments with off-balance sheet credit risk as of December 31, 2024 is as follows:

(in thousands) December 31, 2024
Commercial real estate development and construction $	155,701
Residential real estate development and construction 2,380
Lines of credit, primarily business lines 569,143
Standby letters of credit 29,956
Total commitments to extend credit and available lines of credit $	757,180

The Energy Loan Network, LLC (“ELN”), a wholly-owned subsidiary of the Company, has a loss guarantee program with lenders to cover 90% of the charge-off if it occurs prior to the first payment being made. As of December 31, 2024, $10.4 million, was “at risk” however, ELN’s experience supports that it is unlikely that a guarantee would need to be paid. As soon as the first payment is made, ELN no longer has any risk.

As of December 31, 2024, the total reserve for unfunded commitments was $2.1 million, which is included in Other liabilities in the Consolidated Balance Sheet. The related recovery of credit losses was $2.5 million for the year ended December 31, 2024. The recovery of credit losses is included in Recovery of credit losses in the Consolidated Statement of Income.

The Company is involved in various legal actions arising in the ordinary course of business. The Company’s evaluation has resulted in none being expected to result in a loss contingency.

NOTE 14 – STOCK-BASED COMPENSATION

As of December 31, 2024, the Company had a stock-based compensation plan, the 2014 Stock Incentive Plan (the “Plan”), which was adopted on June 25, 2014. The Plan was amended in April 2021, in connection with the Company’s equity raise to permit the granting of up to 11,500,000 shares of Voting Common Stock in stock-based awards, including restricted stock awards and stock options, to its employees and directors, an increase from 1,200,000 shares of Voting Common Stock prior to the amendment. The Company believes that such awards better align the interests of its employees with those of its stockholders.

As of December 31, 2024, there were 1,081,211 shares remaining to be issued under the 2014 Plan. Compensation expense is recognized using the graded method over the vesting period of the stock option or restricted stock award granted. During the year ended December 31, 2024, expense of $7.6 million, was recognized associated with stock options and restricted stock awards. The Company recognized a tax benefit of $1.5 million, for the year ended December 31, 2024, related to stock-based compensation expense.

Stock Options

Stock option awards are granted with an exercise price equal to the fair value of the Company’s Voting Common Stock at the date of grant; those option awards generally vest based on five years of continuous service and have 10-year contractual terms. Certain option and share awards provide for accelerated vesting if there is a change in control (as defined in the Plan). Stock options issued can require meeting certain performance criteria prior to exercise.

The fair values of the options granted during the year ended December 31, 2024, were determined based on Black- Scholes option-pricing and Monte Carlo Simulation models using the following assumptions:

December 31, 2024

Volatility 35%
Expected dividend yield —%

Expected term 6.5 years

Risk-free rate 4.00%

An active market for the Company’s common stock does not exist, therefore the expected volatility is based on the average annual historical volatility of common stock for comparable public banks in the banking industry. The estimated option life is derived from the “simplified method” formula. The risk-free rate is based upon the U.S. Treasury note rate in effect at the time of grant. The expected dividend yield is based upon implied and historical dividend declarations.

A summary of the activity of options outstanding activity for the year ended December 31, 2024, is presented in the following table:

(dollars in thousands, except per share amounts) Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in thousands)

Outstanding as of December 31, 2023 10,166,324 $	13.61 7.4 years $	27,241
Granted 141,970 $	16.52
Exercised (63,000) $	11.19 $	334
Forfeited or expired (410,902) $	14.39

Outstanding as of December 31, 2024 9,834,392 $	14.06 6.5 years $	37,849

Exercisable as of December 31, 2024 4,534,566 $	14.31 6.4 years $	16,346

A summary of the activity of unvested stock options activity for the period ended December 31, 2024, is presented in the following table:

Shares Weighted-Average Grant-Date Fair Value

Unvested as of December 31, 2023 6,123,938 $	4.11
Granted 141,970 $	6.47
Vested (1,929,146) $	4.07
Forfeited (389,182) $	4.28

Unvested as of December 31, 2024 3,947,580 $	4.19

The total fair value of stock options vested during the year ended December 31, 2024, was $7.9 million. As of December 31, 2024, there was $8.3 million of unrecognized compensation cost related to stock options granted under the Plan, and is expected to be recognized over a weighted-average period of 1.1 years.

Restricted Stock Awards

The Company granted 9,000 restricted stock awards during the year ended December 31, 2024. The vesting terms for restricted stock awards granted range from zero to three years.

The following table summarizes the unvested restricted stock awards activity for the year ended December 31, 2024:

Shares Weighted-Average Grant-Date Fair Value

Balance as of December 31, 2023 31,570 $	15.61
Granted 9,000 $	17.74
Vested (14,570) $	15.84

Balance as of December 31, 2024 26,000 $	16.22

As of December 31, 2024, there was $175 thousand of unrecognized compensation cost related to unvested restricted stock awards granted under the Plan, which is expected to be recognized over a weighted-average period of 1.2 years.

NOTE 15 – EMPLOYEE BENEFIT PLANS