SEC Filing Document

Company: Forbright, Inc.
Ticker: 
CIK: 1925062
Filing Type: DRS/A
Document Type: DRS/A
Date Filed: 2026-04-08
Accession Number: 0001628279-26-000459
Exchange: 
SIC Code: 6022
SIC Description: State Commercial Banks
URL: https://www.sec.gov/Archives/edgar/data/1925062/000162827926000459/filename1.htm

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non-interest expense for years ended December 31, 2025 and 2024 and the change between periods, by major component: For the Years Ended December 31, (dollars in thousands) 2025 2024 $ Change % Change Compensation and benefits $ 127,112 $ 110,356 $ 16,756 15.2 % Information technology 26,918 22,267 4,651 20.9 % Professional fees 15,891 20,809 (4,918) (23.6) % Loan administration and servicing 8,495 6,153 2,342 38.1 % Advertising and marketing 6,244 9,913 (3,669) (37.0) % FDIC insurance 5,032 9,967 (4,935) (49.5) % Other non-interest expense 18,932 20,525 (1,593) (7.8) % Total non-interest expense $ 208,624 $ 199,990 $ 8,634 4.3 % Total non-interest expense was $208.6 million for the year ended December 31, 2025, an increase of $8.6 million, or 4.3%, compared with the year ended December 31, 2024, primarily due to an increase in compensation and benefits and information technology expenses, partially offset by a decrease in professional fees.

Compensation and benefits expenses were $127.1 million for the year ended December 31, 2025, an increase of $16.8 million, or 15.2%, compared to $110.4 million for 2024, primarily due to an increase in the annual incentive bonus and an increase in full-time equivalent employees from 519 to 556.

Information technology expenses were $26.9 million and $22.3 million for the years ended December 31, 2025 and 2024, respectively. The increase of $4.7 million, or 20.9%, was primarily due to software costs associated with banking platforms and an increase in amortization 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 business 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 was $13.2 million, an increase of $2.2 million compared to $11.0 million for the year ended December 31, 2024, 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. The effective tax rate for the years ended December 31, 2025 and 2024 was 13.1% and 20.2%, respectively. The decline in the tax rate in fiscal year 2025 versus fiscal year 2024 was primarily due to the impact of the accretion of the deferred credit into income tax expense.

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.

Financial Condition

Loan Portfolio

We manage our exposure to credit losses by evaluating credit risk in the following loan categories. Descriptions of the loan categories, which provide detail on the levels at which we develop and document our systematic methodology to determine the allowance for credit losses, are:

•Commercial Real Estate - CRE loans are primarily secured by various types of real estate including healthcare facilities, office, retail, warehouse, industrial, multi-family properties, residential real estate (for commercial purposes), and other CRE properties, and are made to owners of such properties. The category also includes loans for the construction of those property types. Within this category, loans are further bifurcated between loans secured by owner-occupied properties and investment (non-owner-occupied) properties. The repayment of loans secured by owner-occupied properties is dependent on cash flow from the successful operation of the business which owns the property. The repayment of loans secured by investment properties is dependent upon the operation (net operating income) or sale of the property. Both property types may be subject to adverse conditions in the CRE market or in the general economy.

• Commercial and Industrial - Within this category, there is further distinction among lender finance loans, fund finance loans, healthcare asset-based loans, and corporate loans (which are typically cash flow loans). The market area for these loans is national with geographic diversification. The loan category also includes asset-secured energy project loans and small business loans and commercial solar loans purchased through fintech platforms. Of primary concern in commercial lending is the borrower’s creditworthiness and ability to successfully generate cash flow from their business to service the debt.

•Consumer - These loans consist primarily of loans made to individuals for personal, solar, family, and residential real estate purposes (including closed end mortgages and home equity lines of credit), with the majority of the portfolio comprised of loans purchased through fintech lender platforms. The vast majority of our consumer loans were purchased or originated before 2024 and a significant portion of the portfolio was sold during 2024. Outside of loans purchased under forward flow purchase agreements, the remaining

consumer and residential real estate purpose loans represents less than 1% of the total loan portfolio as of December 31, 2025. We no longer originate residential real estate loans to consumers.