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

Chunk 40 of 124
Word Count: 1457
Character Count: 9153

Document Content:

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.

Return on average total assets was 0.59% for the three months ended March 31, 2026, compared to 0.67% for the three months ended March 31, 2025. The decrease was primarily due to an increase in average total assets, increase in non-interest expense, and lower net interest income, offset partially by a decrease in the provision for credit losses, the impact of amortization of the deferred credit on income tax expense, and an increase in non-interest income, primarily related to servicing income.

Return on average stockholders’ equity was 5.62% for the three months ended March 31, 2026, compared to 6.05% for the three months ended March 31, 2025. The decrease was primarily due to an increase in average stockholders’ equity, increase in non-interest expense, and lower net interest income, offset partially by a decrease in the provision for credit losses, the impact of amortization of the deferred credit on income tax expense, and an increase in non-interest income, primarily related to servicing income.

Return on average tangible common equity was 5.95% for the three months ended March 31, 2026, compared to 6.47% for the three months ended March 31, 2025. The decrease was primarily due to an increase in average stockholders’ equity, increase in non-interest expense, and lower net interest income, offset partially by a decrease in the provision for credit losses, the impact of amortization of the deferred credit on income tax expense, and an increase in non-interest income, primarily related to servicing income.

Rate Volume Analysis

The following table presents the effects of changes in the average balances of interest-earning assets and interest-bearing liabilities and the corresponding yields and rates on net interest income during the period indicated.

Three Months Ended March 31, 2026 compared to 2025
Change due to:
(in thousands) Volume Yield/rate Total change
Interest-earning assets:
Loans held for investment $	24,673 $	(17,667) $	7,006
Loans held-for-sale 2,530 (3,774) (1,244)
Investment securities (1,872) (1,028) (2,900)
Interest-bearing deposits with banks 1,760 (1,507) 253
Other earning assets (60) (196) (256)
Total interest-earnings assets $	27,031 $	(24,172) $	2,859
Interest-bearing liabilities:
Interest-bearing demand deposits $	(23) $	36 $	13
Money market deposits 3,897 923 4,820
Savings deposits 11,938 (3,941) 7,997
Time deposits (5,651) (1,370) (7,021)
Total deposits 10,161 (4,352) 5,809
Subordinated debt, net (337) (262) (599)
Other borrowings (849) — (849)
Total interest-bearing liabilities $	8,975 $	(4,614) $	4,361
Increase/(decrease) in net interest income $	18,056 $	(19,558) $	(1,502)

Net Interest Income

The following table discloses the components of net interest income for the three months ended March 31, 2026 and 2025:

For the Three Months Ended March 31,
Change
(dollars in thousands) 2026 2025 $ %
Interest income:
Loans held for investment $	93,164 $	86,158 $	7,006 8.1	%
Loans held-for-sale 8,194 9,438 (1,244) (13.2)	%
Deposits with banks 7,582 7,329 253 3.5	%
Interest on investment securities 14,099 16,999 (2,900) (17.1)	%
Interest and dividends on other earning assets 716 972 (256) (26.3)	%
Total interest income 123,755 120,896 2,859 2.4	%
Interest expense:
Deposits 62,295 56,486 5,809 10.3	%
Subordinated debt, net 1,902 2,501 (599) (24.0)	%
Other borrowings — 849 (849) (100.0)	%
Total interest expense 64,197 59,836 4,361 7.3	%
Net interest income $	59,558 $	61,060 $	(1,502) (2.5)	%

Net interest income for the three months ended March 31, 2026 was $59.6 million compared with $61.1 million for the three months ended March 31, 2025, a decrease of $1.5 million, or 2.5%, primarily related to a decrease in yield on loan balances of 155 basis points. Those impacts were partially offset by an increase in average loan balances of $1.2 billion and a decrease of 35 basis points in rates on interest-bearing deposits.

Interest Income

Interest income for the three months ended March 31, 2026 was $123.8 million compared to $120.9 million for the three months ended March 31, 2025, an increase of $2.9 million, or 2.4%, primarily related to a net increase in loan balances offset by a decrease of 155 basis points in yields on loan balances.

Interest Expense

Interest expense for the three months ended March 31, 2026 was $64.2 million compared to $59.8 million for the three months ended March 31, 2025, an increase of $4.4 million, or 7.3%, primarily related to an increase in savings and money market deposit balances, offset by a decrease in rates charged on deposit balances and a decrease in time deposit balances.

Provision for Credit Losses

The ACL represents an amount which we believe is adequate to absorb the lifetime expected credit losses that may be sustained on assets carried at amortized cost as of the balance sheet date. The provision for credit losses represents the amount of expense charged to current earnings from an increase in the ACL. Conversely, a recovery of credit loss is recorded to earnings when the ACL is reduced. Our provisions for, or recoveries of, credit losses arising from the loan, unfunded loan commitments, investment securities, and financing receivables portfolios were as follows:

For the Three Months Ended March 31,
(dollars in thousands) 2026 2025 $ Change % Change
Provision for credit losses:
Provision for credit losses on loans $	3,884 $	8,481 $	(4,597) (54.2)	%
Recovery of credit losses on financing receivables (15) — (15) N/M
Recovery of credit losses on unfunded commitments (396) (22) (374) 1,700.0	%
Total provision for credit losses $	3,473 $	8,459 $	(4,986) (58.9)	%

N/M - not meaningful

The provision for credit losses of $3.5 million for the three months ended March 31, 2026 reflects a decrease of $0.2 million in the ACL – Loans, attributable to mix shift within the loan portfolio, $4.1 million in net charge-offs; $3.1 million from forward flow loans within consumer and commercial and industrial and $0.9 million from corporate finance loans within commercial and industrial, and $0.4 million of reduction to the ACL-Unfunded due to lower loss expectations on unfunded commitments. The provision for credit losses of $8.5 million for the three months ended March 31, 2025 reflects an increase of $4.6 million in the ACL – Loans, primarily due to loan growth and economic uncertainty related to the potential impact of tariffs, and $3.9 million of net charge-offs related primarily to $3.8 million of net charge-offs from forward flow loans within commercial and industrial and consumer.

See below in “—Financial Condition —ACL—Loans” and “—Financial Condition —ACL—Investment Securities” for additional discussion regarding our ACL.

Non-interest Income

The following table presents non-interest income for the three months ended March 31, 2026 and 2025 and the change between periods, by major component:

For the Three Months Ended March 31,
(dollars in thousands) 2026 2025 $ Change % Change
Servicing income $	7,087 $	— $	7,087 N/M
Investment advisory fees 3,193 4,316 (1,123) (26.0)	%
Fee income on loans 2,003 1,441 562 39.0	%
(Losses)/gains on sales of loans and investment securities, net (34) 1,826 (1,860) N/M
Unrealized (losses)/gains on loans and financing receivables, net (1,335) 1,863 (3,198) N/M
Other non-interest income 4,670 4,609 61 1.3	%
Total non-interest income $	15,584 $	14,055 $	1,529 10.9	%

N/M - not meaningful

Total non-interest income was $15.6 million for the three months ended March 31, 2026, an increase of $1.5 million, or 10.9%, compared with the three months ended March 31, 2025, primarily due to solar loan servicing and administration fees related to the solar servicing business acquired during the third quarter of 2025, the recognition of net losses on loan sales during 2026, compared to net gains during 2025, the recognition of unrealized losses on loan fair value marks, compared to net gains during 2025, and a decrease in net fees on FHA/HUD originations in 2026 compared to 2025.

Servicing income was $7.1 million for the three months ended March 31, 2026, related to the solar servicing business acquired during the third quarter of 2025.