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

Chunk 42 of 87
Word Count: 1424
Character Count: 9322

Document Content:

rate risk to their respective Risk Committees. The day-to-day management of interest rate risk has been delegated to the Bank’s Management Asset Liability Committee, which is composed of senior management and operates under policies approved by the boards of directors. The Management Asset Liability Committee meets regularly to review interest rate risk metrics, balance sheet composition, model results and compliance with internal risk limits. In determining appropriate interest rate risk positions, the Management Asset Liability Committee considers, among other factors: •Current and projected interest rate environments •Loan and deposit growth assumptions •Deposit pricing behavior and competitive dynamics •Prepayment speeds and loan repricing characteristics •Liquidity and capital levels •Stress and sensitivity analysis results The Management Asset Liability Committee formulates strategies based on appropriate levels of interest rate risk which are primarily measured based on measuring the impact of changes in interest rates on Net Interest Income and Economic Value of Equity.

At least quarterly, we measure our interest rate risk position using Net Interest Income and Economic Value of Equity sensitivities. Net Interest Income sensitivity is based on an earnings simulation that compares net interest income under non-baseline interest rate scenarios to the baseline Net Interest Income earnings simulation and is measured as a percentage variance to baseline Net Interest Income. Economic Value of Equity is a net present value (“economic value”) simulation that compares the economic value of assets and liabilities—economic value of equity results by subtracting economic value of liabilities from economic value of assets—under various non-baseline interest rate scenarios to the baseline Economic Value of Equity and is measured as a percentage variance to baseline Economic Value of Equity. Net Interest Income sensitivity is generally considered a short-term measure of interest rate risk as it is based on earnings sensitivity over a defined period of time whereas Economic Value of Equity is a long-term measure of interest rate risk as it is a net present value which considers the present value of all future cash flows on assets and liabilities through their lives.

The Management Asset Liability Committee manages interest rate risk in accordance with the Interest Rate Risk Policy which is a Board-approved Policy that is reviewed at least annually. The Interest Rate Risk Policy establishes thresholds for managing and reporting interest rate risk, including limits for Net Interest Income and Economic Value of Equity sensitivity for interest rate changes of different magnitude, direction, or speed.

Modeling of Net Interest Income and Economic Value of Equity uses both actual instrument-level data as well as assumptions. These assumptions include deposit decays, deposit betas, deposit floors, prepayment speeds, new volume pricing, and discount rates. These assumptions are based on historical observations, relevant third-party data, and management judgment. Most assumptions vary by interest rate scenario based on historical observations, relevant third-party data, and management judgment. Given the use of assumptions and management judgment, the Net Interest Income and Economic Value of Equity models and processes are subject to independent review by both internal and external parties.

The Interest Rate Risk Policy requires net interest income simulations to be conducted using both a static balance sheet and a strategy balance sheet. Under a static balance sheet, balance sheet categories are kept flat across the horizon except for cash and retained earnings which are dynamic based on cash flows and earnings in the scenario. Under a strategy balance sheet, management projects dynamic balances based on its forecasted path of the balance sheet which may involve some balance sheet categories increasing and some categories decreasing. The net interest income sensitivity table below uses a static balance sheet. Interest rates in the baseline are kept constant with their values at the balance sheet date and for the non-baseline scenarios, all interest rates are shocked immediately up or down by the amounts show in the table. Resulting twelve-month Net Interest Income in each of the shock scenarios is then compared to the baseline twelve-month Net Interest Income to establish Net Interest Income sensitivity. Market interest rates do not go below zero in any of the shocks.

For Economic Value of Equity simulations, existing assets and liabilities run off over their modeled lives without inclusion of any new volume. The cash flows on assets and liabilities are discounted to present value to generate net present values of cash flows from assets and liabilities for the baseline scenario. Interest rates are then shocked up and down according to the Economic Value of Equity sensitivity table below and cash flows on assets and liabilities are discounted to present value to generate net present value of cash flows from assets and liabilities for each of the shock scenarios. The resulting Economic Value of Equity in each shock scenario is then compared to the baseline Economic Value of Equity to establish sensitivities.

The following table summarizes the simulated change in net interest income over a 12-month horizon as of December 31, 2025:

Change in interest rates: + 200bp + 100bp - 100bp - 200bp
December 31, 2025 % % % %
December 31, 2024 13	% 6	% (7)	% (13)	%

The table above indicates for 2025 that our static balance sheet Net Interest Income is           . This is primarily due to           .

The table above indicates for 2024 that our static balance sheet Net Interest Income is asset-sensitive which means that we benefit from rising rates as its assets reprice faster than its liabilities. This is primarily due to the variable rate nature of the loan portfolio and a relatively short investment portfolio duration as well as the impact of funding from non-interest-bearing sources and deposit betas that do not move to the same degree as market rates. Actual results will differ from the model’s simulated results due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions and the application and timing of various strategies.

The following table summarizes the simulated change in Economic Value of Equity over a 12-month horizon as of December 31, 2025:

Change in interest rates: + 200bp + 100bp - 100bp - 200bp
December 31, 2025 % % % %
December 31, 2024 1	% 1	% (1)	% (2)	%

The table indicates that our Economic Value of Equity for 2025 sensitivity           , which is primarily due to           .

The table indicates that our Economic Value of Equity for 2024 sensitivity is not materially impacted by changes in interest rates, which is primarily due to the short and matched duration of our assets and liabilities.

Qualitative and Quantitative Disclosures About Market Risk

As discussed above, the primary component of our market risk is interest rate volatility and inflationary pressures. We do not have material exposure to foreign currency exchange risk, commodity price risk, or equity price risk. For information regarding the market risk of the Company’s financial instruments, see “—Interest Rate Sensitivity and Market Risk.”

Controls and Procedures

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. We are currently in the process of reviewing, documenting, and testing our internal control over financial reporting.

We have not performed an evaluation of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, nor have we engaged an independent registered public accounting firm to perform an audit of our internal control over financial reporting as of any balance sheet date or for any period reported in our financial statements. Our management is not presently required to perform an annual assessment of the effectiveness of our internal control over financial reporting. This requirement will first apply to our Annual Report on Form 10-K for the year ending December 31, 2027. For as long as we are an emerging growth company, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting. When we lose our status as an emerging growth company, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting.

BUSINESS

Forbright operates at the intersection of two powerful, structural forces reshaping the U.S. banking sector: the rapidly evolving needs of the $10 trillion national middle market and the broadly accelerating shift toward digital‑first banking. Together, these trends have created a distinctive opportunity for the establishment and growth of a category-defining bank of the future, combining modern technology, differentiated lending and deposit products, and scaled fee-based businesses to serve dynamic middle-market companies and consumers.