What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-23 compared with 2025-03-26 · 421 added, 250 removed, 1237 unchanged (35% of the section changed)

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Report of Independent Registered Public Accounting Firm (PCAOB ID 173 )

Consolidated Balance Shee ts

Consolidated Balance Sheets

Consolidated Statements of Income

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Shareholders and the Board of Directors of

To the Shareholders and the Board of Directors of

FinWise Bancorp and Subsidiaries

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of FinWise Bancorp and Subsidiaries (the “Company”), as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in shareholder’s equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of FinWise Bancorp and Subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

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We believe that our audits provide a reasonable basis for our opinion.

/s/ Moss Adams LLP

/s/ Baker Tilly US, LLP

Everett, Washington

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Cash and due from banks $ 12,082 $ 9,600

Interest-bearing deposits in other banks (restricted cash of $ 3.1 million and $ 0 , respectively)

Interest-bearing deposits in other banks (restricted cash of $ 4.1 million and $ 3.2 million, respectively)

151,318 99,562

Total cash and cash equivalents 163,400 109,162

Investment securities available-for-sale, at fair value, net of allowance for credit losses of $ 0 , (amortized cost of $ 30.0 million)

Investment securities held-to-maturity, net of allowance for credit losses of $ 0 , (fair value of $ 11.1 million and $ 13.8 million, respectively)

Investment securities available-for-sale, at fair value, net of allowance for credit losses of $ 0 , (amortized cost of $ 27.5 million and $ 30.0 million, respectively)

27,755 29,930

Investment securities held-to-maturity, net of allowance for credit losses of $ 0 , (fair value of $ 9.0 million and $ 11.1 million, respectively)

Investment in Federal Home Loan Bank (“FHLB”) stock, at cost 440 349

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Premises and equipment, net 2,540 3,548

Assets subject to operating leases, net of accumulated depreciation of $ 4.7 million and $ 2.7 million, respectively

12,575 10,176

Accrued interest receivable 3,707 3,566

Deferred income taxes, net 2,345 —

Small Business Administration (“SBA”) servicing asset, net 3,547 3,273

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Deferred income taxes, net — 899

Paycheck Protection Program Liquidity Facility 64 190

Operating lease liabilities 4,408 5,302

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Interest on deposits 20,295 15,440

Other interest expense — 1

Total interest expense 20,295 15,440

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Occupancy and equipment expenses 1,877 2,179

Credit enhancement expense 8 —

Credit enhancement servicing expense 1,222 1

Credit enhancement guarantee expense 8,533 8

Other operating expenses 12,783 10,706

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Net income $ 16,091 $ 12,742

Other comprehensive income items, net of tax:

Unrealized loss on securities available-for-sale $ ( 97 ) $ —

Unrealized gain on interest rate swaps 509 —

Other comprehensive income (loss) items:

Unrealized gain (loss) on securities available-for-sale 321 ( 97 )

Unrealized gain (loss) on interest rate swaps ( 147 ) 509

Recognition of previously unrealized gain on interest rate swaps in net income ( 387 ) ( 164 )

Other comprehensive income, net of tax 187 —

Other comprehensive income (loss), net of tax ( 161 ) 187

Comprehensive income $ 15,930 $ 12,929

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Balance at December 31, 2023 12,493,565 $ 12 $ 51,200 $ 103,844 $ — $ 155,056

Impact of the adoption of ASC 326 Credit Losses — — — ( 212 ) — ( 212 )

Stock-based compensation expense 393,910 — 2,046 — 2,046

Common stock repurchased and retired ( 524,241 ) ( 1 ) ( 5,504 ) 764 — ( 4,741 )

Stock options exercised, net 29,597 — 25 — 25

BFG ownership purchase 339,176 1 4,124 — 4,125

Common stock repurchased and retired ( 44,608 ) — ( 469 ) 8 ( 461 )

Other comprehensive income, net of tax 187 187

Net income — — — 12,742 12,742

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Stock options exercised, net 140,823 — 628 ( 419 ) — 209

Common stock repurchased and retired ( 44,608 ) — ( 469 ) 8 — ( 461 )

BFG ownership purchase 339,176 1 4,124 — — 4,125

Other comprehensive income — — — — 187 187

Restricted stock surrendered for tax withholding upon vesting ( 16,665 ) — ( 174 ) ( 69 ) — ( 243 )

Other comprehensive loss, net of tax — — — — ( 161 ) ( 161 )

Net income — — — 16,091 — 16,091

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Net income $ 16,091 $ 12,742

Adjustments to reconcile net income to net cash (used in) provided by operating activities

Adjustments to reconcile net income to net cash used in operating activities

Depreciation and amortization 4,864 5,289

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Net (accretion) amortization in securities (discounts) and premiums ( 18 ) ( 25 )

Additions to servicing asset ( 269 ) ( 150 )

Other ( 2,015 ) ( 269 )

Gain on sale of loans, net ( 6,373 ) ( 2,036 )

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Change in fair value of BFG ( 1,300 ) 625

Recovery of SBA servicing asset ( 865 ) ( 376 )

Impairment (recovery) of SBA servicing asset 924 ( 865 )

Stock-based compensation expense 3,579 2,046

Noncash change in credit enhancement asset ( 22,300 ) ( 111 )

Deferred income taxes ( 3,192 ) 90

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Other liabilities 2,102 1,066

Net cash (used in) provided by operating activities ( 14,991 ) 12,265

Net cash used in operating activities

( 28,424 ) ( 14,991 )

Cash flows from investing activities:

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Purchase of lease pools ( 44,362 ) ( 35,831 )

Proceeds from sale of loans and leases

Investment in equity securities — ( 18 )

Proceeds from sales of loans held-for-investment 105,863 529

Proceeds from sales of assets subject to operating leases 468 103

Purchase of investment securities available-for-sale — ( 30,018 )

Purchase of bank premises and equipment, net ( 219 ) ( 1,076 )

Purchase of assets subject to operating leases ( 5,548 ) ( 3,819 )

Proceeds from maturities of securities available-for-sale 2,500 —

Proceeds from maturities and paydowns of securities held-to-maturity 2,653 2,839

Purchases of securities held-to-maturity — ( 2,939 )

(Purchase) redemption of FHLB stock ( 91 ) ( 111 )

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Proceeds from exercise of stock options 481 25

Payment of taxes related to net share settlement of equity awards ( 516 ) —

Repayment of PPP Liquidity Facility — ( 126 )

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Supplemental disclosures of cash flow information:

Cash paid for income taxes $ 8,057 $ 6,626

Cash paid for interest $ 19,157 $ 14,565

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Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies

Nature of business and organization – FinWise Bancorp is a Utah Corporation headquartered in Murray, Utah and operates all business activities through its wholly-owned subsidiaries FinWise Bank, formerly known as Utah Community Bank, and FinWise Investment, LLC.

FinWise Bank was incorporated in the state of Utah on May 7, 1999.

FinWise Bancorp, formerly known as All West Bancorp, was incorporated in the state of Utah on October 22, 2002, after which, it acquired 100 % of FinWise Bank.

As of March 4, 2016, FinWise Bank’s articles of incorporation were amended to rename the entity FinWise Bank.

As of March 15, 2021, FinWise Bancorp’s articles of incorporation were amended and restated to rename the entity FinWise Bancorp.

Note 1 – Business, Basis of Presentation and Summary of Significant Accounting Policies

Nature of business and organization – FinWise Bancorp is a Utah corporation headquartered in Murray, Utah.

The Company operates all business activities through its wholly-owned subsidiaries:

FinWise Bank and FinWise Investment, LLC.

FinWise Bank was originally incorporated as Utah Community Bank in the state of Utah on May 7, 1999.

On March 4, 2016, Utah Community Bank amended its articles of incorporation to change its name to FinWise Bank.

FinWise Bancorp, formerly known as All West Bancorp, was incorporated in Utah on October 22, 2002.

Following its incorporation, All West Bancorp acquired 100 % of Utah Community Bank.

On March 15, 2021, All West Bancorp amended and restated its articles of incorporation to change its name to FinWise Bancorp.

FinWise Investment, LLC was established to hold and manage private investments made by the Company and the Bank.

References herein to “FinWise Bancorp,” “Bancorp” or the “holding company,” refer to FinWise Bancorp on a standalone basis.

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The Bank earns monthly program fees based on the volume of loans originated in these Strategic Programs, as well as interest during the time the Bank holds the loans.

The Company is subject to competition from other financial institutions and to the regulations of certain federal and state agencies and undergoes periodic examinations by those agencies.

Significant concentrations of credit risk – All of the Company's activities are with customers located throughout the United States.

The Company has concentrations in SBA loans, Strategic Program loans, residential real estate loans, and commercial leases.

Accordingly, their ultimate collectability is particularly susceptible to changes in market conditions.

Principles of consolidation – The consolidated financial statements include the accounts of FinWise Bancorp and its wholly-owned subsidiaries, FinWise Bank and FinWise Investment, LLC.

All significant inter-company balances and transactions have been eliminated in consolidation.

Emerging Growth Company status – The Company is an emerging growth company as defined in t he Jumpstart our Business Startups Act of 2012 (the “JOBS Act”).

The JOBS Act permits the Company to extend the transition period for complying with new or revised accounting standards affecting public companies.

The Company has elected to take advantage of this extended transition period, which means that the financial statements included in this annual report, as well as any financial statements that we file in the future, may not be subject to all new or revised accounting standards generally applicable to public companies for the transition period for so long as the Company remains an emerging growth company or until the Company affirmatively and irrevocably opts out of the extended transition period under the JOBS Act.

Significant concentrations of credit risk – The Company's lending and leasing activities are conducted with customers located throughout the United States.

The Company’s loan portfolio may, from time to time, have concentrations in significant balances in certain loan categories, such as SBA loans or Strategic Program loans.

The relative significance and composition of the portfolio may change over time based on business strategy and market conditions.

The collectibility of loans and leases is particularly susceptible to changes in market conditions, such as shifts in interest rates and economic downturns.

Ongoing analysis of the Company's loan portfolio is performed to evaluate whether there is any significant exposure to an individual borrower or group(s) of borrowers as a result of any concentrations of credit risk.

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As of December 31, 2025 and 2024, the Company analyzed its exposure to credit risks and concluded that no significant exposure exists from such concentrations of credit risk.

Principles of consolidation – The consolidated financial statements include the accounts of FinWise Bancorp and its wholly-owned subsidiaries, FinWise Bank and FinWise Investment, LLC.

All significant inter-company balances and transactions have been eliminated in consolidation.

Use of estimates – In preparing the consolidated financial statements in accordance with United States generally accepted accounting principles (“U.S.

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Reclassifications – Reclassifications have been made to prior year amounts to conform to the current year presentation.

Certain of these reclassifications relate to the change in fair value of our SBA servicing asset, which was reclassified from non-interest expense to non-interest income to better align with the SBA servicing asset revenue and the associated costs.

The effect of these reclassifications were not material to the previously reported consolidated financial statements.

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The reserve requirement is still at zero percent as of December 31, 2025.

Restricted cash – The Company established a restricted cash balance required by the Company’s credit card merchant for payment processing and card management services.

Restricted cash – The Company has restricted cash balances required by the Company’s credit card merchant for payment processing and card management services as well as a restricted cash held as collateral against the Company’s derivatives.

Investment securities available-for-sale – U.S.

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Gains and losses are recorded in non-interest income based on the difference between sales proceeds and carrying value.

While the Company

sells the vast majority of the loans funded in its Strategic Programs shortly after origination, the Company may choose to retain a portion of the funded loans and/or receivables.

While the Company sells the vast majority of the loans funded in its Strategic Programs shortly after origination, the Company may choose to retain a portion of the funded loans and/or receivables.

Loans held-for-investment – Loans held-for-investment are reported at their outstanding principal adjusted for any charge-offs, the allowance for credit losses, and deferred fees and costs.

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The Company may change its intent from holding loans for investment and reclassify them as held-for-sale.

Allowance for credit losses - On January 1, 2023, the Company adopted ASU 2016-13, Topic 326 which replaced the incurred loss methodology with a current expected credit losses (“CECL”) model for financial instruments measured at amortized cost and other commitments to extend credit.

Allowance for credit losses – The allowance for credit losses is calculated under the current expected credit loss (“CECL”) model for financial instruments measured at amortized cost and other commitments to extend credit.

CECL requires the immediate recognition of estimated credit losses expected to occur over the estimated remaining life of the asset.

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Also included in the ACL are qualitative factors based on the risks present for each portfolio segment.

These qualitative factors include the following that are derived from the Interagency Policy Statement on Allowance for Credit Losses:

These qualitative factors include the following that are derived from the Interagency

Policy Statement on Allowance for Credit Losses:

changes in lending policies and procedures;

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changes in the effect of competition, legal, and regulatory requirements on the level of estimated credit losses;

and, if applicable, changes in the composition and volume of the loan portfolio due to mergers, acquisitions, and other significant transactions not considered

and, if applicable, changes in the composition and volume of the loan portfolio due to mergers, acquisitions, and other significant transactions not considered elsewhere.

The Bank also considers as an additional qualitative factor any lingering "ripple" effects of the Covid-19 pandemic, including lasting changes to consumer behavior, lending, and society at large.

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Risks common to residential lot loans are those similar to other types of real estate construction loans, as many customers finance the purchase of improved lots in anticipation of constructing a 1 to 4 family residence.

Accordingly, common risks

are changes in market demand for property, supply chain interruption affecting construction materials, inadequate long-term financing arrangements and declines in real estate values.

Accordingly, common risks are changes in market demand for property, supply chain interruption affecting construction materials, inadequate long-term financing arrangements and declines in real estate values.

Changes in market demand for property could lead to longer marketing times resulting in higher carrying costs, declining values and higher interest rates.

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Depreciation expense, which is included in occupancy and equipment expenses, is computed using the straight-line method over the estimated useful lives of the related assets.

Expenditures for new premises and equipment and major improvements are capitalized.

Expenditures for new premises and equipment and major improvements are

Normal costs of maintenance and repairs are charged to expense as incurred.

Gains and losses on dispositions are included in non-interest expense.

Lessor accounting – The Company leases commercial operating equipment to a variety of customers.

Lessor accounting - assets subject to operating leases, net – The Company leases commercial operating equipment to a variety of customers.

At lease inception the Company determines if an arrangement is a lease.

The equipment underlying the operating lease is reported at cost as commercial operating lease equipment within premises and equipment, net in the Company’s Consolidated Balance Sheets and depreciated based on their useful lives on a straight-line basis to the residual value.

The equipment underlying the operating lease is reported at cost and depreciated based on their useful lives on a straight-line basis to the residual value.

These residual values are reviewed annually to ensure the recorded amount does not exceed the fair market value at the lease termination.

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Investments in sales-type leases and direct financing leases are recorded on a net basis.

Profit on sales-

type leases is recognized at lease commencement and recorded in other miscellaneous income.

Profit on sales-type leases is recognized at lease commencement and recorded in other miscellaneous income.

Unearned income on direct financing leases is deferred, included in the net investment in the lease, and recognized over the lease term, yielding a constant periodic rate of return on the net investment in the lease.

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The Company utilizes cash flow hedge accounting treatment for interest rate swaps.

Cash flow hedges are accounted for by recording the changes in the fair

value of the derivative instrument in other comprehensive income (loss) and are recognized in the consolidated statements of income when the hedged item affects earnings.

Cash flow hedges are accounted for by recording the changes in the fair value of the derivative instrument in other comprehensive income (loss) and are recognized in the consolidated statements of income when the hedged item affects earnings.

Derivative instruments are recognized on the consolidated balance sheet as other assets or other liabilities, at their respective fair values.

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Since the repurchase program’s inception, the Company has repurchased and subsequently retired a total of 44,608 shares for $ 0.5 million at an average price of $ 10.30 per share.

The repurchase program will expire on March 31, 2026 unless extended by the Company’s Board of Directors.

Revenue from contracts with customers – The Company applies the provisions of ASC 606, Revenue from Contracts with Customers (“ASC 606”).

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Restricted stock awards are valued based on the fair value of the Company’s common stock on the date of grant.

The Company expenses stock-based compensation related to stock options and restricted stock awards over the requisite service period (generally the vesting period of the equity grant) using the graded-vesting method.

The Company expenses stock-based compensation related to stock options and restricted stock awards over the requisite service period (generally the vesting

period of the equity grant) using the graded-vesting method.

The Company accounts for forfeitures of stock–based awards as they occur.

Stock-based compensation expense is included in salaries and employee benefits on the income statement.

The table below summarizes the weighted-average assumptions used in the Black-Scholes option pricing model at the grant date for stock options granted during 2023.

No stock options were granted during the year ended December 31, 2024.

Risk-free interest rate 3.68 %

Expected term in years 6

Expected volatility 44.2 %

Expected dividend yield —

Earnings per share (“EPS”) – Basic EPS is computed by dividing net earnings allocated to common shareholders by the weighted average number of common shares outstanding.

Diluted EPS is computed by dividing net earnings allocated to common shareholders by the weighted average number of common shares outstanding adjusted to include the effect of potentially dilutive common shares.

Potentially dilutive common shares include incremental common shares issuable upon exercise of outstanding stock options and non-vested restricted common shares, that are not considered participating securities, using the treasury stock method.

The two-class method is used to determine EPS based on participation rights of participating securities in any undistributed earnings.

Each unvested share of restricted stock granted by the Company to its employees that includes rights to participate in distributed earnings is considered a participating security and the Company uses the two-class method to calculate net income available to the Company’s common shareholders per common share – basic and diluted.

Earnings per share (“EPS”) – Basic EPS is computed by dividing net earnings allocated to common shareholders by the weighted average number of common shares outstanding during the period.

Diluted EPS is calculated by dividing net earnings allocated to common shareholders by the weighted average number of common shares outstanding during the period adjusted for the effect of potentially dilutive securities.

Potentially dilutive securities include incremental common shares issuable upon the exercise of stock options and unvested restricted shares, that are not considered participating securities, using the treasury stock method.

The Company uses the two-class method to determine EPS when participating securities are present.

Unvested restricted stock awards that contain nonforfeitable rights to dividends qualify as participating securities, unless the rights were waived by the employee.

For these securities, net income is allocated between common shareholders and participating securities, and EPS is calculated for both basic and diluted shares.

Comprehensive income (loss) – Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income.

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Management periodically reviews and updates its assumptions for estimated funding rates.

Segment reporting – ASC Topic 280, Segment Reporting, requires information to be reported about a company's operating segments using a “management approach”, meaning it is based on the way management organizes segments internally to make operating decisions and assess performance.

Based on this guidance, the Company determined it has one reportable operating segment, the Bank.

The Company’s Chief Executive Officer and its President, who are together considered to be its chief operating decision maker (“CODM”), review consolidated financial information to manage the

Company’s operations.

Since the Company operates and manages its business in one operating and one reportable segment, all required financial segment information can be found in the consolidated financial statements and the notes thereto.

Segment reporting – As further described in Note 17 - Segments, during the third quarter of 2025, the Company implemented segment reporting following the completion of a technology initiative to capture segment-specific financial data and develop reports used by the Company’s chief operating decision maker (“CODM”) to review the Company’s financial performance and determine how to allocate resources.

The Company established three reportable segments:

traditional banking, banking as a service (“BaaS”) and treasury and administration.

For periods prior to July 1, 2025, the Company operated under one operating segment, consistent with the information that was presented to the Company’s CODM.

Recently adopted accounting pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures”, which requires disclosure, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss.

The ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss.

Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in the update and existing segment disclosures in Topic 280.

The Company adopted ASU 2023-07 on January 1, 2024 on a retrospective basis.

The adoption modified disclosures but did not have an impact on the Company's consolidated financial statements.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures”.

ASU 2023-09 improves the transparency of annual income tax disclosures by requiring entities to provide greater disaggregation of information on income taxes paid and on the rate reconciliation disclosures.

This pronouncement also requires qualitative discussion of the primary state and local jurisdictions for income taxes and the type of reconciling categories.

The Company adopted ASU

2023-09 on a retrospective basis effective January 1, 2025 and included the incremental disclosures in Note 12 - Income Taxes.

Recent accounting pronouncements

In November 2025, the FASB issued ASU 2025-08, “Financial instruments – Credit Losses (Topic 326):

Purchased Loans,” which amends the guidance in ASC 326 on the accounting for certain purchased loans.

Under ASU 2025-08, entities must account for acquired loans (excluding credit cards) that meet certain criteria at acquisition (purchased seasoned loans) by recognizing them at their purchase price plus an allowance for expected credit losses (gross-up approach).

Purchased seasoned loans are defined as either:

(1) non-PCD loans that are obtained in a business combination, or (2) non-PCD loans that (a) are obtained in an asset acquisition or upon consolidation of a variable interest entity that is not a business and (b) are acquired more than 90 days after their origination date by a transferee that was not involved in their origination.

ASU 2025-08 also introduces an accounting policy election related to the subsequent measurement of expected credit losses for entities that use a method other than a discounted cash flow analysis to estimate credit losses on purchased seasoned loans.

If this accounting policy is elected, entities can use the amortized cost basis of the asset to subsequently measure their credit loss allowance.

ASU 2025-08 is effective for interim and annual reporting periods beginning after December 15, 2026.

Early adoption is permitted.

The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06 “Intangibles – Goodwill and Other - Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software.” ASU 2025-06 eliminates the consideration of project development stages in determining whether a cost is eligible for capitalization.

Instead, cost capitalization will be based on a “probable to complete” threshold.

This guidance will be effective for the Company on January 1, 2028.

The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

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The Company is currently evaluating the impact that the adoption of this guidance will have on its disclosures.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures”.

ASU 2023-09 improves the transparency of income tax disclosures by requiring entities to provide greater disaggregation of information on income taxes paid and on the rate reconciliation disclosures.

This pronouncement also requires qualitative discussion of the primary state and local jurisdictions for income taxes and the type of reconciling categories.

For public business entities, this ASU is effective for fiscal years beginning after December 15, 2024.

The guidance will be applied on a prospective basis with the option to apply the standard retrospectively.

Early adoption is permitted.

The Company is currently evaluating the impact that the adoption of this guidance will have on its disclosures.

Note 2 – Investments

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The Company reports debt securities AFS on the Company’s Consolidated Balance Sheets at fair value.

The amortized cost, gross unrealized gains and losses, and estimated fair value of investment securities AFS as of December 31, 2024, are summarized as follows:

The amortized cost, gross unrealized gains and losses, and estimated fair value of investment securities AFS as of December 31, 2025 and 2024, are summarized as follows:

December 31, 2025

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$ 27,531 $ 224 $ — $ 27,755

The following table presents the amortized cost and estimated fair value of investment securities AFS as of the period ended, by contractual maturity:

December 31, 2024

($ in thousands) Amortized

Cost Unrealized

Gain Unrealized

Loss Estimated

Treasury securities

$ 30,027 $ 4 $ ( 101 ) $ 29,930

The following table presents the amortized cost and estimated fair value of investment securities AFS at December 31, 2025 , by contractual maturity:

December 31, 2025

($ in thousands) Amortized

Cost Estimated

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$ 27,531 $ 27,755

At December 31, 2024, debt securities AFS in the amount of $ 30.0 million were pledged as collateral for a credit line held by the Bank.

Accrued interest receivable on debt securities AFS totaled $ 0.5 million at December 31, 2024 and was included in accrued interest receivable on the Consolidated Balance Sheet.

At December 31, 2025, debt securities AFS with a fair value of $ 27.8 million were pledged as collateral for a credit line held by the Bank.

Accrued interest receivable on debt securities AFS totaled $ 0.5 million and $ 0.5 million at December 31, 2025 and 2024 , respectively, and was included in accrued interest receivable on the Consolidated Balance Sheets.

Investment Securities Held-to-Maturity, at Cost

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Total securities held-to-maturity $ 12,565 $ — $ 8 $ ( 1,516 ) $ 11,057

The amortized cost and estimated market value of debt securities HTM at December 31, 2025 by contractual maturity are shown below.

Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

December 31, 2025

($ in thousands) Amortized

Cost Estimated

Due in one year or less $ — $ —

Due after one year through five years 1,049 1,026

Due after five years through ten years 1,277 1,177

Due after ten years 7,601 6,779

Total securities HTM

$ 9,927 $ 8,982

At December 31, 2025, debt securities HTM in the amount of $ 9.9 million were pledged as collateral for a credit line held by the Bank.

Credit Quality Indicators & Allowance for Credit Losses - HTM and AFS

On January 1, 2023, the Company adopted ASU 2016-13, which replaced the legacy U.S.

GAAP other-than-temporary impairment (“OTTI”) model with an expected credit loss model (“CECL”).

ASU 2016-13 requires an allowance on lifetime expected credit losses on debt securities HTM and AFS but retains the concept from the OTTI model that credit losses are recognized once securities become impaired.

For debt securities HTM and AFS, the Company evaluates the credit risk of its securities on at least a quarterly basis.

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Accrued interest receivable on debt securities HTM and AFS is excluded from the estimate of credit losses.

At December 31, 2024 and at adoption of CECL on January 1, 2023, there was no ACL related to debt securities HTM or AFS due to the composition of the portfolio which is generally considered not to have credit risk given the United States government issuance or guarantee associated with these agency securities.

The Company had twenty-two securities, consisting of eight collateralized mortgage obligations, ten mortgage-backed securities and four U.S.

Treasury securities, in an unrealized loss position at December 31, 2024 and nineteen securities, consisting of nine collateralized mortgage obligations and ten mortgage-backed securities, in an unrealized loss position at December 31, 2023.

The following table presents the estimated fair value and gross unrealized losses of debt securities

HTM and AFS, aggregated by category and length of time in a continuous unrealized loss position at December 31, 2024 and 2023:

At December 31, 2025 and 2024, there was no ACL related to debt securities HTM or AFS due to the composition of the portfolio which is generally considered not to have credit risk given the United States government issuance or guarantee associated with these agency securities.

The Company had seventeen securities, consisting of eight collateralized mortgage obligations and nine mortgage-backed securities in an unrealized loss position at December 31, 2025 and twenty-two securities, consisting of eight collateralized mortgage obligations, ten mortgage-backed securities and four U.S.

Treasury securities, in an unrealized loss position at December 31, 2024.

The following table presents the estimated fair value and gross unrealized losses of debt securities HTM and AFS, aggregated by category and length of time in a continuous unrealized loss position at December 31, 2025 and 2024:

December 31, 2025

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Losses Fair Value Unrealized

Available-for-sale:

Treasury securities

$ 27,448 $ ( 101 ) $ — $ — $ 27,448 $ ( 101 )

Held-to-maturity:

7 unchanged sentences

Losses Fair Value Unrealized

Available-for-sale:

Treasury securities

$ 27,448 $ ( 101 ) $ — $ — $ 27,448 $ ( 101 )

Held-to-maturity:

Mortgage-backed securities $ — $ — $ 5,164 $ ( 746 ) $ 5,164 $ ( 746 )

1 unchanged sentence

$ 633 $ ( 17 ) $ 8,752 $ ( 1,499 ) $ 9,385 $ ( 1,516 )

The amortized cost and estimated market value of debt securities HTM at December 31, 2024 and December 31, 2023, by contractual maturity are shown below.

Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

December 31, 2024 December 31, 2023

($ in thousands) Amortized

Cost Estimated

Fair Value Amortized

Cost Estimated

Securities held-to-maturity

Due in one year or less $ — $ — $ — $ —

Due after one year through five years 1,365 1,301 — —

Due after five years through ten years 807 734 2,745 2,577

Due after ten years 10,393 9,022 12,643 11,232

Total securities held-to-maturity $ 12,565 $ 11,057 $ 15,388 $ 13,809

At December 31, 2024, debt securities HTM in the amount of $ 12.6 million were pledged as collateral for a credit line held by the Bank.

There were no sales or transfers of investment securities and no realized gains or losses on these securities during the years ended December 31, 2024 or 2023.

There were no sales or transfers of investment securities and no realized gains or losses on these securities during the year ended December 31, 2025 or 2024.

The Bank is a member of the FHLB system.

1 unchanged sentence

At December 31, 2025 and December 31, 2024, the Bank owned $ 0.4 million and $ 0.3 million, respectively, of FHLB stock, which is carried at cost.

The Company evaluated the carrying value of its FHLB stock investment at December 31, 2024 and determined that it was not impaired.

The Company evaluated the carrying value of its FHLB stock investment at December 31, 2025 and determined

that it was not impaired.

This evaluation considered the long-term nature of the investment, the current financial and liquidity position of the FHLB, repurchase activity of excess stock by the FHLB at its carrying value, the return on the investment from recurring and special dividends, and the Company’s intent and ability to hold this investment for a period of time sufficient to recover its recorded investment.

Note 3 – Loans

Loans held-for-investment outstanding by general ledger classification as of December 31, 2024 and December 31, 2023, consisted of the following:

Loans held-for-investment, net – The Company’s loans held-for-investment outstanding by general ledger classification as of December 31, 2025 and December 31, 2024, consisted of the following:

December 31, December 31,

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Strategic Program loans:

Strategic Program loans - with credit enhancement 108,131 891

Strategic Program loans - without credit enhancement 21,637 19,231

Commercial real estate:

3 unchanged sentences

Total loans held-for-investment, gross $ 585,509 $ 465,233

Deferred loan fees, net ( 4,245 ) ( 767 )

Deferred loan fees and discounts, net ( 7,162 ) ( 4,245 )

Allowance for credit losses ( 36,796 ) ( 13,176 )

11 unchanged sentences

These loans are classified as held-for-sale on the balance sheet and measured at the lower of cost or market.

The Company may also hold loans or a portion of the loans or receivables and sell the remainder directly to the Strategic Program provider or other investors.

The Company may choose to retain all or part of the originated loans or receivables, rather than selling them in their entirety.

The portion that remains with the Company is classified as held-for-investment on the balance sheet.

The Company is generally the servicer of the loans it originates through Strategic Programs.

The Company earns a servicing fee equal to a percentage of the outstanding balance of the loans generated under

Strategic Programs for servicing such loans.

In turn, the Strategic Program service providers, subject to the Company’s approval and oversight, typically serve as sub-servicer and perform primary servicing duties including loan collections, modifications, charging-off, reporting and monitoring.

The Company earns a servicing fee equal to a percentage of the outstanding balance of the loans generated under Strategic Programs for servicing such loans.

In turn, the Strategic Program service providers, subject to the Company’s approval and oversight, typically

serve as sub-servicer and perform primary servicing duties including loan collections, modifications, charging-off, reporting and monitoring, for which the Company incurs a cost.

Each Strategic Program provider establishes a “reserve” deposit account with the Company to reasonably ensure the strategic programs will have sufficient funds available to purchase the loans.

2 unchanged sentences

Total cash held in reserve by Strategic Program providers at the Company at December 31, 2025 and December 31, 2024, was $ 53.4 million and $ 53.9 million, respectively.

Strategic Program providers that participate in the Company’s credit enhanced balance sheet program guarantee the credit and fraud losses by maintaining a reserve deposit account with the Bank.

This reserve deposit account is intended to protect the Bank by ensuring that sufficient funds are available to cover any credit and fraud losses, and the Strategic Program provider must periodically replenish the account as needed to meet the required balance.

Collateral reserve balances associated with the Company’s credit enhanced balance sheet program totaled $ 5.4 million and $ 0.1 million at December 31, 2025 and December 31, 2024, respectively.

Strategic Program loans retained and held-for-sale as of December 31, 2025 and December 31, 2024, are summarized as follows:

2 unchanged sentences

Retained Strategic Program loans (1)

$ 129,768 $ 20,122

Strategic Program loans held-for-sale 146,473 91,588

Total Strategic Program loans $ 276,241 $ 111,710

(1) Includes $ 108.1 million and $ 0.9 million of credit enhanced loans at December 31, 2025 and December 31, 2024 , respectively.

Allowance for Credit Losses

In determining an appropriate amount for the allowance, the Bank segmented and aggregated the loan portfolio based on the FDIC Consolidated Reports of Condition and Income (“Call Report”) codes.

These classifications, which in general are based upon the nature of the collateral and type of borrower, are different than the classifications adopted for other financial reporting purposes, which are based upon the proposed use of the loan proceeds.

The following pool segments identified as of December 31, 2024 and 2023 are based on the CECL methodology:

These classifications, which in general are based upon the nature of the collateral and type of borrower, are different than the classifications adopted for other

financial reporting purposes, which are based upon the proposed use of the loan proceeds.

The following pool segments were identified as of December 31, 2025 and 2024 for the purposes of estimating the ACL:

December 31, December 31,

10 unchanged sentences

Retained Strategic Program loans:

Strategic Program loans - with credit enhancement 108,131 891

Strategic Program loans - without credit enhancement 21,637 19,231

Total loans held-for-investment, gross $ 585,509 $ 465,233

Activity in the ACL by common characteristic loan pools based on the CECL methodology was as follows for the periods indicated:

Activity in the ACL by common characteristic loan pools was as follows for the periods indicated:

Year Ended December 31, 2025

10 unchanged sentences

Retained Strategic Program loans

Total allowance for credit losses on financing receivables $ 12,888 $ 11,248 $ ( 12,669 ) $ 1,709 $ 13,176

Strategic Program loans - with credit enhancement 111 23,924 ( 1,639 ) — 22,396

Strategic Program loans - without credit enhancement 6,193 8,611 ( 10,202 ) 1,328 5,930

Total allowance for credit losses $ 13,176 $ 38,479 $ ( 16,413 ) $ 1,554 $ 36,796

Unfunded lending commitments 464 94 — — 558

1 unchanged sentence

Year Ended December 31, 2024

($ in thousands) Beginning Balance Impact of ASU 2016-13 adoption Provision for (Reversal of) Credit Losses Charge-Offs Recoveries Ending Balance

($ in thousands) Beginning Balance Provision for (Reversal of) Credit Losses Charge-Offs Recoveries Ending Balance

Construction and land development $ 316 $ 58 $ — $ — $ 374

8 unchanged sentences

Retained Strategic Program loans:

Total allowance for credit losses on financing receivables $ 11,985 $ 257 $ 11,525 $ ( 12,425 ) $ 1,546 $ 12,888

Strategic Program loans - with credit enhancement — 111 — — 111

Strategic Program loans - without credit enhancement 7,065 7,729 ( 9,796 ) 1,195 6,193

Total allowance for credit losses $ 12,888 $ 11,248 $ ( 12,669 ) $ 1,709 $ 13,176

Unfunded lending commitments 139 325 — — 464

54 unchanged sentences

Doubtful - A doubtful asset has an existing weakness or weaknesses that make collection or liquidation in full, on the basis of currently existing facts and conditions, highly questionable and improbable.

Loss - A loss asset has an existing weakness or weaknesses that render the loan uncollectible and of such little value that continuing to carry as an asset on our books is not warranted.

This classification does not mean that the loan has absolutely no recovery or salvage value, but rather it is not practical nor desirable to defer writing off this basically worthless asset, even though partial recovery may be affected in the future.

Loss - A loss asset has an existing weakness or weaknesses that render the loan uncollectible and of such little value that continuing to carry as an asset on the Company’s books is not warranted.

Not Rated – For Strategic Program loans, the Company does not evaluate and risk rate the loans in the same manner as other loans in the Company’s portfolio.

63 unchanged sentences

Pass — — — — — — — —

Watch — — — — — — —

Watch-with credit enhancement 24,869 — — — — — — 24,869

Special Mention — — — — — — — —

Substandard — — — — — — — —

Not Rated 17,084 1,540 1,109 389 — — 20,122

Not Rated-without credit enhancement 18,769 2,325 106 332 105 — — 21,637

Not Rated-with credit enhancement 82,754 508 — — — — — 83,262

Total 126,392 2,833 106 332 105 — — 129,768

Current period gross writeoff ( 3,801 ) ( 4,683 ) ( 927 ) ( 385 ) — — ( 9,796 )

Current period gross writeoff-without credit enhancement ( 4,565 ) ( 4,769 ) ( 418 ) ( 269 ) ( 167 ) ( 14 ) — ( 10,202 )

Current period gross writeoff-with credit enhancement ( 1,633 ) ( 6 ) ( 1,639 )

Total current period gross writeoff ( 6,198 ) ( 4,775 ) ( 418 ) ( 269 ) ( 167 ) ( 14 ) — ( 11,841 )

Total portfolio loans receivable, gross $ 310,444 $ 93,362 $ 93,700 $ 61,756 $ 10,433 $ 15,814 $ — $ 585,509

3 unchanged sentences

Loans and Leases Amortized Cost Basis by Origination Year

December 31, 2023 2023 2022 2021 Prior Revolving Loans Total

December 31, 2024

2024 2023 2022 2021 Prior Revolving Loans Total

($ in thousands)

59 unchanged sentences

Substandard — — — — — — —

Not Rated 14,506 3,609 1,292 1 — 19,408

Not Rated-without credit enhancement 16,193 1,540 1,109 389 — — 19,231

Not Rated-with credit enhancement 891 — — — — — 891

Total 17,084 1,540 1,109 389 — — 20,122

2 unchanged sentences

Total current period gross writeoff $ ( 3,801 ) $ ( 5,798 ) $ ( 1,775 ) $ ( 943 ) $ ( 352 ) $ — $ ( 12,669 )

Allowance for Credit Losses - Strategic Program Loans with Credit Enhancement

The Company partners with certain Strategic Program service providers who offer credit enhancement on loans, indemnifying or reimbursing the Bank for credit and fraud losses.

In line with GAAP, we estimate and record expected loss provisions for these loans without factoring in the credit enhancement.

When these provisions are recorded, a corresponding credit enhancement asset is recognized, reflecting anticipated recoveries under the service provider’s guarantee.

Reimbursements are made through a deposit reserve account, which the provider replenishes periodically.

The credit enhancement asset is reduced as payments or recoveries are received from the provider or its reserve account.

The table below shows the activity in the credit enhancement asset for the periods indicated:

($ in thousands) 2025 2024

Credit enhancement asset at beginning of period $ 111 $ —

Credit enhancement income 23,924 111

Credit losses settled with partner during period ( 1,624 ) —

Credit enhancement asset at end of period $ 22,411 $ 111

Modified Loans to Troubled Borrowers

Effective January 1, 2023 loan modifications to borrowers experiencing financial difficulty are required to be disclosed by type of modification and by type of loan.

Prior accounting guidance classified loans which were modified as troubled debt restructurings (“TDRs”) only if the modification reflected a concession from the lender in the form of a below market interest rate or other concession in addition to borrower financial difficulty.

On January 1, 2023, the Company adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures.

In the year ended December 31, 2024 there were three material loan modifications reportable under the new guidance.

Subsequent to December 31, 2024, there was a payment default of $ 0.2 million on a loan to a borrower whose loan was modified due to financial difficulties within the previous twelve months and the loan was placed on nonaccrual status.

As of December 31, 2024

($ in thousands) Principal deferment (Months) Outstanding Balance % of Total Loan Type

Commercial real estate - owner occupied

11 months $ 241 0.13 %

Commercial and industrial

11 months $ 367 0.83 %

Residential real estate

11 months $ 153 0.25 %

In the year ended December 31, 2023 there was one material loan modification reportable under the new guidance.

This loan did not go into default during the twelve months following its modification.

As of December 31, 2023

($ in thousands) Principal deferment (Months) Outstanding Balance % of Total Loan Type

Residential real estate 12 months $ 156 0.30 %

Modified loans to troubled borrowers arise from a modification made to a loan in order to alleviate temporary difficulties in the borrower’s financial condition or constraints on the borrower’s ability to repay the loan, and to minimize potential losses to the Company.

GAAP requires that certain types of modifications be reported, which consist of the following:

principal forgiveness, interest rate reduction, other-than-insignificant payment delay, term extension, or any combination of the foregoing.

Modified Loans Held-for-Investment (Excluding Retained Strategic Program Loans)

During the year ended December 31, 2025, there were no new material loan modifications to loans held-for-investment, excluding Strategic Program loans which are discussed separately below.

During the year ended December 31, 2025, there was a payment default of $ 0.2 million on a commercial real estate owner occupied loan to a borrower whose loan was modified due to financial difficulties within the previous twelve months and the loan was placed on nonaccrual status.

Subsequent to December 31, 2025, there was a payment default of $ 0.2 million on a residential real estate loan to a borrower whose loan was modified due to financial difficulties within the previous twelve months and the loan was placed on nonaccrual status.

The remaining modified loan was current as of December 31, 2025.

There were no payment defaults during the year ended December 31, 2024 of modified loans that were modified during the previous twelve months.

The following table presents the amortized cost basis as of December 31, 2024, the percentage of the loans modified to the total class of loans, and the financial effect of modified loans to troubled borrowers that were experiencing financial difficulty during the year ended December 31, 2024:

($ in thousands) Principal Deferment (Months) Amortized Cost at December 31, 2024 % of Total Loan Type

Commercial real estate:

Owner occupied 11 months $ 241 0.13 %

Non-owner occupied 11 months 367 0.83 %

Residential 11 months 153 0.25 %

Modified Retained Strategic Program Loans

Retained Strategic Program loans of $ 20.1 million and $ 19.4 million as of December 31, 2024 and 2023, respectively, consist primarily of personal loans to individuals.

Retained Strategic Program loans of $ 129.8 million and $ 20.1 million as of December 31, 2025 and 2024, respectively, consist of personal loans to individuals and loans to businesses.

A significant amount of the retained Strategic Program loans are made to subprime borrowers.

The subprime borrowers’ ability to repay the loans according to the original loan terms can be compromised by both short-term financial challenges, such as unexpected car repairs or physical injury, and longer-term financial challenges, such as a job loss or more serious injury or illness.

In certain circumstances, some of our strategic programs will modify the original loan terms to optimize the recovery of principal and interest.

The loan modifications typically include i) a delay in payment and extension of the loan term, or ii) accrued interest forgiveness and interest rate and payment reductions.

As of December 31, 2024, the balance of outstanding modified loans to individuals in the retained portfolio was approximately $ 4.4 million.

As of December 31, 2023, the

balance of outstanding modified loans to individuals in the retained portfolio was approximately $ 4.5 million.

In certain circumstances, some of the Company’s strategic programs will modify the original loan terms to optimize the recovery of principal and interest.

The loan modifications may include (i) a delay in payment and extension of the loan term, or (ii) accrued interest forgiveness and interest rate and payment reductions.

As of December 31, 2025 and 2024, the balance of outstanding modified loans to individuals in the retained portfolio was approximately $ 0.2 million and $ 4.4 million, respectively.

The Company does not have any obligation to fund additional amounts to the borrowers.

30 unchanged sentences

Commercial and industrial — — 1,788 1,788

Commercial leases 36 — 360 360

Total $ 55 $ 33,575 $ 2,148 $ 35,723

1 unchanged sentence

Note 4 – Premises and Equipment and Leases

Premises and equipment at December 31, 2024 and 2023, consist of the following:

Premises and equipment, net consist of the following for the periods indicated:

($ in thousands) 2025 2024

Leasehold improvements $ 3,699 $ 3,700

Commercial operating lease equipment 12,874 9,300

Furniture, fixtures, and equipment 2,665 2,786

3 unchanged sentences

Premises and equipment, net $ 2,540 $ 3,548

Total depreciation and amortization expense, included in occupancy and equipment expenses, was $ 3.2 million and $ 2.3 million for the years ended December 31, 2024 and 2023, respectively, which included depreciation expense on assets leased and available for lease of $ 1.6 million and $ 1.0 million for the years ended December 31, 2024 and 2023, respectively.

Leasing as a Lessor - Commercial Operating Lease Equipment

The Company includes commercial operating leases within premises and equipment.

The net book value of the commercial operating leases as of December 31, 2024 and December 31, 2023 was $ 10.4 million and $ 8.2 million.

Depreciation and amortization expense for premises and equipment, included in occupancy and equipment expenses, was $ 0.9 million and $ 1.1 million for the years ended December 31, 2025 and 2024, respectively.

Leasing as a Lessor

The cost and accumulated depreciation of commercial operating equipment the Company is leasing to third parties is as follows:

($ in thousands) 2025 2024

Commercial operating lease equipment $ 17,290 $ 12,874

Less accumulated deprecation ( 4,715 ) ( 2,698 )

Commercial operating lease equipment, net $ 12,575 $ 10,176

Depreciation expense for assets leased and available for lease was $ 2.4 million and $ 1.6 million for the years ended December 31, 2025 and 2024, respectively, and is included in other operating expenses.

Rental income from commercial operating leases for the years ended December 31, 2025 and 2024 was $ 3.2 million and $ 2.2 million, respectively.

27 unchanged sentences

The Company periodically sells the guaranteed portions of SBA loans and retains rights to service the loans.

Loans serviced for others are not included in the accompanying balance sheet.

Loans serviced for others are not included in the accompanying balance sheets.

The unpaid principal balances of SBA loans serviced for others was $ 275.8 million and $ 218.4 million at December 31, 2025 and 2024, respectively.

10 unchanged sentences

Balance at beginning of period $ ( 1,286 ) $ ( 2,151 )

Impairment ( 1,004 ) —

Recovery 80 865

Balance at end of period $ ( 2,210 ) $ ( 1,286 )

The fair market value of the SBA servicing asset as of December 31, 2024 and December 31, 2023, was $ 3.3 million and $ 4.2 million, respectively.

Recovery or impairment adjustments to servicing rights are mainly due to market-based assumptions associated with discounted cash flows, loan prepayment speeds, and changes in interest rates.

18 unchanged sentences

The warrants are free-standing equity instruments and, as a result, are classified within equity at the fair value on the issuance date.

The fair value of the warrants was determined by our board of directors with input from management, relying in part upon valuation reports prepared by a third-party valuation firm using a Black-Scholes option pricing model adjusted for a lack of marketability since the Company’s stock was not publicly traded at that time.

The fair value of the warrants was determined by the Company’s board of directors with input from management, relying in part upon valuation reports prepared by a third-party valuation firm using a Black-Scholes option pricing model adjusted for a lack of marketability since the Company’s stock was not publicly traded at that time.

The resulting fair value of the warrants was $ 0.19 per share.

8 unchanged sentences

Total deposits $ 754,561 $ 544,952

The aggregate amount that exceed the $250 thousand insurance limit of time deposits at December 31, 2024 and 2023 were $ 3.2 million and $ 2.0 million, respectively.

Time certificates of deposit with balances of $250,000 or more at December 31, 2025 and 2024 totaled approximately $ 13.6 million and $ 10.9 million, respectively.

The Bank’s deposits are insurable to applicable limits by the FDIC.

At December 31, 2025 , the scheduled maturities of time deposits are as follows ($ in thousands):

15 unchanged sentences

As of December 31, 2025 and December 31, 2024, the most recent notification from the FDIC categorized the Bank as well-capitalized under the regulatory framework for prompt corrective action (there are no conditions or events since that notification that management believes have changed the Bank’s category).

The following table presents the actual and required capital amounts and ratios for the Bank as of the periods indicated:

The following table presents the actual and required capital amounts and ratios for the Bank as of the dates indicated:

Actual Well-Capitalized

11 unchanged sentences

The Company has not paid any cash dividends on its common stock since inception and it does not intend to pay cash dividends in the foreseeable future.

However, the Company’s Board of Directors may declare a cash or stock dividend out of retained earnings provided the regulatory capital ratio requirements are met.

However, the Company’s Board of Directors may declare a cash or stock dividend out of retained earnings provided the regulatory capital ratio and other regulatory requirements are met.

The Company plans to maintain capital ratios that meet or exceed the well-capitalized standards per the regulations and, therefore, would limit dividends to amounts that are appropriate to maintain those well-capitalized regulatory capital ratios.

5 unchanged sentences

Loans totaling $ 34.2 million and $ 41.6 million were pledged to secure the FHLB line of credit as of December 31, 2025 and December 31, 2024, respectively.

Federal Reserve Bank Lines of Credit

At December 31, 2025 and December 31, 2024, the Bank had a maximum borrowing capacity of $ 193.8 million and $ 239.2 million, respectively, with the FRB, including the secured borrowing capacity through the Discount Window and the Borrower-in-Custody (“BIC”) program, to the extent of collateral pledged.

Loans totaling $ 235.8 million and $ 240.8 million and securities of $ 37.4 million and $ 42.6 million were pledged to secure these lines of credit with the FRB as of December 31, 2025 and December 31, 2024, respectively.

The Company had no advances outstanding under either program as of December 31, 2025 and 2024.

Other Lines of Credit

At December 31, 2024 and December 31, 2023, the Bank had the ability to borrow $ 239.2 million and $ 11.4 million, respectively, from the FRB’s Discount Window on a collateralized basis.

Loans totaling $ 240.8 million and $ 0.0 million and securities of $ 42.6 million and $ 13.0 million were pledged to secure the line of credit with the FRB’s Discount Window as of December 31, 2024 and December 31, 2023, respectively.

The FRB’s Bank Term Funding Program was officially closed in March 2024.

At December 31, 2023, the Bank had the ability to access $ 0.8 million from the FRB’s Bank Term Funding Program on a collateralized basis.

The Bank had an available unsecured line of credit with Pacific Coast Bankers’ Bank to borrow up to $ 10.0 million in overnight funds at December 31, 2025.

Through Zions Bank, the Bank had an available unsecured line of credit of $ 5.0 million at December 31, 2025 and December 31, 2024.

The Bank had an available line of credit with Bankers’ Bank of the West to borrow up to $ 1.1 million in overnight funds at December 31, 2024 and December 31, 2023.

The Bank had an available line of credit with Bankers’ Bank of the

West to borrow up to $ 1.1 million in overnight funds at December 31, 2025 and December 31, 2024.

The Bank had no outstanding balances on such unsecured or secured lines of credit as of December 31, 2025 and December 31, 2024.

Borrower-In-Custody (“BIC”)

During 2024, the Bank was accepted into the FRB’s borrower-in-custody program, which allows financial institutions to pledge loans as collateral for FRB’s Discount Window advances, that are not pledged to the FHLB, while retaining possession or control of the collateral.

As of December 31, 2024, the Bank had secured unused borrowing capacity of $ 198.8 million and had $ 240.8 million in loans that were pledged as collateral under the BIC program (the $ 198.8 million unused borrowing capacity is included in the $ 239.2 million of funds available to borrow from the FRB’s Discount Window in the preceding paragraph).

The Company had no advances outstanding under the BIC program as of December 31, 2024.

Financial Instruments with Off-Balance Sheet Risk

1 unchanged sentence

In the ordinary course of business, the Bank has entered into commitments to extend credit to customers which have not yet been exercised.

These financial instruments include commitments to extend credit in the form of loans.

These financial instruments include commitments to extend credit in the form of loans and credit card arrangements.

Those instruments involve to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets.

For credit card customers, the Company reserves the right to modify or terminate the terms and conditions of credit card accounts at its discretion.

It is important to note that a significant portion of the Company’s commitments and undrawn credit card lines are not fully utilized by customers, so the total amount of these commitments does not necessarily reflect the Company’s future cash obligations.

The Company assesses each customer’s credit profile individually to determine creditworthiness.

The Company’s commitments to extend credit as of the periods indicated are summarized below.

4 unchanged sentences

Revolving, open-end lines of credit $ 2,566 $ 2,365

Credit card arrangements

$ 305,313 $ —

Undisbursed commercial real estate loans 32,414 23,200

7 unchanged sentences

The allowance for credit losses on unfunded commitments was $ 0.6 million and $ 0.5 million as of December 31, 2025 and December 31, 2024, respectively.

Class Action Litigation

In July 2025, the Company notified approximately 600,000 individuals of an alleged data breach in which their personal data was exposed by a former employee following termination of their employment.

Subsequently, several class action lawsuits were filed, all of which have been consolidated into a single class action lawsuit in Utah federal court.

The Company has disputed the claims and is vigorously defending the lawsuit.

The Company participated in a pre-discovery mediation with the plaintiffs’ attorneys on March 17, 2026;

however, the parties were unable to reach an agreement at that time.

The Company maintains insurance coverage that management believes is sufficient to cover any potential losses or damages arising from the lawsuit.

As of December 31, 2025, no accrual for loss has been recorded as management does not believe a loss is probable or, if probable, is not reasonably estimable.

Note 10 – Stock-Based Compensation and Employee Benefit Plans

1 unchanged sentence

The Company utilizes stock-based compensation plans, as well as discretionary grants, for employees, directors and consultants to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentives and to promote the success of the Company’s business.

The 2019 Stock Option Plan (“2019 Plan”) was adopted on June 20, 2019 following approval by the Company’s Board of Directors and shareholders.

The 2019 Stock Plan (“2019 Plan”) was adopted on June 20, 2019 following approval by the Company’s Board of Directors and shareholders.

The 2019 Plan will terminate as to future awards 10 years from the later of the effective date or the earlier of the most recent Board or shareholder approval of an increase in the number of shares reserved for issuance under the 2019 Plan.

1 unchanged sentence

At December 31, 2025, 122,617 shares under the 2019 Plan were available for future issuance.

The 2016 Stock Option Plan (“2016 Plan”) was adopted on April 20, 2017 following approval by the Company’s Board of Directors and shareholders.

The 2016 Stock Plan (“2016 Plan”) was adopted on April 20, 2017 following approval by the Company’s Board of Directors and shareholders.

The 2016 Plan authorizes the issuance of 299,628 common shares.

The 2016 Plan will terminate as to future awards 10 years from the later of the effective date or the earlier of the most recent Board or

shareholder approval of an increase in the number of shares reserved for issuance under the 2016 Plan.

The 2016 Plan will terminate as to future awards 10 years from the later of the effective date or the earlier of the most recent Board or shareholder approval of an increase in the number of shares reserved for issuance under the 2016 Plan.

At December 31, 2025, 2,189 shares under the 2016 Plan were available for future issuance.

5 unchanged sentences

Restricted stock vests over periods ranging from approximately 1 to 5 years.

Upon the exercise of stock options, the Company issues new authorized shares.

Under the Plans, if an award expires or becomes un-exercisable without having been exercised in full, or is surrendered pursuant to an exchange program, the unpurchased shares that were subject thereto shall become available for future grant or sale under the Plans.

11 unchanged sentences

Options vested and exercisable at December 31, 2025 675,962 $ 5.76 4.8 $ 8,236,036

The weighted average grant date fair value of options per share granted during the year ended December 31, 2023 was $ 4.11 , respectively.

The total intrinsic value of options exercised during the years ended December 31, 2024 and 2023 was $ 0.3 million and $ 0.1 million, respectively.

During the years ended December 31, 2024, and 2023 the Company received de minimis proceeds from the exercise of stock options and recognized a de minimis tax benefit from the exercise of stock options for both years.

Upon exercise of the stock options, the Company issued new authorized shares.

Restricted Stock

2 unchanged sentences

The value of the stock awarded is established as the fair market value of the stock at the time of the grant.

The Company recognizes expense, equal to the total value of such awards, ratably over the vesting period of the stock grants.

The Company recognizes expense, equal to the total value of such awards,

ratably over the vesting period of the stock grants.

All restricted stock agreements are conditioned upon continued employment.

Termination of employment prior to a vesting date, as described below, would terminate any interest in non-vested shares.

Termination of employment prior to a vesting date would terminate any interest in unvested shares.

The following summarizes unvested restricted stock activity for the year ended December 31, 2025:

1 unchanged sentence

Unvested as of December 31, 2024

496,643 $ 10.09

Granted 327,363 $ 15.01

2 unchanged sentences

Unvested as of December 31, 2025

The weighted average grant date fair value of restricted stock granted in the year ended December 31, 2023 was $ 8.63 .

651,221 $ 12.34

The total fair value of restricted stock that vested during the years ended December 31, 2025 and 2024 was $ 2.5 million and $ 1.2 million, respectively.

Stock-based Compensation Expense

The following tables present stock-based compensation expense recognized:

The following table presents stock-based compensation expense recognized and income tax benefit for stock-based compensation related to restricted shares:

($ in thousands) 2025 2024

Stock options $ 102 $ 237

Restricted stock 1,809 1,553

Restricted shares 3,477 1,809

Total $ 3,579 $ 2,046

As of December 31, 2024, the Company had unrecognized stock-based compensation expense related to stock options and restricted stock of approximately $ 0.1 million and $ 3.2 million, respectively, which is expected to be recognized over the remaining weighted average vesting period of 1.0 years and 2.4 years, respectively.

Income tax benefit related to restricted shares $ 860 $ 439

As of December 31, 2025, the Company had unrecognized stock-based compensation expense related to stock options and restricted stock of approximately $ 18.9 thousand and $ 4.5 million, respectively, which is expected to be recognized over the remaining weighted average vesting period of 0.5 years and 1.8 years, respectively.

Defined Contribution Plan

The Company has established an employee directed 401(k) plan (“Plan”) for employees meeting certain eligibility requirements.

The Plan requires the Company to contribute a safe harbor amount annually.

In addition, the Plan allows the Company, at its discretion, to make a matching contribution or additional profit sharing contribution based on each eligible employee’s compensation for the Plan year.

The participants must be at least 21 years of age and have at least one year of service in order to be eligible for matching and profit-sharing contributions.

The Company made profit-sharing contributions to the Plan of $ 1.1 million and $ 0.6 million for the years ended December 31, 2024 and 2023 , respectively.

The Plan requires the Company to provide a guaranteed safe harbor matching contribution equal to 100 % of the first 4 % of compensation that employees contribute to their account and this amount is immediately vested.

The Company may also, at its discretion, make matching and profit-sharing contributions based on each eligible employee’s compensation for the Plan year.

Prior to January 1, 2026, employees were eligible for safe harbor contributions with no service requirement and eligible for employer matching and profit-sharing contributions after three months of service.

After January 1, 2026, employees are eligible for safe harbor contributions after three months of service and eligible for employer matching and profit-sharing contributions after one year of service.

Matching and profit-sharing contributions vest according to the Plan’s vesting schedule.

The Company contributed $ 1.3 million and $ 1.1 million to the Plan for the years ended December 31, 2025 and 2024, respectively.

Note 11 – Fair Value of Financial Instruments

9 unchanged sentences

Level 2 – Observable inputs other than Level 1 including quoted prices in active markets for similar instruments, quoted prices in less active markets for identical or similar instruments, or other observable inputs that can be corroborated by observable market data.

Level 3 – Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation also includes observable inputs from

nonbinding single dealer quotes not corroborated by observable market data.

In developing Level 3 measurements, management incorporates whatever market data might be available and uses discounted cash flow models where appropriate.

16 unchanged sentences

The Company’s valuation technique utilized the average of the discounted cash flow method and the Guideline Public Company method.

A 20 % lack of marketability discount was applied to the valuation as well as a 4.50 % discount to non-voting shares to arrive at fair value as of December 31, 2024 and December 31, 2023.

A 4.50 % discount for non-voting shares was applied to the valuation to arrive at fair value as of December 31, 2025 and December 31, 2024.

The calculation of fair value utilized significant unobservable inputs, including projected cash flows, growth rates, and discount rates.

See Note 6 - Investment in Business Funding Group, LLC and Note 14 - Related Party Transactions for more information.

Derivative instruments :

11 unchanged sentences

Derivative asset

The table below presents a reconciliation of our investment in BFG classified as a Level 3 financial instrument and measured at fair value on a recurring basis for the periods indicated:

Financial liabilities:

Derivative liability 2 $ 148 $ —

The table below presents a reconciliation of the Company’s investment in BFG classified as a Level 3 financial instrument and measured at fair value on a recurring basis for the periods indicated:

($ in thousands) 2025 2024

35 unchanged sentences

Discount rate 25.0 % 27.5 %

Lack of marketability discount 20.0 % 20.0 %

Guideline Public Company

1 unchanged sentence

3.5 x to 5.8 x

The tables below present the carrying amount and estimated fair value of the Company's financial instruments as of the periods indicated:

The tables below present the carrying amount and estimated fair value of the Company's financial instruments at the periods indicated:

December 31, 2025 Fair Value Measurements Using

12 unchanged sentences

Investment in BFG 9,000 9,000 — — 9,000

Derivative asset

509 509 — 509 —

Financial liabilities:

1 unchanged sentence

Accrued interest payable 2,632 2,632 — 2,632 —

PPPLF 64 64 — 64 —

December 31, 2023 Fair Value Measurements Using

Derivative liability 148 148 — 148 —

December 31, 2024

Fair Value Measurements Using

($ in thousands) Carrying

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Cash and cash equivalents $ 109,162 $ 109,162 $ 109,162 $ — $ —

Investment securities available-for-sale 29,930 29,930 29,930 — —

Investment securities held-to-maturity 12,565 11,057 — 11,057 —

5 unchanged sentences

Investment in BFG 7,700 7,700 — — 7,700

Derivative asset

509 509 — 509 —

Financial liabilities:

8 unchanged sentences

State 1,817 1,127

Deferred tax expense

Total current tax expense $ 8,861 $ 4,157

Deferred tax expense (benefit)

Federal $ ( 2,533 ) $ 425

State ( 659 ) ( 335 )

Income tax expense $ 4,247 $ 6,353

Total deferred tax expense (benefit)

$ ( 3,192 ) $ 90

Total income tax expense

Federal $ 4,511 $ 3,455

State 1,158 792

Total income tax expense $ 5,669 $ 4,247

The components of net deferred income tax assets and liabilities on the balance sheet at December 31, 2025 and 2024 , are as follows:

3 unchanged sentences

Allowance for credit losses

Accrued bonuses 1,733 —

Loan servicing rights 553 316

Accrued vacation 205 —

Nonqualified stock options 159 154

Restricted stock 815 386

Deferred loan fees, net — 51

Unrealized losses on cash flow hedges 65 —

Unrealized losses on securities AFS — 24

Other 109 438

Total deferred tax assets 13,392 4,894

1 unchanged sentence

ROU asset ( 742 ) ( 875 )

Other reserves ( 5,317 ) —

Deferred loan fees, net ( 1,588 ) ( 2,159 )

2 unchanged sentences

Unrealized gains on cash flow hedges — ( 85 )

Unrealized gains on securities AFS ( 74 ) —

Other ( 361 ) ( 319 )

Total deferred tax liabilities ( 11,047 ) ( 5,793 )

Deferred taxes, net $ ( 899 ) $ ( 748 )

Deferred tax assets (liabilities), net

$ 2,345 $ ( 899 )

The income tax expense recorded differs from the expected income tax expense and the reconciliation of these differences is as follows at December 31, 2025 and 2024 :

($ in thousands) 2024 2023

Federal income tax expense at statutory rates $ 3,568 $ 5,001

($ in thousands) Amount % Amount %

Tax provision at the U.S.

federal statutory rate $ 4,570 21.0 % $ 3,568 21.0 %

State income taxes, net 915 4.2 % 607 3.6 %

Nontaxable or nondeductible items:

Nondeductible compensation 393 1.8 % 27 0.2 %

State income tax expense, net 626 991

Other nontaxable or nondeductible items 13 0.1 % 12 — %

Other adjustments:

Other ( 222 ) ( 1.0 ) % 33 0.2 %

Income tax expense $ 5,669 26.1 % $ 4,247 25.0 %

At December 31, 2024 and 2023 , the Company had no material unrecognized tax benefits or accrued interest and penalties recorded.

The Company does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months.

Income taxes paid, net of refunds were as follows:

($ in thousands) 2025 2024

Federal $ 5,430 $ 4,247

State and local taxes:

Total income taxes paid, net of refunds $ 7,063 $ 8,057

*The amount of income taxes paid during the years ended December 31, 2025 and 2024 does not meet the 5% disaggregation threshold.

Realization of deferred tax assets is based on the Company's ability to generate sufficient future taxable income of the appropriate character.

Management has reviewed all the available evidence, both positive and negative, and determined that a valuation allowance is not necessary as of December 31, 2025.

At December 31, 2025 and 2024, the Compa ny had no material unrecognized tax benefits or accrued interest and penalties recorded.

The Company and its subsidiaries are subject to income tax within U.S.

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Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

During 2024, such derivatives were used to hedge the variable cash flows associated with existing variable-rate deposits.

Such derivatives were used to hedge the variable cash flows associated with existing variable-rate deposits.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income (“OCI”) and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings.

Amounts reported in accumulated OCI related to derivatives will be reclassified to interest on deposits as interest payments are made on the Company’s variable-rate deposits.

During the twelve months following December 31, 2024 , the Company estimates that an additional $ 0.3 million will be reclassified as a reduction to interest expense.

Fair Value of Derivative Instruments on the Consolidated Balance Sheet

The table below presents the notional amount, location, and fair value of the Company’s derivative financial instruments on the Consolidated Balance Sheet as of December 31, 2024 :

During the twelve months following December 31, 2025 , the Company estimates that an additional $ 0.2 million will be reclassified as an increase to interest expense.

Fair Value of Derivative Instruments on the Consolidated Balance Sheets

The tables below present the notional amount, location, and fair value of the Company’s derivative financial instruments on the Consolidated Balance Sheets as of the periods indicated:

Derivative Liabilities

As of December 31, 2025

($ in thousands) Notional Amount Balance Sheet Location Fair Value

Derivatives designated as hedging instruments:

Interest rate swaps $ 80,000 Other liabilities $ 148

Derivative Assets

4 unchanged sentences

Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income

The table below presents the pre-tax effect of cash flow hedge accounting on accumulated other comprehensive income as of December 31, 2024 :

The tables below present the pre-tax effect of cash flow hedge accounting on accumulated other comprehensive income for the periods indicated:

Year Ended December 31, 2025

Amount of Gain Recognized in OCI on Derivative Location of Gain Recognized from Accumulated OCI into Income Amount of Gain Reclassified from Accumulated OCI into Income

($ in thousands) Amount of Gain (Loss) Recognized in OCI on Derivative Location of Gain (Loss) Recognized from Accumulated OCI into Income Amount of Gain (Loss) Reclassified from Accumulated OCI into Income

Derivatives in Cash Flow Hedging Relationships:

1 unchanged sentence

Total $ ( 147 ) $ 387

The table below presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income for the year ended December 31, 2024 :

Location and Amount of Gain Recognized in Income on Cash Flow Hedging Relationships

Location of gain recognized in income Interest on deposits

Total amount of expense line items presented in the statement of financial performance in which the effects of cash flow hedges are recorded

Year Ended December 31, 2024

Derivatives in Cash Flow Hedging Relationships:

Interest rate swaps $ 509 Interest on deposits $ 164

Total $ 509 $ 164

Effect of Cash Flow Hedge Accounting on the Statements of Income

The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income for the periods indicated:

Location and Amount of Gain Recognized in Income on Cash Flow Hedging Relationships Location and Amount of Gain Recognized in Income on Cash Flow Hedging Relationships

($ in thousands) 2025

Location of gain recognized in income Interest on deposits Interest on deposits

Total amounts of income and expense line items presented in consolidated statements of income in which the effects of cash flow hedges are recorded $ 387 $ 164

The effects of cash flow hedging:

1 unchanged sentence

Amount of gain reclassified from accumulated OCI into income $ 387 $ 164

Offsetting Derivative Assets

The table below presents derivative instruments that are subject to enforceable master netting arrangements for the periods indicated.

The Company has not made a policy election to offset its derivative positions.

The net amounts of derivative assets can be reconciled to the tabular disclosure of fair value.

The tabular disclosure of fair value provides the location that derivative assets are presented on the consolidated balance sheet.

Offsetting Derivative Assets and Liabilities

The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of the periods indicated.

The net amounts of derivative assets and liabilities can be reconciled to the tabular disclosure of fair value.

The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheets.

As of December 31, 2025

Gross Amounts Not Offset in the Statement of Financial Position

Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets presented in the Statement of Financial Position Financial Instruments Cash Collateral Received Net Amount

($ in thousands) Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amounts of Liabilities presented in the Statement of Financial Position Financial Instruments Cash Collateral Pledged

Interest rate swaps $ 148 $ — $ 148 $ — $ — $ 148

As of December 31, 2024

Gross Amounts Not Offset in the Statement of Financial Position

($ in thousands) Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets presented in the Statement of Financial Position Financial Instruments Cash Collateral Received Net Amount

Interest rate swaps $ 509 $ — $ 509 $ — $ — $ 509

Note 14 – Related Party Transactions

5 unchanged sentences

The Company underwrites loans sourced by BFG in its normal course of business.

If approved and funded, the Company pays BFG a commission fee based on the amount funded.

If approved and

funded, the Company pays BFG a commission fee based on the amount funded.

There is no guarantee or commitment made by the Company to BFG to approve or fund loans referred by BFG.

The Company is able to use its sole discretion in deciding to approve and fund loans referred by BFG.

SBA 7(a) loans sourced from BFG totaled $ 70.3 million and $ 128.9 million for the years ended December 31, 2024 and 2023, respectively.

The Company paid commission fees to BFG in the amounts of $ 2.8 million and $ 5.2 million for the years ended December 31, 2024 and 2023, respectively.

The Company received distributions from BFG in the amounts of $ 0.6 million and $ 0.7 million for the years ended December 31, 2024 and 2023, respectively.

These distributions were recorded in the Consolidated Statements of Income in other miscellaneous income.

The following table represents a summary of related party transactions with BFG for the periods indicated:

($ in thousands) 2025 2024

SBA 7(a) loans sourced from BFG $ 84,727 $ 70,275

Commission fees paid to BFG $ 3,389 $ 2,811

Distributions received from BFG (1)

$ 1,480 $ 630

(1) Recorded in the consolidated statements of income in other miscellaneous income.

Note 15 – Earnings per Share

1 unchanged sentence

Net income $ 16,091 $ 12,742

Amount allocated to participating common shareholders (1)

Amounts allocated to participating common shareholders (1)

( 705 ) ( 390 )

9 unchanged sentences

(1) Represents earnings attributable to holders of unvested restricted stock issued to the Company’s directors and employees.

On December 31, 2025, executive management elected to waive the dividend rights on their unvested restricted stock awards.

As a result, beginning on December 31, 2025, the unvested shares related to executive management will no longer be treated as participating securities and are excluded from the two-class method calculation of EPS.

This change was effective beginning with the quarter ending December 31, 2025 and had a de minimus impact on basic and diluted earnings per share.

The change does not affect previously reported periods.

Note 16 – Accumulated Other Comprehensive Income

The following tables present changes to accumulated other comprehensive income by component for the periods indicated (in thousands):

Available-for-Sale Securities Cash Flow Hedges Accumulated OCI

Balance at December 31, 2023 $ — $ — $ —

Other comprehensive income (loss) before reclassifications and income tax

( 97 ) 509 412

Amounts reclassified from accumulated other comprehensive income — ( 164 ) ( 164 )

Income tax (expense) benefit 24 ( 85 ) ( 61 )

Total other comprehensive income (loss), net of tax

( 73 ) 260 187

Balance at December 31, 2024 $ ( 73 ) $ 260 $ 187

Available-for-Sale Securities Cash Flow Hedges Accumulated OCI

Balance at December 31, 2024 $ ( 73 ) $ 260 $ 187

Other comprehensive income (loss) before reclassifications and income tax

321 ( 147 ) 174

Amounts reclassified from accumulated other comprehensive income — ( 387 ) ( 387 )

Income tax (expense) benefit ( 81 ) 133 52

Total other comprehensive income (loss), net of tax

240 ( 401 ) ( 161 )

Balance at December 31, 2025 $ 167 $ ( 141 ) $ 26

Note 17 – Segments

As the Company experienced significant growth in size and complexity, management reassessed its approach to analyzing revenues, financial performance, and business activities.

To align with the internal financial reporting with the organizational structure and how the CODM manages the business, evaluates performance, and allocates resources, the Company completed a technology project to capture financial information by segment.

The CODM currently reviews the revenues and financial results for three operating and reportable segments:

traditional banking, banking as a service (“BaaS”), and treasury and administration.

Considering management’s needs due to the increased volume and complexity of its business, management implemented new processes and utilized system capabilities to capture accounting information by cost centers.

The cost centers are subsequently mapped to the established business segments and reports reflecting the new structure and processes were finalized and provided to the CODM during the third quarter of 2025.

Due to the fact that financial data was not previously recorded by cost center, it is not practicable to present segment financial information for comparative prior periods.

The Company’s traditional banking segment provides loan and deposit products and services to consumers and businesses nationally and in and around the Salt Lake City, Utah MSA.

The Company’s BaaS segment provides lending, card and payments solutions nationally to fintech brands.

The treasury and administration segment consists of investments, deposits sourced nationally to support the business segments, interest charged to the traditional banking and BaaS segments on funding provided to those businesses, and other items not specific to the traditional banking or BaaS segments.

The accounting policies applicable to our segments are consistent with those applied to the preparation of the accompanying consolidated financial statements.

Intersegment interest and expense transactions are recorded at the Company’s cost;

there is no intercompany profit or loss on intersegment transactions.

The Company has implemented a transfer pricing process that credits or charges the traditional banking and BaaS segments with intrabank interest income or expense, with the treasury and administration segment as the offset for those entries.

The CODM evaluates performance and allocates resources for each of the Company’s reportable segments based on segment income or loss before other allocated operating expenses and net income.

The CODM uses income or loss before

other allocated operating expenses to allocate resources for each segment predominantly in the annual budget and forecasting process.

The CODM considers budget-to-actual variances on a monthly basis using the income before other allocated operating expenses when making decisions about allocating capital and personnel to the segments.

The Company’s CODM is the chief executive officer and its president.

In the segment reporting below, a non-GAAP subtotal is shown captioned “Income before other operating expense allocation”.

That subtotal presents an income subtotal before consideration of allocated corporate expenses which might be fixed, semi-fixed or otherwise resist changes without regard to a particular line of business.

The following table provides segment information for the periods indicated ($ in thousands):

At and for the Year Ended December 31, 2025

Traditional Banking BaaS Treasury/Other Intersegment Eliminations (1)

Interest income $ 33,438 $ 53,673 $ 18,611 $ ( 13,244 ) $ 92,478

Interest expense 13,992 2,957 16,590 ( 13,244 ) 20,295

Net interest income 19,446 50,716 2,021 — 72,183

Non-interest income 12,448 44,582 2,804 — 59,834

Non-interest expense:

Salaries and benefits 4,241 8,951 818 — 14,010

Other non-interest expense 5,389 14,340 346 — 20,075

Provision for credit losses 5,917 32,656 — — 38,573

Income before other operating expense allocations 16,347 39,351 3,661 — 59,359

Other operating expense allocations 12,450 25,149 — — 37,599

Income before taxes 3,897 14,202 3,661 — 21,760

Income tax expense 1,015 3,700 954 — 5,669

Net income $ 2,882 $ 10,502 $ 2,707 $ — $ 16,091

December 31, 2025

Other segment disclosures:

Total assets $ 439,518 $ 278,462 $ 259,155 $ — $ 977,135

(1) Interest income and expense are allocated to segments based on their respective funding requirements using an internal transfer pricing methodology.

The treasury and administration segment earns interest income from providing funds to the traditional banking and BaaS segments, which in turn incur corresponding interest expense.

These internal interest flows are eliminated at the consolidated level through the intersegment/eliminations column.

Note 18 – Condensed Financial Statements of Parent Company

33 unchanged sentences

Net income $ 16,091 $ 12,742

Adjustments to reconcile net income to net cash provided by operating activities

Adjustments to reconcile net income to net cash used in operating activities:

Equity in undistributed net income of subsidiaries ( 17,510 ) ( 17,960 )

Change in fair value of BFG ( 1,300 ) 625

5 unchanged sentences

Other liabilities 678 ( 642 )

Net cash provided by operating activities 10,650 18,897

Net cash used in operating activities ( 1,491 ) ( 7,310 )

Cash flows from investing activities:

Investment in subsidiary bank ( 17,960 ) ( 21,992 )

Investment in FinWise Investment, LLC — ( 19 )

Net cash used in investing activities ( 17,960 ) ( 22,011 )

Payments to acquire other investments ( 170 ) —

Cash used in investing activities ( 170 ) —

Cash flows from financing activities:

Proceeds from exercise of stock options 481 25

Payment of taxes related to net share settlement of equity awards ( 516 ) —

Common stock repurchased — ( 461 )

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data