What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-03-10 compared with 2022-03-14 · 243 added, 235 removed, 203 unchanged (70% of the section changed)

11 unchanged sentences

The Bank was established in 1910 under a California state charter as Northern Solano Bank, and opened for business on February 1st of that year.

On January 2, 1912, the First National Bank of

Dixon was established under a federal charter, and until 1955, the two entities operated side by side under the same roof and with the same management.

In an effort to increase efficiency of operation, reduce operating expense, and improve

lending capacity, the two banks were consolidated on April 8, 1955, with the First National Bank of Dixon as the surviving entity.

On January 1, 1980, the Bank’s federal charter was relinquished in favor of a California state charter, and the

Bank’s name was changed to First Northern Bank of Dixon.

On January 2, 1912, the First National Bank of Dixon

was established under a federal charter, and until 1955, the two entities operated side by side under the same roof and with the same management.

In an effort to increase efficiency of operation, reduce operating expense, and improve lending

capacity, the two banks were consolidated on April 8, 1955, with the First National Bank of Dixon as the surviving entity.

On January 1, 1980, the Bank’s federal charter was relinquished in favor of a California state charter, and the Bank’s name

was changed to First Northern Bank of Dixon.

In April of 2000, the shareholders of First Northern approved a corporate reorganization, which provided for the creation of the bank holding company.

2 unchanged sentences

The Bank has eleven full-service branches located in the cities of Auburn, Davis, Dixon, Fairfield, Rancho Cordova, Roseville, Sacramento, Vacaville, West Sacramento, Winters and Woodland.

Bank has one satellite banking office inside a retirement community in the city of Davis and a residential mortgage loan office in Davis.

The Bank engages financial advisors, through Raymond James Financial Services, Inc., who offer non-FDIC

insured investment and brokerage services throughout the region from offices strategically located in West Sacramento, Davis and Auburn.

The Bank also has a commercial loan office in the Contra Costa County city of Walnut Creek that serves the

East Bay Area’s small- to medium-sized business lending needs.

has one satellite banking office inside a retirement community in the city of Davis and a residential mortgage loan office in Davis.

The Bank engages financial advisors, through Raymond James Financial Services, Inc., who offer non-FDIC insured

investment and brokerage services throughout the region from offices strategically located in West Sacramento, Davis and Auburn.

The Bank also has a commercial loan office in the Contra Costa County city of Walnut Creek that serves the East Bay

Area’s small- to medium-sized business lending needs.

The Bank’s operations center is located in Dixon and provides back-office support including information services, central operations, and the central loan department.

Bank opened an additional administrative office in Sacramento.

The Bank is in the commercial banking business and generates most of its revenue by providing a wide range of products and services to small- and medium-sized businesses and individuals

including accepting demand, interest bearing transaction, savings, and time deposits, and making commercial, consumer, and real estate related loans.

It also issues cashier’s checks, rents safe deposit boxes, and provides other customary banking

In 2019, the Bank opened

an additional administrative office in Sacramento.

On November 5, 2022, the Bank entered into a Purchase and Assumption Agreement (the “Purchase Agreement”) with Columbia State Bank, a Washington state-chartered commercial bank (“Columbia”) and a

wholly-owned subsidiary of Columbia Banking System, Inc., to acquire three branches of Columbia located in the California towns of Colusa, Orland and Willows.

On January 20, 2023 the Company completed the acquisition of these branches.

This acquisition enabled the Company to extend its existing footprint.

Pursuant to the Purchase Agreement, the Bank

acquired these branches for consideration in an amount equal to 3.15% of the average daily closing balance of the deposits for the period commencing thirty calendar days prior to the closing date and concluding on the date preceding the closing

date plus the net book values of certain assets of Columbia and accrued interest and fees with respect to the acquired loans.

At the closing of the acquisition, and subject to the terms of the Purchase Agreement, the Bank assumed the deposit

liabilities related to certain accounts.

The aggregate deposits assumed totaled approximately $116 million, and the aggregate principal balance of the loans acquired totaled approximately $4 million.

The Bank is in the commercial banking business and generates most of its revenue by providing a wide range of products and services to small- and medium-sized businesses and individuals including

accepting demand, interest bearing transaction, savings, and time deposits, and making commercial, consumer, and real estate related loans.

It also issues cashier’s checks, rents safe deposit boxes, and provides other customary banking services.

First Northern offers a broad range of alternative investment products, fiduciary and other financial services through Raymond James Financial Services, Inc.

First Northern also offers

equipment leasing, credit cards, merchant card processing, payroll services, and limited international banking services through third parties.

The Bank’s principal source of revenue comes from interest income.

Interest income is primarily derived from interest and fees on loans and leases, interest on investments, and due from banks

interest bearing accounts.

First Northern also offers equipment

leasing, credit cards, merchant card processing, payroll services, and limited international banking services through third parties.

The Bank’s principal source of revenue is interest income.

Interest income is primarily derived from interest and fees on loans and leases, interest on investments, and due from banks interest bearing

For the year ended December 31, 2022, these sources comprised approximately 76%, 16%, and 7%, respectively, of the Company’s interest income.

The Bank is a member of the Federal Deposit Insurance Corporation (“FDIC”) and all deposit accounts are insured by the FDIC to the maximum amount permitted by law, currently $250,000 per

The Bank is a member of the Federal Deposit Insurance Corporation (“FDIC”) and all deposit accounts are insured by the FDIC to the maximum amount permitted by law, currently $250,000 per depositor.

Most of the Bank’s deposits are attracted from the market of northern and central Solano County, southern and central Yolo County and Placer County.

The Bank’s deposits are not received from a single depositor or group of affiliated

depositors, the loss of any one which would have a materially adverse impact on the business of the Bank.

The Bank’s deposits are not received from a single depositor or group of affiliated depositors, the

loss of any one which would have a materially adverse impact on the business of the Bank.

A material portion of the Bank’s deposits are not concentrated within a single industry group of related industries.

As of December 31, 2022, the Company had consolidated assets of approximately $1.87 billion, liabilities of approximately $1.75 billion and stockholders’ equity of approximately $125.0 million.

The Company and its subsidiaries employed 190 full-time-equivalent employees as of December 31, 2021.

The Company and the Bank consider their relationship with their employees to be good and have not experienced any interruptions of operations

due to labor disagreements.

Company and its subsidiaries employed 192 full-time-equivalent employees as of December 31, 2022.

The Company and the Bank consider their relationship with their employees to be good and have not experienced any interruptions of operations due to

labor disagreements.

Available Information

The Company makes available free of charge on its website, www.thatsmybank.com , its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and

amendments to those reports, as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the SEC.

The Company makes available free of charge on its website, www.thatsmybank.com , its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to

those reports, as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the SEC.

These filings are also accessible on the SEC’s website at www.sec.gov .

information found on the Company’s website shall not be deemed incorporated by reference by any general statement incorporating by reference this report into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934

and shall not otherwise be deemed filed under such Acts.

The information found on the

Company’s website shall not be deemed incorporated by reference by any general statement incorporating by reference this report into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934 and shall not otherwise be

deemed filed under such Acts.

The Effect of Government Policy on Banking

The earnings and growth of the Bank are affected not only by local market area factors and general economic conditions, but also by government monetary and fiscal policies.

For example, the

Board of Governors of the Federal Reserve System (“FRB”) influences the supply of money through its open market operations in U.S.

Government securities, adjustments to the discount rates applicable to borrowings by depository institutions and

others and establishment of reserve requirements against both member and non-member financial institutions’ deposits.

Such actions significantly affect the overall growth and distribution of loans, investments, and deposits and also affect

interest rates charged on loans and paid on deposits.

For example, the Board of

Governors of the Federal Reserve System (“FRB”) influences the supply of money through its open market operations in U.S.

Government securities, adjustments to the discount rates applicable to borrowings by depository institutions and others and

establishment of reserve requirements against both member and non-member financial institutions’ deposits.

Such actions significantly affect the overall growth and distribution of loans, investments, and deposits and also affect interest rates

charged on loans and paid on deposits.

The nature and impact of future changes in such policies on the business and earnings of the Company cannot be predicted.

Additionally, state and federal tax policies can impact banking

organizations.

Because of the extensive regulation of commercial banking activities in the United States, the business of the Company is particularly susceptible to being affected by the enactment of federal

and state legislation which may have the effect of increasing or decreasing the cost of doing business, modifying permissible activities or enhancing the competitive position of other financial institutions.

Any change in applicable laws,

regulations, or policies may have a material adverse effect on the business, financial condition, or results of operations, or prospects of the Company.

Additionally, state and federal tax policies can impact banking organizations.

Because of the extensive regulation of commercial banking activities in the United States, the business of the Company is particularly susceptible to being affected by the enactment of federal and

state legislation which may have the effect of increasing or decreasing the cost of doing business, modifying permissible activities or enhancing the competitive position of other financial institutions.

Any change in applicable laws, regulations,

or policies may have a material adverse effect on the business, financial condition, or results of operations, or prospects of the Company.

In May 2018, the President signed into law the Economic Growth, Regulatory Relief and Consumer Protection Act (the “EGRRCPA”) which amended various provisions of the Dodd-Frank Act as well as other federal banking

statutes, and generally authorized the FRB to tailor regulation to better reflect the character of the different banking firms that the FRB supervises.

In August 2018, the FRB began implementing the EGRRCPA with several interim final rules

which, among other things, revised the FRB’s Small Bank Holding Company and Savings and Loan Holding Company Policy Statement (the “policy statement”) to raise the consolidated assets threshold from $1 billion to $3 billion, allowing the Company

to qualify under the policy statement.

In August 2018, the FRB began implementing the EGRRCPA with several interim final rules which,

among other things, revised the FRB’s Small Bank Holding Company and Savings and Loan Holding Company Policy Statement (the “policy statement”) to raise the consolidated assets threshold from $1 billion to $3 billion, allowing the Company to

qualify under the policy statement.

This policy statement applies to bank holding companies with pro forma consolidated assets of less than $3 billion that (i) are not engaged in significant nonbanking activities either directly or through a

7 unchanged sentences

use shorter call report forms.

Whether and to what extent the EGRRCPA or new legislation will result in additional regulatory initiatives and policies, or modifications of existing regulations and policies, which may impact our business, cannot

be predicted at this time.

predicted at this time.

Supervision and Regulation of Bank Holding Companies

The Company is a bank holding company subject to the Bank Holding Company Act of 1956, as amended (“BHCA”).

The Company reports to, registers with, and is subject to supervision and

examination by, the FRB.

The Company reports to, registers with, and is subject to supervision and examination by,

The FRB also has the authority to examine the Company’s subsidiaries.

3 unchanged sentences

Standards” below for more information.

The FRB also has the authority to take enforcement action against any bank holding company that commits any unsafe or unsound practice, or violates certain laws, regulations, or conditions imposed in

writing by the FRB.

The FRB also has the authority to take enforcement action against any bank holding company that commits any unsafe or unsound practice, or violates certain laws, regulations, or conditions imposed in writing

See “Prompt Corrective Action and Other Enforcement Mechanisms” below for more information.

Such enforcement powers include the power to assess civil money penalties against any bank holding company violating any provision

of the BHCA or any regulation or order of the FRB under the BHCA.

Knowing violations of the BHCA or regulations or orders of the FRB can also result in criminal penalties for the company and any individuals participating in such conduct.

Such enforcement powers include the power to assess civil money penalties against any bank holding company violating any provision of the BHCA

or any regulation or order of the FRB under the BHCA.

Knowing violations of the BHCA or regulations or orders of the FRB can also result in criminal penalties for the bank holding company and any individuals participating in such conduct.

long-standing FRB policy and provisions of the Dodd-Frank Act, bank holding companies are required to act as a source of financial and managerial strength to their subsidiary banks, and to commit resources to support their subsidiary banks.

support may be required at times when a bank holding company may not have the resources to provide such support, or may not be inclined to provide such support under the then-existing circumstances.

Under the BHCA, a company generally must obtain the prior approval of the FRB before it exercises a controlling influence over a bank, or acquires, directly or indirectly, more than 5% of the

voting shares or substantially all of the assets of any bank or bank holding company.

Under the BHCA, a company generally must obtain the prior approval of the FRB before it exercises a controlling influence over a bank, or acquires, directly or indirectly, more than 5% of the voting

shares or substantially all of the assets of any bank or bank holding company.

Thus, the Company is required to obtain the prior approval of the FRB before it acquires, merges, or consolidates with any bank or bank holding company.

company seeking to acquire, merge, or consolidate with the Company also would be required to obtain the prior approval of the FRB.

The Company is generally prohibited under the BHCA from acquiring ownership or control of more than 5% of the voting shares of any company that is not a bank or bank holding company and from

engaging directly or indirectly in activities other than banking, managing banks, or providing services to affiliates of the holding company.

However, a bank holding company, with the approval of the FRB, may engage, or acquire the voting shares

of companies engaged, in activities that the FRB has determined to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.

A bank holding company must demonstrate that the benefits to the public of

the proposed activity will outweigh the possible adverse effects associated with such activity.

seeking to acquire, merge, or consolidate with the Company also would be required to obtain the prior approval of the FRB.

The Company is generally prohibited under the BHCA from acquiring ownership or control of more than 5% of the voting shares of any company that is not a bank or bank holding company and from engaging

directly or indirectly in activities other than banking, managing banks, or providing services to affiliates of the holding company.

However, a bank holding company, with the approval of the FRB, may engage, or acquire the voting shares of

companies engaged, in activities that the FRB has determined to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.

A bank holding company must demonstrate that the benefits to the public of the

proposed activity will outweigh the possible adverse effects associated with such activity.

The FRB generally prohibits a bank holding company from declaring or paying a cash dividend which would impose undue pressure on the capital of subsidiary banks or would be funded only through

2 unchanged sentences

income is sufficient to fully fund each dividend and its prospective rate of earnings retention appears consistent with its capital needs, asset quality, and overall financial condition.

The Company is also subject to restrictions relating to

the payment of dividends under California corporate law.

The Company is also subject to restrictions relating to the

payment of dividends under California corporate law.

See “Restrictions on Dividends and Other Distributions” below for additional restrictions on the ability of the Company and the Bank to pay dividends.

Supervision and Regulation of the Bank

The Bank is subject to regulation, supervision and regular examination by the Financial Institutions Division of the California Department of Financial Protection and Innovation (“DFPI”) and

The regulations of these agencies affect most aspects of the Bank’s business and prescribe permissible types of loans and investments, the amount of required reserves, requirements for branch offices, the permissible scope of the

Bank’s activities and various other requirements.

While the Bank is not a member of the FRB, it is directly subject to certain regulations of the FRB dealing with such matters as check clearing activities, establishment of banking reserves,

Truth-in-Lending (“Regulation Z”), and Equal Credit Opportunity (“Regulation B”).

The Bank is also subject to regulations of (although not direct supervision and examination by) the Consumer Financial Protection Bureau (“CFPB”), which was

created by the Dodd-Frank Act.

The Bank is subject to regulation, supervision and regular examination by the Financial Institutions Division of the California Department of Financial Protection and Innovation (“DFPI”) and the

The regulations of and laws administered by these agencies affect most aspects of the Bank’s business and prescribe permissible types of loans and investments, the amount of required reserves, requirements for branch offices, the permissible

scope of the Bank’s activities and various other requirements.

While the Bank is not a member of the FRB, it is directly subject to certain regulations of the FRB dealing with such matters as check clearing activities, establishment of banking

reserves, Truth-in-Lending (“Regulation Z”), and Equal Credit Opportunity (“Regulation B”).

The Bank is also subject to regulations of (although not direct supervision and examination by) the Consumer Financial Protection Bureau (“CFPB”), which

was created by the Dodd-Frank Act.

Among the CFPB’s responsibilities are implementing and enforcing federal consumer financial protection laws, reviewing the business practices of financial services providers for legal compliance, monitoring the

3 unchanged sentences

The banking industry is also subject to significantly increased regulatory controls and processes regarding the Bank Secrecy Act and anti-money laundering laws.

Over the past decade, a number

of banks and bank holding companies announced the imposition of regulatory sanctions, including regulatory agreements and cease and desist orders and, in some cases, fines and penalties, by the bank regulators due to failures to comply with the

Bank Secrecy Act and other anti-money laundering legislation.

Over the past decade, a number of

banks and bank holding companies announced the imposition of regulatory sanctions, including regulatory agreements and cease and desist orders and, in some cases, fines and penalties, by the bank regulators due to failures to comply with the Bank

Secrecy Act and other anti-money laundering legislation.

In a number of these cases, the fines and penalties have been significant.

1 unchanged sentence

regulatory approvals for future initiatives requiring regulatory approval, including acquisitions.

Under California law, the Bank is subject to various restrictions on, and requirements regarding, its operations and administration including the maintenance of branch offices and automated

teller machines, capital and reserve requirements, deposits and borrowings, and investment and lending activities.

California law permits a state-chartered bank to invest in the stock and securities of other corporations, subject to a state-chartered bank receiving either general authorization or, depending

on the amount of the proposed investment, specific authorization from the DFPI.

Under California law, the Bank is subject to various restrictions on, and requirements regarding, its operations and administration including the maintenance of branch offices and automated teller

machines, capital and reserve requirements, deposits and borrowings, and investment and lending activities.

California law permits a state-chartered bank to invest in the stock and securities of other corporations, subject to a state-chartered bank receiving either general authorization or, depending on the

amount of the proposed investment, specific authorization from the DFPI.

Federal banking laws, however, impose limitations on the activities and equity investments of state-chartered, federally insured banks.

The FDIC rules on

investments prohibit a state bank from acquiring an equity investment of a type, or in an amount, not permissible for a national bank.

FDIC rules also prohibit a state bank from engaging as a principal in any activity that is not permissible for

a national bank, unless the bank is adequately capitalized and the FDIC approves the activity after determining that such activity does not pose a significant risk to the deposit insurance fund.

The FDIC rules on activities generally permit

subsidiaries of banks, without prior specific FDIC authorization, to engage in those activities that have been approved by the FRB for bank holding companies because such activities are so closely related to banking to be a proper incident

Other activities generally require specific FDIC prior approval, and the FDIC may impose additional restrictions on such activities on a case-by-case basis in approving applications to engage in otherwise impermissible activities.

The FDIC rules on investments

prohibit a state bank from acquiring an equity investment of a type, or in an amount, not permissible for a national bank.

FDIC rules also prohibit a state bank from engaging as a principal in any activity that is not permissible for a national

bank, unless the bank is adequately capitalized and the FDIC approves the activity after determining that such activity does not pose a significant risk to the deposit insurance fund.

The FDIC rules on activities generally permit subsidiaries of

banks, without prior specific FDIC authorization, to engage in those activities that have been approved by the FRB for bank holding companies because such activities are so closely related to banking to be a proper incident thereto.

activities generally require specific FDIC prior approval, and the FDIC may impose additional restrictions on such activities on a case-by-case basis in approving applications to engage in otherwise impermissible activities.

The USA Patriot Act

Title III of the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA Patriot Act”) includes numerous provisions for

fighting international money laundering and blocking terrorism access to the U.S.

Title III of the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA Patriot Act”) includes numerous provisions for fighting

international money laundering and blocking terrorism access to the U.S.

financial system.

The USA Patriot Act requires certain additional due diligence and record keeping practices, including, but not limited to, new customers,

correspondent and private banking accounts.

The USA Patriot Act requires certain additional due diligence and record keeping practices, including, but not limited to, new customers, correspondent and

private banking accounts.

Part of the USA Patriot Act is the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001 (“IMLAFATA”).

Among its provisions, IMLAFATA requires each financial

institution to:

Among its provisions, IMLAFATA requires each financial institution

(i) establish an anti-money laundering program;

1 unchanged sentence

(iii) appoint a Bank Secrecy Act officer responsible for day-to-day compliance;

and (iv) conduct

independent audits.

In addition, IMLAFATA contains a provision encouraging cooperation among financial institutions, regulatory authorities, and law enforcement authorities with respect to individuals, entities and organizations engaged in, or

reasonably suspected of engaging in, terrorist acts or money laundering activities.

IMLAFATA expands the circumstances under which funds in a bank account may be forfeited and requires covered financial institutions to respond under certain

circumstances to requests for information from federal banking agencies within 120 hours.

IMLAFATA also amends the BHCA and the Bank Merger Act to require the federal banking agencies to consider the effectiveness of a financial institution’s

anti-money laundering activities when reviewing an application under these Acts.

and (iv) conduct independent

suspected of engaging in, terrorist acts or money laundering activities.

IMLAFATA expands the circumstances under which funds in a bank account may be forfeited and requires covered financial institutions to respond under certain circumstances to

requests for information from federal banking agencies within 120 hours.

IMLAFATA also amends the BHCA and the federal Bank Merger Act to require the federal banking agencies to consider the effectiveness of a financial institution’s anti-money

laundering activities when reviewing an application under these Acts.

Pursuant to IMLAFATA, the Secretary of the Treasury, in consultation with the heads of other government agencies, has adopted measures applicable to banks, bank holding companies, and/or other

7 unchanged sentences

In general, the GLBA

requires explanations to consumers on policies and procedures regarding the disclosure of such nonpublic personal information, and, except as otherwise required by law, prohibits disclosing such information except as provided in the banks’

policies and procedures and applicable law.

and procedures and applicable law.

These regulations also allow consumers to opt-out of the sharing of certain information between affiliates, and impose other requirements.

3 unchanged sentences

“Risk Factors” in this report.

The Company believes that it complies with all provisions of GLBA and all implementing regulations, and that the Bank has developed appropriate policies and procedures to meet its

responsibilities in connection with the privacy provisions of GLBA.

The Company believes that it complies with all provisions of GLBA and all implementing regulations, and that the Bank has developed appropriate policies and procedures to meet its responsibilities in

connection with the privacy provisions of GLBA.

California and other state legislatures have adopted privacy laws, including laws prohibiting sharing of customer information without the customer’s prior permission.

These laws may make it

more difficult for the Company to share information with its marketing partners, reduce the effectiveness of marketing programs, and increase the cost of marketing programs.

These laws may make it more

difficult for the Company to share information with its marketing partners, reduce the effectiveness of marketing programs, and increase the cost of marketing programs.

In June 2018, the State of California enacted The California Consumer Privacy Act of 2018 (“CCPA”).

1 unchanged sentence

their personal information which is obtained by or shared with “covered businesses”, which includes the Bank and most other banking institutions subject to California law.

The CCPA gives consumers the right to

request disclosure of information collected about them and whether that information has been sold or shared with others, the right to request deletion of personal information subject to certain exceptions, the right to opt out of the sale of

the consumer’s personal information and the right not to be discriminated against because of choices regarding the consumer’s personal information.

The CCPA provides for certain monetary penalties and for its enforcement by the California

Attorney General or consumers whose rights under the law are not observed.

It also provides for damages as well as injunctive or declaratory relief if there has been unauthorized access, theft or disclosure of personal information due to

failure to implement reasonable security procedures.

The CCPA contains several exemptions, including a provision to the effect that the CCPA does not apply where the information is collected, processed, sold or disclosed pursuant to the GLBA if

the GLBA is in conflict with the CCPA.

The impact of the CCPA on the business of the Bank is yet to be determined, but it could result in increased operating expenses as well as additional exposure to the risk of litigation by or on behalf of

In November 2020, California voters approved state-wide Proposition 24, also known as the California Privacy Rights and Enforcement Act of 2020 (the “CPREA”) which expanded and amended certain provisions of the

CCPA and created the California Privacy Protection Agency to enforce privacy rights for Californians and impose fines for violations of such rights.

The CCPA gives consumers the right to request

disclosure of information collected about them and whether that information has been sold or shared with others, the right to request deletion of personal information subject to certain exceptions, the right to opt out of the sale of the

consumer’s personal information and the right not to be discriminated against because of choices regarding the consumer’s personal information.

The CCPA provides for certain monetary penalties and for its enforcement by the California Attorney

General or consumers whose rights under the law are not observed.

It also provides for damages as well as injunctive or declaratory relief if there has been unauthorized access, theft or disclosure of personal information due to failure to

implement reasonable security procedures.

The CCPA contains several exemptions, including a provision to the effect that the CCPA does not apply where the information is collected, processed, sold or disclosed pursuant to the GLBA if the GLBA is

in conflict with the CCPA.

and created the California Privacy Protection Agency to enforce privacy rights for Californians and impose fines for violations of such rights.

The CPREA requires businesses to not share a consumer’s personal information upon the consumer’s

2 unchanged sentences

It also removed the ability of businesses to remedy violations before being penalized for violations and increased the penalties for such violations.

Most of the provisions of the CPREA will take effect

in 2023 but some portions, such as the creation of the new state agency, went into effect immediately.

Most of the provisions of the CPREA will take effect in

2023 but some portions, such as the creation of the new state agency, went into effect immediately.

The impact of these laws on the business of the Bank is yet to be determined, but they could result in increased operating expenses as well as

4 unchanged sentences

In July 2013, the FRB and the other U.S.

federal banking agencies adopted

final rules making significant changes to the U.S.

banking agencies adopted final rules making significant changes to the U.S.

regulatory capital framework for U.S.

banking organizations and to conform this framework to the guidelines published by the Basel Committee on Banking Supervision (“Basel Committee”) known as

the Basel III Global Regulatory Framework for Capital and Liquidity.

The Basel Committee is a committee of banking supervisory authorities from major countries in the global financial system which formulates broad supervisory standards and

guidelines relating to financial institutions for implementation on a country-by-country basis.

banking organizations and to conform this framework to the guidelines published by the Basel Committee on Banking Supervision (“Basel

Committee”) known as the Basel III Global Regulatory Framework for Capital and Liquidity.

The Basel Committee is a committee of banking supervisory authorities from major countries in the global financial system which formulates broad supervisory

standards and guidelines relating to financial institutions for implementation on a country-by-country basis.

These rules adopted by the FRB and the other federal banking agencies (“the U.S.

Basel III Capital Rules”) replaced the federal banking agencies’

general risk-based capital rules, advanced approaches rule, market risk rule, and leverage rules, in accordance with certain transition provisions.

Basel III Capital Rules”) replaced the federal banking

agencies’ general risk-based capital rules, advanced approaches rule, market risk rule, and leverage rules, in accordance with certain transition provisions.

Banks, such as First Northern, became subject to these rules on January 1, 2015.

11 unchanged sentences

First Northern believes that it was in compliance with these requirements at December 31, 2022.

Pursuant to the EGRRCPA, the FRB adopted a final rule, effective August 31, 2018, amending the Small Bank Holding Company and Savings and Loan Holding Company Policy Statement (the “policy statement”) to increase

the consolidated assets threshold to qualify to utilize the provisions of the policy statement from $1 billion to $3 billion.

consolidated assets threshold to qualify to utilize the provisions of the policy statement from $1 billion to $3 billion.

Bank holding companies, such as the Company, are subject to capital adequacy requirements of the FRB;

however, bank

holding companies which are subject to the policy statement are not subject to compliance with the regulatory capital requirements until they hold $3 billion or more in consolidated total assets.

As a consequence, as of December 31, 2018, the

Company was not required to comply with the FRB’s regulatory capital requirements until such time that its consolidated total assets equal $3 billion or more or if the FRB determines that the Company is no longer deemed to be a small bank holding

however, bank holding

companies which are subject to the policy statement are not subject to compliance with the regulatory capital requirements until they hold $3 billion or more in consolidated total assets.

As a consequence, as of December 31, 2018 and through

December 31, 2022, the Company was not required to comply with the FRB’s regulatory capital requirements until such time that its consolidated total assets equal $3 billion or more or if the FRB determines that the Company is no longer deemed to be

a small bank holding company.

However, if the Company had been subject to these regulatory capital requirements, it would have exceeded all regulatory requirements.

8 unchanged sentences

The following table presents the capital ratios for the Bank as of December 31, 2022 (calculated in accordance with the Basel III capital rules):

Adequately Capitalized

Well Capitalized

Tier 1 Leverage Capital (to Average Assets)

3 unchanged sentences

* Ratio for regulatory requirement excludes the capital conservation buffer of 2.50%.

The federal banking agencies must take into consideration concentrations of credit risk and risks from non-traditional activities, as well as an institution’s ability to manage those risks,

when determining the adequacy of an institution’s capital.

The federal banking agencies must take into consideration concentrations of credit risk and risks from non-traditional activities, as well as an institution’s ability to manage those risks, when

determining the adequacy of an institution’s capital.

This evaluation will be made as a part of the institution’s regular safety and soundness examination.

The federal banking agencies must also consider interest rate risk (when the

interest rate sensitivity of an institution’s assets does not match the sensitivity of its liabilities or its off-balance-sheet position) in evaluating a Bank’s capital adequacy.

The federal banking agencies must also consider interest rate risk (when the interest rate

sensitivity of an institution’s assets does not match the sensitivity of its liabilities or its off-balance-sheet position) in evaluating a Bank’s capital adequacy.

In January 2014, the Basel Committee issued an updated version of its leverage ratio and disclosure guidance (“Basel III leverage ratio”).

The Basel Committee guidance continues to set a

minimum Basel III leverage ratio of 3%.

The Basel Committee, in December 2017, adopted further revisions to the Basel III capital standards (“Basel IV”) which refined the definition of the leverage ratio “exposure measures” (the Basel III term

for non risk-weighted assets).

The Basel Committee guidance continues to set a minimum

Basel III leverage ratio of 3%.

risk-weighted assets).

Beginning January 1, 2023, the updates to the leverage ratio will be implemented.

5 unchanged sentences

well capitalized, adequately capitalized, under-capitalized, significantly undercapitalized, and critically undercapitalized.

Under the prompt corrective action provisions of FDICIA, an insured depository institution generally will be classified in one of five capital categories ranging from “well-capitalized” to

“critically under-capitalized.”

An institution that, based upon its capital levels, is classified as “well capitalized,” “adequately capitalized” or “under-capitalized” may be treated as though it were in the next lower

capital category if the appropriate federal banking agency, after notice and opportunity for hearing, determines that an unsafe or unsound condition or an unsafe or unsound practice warrants such treatment.

At each successive lower capital

category, an insured depository institution is subject to increased restrictions on its operations.

Management believes that at December 31, 2021 , the Company and the Bank exceeded the required ratios for classification as “well

capitalized.” Institutions that are “under-capitalized” or lower are subject to certain mandatory supervisory corrective actions.

Under the prompt corrective action provisions of FDICIA, an insured depository institution generally will be classified in one of five capital categories ranging from “well-capitalized” to “critically

under-capitalized.”

An institution that, based upon its capital levels, is classified as “well capitalized,” “adequately capitalized” or “under-capitalized” may be treated as though it were in the next lower capital

category if the appropriate federal banking agency, after notice and opportunity for hearing, determines that an unsafe or unsound condition or an unsafe or unsound practice warrants such treatment.

At each successive lower capital category, an

insured depository institution is subject to increased restrictions on its operations.

Management believes that at December 31, 2022, the Company and the Bank exceeded the required ratios for classification as “well capitalized.” Institutions

that are “under-capitalized” or lower are subject to certain mandatory supervisory corrective actions.

Failure to meet regulatory capital guidelines can result in a bank being required to raise additional capital.

“under-capitalized” bank must develop a capital restoration plan and its parent holding company must generally guarantee compliance with the plan.

In addition to measures taken under the prompt corrective action provisions, commercial banking organizations may be subject to potential enforcement actions by the federal regulators for

unsafe or unsound practices in conducting their businesses or for violations of any law, rule, regulation or any condition imposed in writing by the agency or any written agreement with the agency.

Enforcement actions may include the imposition

of a conservator or receiver, the issuance of a cease-and-desist order that can be judicially enforced, the termination of insurance of deposits (in the case of a depository institution), the imposition of civil money penalties, the issuance of

An “under-capitalized” bank must

develop a capital restoration plan and its parent holding company must generally guarantee compliance with the plan.

In addition to measures taken under the prompt corrective action provisions, commercial banking organizations may be subject to potential enforcement actions by the federal regulators for unsafe or

unsound practices in conducting their businesses or for violations of any law, rule, regulation or any condition imposed in writing by the agency or any written agreement with the agency.

Enforcement actions may include the imposition of a

conservator or receiver, the issuance of a cease-and-desist order that can be judicially enforced, the termination of insurance of deposits (in the case of a depository institution), the imposition of civil money penalties, the issuance of

directives to increase capital, the issuance of formal and informal agreements, the issuance of removal and prohibition orders against institution-affiliated parties and the enforcement of such actions through injunctions or restraining orders

3 unchanged sentences

Safety and Soundness Standards

FDICIA also implemented certain specific restrictions on transactions and required federal banking regulators to adopt overall safety and soundness standards for depository institutions related

to internal control, loan underwriting and documentation and asset growth.

Among other things, FDICIA limits the interest rates paid on deposits by undercapitalized institutions, restricts the use of brokered deposits, limits the aggregate

extensions of credit by a depository institution to an executive officer, director, principal shareholder, or related interest, and reduces deposit insurance coverage for deposits offered by undercapitalized institutions for deposits by certain

employee benefits accounts.

The federal banking agencies may require an institution to submit to an acceptable compliance plan as well as have the flexibility to pursue other more appropriate or effective courses of

action given the specific circumstances and severity of an institution’s non-compliance with one or more standards.

FDICIA also implemented certain specific restrictions on transactions and required federal banking regulators to adopt overall safety and soundness standards for depository institutions related to

internal control, loan underwriting and documentation and asset growth.

Among other things, FDICIA limits the interest rates paid on deposits by undercapitalized institutions, restricts the use of brokered deposits, limits the aggregate extensions

of credit by a depository institution to an executive officer, director, principal shareholder, or related interest, and reduces deposit insurance coverage for deposits offered by undercapitalized institutions for deposits by certain employee

benefits accounts.

The federal banking agencies may require an institution to submit to an acceptable compliance plan as well as have the flexibility to pursue other more appropriate or effective courses of action given

the specific circumstances and severity of an institution’s non-compliance with one or more standards.

Restrictions on Dividends and Other Distributions

The power of the board of directors of an insured depository institution to declare a cash dividend or other distribution with respect to capital is subject to statutory and regulatory

restrictions which limit the amount available for such distribution depending upon the earnings, financial condition and liquidity needs of the institution, as well as general business conditions.

FDICIA prohibits insured depository institutions

from paying management fees to any controlling persons or, with certain limited exceptions, making capital distributions, including dividends, if, after such transaction, the institution would be undercapitalized.

The federal banking agencies also have authority to prohibit a depository institution from engaging in business practices, which are considered to be unsafe or unsound, possibly including

payment of dividends or other payments under certain circumstances even if such payments are not expressly prohibited by statute.

In addition to the restrictions imposed under federal law, banks chartered under California law generally may only pay cash dividends to the extent such payments do not exceed the lesser of

retained earnings of the bank’s net income for its last three fiscal years (less any distributions to shareholders during such period).

In the event a bank desires to pay cash dividends in excess of such amount, the bank may pay a cash dividend

with the prior approval of the DFPI in an amount not exceeding the greatest of the bank’s retained earnings, the bank’s net income for its last fiscal year, or the bank’s net income for its current fiscal year.

The power of the board of directors of an insured depository institution to declare a cash dividend or other distribution with respect to capital is subject to statutory and regulatory restrictions

which limit the amount available for such distribution depending upon the earnings, financial condition and liquidity needs of the institution, as well as general business conditions.

FDICIA prohibits insured depository institutions from paying

management fees to any controlling persons or, with certain limited exceptions, making capital distributions, including dividends, if, after such transaction, the institution would be undercapitalized.

The federal banking agencies also have authority to prohibit a depository institution from engaging in business practices, which are considered to be unsafe or unsound, possibly including payment of

dividends or other payments under certain circumstances even if such payments are not expressly prohibited by statute.

In addition to the restrictions imposed under federal law, banks chartered under California law generally may only pay cash dividends to the extent such payments do not exceed the lesser of retained

earnings of the bank’s net income for its last three fiscal years (less any distributions to shareholders during such period).

In the event a bank desires to pay cash dividends in excess of such amount, the bank may pay a cash dividend with the

prior approval of the DFPI in an amount not exceeding the greatest of the bank’s retained earnings, the bank’s net income for its last fiscal year, or the bank’s net income for its current fiscal year.

Premiums for Deposit Insurance

7 unchanged sentences

2020, the FDIC board of directors voted to adopt a restoration plan to restore the DIF reserve ratio to at least 1.35% within 8 years as required by the FDIC Act.

This action was in response to the reserve ratio dropping to 1.30% primarily due

to the inflow of more than $1 trillion in estimated insured deposits in the first six month of 2020 resulting mainly from the pandemic, monetary policy actions, direct government assistance and an overall reduction in spending.

This action was in response to the reserve ratio dropping to 1.30% primarily due to

the inflow of more than $1 trillion in estimated insured deposits in the first six month of 2020 resulting mainly from the pandemic, monetary policy actions, direct government assistance and an overall reduction in business spending.

No change was

made in the current schedule of assessment rates for all insured depository institutions.

Deposit insurance assessments and assessment rates are subject to change by the FDIC and can be impacted by the overall

economy and the stability of the banking industry as a whole.

Deposit insurance assessments and assessment rates are subject to change by the FDIC and can be impacted by the overall economy

and the stability of the banking industry as a whole.

There can be no assurance that the FDIC will not impose special assessments or increase annual assessments in the future.

The ultimate effect on our business of legislative,

regulatory and economic developments on the DIF cannot be predicted with certainty.

The ultimate effect on our business of legislative, regulatory and

economic developments on the DIF cannot be predicted with certainty.

Community Reinvestment Act and Fair Lending

The Bank is subject to certain fair lending requirements and reporting obligations involving its home mortgage lending operations and is also subject to the Community Reinvestment Act (“CRA”).

The CRA generally requires the federal banking agencies to evaluate the record of a financial institution in meeting the credit needs of the Bank’s local communities, including low- and moderate-income neighborhoods.

CRA generally requires the federal banking agencies to evaluate the record of a financial institution in meeting the credit needs of the Bank’s local communities, including low- and moderate-income neighborhoods.

In addition to substantive

1 unchanged sentence

applications involving business expansion such as acquisitions or de novo branching.

On January 9, 2020, the FDIC and the Office of the Comptroller of the Currency (“OCC”) published a notice of proposed rule-making intended to modernize and strengthen the CRA

regulations to better achieve their underlying statutory purpose by clarifying which activities qualify for CRA credit, updating where activities count for CRA credit, creating a more transparent and objective method for measuring CRA

performance, and providing for more transparent, consistent, and timely CRA-related data collection, recordkeeping, and reporting.

Later in 2020, the OCC adopted the new rule, which will apply to national banks, but the FDIC declined

to take action on its proposed rule, thus leaving in place the existing CRA regulatory framework.

It cannot be predicted at this time as to whether the FDIC will eventually adopt such a proposed rule and, if it does so, what impact this rule may

have on FDIC-supervised institutions, such as the Bank.

On January 9, 2020, the FDIC and the Office of the Comptroller of the Currency (“OCC”) published a notice of proposed rule-making intended to modernize and strengthen the CRA regulations

to better achieve their underlying statutory purpose by clarifying which activities qualify for CRA credit, updating where activities count for CRA credit, creating a more transparent and objective method for measuring CRA performance, and

providing for more transparent, consistent, and timely CRA-related data collection, recordkeeping, and reporting.

Later in 2020, the OCC adopted the new rule, which will apply to national banks, but the FDIC declined to take action on

its proposed rule, thus leaving in place the existing CRA regulatory framework.

It cannot be predicted at this time as to whether the FDIC will eventually adopt such a proposed rule and, if it does so, what impact this rule may have on

FDIC-supervised institutions, such as the Bank.

Certain CFPB Rules

The Consumer Financial Protection Bureau (“CFPB”) has adopted an Ability-to-Repay rule that all newly originated residential mortgages must meet.

The Ability-to-Repay rule establishes

guidelines that the lender must follow when reviewing an applicant’s income, obligations, assets, liabilities, and credit history and requires that the lender make a reasonable and good faith determination of an applicant’s ability to repay the

loan according to its terms.

The Ability-to-Repay rule establishes guidelines that

the lender must follow when reviewing an applicant’s income, obligations, assets, liabilities, and credit history and requires that the lender make a reasonable and good faith determination of an applicant’s ability to repay the loan according to

Lenders will be presumed to have met the Ability-to-Repay rule by originating loans that meet the criteria for “Qualified Mortgages”, which are set forth in detail in the rule.

The mortgage loans originated by the

Bank with the intent to sell them to Freddie Mac meet the Qualified Mortgage criteria.

The mortgage loans originated by the Bank with the intent to

sell them to Freddie Mac meet the Qualified Mortgage criteria.

The CFPB has also adopted a rule on simplified and improved mortgage loan disclosures, otherwise known as Know Before You Owe.

The rule provides that mortgage borrowers receive a loan estimate

three business days after application and a closing disclosure three days before closing.

The rule provides that mortgage borrowers receive a loan estimate three

business days after application and a closing disclosure three days before closing.

These forms replace disclosure forms previously provided to borrowers under other provisions of federal law.

The rule provides for limitations on

application fees and increases in closing costs.

The rule provides for limitations on application fees

and increases in closing costs.

Any new regulatory requirements promulgated by the CFPB could have an adverse impact on our residential mortgage lending business as the industry adapts to the additional regulations.

business strategy, product offerings and profitability may change as the market adjusts to any additional regulations and as these requirements are interpreted by the regulators and courts.

strategy, product offerings and profitability may change as the market adjusts to any additional regulations and as these requirements are interpreted by the regulators and courts.

Conservatorship and Receivership of Insured Depository Institutions

1 unchanged sentence

institution is a party, if the FDIC determines that performance of the contract would be burdensome, and that disaffirmance or repudiation of the contract would promote the orderly administration of the institution’s affairs.

Such disaffirmance

or repudiation would result in a claim by its holder against the receivership or conservatorship.

The amount paid upon such claim would depend upon, among other factors, the amount of receivership assets available for the payment of such claim

and its priority relative to the priority of others.

Such disaffirmance or

repudiation would result in a claim by its holder against the receivership or conservatorship.

The amount paid upon such claim would depend upon, among other factors, the amount of receivership assets available for the payment of such claim and

its priority relative to the priority of others.

In addition, the FDIC as conservator or receiver may enforce most contracts entered into by the institution notwithstanding any provision providing for termination, default, acceleration, or

5 unchanged sentences

financial system and financial institutions, including us.

Many of the law’s provisions have been implemented

by rules and regulations of the federal banking agencies.

Many of the law’s provisions have been implemented by

rules and regulations of the federal banking agencies.

The law contains many provisions which have particular relevance to our business, including provisions that have resulted in adjustments to our FDIC deposit insurance premiums and that

5 unchanged sentences

The environment in which financial institutions continue to operate since the U.S.

financial crisis, including legislative and regulatory changes affecting capital, liquidity, supervision,

permissible activities, corporate governance and compensation, and changes in fiscal policy may have long-term effects on the business model and profitability of financial institutions that cannot now be foreseen.

financial crisis, including legislative and regulatory changes affecting capital, liquidity, supervision, permissible

activities, corporate governance and compensation, and changes in fiscal policy may have long-term effects on the business model and profitability of financial institutions that cannot now be foreseen.

Overdraft and Interchange Fees

The FRB’s Regulation E imposes restrictions on banks’ abilities to charge overdraft services and fees.

The rule prohibits financial institutions from charging fees for paying overdrafts on ATM

and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions.

The Dodd-Frank Act, through a provision known as the Durbin Amendment, required the FRB to establish standards

for interchange fees that are “reasonable and proportional” to the cost of processing the debit card transaction and imposes other requirements on card networks.

Under the rule, the maximum permissible interchange fee that a bank may receive is

the sum of $0.21 per transaction and five basis points multiplied by the value of the transaction, with an additional upward adjustment of no more than $0.01 per transaction if a bank develops and implements policies and procedures reasonably

designed to achieve fraud-prevention standards set by regulation.

This regulation has resulted in decreased revenues and increased compliance costs for the banking industry and the Bank, and there can be no assurance that alternative sources of

revenues can be implemented to offset the impact of these developments.

The rule prohibits financial institutions from charging fees for paying overdrafts on ATM and

one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions.

The Dodd-Frank Act, through a provision known as the Durbin Amendment, required the FRB to establish standards for

interchange fees that are “reasonable and proportional” to the cost of processing debit card transactions and imposes other requirements on card networks.

Under the rule, the maximum permissible interchange fee that a bank may receive is the sum of

$0.21 per transaction and five basis points multiplied by the value of the transaction, with an additional upward adjustment of no more than $0.01 per transaction if a bank develops and implements policies and procedures reasonably designed to

achieve fraud-prevention standards set by regulation.

This regulation has resulted in decreased revenues and increased compliance costs for the banking industry and the Bank, and there can be no assurance that alternative sources of revenues can

be implemented to offset the impact of these developments.

Possible Future Legislation and Regulatory Initiatives

The economic and political environment of the past several years has led to a number of proposed legislative, governmental and regulatory initiatives, at both the federal and state levels,

certain of which are described above, that may significantly impact our industry.

The economic and political environment of the past several years has led to a number of proposed legislative, governmental and regulatory initiatives, at both the federal and state levels, certain of

which are described above, that may significantly impact our industry.

These and other initiatives could significantly change the competitive and operating environment in which we and our subsidiaries operate.

We cannot predict whether

these or any other proposals will be enacted or the ultimate impact of any such initiatives on our operations, competitive situation, financial condition or results of operations.

We cannot predict whether these or any

other proposals will be enacted or the ultimate impact of any such initiatives on our operations, competitive situation, financial condition or results of operations.

The results of the 2020 national elections with the change of the U.S.

President and the shift of control in the U.S.

Senate could lead to new legislative and regulatory initiatives or the roll-back of initiatives

of the previous Administration which could have significant impact on the banking and financial services industry and on our business.

Senate could lead to new legislative and regulatory initiatives or the roll-back of initiatives of

the previous Administration which could have significant impact on the banking and financial services industry and on our business.

We cannot assess at this time the degree to which this may occur.

4 unchanged sentences

In the past, an independent bank’s principal competitors for deposits and loans have been other banks, savings and loan associations, and credit unions.

Many of these competitors are large

financial institutions that have substantial capital, technology and marketing resources, which are well in excess of ours, although these larger institutions may be required to hold more regulatory capital and as a result, achieve lower returns

Many of these competitors are large financial

institutions that have substantial capital, technology and marketing resources, which are well in excess of ours, although these larger institutions may be required to hold more regulatory capital and as a result, achieve lower returns on equity.

For agricultural loans, the Bank also competes with constituent entities with the Federal Farm Credit System.

To a lesser extent, competition is also provided by thrift and loans, mortgage brokerage companies and insurance

Other institutions, such as brokerage houses, mutual fund companies, credit card companies, and even retail establishments have offered new investment vehicles, which also compete with banks for deposit business.

Additionally,

technology has lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks, such as automatic transfer and payment systems.

We also experience competition, especially for deposits,

from internet-based banking institutions and other financial companies, which do not always have a presence in our market footprint and have grown rapidly in recent years.

To a lesser extent, competition is also provided by thrift and loans, mortgage brokerage companies and insurance companies.

institutions, such as brokerage houses, mutual fund companies, credit card companies, and even retail establishments have offered new investment vehicles, which also compete with banks for deposit business.

Additionally, technology has lowered

barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks, such as automatic transfer and payment systems.

We also experience competition, especially for deposits, from internet-based

banking institutions and other financial companies, which do not always have a presence in our market footprint and have grown rapidly in recent years.

Current federal law has made it easier for out-of-state banks to enter and compete in California.

Competition in our principal markets may further intensify as a result of the Dodd-Frank Act

which, among other things, permits out-of-state de novo branching by national banks, state banks and foreign banks from other states.

While the impact of these changes cannot be predicted with certainty, it is clear that the business of banking

in California will remain highly competitive.

Competition in our principal markets may further intensify as a result of the Dodd-Frank Act which,

among other things, permits out-of-state de novo branching by national banks, state banks and foreign banks from other states.

While the impact of these changes cannot be predicted with certainty, it is clear that the business of banking in

California will remain highly competitive.

Competition in our industry is likely to further intensify as a result of continued consolidation of financial services companies, including consolidations of significance in our market area.

In order to compete with major financial institutions and other competitors in its primary service areas, the Bank relies upon the experience of its executive and senior officers in serving business clients, and upon its specialized services,

local promotional activities and the personal contacts made by its officers, directors and employees.

order to compete with major financial institutions and other competitors in its primary service areas, the Bank relies upon the experience of its executive and senior officers in serving business clients, and upon its specialized services, local

promotional activities and the personal contacts made by its officers, directors and employees.

For customers whose loan demand exceeds the Bank’s legal lending limit, the Bank may arrange for such loans on a participation basis with correspondent banks.

1 unchanged sentence

discussed below in “Management’s Discussion and Analysis of Financial Condition and Results of Operation – Liquidity”, have had some impact on the Bank’s liquidity.

The management of investment maturities, sale of loan participations, federal

fund borrowings, qualification for funds under the Federal Reserve Bank’s seasonal credit program, and the ability to sell mortgages in the secondary market is intended to allow the Bank to satisfactorily manage its liquidity.

The management of investment maturities, sale of loan participations, federal fund

borrowings, qualification for funds under the Federal Reserve Bank’s seasonal credit program, and the ability to sell mortgages in the secondary market is intended to allow the Bank to satisfactorily manage its liquidity.

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 1. Business