FIRST NORTHERN COMMUNITY BANCORP 10-K

ITEM 5 - MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is not listed on any exchange. However, trades may be reported on the OTC Markets under the symbol “FNRN.” The Company is aware that JWTT, Inc., Monroe Financial Partners and Raymond James all currently make a market in the Company’s common stock. Management is aware that there are also private transactions in the Company’s common stock, and the data set forth below may not reflect all such transactions. The following table summarizes the range of reported high and low bid quotations of the Company’s Common Stock for each quarter during the last two fiscal years and is based on information from OTC Markets. The quotations reflect the price that would be received by the seller without retail mark-up, mark-down or commissions and may not have represented actual transactions: QUARTER/YEAR HIGH* LOW* 4th Quarter 2025 $ 12.85 $ 11.88 3rd Quarter 2025 $ 12.13 $ 9.24 2nd Quarter 2025 $ 9.70 $ 8.97 1st Quarter 2025 $ 9.95 $ 8.73 4th Quarter 2024 $ 9.34 $ 8.93 3rd Quarter 2024 $ 9.52 $ 8.14 2nd Quarter 2024 $ 8.28 $ 7.33 1st Quarter 2024 $ 8.21 $ 7.07 * Price adjusted for stock dividends in the indicated periods for the 5% stock dividends payable March 25, 2026 and March 25, 2025, as described below. As of March 1, 2026, there were approximately 1,302 holders of record of the Company’s common stock, no par value. In the prior two fiscal years and to date, the Company has declared the following stock dividends: Shareholder Record Date Dividend Percentage Date Payable February 28, 2024 5 % March 25, 2024 February 28, 2025 5 % March 25, 2025 February 27, 2026 5 % March 25, 2026 The Company does not expect to pay a cash dividend in the foreseeable future. Our ability to declare and pay dividends is affected by certain regulatory restrictions. See “Business – Restrictions on Dividends and Other Distributions” in Part I, Item 1 above. For information regarding securities authorized for issuance under equity compensation plans, see Part III, Item 12 of this Annual Report on Form 10-K. 32 Table of Contents Issuer Purchases of Equity Securities The Company made the following purchases of its common stock during the three months ended December 31, 2025: (a) (b) (c) (d) Period Total number of shares purchased Average price paid per share Number of shares purchased as part of publicly announced plans or programs Maximum number of shares that may yet be purchased under the plans or programs(1) October 1 - October 31, 2025 — — — 263,958 November 1 - November 30, 2025 74,300 $ 12.53 74,300 189,658 December 1 - December 31, 2025 42,516 $ 12.85 42,516 147,142 Total 116,816 116,816 (1) On March 27, 2024, the Company approved a stock repurchase program effective May 1, 2024. The stock repurchase program, which remains in effect until April 30, 2026 unless terminated sooner, allows for repurchases by the Company in an aggregate amount of no more than 6% of the Company’s 17,144,680 outstanding shares of common stock as of March 21, 2024. This represented total shares of 1,028,680 eligible for repurchase at May 1, 2024. The total number of shares outstanding and shares eligible for repurchase have been adjusted to give retroactive effect to stock dividends and stock splits, including the 5% stock dividend declared on January 22, 2026, payable on March 25, 2026 to shareholders of record as of February 27, 2026. 33 Table of Contents ITEM 6 - RESERVED 34 Table of Contents ITEM 7 – MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION Introduction This overview highlights selected information in this Annual Report on Form 10-K and may not contain all of the information that is important to you. For a more complete understanding of trends, events, commitments, uncertainties, liquidity, capital resources, and critical accounting estimates, you should carefully read this entire Annual Report on Form 10-K. For a discussion of changes in results of operations comparing the years ended December 31, 2024 and 2023, for the Company and its subsidiary, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 7, 2025. Our subsidiary, First Northern Bank of Dixon, is a California state-chartered bank that derives most of its revenues from lending and deposit taking in the Sacramento Valley region of Northern California. Interest rates, business conditions and customer confidence all affect our ability to generate revenues. In addition, the regulatory environment and competition can challenge our ability to generate those revenues. Financial highlights for 2025 include: The Company reported net income of $21.1 million for 2025, a 5.5% increase compared to net income of $20.0 million for 2024. Net income per common share for 2025 was $1.30, an increase of 8.3% compared to net income per common share of $1.20 for 2024. Net income per common share on a fully diluted basis was $1.27 for 2025, an increase of 6.7% compared to net income per common share on a fully diluted basis of $1.19 for 2024. Net interest income totaled $67.5 million for 2025, an increase of 4.8% from $64.4 million in 2024, primarily due to increases in yields earned on loans and investment securities, which was partially offset by decreases both in volume and yield earned on due from banks and increases in average rate paid on average interest-bearing transaction deposits and savings and MMDAs. Net interest margin was 3.77% for the year ended 2025 which was a 4.7% or 17 basis point increase from the 3.60% reported for the year ended 2024. No provision for credit losses was recorded in 2025, compared to a reversal of provision for credit losses of $0.3 million in 2024. No provision for credit losses was recorded in 2025 primarily due to positive trends in gross domestic product and single-family home prices, coupled with an overall decrease in forecasted loss rates and improvements in qualitative risk factors. Non-interest income totaled $6.1 million in 2025, an increase of 1.3% from $6.0 million in 2024. The increase was primarily due to a decrease in realized losses on sales/calls of available for sale securities and an increase in other income, which was partially offset by decreases in service charges on deposit accounts and debit card income. Non-interest expenses totaled $46.2 million for 2025, up 7.9% from $42.8 million in 2024. The increase was primarily due to increases in salaries and employee benefits, occupancy and equipment, data processing and legal fees. The increase in salaries and benefits was primarily due to an increase in full-time equivalent employees and increases in contingent compensation and group medical insurance expense. The increase in occupancy and equipment was primarily due to an increase in service contracts related to upgrading and maintaining facilities. The increase in data processing was primarily due to an increase in costs of service contracts. The Company reported total assets of $1.91 billion and $1.89 billion for the years ended December 31, 2025 and 2024, respectively. Investments totaled $617.2 million as of December 31, 2025, a 2.6% decrease from $633.9 million as of December 31, 2024. U.S. Treasury securities totaled $87.5 million as of December 31, 2025, down 17.0% from $105.5 million as of December 31, 2024; securities of U.S. government agencies and corporations totaled $85.3 million, down 10.8% from $95.7 million as of December 31, 2024; obligations of state and political subdivisions totaled $75.0 million, up 11.0% from $67.6 million as of December 31, 2024; collateralized mortgage obligations totaled $92.3 million, down 2.8% from $95.0 million as of December 31, 2024; and mortgage-backed securities totaled $277.1 million, up 2.6% from $270.1 million as of December 31, 2024. 35 Table of Contents Loans (including loans held-for-sale), net of allowance, totaled $1.050 billion as of December 31, 2025, a 0.4% increase from $1.047 billion as of December 31, 2024. Commercial loans totaled $146.2 million as of December 31, 2025, up 24.0% from $117.9 million as of December 31, 2024; commercial real estate loans were $702.5 million, down 2.9% from $723.6 million as of December 31, 2024; agriculture loans were $93.6 million, up 1.1% from $92.6 million as of December 31, 2024; residential mortgage loans were $100.7 million, down 4.9% from $105.9 million as of December 31, 2024; residential construction loans were $5.8 million, down 14.9% from $6.9 million as of December 31, 2024; and consumer loans totaled $15.5 million, down 1.5% from $15.7 million as of December 31, 2024. Deposits totaled $1.68 billion as of December 31, 2025, a 1.2% decrease from $1.70 billion as of December 31, 2024. There were no FHLB advances outstanding as of December 31, 2025 and December 31, 2024. Stockholders' equity increased to $212.0 million as of December 31, 2025, a 20.2% increase from $176.3 million as of December 31, 2024. The increase was primarily due to 2025 net income of $21.1 million and a decrease in accumulated other comprehensive loss, net of $18.4 million. Critical Accounting Policies and Estimates The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, income and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to the allowance for credit losses. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements: Allowance for Credit Losses on Loans The Company believes the allowance for credit losses (ACL) accounting policy is critical because the loan portfolio represents the largest asset on the consolidated balance sheet, and there is significant judgment used in determining the adequacy of the ACL. Management estimates the ACL using relevant information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Loan losses are charged off against the allowance, while recoveries of amounts previously charged off are credited to the allowance. A provision for credit losses is based on the Company’s periodic evaluation of the factors mentioned below, as well as other pertinent factors. In determining the ACL, accruing loans with similar risk characteristics are generally evaluated collectively. To estimate expected losses the Company generally utilizes historical loss trends and the remaining contractual lives of the loan portfolios to determine estimated credit losses through a reasonable and supportable forecast period. The Company utilized a reasonable and supportable forecast period of approximately four quarters and obtained the forecast data from Moody’s Analytics. Individual loan credit quality indicators, including historical credit losses, have been statistically correlated with various econometrics, including national unemployment rate, national gross domestic product, and single-family home prices. Model forecasts may be adjusted for inherent limitations or biases that have been identified through independent validation and back-testing of model performance to actual realized results. The Company also considered the impact of portfolio concentrations, changes in underwriting practices, imprecision in its economic forecasts, and other risk factors that might influence its loss estimation process. Increases in external risk factors due to more pessimistic business and economic conditions could potentially add $4.6 million based on existing loan balances, if not more, to the ACL. While management utilizes its best judgment and information available, the ultimate adequacy of our allowance accounts is dependent upon a variety of factors beyond our control, including the performance of our portfolios, the economy and changes in interest rates. 36 Table of Contents Impact of Recently Issued Accounting Standards Accounting Standards Adopted in 2025 In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. Among other things, these amendments provide additional transparency into an entity’s income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The standard requires that public business entities disclose, on an annual basis, specific categories in the rate reconciliation and additional information for reconciling items meeting a certain quantitative threshold. The amendments also require that entities disclose on an annual basis: 1) income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes and 2) the income taxes paid (net of refunds received) disaggregated by individual jurisdictions exceeding 5% of total income taxes paid (net of refunds received). The amendments are effective for public business entities for annual periods beginning after December 15, 2024. The Company adopted this ASU retrospectively. Adoption of this ASU did not have a material impact on the Company's consolidated financial statements. For additional information, see Note 18 to the Consolidated Financial Statements in this Form 10-K. In March 2024, the FASB issued guidance within ASU 2024-01, Compensation — Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards . The amendments in the ASU apply to companies that provide employees and non-employees with profits interest and similar awards to align compensation with a company’s operating performance and provide those holders with the opportunity to participate in future profits and/or equity appreciation of the company. The purpose of the ASU is to clarify the application of the scope guidance in Accounting Standards Codification (ASC) paragraph 718-10-15-3 in determining if a profit interest award should be accounted for in accordance with Topic 718: Compensation—Stock Compensation. The amendment in ASC paragraph 718-10-15-3 is solely intended to improve the overall clarity and does not change the guidance. The ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. If a company adopts the amendments in an interim period, it should adopt them as of the beginning of the annual period that includes the interim period. The amendments should be applied either (1) retrospectively to all prior periods presented in the financial statements or (2) on a prospective basis. Adoption of this ASU did not have a material impact on the Company’s consolidated financial statements, as the Company does not typically provide these types of awards. For additional information, see Note 15 to the Consolidated Financial Statements in this Form 10-K. Recently Issued Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period. In January 2025, the FASB issued ASU 2025-01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. ASU 2025-01 amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of ASU 2024-03 is permitted. The Company is evaluating the accounting and disclosure requirements of this update and the impact of adopting the new guidance on the consolidated financial statements. In November 2025, the FASB issued ASU 2025-08, Financial Instruments - Credit Losses (Topic 326): Purchased Loans. This ASU expands the population of acquired financial assets accounted for using the gross-up approach. Acquired loans (excluding credit cards) are deemed purchased seasoned loans and accounted for using the gross-up approach upon acquisition if criteria established by the new guidance are met. This change aims to enhance comparability, consistency, and better reflect the economics of acquiring financial assets. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued or made available for issuance. The Company is evaluating the accounting and disclosure requirements of this update and the impact of adopting the new guidance on the consolidated financial statements. In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. This ASU enables entities to apply hedge accounting to a greater number of highly effective economic hedges in the following five areas: similar risk assessment for cash flow hedges, hedging forecasted interest payments on choose-your-rate debt instruments, cash flow hedges of nonfinancial forecasted transactions, net written options as hedging instruments, foreign-currency-denominated debt instrument as hedging instrument and hedged item (dual hedge). This ASU is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods. Early adoption is permitted on any date on or after the issuance of ASU No. 2025-09. The Company is evaluating the accounting and disclosure requirements of this update and the impact of adopting the new guidance on the consolidated financial statements. 37 Table of Contents In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. This ASU does not change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements. The amendments in this ASU: clarify that the guidance in Topic 270 applies to all entities that provide interim financial statements and notes in accordance with GAAP; create a comprehensive list in FASB Accounting Standards Codification Topic 270 of interim disclosures that are required in interim financial statements and notes in accordance with GAAP; incorporate a disclosure principle, which is modeled after previous SEC guidance, that requires entities to disclose events and changes that occur after the end of the most recent fiscal year that have a material impact on the entity; and improve guidance about information included in and the format of interim financial statements. The amendments in this ASU are effective for pubic business entities for interim periods within annual periods beginning after December 15, 2027. Early adoption is permitted for all entities. The amendments can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is evaluating the disclosure requirements of this update and the impact of adopting the new guidance on the consolidated financial statements. In December 2025, the FASB issued ASU 2025-12, Codification Improvements. The amendments in this ASU update the FASB ASC for a broad range of Topics arising from technical corrections, unintended application of the ASC, clarifications, and other minor improvements. The amendments in this ASU, which addresses 33 issues, affect a wide variety of Topics in the ASC and apply to all reporting entities within the scope of the affected accounting guidance. The amendments in this ASU are effective for all entities for annual periods beginning after December 15, 2026, and interim periods within those annual periods. Early adoption is permitted in both interim and annual periods in which financial statements have not yet been issued or made available for issuance. The Company is evaluating the accounting and disclosure requirements of this update and the impact of adopting the new guidance on the consolidated financial statements. 38 Table of Contents STATISTICAL INFORMATION AND DISCUSSION The following statistical information and discussion should be read in conjunction with the audited consolidated financial statements and accompanying notes included in Part II (Item 8) of this Annual Report on Form 10-K. The following tables present information regarding the consolidated average assets, liabilities and stockholders’ equity, the amounts of interest income from average earning assets and the resulting yields, and the amount of interest expense paid on interest-bearing liabilities. Average loan balances include non-performing loans. Interest income includes proceeds from loans on non-accrual status only to the extent cash payments have been received and applied as interest income. Tax-exempt income is not shown on a tax equivalent basis. Distribution of Assets, Liabilities and Stockholders ’ Equity; Interest Rates and Interest Differential (Dollars in thousands) 2025 2024 Average Balance Percent Average Balance Percent ASSETS Cash and Due From Banks $ 132,839 6.9 % $ 159,998 8.4 % Certificates of Deposit 14,244 0.8 % 17,780 0.9 % Investment Securities 614,346 32.6 % 591,225 31.3 % Loans (1) 1,048,539 55.6 % 1,045,419 55.3 % Stock in Federal Home Loan Bank and other equity securities, at cost 10,768 0.6 % 10,518 0.6 % Other Assets 66,496 3.5 % 65,713 3.5 % Total Assets $ 1,887,232 100.0 % $ 1,890,653 100.0 % LIABILITIES & STOCKHOLDERS’ EQUITY Deposits: Demand $ 649,590 34.4 % $ 701,685 37.0 % Interest-Bearing Transaction Deposits 429,649 22.9 % 417,373 22.1 % Savings and MMDAs 457,453 24.2 % 435,160 23.0 % Time Certificates 140,550 7.4 % 152,285 8.1 % FHLB advances 1,645 0.1 % — — % Other Liabilities 15,056 0.8 % 16,542 0.9 % Stockholders’ Equity 193,289 10.2 % 167,608 8.9 % Total Liabilities and Stockholders’ Equity $ 1,887,232 100.0 % $ 1,890,653 100.0 % (1) Average balances for loans include loans held-for-sale and non-accrual loans and are net of the allowance for credit losses. 39 Table of Contents Net Interest Earnings Average Balances, Yields and Rates (Dollars in thousands) 2025 2024 Assets Average Balance Interest Income/Expense Yields Earned/Rates Paid Average Balance Interest Income/Expense Yields Earned/Rates Paid Total Loans, Including Loan Fees (1) $ 1,048,539 $ 57,999 5.53 % $ 1,045,419 $ 55,389 5.30 % Due From Banks 100,656 4,273 4.25 % 121,308 6,477 5.34 % Certificates of Deposit 14,244 592 4.16 % 17,780 724 4.07 % Investment Securities: Taxable 562,307 16,783 2.98 % 548,661 13,795 2.51 % Non-taxable (2) 52,039 1,642 3.16 % 42,564 1,216 2.86 % Total Investment Securities 614,346 18,425 3.00 % 591,225 15,011 2.54 % Other Earning Assets 10,768 1,018 9.45 % 10,518 1,051 9.99 % Total Earning Assets $ 1,788,553 $ 82,307 4.60 % $ 1,786,250 $ 78,652 4.40 % Cash and Due from Banks 32,183 38,690 Interest Receivable and Other Assets 66,496 65,713 Total Assets $ 1,887,232 $ 1,890,653 (1) Average balances for loans include loans held-for-sale and non-accrual loans and are net of the allowance for credit losses, but non-accrued interest thereon is excluded. Includes amortization of deferred loan fees and costs. (2) Interest income and yields on tax-exempt securities are not presented on a taxable equivalent basis. 40 Table of Contents Continuation of Net Interest Earnings Average Balances, Yields and Rates (Dollars in thousands) 2025 2024 Liabilities and Stockholders' Equity Average Balance Interest Income/Expense Yields Earned/Rates Paid Average Balance Interest Income/Expense Yields Earned/Rates Paid Interest-Bearing Liabilities: Interest-Bearing Transaction Deposits $ 429,649 $ 2,921 0.68 % $ 417,373 $ 2,507 0.60 % Savings and MMDAs 457,453 6,803 1.49 % 435,160 5,478 1.26 % Time Certificates 140,550 5,036 3.58 % 152,285 6,307 4.14 % Total Interest-Bearing Deposits 1,027,652 14,760 1.44 % 1,004,818 14,292 1.42 % FHLB advances 1,645 75 4.56 % — — — % Total Interest-Bearing Liabilities 1,029,297 14,835 1.44 % 1,004,818 14,292 1.42 % Demand Deposits 649,590 701,685 Total Funding Liabilities 1,678,887 $ 14,835 0.88 % 1,706,503 $ 14,292 0.84 % Interest payable and Other Liabilities 15,056 16,542 Stockholders’ Equity 193,289 167,608 Total Liabilities and Stockholders’ Equity $ 1,887,232 $ 1,890,653 Net Interest Income and Net Interest Margin (1) $ 67,472 3.77 % $ 64,360 3.60 % Net Interest Spread (2) 3.16 % 2.98 % (1) Net interest margin is computed by dividing net interest income by total average interest-earning assets. (2) Net interest spread represents the average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities. 41 Table of Contents Analysis of Changes in Interest Income and Interest Expense (Dollars in thousands) Following is an analysis of changes in interest income and expense (dollars in thousands) for 2025 over 2024. Changes not solely due to interest rate or volume have been allocated proportionately to interest rate and volume. 2025 Over 2024 Volume Interest Rate Change Loans $ 166 $ 2,444 $ 2,610 Due From Banks (1,000 ) (1,204 ) (2,204 ) Certificates of Deposit (147 ) 15 (132 ) Investment Securities - Taxable 351 2,637 2,988 Investment Securities - Non-taxable 290 136 426 Other Earning Assets 25 (58 ) (33 ) Increase (decrease) in Interest Income (315 ) 3,970 3,655 Deposits: Interest-Bearing Transaction Deposits 76 338 414 Savings and MMDAs 292 1,033 1,325 Time Certificates (462 ) (809 ) (1,271 ) FHLB advances 75 — 75 Increase (decrease) in Interest Expense (19 ) 562 543 Increase (decrease) in Net Interest Income: $ (296 ) $ 3,408 $ 3,112 42 Table of Contents INVESTMENT PORTFOLIO Composition of Investment Securities The mix of investment securities held by the Company at December 31 of the previous two fiscal years was as follows (dollars in thousands): 2025 2024 Investment securities available-for-sale (at fair value): U.S. Treasury Securities $ 87,556 $ 105,545 Securities of U.S. Government Agencies and Corporations 85,344 95,684 Obligations of State and Political Subdivisions 75,003 67,591 Collateralized Mortgage Obligations 92,284 94,945 Mortgage-Backed Securities 277,056 270,088 Total Investments $ 617,243 $ 633,853 Maturities of Investment Securities The following table summarizes the contractual maturity (dollars in thousands) and projected yields of the Company’s investment securities as of December 31, 2025. The yields on tax-exempt securities are shown on a tax equivalent basis. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. In addition, factors such as prepayments and interest rates may affect the yield on carrying value of mortgage related securities. Period to Maturities After One But After Five But Within One Year Within Five Years Within Ten Years Amount Yield Amount Yield Amount Yield Investment securities available-for-sale (at fair value): U.S. Treasury Securities $ 32,933 3.38 % $ 54,623 3.49 % $ — — Securities of U.S. Government Agencies and Corporations 15,307 1.76 % 54,251 2.68 % 15,786 4.42 % Obligations of State and Political Subdivisions 1,291 2.57 % 8,643 3.04 % 22,449 3.46 % Collateralized Mortgage Obligations — — 2,552 4.66 % 3,174 3.43 % Mortgage-Backed Securities — — 19,008 3.40 % 158,760 2.76 % TOTAL $ 49,531 2.86 % $ 139,077 3.16 % $ 200,169 2.98 % After Ten Years Total Amount Yield Amount Yield Investment securities available-for-sale (at fair value): U.S. Treasury Securities $ — — $ 87,556 3.45 % Securities of U.S. Government Agencies and Corporations — — 85,344 2.84 % Obligations of State & Political Subdivisions 42,620 3.97 % 75,003 3.69 % Collateralized Mortgage Obligations 86,558 2.31 % 92,284 2.41 % Mortgage-Backed Securities 99,288 3.78 % 277,056 3.17 % TOTAL $ 228,466 3.26 % $ 617,243 3.11 % 43 Table of Contents LOAN PORTFOLIO Composition of Loans The mix of loans, net of deferred origination fees and costs and allowance for credit losses and excluding loans held-for-sale, at December 31, 2025 and December 31, 2024 was as follows (dollars in thousands): 2025 2024 Balance Percent Balance Percent Commercial $ 146,178 13.7 % $ 117,921 11.1 % Commercial Real Estate 702,455 66.0 % 723,650 68.1 % Agriculture 93,627 8.8 % 92,564 8.7 % Residential Mortgage 100,684 9.5 % 105,886 10.0 % Residential Construction 5,837 0.5 % 6,858 0.6 % Consumer 15,478 1.5 % 15,716 1.5 % 1,064,259 100.0 % 1,062,595 100.0 % Allowance for credit losses (14,519 ) (15,885 ) Net deferred origination fees and costs 733 142 TOTAL $ 1,050,473 $ 1,046,852 As shown in the comparative figures for loan mix during 2025 and 2024, total loans increased primarily as a result of an increase in commercial loans, which was partially offset by decreases in commercial real estate and residential mortgage loans. Commercial loans are primarily for financing the needs of a diverse group of businesses located in the Bank’s market areas. Commercial real estate loans generally fall into two categories, owner-occupied and non-owner occupied. Real estate construction loans are generally for financing the construction of single-family residential homes for individuals and builders we believe are well-qualified. These loans are secured by real estate and have short maturities. Residential mortgage loans, which are secured by real estate, include owner-occupied and non-owner-occupied properties in the Bank’s market areas. Loans are considered agriculture loans when the primary source of repayment is from the sale of an agricultural or agricultural-related product or service. Such loans are secured and/or unsecured to producers and processors of crops and livestock. The Bank also makes loans to individuals for investment purposes. 44 Table of Contents Maturities and Sensitivities of Loans to Changes in Interest Rates The following table presents the maturity distribution of our loan portfolio at December 31, 2025 (dollars in thousands) (excludes loans held-for-sale). The table also presents the portion of loans that have fixed interest rates or variable interest rates that fluctuate over the life of the loans in accordance with changes in an interest rate index. Due in One Year or Less After One but Within Five Years After Five but Within Fifteen Years After Fifteen Years Total Commercial $ 14,616 $ 74,644 $ 56,908 $ 10 $ 146,178 Commercial Real Estate 38,791 170,058 456,976 36,630 702,455 Agriculture 19,336 7,043 32,757 34,491 93,627 Residential Mortgage 304 944 21,900 77,536 100,684 Residential Construction 2,223 37 — 3,577 5,837 Consumer 687 6,205 7,158 1,428 15,478 Total $ 75,957 $ 258,931 $ 575,699 $ 153,672 $ 1,064,259 Loans with fixed interest rates: Commercial $ 3,428 $ 59,250 $ 41,707 $ — $ 104,385 Commercial Real Estate 19,993 122,789 180,759 22,309 345,850 Agriculture 2,090 3,805 14,283 — 20,178 Residential Mortgage 51 913 19,241 11,643 31,848 Residential Construction 83 — — — 83 Consumer 326 132 30 595 1,083 Total $ 25,971 $ 186,889 $ 256,020 $ 34,547 $ 503,427 Loans with variable interest rates: Commercial $ 11,188 $ 15,394 $ 15,201 $ 10 $ 41,793 Commercial Real Estate 18,798 47,269 276,217 14,321 356,605 Agriculture 17,246 3,238 18,474 34,491 73,449 Residential Mortgage 253 31 2,659 65,893 68,836 Residential Construction 2,140 37 — 3,577 5,754 Consumer 361 6,073 7,128 833 14,395 Total $ 49,986 $ 72,042 $ 319,679 $ 119,125 $ 560,832 Non-Accrual, Past Due, OREO and Loan Modifications It is generally the Company’s policy to discontinue interest accruals once a loan is past due for a period of 90 days as to interest or principal payments. When a loan is placed on non-accrual, interest accruals cease and uncollected accrued interest is reversed and charged against current income. Payments received on non-accrual loans are applied against principal. A loan may only be restored to an accruing basis when it again becomes well secured and in the process of collection or all past due amounts have been collected and an appropriate period of performance has been demonstrated. The following table summarizes the Company’s non-accrual loans by loan category (dollars in thousands), net of guarantees of the State of California and U.S. Government, including its agencies and its government-sponsored agencies, at December 31, 2025 and 2024. At December 31, 2025 At December 31, 2024 Gross Guaranteed Net Gross Guaranteed Net Commercial $ 139 $ 139 $ — $ 139 $ 139 $ — Commercial real estate 657 — 657 7,993 — 7,993 Agriculture 4,423 809 3,614 2,236 — 2,236 Residential mortgage 174 — 174 202 — 202 Residential construction — — — — — — Consumer 637 — 637 642 — 642 Total non-accrual loans $ 6,030 $ 948 $ 5,082 $ 11,212 $ 139 $ 11,073 45 Table of Contents Non-accrual loans amounted to $6,030,000 at December 31, 2025, and were comprised of one commercial loan totaling $139,000, one commercial real estate loan totaling $657,000, four agriculture loans totaling $4,423,000, three residential mortgage loans totaling $174,000 and five consumer loans totaling $637,000. Non-accrual loans amounted to $11,212,000 at December 31, 2024, and were comprised of one commercial loan totaling $139,000, one commercial real estate loan totaling $7,993,000, two agriculture loans totaling $2,236,000, three residential mortgage loans totaling $202,000 and four consumer loans totaling $642,000. If interest on non-accrual loans had been accrued, such interest income would have approximated $627,000 and $497,000 during the years ended December 31, 2025 and 2024, respectively. Income actually recognized on nonaccrual loans at payoff approximated $421,000 and $450,000 for the years ended December 31, 2025 and 2024, respectively. A loan is considered to be collateral dependent when repayment is expected to be provided substantially through the operation or sale of the collateral. The ACL on collateral dependent loans is measured using the fair value of the underlying collateral, adjusted for costs to sell when applicable, less the amortized cost basis of the financial asset. It is generally the Company’s policy that if the value of the underlying collateral is determined to be less than the recorded amount of the loan, a charge-off will be taken. As the following table illustrates, total non-performing assets, which consists of loans on non-accrual status, loans past due 90-days and still accruing and Other Real Estate Owned ("OREO") net of guarantees of the State of California and U.S. Government, including its agencies and its government-sponsored agencies, decreased $4,750,000, or 42.9%, to $6,323,000 from December 31, 2024 to December 31, 2025. Non-performing assets net of guarantees represented 0.3% and 0.6% of total assets at December 31, 2025 and 2024, respectively. The Bank’s management believes that the $6,030,000 in non-accrual loans were appropriately reflected at the lower of the carrying value of the loan or the fair value of the underlying collateral at December 31, 2025. However, no assurance can be given that the existing or any additional collateral will be sufficient to secure full recovery of the obligations owed under these loans. At December 31, 2025 At December 31, 2024 Gross Guaranteed Net Gross Guaranteed Net (dollars in thousands) Non-accrual loans $ 6,030 $ 948 $ 5,082 $ 11,212 $ 139 $ 11,073 Loans 90 days past due and still accruing — — — — — — Total non-performing loans 6,030 948 5,082 11,212 139 11,073 Other real estate owned 1,241 — 1,241 — — — Total non-performing assets 7,271 948 6,323 11,212 139 11,073 Non-performing loans (net of guarantees) to total loans 0.5 % 1.0 % Non-performing assets (net of guarantees) to total assets 0.3 % 0.6 % Allowance for credit losses to non-performing loans (net of guarantees) 285.7 % 143.5 % The Company had no loans that were 90 days or more past due and still accruing at December 31, 2025. OREO consists of property that the Company has acquired by deed in lieu of foreclosure or through foreclosure proceedings, and property that the Company does not hold title to but is in actual control of, known as in-substance foreclosure. OREO can also consist of Company owned properties that the Company has determined are no longer intended for use or future development. The estimated fair value of the property is determined prior to transferring the balance to OREO. The balance transferred to OREO is the estimated fair value of the property less estimated cost to sell. Impairment may be deemed necessary to bring the book value of the loan equal to the appraised value. Appraisals or loan officer evaluations are then conducted periodically thereafter charging any additional impairment to the appropriate expense account. The Company had OREO totaling $1,241,000 as of the year ended December 31, 2025. OREO as of December 31, 2025 represented land, transferred from premises and equipment, that the Company determined is no longer intended for future development and is actively marketing it for sale. The Company had no OREO as of December 31, 2024. 46 Table of Contents Potential Problem Loans The Company manages asset quality and credit risk by maintaining diversification in its loan portfolio and through review processes that include analysis of credit requests and ongoing examination of outstanding loans and delinquencies, with particular attention to portfolio dynamics and loan mix. The Company strives to identify loans experiencing difficulty early enough to correct the problems, to record charge-offs promptly based on realistic assessments of collectability and current collateral values and to maintain an adequate allowance for credit losses at all times. Asset quality reviews of loans and other non-performing assets are administered using credit risk rating standards and criteria similar to those employed by state and federal banking regulatory agencies. The federal banking regulatory agencies utilize the following definitions for assets adversely classified for supervisory purposes: “Substandard Assets: a substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.” “Doubtful Assets: An asset classified doubtful has all the weaknesses inherent in one classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable." OREO and loans rated Substandard and Doubtful are deemed “classified assets.” This category, which includes both performing and non-performing assets, receives an elevated level of attention regarding collection. Commercial loans, whether secured or unsecured, generally are made to support the short-term operations and other needs of small businesses. These loans are generally secured by the receivables, equipment, and other real property of the business and are susceptible to the related risks described above. Problem commercial loans are generally identified by periodic review of financial information that may include financial statements, tax returns, and payment history of the borrower. Based on this information, the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to provide a significant principal payment and/or additional collateral or requiring similar support from guarantors. When repayment becomes unlikely based on the borrower’s income and cash flow, repossession or foreclosure of the underlying collateral may become necessary. Collateral values may be determined by appraisals obtained through Bank-approved, licensed appraisers, qualified independent third parties, purchase invoices, or other appropriate documentation. Appropriate valuations are obtained at origination of the credit and periodically thereafter (generally every 3-12 months depending on the collateral type and market conditions), once repayment is questionable, and the loan has been deemed classified. Commercial real estate loans generally fall into two categories, owner-occupied and non-owner occupied. Loans secured by owner occupied real estate are primarily susceptible to changes in the market conditions of the related business. This may be driven by, among other things, industry changes, geographic business changes, changes in the individual financial capacity of the business owner, general economic conditions, and changes in business cycles. These same risks apply to commercial loans whether secured by equipment, receivables, or other personal property or unsecured. Problem commercial real estate loans are generally identified by periodic review of financial information that may include financial statements, tax returns, payment history of the borrower, and site inspections. Based on this information, the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to provide a significant principal payment and/or additional collateral or requiring similar support from guarantors. Notwithstanding, when repayment becomes unlikely based on the borrower's income and cash flow, repossession or foreclosure of the underlying collateral may become necessary. Losses on loans secured by owner-occupied real estate, equipment, or other personal property generally are dictated by the value of underlying collateral at the time of default and liquidation of the collateral. When default is driven by issues related specifically to the business owner, collateral values tend to provide better repayment support and may result in little or no loss. Alternatively, when default is driven by more general economic conditions, underlying collateral generally has devalued more and results in larger losses due to default. Loans secured by non-owner occupied real estate are primarily susceptible to risks associated with swings in occupancy or vacancy and related shifts in lease rates, rental rates or room rates. Most often, these shifts are a result of changes in general economic or market conditions or overbuilding and resultant over-supply of space. Losses are dependent on the value of underlying collateral at the time of default. Values are generally driven by these same factors and influenced by interest rates and required rates of return as well as changes in occupancy costs. Collateral values may be determined by appraisals obtained through Bank-approved, licensed appraisers, qualified independent third parties, sales invoices, or other appropriate means. Appropriate valuations are obtained at origination of the credit and periodically thereafter (generally every 3-12 months depending on the collateral type and market conditions), once repayment is questionable, and the loan has been deemed classified. 47 Table of Contents Agricultural loans, whether secured or unsecured, generally are made to producers and processors of crops and livestock. Repayment is primarily from the sale of an agricultural product or service. Agricultural loans are generally secured by inventory, receivables, equipment, and other real property. Agricultural loans primarily are susceptible to changes in market demand for specific commodities. This may be exacerbated by, among other things, industry changes, changes in the individual financial capacity of the business owner, general economic conditions and changes in business cycles, as well as changing weather conditions. Problem agricultural loans are generally identified by periodic review of financial information that may include financial statements, tax returns, crop budgets, payment history, and crop inspections. Based on this information, the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to provide a significant principal payment and/or additional collateral or requiring similar support from guarantors. Notwithstanding, when repayment becomes unlikely based on the borrower’s income and cash flow, repossession or foreclosure of the underlying collateral may become necessary. Collateral values may be determined by appraisals obtained through Bank-approved, licensed appraisers, qualified independent third parties, purchase invoices, or other appropriate documentation. Appropriate valuations are obtained at origination of the credit and periodically thereafter (generally every 3-12 months depending on the collateral type and market conditions), once repayment is questionable, and the loan has been deemed classified. Residential mortgage loans, which are secured by real estate, are primarily susceptible to four risks: non-payment due to diminished or lost income, over-extension of credit, a lack of borrower’s cash flow to sustain payments, and shortfalls in collateral value. In general, non-payment is due to loss of employment and follows general economic trends in the marketplace, particularly the upward movement in the unemployment rate, loss of collateral value, and demand shifts. Problem residential mortgage loans are generally identified via payment default. Based on this information, the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to provide a significant principal payment and/or additional collateral or requiring similar support from guarantors. When repayment becomes unlikely based on the borrower’s income and cash flow, repossession or foreclosure of the underlying collateral may become necessary. Collateral values may be determined by appraisals obtained through Bank-approved, licensed appraisers, qualified independent third parties, purchase invoices, or other appropriate documentation. Appropriate valuations are obtained at origination of the credit and periodically thereafter (generally every 3-12 months depending on the collateral type and market conditions), once repayment is questionable, and the loan has been deemed classified. Construction loans, whether owner occupied or non-owner occupied residential development loans, are not only susceptible to the related risks described above but the added risks of construction itself, including cost over-runs, mismanagement of the project, or lack of demand and market changes experienced at time of completion. Again, losses are primarily related to underlying collateral value and changes therein as described above. Problem construction loans are generally identified by periodic review of financial information that may include financial statements, tax returns and payment history of the borrower. Based on this information, the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to provide a significant principal payment and/or additional collateral or requiring similar support from guarantors, or repossession or foreclosure of the underlying collateral. Collateral values may be determined by appraisals obtained through Bank-approved, licensed appraisers, qualified independent third parties, purchase invoices, or other appropriate documentation. Appropriate valuations are obtained at origination of the credit and periodically thereafter (generally every 3-12 months depending on the collateral type and market conditions), once repayment is questionable, and the loan has been deemed classified. Consumer loans, whether unsecured or secured, are primarily susceptible to four risks: non-payment due to diminished or lost income, over-extension of credit, a lack of borrower’s cash flow to sustain payments, and shortfall in collateral value. In general, non-payment is due to loss of employment and will follow general economic trends in the marketplace, particularly the upward movements in the unemployment rate, loss of collateral value, and demand shifts. Problem consumer loans are generally identified via payment default. Based on this information, the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to provide a significant principal payment and/or additional collateral or requiring similar support from guarantors. When repayment becomes unlikely based on the borrower’s income and cash flow, repossession or foreclosure of the underlying collateral may become necessary. Collateral values may be determined by appraisals obtained through Bank-approved, licensed appraisers, qualified independent third parties, purchase invoices, or other appropriate documentation. Appropriate valuations are obtained at origination of the credit and periodically thereafter (generally every 3-12 months depending on the collateral type and market conditions), once repayment is questionable, and the loan has been deemed classified. 48 Table of Contents Once a loan becomes delinquent or repayment becomes questionable, a Company collection officer will address collateral shortfalls with the borrower and attempt to obtain additional collateral or a principal payment. If this is not forthcoming and payment of principal and interest in accordance with the contractual terms of the loan agreement becomes unlikely, the Company will consider the loan to be individually evaluated and will estimate its probable loss, using the present value of future cash flows discounted at the loan's effective interest rate, the loan's observable market price, or the fair value of the collateral if the loan is collateral dependent. For collateral dependent loans, the Company will utilize a recent valuation of the underlying collateral less estimated costs of sale, and charge-off the loan down to the estimated net realizable amount. Depending on the length of time until final collection, the Company may periodically revalue the estimated loss and take additional charge-offs or specific reserves as warranted. Revaluations may occur as often as every 3-12 months depending on the underlying collateral and volatility of values. Final charge-offs or recoveries are taken when the collateral is liquidated and the actual loss is confirmed. Unpaid balances on loans after or during collection and liquidation may also be pursued through legal action and attachment of wages or judgment liens on the borrower's other assets. Excluding the non-performing loans, net of guarantees cited previously, loans totaling $18,259,000 and $11,782,000 were classified as substandard or doubtful loans, representing potential problem loans at December 31, 2025 and 2024, respectively. In Management’s opinion, the potential loss related to these problem loans was sufficiently covered by the Bank’s existing loan loss reserve (Allowance for Credit Losses) at December 31, 2025 and 2024. The ratio of the allowance for credit losses to total loans at December 31, 2025 and 2024 was 1.36% and 1.49%, respectively. The decrease in the ratio of the allowance for credit losses to total loans was primarily due to positive trends in gross domestic product and single-family home prices, coupled with an overall decrease in forecasted loss rates and improvements in qualitative risk factors. Management considered the allowance for credit losses of $14,519,000 to be adequate as a reserve against expected losses as of December 31, 2025. 49 Table of Contents Analysis of the Allowance for Credit Losses On Loans (Dollars in thousands) 2025 2024 2023 Balance at Beginning of Year $ 15,885 $ 16,596 $ 14,792 Impact of adopting ASC 326 — — 800 Provision for Credit Losses (500 ) 200 1,150 Loans Charged-Off: Commercial (648 ) (956 ) (366 ) Commercial Real Estate (26 ) — — Agriculture (474 ) — (2,567 ) Residential Mortgage (5 ) — (3 ) Residential Construction — — — Consumer (19 ) (28 ) (13 ) Total Charged-Off (1,172 ) (984 ) (2,949 ) Recoveries: Commercial 273 60 235 Commercial Real Estate — — — Agriculture — — 2,567 Residential Mortgage — — — Residential Construction — — — Consumer 33 13 1 Total Recoveries 306 73 2,803 Net Charge-offs (866 ) (911 ) (146 ) Balance at End of Year $ 14,519 $ 15,885 $ 16,596 Ratio of net charge-offs during the year to average Loans Outstanding During the Year (0.08 )% (0.09 )% (0.01 )% Allowance for Credit Losses to Total Loans 1.36 % 1.49 % 1.55 % Nonaccrual loans to Total Loans 0.57 % 1.06 % 0.37 % Allowance for Credit Losses to Nonaccrual loans 240.78 % 141.68 % 415.11 % 50 Table of Contents Allocation of the Allowance for Credit Losses The Allowance for Credit Losses has been established as a general component available to absorb expected credit losses throughout the loan portfolio. The following table is an allocation of the Allowance for Credit Losses balance on the dates indicated (dollars in thousands): December 31, 2025 December 31, 2024 Allocation of Allowance for Credit Losses Balance Allowance as a % of Total Allowance Loans as a % of Total Loans, net Allocation of Allowance for Credit Losses Balance Allowance as a % of Total Allowance Loans as a % of Total Loans, net Loan Type: Commercial $ 2,425 16.7 % 13.7 % $ 1,622 10.2 % 11.1 % Commercial Real Estate 9,343 64.4 % 66.0 % 10,245 64.5 % 68.1 % Agriculture 1,074 7.4 % 8.8 % 1,555 9.8 % 8.7 % Residential Mortgage 1,005 6.9 % 9.5 % 1,779 11.2 % 10.0 % Residential Construction 376 2.6 % 0.5 % 433 2.7 % 0.6 % Consumer 296 2.0 % 1.5 % 251 1.6 % 1.5 % Total $ 14,519 100.0 % 100.0 % $ 15,885 100.0 % 100.0 % The Bank believes that any breakdown or allocation of the allowance into loan categories lends an appearance of exactness, which does not exist, because the allowance is available for all loans. The allowance breakdown shown above is computed taking actual experience into consideration but should not be interpreted as an indication of the specific amount and allocation of actual charge-offs that may ultimately occur. For additional information, see Note 3 to the Consolidated Financial Statements in this Form 10-K. 51 Table of Contents Deposits The following table sets forth the average amount and the average rate paid on each of the listed deposit categories (dollars in thousands) during the periods specified: 2025 2024 2023 Average Average Average Average Average Average Amount Rate Amount Rate Amount Rate Deposit Type: Non-interest-Bearing Demand $ 649,590 — $ 701,685 — $ 736,838 — Interest-Bearing Demand (NOW) $ 429,649 0.68 % $ 417,373 0.60 % $ 467,660 0.35 % Savings and MMDAs $ 457,453 1.49 % $ 435,160 1.26 % $ 454,854 0.65 % Time $ 140,550 3.58 % $ 152,285 4.14 % $ 97,639 3.11 % Approximately 40% of our deposits were uninsured for each of the years ended December 31, 2025 and 2024. Time Deposits include brokered deposits totaling $0 and $9,999,000 as of December 31, 2025 and December 31, 2024, respectively. The brokered deposits purchased are time deposits $250,000 (dollars in thousands) or less that mature within twelve months. The following table sets forth by time remaining to maturity for the Bank’s time deposits over $250,000 (dollars in thousands) as of December 31, 2025: Three months or less $ 18,034 Over three months through six months 14,471 Over six months through twelve months 14,924 Over twelve months 6,201 Total $ 53,630 Short-Term Borrowings The Company had no secured borrowings and no Federal Funds purchased at December 31, 2025 and 2024. Additional short-term borrowings available to the Company consist of a line of credit and advances with the Federal Home Loan Bank ("FHLB") secured under terms of a blanket collateral agreement by a pledge of FHLB stock and all loans held by the Company. At December 31, 2025, the Company had a current collateral borrowing capacity with the FHLB of $390,191,000 and, at such date, also had unsecured formal lines of credit totaling $130,000,000 with correspondent banks. The Company had no Federal Funds purchased during the years ended December 31, 2025 and 2024. Long-Term Borrowings The Company had no long-term borrowings at December 31, 2025 and 2024. There were no average outstanding balances of long-term borrowings during 2025 and 2024. 52 Table of Contents Supplemental Compensation Plans The Company and the Bank maintain an unfunded non-contributory defined benefit pension plan (“Salary Continuation Plan”) and related split dollar plan for a select group of highly compensated employees. Eligibility to participate in the Salary Continuation Plan is limited to a select group of management or highly compensated employees of the Bank that are designated by the Board. Additionally, the Company and the Bank adopted a supplemental executive retirement plan (“SERP”) in 2006. The SERP is intended to integrate the various forms of retirement payments offered to executives. At December 31, 2025, the benefit obligation was $4,405,000, of which $4,716,000 was recorded in interest payable and other liabilities and $(311,000) was recorded in accumulated other comprehensive loss, net, in the Consolidated Balance Sheets. At December 31, 2024, the benefit obligation was $4,500,000, of which $4,793,000 was recorded in interest payable and other liabilities and $(293,000) was recorded in accumulated other comprehensive loss, net, in the Consolidated Balance Sheets. The Company and the Bank maintain an unfunded non-contributory defined benefit pension plan (“Directors’ Retirement Plan”) and related split dollar plan for the directors of the Bank. At December 31, 2025, the benefit obligation was $380,000, of which $480,000 was recorded in interest payable and other liabilities and $(100,000) was recorded in accumulated other comprehensive loss, net, in the Consolidated Balance Sheets. At December 31, 2024, the benefit obligation was $397,000, of which $539,000 was recorded in interest payable and other liabilities and $(142,000) was recorded in accumulated other comprehensive loss, net, in the Consolidated Balance Sheets. For additional information, see Note 17 to the Consolidated Financial Statements in this Form 10-K. Overview Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Net income for the year ended December 31, 2025, was $21.1 million, representing an increase of $1.1 million, or 5.5%, compared to net income of $20.0 million for the year ended December 31, 2024. The increase in net income was primarily attributable to an increase in net interest income of $3.1 million and a decrease in provision for income tax of $1.5 million, which was partially offset by an increase in non-interest expenses of $3.4 million. The increase in net interest income was primarily due to increases in yield on loans and investment securities and a decrease in volume and rate paid on time certificates, which was partially offset by decreases in volume and yield on due from banks and increases in rates paid on interest-bearing transaction deposits and savings and MMDAs. The increase in non-interest expenses was primarily due to an increase in salaries and employee benefits, occupancy and equipment and data processing expenses. The decrease in provision for income tax was due to the execution of a tax planning strategy that involved purchasing investment tax credits under the Inflation Reduction Act of 2022 tied to alternative energy projects. The investment tax credits were acquired at a discount and recognized as a reduction to income tax expense in 2025. Total assets were $1.91 billion as of December 31, 2025, representing an increase of $19.2 million, or 1.0%, compared to total assets of $1.89 billion as of December 31, 2024. For the year ended December 31, 2025 compared to the year ended December 31, 2024, there was a $26.1 million increase in cash, $3.6 million increase in net loans, $9.9 million increase in interest receivable and other assets, which was partially offset by a $16.6 million decrease in investment securities and a $5.9 million decrease in certificates of deposit. Total deposits decreased $20.9 million, or 1.2%, to $1.68 billion as of December 31, 2025, compared to $1.70 billion at December 31, 2024. 53 Table of Contents Results of Operations Net Interest Income Net interest income is the excess of interest and fees earned on the Bank’s loans, investment securities, federal funds sold and banker’s acceptances over the interest expense paid on deposits and other borrowed funds which are used to fund those assets. Net interest income is primarily affected by the yields and mix of the Bank’s interest-earning assets and interest-bearing liabilities outstanding during the period. The $3,655,000 increase in the Bank's interest and dividend income in 2025 from 2024 was primarily driven by an increase in interest rates on loans and investment securities, which was partially offset by a decrease in the average balance and interest rate on due from banks. The $2,610,000 increase in the Bank's interest income on loans was primarily driven by an increase of $2,444,000 attributable to an increase in interest rates. The $2,204,000 decrease in the Bank’s interest income on due from banks was primarily driven by a decrease of $1,000,000 due to the decreased average due from bank balances outstanding and a decrease of $1,204,000 attributable to a decrease in average interest rates paid on excess reserves at the FRB. The $132,000 decrease in the Bank's interest income on certificates of deposit was driven by a decrease of $147,000 due to the decrease in average certificates of deposit outstanding, which was partially offset by an increase of $15,000 due to the increase in average interest rates paid on certificates of deposit. The $3,414,000 increase in the Bank’s interest income on investment securities was driven by an increase of $2,773,000 due to an increase in interest rates and an increase of $641,000 driven by increased investment securities balances outstanding. The $543,000 increase in the Bank's interest expense on deposits was primarily driven by an increase of $568,000 due to increases in interest rates, which was partially offset by a decrease of $25,000 due to a decrease in average time certificates balances outstanding. See “Analysis of Changes in Interest Income and Interest Expense” in this Annual Report on Form 10-K for the effects of interest rates and loan/deposit volume on net interest income. The FRB influences the general market rates of interest, including the deposit and loan rates offered by many financial institutions. Our loan portfolio is significantly affected by changes in the prime interest rate. As of December 31, 2024, the prime rate was 7.50%. The prime rate decreased several times beginning in September 2025, decreasing to 6.75% as of December 31, 2025. As of December 31, 2024, the target range for the federal funds rate was 4.25% to 4.50%. During 2025 the FRB cut interest rates in each of September, October and December. As of December 31, 2025, the target rate for the federal funds rate was 3.50% to 3.75%. For additional information, see “The Bank is Subject to Interest Rate Risk” and “Beginning in 2021, the U.S. Economy Began to Reflect Relatively Rapid Rates of Increase in the Consumer Price Index and Other Economic Indices; a Prolonged Elevated Rate of Inflation Could Present Risks for the U.S. Banking Industry and Our Business”, in “Risk Factors” (Item 1A) of this Annual Report on Form 10-K. We are primarily funded by core deposits, with non-interest-bearing demand deposits historically being a significant source of funds. This lower-cost funding base is expected to have a positive impact on our net interest income and net interest margin in a rising interest rate environment. The nature and impact of future changes in interest rates and monetary policy on the business and earnings of the Company cannot be predicted. For additional information, see “The Effects of Changes or Increases in, or Supervisory Enforcement of, Banking or Other Laws and Regulations or Governmental Fiscal or Monetary Policies Could Adversely Affect Us”, and “The Bank is Subject to Interest Rate Risk” and “Beginning in 2021, the U.S. Economy Began to Reflect Relatively Rapid Rates of Increase in the Consumer Price Index and Other Economic Indices; a Prolonged Elevated Rate of Inflation Could Present Risks for the U.S. Banking Industry and Our Business” in “Risk Factors" (Item 1A) of this Annual Report on Form 10-K. Interest income on loans for 2025 was up 4.7% from 2024, increasing from $55,389,000 to $57,999,000. The increase in interest income on loans was primarily due to higher yields earned on newly originated loans and loans repricing at higher rates coupled with a 0.3% increase in average balance of loans. Interest income on interest-bearing due from banks for 2025 was down 34.0% from 2024, decreasing from $6,477,000 to $4,273,000. The decrease in interest income on interest-bearing due from banks was the result of a 17.0% decrease in average balances of interest-bearing due from banks coupled with a 109 basis point decrease in yield on interest-bearing due from banks. Interest income on certificates of deposit for 2025 was down 18.2% from 2024, decreasing from $724,000 to $592,000. The decrease in interest income on certificates of deposit was primarily due to a 19.9% decrease in average balances of certificates of deposit, which was partially offset by an 9 basis point increase in yield on certificates of deposit. 54 Table of Contents Interest income on investment securities for 2025 was up 22.7% from 2024, increasing from $15,011,000 to $18,425,000. The increase in interest income on investment securities was the result of a 3.9% increase in average investment securities volume coupled with a 46 basis point increase in investment securities yields. The Bank deployed excess liquidity into the investment portfolio over the course of 2025 at higher reinvestment rates. Investment securities yields were 3.00% and 2.54% for 2025 and 2024, respectively. Interest expense on interest-bearing liabilities for 2025 was up 3.8% from 2024, increasing from $14,292,000 to $14,835,000. The increase in interest expense on interest-bearing liabilities was the result of a 2.4% increase in interest-bearing liabilities coupled with a 2 basis point increase in interest rates paid on interest-bearing liabilities. The mix of deposits for the previous three years was as follows (dollars in thousands): 2025 2024 2023 Average Average Average Balance Percent Balance Percent Balance Percent Non-interest-Bearing Demand $ 649,590 38.7 % $ 701,685 41.1 % $ 736,838 41.9 % Interest-Bearing Demand (NOW) 429,649 25.6 % 417,373 24.5 % 467,660 26.6 % Savings and MMDAs 457,453 27.3 % 435,160 25.5 % 454,854 25.9 % Time 140,550 8.4 % 152,285 8.9 % 97,639 5.6 % Total $ 1,677,242 100.0 % $ 1,706,503 100.0 % $ 1,756,991 100.0 % The Bank’s net interest margin (net interest income divided by average earning assets) was 3.77% in 2025 and 3.60% in 2024. The net interest spread (average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities) was 3.16% in 2025 and 2.98% in 2024. The 18 basis point increase in net spread in 2025 over 2024 was due to an overall increase in interest rates on earning assets, which was partially offset by an overall increase in interest rates on deposits. Provision for Credit Losses The provision for credit losses is established by charges to earnings on management’s evaluation of expected losses on the loan portfolio. Based on this evaluation, the Company recorded no provision for credit losses in 2025 and a reversal of provision for credit losses of $250,000 in 2024. No provision for credit losses was recorded in 2025 primarily due to positive trends in gross domestic product and single-family home prices, coupled with an overall decrease in loss rates and improvements in risk factors. The reversal of provision for credit losses in 2024 was primarily due to a decrease in loans outstanding and a decrease in unfunded commitments. The ratio of the Allowance for Credit Losses to total loans at December 31, 2025 was 1.36% compared to 1.49% at December 31, 2024. The ratio of the Allowance for Credit Losses to total non-accrual loans and loans past due 90 days or more, net of guarantees was 285.7% at December 31, 2025, compared to 143.5% at December 31, 2024. 55 Table of Contents Non-Interest Income and Expenses Non-interest income consisted primarily of service charges on deposit accounts, net realized losses on sale of available-for-sale securities, net realized gains on sales of loans held-for-sale, debit card income and other income. Non-interest income increased to $6,097,000 in 2025 from $6,019,000 in 2024, representing an increase of $78,000, or 1.3%. Non-interest expenses consisted primarily of salaries and employee benefits, occupancy and equipment expense, data processing expense, amortization of core deposit intangible and other expenses. Non-interest expenses increased to $46,164,000 in 2025 from $42,789,000 in 2024, representing an increase of $3,375,000, or 7.9%. Following is an analysis of the increase or decrease in the components of non-interest expenses (dollars in thousands) during the periods specified: 2025 over 2024 Amount Percent Salaries and Employee Benefits $ 1,525 6.4 % Occupancy and Equipment 331 7.0 % Data Processing 349 8.3 % Stationery and Supplies 26 8.3 % Advertising 31 6.7 % Directors Fees (9 ) (2.9 )% Amortization of core deposit intangible (89 ) (10.9 )% Other Expense 1,211 15.0 % Total $ 3,375 7.9 % The increase in salaries and employee benefits in 2025 was primarily due to a 4.1% increase in regular salaries, 47.4% increase in contingent compensation, and 42.1% increase in group insurance, partially offset by a 24.5% decrease in commissions. The increase in regular salaries, contingent compensation, and group insurance was primarily due to an increase in full-time equivalent employees and increased costs of insurance provided to employees. The decrease in commissions was primarily due to a decrease in mortgage loan production volumes and deposit growth. The increase in occupancy and equipment was primarily due to an increase in service contracts related to upgrades to certain facilities coupled with the overall maintenance of facilities. The increase in data processing was primarily due to an increase in costs of service contracts. The increase in other expenses was primarily due to a 257.2% increase in legal fees, 84.5% increase in amortization expense on housing tax credits, 19.3% increase in contributions, and 16.3% increase in accounting and audit fees. The increase in legal fees is primarily due to general corporate matters and legal services rendered relating to the creation of the Company's new stock incentive plan and new employee stock purchase plan. 56 Table of Contents Income Taxes The provision for income taxes is primarily affected by the tax rate, the level of earnings before taxes and the level of tax-exempt income. In 2025, tax expense decreased to $6,277,000 from $7,806,000 in 2024, due to the execution of a tax planning strategy that involved purchasing investment tax credits under the Inflation Reduction Act of 2022 tied to alternative energy projects. The investment tax credits were acquired at a discount and recognized as a reduction to income tax expense in 2025. Non-taxable municipal bond income was $1,642,000 and $1,216,000 for the years ended December 31, 2025 and 2024, respectively. Liquidity Liquidity is defined as the ability to generate cash at a reasonable cost to fulfill lending commitments and support asset growth, while satisfying the withdrawal demands of deposit customers and any debt repayment requirements. The Bank’s principal sources of liquidity are core deposits and loan and investment payments and proceeds of sale and prepayments. Providing secondary sources of liquidity are excess reserves at the Federal Reserve Bank and the available-for-sale investment portfolio. The Company held $119,306,000 in excess reserves at the Federal Reserve Bank and $617,243,000 total investment securities at December 31, 2025. Under certain deposit, borrowing, and other arrangements, the Company must hold and pledge investment securities as collateral. At December 31, 2025, such collateral requirements totaled approximately $95,479,000. As a smaller source of liquidity, the Bank can utilize existing credit arrangements. The Company’s primary source of liquidity on a stand-alone basis is dividends from the Bank. As discussed in Part I (Item 1) of this Annual Report on Form 10-K, dividends from the Bank are subject to regulatory and corporate law restrictions. Liquidity risk can result from the mismatching of asset and liability cash flows, or from disruptions in the financial markets. The Bank experiences seasonal swings in deposits, which can impact liquidity. Management has sought to address these seasonal swings by scheduling investment maturities and developing seasonal credit arrangements with the FHLB, Federal Reserve Bank and Federal Funds lines of credit with correspondent banks. The Company maintains short-term unsecured lines of credit with other banks which totaled $130,000,000 at December 31, 2025. Additionally, the Company has a line of credit with the FHLB, with a remaining borrowing capacity at December 31, 2025 of $390,191,000; credit availability is subject to certain collateral requirements. In addition, the ability of the Bank’s real estate department to originate and sell loans into the secondary market has provided another tool for the management of liquidity. As of December 31, 2025, the Company has not created any special purpose entities to securitize assets or to obtain off-balance sheet funding. The liquidity position of the Bank is managed daily, thus enabling the Bank to adapt its position according to market fluctuations. Liquidity is measured by various ratios, the most common of which is the ratio of net loans (including loans held-for-sale) to deposits. This ratio was 62.6% on December 31, 2025, and 61.6% on December 31, 2024. The Bank’s ratio of core deposits to total assets was 85.0% and 87.0% for the years ended December 31, 2025 and December 31, 2024, respectively. Core deposits include demand deposits, interest-bearing transaction deposits, savings and money market deposit accounts, and non-brokered time deposits of $250,000 or less. Core deposits are important in maintaining a strong liquidity position as they represent a stable and relatively low-cost source of funds. Management believes that the Bank’s liquidity position was adequate in 2025. This is best illustrated by the change in the Bank’s net non-core ratio, which explains the degree of reliance on non-core liabilities to fund long-term assets. At December 31, 2025, the Bank’s net core funding dependence ratio, the difference between non-core funds, time deposits $250,000 or more and brokered time deposits under $250,000, and short-term investments to long-term assets, was (7.38)% as of December 31, 2025, and (5.17%) as of December 31, 2024. This ratio indicated that, at December 31, 2025, the Bank did not significantly rely upon non-core deposits and borrowings to fund the Bank’s long-term assets, namely loans and investments. The Bank believes that by maintaining adequate volumes of short-term investments and implementing competitive pricing strategies on deposits, it can ensure adequate liquidity to support future growth. The Bank also believes that its liquidity position remains strong to meet both present and future financial obligations and commitments, events or uncertainties that have resulted or are reasonably likely to result in material changes with respect to the Bank’s liquidity. 57 Table of Contents Commitments The following table details the amounts and expected maturities of commitments as of December 31, 2025 (amounts in thousands): Maturities by period Commitments Total Less than 1 year 1-3 years 3-5 years More than 5 years Commitments to extend credit Commercial $ 50,673 $ 32,326 $ 1,740 $ 10,899 $ 5,708 Commercial Real Estate 14,064 4,220 666 — 9,178 Agriculture 13,250 9,170 912 525 2,643 Residential Construction 14,286 3,217 9,645 — 1,424 Consumer 39,033 13,790 5,629 5,689 13,925 Standby Letters of Credit 1,038 1,038 — — — Total $ 132,344 $ 63,761 $ 18,592 $ 17,113 $ 32,878 Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Off-Balance Sheet Arrangements The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit in the form of loans or through standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the balance sheet. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. These loans have been sold to third parties without recourse, subject to customary default, representations and warranties, recourse for breaches of the terms of the sales contracts and payment default recourse. Financial instruments, whose contract amounts represent credit risk at December 31 of the indicated years, were as follows (amounts in thousands): 2025 2024 Undisbursed loan commitments $ 131,306 $ 140,092 Standby letters of credit 1,038 922 $ 132,344 $ 141,014 Our liquidity position is continuously monitored and adjustments are made to balance between sources and uses of funds as deemed appropriate. The Bank believes that it has the means to provide adequate liquidity for funding normal operations in 2026. 58 Table of Contents Capital The Company believes a strong capital position is essential to the Company’s continued growth and profitability. A solid capital base provides depositors and shareholders with a margin of safety, while allowing the Company to take advantage of profitable opportunities, support future growth and provide protection against any unforeseen losses. At December 31, 2025, stockholders’ equity totaled $212.0 million, an increase of $35.7 million from $176.3 million at December 31, 2024. The increase in 2025 was primarily due to net income of $21.0 million and a decrease in accumulated other comprehensive loss, net of $18.4 million. Also affecting capital in 2025 were stock repurchases totaling $4.7 million and paid-in capital in the amount of $0.9 million resulting from employee stock purchases and stock plan accruals. On March 27, 2024, the Company approved a stock repurchase program effective May 1, 2024. The stock repurchase program, which remains in effect until April 30, 2026 unless terminated sooner, allows for repurchases by the Company in an aggregate amount of no more than 6% of the Company’s 17,144,680 outstanding shares of common stock as of March 21, 2024. This represented total shares of 1,028,679 eligible for repurchase at May 1, 2024. The total number of shares outstanding and shares eligible for repurchase has been adjusted to give retroactive effect to stock dividends and stock splits, including the 5% stock dividend declared on January 22, 2026, payable on March 25, 2026 to shareholders of record as of February 27, 2026. The Company repurchased 452,589 shares (adjusted for stock dividends) of the Company's outstanding common stock during the year ended December 31, 2025, and 147,142 shares remained available for repurchase under the stock repurchase program at December 31, 2025. The purpose of the stock repurchase program was to give management the ability to manage capital and create liquidity for shareholders who want to sell their stock. Management believed that the stock repurchase program was a prudent use of excess capital. The capital of the Company and the Bank historically have been maintained at a level that is in excess of regulatory guidelines for a “well capitalized” institution. The policy of annual stock dividends rather than cash dividends has, over time, allowed the Company to match capital and asset growth through retained earnings and a managed program of geographic growth. ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. 59 Table of Contents