What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-03-07 · 177 added, 382 removed, 694 unchanged (45% of the section changed)

13 unchanged sentences

Our profit centers, which are comprised of private bankers, lenders, wealth planners, and portfolio managers, under the leadership of a local chairman and/or president, are also supported centrally by teams providing management services such as operations, risk management, credit administration, marketing, technology support, human capital, and accounting/finance services, which we refer to as support centers.

From 2004, when we opened our first profit center, until December 31, 2024, we have expanded our footprint into fourteen full service profit centers, five loan production offices, and one trust office located across five states.

From 2004, when we opened our first profit center, until December 31, 2025, we have expanded our footprint into fourteen full service profit centers, four loan production offices, and one trust office located across five states.

As of and for the year ended December 31, 2025, we had $3.15 billion in total assets, $96.9 million in total revenues, and provided fiduciary and advisory services on $7.28 billion of assets under management (AUM).

Recent Industry Developments

During 2024, the banking industry largely rebounded from the disruption and volatility seen in 2023 stemming from the failure of multiple banks, which created industry wide concerns related to liquidity, deposit outflows, and unrealized securities losses.

Valuations for bank stocks improved during the year, although there are still headwinds across the industry.

The Bank remains stable with strong fundamentals including uninsured deposits at $902.6 million, or 35.9% of total deposits as of December 31, 2024.

The Company has a low amount of held-to-maturity debt securities, which represent 2.6% of Total assets and carries unrecognized losses amounting to 3.0% of Total shareholders’ equity as of December 31, 2024.

We have a conservative credit appetite as evidenced by our limited exposure to non-owner occupied office space commercial real estate (“CRE”), which has been negatively impacted by the shift to hybrid work environments.

Our client base is well diversified with no single industry concentration.

Primary Factors Used to Evaluate the Results of Operations

25 unchanged sentences

• Bank fees —income generated through bank-related service charges such as:

electronic transfer fees, treasury management fees, bill pay fees, servicing fees for Main Street Lending Program (“MSLP”), loan prepayment penalty fees, loan interest rate swap fees, and other banking fees.

electronic transfer fees, treasury management fees, bill pay fees, loan prepayment penalty fees, loan interest rate swap fees, and other banking fees.

Banking fees are primarily impacted by the level of business activities and cash movement activities of our clients.

44 unchanged sentences

For the year ended December 31, 2025, our Income before income taxes was $17.1 million, a $5.5 million, or 47.5%, increase from the year ended December 31, 2024.

The increase was primarily driven b y a $1.6 million increase in Net interest income, after provision for credit losses and a $5.8 million increase in Non-interest income, partially offset by a $2.9 million increase in Non-interest expense.

• The increase in Net interest income, after provision for credit losses was primarily driven by an increase in Total interest and dividend income due to an increase in total average interest-earning assets and average yield and a decrease in the Provision for credit losses predominately due to decreases in individually analyzed and pooled loan reserves, offset partially by an increase in Total interest expense due to an increase in total average interest-bearing liabilities and average rate.

• The increase in Non-interest income was due to an increase in Net gain on mortgage loans driven by higher average gain on sale margins and origination volumes, increase in Risk management and insurance fees due to an increase in insurance client agreements, decrease in impairment to the carrying value of a contingent consideration asset, and decrease in Net loss on loans accounted for under the fair value option recorded.

• The increase in Non-interest expense was primarily driven by increases in Other operational costs attributed to higher costs on non-performing asset workouts, fraud losses, and an OREO write-down, Technology and information system costs related to enhancements of our information technology infrastructure, and Occupancy and equipment costs related to additional rent expense on the extension of a lease in 2024.

The increase was primarily driven b y an $11.0 million increase in Net interest income, partially offset by a $3.1 million increase in Provision for credit losses, a $1.3 million increase in Non-interest expense, and a $1.1 million decrease in non-interest income.

• The increase in Net interest income was primarily driven by a 27 basis point increase in net interest margin and an increase in average interest-earnings assets.

The increase in net interest margin was primarily due to a 31 basis point decrease in total cost of funds.

• The increase in Provision for credit losses was primarily driven by loan growth, partially offset by favorable mix shifts within our portfolio.

• The increase in Non-interest expense was primarily driven by increases in Salaries and employee benefits due to salary increases and Data processing relating to upgrades to our digital banking platform, partially offset by a decrease in Professional services due to decreases in FDIC insurance fees and audit fees.

• The decrease in Non-interest income was primarily driven by decreases in Risk management and insurance fees due to a decrease in new insurance client agreements, Trust and investment management fees due to lower investment agency and managed trust fees, and Bank fees due to a large prepayment penalty fee collected in 2024, partially offset by an increase in Net gain on loans accounted for under the fair value option due to lower charge-offs and overall improved performance of the portfolio.

Net Interest Income

The year ended December 31, 2025 compared with the year ended December 31, 2024 .

For the year ended December 31, 2024, Net interest income, before Provision for credit losses, was $64.3 million, a decrease of $6.8 million, or 9.6%, compared to the year ended December 31, 2023.

This decrease was driven by a $174.2 million increase in average interest-bearing deposit balances and a 54 basis point increase in average rates paid on Interest-bearing deposits, offset partially by a 27 basis point increase in the average yield on loans and a $53.7 million increase in Interest-bearing deposits in other financial institutions.

For the year ended December 31, 2024, our net interest margin was 2.37% and our net interest spread was 1.50%.

For the year ended December 31, 2023, our net interest margin was 2.62% and our net interest spread was 1.71%.

The decrease in average loans outstanding for the year ended December 31, 2024 compared to the same periods in 2023 was primarily due to net declines in the Cash, Securities and Other, Construction and Development, and Commercial and Industrial portfolios, offset by net growth in the 1-4 Family Residential and Non-Owner Occupied Commercial Real Estate portfolios.

Contributing factors to the decline in the Commercial and Industrial portfolio was the resolution of a problem credit relationship, which decreased non-performing loans by $42.2 million and increased Other real estate owned ("OREO") by $35.9 million, as well as net pay downs.

Average loan yield was 5.70% for the year ended December 31, 2024, compared to 5.43% for the year ended December 31, 2023.

The increase in loan yield during the period was primarily driven by an increase in yields on new loan production due to the continued elevated interest rate environment.

Interest income on our Debt securities portfolio increased as a result of an increase in average yield of 3.47% for the year ended December 31, 2024, compared to 3.11% for the year ended December 31, 2023.

Our average Debt securities balance during the year ended December 31, 2024 was $76.7 million, a decrease of $2.5 million from the year ended December 31, 2023.

Interest expense on Deposits increased during the year ended December 31, 2024.

Average interest-bearing deposit rates were 4.07% and 3.53% for the years ended December 31, 2024 and 2023.

The increase in Interest-bearing deposit rates was primarily attributable to the continued elevated interest rate environment and highly competitive deposit market.

For the year ended December 31, 2025, Net interest income, before Provision for credit losses, was $75.4 million, an increase of $11.0 million, or 17.2%, compared to the year ended December 31, 2024.

The increase was primarily driven by a $142.9 million increase in average interest-earning assets and a 27 basis point increase in net interest margin.

The increase in net interest margin was primarily driven by a 32 basis point decrease in deposit costs.

Total interest and dividend income increased $7.1 million, or 4.7%, during the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to a $142.9 million increase in average interest-earning assets, partially offset by a 3 basis point decrease in the average interest-earning assets yield.

The increase in average interest-earning assets was driven by increases in average interest-bearing deposits in other financial institutions, debt securities, and loans, of $33.9 million, $31.4 million, and $74.6 million, respectively.

The decrease in the average interest-earning assets yield was primarily driven by a 78 basis point decrease in interest-bearing deposits in other financial institution yield due to the lower interest rate environment.

Interest expense on Interest-bearing deposits decreased $3.1 million, or 3.7%, during the year ended December 31, 2025, primarily due to lower rates, partially offset by a $214.7 million increase in average interest-bearing deposits.

Average interest-bearing deposit rates were 3.54% for the year ended December 31, 2025, compared to 4.07% for the year ended December 31, 2024.

The decrease in the average Interest-bearing deposits rate was primarily attributable to reducing deposit rates commensurate with the short-term rate decreases.

The increase in average interest-bearing deposits was primarily driven by growth in money market deposit accounts.

The following table presents an analysis of Net interest income and net interest margin for the periods presented, using daily average balances for each major category of interest-earning assets and interest-bearing liabilities, the interest earned or paid, and the average rate earned or paid on those assets or liabilities:

5 unchanged sentences

Debt securities 108,020 4,480 4.15 76,650 2,658 3.47

76,650 2,658 3.47 79,150 2,463 3.11

Correspondent bank stock 6,715 576 8.58 5,322 463 8.70

5 unchanged sentences

2,863,230 159,787 5.58 2,720,378 152,651 5.61

Allowance for credit losses (23,718) (21,468)

Noninterest-earning assets 129,178 127,749

17 unchanged sentences

_____________________________

(1) Average balance represents daily averages, unless otherwise noted.

(2) Represents monthly averages.

(1) Average balance represents daily averages.

(2) Non-accrual loans are included in the respective average loan balances.

20 unchanged sentences

Loans held at fair value (311) (14) (325)

Total (decrease) increase in interest income $ (20) $ 7,113 $ 7,093

Total increase (decrease) in interest income $ 7,277 $ (141) $ 7,136

Interest-bearing liabilities:

2 unchanged sentences

Subordinated notes (332) 37 (295)

Total increase in interest expense $ 4,490 $ 9,384 $ 13,874

Decrease in net interest income $ (4,510) $ (2,271) $ (6,781)

Total increase (decrease) in interest expense $ 6,802 $ (10,710) $ (3,908)

Increase in net interest income $ 475 $ 10,569 $ 11,044

Provision for Credit Losses

2 unchanged sentences

For the years ended December 31, 2025 and 2024, we recorded $5.0 million and $1.9 million Provision for credit losses, respectively.

The provision recorded for the year ended December 31, 2024 was due to related provisioning on $9.0 million of net charge-offs, $3.5 million decrease in provisions on individually analyzed loans, $2.1 million release of provisions on pooled loans, and $1.5 million provision releases related to off-balance sheet commitments.

The release of provision related to individually analyzed loans was predominately due to the migration of one loan relationship out of non-performing loans and into OREO, pay downs on non-performing loans, and charge-offs.

The release of provision related to pooled loans was predominately due to net pay downs, changes in our portfolio mix, as well as modest macroeconomic forecast improvements.

The release of provision related to off-balance sheet commitments for the year ended December 31, 2024 was predominately due to decreases in non-cancellable commitments..

The provision recorded for the year ended December 31, 2025 was primarily due to loan growth, charge-offs, and specific reserves related to individually analyzed loans, partially offset by favorable mix shifts within our portfolio.

The Company maintains a credit management program which includes internal and external loan review along with recurring portfolio monitoring activities to address the changing environment.

2 unchanged sentences

The year ended December 31, 2025 compared with the year ended December 31, 2024 .

For the year ended December 31, 2024 compared to the year ended December 31, 2023, Non-interest income increased $5.7 million, or 26.1%, to $27.7 million.

The increase in non-interest income was primarily due to a $2.1 million increase in Net gain on mortgage loans driven by higher average gain on sale margins and origination volumes, $0.7 million increase in Risk management and insurance fees due to an increase in insurance client agreements, $0.9 million decrease in impairment to the carrying value of a contingent consideration asset, and $1.0 million decrease in Net losses on loans accounted for under the fair value option.

For the year ended December 31, 2025 compared to the year ended December 31, 2024, Non-interest income decreased $1.1 million, or 4.0%, to $26.6 million.

The decrease in non-interest income was primarily driven by decreases in Risk management and insurance fees, Trust and investment management fees, and Bank fees, partially offset by an increase in Net gain on loans accounted for under the fair value option.

The following table presents the significant categories of our Non-interest income during the periods presented:

4 unchanged sentences

Net gain on mortgage loans 4,443 4,912 (469) (9.5)

Net loss on loans held for sale (105) (178) 73 41.0

Net gain (loss) on loans held for sale 222 (105) 327 311.4

Bank fees 1,345 2,036 (691) (33.9)

1 unchanged sentence

Income on company-owned life insurance 455 431 24 5.6

Net loss on loans accounted for under the fair value option (999) (2,010) 1,011 50.3

Unrealized loss recognized on equity securities (33) (22) (11) (50.0)

Net gain (loss) on loans accounted for under the fair value option 6 (999) 1,005 100.6

Net gain on other real estate owned 459 — 459 n/a

Unrealized gain (loss) recognized on equity securities 14 (33) 47 142.4

Other 624 581 43 7.4

Total non-interest income $ 26,571 $ 27,680 $ (1,109) (4.0)

Trust and investment management fees —For the year ended December 31, 2024 compared to the same period in 2023, our Trust and investment management fees increased by $0.4 million, or 2.2%, to $19.2 million.

The increase was primarily attributable to an increase in assets under management due to an increase in market values.

Net gain on mortgage loans —For the year ended December 31, 2024 compared to the same period in 2023, our Net gain on mortgage loans increased by $2.1 million, or 73.8%, to $4.9 million.

The increase in Net gain on mortgage loans was driven by higher average gain on sale margins and origination volumes.

Net loss on loans held for sale —During the year ended December 31, 2024, the Company reclassified $5.8 million of loans held for investment to loans held for sale.

The transfers occurred at the point in time the Company decided to sell the loans.

During the year ended December 31, 2024, a total of $5.4 million reclassified loans held for investment were sold resulting in a gain of $0.1 million and a $0.2 million write-down on Loans held for sale still held by the Company at year-end was recognized, resulting in a Net loss on loans held for sale of $0.1 million.

Risk management and insurance fees —The increase in Risk management and insurance fees of $0.7 million, or 81.1%, to $1.7 million was primarily driven by an increase in insurance client agreements.

Net loss on loans accounted for under the fair value option —The Company elected the fair value option on certain loans purchased in 2022.

The decrease in Net loss on loans accounted for under the fair value option of $1.0 million, or 50.3% was primarily attributable to overall improved performance of the portfolio.

Other —The increase in Other income of $1.4 million, or 175.0% was primarily attributable to a $0.9 million year-over-year decrease in impairment recorded to the carrying value of a contingent consideration asset recorded related to the sale of First Western Capital Management in 2020.

The initial contingent asset value was established using asset growth assumptions provided by the buyer, which have not materialized.

Trust and investment management fees —The decrease in Trust and investment management fees of $0.7 million, or 3.9%, was primarily attributable to lower investment agency and managed trust fees.

Net gain on mortgage loans —The decrease in Net gain on mortgage loans of $0.5 million, or 9.5%, was primarily attributable to lower margins due to a highly competitive mortgage market.

Net gain (loss) on loans held for sale —During the year ended December 31, 2025, the Net gain on loans held for sale of $0.2 million was due to a reversal of a write-down on a non-accrual loan recorded in the fourth quarter of 2024.

This loan was previously classified as held for sale;

however, during the first quarter of 2025, it was transferred to held for investment and charged off through the ACL.

Bank Fees — The decrease in Bank fees of $0.7 million, or 33.9%, was primarily driven by a large loan prepayment penalty fee collected in 2024.

Risk management and insurance fees —The decrease in Risk management and insurance fees of $1.1 million, or 66.9%, was primarily driven by a decrease in new insurance client agreements.

Net gain (loss) on loans accounted for under the fair value option —The increase in Net gain on loans accounted for under the fair value option of $1.0 million, or 100.6%, was primarily attributable to lower charge-offs and overall improved performance of the portfolio.

Net gain on other real estate owned —In 2025, we sold two OREO properties for a net gain of $0.5 million.

Non-Interest Expense

The year ended December 31, 2025 compared with the year ended December 31, 2024 .

The increase in Non-interest expense of 3.8% to $78.5 million was driven by Other operational costs attributed to an OREO write-down driven by updated appraisals, higher costs on non-performing asset workouts, and fraud losses.

Technology and information system costs related to enhancements of our information technology infrastructure, and Occupancy and equipment costs related to additional rent expense on the extension of a lease in 2024.

The increase in Non-interest expense of 1.7% to $79.8 million was driven by increases in Salaries and employee benefits and Data processing, partially offset by a decrease in Professional services.

The following presents the significant categories of our Non-interest expense for the periods presented:

11 unchanged sentences

Total non-interest expense $ 79,840 $ 78,492 $ 1,348 1.7

Occupancy and equipment— The increase in Occupancy and equipment of $0.7 million, or 9.0%, was driven by additional rent expense related to the extension of a lease in 2024.

Professional services— The increase in Professional services of $0.3 million, or 4.1%, was driven by increased legal fees, audit fees, and FDIC insurance costs due to an increase in our assessment rate.

Technology and information systems— The increase in Technology and information systems of $0.7 million, or 19.2%, was primarily driven by increased costs related to enhancements of our information technology infrastructure.

Data processing —The decrease in Data processing of $0.4 million, or 7.9% was driven by lower system costs related to our trust and investment management system.

Marketing— The decrease in Marketing of $0.3 million, or 21.6%, was driven by lower advertising costs and decreased events and sponsorships.

Other— The increase in Other of $2.1 million, or 38.4%, was primarily driven by a $1.1 million OREO write-down driven by updated appraisals, increased costs related to non-performing asset workouts, and fraud losses.

The Company recorded an income tax provision of $3.1 million and $1.8 million for the years ended December 31, 2024 and 2023, respectively, reflecting an effective tax rate 26.8% and 26.0%, respectively.

Salaries and employee benefits— The increase in Salaries and employee benefits of $1.1 million, or 2.4%, was primarily driv en by salary increases.

Professional services —The decrease in Professional services of $0.3 million, or 3.3%, was primarily driven by decreases in FDIC insurance fees and audit fees, partially offset by an increase in recruiting expenses.

Data processing —The increase in Data processing of $0.6 million, or 14.6%, was primarily driven by upgrades to our digital banking platform.

The Company recorded an income tax provision of $3.9 million and $3.1 million for the years ended December 31, 2025 and 2024, respectively, reflecting an effective tax rate of 22.8% and 26.8%, respectively.

Segment Reporting

14 unchanged sentences

$ 90,996 $ 5,918 $ 96,914

Income before taxes 10,629 950 11,579

Income before income taxes 16,410 664 17,074

Profit margin 18.0 % 11.2 % 17.6 %

3 unchanged sentences

$ 84,027 $ 6,044 $ 90,071

Income (loss) before taxes

9,660 (2,599) 7,061

Income before income taxes 10,629 950 11,579

Profit margin 12.6 % 15.7 % 12.9 %

10 unchanged sentences

Total non-interest income 22,128 22,768 (640) (2.8)

22,768 19,122 3,646 19.1

Total income before non-interest expense 90,996 84,027 6,969 8.3

2 unchanged sentences

All other non-interest expense 29,520 29,421 99 0.3

29,421 26,491 2,930 11.1

Income before income taxes $ 16,410 $ 10,629 $ 5,781 54.4

1 unchanged sentence

Total assets $ 3,112,700 $ 2,891,615 $ 221,085 7.6 %

_____________________________

(1) All other non-interest income primarily includes Trust and investment management fees, Bank fees, Risk management and insurance fees, Net loss on loans accounted for under the fair value option, and Other.

(2) All other non-interest expense primarily includes Occupancy and equipment, Professional services, Technology and information systems, Data processing, Marketing, and Other.

The Wealth Management segment reported Income before income taxes of $16.4 million for the year ended December 31, 2025, compared to $10.6 million for the same period in 2024.

The majority of our assets and liabilities are on the Wealth Management segment balance sheet and the increase in Income before taxes is primarily attributable to an increases in Net interest income, after provision for credit losses and Non-interest income, partially offset by increases in Non-interest expense.

The increase in Net interest income, after provision for credit losses was driven by a decrease in Provision for credit losses primarily due to a decrease in provisions related to individually analyzed loans and an increase in Total interest and dividend income due to an increase in total average interest-earning assets and average yield, offset partially by an increase in Total interest expense due to an increase in total average interest-bearing liabilities and average rate.

The increase in Non-interest income was primarily driven by increases in Risk management and insurance fees and a decrease in Net loss on loans accounted for under the fair value option recorded.

The increase in Non-interest expense was driven by increases in Technology and information systems expenses, Occupancy and equipment costs, and Other expenses.

The majority of our assets and liabilities are on the Wealth Management segment balance sheet.

The increase in Income before income taxes was primarily attributable to an increase in Net interest income, after provision for credit losses, partially offset by an increase in Non-interest expense.

The increase in Net interest income, after provision for credit losses, was primarily driven by increases in net interest margin and average interest-earning assets, partially offset by an increase in Provision for credit losses.

The increase in Non-interest expense was primarily driven by increases in Salaries and employee benefits and Data processing, partially offset by a decrease in Professional services.

As of and for the Year Ended December 31,

9 unchanged sentences

All other non-interest expense 1,566 1,466 100 6.8

1,466 1,567 (101) (6.4)

Income (loss) before income taxes $ 950 $ (2,599) $ 3,549 136.6

Income before income taxes $ 664 $ 950 $ (286) (30.1)

Total assets $ 42,281 $ 27,422 $ 14,859 54.2 %

_____________________________

(1) All other non-interest expense primarily includes Occupancy and equipment, Data processing, and Other.

The Mortgage segment reported Income before income tax of $1.0 million for the year ended December 31, 2024, compared to a loss before income tax of $2.6 million for the same period in 2023.

The increase in Income before taxes was primarily driven by an increase in Non-interest income and a decrease in Non-interest expense.

The increase in Non-interest income was primarily driven by higher average gain on sale margins and origination volume.

The decrease in Non-interest expense was primarily due to lower Salaries and employee benefits.

The Mortgage segment reported Income before income tax of $0.7 million for the year ended December 31, 2025, compared to $1.0 million for the same period in 2024.

The decrease in Income before income taxes was primarily driven by a decrease in Net gain on mortgage loans.

The decrease in Net gain on mortgage loans was primarily driven by lower margins due to a highly competitive mortgage market.

Financial Condition

3 unchanged sentences

Cash and cash equivalents $ 200,281 $ 237,941 $ (37,660) (15.8) %

Held-to-maturity debt securities, at amortized cost, net of allowance for credit losses of $71 and $71 (fair value of $68,161 and $66,617), respectively

Available-for-sale debt securities, at fair value (amortized cost of $45,623 and $0, respectively)

45,607 — 45,607 n/a

Held-to-maturity debt securities, net of allowance for credit losses of $74 and $71 (fair value of $90,635 and $68,161), respectively

94,970 75,724 19,246 25.4

16 unchanged sentences

Total liabilities and shareholders’ equity $ 3,154,981 $ 2,919,037 $ 235,944 8.1

_____________________________

(*) Represents percentages that are not meaningful..

Cash and cash equivalents decreased by $37.7 million, or 15.8%, to $200.3 million as of December 31, 2025 compared to December 31, 2024.

The decrease was a result of decreases in Borrowings and Deposits, offset partially by the decrease in Loans.

The decrease was a result of the increase in Loans and debt securities, partially offset by an increase in Deposits.

Available-for-sale debt securities were $45.6 million as of December 31, 2025, compared to $0.0 as of December 31, 2024.

The increase was due to the purchase of residential mortgage-backed securities issued by U.S.

government agencies and sponsored enterprises.

Held-to-maturity debt securities increased by $19.2 million, or 25.4%, to $95.0 million as of December 31, 2025 compared to December 31, 2024.

The increase was primarily due to Held-to-maturity debt security purchases throughout the year.

Loans, net of allowance decreased by $99.7 million, or 4.0%, to $2.41 billion as of December 31, 2024 compared to December 31, 2023.

The decrease was due to payoffs outpacing new production as well as the migration of a large relationship out of loans and into OREO.

The increase was primarily due to the purchase of residential and commercial mortgage-backed securities issued by U.S.

government agencies and sponsored enterprises.

Loans, net of allowance increased by $221.7 million, or 9.2%, to $2.63 billion as of December 31, 2025 compared to December 31, 2024.

The increase was primarily driven by growth in the Non-owner occupied commercial real estate, 1-4 family residential, Cash, securities, and Other, and Owner occupied commercial real estate portfolios, partially offset by a decrease in the Construction and development portfolio.

Mortgage loans held for sale increased by $14.7 million, or 57.8%, to $40.2 million as of December 31, 2025 compared to December 31, 2024.

The increase was driven driven by higher funded loan volume and the timing of loan sale settlements.

Goodwill and other intangible assets, net decreased by $0.2 million, or 0.7%, to $31.6 million as of December 31, 2024 compared to December 31, 2023.

The decrease was driven by amortization on intangible assets.

Other real estate owned, net increased by $35.9 million as of December 31, 2024 compared to December 31, 2023.

The increase was due to the migration of a large relationship out of loans and into OREO.

The increase was primarily due to the timing of loan originations and sales.

Other real estate owned, net decreased by $32.9 million, or 91.5%, as of December 31, 2025 compared to December 31, 2024.

The decrease was due to the sale of two OREO properties and an OREO write-down.

Other assets increased by $5.2 million, or 5.9%, to $93.1 million as of December 31, 2025 compared to December 31, 2024.

The increase was driven by a $10.2 million increase in our lease assets primarily due to an extension of a lease, offset partially by a $3.3 million decrease in Deferred tax assets, net.

Deposits decreased $14.8 million, or 0.6%, to $2.51 billion as of December 31, 2024 compared to December 31, 2023.

The decrease was driven primarily by operating account fluctuations and clients using liquidity for strategic investments.

Noninterest-bearing deposit accounts decreased $107.0 million, or 22.2%, to $375.6 million as of December 31, 2024.

The increase was primarily due to low-income housing tax credit and investment fund contributions and an increase in right-of-use lease assets due to the extension of three leases.

Deposits increased $232.4 million, or 9.2%, to $2.75 billion as of December 31, 2025 compared to December 31, 2024.

The increase was primarily driven by increases in money market deposit accounts, partially offset by decreases in time deposit accounts and Noninterest-bearing deposit accounts.

Noninterest-bearing deposit accounts decreased $30.6 million, or 8.2%, to $345.0 million as of December 31, 2025 compared to December 31, 2024.

Money market deposit accounts increased $400.0 million, or 26.4%, to $1.91 billion as of December 31, 2025 compared to December 31, 2024.

Time deposit accounts decreased $25.0 million, or 5.0%, to $471.4 million as of December 31, 2024.

Time deposit accounts decreased $118.9 million, or 25.2%, to $352.5 million as of December 31, 2025 compared to December 31, 2024.

Interest checking accounts decreased $17.1 million, or 12.3%, to $122.3 million compared to December 31, 2024.

The decrease in noninterest-bearing deposit accounts and net increases in interest-bearing deposit accounts was primarily attributable to operating account fluctuations and a shift from noninterest-bearing deposit products into higher yielding products as clients seek higher rates for excess liquidity.

Borrowings decreased $2.0 million, or 1.8%, to $107.6 million as of December 31, 2025 compared to December 31, 2024.

The decrease was primarily driven by a by a lower reliance on FHLB and FRB borrowings due to the decrease in loans.

Other liabilities increased $17.3 million, or 67.4%, to $42.9 million as of December 31, 2024 compared to December 31, 2023.

The increase was primarily due to a $9.6 million increase in payables related to participated non-performing assets and a $10.1 million increase in our lease liability due to an extension of a lease, offset partially by a $1.5 million decrease in the unfunded commitment liability due to decreases in noncancellable commitments.

The decrease was primarily driven by $8.0 million of subordinated notes that were redeemed in 2025, partially offset by an increase in FHLB borrowings to support the interest-earning asset growth.

Other liabilities decreased $7.7 million, or 17.9%, to $35.2 million as of December 31, 2025 compared to December 31, 2024.

The decrease was primarily due to payments related to resolution of participated non-performing assets, partially offset by an increase in lease liabilities due to the extension of three leases.

Total shareholders’ equity increased $13.2 million, or 5.2%, to $265.6 million as of December 31, 2025.

The increase was primarily due to Net income for the year and a $0.7 million increase in Additional paid-in capital driven by stock-based compensation expense.

The increase was primarily due to Net income for the year.

Assets Under Management

32 unchanged sentences

Yield* 0.06 % 0.05 %

401(k)/Retirement Balance as of Beginning of Period $ 1,066 $ 909

Total Assets Under Management Excluding 401(k)/Retirement Balances at Beginning of Period $ 6,125 $ 5,687

New relationships 23 44

3 unchanged sentences

Market change, net 315 934

Ending Balance (1)

$ 1,196 $ 1,066

Total Assets Under Management Excluding 401(k)/Retirement Balances $ 6,125 $ 6,125

Yield* 0.28 % 0.29 %

Total Assets Under Management as of Beginning of Period $ 6,753 $ 6,107

New relationships 54 78

Closed relationships (184) (122)

Contributions 589 557

Withdrawals (1,016) (767)

Market change, net 1,125 900

401(k)/Retirement Balance $ 1,153 $ 1,196

Yield* 0.13 % 0.13 %

Total Assets Under Management $ 7,278 $ 7,321

2 unchanged sentences

(*) Trust and investment management fees divided by period-end balance.

(1) AUM reported for the current period is one quarter in arrears.

AUM increased $568.0 million, or 8.4%, to $7.32 billion for the year ended December 31, 2024.

The increase was attributable to contributions and improving market conditions year-over-year resulting in an increase in the value of assets under management balances, offset partially by net withdrawals.

AUM decreased $43 million, or 0.6%, to $7.28 billion for the year ended December 31, 2025.

The decrease was primarily attributable to net withdrawals, partially offset by improved market conditions.

Debt securities

Debt securities we intend to hold for an indefinite period of time, but not necessarily to maturity, are classified as available-for-sale and are recorded at fair value using current market information from a third-party pricing service, with unrealized gains and losses excluded from earnings and reported in OCI, net of tax.

The carrying values of our debt securities classified as available-for-sale are adjusted for unrealized gain or loss, and any gain or loss is reported on an after-tax basis as a component of OCI in shareholders’ equity.

As of December 31, 2025 and 2024, investments in debt securities classified as available-for-sale totaled $45.6 million and $0.0, respectively.

Debt securities for which we have the intent and ability to hold to their maturity are classified as Held-to-maturity debt securities and are recorded at amortized cost.

Debt securities held-to-maturity are carried at cost, adjusted for the amortization of premiums and the accretion of discounts using the level-yield method over the remaining period until maturity.

As of December 31, 2024 and 2023, all our investments in debt securities were classified as held-to-maturity.

The following tables present the amortized cost and estimated fair value of our debt securities as of the dates noted:

December 31, 2024

(dollars in thousands) Amortized

Value Allowance for Credit Losses

Debt securities held-to-maturity:

Treasury debt $ 246 $ — $ (4) $ 242 $ —

Corporate bonds 23,578 — (2,801) 20,777 (71)

Government National Mortgage Association ("GNMA") mortgage-backed securities – residential

31,361 — (3,383) 27,978 —

Federal National Mortgage Association ("FNMA") mortgage-backed securities – residential

12,011 — (689) 11,322 —

Government collateralized mortgage obligations ("GMO") and mortgage-backed securities ("MBS") – commercial

5,075 5 (483) 4,597 —

Corporate collateralized mortgage obligations ("CMO") and MBS

3,524 — (279) 3,245 —

Total debt securities held-to-maturity

$ 75,795 $ 5 $ (7,639) $ 68,161 $ (71)

December 31, 2023

(dollars in thousands) Amortized

Value Allowance for Credit Losses

Debt securities held-to-maturity:

Treasury debt $ 253 $ — $ (11) $ 242 $ —

Corporate bonds 23,687 — (3,020) 20,667 (71)

GNMA mortgage-backed securities – residential 34,579 — (3,410) 31,169 —

FNMA mortgage-backed securities – residential 6,035 — (509) 5,526 —

Government GMO and MBS – commercial 5,836 9 (377) 5,468 —

Corporate CMO and MBS 3,783 — (238) 3,545 —

Total debt securities held-to-maturity

$ 74,173 $ 9 $ (7,565) $ 66,617 $ (71)

The following presents the book value of our contractual maturities and weighted average yield for our debt securities as of the dates presented.

Debt securities HTM are carried at cost, adjusted for the amortization of premiums and the accretion of discounts using the level-yield method over the remaining period until maturity.

As of December 31, 2025 and 2024, investments in debt securities classified as HTM totaled $95.0 million and $75.7 million, respectively.

The following provides information regarding contractual maturities and weighted average yield for our investment securities as of the dates presented.

Contractual maturities may differ from expected maturities because issuers can have the right to call or prepay obligations without penalties.

Our debt securities are taxable securities.

The weighted average yield for each range of maturities was calculated using the yield on each security within that range weighted by the amortized cost of each security as of December 31, 2024.

Our investments are taxable securities.

The weighted average yield for each range of maturities was calculated using the yield on each security within that range weighted by the amortized cost of each security.

Weighted average yields are not presented on a taxable equivalent basis.

8 unchanged sentences

Cost Weighted

Debt securities available-for-sale:

Residential mortgage-backed securities issued by U.S.

government agencies and sponsored enterprises $ — — % $ — — % $ — — % $ 45,623 4.87 %

Total available-for-sale $ — — $ — — $ — — $ 45,623 4.87

Debt securities held-to-maturity:

Treasury debt $ — — % $ 246 0.01 % $ — — % $ — — %

treasuries $ — — % $ 248 3.74 % $ — — % $ — — %

government agencies and sponsored enterprises — — 360 3.78 395 2.75 2,657 3.99

Residential mortgage-backed securities issued by U.S.

government agencies and sponsored enterprises 10 3.24 4,761 4.82 1,291 2.14 53,777 3.46

Residential mortgage-backed securities - other — — 11 4.76 305 5.02 435 4.03

Commercial mortgage-backed securities issued by U.S.

government agencies and sponsored enterprises — — — — 6,000 4.61 138 2.01

Corporate bonds — — 6,690 6.62 17,966 5.25 — —

GNMA mortgage-backed securities – residential — — 35 * 27 * 31,299 1.07

FNMA mortgage-backed securities – residential — — 3,137 0.21 812 0.02 8,060 0.37

Government GMO and MBS – commercial — — 112 0.01 1,391 0.06 3,573 0.10

Corporate CMO and MBS — — 15 * 357 0.03 3,153 0.16

Total debt securities held-to-maturity $ — — % $ 7,540 0.57 % $ 21,997 1.31 % $ 46,258 1.70 %

Total held-to-maturity $ 10 3.24 $ 12,070 5.77 $ 25,957 4.91 $ 57,007 3.49

Maturity as of December 31, 2024

8 unchanged sentences

Debt securities held-to-maturity:

Treasury Debt $ 253 * % $ — — % $ — — % $ — — %

treasuries $ — — % $ 246 3.74 % $ — — % $ — — %

government agencies and sponsored enterprises — — 35 8.07 938 3.34 2,901 4.09

Residential mortgage-backed securities issued by U.S.

government agencies and sponsored enterprises — — 3,250 5.06 1,291 1.91 42,678 2.70

Residential mortgage-backed securities - other — — 15 5.38 357 5.61 506 4.17

Commercial mortgage-backed securities issued by U.S.

government agencies and sponsored enterprises — — — — — — 173 1.94

Corporate bonds — — 3,995 6.43 19,410 4.69 — —

GNMA mortgage-backed securities – residential — — 66 * — — 34,513 1.14

FNMA mortgage-backed securities – residential — — — — 1,116 0.02 4,919 0.13

Government GMO and MBS – commercial — — 178 0.01 1,579 0.07 4,079 0.13

Corporate CMO and MBS — — — — 415 0.03 3,368 0.18

Total debt securities held-to-maturity $ 253 — % $ 4,322 0.31 % $ 22,505 1.35 % $ 47,093 1.59 %

Total held-to-maturity $ — — $ 7,541 5.76 $ 21,996 4.49 $ 46,258 2.80

_____________________________

(*) Represents percentages that are insignificant

As of December 31, 2024 and 2023, there were no holdings of debt s ecurities of any one issuer, other than the U.S.

Government sponsored entities and its agencies, in an amount greater than 10% of shareholders’ equity.

Allowance for Credit Losses for HTM Debt Securities

Management measures expected credit losses on Held-to-maturity debt securities on a collective basis by major security type.

Allowance for Credit Losses for Debt Securities

Management measures expected credit losses on debt securities on a collective basis by major security type.

The majority of our held-to-maturity investment portfolio consists of debt securities issued by U.S.

government entities and agencies and we consider the risk of credit loss to be zero and, therefore, we do not record an ACL.

The Company's non-government backed debt securities include private label CMO and MBS as well as corporate bonds.

Accrued interest receivable on Held-to-maturity debt securities totaled $0.3 million and $0.4 million as of December 31, 2024 and 2023, respectively, and was excluded from the estimate of credit losses.

The following table presents the activity in the allowance for credit losses for Held-to-maturity debt securities by major security type for the years noted:

Year Ended December 31,

(dollars in thousands) Corporate Bonds Corporate CMO Corporate Bonds Corporate CMO

Allowance for credit losses:

Beginning balance $ 71 $ — $ — $ —

Impact of ASU 2016-13 adoption — — 71 —

Provision for credit losses — — — —

Securities charged-off (recoveries) — — — —

Total ending allowance balance $ 71 $ — $ 71 $ —

The Company's non-government backed debt securities include private label MBS as well as corporate bonds.

The ACL on HTM debt securities was $0.1 million as of December 31, 2025 and 2024.

There was no ACL on AFS debt securities as of December 31, 2025 and December 31, 2024.

Loan Portfolio

9 unchanged sentences

As of December 31, 2025 and 2024, we had Loans held for sale of $0.0 million and $0.3 million , respectively.

Beginning in the first quarter of 2022, the Company entered into whole loan purchase agreements to acquire third party originated and serviced unsecured consumer loans to hold for investment and elected the fair value option to account for these loans.

As of December 31, 2025, the Compan y has $3.2 million in loans accounted for under the fair value option with an unpaid principal balance of $3.2 million.

1 unchanged sentence

See Note 16 – Fair Value in the Notes to the Consolidated Financial Statements.

As of December 31, 2024 , the Company has $2.0 million in PPP loans outstanding with $40 thousand in remaining fees to be recognized.

As of December 31, 2023 , the Company had $4.2 million in PPP loans outstanding with $0.1 million in remaining fees to be recognized.

The remaining fees represent the net amount of the fees from the SBA for participation in the PPP less the loan origination costs on these loans.

The current amortization of this income is being recognized over a five-year period from the time of origination, however, if a loan receives full forgiveness from the SBA or if the borrower repays the loan, the remaining income will be recognized upon payoff.

The following presents our loan portfolio by type of loan as of the dates noted:

2 unchanged sentences

Cash, securities, and other $ 164,726 6.3 % $ 119,834 5.0 %

$ 119,834 5.0 % $ 139,947 5.6 %

Consumer and other 19,596 0.7 17,482 0.7

5 unchanged sentences

Total loans held for investment at amortized cost $ 2,646,302 100.0 % $ 2,418,282 100.0 %

Portfolio layer method basis adjustment for hedged portfolio 939 —

Loans accounted for under the fair value option (1)

4 unchanged sentences

_____________________________

(1) Includes PPP loans of $2.0 million an d $4.2 million as of December 31, 2024 and 2023, respectively.

(1) Includes $3.2 million and $7.5 million of unpaid principal balance of Loans held for investment accounted for under the fair value option as o f December 31, 2025 and 2024, respectively.

(2) Include s $39.5 million and $25.2 million of u npaid principal balance of Mortgage loans held for sale as of December 31, 2025 and 2024, respectively.

(4) Includes $0.6 million of pr incipal balance of loans held for sale as of December 31, 2024.

(3) Includes $0.0 and $0.6 million of pr incipal balance of loans held for sale as of December 31, 2025 and 2024, respectively.

• Cash, securities, and other— consists of consumer and commercial purpose loans that are primarily secured by securities managed and under custody with us, cash on deposit with us or life insurance policies.

1 unchanged sentence

This segment of our portfolio is affected by a variety of local and national economic factors affecting borrowers’ employment prospects, income levels, and overall economic sentiment.

PPP loans that are fully guaranteed by the SBA are classified within this line item and had balances of $2.0 million and $4.2 million as of December 31, 2024 and 2023, respectively.

• Consumer and other— consists of unsecured consumer loans.

This segment of our portfolio is affected by a variety of local and national economic factors affecting borrowers’ employment prospects, income levels, and overall economic sentiment.

Loans held for investment accounted for under the fair value option are also classified within this line item and had an unpaid principal balance of $7.5 million and $14.1 million as of December 31, 2024 and 2023, respectively.

Loans held for investment accounted for under the fair value option are primarily consumer and other loans and are presented separately within the above table.

• Construction and development —consists of loans to finance the construction of residential and non-residential properties.

9 unchanged sentences

This portfolio primarily consists of term loans and lines of credit which are dependent on the strength of the industries of the related borrowers and the success of their businesses.

MSLP loans of $1.7 million and $5.1 million as of December 31, 2024 and 2023, respectively, are included in this category.

The largest category of the Company’s loan portfolio is Commercial Real Estate (“CRE”).

An additional breakdown of the Company’s CRE portfolio follows.

One of the larger categories of the Company’s loan portfolio is Commercial Real Estate (CRE).

The following provides balances by asset type of the Company’s CRE portfolio:

As of December 31, 2025

14 unchanged sentences

Colorado $ 771,025 76.0 %

Arizona 53,517 6.8

Wyoming 51,864 6.6

Montana 69,635 6.9

Wyoming 50,386 5.0

Arizona 38,544 3.8

California 19,370 1.9

2 unchanged sentences

$ 1,013,953 100.0 %

The CRE portfolio is comprised of loans made to purchase, construct and finance commercial real estate properties.

The CRE portfolio is comprised of loans made to purchase and finance commercial real estate properties.

On average, the balances are small and geographically disbursed across our footprint.

Specifically, our CRE portfolio has an average loan balance of $2.47 million with a weighted average loan-to-value ratio (“LTV”) of 52.9% as of December 31, 2024.

Specifically, our CRE portfolio has an average loan balance of $3.10 million and $2.47 million with a weighted average loan-to-value ratio (LTV) of 54.3% and 52.9% as of December 31, 2025 and 2024, respectively.

Due to the recent trends in the banking industry, there has been increased risk associated with commercial real estate loans, including with respect to the higher vulnerability of these credits to pressure as interest rates remain elevated and market conditions in many large metropolitan areas continue to show signs of stress.

1 unchanged sentence

The Company maintains a practice of regular and ongoing loan reviews, stress tests, and sensitivity analyses to assess the level of risk in the loan portfolio.

Loan reviews include monitoring past due rates, non-performing trends, concentrations, LTV’s, among other qualitative factors.

Credit policies are robust and are updated as needed to meet the strategic and risk mitigation goals of the company.

The contractual maturity ranges of loans in our loan portfolio and the amount of such loans with fixed and floating interest rates in each maturity range, at amortized cost as of the dates noted, are summarized in the following tables:

Loan reviews include monitoring past due rates, non-performing trends, concentrations, LTVs, among other qualitative factors.

The Company believes its credit policies are robust and are updated as needed to meet the strategic and risk mitigation goals of the company.

As of December 31, 2025

5 unchanged sentences

Cash, securities, and other $ 69,446 $ 94,628 $ — $ 652 $ 164,726

$ 2,376 $ 663 $ 119,834

Consumer and other 14,793 3,571 — 1,232 19,596

18 unchanged sentences

Cash, securities, and other $ 40,409 $ 76,386 $ 2,376 $ 663 $ 119,834

$ 1,611 $ 677 $ 139,947

Consumer and other 10,129 5,430 712 1,211 17,482

12 unchanged sentences

_____________________________

(1) Includes PPP loans.

(1) Loans accounted for under the fair value option are disclosed at fair value rather than amortized cost

Loan Modifications

GAAP requires that certain types of modifications of loans in response to a borrower’s financial difficulty be reported and include the following;

(i) principal forgiveness, (ii) interest rate reduction, (iii) other than insignificant payment delay, (iv) term extension, or (v) any combination of the foregoing.

Each modified loan is separately negotiated with the borrower and includes terms and conditions that reflect the borrower’s prospective ability to service their obligations as modified.

The Company had loan modifications of $1.1 million at December 31, 2024.

For additional information on loan modifications, see Note 4 – Loans and the Allowance For Credit Losses.

Non-Performing Assets

5 unchanged sentences

The amounts reported as OREO are supported by recent appraisals, with the appraised values adjusted, where applicable, for expected transaction fees likely to be incurred upon sale of the property.

We incur recurring expenses relating to OREO in the form of maintenance, taxes, insurance and legal fees, among others, until the OREO parcel is disposed.

While disposition efforts with respect to our OREO are generally ongoing, if these properties are appraised at lower-than-expected values or if we are unable to sell the properties at the prices for which we expect to be able to sell them, we may incur additional losses.

In the second quarter of 2024, the Company recorded $11.4 million of OREO as a result of obtaining physical possession of two foreclosed properties as partial consideration for amounts owed on non-performing loans related to an isolated loan relationship.

During the third quarter of 2024, the Company recorded an additional $25.6 million of OREO related to a third foreclosed property within the same loan relationship.

During the year ended December 31, 2024, the Company recorded a provision for Other real estate owned of $1.1 million.

As of December 31, 2024, the Company owned OREO properties totaling $35.9 million.

As of December 31, 2023, the Company did not own OREO properties.

The Company had $0.7 million and $1.7 million of interest reversed on non-accrual loans during the years ended December 31, 2024 and 2023, respectively.

We incur recurring expenses relating to OREO in the form of maintenance, taxes, insurance, and legal fees, among others, until the OREO property is disposed.

During 2025, the Company sold two OREO properties resulting in a net gain on sale of $0.5 million.

During the years ended December 31, 2025 and 2024, the Company recorded provisions for OREO of $1.3 million and $1.1 million, respectively.

As of December 31, 2025 and 2024, OREO properties had carrying amounts of $3.0 million and $35.9 million, respectively.

The Company reversed $0.1 million and $0.7 million of interest income on non-accrual loans during the years ended December 31, 2025 and 2024, respectively.

The amount of interest income that would have been recognized on loans accounted for on a non-accrual basis pursuant to contractual terms was $2.4 million and $6.8 million for the years ended December 31, 2025 and 2024, respectively.

We had amortized cost of $19.6 million and $48.7 million in non-performing assets as of December 31, 2025 and 2024, respectively.

Although consistent balances of non-performing assets when comparing December 31, 2024 and December 31, 2023, there was significant activity during the ended December 31, 2024.

Non-performing loans decreased $38.1 million and OREO increased $35.9 million.

These changes were predominately due to the migration of one loan relationship out of non-performing loans and into OREO, as well as pay downs, charge-offs, and write-downs, offset by additions to non-performing loans.

The decrease in non-performing assets was primarily driven by the sale of two OREO properties, a write-down of OREO, pay downs, and a charge-off, partially offset by additions to non-accrual loans.

The following presents the amortized cost basis of non-performing loans as of the dates indicated:

3 unchanged sentences

Cash, securities, and other $ 1,704 $ 1,704

Consumer and Other — 7,504

Construction and Development — 2,719

1-4 Family Residential — 3,016

Owner Occupied CRE — 3,980

Commercial and industrial 14,855 11,048

11 unchanged sentences

Credit Quality Indicators

We categorize loans into risk categories based on relevant information about the ability of the borrowers to service their debt, such as:

current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.

We analyze loans individually by classifying the loans by credit risk on a quarterly basis, which are segregated into the following definitions for risk ratings:

Special Mention —Loans categorized as special mention have a potential weakness or borrowing relationships that require more than the usual amount of management attention.

Adverse industry conditions, deteriorating financial conditions, declining trends, management problems, documentation deficiencies, or other similar weaknesses may be evident.

Ability to meet current payment schedules may be questionable, even though interest and principal are still being paid as agreed.

The asset has potential weaknesses that may result in deteriorating repayment prospects if left uncorrected.

Loans in this risk grade are not considered adversely classified.

Substandard— Substandard loans are considered "classified" and are inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any.

Loans so classified have a well-defined weakness or weaknesses that jeopardizes the liquidation of the debt.

They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Loans in this category may be placed on non-accrual status and may individually be evaluated.

Doubtful —Loans graded doubtful are considered "classified" and have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable.

However, the amount or certainty of eventual loss is not known because of specific pending factors.

Loans accounted for under the fair value option are not rated.

Loans not meeting any of the three criteria above are considered to be pass-rated loans.

As of December 31, 2024 and 2023, non-performing loans of $12.8 million and $50.8 million, respectively, were included in the substandard category in the table below.

The following presents the amortized cost basis of loans by credit quality indicator, by class of financing receivable, as of the dates noted:

The following presents the amortized cost basis of loans by credit quality indicator (see Note 4 – Loans and Allowance for Credit Losses for credit quality indicator descriptions), by class of financing receivable, as of the dates noted:

December 31, 2025 Pass Special

1 unchanged sentence

Cash, securities, and other $ 163,022 $ — $ 1,704 $ — $ — $ 164,726

$ 118,130 $ — $ 1,704 $ — $ — $ 119,834

Consumer and other (1)

9 unchanged sentences

Cash, securities, and other $ 118,130 $ — $ 1,704 $ — $ — $ 119,834

$ 138,243 $ — $ 1,704 $ — $ — $ 139,947

Consumer and other (1)

7 unchanged sentences

_____________________________

(1) Includes PPP loans of $2.0 million an d $4.2 million as of December 31, 2024 and 2023, respectively.

(1) Includes $3.2 million and $7.3 million of loans held for investment accounted for under the fair value option as of December 31, 2025 and 2024, respectively.

As of December 31, 2025 and 2024, non-accrual loans of $16.6 million and $12.8 million, respectively, were included in the substandard category in the table above.

Allowance for Credit Losses on Loans

On January 1, 2023, the Company adopted the new CECL standard, ASU 2016-13, using the modified retrospective method for all financial assets measured at amortized cost.

Beginning January 1, 2023, the allowance for credit losses for loans is measured on the loan’s amortized cost basis, excluding interest receivable.

Interest receivable excluded at December 31, 2024 and 2023 was $9.8 million and $10.8 million, respectively.

The Allowance for credit losses (“ACL”) is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans.

The ACL excludes loans held for sale and loans accounted for under the fair value option.

The Company elected to not measure an ACL for accrued interest receivables, as we write off applicable accrued interest receivable balances in a timely manner when a loan is placed on non-accrual status, in which any accrued but uncollected interest is reversed from current income.

Loans are charged off against the allowance when management believes the uncollectability of a loan balance is confirmed.

Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

Management estimates the allowance balance using relevant available information, from internal and external sources, related to past events, current conditions, and reasonable and supportable forecasts.

Actual Company and regional peer historical credit loss experience provides the basis for the estimation of expected credit losses.

The Company identified and grouped portfolio segments based on risk characteristics and underlying collateral.

The call code for each financial asset type was assessed and, where appropriate, expanded for certain call codes into separate segments based on risk characteristics.

CECL requires an allowance for credit losses on all portfolio loans including purchased loans without credit deterioration.

As of December 31, 2024, the Company held $164.3 million in acquired loans with $1.4 million in allowance for credit losses as well as $4.0 million in unamortized net discounts.

As of December 31, 2023 , the Company held $208.2 million in acquired loans with $2.0 million in Allowance for credit losses as well as $3.9 million in unamortized net discounts.

ACL for pooled loans are estimated using a discounted cash flow (“DCF”) methodology using the amortized cost basis (excluding interest) for all loans modeled within a performing pool of loans.

The DCF analysis pairs loan-level term information, for example, maturity date, payment amount, interest rate, with top-down pool assumptions such as default rates, prepayment speeds, to produce individual expected cash flows for every instrument in the segment.

The results are then aggregated to produce segment level results and reserve requirements for each segment.

The quantitative DCF model also incorporates forward-looking macroeconomic information over a reasonable and supportable period of four quarters.

Subsequent to the four quarter period, the Company reverts to its historical loss rate and historical prepayment and curtailment speeds on a straight-line basis over a four quarter reversion period.

The Company applies qualitative factors to capture losses that are expected but may not be adequately reflected in the quantitative model described above.

Qualitative adjustments are made based on management’s assessment of the risks that may lead to a future credit loss or differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, changes in environmental and economic conditions, or other relevant factors.

Loans that do not share risk characteristics are evaluated on an individual basis.

Loans evaluated individually are not included in the pooled loan evaluation.

When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

ACL - held-to-maturity debt securities:

Held-to-maturity debt securities are carried at amortized cost when management has the positive intent and ability to hold them to maturity.

The majority of our held-to-maturity investment portfolio consists of securities issues by U.S.

government entities and agencies.

These securities are either explicitly or implicitly guaranteed by the U.S.

government, are highly rated by major rating agencies, and have a long history of no credit losses.

With respect to these securities, we consider the risk of credit loss to be zero and, therefore, we do not record an ACL for these securities.

The Company's non-government backed securities include private label CMO and MBS and bank subordinated debt.

Private label refers to private institutions such as brokerage firms, banks, and home builders, that also securitize mortgages.

Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type.

Accrued interest receivable on held-to-maturity debt securities is excluded from the estimate of credit losses.

The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts.

Management reviewed the collectability of CMO and MBS debt securities and corporate bonds taking into consideration factors such as the asset quality and delinquencies of the issuers.

ACL - off-balance sheet credit exposures:

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company.

The allowance for credit losses on off-balance sheet credit exposures is adjusted through the Provision for credit losses and is recorded in Other liabilities.

The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life.

The probability of funding is based on historical utilization statistics for unfunded loan commitments.

The loss rates used are calculated using the same assumptions as the associated funded balance.

The Allowance for credit losses for loans represents Management’s best estimate of current expected credit losses on loans considering available information, from internal and external sources, relevant to assessing collectability over the loans’ contractual terms, adjusted for expected prepayments when appropriate.

The ACL for loans represents Management’s best estimate of CECL on loans considering available information, from internal and external sources, relevant to assessing collectability over the loans’ contractual terms, adjusted for expected prepayments when appropriate.

Our quantitative discounted cash flow models use twelve-month economic forecasts including;

housing price index (“HPI”), gross domestic product (“GDP”), and national unemployment.

The $2.1 million release of provision on pooled loans for the year ended December 31, 2024 was predominately due to net pay downs in the loan portfolio as well as modest HPI, GDP, and unemployment forecast improvements.

The allowance for credit losses on non-performing loans was $0.3 million and $3.8 million as of December 31, 2024 and 2023, respectively.

This $3.5 million decrease in provision on individually analyzed loans for the year ended December 31, 2024 was primarily due to the migration of one loan relationship out of non-performing loans and into OREO, pay downs, and charge-offs.

The following presents summary information regarding our allowance for credit losses for the periods presented:

HPI, GDP, and national unemployment.

The ACL increased $3.1 million during the year ended December 31, 2025.

The ACL on pooled loans was $18.0 million as of December 31, 2025 and 2024.

The ACL on pooled loans remained stable as of the year ended December 31, 2025 compared to December 31, 2024 primarily due to favorable mix shifts within our portfolio, offset by loan growth.

The ACL on individually analyzed loans was $3.4 million and $0.3 million as of December 31, 2025 and 2024, respectively.

The $3.1 million provision on individually analyzed loans for the year ended December 31, 2025 was primarily due to the addition of individually analyzed loans with collateral shortfalls.

The remaining $1.9 million of provision on loans for the year ended December 31, 2025 was related to net charge-offs.

The following presents summary information regarding our ACL for the periods presented:

Year Ended December 31,

5 unchanged sentences

Allowance for credit losses at beginning of period $ 18,330 $ 23,931

Impact of adopting ASU 2016-13 — 3,470

Provision for credit losses 4,993 3,439

Consumer and other — (50)

Non-owner occupied CRE (111) —

Commercial and industrial (2,031) (9,352)

13 unchanged sentences

(3) Excludes Mortgage loans held for sale of $40.2 million and $25.5 million as of December 31, 2025 and 2024, respectively.

Excludes Loans held for sale of $0.3 million and $0.0 million as of December 31, 2024 and 2023, respectively.

Excludes $3.2 million and $7.3 million of loans held for investment accounted for under the fair value option as of December 31, 2025 and 2024, respectively.

The following represents the allocation of the allowance for credit losses among loan categories and other summary information.

The following presents the allocation of the ACL among loan categories and other summary information.

The allocation for credit losses by category should neither be interpreted as an indication of future charge-offs, nor as an indication that charge-offs in future periods will necessarily occur in these amounts or in the indicated proportions.

13 unchanged sentences

Allowance for credit losses - off-balance sheet credit exposure

The allowance for credit losses on off-balance sheet credit exposures is adjusted through Provision for credit losses and is recorded in Other liabilities.

The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life.

The probability of funding is based on historical utilization statistics for unfunded loan commitments.

The loss rates used are calculated using the same assumptions as the associated funded balance.

Refer above for changes in the factors that influenced the current estimate of ACL and reasons for the changes.

In addition to changes in loss rates, another reason for the decrease in the ACL on unfunded loan commitments was a significant decrease in non-cancellable commitments throughout 2024.

The following table presents the changes in the ACL on unfunded loan commitments:

(dollars in thousands) 2024 2023

Beginning balance $ 2,178 $ 419

Impact of adopting ASU 2016-13 — 3,481

Release of credit losses (1,506) (1,722)

Ending balance $ 672 $ 2,178

In the normal course of business, there may be various outstanding commitments to obtain funding and to extend credit, such as letters of credit and unfunded loan commitments, which are not reflected in the accompanying Condensed

Consolidated Financial Statements.

The Company assessed the off balance sheet credit exposures as of December 31, 2025 and determined an ACL of $0.7 million was adequate to absorb the estimated credit losses.

For additional information regarding the Company’s ACL on off-balance sheet credit exposures, see Note 10 – Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements.

Deferred Tax Assets, Net

1 unchanged sentence

Our deferred tax assets, net, are valued based on the amounts that are expected to be recovered in the future utilizing the tax rates in effect at the time recognized.

Our deferred tax assets, net for the year ended December 31, 2024, decreased $3.3 million, or 51.9%, from December 31, 2023.

The decrease was primarily due to changes in temporary differences, most notably the decrease in Allowance for credit losses and stock compensation as of and during the year ended December 31, 2024.

Deferred tax assets, net as of December 31, 2025 were $4.0 million an increase of $0.9 million, or 30.0%, from December 31, 2024.

The increase was primarily due to changes in temporary differences, most notably the increase in Allowance for credit losses as of and during the year ended December 31, 2025.

Our deposit products include money market accounts, demand deposit accounts, time-deposit accounts (typically certificates of deposit), interest checking accounts, and saving accounts.

Our accounts are federally insured by the FDIC up to the legal maximum amount.

Total deposits decreased by $14.8 million, or 0.6%, to $2.51 billion as of December 31, 2024 from December 31, 2023.

The decrease was driven primarily by operating account fluctuations and clients using liquidity for strategic investments.

Total deposits increased by $232.4 million, or 9.2%, to $2.75 billion as of December 31, 2025 from December 31, 2024.

Total average deposits for the year ended December 31, 2025 were $2.59 billion, an increase of $151.9 million, or 6.2%, compared to $2.44 billion for the year ended December 31, 2024.

The increase in average deposits for the year ended December 31, 2024, compared to the same period in 2023, was driven primarily by Interest-bearing deposits due to new and expanded deposit relationships offset partially by a decline in Noninterest-bearing deposits.

The following table presents the average balances and average rates paid on deposits during the periods presented:

The increase in average deposits for the year ended December 31, 2025, compared to the same period in 2024, was driven primarily by increases in money market deposit accounts, partially offset by decreases in time deposit accounts and Noninterest-bearing deposit accounts.

The following presents the average balances and average rates paid on deposits during the periods presented:

For the Year Ended December 31,

12 unchanged sentences

Average Noninterest-bearing deposits to average total deposits was 13.6% and 17.0% for the years ended December 31, 2025 and 2024, respectively.

Our average cost of funds was 3.44% and 2.92% during the years ended December 31, 2024 and 2023, respectively.

The increase in cost was primarily driven by an unfavorable mix shift in the deposit portfolio and increased rates on Interest-bearing deposit accounts due to the competitive deposit market and an unfavorable mix shift in deposit balances.

Total money market accounts as of December 31, 2024 were $1.51 billion, an increase of $127.5 million, or 9.2%, compared to $1.39 billion as of December 31, 2023.

Average cost of deposits was 3.06% and 3.38% during the years ended December 31, 2025 and 2024, respectively.

The decrease in cost of deposits was primarily attributable to reducing deposit rates commensurate with the short-term rate decreases.

Money market deposit accounts as of December 31, 2025 were $1.91 billion, an increase of $400.0 million, or 26.4%, compared to $1.51 billion as of December 31, 2024.

Interest checking accounts decreased $17.1 million, or 12.3%, to $122.3 million compared to December 31, 2024.

Total time deposits as of December 31, 2024 were $471.4 million, a decrease of $25.0 million, or 5.0%, compared to December 31, 2023.

Time deposits as of December 31, 2025 were $352.5 million, a decrease of $118.9 million, or 25.2%, compared to December 31, 2024.

The following table presents the amount of certificates of deposit by time remaining until maturity as of December 31, 2025:

5 unchanged sentences

As of December 31, 2025 and 2024, borrowings totaled $107.6 million and $109.6 million, respectively.

On March 12, 2023, the FRB announced it would make additional funding available to eligible depository institutions to help assure banks have the ability to meet the needs of depositors made available through the creation of a new Bank Term Funding Program ("BTFP").

The BTFP was meant to be an additional resource of liquidity against high-quality securities, eliminating an institutions need to quickly sell those securities in times of stress.

As of December 31, 2023 , the Company had pledged a par value of $44.3 million in securities under the BTFP and borrowed $31.0 million with a maturity date of March 27, 2024 .

In 2024 , an additional $10.0 million was borrowed and $41.0 million was repaid, resulting in no outstanding balance as of December 31, 2024 .

The rate for the borrowings was based on the one year overnight swap rate plus 10 basis points and was fixed over the term of the advance based on the date of the advance.

The decrease in borrowings as of December 31, 2024, compared to December 31, 2023, was driven by a lower reliance on FHLB and FRB borrowings due to the decrease in loans.

The decrease in borrowings as of December 31, 2025, compared to December 31, 2024, was primarily driven by $8.0 million of subordinated notes that were redeemed in 2025, partially offset by an increase in FHLB borrowings to support the interest-earning asset growth.

Additionally, borrowings from the Paycheck Protection Program Loan Facility (PPPLF) from the Federal Reserve decreased from $2.0 million as of December 31, 2024 to $0.5 million as of December 31, 2025 due to the pay down of PPP loans .

Borrowing from the PPPLF facility is expected to trend in the same direction as the PPP loan balances.

The following table presents balances of each of the borrowing facilities as of the dates noted:

The following presents balances of each of the borrowing facilities as of the dates noted:

(dollars in thousands) 2025 2024

3 unchanged sentences

Total $ 107,613 $ 109,603

We have a blanket pledge and security agreement with FHLB that requires certain loans and securities to be pledged as collateral for any outstanding borrowings under the agreement.

The collateral pledged as of December 31, 2024 and 2023 amounted to $1.30 billion and $1.31 billion, respectively.

Based on this collateral and the Company’s holdings of FHLB stock, the Company was eligible to borrow an additional $582.0 million as of December 31, 2024.

The following presents additional information on our FHLB borrowings:

(dollars in thousands) As of and for the

6 unchanged sentences

Average interest rate at the end of the period 3.86 %

The Bank has borrowing capacity associated with two unsecured federal funds lines of credit up to $10 million and $19 million.

As of December 31, 2024 and 2023, there were no amounts outstanding on any of the federal funds lines.

Our borrowing facilities include various financial and other covenants, including, but not limited to, a requirement that the Bank maintains regulatory capital that is deemed "well capitalized" by federal banking agencies.

As of December 31, 2025 and 2024, the Company was in compliance with the covenant requirements.

Cash Flow Hedges :

On March 21, 2023, the Company executed an interest rate swap with a notional amount that was designated as a cash flow hedge of certain Federal Home Loan Bank borrowings.

The notional amount of the interest rate swaps does not represent amounts exchanged by the parties.

The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.

The swap hedges the benchmark index (SOFR) with a receive float/pay fixed swap for the period March 21, 2023 through April 1, 2026.

The notional amount of the interest rate swap as of December 31, 2024 and 2023 was $50.0 million .

As of December 31, 2024 and 2023, this hedge was determined to be effective, and the Company expects the hedge to remain effective during the remaining terms of the swap.

Derivatives Not Designated as Hedges :

The Company periodically enters into interest rate swaps to offset interest rate exposure with its commercial variable rate loan clients.

Clients with variable rate loans may choose to enter into an interest rate swap to hedge the interest rate risk on the loan and effectively pay a fixed rate payment.

The Company will simultaneously enter into an interest rate swap on the same underlying loan and notional amount to hedge risk on the fixed rate loan.

The notional amount of interest rate swaps with its loan customers as of December 31, 2024 and 2023 was $70.4 million and $30.3 million, respectively .

While these derivatives represent economic hedges, they do not qualify as hedges for accounting purposes.

During the years ended December 31, 2024 and 2023, the Company recognized $0.3 million and $0.4 million , respectively, of fees related to new interest rate swaps, which are included in the Bank fees line of the Condensed Consolidated Statements of Income

Liquidity and Capital Resources

Liquidity resources primarily include interest-bearing and noninterest-bearing deposits which primarily contribute to our ability to raise funds to support asset growth, acquisitions, and meet deposit withdrawals and other payment obligations.

Access to purchased funds primarily include the ability to borrow from FHLB, other correspondent banks and the use of brokered deposits.

The following table presents, during the periods shown, the composition of our funding sources and the average assets in which those funds are invested as a percentage of average total assets for the periods presented:

Liquidity resources primarily include Interest-bearing and Noninterest-bearing deposits which contribute to our ability to raise funds to support asset growth, acquisitions, and meet deposit withdrawals and other payment obligations.

Access to purchased funds include the ability to borrow from FHLB, other correspondent banks, and the use of brokered deposits.

The following presents the composition of our funding sources and the average assets in which those funds are invested as a percentage of average total assets for the periods presented:

Average Percentage for the Year Ended

12 unchanged sentences

Mortgage loans held for sale 0.83 0.63

Loans held at fair value 0.37 0.66

Interest-bearing deposits in other financial institutions 6.89 6.05

7 unchanged sentences

Capital Resources

Total shareholders’ equity increased $9.6 million , or 3.9%, to $252.3 million as of December 31, 2024 compared to December 31, 2023.

The increase was primarily due to Net income and a $0.7 million increase in Additional paid-in capital driven by stock-based compensation expense.

On June 13, 2024, the Company announced that its Board of Directors authorized the repurchase of up to 200,000 shares of the Company’s common stock, no par value, from time to time, within one year (the “2024 Repurchase Plan”) and that the Board of Governors of the Federal Reserve System advised the Company that it has no objection to the Company’s 2024 Repurchase Plan.

The Company may repurchase shares in privately negotiated transactions, in the open market, including pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 promulgated by the Securities and Exchange Commission, or otherwise in a manner that complies with applicable federal securities laws.

The 2024 Repurchase Plan does not obligate the Company to acquire a specific dollar amount or number of shares and it may be extended, modified or discontinued at any time without notice.

During the year ended December 31, 2024, the Company repurchased 5,501 shares under the authorization of the 2024 Repurchase Plan.

As of December 31, 2024, there were 194,499 shares available for repurchase under the plan.

We are subject to various regulatory capital adequacy requirements at a consolidated level and the Bank level.

5 unchanged sentences

As of December 31, 2025 and 2024, our holding company and Bank were in compliance with all applicable regulatory capital requirements, and the Bank was classified as "well capitalized," for purposes of the prompt corrective action regulations.

See Note 22 – Regulatory Capital Matters for capital amounts and ratios .

As we continue to grow our operations and maintain capital requirements, our regulatory capital levels may decrease depending on our level of earnings.

We continue to monitor growth and control our capital activities in order to remain in compliance with all applicable regulatory capital standards.

The following table presents our regulatory capital ratios for the dates noted:

December 31, 2024 December 31, 2023

(dollars in thousands) Amount Ratio Amount Ratio

Tier 1 capital to risk-weighted assets

Bank $ 256,419 11.41 % $ 244,390 10.54 %

Consolidated 226,244 10.07 218,150 9.40

CET1 to risk-weighted assets

Bank 256,419 11.41 244,390 10.54

Consolidated 226,244 10.07 218,150 9.40

Total capital to risk-weighted assets

Bank 271,981 12.10 265,391 11.45

Consolidated 294,807 13.12 292,151 12.59

Tier 1 capital to average assets

Bank 256,419 8.94 244,390 8.71

Consolidated 226,244 7.88 218,150 7.77

Contractual Obligations and Off-Balance Sheet Arrangements

20 unchanged sentences

_____________________________

(1) Reflects contractual maturity dates of March 31, 2030, December 1, 2030, September 1, 2031, and December 15, 2032, although the Company can call the notes prior to their contractual maturity.

The following presents financial instruments whose contract amounts represent credit risk, as of the periods presented:

(dollars in thousands) Fixed Rate Variable Rate Fixed Rate Variable Rate

Unused lines of credit $ 68,427 $ 453,520 $ 86,398 $ 540,255

Standby letters of credit 13,864 8,000 13,922 12,094

Commitments to make loans to sell 19,769 — 18,917 —

Commitments to make loans 4,029 15,563 5,275 7,115

(1) Reflects contractual maturity date of December 1, 2030, although the Company can call the note prior to contractual maturity.

(2) Reflects contractual maturity dates of September 1, 2031 and December 15, 2032, although the Company can call the notes prior to contractual maturity.

We may enter into contracts for services in the conduct of ordinary business operations, which may require payment for services to be provided in the future and may contain penalty clauses for early termination of the contracts.

6 unchanged sentences

Actual results may differ from these estimates under different assumptions or conditions.

We have identified our Allowance for Credit Losses ("ACL") and Goodwill as being critical because our policies require management to use significant judgement and use subjective and complex measurements about matters that are inherently uncertain and because of the likelihood that materially different amounts would be reported under different conditions or using different assumptions.

We have identified our Allowance for credit losses (ACL), the evaluation of goodwill impairment, and the fair value of certain financial instruments as being critical because our policies require management to use significant judgment and use subjective and complex measurements about matters that are inherently uncertain and because of the likelihood that materially different amounts would be reported under different conditions or using different assumptions.

Our accounting policies and procedures, including those identified as being critical, are described in further detail in Note 1 – Organization and Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements.

Our ACL policies govern the processes and procedures used to estimate potential for credit losses in our loan receivables and held-to-maturity debt securities.

It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor.

Our ACL policies govern the processes and procedures used to estimate the potential for credit losses in our loan receivables and held-to-maturity debt securities.

It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments).

The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans.

20 unchanged sentences

We have selected October 31 as the date to perform our annual impairment test.

The test is performed at the reporting unit level by applying a fair value-based test using discounted estimated future net cash flows.

The test is performed at the reporting unit level.

Impairment exists when the carrying amount of the goodwill exceeds estimated fair values.

11 unchanged sentences

See Note 6 – Goodwill and Other Intangible Assets for further information on Goodwill.

Fair Value Measurements:

Fair value measurement estimates are used for certain recorded and disclosed financial instruments on a recurring and non-recurring basis.

Such estimates utilize a variety of assumptions, which are subject to uncertainty.

Certain fair value measurements have a higher degree of sensitivity of the reported amount to the methods, assumptions, and estimates underlying the calculation.

See Note 16 – Fair Value for further information on fair value measurements and the estimated changes during the reporting periods.

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 7. Management’s Discussion and Analysis