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Item 1. Financial Statements

2025-10-27 compared with 2025-07-28 · 170 added, 136 removed, 1406 unchanged (18% of the section changed)

3 unchanged sentences

Consolidated Balance Sheets

September 30,

2025 December 31,

32 unchanged sentences

Preferred stock, $ 1 par value, 2,500,000 shares authorized, none issued or outstanding

Common stock, $ 1 par value, 10,000,000 shares authorized, 5,522,271 and 5,518,210 issued and outstanding at June 30, 2025 and December 31, 2024, respectively

Common stock, $ 0.25 par value, 40,000,000 shares authorized, 22,090,668 and 22,072,840 issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Additional paid-in capital 10,183 9,311

6 unchanged sentences

Consolidated Statements of Income

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(In Thousands, Except Per Share Data) 2025 2024 2025 2024

13 unchanged sentences

Net Interest Income 35,346 28,842 100,235 82,342

Provision (benefit) for credit losses

Provision for credit losses

1,716 2,063 2,283 2,092

2 unchanged sentences

Other Operating Income

Gain on sale by Pacific Wealth Advisors

14,211 — 14,211 —

Mortgage banking income 7,273 7,047 18,924 16,962

2 unchanged sentences

Service charges on deposit accounts 796 605 2,199 1,726

Unrealized gain (loss) on marketable equity securities

Unrealized gain on marketable equity securities

80 576 108 830

6 unchanged sentences

Professional and outside services 1,112 903 3,340 2,384

Marketing expense 1,042 690 1,714 1,203

Insurance expense 802 596 2,575 2,067

1 unchanged sentence

600 — 1,800 —

Marketing expense 508 860 2,222 2,063

OREO expense, net rental income and gains on sale ( 16 ) 2 ( 11 ) ( 387 )

13 unchanged sentences

Consolidated Statements of Comprehensive Income

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In Thousands) 2025 2024 2025 2024

5 unchanged sentences

Derivatives and hedging activities:

Unrealized holding gains (losses) arising during the period

Unrealized holding (losses) arising during the period

( 60 ) ( 488 ) ( 403 ) ( 160 )

Foreign currency translation income (loss) ( 127 ) — 23 —

Income tax expense related to unrealized (gains) losses

Income tax expense related to net unrealized (gains)

( 695 ) ( 2,872 ) ( 2,474 ) ( 3,847 )

62 unchanged sentences

Exercise of stock options and vesting of restricted stock units, net 4 1 ( 13 ) — — ( 12 )

Other comprehensive gain, net of tax

Other comprehensive income, net of tax

— — — — 1,955 1,955

2 unchanged sentences

22,087 $ 5,522 $ 9,837 $ 277,255 ($ 2,395 ) $ 290,219

Cash dividend on common stock ($ 0.16 per share)

— — — ( 3,591 ) — ( 3,591 )

Stock-based compensation expense — — 363 — — 363

Exercise of stock options and vesting of restricted stock units, net 4 1 ( 17 ) — — ( 16 )

Other comprehensive income, net of tax

— — — — 1,623 1,623

Net income — — — 27,065 — 27,065

Balance as of September 30, 2025

22,091 $ 5,523 $ 10,183 $ 300,729 ($ 772 ) $ 315,663

See notes to consolidated financial statements

1 unchanged sentence

Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(In Thousands) 2025 2024

4 unchanged sentences

Amortization of investment security premium, net of discount accretion 43 309

Unrealized (gain) loss on marketable equity securities ( 28 ) ( 254 )

Unrealized gain on marketable equity securities

( 108 ) ( 830 )

Stock-based compensation 922 692

10 unchanged sentences

Gain on sale of other real estate owned — ( 392 )

Gain on sale by Pacific Wealth Advisors

Net changes in assets and liabilities:

Increase in accrued interest receivable

( 1,349 ) ( 951 )

Decrease in other assets 16,391 511

Increase (decrease) in other liabilities 1,117 ( 8,381 )

Decrease in other liabilities

( 1,682 ) ( 6,808 )

Net Cash Provided (Used) by Operating Activities 104,795 ( 44,245 )

14 unchanged sentences

Purchases of premises and equipment ( 3,249 ) ( 2,063 )

Net Cash (Used) Provided by Investing Activities ( 95,469 ) ( 21,604 )

Net Cash (Used) by Investing Activities

( 160,380 ) ( 100,692 )

Financing Activities:

Increase (decrease) in deposits 128,981 ( 21,249 )

Increase in deposits

226,274 140,512

Increase in borrowings ( 10,129 ) ( 321 )

Repurchase of common stock — ( 788 )

Proceeds from the issuance of common stock ( 1 ) —

Cash dividends paid ( 10,604 ) ( 10,120 )

Net Cash Provided (Used) by Financing Activities 161,892 1,540

Net Cash Provided by Financing Activities

205,541 129,283

Net Change in Cash and Cash Equivalents 149,956 ( 15,654 )

20 unchanged sentences

The Company has evaluated subsequent events and transactions for potential recognition or disclosure.

Operating results for the interim period ended June 30, 2025 are not necessarily indicative of the results anticipated for the year ending December 31, 2025.

Operating results for the interim period ended September 30, 2025 are not necessarily indicative of the results anticipated for the year ending December 31, 2025.

These consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

1 unchanged sentence

There have been no significant changes in our application of these accounting policies in 2025.

Common Stock Split

On September 18, the Company effected a four -for-one forward stock split of its common stock, a proportionate increase the number of authorized shares of the common stock from 10,000,000 to 40,000,000 and proportionate decrease in the par value of the common stock from $ 1.00 per share to $ 0.25 per share.

All share, equity award and per share amounts presented throughout this Quarterly Report of Form 10-Q have been retrospectively adjusted to reflect the common stock split.

Reclassification of Prior Period Presentation

66 unchanged sentences

Additionally, deal-related costs of $ 1.1 million for the year ended December 31, 2024 have been incurred and expensed in connection with the acquisition of Sallyport and recognized within professional and outside services expense on the Consolidated Statements of Income .

The following tables present unaudited pro forma results of operations for the three and six-month periods ended June 30, 2024 as if the acquisition of SCF had occurred on January 1, 2024.

The following tables present unaudited pro forma results of operations for the three and nine-month periods ended September 30, 2024 as if the acquisition of SCF had occurred on January 1, 2024.

The proforma results have been prepared for comparative purposes only and are not necessarily indicative of the results that would have been obtained had the acquisition actually occurred on January 1, 2024, primarily due to the Company's lower cost of funding as compared to SCF.

(In Thousands, except per share data) Three Months Ended June 30, 2024

(In Thousands, except per share data) Three Months Ended September 30, 2024

Pro Forma Adjustments 3

6 unchanged sentences

Weighted Average Shares Outstanding, Diluted 22,332,220 22,332,220

(In Thousands, except per share data) Six Months Ended June 30, 2024

(In Thousands, except per share data) Nine Months Ended September 30, 2024

Pro Forma Adjustments 3

6 unchanged sentences

Weighted Average Shares Outstanding, Diluted 22,296,540 22,296,540

1 SCF represents unaudited results from April 1 to June 30 for 2024.

2 SCF represents unaudited results from January 1 to June 30 for 2024.

1 SCF represents unaudited results from July 1 to September 30 for 2024.

2 SCF represents unaudited results from January 1 to September 30 for 2024.

3 Proforma adjustments include a provision for income taxes using the Company's statutory rate.

1 unchanged sentence

Marketable Equity Securities

The Company held marketable equity securities with fair values of $ 8.7 million at both June 30, 2025 and December 31, 2024.

The Company held marketable equity securities with fair values of $ 8.3 million at September 30, 2025 and $ 8.7 million at December 31, 2024, respectively.

The realized and unrealized gains (losses) recognized on marketable equity securities in other operating income in the Company's Consolidated Statements of Income were as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In Thousands) 2025 2024 2025 2024

6 unchanged sentences

(In Thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Fair Value

June 30, 2025

September 30, 2025

Securities available for sale

5 unchanged sentences

(In Thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

June 30, 2025

September 30, 2025

Securities held to maturity

15 unchanged sentences

Total securities held to maturity, net of ACL $ 36,750 $ 175 ($ 1,175 ) $ 35,750

Gross unrealized losses on available for sale securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2025 and December 31, 2024 were as follows:

Gross unrealized losses on available for sale securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2025 and December 31, 2024 were as follows:

Less Than 12 Months More Than 12 Months Total

(In Thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses

June 30, 2025

September 30, 2025

Securities available for sale

19 unchanged sentences

Consideration is given to the extent to which the fair value is less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.

At June 30, 2025, the Company had two available for sale securities in an unrealized loss position without an ACL that have been in a loss position for less than twelve months.

There were 32 available for sale securities without an ACL with unrealized losses at June 30, 2025 that have been in a loss position for more than twelve months.

At June 30, 2025, the Company had two held to maturity securities in an unrealized loss position without an ACL that have been in a loss position for more than twelve months.

At September 30, 2025, the Company had two available for sale securities in an unrealized loss position without an ACL that have been in a loss position for less than twelve months.

There were 30 available for sale securities without an ACL with unrealized losses at September 30, 2025 that have been in a loss position for more than twelve months.

At September 30, 2025, the Company had two held to maturity securities in an unrealized loss position without an ACL that have been in a loss position for more than twelve months.

Management does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost.

The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline.

Accordingly, as of June 30, 2025, management believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, primarily changes in interest rates and other market conditions, and therefore no losses have been recognized in the Company's Consolidated Statements of Income .

At June 30, 2025 and December 31, 2024, carrying amounts of $ 192.6 million and $ 177.4 million in securities were pledged for deposits and borrowings, respectively.

The amortized cost and estimated fair values of available for sale and held to maturity debt securities at June 30, 2025, are distributed by contractual maturity as shown below.

Accordingly, as of September 30, 2025, management believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, primarily changes in interest rates and other market conditions, and therefore no losses have been recognized in the Company's Consolidated Statements of Income .

At September 30, 2025 and December 31, 2024, carrying amounts of $ 211.5 million and $ 177.4 million in securities were pledged for deposits and borrowings, respectively.

The amortized cost and estimated fair values of available for sale and held to maturity debt securities at September 30, 2025, are distributed by contractual maturity as shown below.

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

1 unchanged sentence

June 30, 2025

US Treasury and government sponsored entities

Treasury and government sponsored entities

Within 1 year $ 184,617 $ 182,120

12 unchanged sentences

1-5 years $ — $ —

5-10 years $ 17,825 $ 17,869

Over 10 years 5,000 5,000

Total $ 22,825 $ 22,869

There were no proceeds from sales of investment securities for the three and six-month periods ending June 30, 2025 and 2024.

A summary of interest income for the three and six-month periods ending June 30, 2025 and 2024, on available for sale investment securities are as follows:

Three Months Ended June 30, Six Months Ended June 30,

There were no proceeds from sales of investment securities for the three and nine-month periods ending September 30, 2025 and 2024.

A summary of interest income for the three and nine-month periods ending September 30, 2025 and 2024, on available for sale investment securities are as follows:

Three Months Ended September 30, Nine Months Ended September 30,

(In Thousands) 2025 2024 2025 2024

US Treasury and government sponsored entities $ 2,415 $ 2,499 $ 4,739 $ 5,068

Treasury and government sponsored entities

$ 2,224 $ 2,443 $ 6,963 $ 7,511

Agency mortgage-backed securities 61 — 114 —

6 unchanged sentences

Loans Held for Sale

Loans held for sale are comprised entirely of 1-4 family residential mortgage loans as of June 30, 2025 and December 31, 2024.

Loans held for sale are comprised entirely of 1-4 family residential mortgage loans as of September 30, 2025 and December 31, 2024.

The Company designates loans held for sale as either carried at fair value or the lower of cost or fair value at loan level at origination.

1 unchanged sentence

The following table presents amortized cost and unpaid principal balance of loans, categorized by the segments used in the Company's Current Expected Credit Losses (“CECL”) methodology to assess credit risk, for the periods indicated:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

(In Thousands) Amortized Cost Unpaid Principal Difference Amortized Cost Unpaid Principal Difference

15 unchanged sentences

Net loans $ 2,195,613 $ 2,228,783 ($ 9,813 ) $ 2,107,243 $ 2,138,450 ($ 9,187 )

The difference between the amortized cost and unpaid principal balance is net deferred origination fees totaling $ 10.0 million at June 30, 2025 and $ 9.2 million at December 31, 2024.

Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $ 9.7 million and $ 8.4 million at June 30, 2025 and December 31, 2024, respectively, and is included in other assets in the Consolidated Balance Sheets .

The difference between the amortized cost and unpaid principal balance is net deferred origination fees totaling $ 9.8 million at September 30, 2025 and $ 9.2 million at December 31, 2024.

Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $ 9.8 million and $ 8.4 million at September 30, 2025 and December 31, 2024, respectively, and is included in other assets in the Consolidated Balance Sheets .

Allowance for Credit Losses

The table below presents activity in the ACL related to loans held for investment for the periods indicated.

Three Months Ended June 30, Beginning Balance Credit Loss Expense (Benefit) Charge-offs Recoveries Ending Balance

Three Months Ended September 30, Beginning Balance Credit Loss Expense (Benefit) Charge-offs Recoveries Ending Balance

(In Thousands)

27 unchanged sentences

Total $ 17,694 $ 1,738 ($ 15 ) $ 111 $ 19,528

Six Months Ended June 30, Beginning Balance Credit Loss Expense (Benefit) Charge-offs Recoveries Ending Balance

Nine Months Ended September 30, Beginning Balance Credit Loss Expense (Benefit) Charge-offs Recoveries Ending Balance

(In Thousands)

28 unchanged sentences

The following table shows gross charge-offs by year of loan origination for the periods indicated:

Six Months Ended June 30,

Nine Months Ended September 30,

(In Thousands) 2025 2024 2023 2022 2021 Prior Total

29 unchanged sentences

Generally, current period renewals of credit are re-underwritten at the point of renewal and considered current period originations for purposes of the table below.

June 30, 2025 2025 2024 2023 2022 2021 Prior Total

September 30, 2025 2025 2024 2023 2022 2021 Prior Total

(In Thousands)

116 unchanged sentences

Due Current Total Greater Than 90 Days Past Due Still Accruing

June 30, 2025

September 30, 2025

Commercial & industrial loans $ — $ — $ 1,661 $ 1,661 $ 473,188 $ 474,849 $ 1,375

38 unchanged sentences

Nonaccrual loans:

Nonaccrual loans net of government guarantees totaled $ 7.8 million and $ 7.5 million at June 30, 2025 and December 31, 2024, respectively.

Nonaccrual loans net of government guarantees totaled $ 9.6 million and $ 7.5 million at September 30, 2025 and December 31, 2024, respectively.

The following table presents loans on nonaccrual status and loans on nonaccrual status for the periods presented for which there was no related ACL.

All loans with no ACL are individually evaluated for credit losses in the Company's CECL methodology.

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

(In Thousands) Nonaccrual Nonaccrual With No ACL Nonaccrual Nonaccrual With No ACL

12 unchanged sentences

Net nonaccrual loans $ 9,564 $ 8,832 $ 7,516 $ 6,976

There was no interest on nonaccrual loans reversed through interest income during the three or six-month periods ending June 30, 2025 or June 30, 2024.

There was no interest earned on nonaccrual loans with a principal balance during the six-month periods ending June 30, 2025 and June 30, 2024.

However, the Company recognized interest income of $ 45,000 and $ 32,000 in the three-month periods ending June 30, 2025 and 2024, respectively, and $ 87,000 and $ 234,000 in the six-month periods ending June 30, 2025 and 2024, respectively, related to interest collected on nonaccrual loans whose principal had been paid down to zero.

There was no interest on nonaccrual loans reversed through interest income during the three or nine -month periods ending September 30, 2025 or September 30, 2024.

There was no interest earned on nonaccrual loans with a principal balance during the nine -month periods ending September 30, 2025 and September 30, 2024.

However, the Company recognized interest income of $ 143,000 and $ 11,000 in the three-month periods ending September 30, 2025 and 2024, respectively, and $ 230,000 and $ 246,000 in the nine -month periods ending September 30, 2025 and 2024, respectively, related to interest collected on nonaccrual loans whose principal had been paid down to zero.

Loan Modifications:

5 unchanged sentences

The percentage of the amortized cost basis of loans that were modified to borrowers experiencing financial difficulty as compared to the amortized cost basis of each class of financing receivable is also presented below:

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

Payment Modification Term and payment modifications Total Modifications Percentage of Class of Financing Receivable

3 unchanged sentences

Total $ — $ — $ — — %

Three Months Ended June 30, 2024

Term Modification Term and payment modifications Total Modifications Percentage of Class of Financing Receivable

Three Months Ended September 30, 2024

Payment Modification Term and payment modifications Total Modifications Percentage of Class of Financing Receivable

(In Thousands)

Commercial & industrial loans $ — $ 195 $ 195 0.05 %

Residential real estate:

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 372 — 372 0.82 %

Total $ 372 $ 195 $ 567 0.03 %

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

Term Modification Term and payment modifications Total Modifications Percentage of Class of Financing Receivable

3 unchanged sentences

Total $ — $ 3,252 $ 3,252 0.15 %

Six Months Ended June 30, 2024

Term Modification Term and payment modifications Total Modifications Percentage of Class of Financing Receivable

Nine Months Ended September 30, 2024

Term Modification Payment Modification Term and payment modifications Total Modifications Percentage of Class of Financing Receivable

(In Thousands)

Commercial & industrial loans $ 4,033 $ — $ 448 $ 4,481 1.08 %

Residential real estate:

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens — 372 — 372 0.82 %

Total $ 4,033 $ 372 $ 448 $ 4,853 0.24 %

1 unchanged sentence

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty as of the dates indicated:

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (months)

2 unchanged sentences

Owner occupied properties $ — — % 0

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (months)

1 unchanged sentence

Commercial & industrial loans $ — — % 73

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (months)

2 unchanged sentences

Owner occupied properties $ — — % 33

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (months)

3 unchanged sentences

These are loans that have been modified within twelve months of the dates indicated:

June 30, 2025 December 31, 2024

(In Thousands)

(In Thousands) September 30, 2025 December 31, 2024

Commercial & industrial loans $ 150 $ 5,075

6 unchanged sentences

Total $ 5,165 $ 7,291

The following table presents the amortized cost basis of loans that had a payment default during the period indicated and were modified in the twelve months before default to borrowers experiencing financial difficulty:

Three Months Ended June 30, 2025 Six Months Ended June 30, 2025

Term modification Term modification

The following table presents the amortized cost basis of loans that had a payment default during the periods indicated and were modified in the twelve months before default to borrowers experiencing financial difficulty:

Three Months Ended September 30, 2025 Nine Months Ended September 30, 2025

Term and payment modification Term and payment modification

(In Thousands)

Residential real estate:

1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens $ — $ —

1-4 family residential construction loans — —

Other construction, land development and raw land loans — —

Commercial real estate:

Owner occupied properties $ 3,230 $ 3,230

Total $ 3,230 $ 3,230

Three Months Ended June 30, 2024 Six Months Ended June 30, 2024

Three Months Ended September 30, 2024 Nine Months Ended September 30, 2024

Term modification Term modification

7 unchanged sentences

The following table presents the payment performance of loans that have been modified in the last twelve months as of the date indicated:

June 30, 2025

September 30, 2025

Greater Than 89 Days Past Due Total Past Due Current

7 unchanged sentences

Total $ 1,785 $ 1,785 $ 3,380 $ 5,165

June 30, 2024

Total Past Due Current Total

September 30, 2024

60-89 Days Past Due Greater Than 89 Days Past Due Total Past Due Current Total

(In Thousands)

12 unchanged sentences

Income on purchased receivables is accrued and recognized on the principal amount outstanding using an effective interest method except when management believes doubt exists as to the collectability of the income or principal.

There were eight nonperforming purchased receivables with a balance of $ 4.0 million as of June 30, 2025 and there were four nonperforming purchased receivable with a balance of $ 3.8 million as of December 31, 2024 for which management was not accruing income.

There were six nonperforming purchased receivables with a balance of $ 2.3 million as of September 30, 2025 and there were four nonperforming purchased receivable with a balance of $ 3.8 million as of December 31, 2024 for which management was not accruing income.

The following table summarizes the components of net purchased receivables for the dates indicated:

(In Thousands) June 30, 2025 December 31, 2024

(In Thousands) September 30, 2025 December 31, 2024

Purchased receivables $ 109,977 $ 77,727

2 unchanged sentences

The following table sets forth information regarding changes in the ACL on purchased receivables for the periods indicated:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In Thousands) 2025 2024 2025 2024

Balance at beginning of period $ 3,432 $ — $ 3,649 $ —

Adjustment related to PCD collections payable to sellers 1

( 1,513 ) — ( 1,513 ) —

Charge-offs — — ( 281 ) —

1 unchanged sentence

Charge-offs net of recoveries 20 — ( 261 ) —

Provision for purchased receivables

(Benefit) / provision for purchased receivables ( 15 ) — 49 —

Balance at end of period $ 1,924 $ — $ 1,924 $ —

1 Represents a reduction in the allowance for credit losses on a purchased credit deteriorated purchased receivable acquired in 2024 in connection with the Sallyport acquisition.

Collections received during the period presented above are contractually payable to the sellers under the purchase agreement if collected within one year of the acquisition of SCF.

Accordingly, the decrease in the allowance was offset by the recognition of a liability to the sellers, and no benefit was recognized in the provision for credit losses.

Servicing Rights

Mortgage servicing rights

The following table details the activity in the Company's mortgage servicing rights (“MSR”) for the three and six-month periods ended June 30, 2025 and 2024:

Three Months Ended March 31, Six Months Ended June 30,

The following table details the activity in the Company's mortgage servicing rights (“MSR”) for the three and nine-month periods ended September 30, 2025 and 2024:

Three Months Ended September 30, 2025 Nine Months Ended September 30,

(In Thousands) 2025 2024 2025 2024

8 unchanged sentences

(2) Represents changes due to collection/realization of expected cash flows over time.

The following table details information related to our serviced mortgage loan portfolio as of June 30, 2025 and December 31, 2024:

(In Thousands) June 30, 2025 December 31, 2024

The following table details information related to our serviced mortgage loan portfolio as of September 30, 2025 and December 31, 2024:

(In Thousands) September 30, 2025 December 31, 2024

Balance of mortgage loans serviced for others $ 1,601,174 $ 1,460,720

2 unchanged sentences

MSR as a percentage of serviced loans 1.74 % 1.81 %

The Company recognized servicing fees of $ 1.4 million and $ 1.1 million during the three-month periods ending June 30, 2025 and 2024, respectively, and $ 2.9 million and $ 2.1 million during the six-month periods ending June 30, 2025 and 2024, respectively, which includes contractually specified servicing fees and ancillary fees as a component of other noninterest income in the Company's Consolidated Statements of Income.

The Company recognized servicing fees of $ 1.5 million and $ 1.1 million during the three-month periods ending September 30, 2025 and 2024, respectively, and $ 4.4 million and $ 3.2 million during the nine -month periods ending September 30, 2025 and 2024, respectively, which includes contractually specified servicing fees and ancillary fees as a component of other noninterest income in the Company's Consolidated Statements of Income.

The following table outlines the weighted average key assumptions used in measuring the fair value of MSRs and the sensitivity of the current fair value of MSRs to immediate adverse changes in those assumptions as of the dates indicated.

1 unchanged sentence

(In Thousands)

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Fair value of MSRs

25 unchanged sentences

Commercial servicing rights

The commercial servicing rights asset (“CSR”) has a carrying value of $ 2.4 million at June 30, 2025 and $ 2.2 million at December 31, 2024, respectively, and is included in other assets and carried at fair value on the Company's Consolidated Balance Sheets .

Total commercial loans serviced for others were $ 306.0 million and $ 279.7 million at June 30, 2025 and December 31, 2024, respectively.

Key assumptions used in measuring the fair value of the CSR as of June 30, 2025 and December 31, 2024 include a constant prepayment rate of 11.38 % and a discount rate of 12.00 %.

The commercial servicing rights asset (“CSR”) has a carrying value of $ 2.4 million at September 30, 2025 and $ 2.2 million at December 31, 2024, respectively, and is included in other assets and carried at fair value on the Company's Consolidated Balance Sheets .

Total commercial loans serviced for others were $ 302.6 million and $ 279.7 million at September 30, 2025 and December 31, 2024, respectively.

Key assumptions used in measuring the fair value of the CSR as of September 30, 2025 and December 31, 2024 include a constant prepayment rate of 11.38 % and a discount rate of 12.00 %.

The Company's lease commitments consist primarily of agreements to lease land and office facilities that it occupies to operate several of its retail branch locations that are classified as operating leases and are recognized on the balance sheet as right-of-use (“ROU”) assets and lease liabilities.

As of June 30, 2025, the Company has operating lease ROU assets of $ 7.0 million and operating lease liabilities of $ 7.1 million.

As of September 30, 2025, the Company has operating lease ROU assets of $ 6.5 million and operating lease liabilities of $ 6.6 million.

As of December 31, 2024, the Company had operating lease ROU assets of $ 7.5 million and operating lease liabilities of $ 7.5 million.

The Company did not have any agreements that are classified as finance leases as of June 30, 2025 or December 31, 2024.

The Company did not have any agreements that are classified as finance leases as of September 30, 2025 or December 31, 2024.

The following table presents additional information about the Company's operating leases for the periods indicated:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In Thousands) 2025 2024 2025 2024

10 unchanged sentences

(In Thousands) Operating Leases

2025 (Six months) $ 1,329

2025 (Three months) $ 675

Thereafter 3,755

7 unchanged sentences

Similarly, the Company could be required to settle its obligations under the agreement if specific regulatory events occur, such as if the Company were issued a prompt corrective action directive or a cease and desist order, or if certain regulatory ratios fall below specified levels.

The Company pledged $ 587,000 as of June 30, 2025 and $ 579,000 as of December 31, 2024, in available for sale securities to collateralize fair value shortfalls on interest rate swap agreements.

The Company had interest rate swaps related to commercial loans with an aggregate notional amount of $ 319.0 million and $ 309.0 million at June 30, 2025 and December 31, 2024, respectively.

At June 30, 2025, the notional amount of interest rate swaps is made up of 26 variable to fixed rate swaps to commercial loan customers totaling $ 159.5 million, and 26 fixed to variable rate swaps with a counterparty totaling $ 159.5 million.

Changes in fair value from these 26 interest rate swaps offset each other in the three-month periods ending June 30, 2025.

The Company recognized zero and $ 10,000 in fee income related to interest rate swaps in the three-month periods ending June 30, 2025 and 2024, respectively, and $ 129,000 and $ 73,000 in fee income related to interest rate swaps in the six-month periods ending June 30, 2025 and 2024, respectively.

The Company pledged $ 592,000 as of September 30, 2025 and $ 579,000 as of December 31, 2024, in available for sale securities to collateralize fair value shortfalls on interest rate swap agreements.

The Company had interest rate swaps related to commercial loans with an aggregate notional amount of $ 319.8 million and $ 309.0 million at September 30, 2025 and December 31, 2024, respectively.

At September 30, 2025, the notional amount of interest rate swaps is made up of 26 variable to fixed rate swaps to commercial loan customers totaling $ 159.9 million, and 26 fixed to variable rate swaps with a counterparty totaling $ 159.9 million.

Changes in fair value from these 26 interest rate swaps offset each other in the three-month periods ending September 30, 2025.

The Company recognized zero and $ 287,000 in fee income related to interest rate swaps in the three-month periods ending September 30, 2025 and 2024, respectively, and $ 129,000 and $ 361,000 in fee income related to interest rate swaps in the nine-month periods ending September 30, 2025 and 2024, respectively.

Interest rate swap income is recorded in other operating income on the Consolidated Statements of Income .

4 unchanged sentences

The floating rate that the dealer pays is equal to the three month CME SOFR plus tenor spread adjustment 0.26 % plus 1.37 %, which reprices quarterly on the payment date.

This rate was 5.95 % as of June 30, 2025.

The Company pledged $ 130,000 in cash to collateralize initial margin and fair value exposure of our counterparty on this interest rate swap as of June 30, 2025 and December 31, 2024.

This rate was 5.67 % as of September 30, 2025.

The Company pledged $ 130,000 in cash to collateralize initial margin and fair value exposure of our counterparty on this interest rate swap as of September 30, 2025 and December 31, 2024.

Changes in the fair value of this interest rate swap are reported in other comprehensive income on the Consolidated Statements of Income .

The unrealized gain, net of tax on this interest rate swap was $ 1.0 million as of June 30, 2025 and the unrealized gain, net of tax was $ 1.3 million as of December 31, 2024.

The unrealized gain, net of tax on this interest rate swap was $ 1.0 million as of September 30, 2025 and the unrealized gain, net of tax was $ 1.3 million as of December 31, 2024.

Derivatives related to home mortgage banking activities

4 unchanged sentences

Market risk with respect to commitments to originate loans arises from changes in the value of contractual positions due to changes in interest rates.

Residential Mortgage, LLC (“RML”) had commitments to originate mortgage loans held for sale totaling $ 73.2 million and $ 32.3 million at June 30, 2025 and December 31, 2024, respectively.

Residential Mortgage, LLC (“RML”) had commitments to originate mortgage loans held for sale totaling $ 74.0 million and $ 32.3 million at September 30, 2025 and December 31, 2024, respectively.

Changes in the value of RML's interest rate derivatives are recorded in mortgage banking income on the Consolidated Statements of Income .

None of these derivatives are designated as hedging instruments.

The following table presents the fair value of derivatives not designated as hedging instruments at June 30, 2025 and December 31, 2024:

The following table presents the fair value of derivatives not designated as hedging instruments at September 30, 2025 and December 31, 2024:

(In Thousands) Asset Derivatives

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Balance Sheet Location Fair Value Fair Value

4 unchanged sentences

(In Thousands) Liability Derivatives

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Balance Sheet Location Fair Value Fair Value

3 unchanged sentences

The following table presents the net gains (losses) of derivatives not designated as hedging instruments for periods indicated below:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In Thousands) Income Statement Location 2025 2024 2025 2024

5 unchanged sentences

We do not offset such financial instruments for financial reporting purposes.

The following table summarizes the derivatives that have a right of offset as of June 30, 2025 and December 31, 2024:

June 30, 2025 Gross amounts not offset in the Statement of Financial Position

The following table summarizes the derivatives that have a right of offset as of September 30, 2025 and December 31, 2024:

September 30, 2025 Gross amounts not offset in the Statement of Financial Position

(In Thousands) Gross amounts of recognized assets and liabilities Gross amounts offset in the Statement of Financial Position Net amounts of assets and liabilities presented in the Statement of Financial Position Financial Instruments Collateral Posted Net Amount

26 unchanged sentences

Interest rate contracts are valued in a model, which uses as its basis a discounted cash flow technique incorporating credit valuation adjustments to reflect nonperformance risk in the measurement of fair value.

Although the Company has determined that the majority of inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy, the credit valuation

adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties.

However, as of June 30, 2025, the Company has assessed the significance of the impact of these adjustments on the overall valuation of its interest rate positions and has determined that they are not significant to the overall valuation of its interest rate derivatives.

Although the Company has determined that the

majority of inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties.

However, as of September 30, 2025, the Company has assessed the significance of the impact of these adjustments on the overall valuation of its interest rate positions and has determined that they are not significant to the overall valuation of its interest rate derivatives.

As a result, the Company has classified its interest rate derivative valuations in Level 2 of the fair value hierarchy.

17 unchanged sentences

Estimated fair values as of the periods indicated are as follows:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

(In Thousands) Carrying Amount Fair Value Carrying Amount Fair Value

24 unchanged sentences

(In Thousands) Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

June 30, 2025

September 30, 2025

Available for sale securities

31 unchanged sentences

Total other liabilities $ 13,011 $ — $ 13,011 $ —

The following tables provide a reconciliation of the assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three and six-month periods ended June 30, 2025 and 2024:

(In Thousands) Beginning balance Change included in earnings Purchases and issuances Sales and settlements Ending balance Net change in unrealized gains (losses) relating to items held at end of period

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

Interest rate lock commitments $ 1,296 ($ 592 ) $ 4,880 ($ 4,053 ) $ 1,531 $ 1,531

2 unchanged sentences

Total $ 31,202 ($ 1,906 ) $ 6,458 ($ 4,053 ) $ 31,701 $ 1,531

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Interest rate lock commitments $ 1,059 ($ 647 ) $ 5,173 ($ 4,258 ) $ 1,327 $ 1,327

3 unchanged sentences

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

Interest rate lock commitments $ 465 ($ 1,371 ) $ 11,576 ($ 9,139 ) $ 1,531 $ 1,531

2 unchanged sentences

Total $ 29,098 ($ 4,551 ) $ 16,293 ($ 9,139 ) $ 31,701 $ 1,531

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Interest rate lock commitments $ 342 ($ 1,375 ) $ 11,102 ($ 8,742 ) $ 1,327 $ 1,327

2 unchanged sentences

Total $ 22,106 ($ 2,604 ) $ 14,273 ($ 8,742 ) $ 25,033 $ 1,327

There were no changes in unrealized gains and losses for the three and six-month periods ending June 30, 2025 and 2024 included in other comprehensive income for recurring Level 3 fair value measurements.

As of and for the periods ending June 30, 2025 and December 31, 2024, except for certain assets as shown in the following table, no impairment or valuation adjustment was recognized for assets recognized at fair value on a nonrecurring basis.

There were no changes in unrealized gains and losses for the three and nine-month periods ending September 30, 2025 and 2024 included in other comprehensive income for recurring Level 3 fair value measurements.

As of and for the periods ending September 30, 2025 and December 31, 2024, except for certain assets as shown in the following table, no impairment or valuation adjustment was recognized for assets recognized at fair value on a nonrecurring basis.

For loans individually measured for credit losses, the Company classifies fair value measurements using observable inputs, such as external appraisals, as Level 2 valuations in the fair value hierarchy, and unobservable inputs, such as in-house evaluations, as Level 3 valuations in the fair value hierarchy.

(In Thousands) Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

June 30, 2025

September 30, 2025

Loans individually measured for credit losses $ 194 $ — $ — $ 194

3 unchanged sentences

Total $ — $ — $ — $ —

The following table presents the (gains) losses resulting from nonrecurring fair value adjustments for the three and six-month periods ended June 30, 2025 and 2024:

Three Months Ended June 30, Six Months Ended June 30,

The following table presents the (gains) losses resulting from nonrecurring fair value adjustments for the three and nine-month periods ended September 30, 2025 and 2024:

Three Months Ended September 30, Nine Months Ended September 30,

(In Thousands) 2025 2024 2025 2024

3 unchanged sentences

Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)

The following tables provide a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company’s assets and liabilities classified as Level 3 and measured at fair value on a recurring and nonrecurring basis at June 30, 2025 and December 31, 2024:

Financial Instrument Valuation Technique - Recurring Basis

Unobservable Input Weighted Average Rate Range

June 30, 2025

September 30, 2025

Loans individually measured for credit losses Discounted cash flow Discount rate 0.43 %

Interest rate lock commitment External pricing model Pull through rate 92.05 %

14 unchanged sentences

The Community Banking segment's principal business focus is the offering of loan and deposit products to business and consumer customers in its primary market areas.

As of June 30, 2025, the Community Banking segment operated 20 branches throughout Alaska.

As of September 30, 2025, the Community Banking segment operated 20 branches throughout Alaska.

The Home Mortgage Lending segment's principal business focus is the origination and sale of mortgage loans for 1-4 family residential properties, mortgage loan servicing for a portion of mortgage loans sold, and investment in certain 1-4 family residential mortgage loans on our balance sheet.

11 unchanged sentences

Summarized financial information for the Company's reportable segments and the reconciliation to the consolidated financial results for the periods presented is shown in the following tables:

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

(In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated

30 unchanged sentences

Net income $ 22,256 $ 1,856 $ 2,953 $ 27,065

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

(In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated

48 unchanged sentences

miscellaneous operating costs related to specialty finance activities.

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

(In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated

29 unchanged sentences

Net income $ 7,087 $ 1,277 $ 461 $ 8,825

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

(In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated

4 unchanged sentences

Mortgage banking income - intersegment revenues

— 1,275 — 1,275

Purchased receivable income

21 unchanged sentences

Intersegment expense

1,275 — — 1,275

Other segment items (2)

18 unchanged sentences

miscellaneous operating costs related to specialty finance activities.

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

(In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated

30 unchanged sentences

Net income $ 40,787 $ 4,589 $ 6,791 $ 52,167

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

(In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated

51 unchanged sentences

miscellaneous operating costs related to specialty finance activities.

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

(In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated

3 unchanged sentences

Provision (benefit) for credit losses

1,505 587 — 2,092

Net interest income after provision for credit losses 72,956 7,361 ( 67 ) 80,250

23 unchanged sentences

Net income $ 21,527 $ 2,805 $ 1,712 $ 26,044

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

(In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated

18 unchanged sentences

Provision (benefit) for credit losses

1,505 587 — 2,092

Segment gross profit

28 unchanged sentences

miscellaneous operating costs related to specialty finance activities.

June 30, 2025

September 30, 2025

(In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated

12 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements