NORTHRIM BANCORP INC 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The following report, audited consolidated financial statements and the notes thereto are set forth in this Annual Report on Form 10-K on the pages indicated: Report of Independent Registered Public Accounting Firm ( Baker Tilly US, LLP , Portland, Oregon , PCAOB ID: 23 ) 70 Consolidated Balance Sheets at December 31, 2025 and 202 4 72 For the Years Ended December 2025, 2024 and 2023: Consolidated Statements of Income 73 Consolidated Statements of Comprehensive Income 74 Consolidated Statements of Changes in Shareholders’ Equity 75 Consolidated Statements of Cash Flows 76 Notes to the Consolidated Financial Statements 78 69 Report of Independent Registered Public Accounting Firm The Shareholders and the Board of Directors of Northrim BanCorp, Inc. and Subsidiaries Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Northrim BanCorp, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 70 Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Allowance for Credit Losses – Loans Critical Audit Matter Description As described in Note 1 and Note 5 to the consolidated financial statements, the Company’s allowance for credit losses – loans was $23.7 million at December 31, 2025. The allowance for credit losses – loans is management’s best estimate of current expected credit losses in its loan portfolio. The estimate of current expected credit losses is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of loans. Historical loss experience is the starting point for estimating expected credit losses. The quantitative portion of the allowance for credit losses – loans is derived using either the discounted cash flow method or weighted average remaining life method, depending on the nature and size of the loan pool, and the Company also considers the effects of qualitative factors in its calculation of expected losses in the loan portfolio. The qualitative factor methodology is based on quantitative metrics, but also includes a high degree of subjectivity and changes in certain metrics could have a significant impact on the allowance calculation. We identified management’s estimation and application of the forecast of economic conditions used in the calculation of the probability of default and management’s qualitative factors used to estimate the expected loss rate in the allowance for credit losses – loans as a critical audit matter. The forecast of economic conditions component of the allowance for credit losses - loans is used to compare the conditions that existed during the historical period to current conditions and future expectations, and to make adjustments to the historical data loss rates accordingly. The qualitative factors are management’s best estimate of the adjustments required for additional risk expected in each loan pool. Auditing management’s judgments regarding the application of forecast of economic conditions and qualitative adjustments involved significant audit effort, as well as especially challenging and subjective auditor judgment when performing audit procedures and evaluating the results of those procedures. How We Addressed the Matter in Our Audit Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included evaluating the design and testing the operating effectiveness of internal controls relating to management’s calculation of the allowance for credit losses – loans, including controls over the reasonableness of the forecast of economic conditions and qualitative factors used in the estimation of the expected loss rate. Our audit procedures related to the critical audit matter included the following, among others: • Obtaining management’s analysis and supporting documentation related to the forecast of economic conditions and testing whether the forecast of economic conditions and other key assumptions used in the calculation of the allowance for credit losses - loans are reasonable and supportable based on the analysis provided by management; • Evaluating the methodology and the reasonableness of assumptions used by management to estimate the forecast of economic conditions and qualitative factors and testing whether these factors were applied to the calculation appropriately; • Evaluating the relevance and reliability of the data used by management to estimate the qualitative factors used in the calculation of the allowance for credit losses – loans; and • Developing an independent expectation of the qualitative adjustments using a combination of internal and external data and comparing the expected balance to the Company’s recorded amounts. /s/ Baker Tilly US, LLP Portland, Oregon March 6, 2026 We have served as the Company’s auditor since 2010. 71 CONSOLIDATED FINANCIAL STATEMENTS NORTHRIM BANCORP, INC. Consolidated Balance Sheets December 31, 2025 and 2024 December 31, 2025 December 31, 2024 (In Thousands, Except Share Data) ASSETS Cash and due from banks $ 36,042 $ 42,101 Interest bearing deposits in other banks 109,864 20,635 Marketable equity securities 8,392 8,719 Investment securities available for sale, at fair value 420,661 478,617 Investment securities held to maturity, at amortized cost 26,750 36,750 Investment in Federal Home Loan Bank stock 6,764 5,331 Loans held for sale 100,323 59,957 Loans 2,295,499 2,129,263 Allowance for credit losses, loans ( 23,737 ) ( 22,020 ) Net loans 2,271,762 2,107,243 Purchased receivables, net 101,642 74,078 Mortgage servicing rights, at fair value 27,474 26,439 Premises and equipment, net 39,692 37,757 Operating lease right-of-use assets 5,911 7,455 Goodwill 49,874 50,018 Other intangible assets, net 950 950 Other assets 84,172 85,819 Total assets $ 3,290,273 $ 3,041,869 LIABILITIES Deposits: Demand $ 721,925 $ 706,225 Interest-bearing demand 1,242,546 1,108,404 Savings 250,006 250,900 Money market 195,793 196,290 Certificates of deposit less than $250,000 104,505 201,296 Certificates of deposit $250,000 and greater 298,254 217,074 Total deposits 2,813,029 2,680,189 Borrowings 12,805 23,045 Subordinated debentures 68,924 10,310 Operating lease liabilities 5,941 7,487 Other liabilities 63,030 53,722 Total liabilities 2,963,729 2,774,753 COMMITMENTS AND CONTINGENCIES (NOTE 19) SHAREHOLDERS' EQUITY Preferred stock, $ 1 par value, 2,500,000 shares authorized, none issued or outstanding — — Common stock, $ 0.25 par value, 40,000,000 shares authorized, 22,111,637 and 22,072,840 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively 5,528 5,518 Additional paid-in capital 10,822 9,311 Retained earnings 309,575 259,311 Accumulated other comprehensive income (loss), net of tax 619 ( 7,024 ) Total shareholders' equity 326,544 267,116 Total liabilities and shareholders' equity $ 3,290,273 $ 3,041,869 See notes to consolidated financial statements 72 NORTHRIM BANCORP, INC. Consolidated Statements of Income Years Ended December 31, 2025, 2024, and 2023 (In Thousands, Except Share and Per Share Data) 2025 2024 2023 Interest and Dividend Income Interest and fees on loans and loans held for sale $ 160,146 $ 134,739 $ 108,612 Interest on investment securities available for sale 11,482 13,756 15,833 Dividends on marketable equity securities 552 876 766 Interest on investment securities held to maturity 1,869 1,892 1,893 Dividends on Federal Home Loan Bank stock 586 314 203 Interest on deposits in other banks 3,743 2,342 4,644 Total Interest Income 178,378 153,919 131,951 Interest Expense Interest expense on deposits 40,456 39,347 26,511 Interest expense on borrowings 1,508 986 1,784 Interest expense on subordinated debentures 805 403 400 Total Interest Expense 42,769 40,736 28,695 Net Interest Income 135,609 113,183 103,256 Provision for credit losses 3,910 3,293 3,842 Net Interest Income After Provision for Credit Losses 131,699 109,890 99,414 Other Operating Income Mortgage banking income 25,237 24,002 12,763 Purchased receivable income 25,806 7,146 4,482 Gain on sale by Pacific Wealth Advisors 14,486 — — Bankcard fees 4,675 4,366 3,862 Service charges on deposit accounts 2,986 2,348 2,044 Unrealized gain on marketable equity securities 169 465 120 Gain on sale of available for sale securities, net 1 — — Gain on sale of marketable equity securities, net — 112 — Other income 3,843 3,602 3,104 Total Other Operating Income 77,203 42,041 26,375 Other Operating Expense Salaries and other personnel expense 78,337 67,847 61,741 Data processing expense 13,125 10,986 9,821 Occupancy expense 7,822 7,609 7,394 Professional and outside services 4,681 4,351 3,128 Marketing expense 3,728 3,028 2,929 Insurance expense 3,212 2,961 2,519 Compensation expense - SCF acquisition payments 2,333 — — Intangible asset amortization expense — — 17 OREO (income) expense, net of rental income and gains on sale ( 11 ) ( 385 ) ( 794 ) Other operating expense 11,156 8,540 7,426 Total Other Operating Expense 124,383 104,937 94,181 Income Before Provision for Income Taxes 84,519 46,994 31,608 Provision for income taxes 19,911 10,023 6,214 Net Income $ 64,608 $ 36,971 $ 25,394 Earnings Per Share, Basic $ 2.92 $ 1.68 $ 1.13 Earnings Per Share, Diluted $ 2.87 $ 1.66 $ 1.12 Weighted Average Shares Outstanding, Basic 22,088,891 22,011,188 22,405,884 Weighted Average Shares Outstanding, Diluted 22,485,351 22,335,932 22,645,840 See notes to consolidated financial statements 73 NORTHRIM BANCORP, INC. Consolidated Statements of Comprehensive Income Years Ended December 31, 2025, 2024, and 2023 2010 (In Thousands) 2025 2024 2023 Net income $ 64,608 $ 36,971 $ 25,394 Other comprehensive income, net of tax: Securities available for sale: Unrealized holding gains arising during the period $ 10,921 $ 12,741 $ 17,755 Reclassification of net gains included in net income (net of tax expense of $ 1 , $ 0 , and $ 0 in 2025, 2024, and 2023, respectively) ( 1 ) — — Derivatives and hedging activities: Unrealized holding gains (losses) during the period ( 341 ) 411 ( 88 ) Foreign currency translation income 71 — — Income tax expense related to unrealized gains ( 3,007 ) ( 3,739 ) ( 5,023 ) Other comprehensive income, net of tax 7,643 9,413 12,644 Comprehensive income $ 72,251 $ 46,384 $ 38,038 See notes to consolidated financial statements 74 NORTHRIM BANCORP, INC. Consolidated Statements of Changes in Shareholders’ Equity Years Ended December 31, 2025, 2024, and 2023 Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Number of Shares Par Value (In Thousands) Balance at January 1, 2023 22,803 $ 5,701 $ 17,784 $ 224,225 ($ 29,081 ) $ 218,629 Cash dividend declared — — — ( 13,582 ) — ( 13,582 ) Stock-based compensation expense — — 937 — — 937 Exercise of stock options and vesting of restricted stock units, net 84 21 ( 281 ) — — ( 260 ) Repurchase of common stock ( 836 ) ( 209 ) ( 8,835 ) — — ( 9,044 ) Other comprehensive income, net of tax — — — — 12,644 12,644 Net income — — — 25,394 — 25,394 Balance at December 31, 2023 22,051 $ 5,513 $ 9,605 $ 236,037 ($ 16,437 ) $ 234,718 Cash dividend declared — — — ( 13,697 ) — ( 13,697 ) Stock-based compensation expense — — 913 — — 913 Exercise of stock options and vesting of restricted stock units, net 80 20 ( 433 ) — — ( 413 ) Repurchase of common stock ( 60 ) ( 15 ) ( 774 ) — — ( 789 ) Other comprehensive income, net of tax — — — — 9,413 9,413 Net income — — — 36,971 — 36,971 Balance at December 31, 2024 22,071 $ 5,518 $ 9,311 $ 259,311 ($ 7,024 ) $ 267,116 Cash dividend declared — — — ( 14,344 ) — ( 14,344 ) Stock-based compensation expense — — 1,734 — — 1,734 Exercise of stock options and vesting of restricted stock units, net 41 10 ( 223 ) — — ( 213 ) Other comprehensive income, net of tax — — — — 7,643 7,643 Net income — — — 64,608 — 64,608 Balance at December 31, 2025 22,112 $ 5,528 $ 10,822 $ 309,575 $ 619 $ 326,544 See notes to consolidated financial statements 75 NORTHRIM BANCORP, INC. Consolidated Statements of Cash Flows Years Ended December 31, 2025, 2024, and 2023 (In Thousands) 2025 2024 2023 Operating Activities: Net income $ 64,608 $ 36,971 $ 25,394 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Gain on sale of securities, net ( 1 ) ( 112 ) — Depreciation and amortization of premises 3,534 3,610 3,294 Amortization of debt issuance costs 14 — — Intangible asset amortization — — 17 Amortization of investment security premium, net of discount accretion ( 37 ) 368 483 Unrealized (gain) on marketable equity securities ( 169 ) ( 465 ) ( 120 ) Deferred tax (income) expense ( 1,506 ) ( 152 ) 580 Stock-based compensation 1,734 913 937 Deferral of loan fees and amortization, net of costs 977 631 ( 54 ) Provision for credit losses 3,910 3,293 3,842 Origination of home mortgage servicing rights carried at fair value ( 4,817 ) ( 4,748 ) ( 3,616 ) Purchases of home mortgage servicing rights carried at fair value — ( 2,328 ) — Change in fair value of home mortgage servicing rights carried at fair value 3,782 201 2,687 Change in fair value of commercial servicing rights carried at fair value 334 52 62 Gain on sale of loans ( 16,777 ) ( 13,994 ) ( 7,828 ) Proceeds from the sale of loans held for sale 851,911 595,164 379,546 Origination of loans held for sale ( 776,032 ) ( 609,153 ) ( 376,154 ) Gain on sale of other real estate owned — ( 392 ) ( 929 ) Impairment on other real estate owned — — 123 Gain on sale of Pacific Wealth Advisors ( 14,486 ) — — Net changes in assets and liabilities: Decrease (increase) in accrued interest receivable ( 1,040 ) 456 ( 2,021 ) Decrease (increase) in other assets 23,462 ( 13,503 ) 5,347 (Decrease) increase in other liabilities ( 64 ) ( 5,539 ) 7,185 Net Cash Provided (Used) by Operating Activities 139,337 ( 8,727 ) 38,775 Investing Activities: Investment in securities: Purchases of investment securities available for sale ( 96,439 ) ( 49,464 ) ( 26,030 ) Purchases of marketable equity securities — ( 1,964 ) ( 2,297 ) Purchases of FHLB stock ( 22,584 ) ( 32,353 ) ( 5,703 ) Proceeds from sales/calls/maturities of securities available for sale 165,367 221,159 82,398 Proceeds from sales of marketable equity securities 481 6,973 — Proceeds from calls/maturities of securities held to maturity 10,000 — — Proceeds from redemption of FHLB stock 21,151 30,002 6,539 (Increase) decrease in purchased receivables, net ( 27,606 ) 10,672 ( 16,848 ) Increase in loans, net ( 268,474 ) ( 341,764 ) ( 287,893 ) Proceeds from sale of other real estate owned — 392 1,079 Sallyport Commercial Finance, LLC acquisition, net of cash received 144 ( 40,658 ) — Purchases of premises and equipment ( 5,469 ) ( 620 ) ( 6,166 ) Net Cash Used by Investing Activities ( 223,429 ) ( 197,625 ) ( 254,921 ) Financing Activities: Increase (decrease) in deposits 132,840 195,134 97,844 Proceeds from borrowings 562,910 697,553 194,500 Repayments of borrowings ( 573,150 ) ( 728,390 ) ( 194,920 ) Proceeds from the issuance of subordinated debt 60,000 — — Payment of debt issuance costs ( 1,400 ) — — Proceeds from the issuance of common stock 609 801 555 Repurchase of common stock — ( 789 ) ( 9,044 ) Cash dividends paid ( 14,547 ) ( 13,751 ) ( 13,609 ) Net Cash Provided by Financing Activities 167,262 150,558 75,326 Net Change in Cash and Cash Equivalents 83,170 ( 55,794 ) ( 140,820 ) Cash and Cash Equivalents at Beginning of Year 62,736 118,530 259,350 Cash and Cash Equivalents at End of Year $ 145,906 $ 62,736 $ 118,530 76 Supplemental Information: Income taxes paid $ 17,591 $ 6,720 $ 2,031 Interest paid $ 42,555 $ 40,482 $ 28,547 Noncash commitments to invest in Low Income Housing Tax Credit Partnerships $ 13,407 $ — $ 14,273 Transfer of loans to other real estate owned $ — $ — $ 273 Non-cash lease liability arising from obtaining right of use assets $ — $ 250 $ 423 Cash dividends declared but not paid $ 203 $ 101 $ 110 Acquisitions: Assets acquired $ — $ 66,129 $ — Liabilities assumed $ — ($ 41,275 ) $ — Pre-existing debt settlement $ — $ 12,000 $ — See notes to consolidated financial statements 77 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - Summary of Significant Accounting Policies Nature of Operations: Northrim BanCorp, Inc. (the “Company”), is a publicly traded bank holding company headquartered in Anchorage, Alaska that is primarily engaged in the delivery of business and personal banking services through its wholly-owned banking subsidiary, Northrim Bank (“the Bank”). The Bank also engages in retail mortgage origination services through its wholly-owned subsidiary, Residential Mortgage, LLC (“RML”). In addition, the Bank also engages in specialty finance activities through a division of the Bank, Northrim Funding Services (“NFS”), which operates a factoring division in Bellevue, Washington, and through the Bank's wholly-owned subsidiary, Sallyport Commercial Finance, LLC (“SCF”), which provides factoring, asset based lending and alternative working capital solutions to small and medium sized enterprises in the United States, Canada, and the United Kingdom. The Company completed the acquisition of SCF on October 31, 2024. SCF holds a 100 % interest in Sallyport Commercial Finance CAN, LLC, and a 40 % interest in Sallyport Commercial Finance LTD (“SCF LTD”). Sallyport Commercial Finance ULC (“SCF CAN”), a wholly-owned subsidiary of Sallyport Commercial Finance CAN, LLC, and SCF LTD offer the same products and services as SCF, but they operate in Canada and the United Kingdom, respectively. Use of Estimates: The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States and prevailing practices within the banking industry. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of income, gains, expenses, and losses during the reporting periods. Actual results could differ from those estimates. Significant estimates include the allowance for credit losses (“ACL”), valuation of goodwill and other intangibles, and valuation of mortgage servicing rights (“MSRs”). Consolidation: The accompanying consolidated financial statements include the accounts of the Company, the Bank, RML, SCF, and Northrim Investment Services Company (“NISC”). Significant intercompany balances have been eliminated in consolidation. As of December 31, 2025, the Company had one wholly-owned business trust subsidiary, Northrim Statutory Trust 2 (“Trust 2”), that was formed to issue trust preferred securities and related common securities of Trust 2. The Company has not consolidated the accounts of Trust 2 in its consolidated financial statements in accordance with U.S. GAAP. As a result, the junior subordinated debentures issued by the Company to Trust 2 are reflected on the Company’s consolidated balance sheet as junior subordinated debentures. Variable interest entities (“VIEs”): The Company consolidates affiliates in which we have a controlling interest. To determine if we have a controlling financial interest in an entity we first evaluate if we are required to apply the variable interest entity model, otherwise the entity is evaluated under the voting interest model. The Company continuously evaluates its non-majority owned investments in affiliates to determine if they are VIEs. Where we hold current or potential rights that give us the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance combined with a variable interest that gives us the right to receive potentially significant benefits or the obligation to absorb potentially significant losses, we have a controlling financial interest in that VIE. Rights held by others to remove the party with power over the VIE are not considered unless one party can exercise those rights unilaterally. When changes occur to the design of an entity we reconsider whether it is subject to the VIE model. We continuously evaluate whether we have a controlling financial interest in a VIE. We hold a controlling financial interest in other entities where we currently hold, directly or indirectly, more than 50% of the voting rights or where we exercise control through substantive participating rights. We reevaluate whether we have a controlling financial interest in these entities when our voting or substantive participating rights change. Affiliates are unconsolidated VIEs and other entities in which we do not have a controlling financial interest, but over which we have significant influence, most often because we hold a voting interest of 20% to 50%. Affiliates are accounted for as equity method investments. As of December 31, 2025, the Company owns a 100 % interest in RML and a 100 % interest in SCF and consolidates these entities into its financial statements. The Company owns a 21 % interest in Pacific Wealth Advisors, LLC (“PWA”), a 40 % interest in SCF LTD, and owned a 30 % interest in Homestate prior to its dissolution in 2023, and these investments are accounted for as equity method investments. The Company does not consolidate the balance sheets and income statements of PWA, Homestate, or SCF LTD into its financial statements. The Company has determined that PWA and Homestate are not VIEs. The Company has 78 determined that SCF LTD is a VIE. However, the Company does not have a controlling interest in SCF LTD and therefore does not consolidate SCF LTD's operations into its financial statements. The Company's portion of the results of PWA, SCF LTD, and Homestate, prior to its dissolution in 2023, are included in “Other income” in our Consolidated Statements of Income. Investments in low income housing tax credit companies are presented on a one-line basis in the caption “Other assets” in our Consolidated Balance Sheets. Operating Segments: Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision making group, in deciding how to allocate resources and in assessing performance. The Company uses the "management approach" in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company's CODM for making operating decisions and assessing performance as the source for determining the Company's reportable segments. Management, including the CODM, review operating results by the revenue of different services. For the year ended December 31, 2025 and 2024, the Company has three operating business lines; Community Banking, Home Mortgage Lending, and Specialty Finance. Information about the Company's reportable segments is included in Note 26. Stock split: Effective September 18, 2025 the Company effected a four -for-one forward stock split of its common stock, a proportionate increase in the number of authorized shares of the common stock from 10,000,000 to 40,000,000 , and a 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 report have been retroactively adjusted to reflect the common stock split. Reclassifications: Certain reclassifications have been made to prior year amounts to maintain consistency with the current year with no impact on net income or total shareholders’ equity. Subsequent Events: The Company has evaluated events and transactions subsequent to December 31, 2025 for potential recognition or disclosure. Cash and Cash Equivalents: For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, interest-bearing deposits with other banks, federal funds sold, and securities with original maturities of less than 90 days at acquisition. Equity Securities: Marketable equity securities are stated at fair value. Changes in fair value are included in “Unrealized gain (loss) on marketable equity securities” in our Consolidated Statements of Income. Non-marketable equity securities are accounted for under the equity method of accounting and are included in other assets in our Consolidated Balance Sheets. The Company performs an impairment analysis on its non-marketable equity securities when events or circumstances indicate impairment potentially exists. Investment Securities: Debt securities are classified as available for sale if the Company intends and has the ability to hold those securities for an indefinite period of time, but not necessarily to maturity. Any decision to sell a debt security classified as available for sale would be based on various factors, including significant movements in interest rates, changes in the maturity mix of assets and liabilities, liquidity needs, regulatory capital considerations, and other similar factors. Premiums and discounts are amortized over the life of the related investment security as an adjustment to yield using the effective interest method. Dividend and interest income are recognized when earned. Securities available for sale are stated at fair value. Realized gains or losses, determined on the basis of the cost of specific securities sold, are included in earnings. Unrealized holding gains or losses are included in other comprehensive income as a separate component of shareholders' equity, net of tax. Held to maturity securities are stated at cost, adjusted for amortization of premium and accretion of discount on a level-yield basis. The Company has the ability and intent to hold these securities to maturity. The Company amortizes purchase premiums for callable debt securities to the earliest call date and discounts are accreted over the contractual life. Allowance for Credit Losses - Investment Securities: For available for sale debt securities in an unrealized loss position, the Company evaluates the securities to determine whether the decline in the fair value below the amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors. Any impairment that is not credit related is recognized in other comprehensive income, net of applicable taxes. Credit-related impairment is recognized as an ACL on the balance sheet, limited to the amount by which the amortized cost basis exceeds the fair value, with a corresponding adjustment to earnings. 79 The ACL may be reversed if conditions change. However, if the Company intends to sell an impaired available for sale debt security or more likely than not will be required to sell such a security before recovering its amortized cost basis, the entire impairment amount must be recognized in earnings with a corresponding adjustment to the security’s amortized cost basis. Because the security’s amortized cost basis is adjusted to fair value, there would be no ACL. In evaluating available for sale debt securities in unrealized loss positions for impairment and the criteria regarding its intent or requirement to sell such securities, the Company considers the extent to which fair value is less than amortized cost, whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuers’ financial condition, among other factors. Changes in the ACL are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the ACL when management believes the uncollectability of an available for sale debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met. The ACL on held to maturity securities is estimated on a collective basis by major security type. At December 31, 2025, the Company’s held to maturity securities consisted of investments in corporate bonds. Expected credit losses for these securities are estimated using a discounted cash flow (“DCF”) methodology which considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Accrued interest receivable is excluded from the estimate of credit losses. Federal Home Loan Bank Stock: The Company’s investment in Federal Home Loan Bank of Des Moines (“FHLB”) stock is carried at par value because the shares can only be redeemed with the FHLB at par. The Company is required to maintain a minimum level of investment in FHLB stock based on the Company’s total Bank assets and outstanding advances. FHLB stock is carried at cost and is subject to recoverability testing at least annually. Loans held for sale: 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. Loans held for sale include residential mortgage loans that have been originated for sale in the secondary market. Related gains or losses on the sale of these loans are recognized in mortgage banking income. Loans: Loans are carried at their principal amount outstanding, net of charge-offs, unamortized fees, and direct loan origination costs. Loan origination fees received in excess of direct origination costs are deferred and accreted to interest income using the interest method in accordance with Accounting Standards Codification (“ASC”) 310 over the life of the loan. Loan balances are charged-off to the ACL when management believes that collection of principal is unlikely. Interest income on loans is accrued and recognized on the principal amount outstanding except for loans in a nonaccrual status. All classes of loans are placed on nonaccrual when management believes doubt exists as to the collectability of the interest or principal. Cash payments received on nonaccrual loans are directly applied to the principal balance. Generally, a loan may be returned to accrual status when the delinquent principal and interest is brought current in accordance with the terms of the loan agreement and certain ongoing performance criteria have been met. Loans are reported as past due when installment payments, interest payments, or maturity payments are past due based on contractual terms. The Company classifies fair value measurements on loans as level 3 valuations in the fair value hierarchy because of their use of unobservable inputs. Allowance for Credit Losses - Loans : Under the current expected credit loss model (“CECL”), the ACL on loans is a valuation allowance estimated at each balance sheet date that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. The Company estimates the ACL on loans based on the underlying assets’ amortized cost basis, which is the amount at which the loan is originated or acquired, adjusted for applicable accretion or amortization of premium, discount, and net deferred fees or costs, collection of cash, and charge-offs. In the event that collection of principal becomes uncertain, the Company has policies in place to reverse accrued interest in a timely manner. Therefore, the Company has made a policy election to exclude accrued interest from the measurement of ACL. Expected credit losses are reflected in the ACL through a provision for or (reversal) of credit loss expense. When the Company deems all or a portion of a financial asset to be uncollectible the appropriate amount is written off and the ACL is reduced by the same amount. The Company applies judgment to determine when a financial asset is deemed uncollectible; however, generally speaking, an asset will be considered uncollectible when management believes that collection of principal is unlikely. Subsequent recoveries, if any, are credited to the ACL when received. 80 The Company measures expected credit losses of financial assets on a collective (pool) basis, when the financial assets share similar risk characteristics. Depending on the nature and size of the pool of financial assets with similar risk characteristics, the Company uses either a DCF method or a weighted average remaining life method to estimate expected credit losses quantitatively. The weighted average remaining life method uses exposure at default, along with the expected credit losses adjusted for prepayments to calculate the required allowance. The Company utilizes peer historical loss data to estimate credit losses under the weighted average remaining life method. Under the DCF method, the Company utilizes complex models to obtain reasonable and supportable forecasts to calculate two predictive metrics, the probability of default (“PD”) and loss given default (“LGD”). Under the DCF method the combination of adjustments for the credit expectations PD and LGD, and timing expectations (prepayment, curtailment, and time to recovery), produces an expected cash flow stream at the instrument level. Instrument effective yield is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce an instrument-level net present value of expected cash flows (“NPV”). An ACL is established for the difference between the instrument’s NPV and amortized cost basis. In addition to the quantitative portion of the ACL derived using either the DCF or weighted average remaining life method, the Company also considers the effects of the qualitative factors in its calculation of expected losses in the loan portfolio. The qualitative factor methodology is based on quantitative metrics, but also includes a high degree of subjectivity and changes in any of the metrics could have a significant impact on our calculation of the allowance. Loans that do not share risk characteristics with other loans in the portfolio are individually evaluated for expected credit losses and are not included in the collective evaluation. Loans are identified for individual evaluation during regular credit reviews of the portfolio. A loan is generally identified for individual evaluation when management determines that we will probably not be able to collect all amounts due according to the loan contract, including scheduled interest payments. When we identify a loan for individual evaluation, we measure expected credit losses using DCF, except when the sole remaining source of the repayment for the loan is the liquidation of the collateral. In these cases, we use the current fair value of the collateral, less selling costs, instead of DCF. The analysis of collateral dependent loans includes external appraisals or in-house evaluations on loans secured by real property, management’s assessment of the current market, recent payment history and an evaluation of other sources of repayment. The Company’s determination of which method to use is based upon several factors. The Company takes into account compliance with legal and regulatory guidelines, the amount of the loan, the estimated value of the collateral, the location and type of collateral to be valued, and how critical the timing of completion of the analysis is to the assessment of value. Those factors are balanced with the level of internal expertise, internal experience, and market information available, versus external expertise available such as qualified appraisers, brokers, auctioneers, and equipment specialists. The Company uses external appraisals to estimate fair value for projects that are not fully constructed as of the date of valuation. These projects are generally valued as if complete, with an appropriate allowance for cost of completion, including contingencies developed from external sources such as vendors, engineers, and contractors. If we determine that the value of an individually evaluated loan is less than the recorded investment in the loan, we either recognize an ACL specific to that loan, or charge-off the deficit balance on collateral dependent loans if it is determined that such amount represents a confirmed loss. Subsequent changes in the expected credit losses for loans evaluated individually are included within the provision for credit losses in the same manner in which the expected credit loss initially was recognized or as a reduction in the provision that would otherwise be reported. The Company’s estimate of the ACL reflects losses expected over the remaining contractual life of the assets. The contractual term does not consider extensions, renewals or modifications. Loans guaranteed by the U.S. government ASC 326 requires credit enhancements that mitigate credit losses, such as the U.S. government guarantees, to be considered in estimating credit losses. These guarantees are considered “embedded” and, therefore, are considered when estimating credit loss on loans guaranteed by the U.S. government. Given that the loans are fully guaranteed by the U.S. government and absent any specific loss information on any of our guaranteed loans, the Company does not carry an ACL on its portion of loans guaranteed by the U.S. government. Loan Commitments and Allowance for Credit Losses on Off-Balance Sheet Credit Exposures: The Company enters into various types of transactions that involve financial instruments with off-balance sheet risk, including commitments to extend credit and standby letters of credit issued to meet customer financing needs. We apply the same credit standards to these commitments as in all of our lending activities and include these commitments in our lending risk evaluations. The Company’s exposure to credit loss in the event of nonperformance by the other party to commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded. 81 The Company records an ACL on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancellable, through a charge to provision for credit loss expense in the Company’s consolidated statements of income. The ACL on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the current expected credit loss model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur, and is included in other liabilities on the Company’s consolidated balance sheets. Purchased Receivables and related Allowance for Credit Losses: The Company purchases accounts receivable from its customers. The purchased receivables are carried at amortized cost, net of an ACL. Management measures expected credit losses on purchased receivables by evaluating each receivable individually. Each quarter, management reviews purchased receivable asset balances compared to assets eligible for advancement of funds in order to determine the exposure to loss for the Company. Exposure is zero when outstanding balances exceed assets eligible for advancement. Management may determine that an ACL is appropriate for individual purchased receivables based on asset specific facts and circumstances. Fees charged to the customer are earned while the balances of the purchases are outstanding, which is typically less than one year. Changes in the ACL are recorded as provision for (or reversal of) credit loss expense. Acquired Loans and Purchased Receivables: Loans and purchased receivables acquired that are of poor credit quality and with more than an insignificant evidence of credit deterioration since their origination or original purchase are purchased credit deteriorated (“PCD”) assets. PCD assets are recorded at their purchase price plus an ACL estimated at the time of acquisition. Under this approach, there is no provision for credit losses recognized at acquisition; rather, there is a gross-up of the purchase price of the financial asset for the estimate of expected credit losses and a corresponding ACL recorded. Changes in estimates of expected credit losses after acquisition are recognized as provision for credit losses in subsequent periods. In general, interest income recognition for PCD financial assets is consistent with interest income recognition for the similar non-PCD financial asset. Other Real Estate Owned: Other Real Estate Owned (“OREO”) represents properties acquired through foreclosure or its equivalent. Prior to foreclosure, the carrying value is adjusted to the fair value, less cost to sell, of the real estate to be acquired by an adjustment to the ACL for loans. Management’s evaluation of fair value is based on appraisals or discounted cash flows of anticipated sales. After foreclosure, any subsequent reduction in the carrying value is charged against earnings. Operating expenses associated with OREO are charged to earnings in the period they are incurred. Operating expenses associated with OREO are recorded net of rental income and gain on sales associated with OREO. Premises and Equipment: Premises and equipment, including leasehold improvements, are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization expense for financial reporting purposes is computed using the straight-line method based upon the shorter of the lease term or the estimated useful lives of the assets that vary according to the asset type and include; furniture and equipment ranging between three and seven years , leasehold improvements ranging between two and 15 years, and buildings at 39 years. Maintenance and repairs are charged to current operations, while renewals and betterments are capitalized. Long-lived assets such as premises and equipment are reviewed for impairment at least annually or whenever events or changes in business circumstances indicate that the remaining useful life may warrant revision, or that the carrying amount of the long-lived asset may not be fully recoverable. If impairment is determined to exist, any related impairment loss is calculated based on fair value. Impairment losses on assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal. Operating Leases: The Company leases branch locations, corporate office space, and equipment under non-cancelable leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The leases contain various provisions for increases in rental rates, based either on changes in the published Consumer Price Index or a predetermined escalation schedule. Substantially all of the leases provide the Company with one or more options to renew, with renewal terms that can extend the lease term from one to ten years or more. The exercise of lease renewal options is at management's sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. In addition to annual impairment reviews, management reviews right-of-use assets anytime a change in circumstances indicates the carrying amount of these assets may not be recoverable. Goodwill and Other Intangible Assets: Intangible assets are comprised of goodwill and other intangibles acquired in business combinations. Goodwill and intangible assets with indefinite useful lives are not amortized. Intangible assets with definite useful lives are amortized to their estimated residual values over their respective useful lives, and are also reviewed for impairment. Amortization of intangible assets is included in other operating expense in the Consolidated Statements of Income. The Company performs a goodwill impairment analysis at each reporting unit on an annual basis. Additionally, the Company performs a goodwill impairment evaluation on an interim basis when events or circumstances indicate impairment potentially exists. 82 Low Income Housing Tax Credit Partnerships: The Company earns a return on its investments in these partnerships in the form of tax credits and deductions that flow through to it as a limited partner. The Company amortizes these investments in tax expense over the period during which tax benefits are received. Servicing Rights: MSRs and commercial servicing rights (“CSRs”) associated with loans originated and sold, where servicing is retained, are measured at fair value and changes in fair value are reported through earnings. Changes in the fair value of servicing rights occur primarily due to the collection/realization of expected cash flows, as well as changes in valuation inputs and assumptions. Under the fair value method, servicing rights are carried on the balance sheet at fair value and the changes in fair value for MSRs are reported in earnings in mortgage banking income and the changes in fair value for CSRs are reported in commercial serving revenue in other operating income in the period in which the change occurs. Fair value measurements are determined using a discounted cash flow model. In order to determine the fair value of servicing rights, the present value of net expected future cash flows is estimated. Assumptions used include market discount rates, anticipated prepayment speeds, escrow calculations, delinquency rates, and ancillary fee income net of servicing costs. Other Assets: Other assets include purchased software and prepaid expenses. Purchased software is carried at amortized cost and is amortized using the straight-line method over its estimated useful life or the term of the agreement. Also included in other assets is the net deferred tax asset, bank owned life insurance carried at cash surrender value, net of premium charges, accrued interest receivable, taxes receivable, and rate lock derivatives. Derivatives: The Company records all derivatives on the Consolidated Balance Sheets at fair value. The accounting for change in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate the derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Interest rate swaps that are designated as a cash flow hedge and satisfy the hedge accounting requirements involve the receipt of variable amounts from a counter-party in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. For derivatives which are designed as cash flow hedges and satisfy hedge accounting requirements, the effective portion of changes in the fair value of the derivative is recorded in accumulated other comprehensive income (loss). The fair value of the Company's derivatives is determined using DCF analysis using observable market based inputs. The Company considers all free-standing derivatives not designated in a hedging relationship as economic hedges and recognizes these derivatives as either assets or liabilities in the balance sheet. These assets and liabilities are measured at fair value, and changes in fair value are recorded in earnings. By using derivatives, the Company is exposed to counterparty credit risk, which is the risk that counterparties to the derivative contracts do not perform as expected. If a counterparty fails to perform, our counterparty credit risk is equal to the amount reported as a derivative asset on our balance sheet, net of cash collateral received. We minimize counterparty credit risk through credit approvals, limits, monitoring procedures, and obtaining collateral, where appropriate. For derivative instruments executed with the same counterparty under a master netting arrangement, we do not offset fair value amounts of interest rate swaps in liability positions with interest rate swaps in asset positions. For further detail, see Note 20 of the notes to the Company's Consolidated Financial Statements included in Part II. Item 8 of this report. Transfers or sales of financial assets: For transfers of entire financial assets or a participating interest in an entire financial asset recorded as sales, we recognize and initially measure at fair value all assets obtained and liabilities incurred. We record a gain or loss in other operating income for the difference between the carrying amount and the fair value of the assets sold. Fair values are based on quoted market prices, quoted market prices for similar assets, or if market prices are not available, then the fair value is estimated using discounted cash flow analysis with assumptions for credit losses, prepayments and discount rates that are corroborated by and verified against market observable data, where possible. Revenue Recognition: The majority of the Company's revenues come from interest income on loans and investment securities, as well as other non-interest income including mortgage banking income, bankcard fees, purchased receivable income, and service charges on deposits. The Company recognizes income in accordance with the applicable accounting guidance for these revenue sources. The Company's revenues that are within the scope of ASC Topic 606 (“Topic 606”) are presented within other operating income and include bankcard fees, service charges on deposits, and other non-interest income including merchant services fees, commissions from sales of mutual funds and other investments, safety deposit box rental fees, bank check and other check fees, and other miscellaneous revenue streams. The Company generates revenue from factoring services by purchasing trade receivables from customers at a discount. This revenue is included in Purchased Receivable Income on the Company's Consolidated Statements of Income. Purchased receivable income represents factoring fees earned for providing financing, credit administration, and collection services. Purchased receivable income is recognized at the point in time when control of the receivable is transferred to the Company and the related services are substantially complete, which generally occurs upon purchase of the receivable. 83 Bankcard fees are primarily comprised of debit card income and ATM fees. Debit card income is primarily comprised of interchange fees earned whenever the Company’s debit cards are processed through card payment networks such as Visa or MasterCard. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. The Company’s performance obligation for bankcard fees are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payments are typically received immediately or in the following month. Service charges on deposit accounts consist of general service fees for monthly account maintenance, activity- or transaction-based fees, and account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), and other deposit account related fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Revenue is recognized when our performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed. Payments for service charges on deposit accounts are primarily received immediately or in the following month through a direct charge to customers’ accounts. Other operating income consists of other recurring revenue streams such as merchant services income, commissions from sales of mutual funds and other investments, safety deposit box rental fees, bank check and other check fees, unrealized gains and losses on marketable securities, and other miscellaneous revenue streams. Merchant services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees. The Company’s performance obligation for merchant services income is largely satisfied, and related revenue recognized, when the transactions have been completed. Payment is typically received immediately or in the following month. The Company earns commissions from the sale of mutual funds as periodic service fees (i.e., trailers) from Elliott Cove Capital Management typically based on a percentage of net asset value. Trailer revenue is recorded over time, quarterly, as net asset value is determined. The Company also earns commission income from the sale of annuity products. The Company acts as an intermediary between the Company's customer and Elliott Cove Investment Advisors for these transactions, and commissions from annuity product sales are recorded when the Company’s performance obligation is satisfied, which is generally upon the issuance of the annuity policy. The Company does not earn trailer fees on annuity sales. Payment for commissions from sales of mutual funds and other investments and annuity sales is typically received in the following quarter. Other service charges include revenue from safety deposit box rental fees, processing wire transfers, bank check and other check fees, and other services. The Company’s performance obligations for these other revenue streams are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payments are typically received immediately or in the following month. Revenue within the contracts with customers is recognized when obligations under the terms of a contract with customers are satisfied. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. When the amount of consideration is variable, the Company will only recognize revenue to the extent that it is probable that the cumulative amount recognized will not be subject to a significant reversal in the future. Substantially all of the Company's contracts with customers have expected durations of one year or less and payments are typically due when or as the services are rendered or shortly thereafter. When third parties are involved in providing services to customers, the Company recognizes revenue on a gross basis when it has control over those services being provided to the customer; otherwise, revenue is recognized for the net amount of any fee or commission. Advertising: Advertising, promotion, and marketing costs are expensed as incurred. The Company reported total expenses in these areas of $ 3.7 million, $ 3.0 million, and $ 2.9 million for each of the years ending December 31, 2025, 2024, and 2023, respectively. Stock Incentive Plans: The Company has stock-based employee compensation plans as more fully discussed in Note 22, Stock-Based Compensation to the Company's Consolidated Financial Statements included in Part II. Item 8 of this report. Compensation cost is recognized for stock options, restricted stock units, and performance stock units issued to employees based on the fair value of these awards at the date of grant. A Black Scholes model is utilized to estimate the fair value of stock options. The market price for the Company's common stock at the date of grant issued is the fair value of restricted and performance stock awards. The Company recognizes compensation expense over the vesting period of each award. The Company's recognizes forfeitures as they occur. Income Taxes: The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the future consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period 84 that includes the enactment date. Our policy is to recognize interest and penalties on unrecognized tax benefits in “Other operating expense" in the Consolidated Statements of Income. Foreign Currency Translation: Assets, liabilities and operations of foreign subsidiaries, which includes subsidiaries owned by SCF, are recorded based on the functional currency of each entity. The Company has determined that the functional currency of foreign subsidiaries is the local currency. The assets, liabilities and operations are translated, for consolidation purposes, from the local currency to the U.S. dollar reporting currency at period-end rates for assets and liabilities and generally at average rates for results of operations. Related translation adjustments are reported as a component of other comprehensive income, whereas gains and losses resulting from foreign currency transactions are included in results of operations in other operating income. Earnings Per Share: Earnings per share is calculated using the weighted average number of shares and dilutive common stock equivalents outstanding during the period. Stock options and restricted stock units, as described in Note 22 of the notes to the Company's Consolidated Financial Statements included in Part II. Item 8 of this report, are considered to be common stock equivalents. Potentially dilutive shares are excluded from the computation of earnings per share if their effect is anti-dilutive. There were no anti-dilutive shares outstanding related to options to acquire common stock in 2025, 2024, or 2023. Information used to calculate earnings per share was as follows: (In Thousands) 2025 2024 2023 Net income $ 64,608 $ 36,971 $ 25,394 Basic weighted average common shares outstanding 22,089 22,011 22,406 Dilutive effect of potential common shares from awards granted under equity incentive program 396 325 240 Total 22,485 22,336 22,646 Earnings per common share Basic $ 2.92 $ 1.68 $ 1.13 Diluted $ 2.87 $ 1.66 $ 1.12 Comprehensive Income: Comprehensive income consists of net income, net unrealized gains (losses) on securities available for sale after the tax effect, net unrealized gains (losses) on derivative and hedging activities after the tax effect, and foreign currency transaction adjustments after the tax effect. Concentrations: A significant portion of the Company’s business is derived from operations in Alaska. As such, the Company’s growth and operations depend upon the economic conditions of Alaska. Alaska relies primarily upon the natural resources industries, particularly oil production, as well as tourism, government and U.S. military spending for their economic success. A significant majority of the unrestricted revenues of the Alaska state government are currently funded through various taxes and royalties on the oil industry. The Company’s business is and will remain sensitive to economic factors that relate to these industries and local and regional business conditions. As a result, local or regional economic downturns, or downturns that disproportionately affect one or more of the key industries in regions served by the Company, may have a more pronounced effect upon its business than they might on an institution that is less geographically concentrated. The extent of the future impact of these events on economic and business conditions cannot be predicted; however, prolonged or acute fluctuations could have a material and adverse impact upon the Company’s results of operation and financial condition. At December 31, 2025 and 2024, the Company had $ 697.0 million and $ 690.0 million, respectively, in commercial and construction loans. Additionally, the Company continues to have a concentration in large borrowing relationships. At December 31, 2025, 20 % of the Company’s loan portfolio is attributable to 28 large borrowing relationships. The Company has additional unfunded commitments to these borrowers of $ 176.5 million at December 31, 2025. Fair Value Measurements: Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. GAAP established a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies. In accordance with GAAP, the Company groups its assets and liabilities measured at fair value into the following three levels: 85 • Level 1 : Valuation is based upon quoted prices for identical instruments traded in active markets. A quoted market price in an active market provides the most reliable evidence of fair value and is used to measure fair value whenever available. A contractually binding sales price also provides reliable evidence of fair value. • Level 2 : Valuation is based upon quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. • Level 3 : Valuation is generated from model-based techniques that use significant assumptions not observable in the market, or inputs that require significant management judgment or estimation, some of which may be internally developed. Recent Accounting Pronouncements Accounting pronouncements implemented in 2025 In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures (“ASU 2023-09”). The amendments in ASU 2023-09 improve transparency of income tax disclosures related to rate reconciliation and income taxes paid disclosures by requiring consistent categories and greater disaggregation of information in rate reconciliation, and by requiring disclosure of income taxes paid disaggregated by jurisdiction. The amendments in ASU 2023-09 allow investors to better assess, in their capital allocation decisions, how an entity's worldwide operations and related tax risks and tax planning and operations opportunities affect its income tax rate and prospects for future cash flow. ASU 2023-09 is effective for the Company for fiscal years beginning after December 15, 2024 and may be applied on a prospective or retrospective basis. The Company adopted ASU 2023-09 on December 31, 2025, and the adoption expands our disclosures around income taxes. In March 2024, the FASB issued ASU 2024-02, Codification Improvements - Amendments to Remove References to the Concepts Statements (“ASU 2024-02”). ASU 2024-02 contains amendments to the Codification that remove references to various Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Concepts Statements to provide guidance in certain topical areas. FASB Concepts Statement are nonauthoritative. Removing all references to Concepts Statements in the guidance is intended to simplify the Codification and draw a distinction between authoritative and nonauthoritative literature. ASU 2024-02 is effective for the Company for fiscal years beginning after December 15, 2024 and may be applied on a prospective or retrospective basis. The Company adopted ASU 2024-02 on January 1, 2025, and the adoption did not have a material impact on the Company's consolidated financial statements. In July 2025, the FASB issued ASU 2025‑05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025‑05”). ASU 2025‑05 is intended to reduce the cost and complexity of applying the CECL model to current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers. The amendments introduce (i) a practical expedient available to all entities and (ii) an accounting policy election available to entities other than public business entities that also elect the practical expedient. Under the practical expedient, an entity may assume that current conditions as of the balance sheet date do not change over the remaining life of current accounts receivable and current contract assets. This simplifies the estimate of expected credit losses for short‑term assets by reducing the need to incorporate detailed forward‑looking macroeconomic forecasts that stakeholders indicated were costly to develop and had limited effect on loss estimates for these assets. ASU 2025‑05 is effective for annual and interim periods beginning after December 15, 2025, with early adoption permitted. The amendments apply only to current receivables and contract assets. The Company adopted ASU 2025-05 on December 31, 2025, and the adoption did not have a material impact on the Company's consolidated financial statements. 86 Accounting pronouncements to be implemented in future periods In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”). This updated mandates that public business entities provide detailed disclosures in the notes to the financial statements, breaking down specific expense categories such as purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities included in each relevant expense cation. The objective is to enhance transparency, enabling investors to gain a clearer understanding of the nature and impact of these expenses on the Company's financial performance. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and may be applied on a prospective or retrospective basis. The Company intends to adopt ASU 2024-03 prospectively and does not believe that the adoption will have a material impact on the Company's consolidated financial statements. In November 2025, the FASB issued ASU 2025‑08, Financial Instruments—Credit Losses (Topic 326): Purchased Loans ("ASU 2025-08"). The amendments in ASU 2025‑08 are intended to simplify and improve the accounting for acquired loans under the CECL model by expanding the use of the “gross‑up” approach currently applied only to PCD assets. Under prior generally accepted accounting principles, entities were required to distinguish between PCD and non‑PCD acquired loans, resulting in differing Day 1 accounting and concerns about complexity, comparability, and perceived double‑counting of credit losses for non‑PCD loans. ASU 2025‑08 creates a new category of “purchased seasoned loans,” defined as acquired loans—in a business combination or acquired more than 90 days after origination—other than credit cards, that meet certain criteria. These loans must now be accounted for using the gross‑up approach. This method requires an entity to recognize an allowance for expected credit losses at the acquisition date with a corresponding increase to the loan’s amortized cost basis, eliminating Day 1 credit loss expense while reducing subsequent interest income. Existing guidance for PCD assets remains unchanged. ASU 2025‑08 is effective for the Company for interim and annual reporting periods beginning after December 15, 2026 and must be applied prospectively to loans acquired after the adoption date. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2025‑08 but does not expect the adoption to have a material effect on its consolidated financial statements. In November 2025, FASB issued ASU 2025‑09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements (“ASU 2025‑09”). The amendments in ASU 2025‑09 clarify and expand certain aspects of hedge accounting to better align financial reporting with the economics of an entity’s risk‑management activities. The ASU addresses stakeholder feedback following the implementation of prior hedge accounting guidance and issues arising from the global transition away from LIBOR. The amendments include targeted improvements across several areas of hedge accounting. Among the key changes, ASU 2025‑09 (i) expands the ability to aggregate forecasted transactions with similar risk exposures in cash flow hedges, (ii) introduces a model that facilitates hedge accounting for forecasted interest payments on “choose‑your‑rate” debt instruments, (iii) broadens hedge accounting for forecasted purchases and sales of nonfinancial assets, and (iv) updates guidance related to net written options used as hedging instruments. These improvements are intended to reduce complexity, increase consistency, and enhance the decision‑usefulness of hedge accounting outcomes. ASU 2025‑09 is effective for the Company for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2025‑09 and does not expect the adoption to have a material effect on its consolidated financial statements. In December 2025, the FASB issued ASU 2025‑11, Interim Reporting (Topic 270): Narrow‑Scope Improvements (“ASU 2025‑11”). The amendments are intended to improve the clarity and navigability of interim reporting requirements within Topic 270 by clarifying when interim reporting guidance applies, enhancing the organization of required interim disclosures, and specifying the form and content of interim financial statements. The guidance responds to stakeholder feedback that existing interim reporting requirements were difficult to navigate because of the historical origins and accumulated amendments within Topic 270. ASU 2025‑11 adds a disclosure principle requiring entities to disclose events that occur after the end of the most recent annual reporting period that have a material impact on the entity. The amendments also introduce a comprehensive list of required interim disclosures drawn from various Codification topics and clarify the presentation requirements for interim financial statements, including condensed financial statements and accompanying footnotes. Importantly, the ASU does not change the fundamental nature of interim reporting nor expand or reduce existing disclosure requirements; rather, it improves clarity and consistency across entities that issue interim financial statements in accordance with generally accepted accounting principles. ASU 2025‑11 is effective for the Company for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of ASU 2025‑11 and does not expect the adoption to have a material effect on its consolidated financial statements. In December 2025, the FASB issued ASU 2025‑12, Codification Improvements (“ASU 2025‑12”). This Update is part of the FASB’s ongoing project to address stakeholder‑identified issues in the Accounting Standards Codification. The 87 amendments consist of technical corrections, clarifications, and other incremental improvements intended to enhance the clarity, consistency, and usability of U.S. GAAP. These Codification improvements are not expected to significantly affect current accounting practices or impose substantial costs on most entities. The amendments span a wide range of Topics and include clarifications to diluted earnings‑per‑share calculations, updates to disclosure requirements for certain lease receivables, refinements to the calculation of reference amounts for beneficial interests, clarification of permissible methods for treasury stock retirements, and guidance regarding the transfer and measurement of receivables arising from contracts with customers. Although the updates are largely non‑substantive, certain clarifications may affect how entities apply existing guidance where the prior Codification language was ambiguous or inconsistent. ASU 2025‑12 is effective for the Company for annual reporting periods beginning after December 15, 2026, including interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2025‑12 and does not expect the adoption to have a material effect on its consolidated financial statements. NOTE 2 - Business Combinations On October 31, 2024, the Company completed the acquisition of 100 % of the equity interest in SCF in a cash transaction that is valued at approximately $ 53.9 million. The primary reason for the acquisition was to expand the Company's presence in the specialty finance industry. SCF provides factoring, asset based lending, and alternative working capital solutions to small and medium sized enterprises in the United States, and, to a lesser extent, in Canada and the United Kingdom through its subsidiaries. SCF operates as a wholly-owned subsidiary, and is expected to complement the products currently offered by NFS, a factoring division of the Bank. The consideration transferred or transferable to the former owners of SCF and the assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting and were recorded at their estimated fair values as of the October 31, 2024 acquisition date. The Company paid $ 47.9 million in cash on October 31, 2024 when the acquisition was completed. The Company had pre-existing loans to SCF which totaled $ 12 million. The fair value of these loans approximate their carrying value, and as a result of the acquisition, the loans were effectively settled at their carrying value, resulting in no gain or loss. The fair value of the loans were considered as part of the total purchase consideration in the transaction. Estimated fair values recorded in the transaction are subject to change for up to one year after the closing date of the acquisition. The application of the acquisition method of accounting resulted in the recognition of goodwill in the amount of $ 35.0 million. No other intangibles were identified. In February 2025, in accordance with the terms of the purchase agreement, the Company determined the final value of consideration transferred to the former owners of SCF. The final value of consideration transferred decreased $ 144,000 to $ 47.7 million from $ 47.9 million which decreased goodwill to $ 34.9 million. The former owners of SCF (the “sellers”) will receive additional cash proceeds (the “earn-out payments”) of up to $ 6 million. The earn-out payments of $ 2 million per year are payable on each of the first three anniversaries of the closing date, and the first payment of $ 2 million was made in the fourth quarter of 2025. The purchase agreement provides for the these earn-out payments to be paid to the sellers in future periods, provided that certain principal employees of SCF, including certain of the sellers, have not been terminated for cause or terminated their employment for good reason. The earn-out payments have not been included in acquisition consideration and will be expensed when incurred as compensation expense in future periods. 88 A summary of the net assets acquired and the estimated fair value adjustments are presented below: (In Thousands) October 31, 2024 Cost basis net assets $ 29,638 Cash payment made ( 47,855 ) Pre-existing debt effectively settled ( 12,000 ) Fair value adjustments: Net loans ( 1,260 ) Net purchased receivables ( 3,524 ) Goodwill ($ 35,001 ) The $ 35.0 million of goodwill recorded in connection with the acquisition of SCF represents the excess purchase price over the estimated fair value of the net assets acquired, and resulted from the expected decrease in funding costs and, to a lesser extent, expected operational efficiencies. All of the goodwill is expected to be deductible for tax purposes. A summary of the assets acquired and liabilities assumed at their estimated fair values are presented below: (In Thousands) October 31, 2024 Assets Acquired: Cash and equivalents $ 7,197 Loans, net 9,158 Purchased receivables, net 48,034 Premises and equipment, net 54 Right-of-use assets 44 Other assets 1,642 Total assets acquired $ 66,129 Liabilities Assumed: Borrowings $ 40,207 Lease liability 47 Other liabilities 1,021 Total liabilities assumed $ 41,275 The fair value of assets acquired and liabilities assumed approximates book value as of the acquisition date as all loans and borrowings have variable interest rates. Purchased receivables have an average life of less than 45 days. Some of the assets acquired exhibited evidence of credit deterioration at the acquisition date. These assets were designated as PCD assets in accordance with U.S. GAAP. The following table presents PCD loan and purchased receivable activity at the date of acquisition: (In Thousands) Loans Purchased Receivables Unpaid principal balance $ 10,418 $ 51,558 ACL at acquisition ( 1,260 ) ( 3,524 ) Total $ 9,158 $ 48,034 89 Based on an evaluation in accordance with Rule 3-05 and Rule 11-01(b) of Regulations S-X, the acquisition of SCF does not meet the significance thresholds requiring separate financial statement disclosure. The operations of SCF are included in our operating results from October 31, 2024, and added revenue of $ 2.6 million, non-interest expense of $ 1.5 million, and net income of $ 943,000 , before taxes, for the year ended December 31, 2024. SCF’s results of operations prior to the acquisition are not included in our operating results. 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 table presents unaudited pro forma results of operations for the years ended December 31, 2024 and 2023 as if the acquisition of SCF had occurred on January 1, 2023. 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, 2023, primarily due to the Company's lower cost of funding as compared to SCF. (In Thousands, except per share data) December 31, 2024 (Unaudited) Company SCF 1 Pro Forma Adjustments 2 Pro Forma Combined Net interest and other income $ 155,224 $ 12,900 $ 168,124 Net income 36,971 4,224 ( 1,201 ) 39,994 Earnings Per Share, Basic $ 1.68 $ 1.82 Earnings Per Share, Diluted $ 1.66 $ 1.79 Weighted Average Shares Outstanding, Basic 22,011,188 22,011,188 Weighted Average Shares Outstanding, Diluted 22,335,932 22,335,932 December 31, 2023 (Unaudited) Net interest and other income $ 129,631 $ 15,399 $ 145,030 Net income 25,394 7,258 ( 2,063 ) 30,589 Earnings Per Share, Basic $ 1.13 $ 1.37 Earnings Per Share, Diluted $ 1.12 $ 1.35 Weighted Average Shares Outstanding, Basic 22,405,884 22,405,884 Weighted Average Shares Outstanding, Diluted 22,645,840 22,645,840 1 SCF represents results from January 1 to October 31 for 2024 and represents results from January 1 to December 31, for 2023. 2 Proforma adjustments include a provision for income taxes using the Company's statutory rate. NOTE 3 – Cash and Due from Banks The Company is required to maintain a $ 100,000 and $ 30,000 balance with a correspondent bank to collateralize the initial margin and the fair value exposure of one of its interest rate swaps, respectively, at December 31, 2025 and 2024. 90 NOTE 4 - Interest Bearing Deposits in Other Banks All interest bearing deposits in other banks have a maturity of one year or less. Balances at December 31 for the respective years are as follows: (In Thousands) 2025 2024 Interest bearing deposits at Federal Reserve Bank $ 105,919 $ 20,364 Interest bearing deposits at FHLB 3,796 141 Other interest bearing deposits at other institutions 149 130 Total $ 109,864 $ 20,635 NOTE 5 - Investment Securities Marketable Equity Securities The Company held marketable equity securities with fair values of $ 8.4 million and $ 8.7 million at December 31, 2025 and 2024, respectively. The gross realized and unrealized gains (losses) recognized on marketable equity securities in other operating income in the Company's Consolidated Statements of Income for the periods indicated were as follows: (In Thousands) 2025 2024 2023 Unrealized gain (loss) on marketable equity securities $ 169 $ 465 $ 120 Gain on sale of marketable equity securities, net — 112 — Total $ 169 $ 577 $ 120 Debt securities Debt securities have been classified in the financial statements as available for sale or held to maturity. The following table summarizes the amortized cost, estimated fair value, and ACL of debt securities and the corresponding amounts of gross unrealized gains and losses of available for sale securities recognized in accumulated other comprehensive income (loss) and unrecognized gains and losses of held to maturity securities at the periods indicated: (In Thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Fair Value December 31, 2025 Securities available for sale U.S. Treasury and government sponsored entities $ 389,391 $ 1,717 ($ 2,371 ) $ — $ 388,737 U.S. Agency mortgage-backed securities 4,797 1 — — 4,798 Corporate bonds 5,003 — ( 51 ) — 4,952 Collateralized loan obligations 22,141 33 — — 22,174 Total securities available for sale $ 421,332 $ 1,751 ($ 2,422 ) $ — $ 420,661 December 31, 2024 Securities available for sale U.S. Treasury and government sponsored entities $ 444,370 $ 294 ($ 11,733 ) $ — $ 432,931 Corporate bonds 9,009 9 ( 223 ) — 8,795 Collateralized loan obligations 36,827 66 ( 2 ) — 36,891 Total securities available for sale $ 490,206 $ 369 ($ 11,958 ) $ — $ 478,617 91 (In Thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2025 Securities held to maturity Corporate bonds $ 26,750 $ 426 ($ 578 ) $ 26,598 Allowance for credit losses — — — — Total securities held to maturity, net of ACL $ 26,750 $ 426 ($ 578 ) $ 26,598 December 31, 2024 Securities held to maturity Corporate bonds $ 36,750 $ 175 ($ 1,175 ) $ 35,750 Allowance for credit losses — — — — Total securities held to maturity, net of ACL $ 36,750 $ 175 ($ 1,175 ) $ 35,750 Gross unrealized losses on investment 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 December 31, 2025 and 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 2025 Securities Available for Sale U.S. Treasury and government sponsored entities $ 19,992 ($ 8 ) $ 236,387 ($ 2,363 ) $ 256,379 ($ 2,371 ) Corporate bonds — — 4,592 ( 51 ) 4,592 ( 51 ) Total $ 19,992 ($ 8 ) $ 240,979 ($ 2,414 ) $ 260,971 ($ 2,422 ) 2024 Securities Available for Sale U.S. Treasury and government sponsored entities $ 44,262 ($ 422 ) $ 358,446 ($ 11,311 ) $ 402,708 ($ 11,733 ) Corporate bonds — — 4,786 ( 223 ) 4,786 ( 223 ) Collateralized loan obligations — — 4,993 ( 2 ) 4,993 ( 2 ) Total $ 44,262 ($ 422 ) $ 368,225 ($ 11,536 ) $ 412,487 ($ 11,958 ) Management evaluates available for sale debt securities in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors. 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 December 31, 2025 and 2024, there were two and four available for sale securities in an unrealized loss position without an ACL, respectively, that have been in a loss position for less than twelve months. There were 27 and 40 available for sale securities without an ACL with unrealized losses at December 31, 2025 and 2024, respectively, that have been at a loss position for more than twelve months. At both December 31, 2025 and 2024, there were zero held to maturity securities in an unrealized loss position without an ACL that have been in a loss position for less than twelve months. At December 31, 2025 and 2024, there were two and three held to maturity securities in an unrealized loss position without an ACL, respectively, 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 December 31, 2025, management believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, including changes in interest rates and other market conditions, and therefore no losses have been recognized in the Company's Consolidated Statements of Income. At December 31, 2025 and 2024, $ 210.3 million and $ 177.4 million in securities were pledged for deposits and borrowings, respectively. 92 The amortized cost and fair values of available for sale and held to maturity debt securities at December 31, 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. (In Thousands) Amortized Cost Fair Value Weighted Average Yield U.S. Treasury and government sponsored entities Within 1 year $ 200,029 $ 198,035 1.36 % 1-5 years 179,683 180,759 3.75 % 5-10 years 9,679 9,943 4.41 % Total $ 389,391 $ 388,737 2.54 % U.S. Agency mortgage-backed securities 5-10 years $ 972 $ 972 5.28 % Over 10 years 3,825 3,826 4.89 % Total $ 4,797 $ 4,798 4.96 % Corporate bonds Within 1 year $ 10,000 $ 10,016 5.36 % 1-5 years 5,003 4,952 1.50 % 5-10 years 16,750 16,249 5.02 % Total $ 31,753 $ 31,217 4.58 % Collateralized loan obligations 5-10 years $ 8,141 $ 8,171 6.00 % Over 10 years 14,000 14,003 5.41 % Total $ 22,141 $ 22,174 5.63 % The proceeds and resulting gains and losses, computed using specific identification, from sales of investment securities for the years ending December 31, 2025, 2024, and 2023, respectively, are as follows: (In Thousands) Proceeds Gross Gains Gross Losses 2025 Available for sale securities $ 1,446 $ — ($ 1 ) 2024 Available for sale securities $ — $ — $ — 2023 Available for sale securities $ — $ — $ — A summary of interest income for the years ending December 31, 2025, 2024, and 2023 on available for investment securities is as follows: (In Thousands) 2025 2024 2023 U.S. Treasury and government sponsored entities $ 9,368 $ 9,810 $ 11,074 U.S. Agency mortgage-backed securities 173 — — Other 1,941 3,943 4,741 Total taxable interest income $ 11,482 $ 13,753 $ 15,815 Municipal securities $ — $ 3 $ 18 Total tax-exempt interest income $ — $ 3 $ 18 Total $ 11,482 $ 13,756 $ 15,833 93 NOTE 6 - Loans and Allowance for Credit Losses Loans Held for Sale Loans held for sale are comprised entirely of 1-4 family residential mortgage loans as of December 31, 2025 and 2024. Loans Held for Investment The following table presents amortized cost and unpaid principal balance of loans for the periods indicated: December 31, 2025 December 31, 2024 (In Thousands) Amortized Cost Unpaid Principal Difference Amortized Cost Unpaid Principal Difference Commercial & industrial loans $ 484,390 $ 486,717 ($ 2,327 ) $ 437,922 $ 440,163 ($ 2,241 ) Commercial real estate: Owner occupied properties 433,157 435,050 ( 1,893 ) 418,092 420,060 ( 1,968 ) Non-owner occupied and multifamily properties 763,180 767,617 ( 4,437 ) 615,662 619,431 ( 3,769 ) Residential real estate: 1-4 family residential properties secured by first liens 243,185 243,167 18 270,966 270,535 431 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 67,116 66,470 646 49,160 48,857 303 1-4 family residential construction loans 39,059 39,311 ( 252 ) 39,516 39,789 ( 273 ) Other construction, land development and raw land loans 173,589 175,261 ( 1,672 ) 212,561 214,068 ( 1,507 ) Obligations of states and political subdivisions in the US 32,434 32,433 1 29,471 29,468 3 Agricultural production, including commercial fishing 47,445 47,682 ( 237 ) 45,840 46,069 ( 229 ) Consumer loans 9,763 9,659 104 7,638 7,562 76 Other loans 2,181 2,296 ( 115 ) 2,435 2,448 ( 13 ) Total 2,295,499 2,305,663 ( 10,164 ) 2,129,263 2,138,450 ( 9,187 ) Allowance for credit losses ( 23,737 ) ( 22,020 ) $ 2,271,762 $ 2,305,663 ($ 10,164 ) $ 2,107,243 $ 2,138,450 ($ 9,187 ) The difference between the amortized cost and unpaid principal balance is primarily net deferred origination fees totaling $ 10.2 million at December 31, 2025 and $ 9.2 million at December 31, 2024. 94 Allowance for Credit Losses The activity in the ACL related to loans held for investment for the periods indicated is as follows: Beginning Balance Credit Loss Expense (Benefit) Charge-offs Recoveries Ending Balance (In Thousands) 2025 Commercial & industrial loans $ 5,800 $ 2,694 ($ 1,998 ) $ 211 $ 6,707 Commercial real estate: Owner occupied properties 2,944 ( 767 ) — 30 2,207 Non-owner occupied and multifamily properties 3,967 473 — — 4,440 Residential real estate: 1-4 family residential properties secured by first liens 4,364 1,348 — — 5,712 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 775 240 — 26 1,041 1-4 family residential construction loans 230 94 — — 324 Other construction, land development and raw land loans 3,589 ( 745 ) ( 5 ) — 2,839 Obligations of states and political subdivisions in the US 106 37 — — 143 Agricultural production, including commercial fishing 169 28 — 5 202 Consumer loans 71 105 ( 67 ) 5 114 Other loans 5 3 — — 8 Total $ 22,020 $ 3,510 ($ 2,070 ) $ 277 $ 23,737 Beginning Balance Impact of SCF acquisition Credit Loss Expense (Benefit) Charge-offs Recoveries Ending Balance (In Thousands) 2024 Commercial & industrial loans $ 3,438 $ 1,260 $ 890 ($ 149 ) $ 361 $ 5,800 Commercial real estate: Owner occupied properties 2,867 — 77 — — 2,944 Non-owner occupied and multifamily properties 3,294 — 673 — — 3,967 Residential real estate: 1-4 family residential properties secured by first liens 3,470 — 894 — — 4,364 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 551 — 202 — 22 775 1-4 family residential construction loans 191 — 39 — — 230 Other construction, land development and raw land loans 3,127 — 462 — — 3,589 Obligations of states and political subdivisions in the US 80 — 26 — — 106 Agricultural production, including commercial fishing 168 — 20 ( 25 ) 6 169 Consumer loans 81 — ( 9 ) ( 15 ) 14 71 Other loans 3 — 2 — — 5 Total $ 17,270 $ 1,260 $ 3,276 ($ 189 ) $ 403 $ 22,020 95 Loans Individually Evaluated for Credit Losses December 31, 2025 December 31, 2024 (In Thousands) Pooled Loans Individually Evaluated Loans Pooled Loans Individually Evaluated Loans Commercial & industrial loans $ 410,521 $ 73,869 $ 417,311 $ 20,611 Commercial real estate: Owner occupied properties 414,205 18,952 417,376 716 Non-owner occupied and multifamily properties 753,441 9,739 606,813 8,849 Residential real estate: 1-4 family residential properties secured by first liens 242,865 320 270,966 — 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 66,744 372 48,694 466 1-4 family residential construction loans 39,059 — 39,516 — Other construction, land development and raw land loans 171,935 1,654 211,035 1,526 Obligations of states and political subdivisions in the US 32,434 — 29,471 — Agricultural production, including commercial fishing 47,445 — 45,840 — Consumer loans 9,763 — 7,638 — Other loans 2,181 — 2,435 — Total $ 2,190,593 $ 104,906 $ 2,097,095 $ 32,168 Credit Quality Information As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management utilizes a loan risk grading system called the Asset Quality Rating (“AQR”) system to assign a risk classification to each of its loans. The risk classification is a dual rating system that contemplates both probability of default and risk of loss given default. Loans are graded on a scale of 1 to 10 and, loans graded 1 – 6 are considered “pass” grade loans. Loans graded 7 or higher are considered "classified" loans. A description of the general characteristics of the AQR risk classifications are as follows: Pass grade loans – 1 through 6: The borrower demonstrates sufficient cash flow to fund debt service, including acceptable profit margins, cash flows, liquidity and other balance sheet ratios. Historic and projected performance indicates that the borrower is able to meet obligations under most economic circumstances. The Company has competent management with an acceptable track record. The category does not include loans with undue or unwarranted credit risks that constitute identifiable weaknesses. Classified loans: Special Mention – 7: A "special mention" credit has weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset at some future date. Substandard – 8: A "substandard" credit is inadequately protected by the current worth and paying capacity of the obligor or by the collateral pledged, if any. Assets so classified must have a well-defined weakness, or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Doubtful – 9: An asset classified "doubtful" has all the weaknesses inherent in one that is classified "substandard-8" 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. The loan has substandard characteristics, and available information suggests that it is unlikely that the loan will be repaid in its entirety. Loss – 10: An asset classified "loss" is considered uncollectible and of such little value that its continuance on the books is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not 96 practical or desirable to defer writing off this basically worthless asset, even though partial recovery may be affected in the future. The following tables present the Company's portfolio of risk-rated loans by grade and by year of origination. Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal of loan constitutes a current period origination. 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. December 31, 2025 2025 2024 2023 2022 2021 Prior Total (In Thousands) Commercial & industrial loans Pass $ 140,717 $ 73,544 $ 61,463 $ 98,091 $ 24,360 $ 40,558 $ 438,733 Classified — 3,540 5,905 16,590 12,845 6,777 45,657 Total commercial & industrial loans $ 140,717 $ 77,084 $ 67,368 $ 114,681 $ 37,205 $ 47,335 $ 484,390 Commercial real estate: Owner occupied properties Pass $ 34,589 $ 70,158 $ 61,563 $ 67,334 $ 52,207 $ 126,589 $ 412,440 Classified 6,002 — — 3,674 — 11,041 20,717 Total commercial real estate owner occupied properties $ 40,591 $ 70,158 $ 61,563 $ 71,008 $ 52,207 $ 137,630 $ 433,157 Non-owner occupied and multifamily properties Pass $ 136,992 $ 119,749 $ 68,208 $ 138,103 $ 67,826 $ 221,420 $ 752,298 Classified — — — 1,143 — 9,739 10,882 Total commercial real estate non-owner occupied and multifamily properties $ 136,992 $ 119,749 $ 68,208 $ 139,246 $ 67,826 $ 231,159 $ 763,180 Residential real estate: 1-4 family residential properties secured by first liens Pass $ 67,166 $ 53,573 $ 75,846 $ 33,276 $ 2,953 $ 9,684 $ 242,498 Classified — — 514 — — 173 687 Total residential real estate 1-4 family residential properties secured by first liens $ 67,166 $ 53,573 $ 76,360 $ 33,276 $ 2,953 $ 9,857 $ 243,185 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens Pass $ 21,690 $ 18,943 $ 10,356 $ 5,820 $ 2,924 $ 6,866 $ 66,599 Classified — — 430 — — 87 517 Total residential real estate 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens $ 21,690 $ 18,943 $ 10,786 $ 5,820 $ 2,924 $ 6,953 $ 67,116 1-4 family residential construction loans Pass $ 23,151 $ 5,946 $ — $ — $ — $ 9,962 $ 39,059 Classified — — — — — — — Total residential real estate 1-4 family residential construction loans $ 23,151 $ 5,946 $ — $ — $ — $ 9,962 $ 39,059 Other construction, land development and raw land loans Pass $ 53,248 $ 45,743 $ 38,772 $ 13,462 $ 9,175 $ 5,455 $ 165,855 Classified — — — 6,277 26 1,431 7,734 Total other construction, land development and raw land loans $ 53,248 $ 45,743 $ 38,772 $ 19,739 $ 9,201 $ 6,886 $ 173,589 Obligations of states and political subdivisions in the US Pass $ — $ 4,569 $ — $ 27,864 $ — $ 1 $ 32,434 Classified — — — — — — — Total obligations of states and political subdivisions in the US $ — $ 4,569 $ — $ 27,864 $ — $ 1 $ 32,434 Agricultural production, including commercial fishing Pass $ 3,142 $ 8,770 $ 7,950 $ 8,924 $ 14,908 $ 3,631 $ 47,325 Classified — — — — 120 — 120 Total agricultural production, including commercial fishing $ 3,142 $ 8,770 $ 7,950 $ 8,924 $ 15,028 $ 3,631 $ 47,445 97 Consumer loans Pass $ 4,757 $ 1,848 $ 1,646 $ 507 $ 32 $ 969 $ 9,759 Classified — — 2 2 — — 4 Total consumer loans $ 4,757 $ 1,848 $ 1,648 $ 509 $ 32 $ 969 $ 9,763 Other loans Pass $ — $ — $ 639 $ 65 $ 274 $ 1,203 $ 2,181 Classified — — — — — — — Total other loans $ — $ — $ 639 $ 65 $ 274 $ 1,203 $ 2,181 Total loans Pass $ 485,452 $ 402,843 $ 326,443 $ 393,446 $ 174,659 $ 426,338 $ 2,209,181 Classified 6,002 3,540 6,851 27,686 12,991 29,248 86,318 Total loans $ 491,454 $ 406,383 $ 333,294 $ 421,132 $ 187,650 $ 455,586 $ 2,295,499 Total pass loans $ 485,452 $ 402,843 $ 326,443 $ 393,446 $ 174,659 $ 426,338 $ 2,209,181 Government guarantees ( 17,804 ) ( 29,791 ) ( 19,923 ) ( 4,766 ) ( 10,173 ) ( 17,368 ) ( 99,825 ) Total pass loans, net of government guarantees $ 467,648 $ 373,052 $ 306,520 $ 388,680 $ 164,486 $ 408,970 $ 2,109,356 Total classified loans $ 6,002 $ 3,540 $ 6,851 $ 27,686 $ 12,991 $ 29,248 $ 86,318 Government guarantees — — ( 1,641 ) ( 16,831 ) ( 11,567 ) ( 12,300 ) ( 42,339 ) Total classified loans, net government guarantees $ 6,002 $ 3,540 $ 5,210 $ 10,855 $ 1,424 $ 16,948 $ 43,979 December 31, 2024 2024 2023 2022 2021 2020 Prior Total (In Thousands) Commercial & industrial loans Pass $ 112,361 $ 70,871 $ 120,377 $ 37,628 $ 10,581 $ 40,288 $ 392,106 Classified 201 3,386 16,888 14,973 5,759 4,609 45,816 Total commercial & industrial loans $ 112,562 $ 74,257 $ 137,265 $ 52,601 $ 16,340 $ 44,897 $ 437,922 Commercial real estate: Owner occupied properties Pass $ 68,074 $ 48,655 $ 74,611 $ 64,234 $ 74,662 $ 74,987 $ 405,223 Classified — — 492 — 348 12,029 12,869 Total commercial real estate owner occupied properties $ 68,074 $ 48,655 $ 75,103 $ 64,234 $ 75,010 $ 87,016 $ 418,092 Non-owner occupied and multifamily properties Pass $ 114,879 $ 70,806 $ 104,924 $ 73,008 $ 65,592 $ 175,349 $ 604,558 Classified — — 1,166 30 — 9,908 11,104 Total commercial real estate non-owner occupied and multifamily properties $ 114,879 $ 70,806 $ 106,090 $ 73,038 $ 65,592 $ 185,257 $ 615,662 Residential real estate: 1-4 family residential properties secured by first liens Pass $ 103,919 $ 108,642 $ 43,562 $ 3,279 $ 4,228 $ 6,978 $ 270,608 Classified — 205 — — — 153 358 Total residential real estate 1-4 family residential properties secured by first liens $ 103,919 $ 108,847 $ 43,562 $ 3,279 $ 4,228 $ 7,131 $ 270,966 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens Pass $ 18,946 $ 13,553 $ 5,116 $ 2,695 $ 2,097 $ 6,083 $ 48,490 Classified — 372 — — — 298 670 Total residential real estate 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens $ 18,946 $ 13,925 $ 5,116 $ 2,695 $ 2,097 $ 6,381 $ 49,160 1-4 family residential construction loans Pass $ 25,458 $ 4,118 $ 2,353 $ — $ — $ 7,587 $ 39,516 98 Classified — — — — — — — Total residential real estate 1-4 family residential construction loans $ 25,458 $ 4,118 $ 2,353 $ — $ — $ 7,587 $ 39,516 Other construction, land development and raw land loans Pass $ 63,430 $ 60,693 $ 51,809 $ 25,836 $ 1,236 $ 7,942 $ 210,946 Classified — — — — — 1,615 1,615 Total other construction, land development and raw land loans $ 63,430 $ 60,693 $ 51,809 $ 25,836 $ 1,236 $ 9,557 $ 212,561 Obligations of states and political subdivisions in the US Pass $ — $ — $ 29,471 $ — $ — $ — $ 29,471 Classified — — — — — — — Total obligations of states and political subdivisions in the US $ — $ — $ 29,471 $ — $ — $ — $ 29,471 Agricultural production, including commercial fishing Pass $ 8,097 $ 8,776 $ 8,380 $ 15,847 $ 3,109 $ 1,631 $ 45,840 Classified — — — — — — — Total agricultural production, including commercial fishing $ 8,097 $ 8,776 $ 8,380 $ 15,847 $ 3,109 $ 1,631 $ 45,840 Consumer loans Pass $ 3,346 $ 2,377 $ 717 $ 75 $ 252 $ 820 $ 7,587 Classified — 45 5 — — 1 51 Total consumer loans $ 3,346 $ 2,422 $ 722 $ 75 $ 252 $ 821 $ 7,638 Other loans Pass $ — $ 345 $ 122 $ 285 $ 1,683 $ — $ 2,435 Classified — — — — — — — Total other loans $ — $ 345 $ 122 $ 285 $ 1,683 $ — $ 2,435 Total loans Pass $ 518,510 $ 388,836 $ 441,442 $ 222,887 $ 163,440 $ 321,665 $ 2,056,780 Classified 201 4,008 18,551 15,003 6,107 28,613 72,483 Total loans $ 518,711 $ 392,844 $ 459,993 $ 237,890 $ 169,547 $ 350,278 $ 2,129,263 Total pass loans $ 518,510 $ 388,836 $ 441,442 $ 222,887 $ 163,440 $ 321,665 $ 2,056,780 Government guarantees ( 35,244 ) ( 12,421 ) ( 7,727 ) ( 13,785 ) ( 1,591 ) ( 17,276 ) ( 88,044 ) Total pass loans, net of government guarantees $ 483,266 $ 376,415 $ 433,715 $ 209,102 $ 161,849 $ 304,389 $ 1,968,736 Total classified loans $ 201 $ 4,008 $ 18,551 $ 15,003 $ 6,107 $ 28,613 $ 72,483 Government guarantees — ( 1,640 ) ( 14,816 ) ( 13,476 ) ( 5,183 ) ( 7,963 ) ( 43,078 ) Total classified loans, net government guarantees $ 201 $ 2,368 $ 3,735 $ 1,527 $ 924 $ 20,650 $ 29,405 99 Past Due Loans The following tables present an aging of contractually past due loans as of the periods indicated: (In Thousands) 30-59 Days Past Due 60-89 Days Past Due Greater Than 90 Days Past Due Total Past Due Current Total Greater Than 90 Days Past Due Still Accruing December 31, 2025 Commercial & industrial loans $ 190 $ — $ 1,500 $ 1,690 $ 482,700 $ 484,390 $ — Commercial real estate: Owner occupied properties — — — — 433,157 433,157 — Non-owner occupied and multifamily properties — — — — 763,180 763,180 — Residential real estate: 1-4 family residential properties secured by first liens 1,505 — 514 2,019 241,166 243,185 — 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 194 — 372 566 66,550 67,116 — 1-4 family residential construction loans — — — — 39,059 39,059 — Other construction, land development and raw land loans — 277 1,377 1,654 171,935 173,589 — Obligations of states and political subdivisions in the US — — — — 32,434 32,434 — Agricultural production, including commercial fishing — — — — 47,445 47,445 — Consumer loans — 2 — 2 9,761 9,763 — Other loans — — — — 2,181 2,181 — Total $ 1,889 $ 279 $ 3,763 $ 5,931 $ 2,289,568 $ 2,295,499 $ — December 31, 2024 Commercial & industrial loans $ 718 $ — $ 1,558 $ 2,276 $ 435,646 $ 437,922 $ — Commercial real estate: Owner occupied properties — 492 224 716 417,376 418,092 — Non-owner occupied and multifamily properties — — — — 615,662 615,662 — Residential real estate: 1-4 family residential properties secured by first liens 712 323 205 1,240 269,726 270,966 — 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens — — 466 466 48,694 49,160 17 1-4 family residential construction loans — — 94 94 39,422 39,516 — Other construction, land development and raw land loans — — 1,432 1,432 211,129 212,561 — Obligations of states and political subdivisions in the US — — — — 29,471 29,471 — Agricultural production, including commercial fishing — — — — 45,840 45,840 — Consumer loans — — — — 7,638 7,638 — Other loans — — — — 2,435 2,435 — Total $ 1,430 $ 815 $ 3,979 $ 6,224 $ 2,123,039 $ 2,129,263 $ 17 100 Nonaccrual Loans Nonaccrual loans net of government guarantees totaled $ 12.0 million and $ 7.5 million at December 31, 2025 and December 31, 2024, respectively. The following table presents loans on nonaccrual status and loans on nonaccrual status for which there was no related ACL for the periods presented: December 31, 2025 December 31, 2024 (In Thousands) Nonaccrual Nonaccrual With No ACL ACL on Nonaccrual Nonaccrual Nonaccrual With No ACL ACL on Nonaccrual Commercial & industrial loans $ 4,251 $ 1,641 $ 1,248 $ 4,983 $ 4,760 $ 1,263 Commercial real estate: Owner occupied properties 5,134 2,725 86 224 224 — Residential real estate: 1-4 family residential properties secured by first liens 514 — 60 233 — 4 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 415 372 1 550 466 1 1-4 family residential construction loans — — — 94 94 — Other construction, land development and raw land loans 1,654 1,654 — 1,432 1,432 — Total nonaccrual loans 11,968 6,392 1,395 7,516 6,976 1,268 Government guarantees on nonaccrual loans — — — — — — Net nonaccrual loans $ 11,968 $ 6,392 $ 1,395 $ 7,516 $ 6,976 $ 1,268 Interest income which would have been recognized on nonaccrual loans for 2025, 2024, and 2023 amounted to $ 337,000 , $ 371,000 , and $ 499,000 , respectively. There was no interest on nonaccrual loans reversed through interest income in 2025 and 2024, respectively. There was no interest recognized on nonaccrual loans with a principal balance during 2025 or 2024. However, the Company recognized interest income of $ 214,000 , $ 241,000 , and $ 656,000 in 2025, 2024, and 2023, respectively, related to interest collected on nonaccrual loans whose principal has been paid down to zero. Loans are classified as collateral dependent when it is probable that the Company will be unable to collect the scheduled payments of principal and interest when due, and repayment is expected to be provided substantially through the sale of the collateral. As of December 31, 2025 and 2024, there are no collateral dependent loans for which foreclosure is probable. Loan Modifications The Company modifies loans to borrowers experiencing financial difficulty as a normal part of our business. These modifications include providing term extensions/modifications, payment modifications, interest rate modifications, or, on rare occasions, principal forgiveness. When principal forgiveness is provided, the amount of forgiveness is charged-off against the ACL. The Company may provide multiple types of concessions on one loan. 101 The following tables show the amortized cost basis of the loans that were both experiencing financial difficulty and modified as of the dates indicated, by class and type of modification. 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: Twelve Months Ended December 31, 2025 Term Modification Payment Modification Term and payment modifications Total Modifications Percentage of Class of Financing Receivable (In Thousands) Commercial & industrial loans $ 3,239 $ — $ 230 $ 3,469 0.72 % Commercial real estate: Owner occupied properties — — 3,193 3,193 0.74 % Total $ 3,239 $ — $ 3,423 $ 6,662 0.29 % Twelve Months Ended December 31, 2024 Term Modification Payment Modification Term and payment modifications Total Modifications Percentage of Class of Financing Receivable (In Thousands) Commercial & industrial loans $ 4,671 $ — $ 404 $ 5,075 1.16 % Residential real estate: 1-4 family residential properties secured by first liens — 372 — 372 0.14 % Total $ 4,671 $ 372 $ 404 $ 5,447 0.26 % The Company has no outstanding commitments to the borrowers included in the previous table. The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the years indicated: Twelve Months Ended December 31, 2025 Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (months) (In Thousands) Commercial & industrial loans $ — 0.25 % 23 Commercial real estate: Owner occupied properties — — % 33 Twelve Months Ended December 31, 2024 Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (months) (In Thousands) Commercial & industrial loans $ — 8 % 10 The Company monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the payment performance of such loans as of the dates indicated that were modified in the last twelve months: 102 December 31, 2025 30-59 Days Past Due 60-89 Days Past Due Greater Than 89 Days Past Due Total Past Due (In Thousands) Commercial & industrial loans $ — $ — $ — $ — Commercial real estate: Owner occupied properties $ — $ — $ — $ — Total $ — $ — $ — $ — December 31, 2024 30-59 Days Past Due 60-89 Days Past Due Greater Than 89 Days Past Due Total Past Due (In Thousands) Commercial real estate: Owner occupied properties $ — $ — $ 224 $ 224 Residential real estate: 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens — — 466 466 Other construction, land development and raw land loans — — 1,527 1,527 Total $ — $ — $ 2,217 $ 2,217 103 The following table presents the amortized cost basis of loans that had a payment default during 2025 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty: December 31, 2025 Term modification Payment modification Term and payment modification (In Thousands) Commercial & industrial loans $ — $ — $ 142 Commercial real estate: Owner occupied properties — — 3,193 Residential real estate: 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 372 — 1-4 family residential construction loans — — — Other construction, land development and raw land loans 1,376 — — Total $ 1,376 $ 372 $ 3,335 December 31, 2024 Term modification Term and payment modification (In Thousands) Commercial & industrial loans $ — $ 97 Commercial real estate: Owner occupied properties — 224 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 665 — Total $ 665 $ 321 Loans to Related Parties Certain directors, and companies of which directors are principal owners, and executive officers have loans with the Company. Such transactions are made on substantially the same terms, including interest rates and collateral required, as those prevailing for similar transactions of unrelated parties. An analysis of the loan transactions for the years indicated follows: (In Thousands) 2025 2024 2023 Balance, beginning of the year $ 892 $ 2,395 $ 1,996 Loans made — 398 521 Repayments 385 55 122 Loans removed due to Board member retirement — 1,846 — Balance, end of year $ 507 $ 892 $ 2,395 The Company had $ 120,000 of unfunded loan commitments to these directors or their related interests on both December 31, 2025 and December 31, 2024. Pledged Loans At December 31, 2025, there were $ 771.1 million loans pledged as collateral to secure available borrowing lines and no loans pledged as collateral to secure public deposits. At December 31, 2024, $ 666.7 million loans were pledged as collateral to secure available borrowing lines and there were no loans pledged as collateral to secure public deposits. 104 NOTE 7 - Purchased Receivables Purchased receivables are carried at their principal amount outstanding, net of an ACL, and have a maturity of less than one year . Income on purchased receivables is accrued and recognized on the balance outstanding using an effective interest method except when management believes doubt exists as to the collectability of the income or principal. There was one nonperforming purchased receivable with a balance of $ 67,000 as of December 31, 2025 for which management is not accruing income and four nonperforming purchased receivables with a balance of $ 3.8 million as of December 31, 2024. However, the Company recognized nonaccrual fee income of $ 899,000 in 2025 related to fees collected on nonaccrual purchased receivables whose principal has been paid down to zero. There is no ACL at December 31, 2025 associated with the $ 67,000 nonperforming and past due purchased receivable balances. The $ 3.6 million ACL at December 31, 2024 is associated with $ 3.8 million nonperforming and past due purchased receivables as of December 31, 2024. The following table summarizes the components of net purchased receivables at December 31, for the years indicated: (In Thousands) 2025 2024 Purchased receivables $ 101,642 $ 77,727 Allowance for credit losses - purchased receivables — ( 3,649 ) Total $ 101,642 $ 74,078 The following table sets forth information regarding changes in the ACL on purchased receivables for the periods indicated: (In Thousands) 2025 2024 2023 Balance at beginning of year $ 3,649 $ — $ — Impact of acquisition of Sallyport Commercial Finance, LLC — 3,524 — Adjustment related to PCD collections payable to sellers 1 ( 1,513 ) — — Charge-offs ( 2,211 ) — — Recoveries 33 — — Charge-offs net of recoveries ( 2,178 ) — — Provision for purchased receivables 42 125 — Balance at end of year $ — $ 3,649 $ — 1 Represents a reduction in the allowance for credit losses on a purchased credit deteriorated purchased receivable acquired in 2024 in connection with the SCF 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. 105 NOTE 8 - Servicing Rights Mortgage servicing rights The following table details the activity in the Company's MSR for the year indicated: (In Thousands) 2025 2024 2023 Balance, beginning of period $ 26,439 $ 19,564 $ 18,635 Purchased MSRs — 2,328 — Additions for new MSR capitalized 4,817 4,748 3,616 Changes in fair value: Due to changes in model inputs of assumptions (1) ( 1,402 ) 1,334 ( 922 ) Other (2) ( 2,380 ) ( 1,535 ) ( 1,765 ) Carrying value, December 31 $ 27,474 $ 26,439 $ 19,564 (1) Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates. (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 the dates indicated: (In Thousands) December 31, 2025 December 31, 2024 Balance of mortgage loans serviced for others $ 1,629,528 $ 1,460,720 Weighted average rate of note 4.77 % 4.46 % MSR as a percentage of serviced loans 1.69 % 1.81 % The Company recognized servicing fees of $ 6.0 million, $ 4.4 million, and $ 3.8 million during 2025, 2024, and 2023, respectively, which includes contractually specified servicing fees and ancillary fees which are included in "Mortgage banking income" 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. See Note 25 of the notes to the Company's Consolidated Financial Statements included in Part II. Item 8 of this report for additional information on key assumptions for MSRs. (In Thousands) December 31, 2025 December 31, 2024 Fair value of MSRs $ 27,474 $ 26,439 Expected weighted-average life (in years) 8.82 9.51 Key assumptions: Constant prepayment rate 1 10.01 % 9.09 % Impact on fair value from 10% adverse change ($ 1,022 ) ($ 935 ) Impact on fair value from 25% adverse change ($ 2,427 ) ($ 2,222 ) Discount rate 10.97 % 10.99 % Impact on fair value from 100 basis point increase ($ 871 ) ($ 1,592 ) Impact on fair value from 200 basis point increase ($ 1,864 ) ($ 2,544 ) Cost to service assumptions ($ per loan) $ 81 $ 81 Impact on fair value from 10% adverse change ($ 239 ) ($ 235 ) Impact on fair value from 25% adverse change ($ 597 ) ($ 588 ) 106 1 Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior. These sensitivities in the preceding table are hypothetical and caution should be exercised when relying on this data. Changes in value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in the assumption to the change in the value may not be linear. Also, the effect of a variation in a particular assumption on the value of the MSR held is calculated independently without changing any other assumptions. In reality, changes in one factor may result in changes in others, which might magnify or counteract the sensitivities. Commercial servicing rights CSRs have a carrying value of $ 2.3 million at December 31, 2025 and $ 2.2 million at December 31, 2024 and total commercial loans serviced for others were $ 296.2 million and $ 279.7 million at December 31, 2025 and 2024, respectively. Key assumptions used in measuring the fair value of CSRs as of December 31, 2025 and 2024 include an average conditional prepayment rate of 11.71 % and 11.38 % and a discount rate of 12.00 % and 12.00 %, respectively. NOTE 9 - Other Real Estate Owned At December 31, 2025 and 2024, the Company held zero assets, respectively, as OREO. The following table details net operating (income) expense related to OREO for the years indicated: Years Ended December 31, (In Thousands) 2025 2024 2023 OREO (income) expense, net rental income and gains on sale: OREO operating expense ($ 11 ) $ 7 $ 16 Impairment on OREO — — 123 Rental income on OREO — — ( 4 ) (Gains)/ losses on sale of OREO — ( 392 ) ( 929 ) Total ($ 11 ) ($ 385 ) ($ 794 ) NOTE 10 - Premises and Equipment The following summarizes the components of premises and equipment at December 31 for the years indicated: (In Thousands) Useful Life 2025 2024 Land $ 4,560 $ 4,560 Furniture and equipment 3 - 7 years 21,207 20,062 Tenant improvements 2 - 15 years 12,491 12,531 Buildings 39 years 43,703 39,381 Total Premises and Equipment 81,961 76,534 Accumulated depreciation and amortization ( 42,269 ) ( 38,777 ) Total Premises and Equipment, Net $ 39,692 $ 37,757 Depreciation and amortization expense was $ 3.5 million, $ 3.6 million, and $ 3.3 million for the years ended December 31, 2025, 2024, and 2023, respectively. NOTE 11 – Leases The Company's lease commitments consist primarily of agreements to lease land and office facilities that it occupies to operate several of its retail locations that are classified as operating leases and are recognized on the balance sheet as right-of-use (“ROU”) asset and lease liabilities. As of December 31, 2025, the Company has operating lease ROU assets of $ 5.9 million and operating lease liabilities of $ 5.9 million. As of December 31, 2024, the Company has operating lease ROU assets of $ 7.5 107 million and operating lease liabilities of $ 7.5 million. The Company does not have any agreements that are classified as finance leases. The following table presents additional information about the Company's operating leases for the years indicated: (In Thousands) 2025 2024 Lease Cost Operating lease cost (1) $ 3,060 $ 2,975 Short term lease cost (1) 247 141 Total lease cost $ 3,307 $ 3,116 Other information Operating leases - operating cash flows $ 2,738 $ 2,779 Weighted average lease term - operating leases, in years 13.25 11.57 Weighted average discount rate - operating leases 3.87 % 3.65 % (1) Expenses are classified within occupancy expense on the Consolidated Statements of Income. The table below reconciles the remaining undiscounted cash flows for the next five years for each twelve-month period presented and the total of the subsequent remaining years to the operating lease liabilities recorded on the balance sheet: (In Thousands) Operating Leases 2026 $ 1,601 2027 1,094 2028 831 2029 662 2030 308 Thereafter 3,238 Total minimum lease payments $ 7,734 Less: amount of lease payment representing interest ( 1,793 ) Present value of future minimum lease payments $ 5,941 NOTE 12 - Goodwill and Intangible Assets A summary of goodwill and intangible assets at December 31, 2025 and 2024, is as follows: (In Thousands) 2025 2024 Intangible assets: Goodwill $ 49,874 $ 50,018 Trade name intangible 950 950 Total $ 50,824 $ 50,968 108 NOTE 13 - Other Assets A summary of other assets as of December 31, 2025 and 2024, is as follows: (In Thousands) 2025 2024 Other assets: Investment in Low Income Housing Partnerships $ 34,078 $ 24,266 Accrued interest receivable 12,542 11,502 Interest rate swaps not designated as hedging instruments, at fair value 7,999 13,011 Due from sale of Pacific Wealth Advisors 6,339 — Bank owned life insurance, net 4,050 3,926 Assets held for deferred compensation plans 3,266 — Prepaid expenses 2,608 2,644 Commercial servicing rights, at fair value 2,342 2,194 Taxes receivable 1,751 1,984 Interest rate lock commitments 923 465 Deferred taxes, net 675 2,177 Software 535 744 Due from Federal Home Loan Bank of Des Moines — 14,600 Equity method investments — 1,159 Other assets 7,064 7,147 Total $ 84,172 $ 85,819 Low Income Housing Partnerships: The following table shows the Company's commitments to invest in various LIHTC partnerships. The Company earns a return on its investments in the form of tax credits and deductions that flow through to it as a limited partner in these partnerships. The Company recognized amortization expense of $ 3.6 million, $ 3.7 million, and $ 3.6 million in 2025, 2024, and 2023, respectively. The Company expects to fund its remaining $ 13.2 million in commitments on these investments through 2041. (In Thousands) Date of original commitment Years over which tax benefits are earned Original commitment amount Less: life to date contributions Remaining commitment amount USA 57 December 2006 15 3,000 ( 3,000 ) — WNC December 2012 16 2,500 ( 2,500 ) — R4 - Coronado March 2013 17 10,729 ( 10,667 ) 62 R4 - MVV May 2014 17 8,528 ( 8,408 ) 120 R4 - PJ33 June 2016 17 6,835 ( 6,695 ) 140 R4 - Coronado II July 2019 17 7,302 ( 7,059 ) 243 R4 - Duke Apartments November 2019 17 3,985 ( 3,855 ) 130 R4 - Aspen House July 2023 17 8,534 ( 8,313 ) 221 R4 - Old Mat II July 2023 17 5,739 ( 5,532 ) 207 R4 - Baxter Borealis July 2025 17 7,560 ( 780 ) 6,780 R4 - Ketchikan PSH July 2025 17 5,847 ( 510 ) 5,337 Total $ 70,559 ($ 57,319 ) $ 13,240 109 NOTE 14 - Deposits Deposits: At December 31, 2025, the scheduled maturities of certificates of deposit are as follows: (In Thousands) 2026 $ 369,196 2027 28,690 2028 2,213 2029 862 2030 233 Thereafter 1,565 Total $ 402,759 The Company offers IntraFi ® Network Deposits SM as a member of IntraFi® Network SM (Network). When a Network member places a deposit using IntraFi Network Deposits, that certificate of deposit or interest-bearing demand deposit account is divided into amounts under the standard FDIC insurance maximum ($250,000) and is allocated among member banks, making the large deposit eligible for FDIC insurance. In addition to customer deposit placement, the IntraFi Network Deposits also allows placement of the Bank's own investment dollars. The Company had $ 50.0 million in IntraFi Network Deposits certificates of deposits and $ 589.5 million in IntraFi Network Deposits in deposit accounts at December 31, 2025 and $ 49.2 million in IntraFi Network Deposits certificates of deposits and $ 461.1 million in IntraFi Network Deposits in deposit accounts at December 31, 2024. At December 31, 2025 and 2024, the Company held $ 2.4 million and $ 2.9 million, respectively, in deposits for related parties, including directors, executive officers, and their affiliates. At December 31, 2025 and 2024, the Company reclassified $ 544,000 and $ 547,000 , respectively, in overdrafts from deposits to loans. NOTE 15 - Borrowings The Company has a maximum line of credit with the FHLB approximating 45 % of eligible assets, however the Company is subject to provisions under Alaska state law, which generally limit the amount of the Bank's outstanding debt to 15 % of total assets or $ 490.6 million at December 31, 2025 and $ 454.1 million at December 31, 2024. FHLB advances are subject to collateral criteria that require the Company to pledge assets under a blanket pledge arrangement as collateral for its borrowings from the FHLB. Based on assets currently pledged and advances currently outstanding at December 31, 2025, the Company's available borrowing line is $ 433.05 million, representing approximately 13 % of total assets. Additional advances of up to 45 % of eligible assets, or $ 1.48 billion, are dependent on the availability of acceptable collateral such as marketable securities or real estate loans, although all FHLB advances are secured by a blanket pledge of the Company’s assets. The Company has outstanding FHLB advances of $ 12.8 million and $ 13.2 million as of December 31, 2025 and 2024, respectively, which were originated to match fund low income housing projects that qualify for long-term fixed interest rates. These advances have original terms of either 18 or 20 years with 30 year amortization periods and fixed interest rates ranging from 1.23 % to 3.25 %. The Federal Reserve Bank is holding $ 70 million of securities as collateral to secure available borrowing lines through the discount window of $ 69.2 million at December 31, 2025. There were no discount window advances outstanding at December 31, 2025 and 2024. The Company paid less than $ 1,000 in interest in 2025 and 2024 on this agreement. Securities sold under agreements to repurchase were zero for both December 31, 2025 and 2024. 110 The future principal payments that are required on the Company’s borrowings as of December 31, 2025, are as follows: (In Thousands) 2026 $ 453 2027 462 2028 474 2029 485 2030 498 Thereafter 10,433 Total $ 12,805 The Company recognized interest expense of $ 1.5 million, $ 1.0 million, and $ 1,783,000 on borrowings and securities sold under repurchase agreements in 2025, 2024, and 2023, respectively. The average interest rates paid on long-term debt in the same periods was 3.76 %, 3.13 %, and 2.93 %, respectively. NOTE 16 - Subordinated Debentures In December of 2005, the Company formed a wholly-owned Connecticut statutory business trust subsidiary, Northrim Statutory Trust 2 (the “Trust 2”), which issued $ 10 million of guaranteed undivided beneficial interests in the Company’s Junior Subordinated Deferrable Interest Debentures (“Trust Preferred Securities 2”). These debentures qualify as Tier 1 capital under Federal Reserve Board guidelines. All of the common securities of Trust 2 are owned by the Company. The proceeds from the issuance of the common securities and the Trust Preferred Securities 2 were used by Trust 2 to purchase $ 10.3 million of junior subordinated debentures of the Company. Trust 2 is not consolidated in the Company’s financial statements in accordance with GAAP; therefore, the Company has recorded its investment in Trust 2 as an other asset and the subordinated debentures as a liability. The debentures, which represent the sole asset of Trust 2, accrue and pay distributions quarterly at a variable rate of 90 -day CME SOFR plus tenor spread adjustment 0.26 % plus 1.37 % per annum, adjusted quarterly, of the stated liquidation value of $ 1,000 per capital security as of December 31, 2024. The interest rate on these debentures was 5.35 % at December 31, 2025 compared to 5.99 % at December 31, 2024. The interest cost to the Company on these debentures was $ 612,000 , $ 717,000 , and $ 693,000 in 2025, 2024, and 2023, respectively. The Company has entered into contractual arrangements which, taken collectively, fully and unconditionally guarantee payment of: (i) accrued and unpaid distributions required to be paid on the Trust Preferred Securities 2; (ii) the redemption price with respect to any Trust Preferred Securities 2 called for redemption by Trust 2; and (iii) payments due upon a voluntary or involuntary dissolution, winding up or liquidation of Trust 2. The Trust Preferred Securities 2 are mandatorily redeemable upon maturity of the debentures on March 15, 2036, or upon earlier redemption as provided in the indenture. The Company has the right to redeem the debentures purchased by Trust 2 in whole or in part, on or after March 15, 2011. As specified in the indenture, if the debentures are redeemed prior to maturity, the redemption price will be the principal amount and any accrued but unpaid interest. 111 In November of 2025, the Company issued and sold $ 60.0 million in aggregate principal amount of its 6.875 % Fixed-to-Floating Rate Subordinated Notes due 2035 (the “Subordinated Notes”). The Subordinated Notes were issued by the Company to the Purchasers at a price equal to 100 % of their face amount. The Subordinated Notes mature on December 1, 2035 and bear interest at a fixed rate of 6.875 % per year, from November 26, 2025 to, but excluding, December 1, 2030 or the date of earlier redemption, payable semi-annually in arrears. From and including December 1, 2030 to, but excluding, the maturity date or earlier redemption date, the interest rate will reset quarterly at a variable rate equal to the then current three-month SOFR, plus 3.48 % per annum, payable quarterly in arrears. As provided in the Subordinated Notes, the interest rate on the Subordinated Notes during the applicable floating rate period may be determined based on a rate other than three-month term SOFR. The interest cost to the Company on these debentures was $ 401,000 in 2025. The Company incurred debt issuance costs of $ 1.4 million which will amortize through December 1, 2035. The amortization expense amounted to $ 14,000 in 2025. Prior to December 1, 2030, the Company may redeem the Subordinated Notes, in whole but not in part, only under certain limited circumstances set forth in the indenture governing the Subordinated Notes. On or after December 1, 2030, the Company may redeem the Subordinated Notes, in whole or in part, at its option, on any interest payment date. Any redemption by the Company would be at a redemption price equal to 100 % of the principal amount of the Subordinated Notes being redeemed, together with any accrued and unpaid interest on the Subordinated Notes being redeemed to, but excluding, the date of redemption. The Subordinated Notes are not subject to redemption at the option of the holder. Principal and interest on the Subordinated Notes are subject to acceleration only in limited circumstances in the case of certain bankruptcy and insolvency-related events with respect to the Company. The Subordinated Notes are unsecured, subordinated obligations of the Company, are not obligations of, and are not guaranteed by, any subsidiary of the Company, and rank junior in right of payment to the Company’s current and future senior indebtedness. The Subordinated Notes are intended to qualify as Tier 2 capital of the Company for regulatory capital purposes. NOTE 17 – Accumulated Other Comprehensive Income (Loss) The following table shows changes in accumulated other comprehensive income (loss) by component for the years ended December 31, 2025, 2024, and 2023: (In Thousands) Unrealized gains (losses) on securities available for sale Unrealized gains (losses) on derivatives and hedging Reclassification of net gains included in net income Foreign currency translation adjustments Total Balance at December 31, 2022 ($ 30,122 ) $ 1,041 $ — $ — ($ 29,081 ) Other comprehensive income (loss), net of tax benefit of $( 5,023 ) 12,707 ( 63 ) — — 12,644 Balance at December 31, 2023 ($ 17,415 ) $ 978 $ — $ — ($ 16,437 ) Other comprehensive income (loss), net of tax benefit of $( 3,739 ) 9,119 294 — — 9,413 Balance at December 31, 2024 ($ 8,296 ) $ 1,272 $ — $ — ($ 7,024 ) Other comprehensive income (loss), net of tax benefit of $( 3,007 ) 7,815 ( 244 ) 1 71 7,643 Balance at December 31, 2025 ($ 481 ) $ 1,028 $ 1 $ 71 $ 619 112 NOTE 18 - Employee Benefit Plans Employees of the Company are eligible to participate in the Company's 401(k) plan immediately upon date of hire. Employees may elect to have a portion of their salary contributed to the 401(k) plan in accordance with Section 401(k) of the Internal Revenue Code of 1986 (the “Code”). The Company provides for a mandatory $ 1.00 match for each $1.00 contributed by employees of the Bank up to 6 % of the employee’s eligible salary. The Company provides for a mandatory $ 1.00 match for each $1.00 contributed by employees of RML up to 3 % of the employee’s eligible salary. The Bank or RML may increase the matching contribution at the discretion of the Board of Directors. The Company expensed $ 2.9 million, $ 2.1 million, and $ 2.0 million, in 2025, 2024, and 2023, respectively, for 401(k) contributions and included this expense in “Salaries and other personnel expense” in the Consolidated Statements of Income. The Bank has a Supplemental Executive Retirement Plan (“SERP”) for executive officers of the Bank whose retirement benefits under the 401(k) plan have been limited under provisions of the Code. While contributions to this plan were halted in 2025, the Bank still has liabilities related to the SERP. Contributions to this plan totaled zero , $ 397,000 , and $ 350,000 , in 2025, 2024, and 2023, respectively. These expenses are included in “Salaries and other personnel expense” in the Consolidated Statements of Income. At December 31, 2025 and 2024, the balance of the accrued liability for this plan was included in “Other liabilities” and totaled $ 2.6 million and $ 2.5 million, respectively. The Bank redirected employer contributions from the SERP in 2025 to the individual participant accounts under the Northrim non-qualified deferred compensation plan. Existing balances in the SERP will be paid out accordingly. Contributions in 2025 for this plan, which formerly would have been made to the SERP plan, were $ 256,000 in 2025 and are also included in “Salaries and other personnel expense” in the Consolidated Statements of Income. RML has a non-qualified deferred compensation plan (“DCP”), under which RML has agreed to make payment to certain key executives and loan officers, based on contributions made by RML to the plan. Contributions and earnings made to the participant accounts for the DCP are vested over ten years . The Company recorded expenses of $ 374,000 , $ 380,000 , and $ 333,000 in 2025, 2024, and 2023, respectively. RML's recorded obligation under the DCP amounted to $ 939,000 and $ 2.1 million at December 31, 2025 and 2024, respectively, and was included in “Other liabilities”. The Bank also has a non-qualified deferred compensation plan in which certain former executive officers participate. The Bank's net liability under this plan is dependent upon market gains and losses on assets held in the plan. The Bank recognized an increase in its liability of $ 59,000 in 2025, a increase in its liability of $ 24,000 in 2024, and a decrease in its liability of $ 10,000 in 2023. These changes are included in “Salaries and other personnel expense” in the Consolidated Statements of Income. At both December 31, 2025 and 2024, the balance of the accrued liability for this plan was included in “Other liabilities” and totaled $ 1.8 million. All employees of the Bank employed on the last day of the calendar year or retired during the year are eligible and will participate in the Profit Sharing Plan. The aggregate amount to be paid to employees under the Profit Sharing Plan is determined using Company-wide performance goals that are established by the Compensation Committee of the Board of Directors. If the performance goals are met for the year, profit sharing for the period is calculated based on a formula that is also approved by the Compensation Committee each year. The Compensation Committee has complete discretion to designate an employee as ineligible for profit sharing, or to adjust the amount of profit share payments by individual employee or in aggregate. Profit share expense was $ 6.3 million, $ 5.2 million, and $ 2.5 million for 2025, 2024, and 2023, respectively. At both December 31, 2025 and 2024, the Company had accrued $ 2.0 million, related to employee's paid time off benefit. The balance of the accrued liability for this plan was included in “Other liabilities”. SCF employees are currently offered benefits under the Professional Employer Organization (“PEO”), TriNet. Under the PEO arrangement, SCF employees are eligible to participate in a safe harbor retirement plan that matches 100 % up to 3 % of compensation, and then anything over 3 % compensation is matched at 50 % up to 5 % of eligible compensation. SCF employees are intended to align to Bank's benefits package in 2026, subject to the termination of the PEO arrangement. NOTE 19 - Commitments and Contingencies Employee benefit plans: The Company is self-insured for medical, dental, and vision plan benefits provided to employees. The Company has obtained stop-loss insurance to limit total medical claims in any one year to $ 250,000 per covered individual. The Company has established a liability for outstanding incurred but unreported claims. While management 113 uses what it believes are pertinent factors in estimating the liability, it is subject to change due to claim experience, type of claims, and rising medical costs. Legal proceedings: The Company from time to time may be involved with disputes, claims, and litigation related to the conduct of its banking business. In the opinion of management, the resolution of these matters will not have a material effect on the Company’s financial position, results of operations, or cash flows. Financial Instruments with Off-Balance Sheet Risk: In the ordinary course of business, the Company enters into various types of transactions that involve financial instruments with off-balance sheet risk. These instruments include commitments to extend credit and standby letters of credit and are not reflected in the accompanying balance sheets. These transactions may involve to varying degrees credit and interest rate risk in excess of the amount, if any, recognized in the balance sheets. Certain commitments are collateralized. We apply the same credit standards to these commitments as in all of our lending activities and include these commitments in our lending risk evaluations. Management does not anticipate any loss as a result of these commitments. The Company’s off-balance sheet credit risk exposure is the contractual amount of commitments to extend credit and standby letters of credit. The Company applies the same credit standards to these contracts as it uses in its lending process. The following table presents the off-balance sheet commitments as of December 31, 2025 and December 31, 2024: (In Thousands) 2025 2024 Off-balance sheet commitments: Commitments to extend credit $ 611,719 $ 494,633 Commitments to originate loans held for sale $ 45,704 $ 32,299 Standby letters of credit $ 3,632 $ 2,558 Commitments to extend credit are agreements to lend to customers. These commitments have specified interest rates and generally have fixed expiration dates but may be terminated by the Company if certain conditions of the contract are violated. Our exposure to credit loss under commitments to extend credit is represented by the amount of these commitments. Although currently subject to draw down, many of the commitments do not necessarily represent future cash requirements. Collateral held relating to these commitments varies, but generally includes real estate, inventory, accounts receivable, and equipment. Mortgage loans sold to investors may be sold with servicing rights released, for which the Company makes only standard legal representations and warranties as to meeting certain underwriting and collateral documentation standards. In the past two years, the Company has had to repurchase ten loans due to deficiencies in underwriting or loan documentation and has not realized significant losses related to these loans. Management believes that any liabilities that may result from such recourse provisions are not significant. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Credit risk arises in these transactions from the possibility that a customer may not be able to repay the Company upon default of performance. Collateral held for standby letters of credit is based on an individual evaluation of each customer’s creditworthiness. Total unfunded commitments were $ 661.1 million and $ 529.5 million at December 31, 2025 and 2024, respectively. The Company does not expect that all of these commitments are likely to be fully drawn upon at any one time. The Company has an ACL related to these commitments and letters of credit that is recorded in "Other liabilities" on the Consolidated Balance Sheets. The ACL for unfunded commitments was $ 2.7 million and $ 2.3 million as of December 31, 2025 and 2024, respectively. Capital Expenditures and Commitments: At December 31, 2025, the Company has $ 1.5 million capital commitments related to new branch construction and renovations. There were no other material changes outside of the ordinary course of business to any of our material contractual obligations during 2025. 114 NOTE 20 - Derivatives Derivatives related to community banking activities The Company enters into commercial loan interest rate swaps with commercial banking customers which are offset with a corresponding swap agreement with a third party financial institution (“counterparty”). The Company has agreements with its counterparties that contain provisions that provide that if the Company fails to maintain its status as a "well-capitalized" institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements. These agreements also require that the Company and the counterparty collateralize any fair value shortfalls that exceed $ 250,000 with eligible collateral, which includes cash and securities backed with the full faith and credit of the federal government. 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 $ 596,000 and $ 579,000 in available for sale securities to collateralize fair value shortfalls on interest rate swap agreements as of December 31, 2025 and 2024, respectively. The Company had interest rate swaps related to commercial loans with an aggregate notional amount of $ 358.6 million and $ 309.0 million at December 31, 2025 and 2024, respectively. At December 31, 2025, the notional amount of interest rate swaps is made up of 27 variable to fixed rate swaps to commercial loan customers totaling $ 179.3 million, and 27 fixed to variable rate swap with a counterparty totaling $ 179.3 million. Changes in fair value from these 54 interest rate swaps offset each other in both 2025 and 2024. The Company recognized $ 472,000 , $ 540,000 , and $ 61,000 in fee income related to interest rate swaps in 2025 and 2024, and 2023, respectively. Interest rate swap income is recorded in other operating income on the Consolidated Statements of Income. None of these interest rate swaps are designated as hedging instruments. The Company has an interest rate swap to hedge the variability in cash flows arising out of its junior subordinated debentures, which is floating rate debt, by swapping the cash flows with an interest rate swap which receives floating and pays fixed. The Company has designated this interest rate swap as a hedging instrument. The interest rate swap effectively fixes the Company's interest payments on the $ 10.0 million of junior subordinated debentures held under Trust 2 at 3.72 % through its maturity date.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 5.35 % as of December 31, 2025 and 5.99 % as of December 31, 2024. 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 December 31, 2025 and 2024, respectively. Changes in the fair value of this interest rate swap are reported in other comprehensive income. The unrealized gain, net of tax on this interest rate swap was $ 1.0 million as of December 31, 2025 and the unrealized gain, net of tax on this interest rate swap was $ 1.3 million as of December 31, 2024. Derivatives swaps related to home mortgage lending activities The Company also uses derivatives to hedge the risk of changes in the fair values of interest rate lock commitments. The Company enters into commitments to originate residential mortgage loans at specific rates; the value of these commitments are detailed in the table below as “interest rate lock commitments”. In addition, the Company hedges the interest rate risk associated with its residential mortgage loan commitments, which are referred to as "retail interest rate contracts" in the table below. Market risk with respect to commitments to originate loans arises from changes in the value of contractual positions due to changes in interest rates. At December 31, 2025 and 2024, RML had commitments to originate mortgage loans held for sale totaling $ 45.7 million and $ 32.3 million, 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 home mortgage lending derivatives are designated as hedging instruments. 115 The following table presents the fair value of derivatives not designated as hedging instruments as of the dates noted: (In Thousands) Asset Derivatives December 31, 2025 December 31, 2024 Balance Sheet Location Fair Value Fair Value Interest rate swaps Other assets $ 7,999 $ 13,011 Interest rate lock commitments Other assets 923 465 Retail interest rate contracts Other assets — 49 Total $ 8,922 $ 13,525 (In Thousands) Liability Derivatives December 31, 2025 December 31, 2024 Balance Sheet Location Fair Value Fair Value Interest rate swaps Other liabilities $ 7,999 $ 13,011 Retail interest rate contracts Other liabilities 50 — Total $ 8,049 $ 13,011 The following table presents the net gains (losses) of derivatives not designated as hedging instruments as of the dates noted: (In Thousands) Income Statement Location December 31, 2025 December 31, 2024 Retail interest rate contracts Mortgage banking income ($ 664 ) $ 177 Interest rate lock commitments Mortgage banking income 444 111 Total ($ 220 ) $ 288 Our derivative transactions with counterparties under International Swaps and Derivatives Association master agreements include “right of set-off” provisions. “Right of set-off” provisions are legally enforceable rights to offset recognized amounts and there may be an intention to settle such amounts on a net basis. We do not offset such financial instruments for financial reporting purposes. 116 The following table summarizes the derivatives that have a right of offset as of December 31, 2025 and 2024: December 31, 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 Asset Derivatives Interest rate swaps $ 7,999 $ — $ 7,999 $ — $ — $ 7,999 Liability Derivatives Interest rate swaps $ 7,999 $ — $ 7,999 $ — $ 7,999 $ — Retail interest rate contracts 50 — 50 — — 50 December 31, 2024 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 Asset Derivatives Interest rate swaps $ 13,011 $ — $ 13,011 $ — $ — $ 13,011 Retail interest rate contracts 49 — 49 — — 49 Liability Derivatives Interest rate swaps $ 13,011 $ — $ 13,011 $ — $ 13,011 $ — NOTE 21 - Common Stock Quarterly cash dividends were paid aggregating to $ 14.5 million, $ 13.8 million, and $ 13.6 million, or $ 0.640 per share, $ 0.615 per share, and $ 0.600 per share, in 2025, 2024, and 2023, respectively. On January 26, 2026, the Company announced that its Board of Directors declared a $ 0.16 per share cash dividend payable on March 13, 2026, to shareholders of record on March 5, 2026. Federal and State regulations place certain limitations on the payment of dividends by the Company. NOTE 22 - Stock-Based Compensation The Company adopted the 2025 Stock Incentive Plan (“2025 Plan”) following shareholder approval of the 2025 Plan at the 2025 Annual Meeting. Subsequent to the adoption of the 2025 Plan, no additional grants may be issued under the prior plans. The 2025 Plan provides for grants of up to 1,300,000 shares, which includes any shares subject to stock awards under the Company's previous stock incentive plans. Stock Options: Under the 2020 Stock Incentive Plan and previous plans, certain key employees have been granted the option to purchase set amounts of common stock at the market price on the day the option was granted. Optionees, at their own discretion, may pay cash to cover the cost of exercise, may cover the cost of exercise through the exchange at the then fair value of already owned shares of the Company’s stock, or they may cover the cost of exercise through net settlement of a portion of the stock options exercised in satisfaction of the exercise price and applicable tax withholding requirements. The two latter 117 options are referred to as cashless stock option exercises. Options are granted for a 10-year period and vest on a pro-rata basis over the initial three years from the grant date. The Company measures the fair value of each stock option at the date of grant using the Black-Scholes option pricing model using assumptions noted in the following table. Expected volatility is based on the historical volatility of the price of the Company’s common stock. The Company uses historical data to estimate option exercise and stock option forfeiture rates within the valuation model. The expected term of options granted is determined based on historical experience with similar options and represents the period of time that options granted are expected to be outstanding. The expected dividend yield is based on dividend trends and the market value of the Company’s common stock at the time of grant. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. There were no stock options granted in 2025, 2024, or 2023. The following table summarizes stock option activity during 2025: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life, in Years Outstanding at January 1, 2025 333,568 $ 8.87 Granted — — Forfeited — — Exercised ( 73,096 ) 8.34 Outstanding at December 31, 2025 260,472 $ 9.02 3.66 At December 31, 2025, 2024, and 2023, there were 260,472 , 333,568 , and 403,320 options exercisable, with weighted average exercise prices of $ 9.02 , $ 8.87 , and $ 8.70 , respectively. The aggregate intrinsic value of the stock options is the total pretax intrinsic value (i.e., the difference between the Company’s closing stock price on December 31, 2025 and the exercise price, times the number of shares) that would have been received by the option holders had all the option holders exercised their options on December 31, 2025. This amount changes based on the fair value of the Company’s stock. The total intrinsic value of options outstanding and exercisable as of December 31, 2025, 2024, and 2023 was $ 4.6 million, $ 3.5 million, and $ 2.3 million, respectively. The total intrinsic value of options exercised for the years ended December 31, 2025, 2024, and 2023 was $ 1.1 million, $ 628,000 , and $ 355,000 , respectively. As noted above, the Company allows stock options to be exercised through cash or cashless transactions. In each of 2025, 2024, and 2023 the Company received no cash for cash stock option exercises. In 2025, 2024, and 2023 the Company net settled $ 609,000 , $ 699,000 , and $ 445,000 respectively, for cashless stock option exercises. The Company withheld $ 822,000 , $ 851,000 , and $ 534,000 to pay for stock option exercises or income taxes that resulted from the exercise of stock options in 2025, 2024, and 2023, respectively. For the years ended December 31, 2025, 2024 and 2023, the Company recognized zero , $ 33,000 , and $ 74,000 , respectively, in stock option compensation expense. As of December 31, 2025, there was no unrecognized compensation expense related to non-vested options. Restricted Stock Units: Under the 2025 Plan, the Company grants restricted stock units to certain key employees periodically. Recipients of restricted stock units do not pay any cash consideration to the Company for the shares and receive all dividends with respect to such shares when the shares vest. Restricted stock units cliff vest at the end of a three-year time period. 118 The following table summarizes restricted stock unit activity during 2025: Number of Shares Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Life, in Years Outstanding at January 1, 2025 193,196 $ 11.82 Granted 70,980 17.12 Dividend equivalents awarded 6,796 — Vested ( 336 ) 21.95 Forfeited ( 9,004 ) 14.14 Outstanding at December 31, 2025 261,632 $ 13.31 2.72 The total intrinsic value of restricted stock units vested for the years ended December 31, 2025, 2024, and 2023 was $ 7,000 , $ 1.4 million, and $ 1.1 million, respectively. For the years ended December 31, 2025, 2024 and 2023, the Company recognized $ 993,000 , $ 670,000 , and $ 751,000 , respectively, in restricted stock unit compensation expense. As of December 31, 2025, there was approximately $ 1.6 million of total unrecognized compensation expense related to non-vested units, which is expected to be recognized over the weighted-average vesting period of 2.7 years. Performance Stock Units: Under the 2025 Plan, the Company grants performance stock units to certain key employees periodically. Recipients of performance stock units do not pay any cash consideration to the Company for the shares and receive all dividends with respect to such shares when the shares vest. Performance stock units cliff vest at the end of a three-year time period if the performance criteria are met. The following table summarizes performance stock unit activity during 2025: Number of Shares Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Life, in Years Outstanding at January 1, 2025 65,292 $ 11.25 Granted 27,676 17.24 Dividend equivalents awarded 2,427 — Vested — — Forfeited — — Outstanding at December 31, 2025 95,395 $ 13.14 1.92 The Company recognized $ 741,000 and $ 209,000 for the years ended December 31, 2025 and 2024 in performance stock unit compensation expense and $ 111,000 for the year ended December 31, 2023. As of December 31, 2025, there was approximately $ 668,000 of total unrecognized compensation expense related to non-vested units, which is expected to be recognized over the weighted-average vesting period of 1.9 years. NOTE 23 - Regulatory Matters The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum requirements can initiate certain mandatory, and possibly discretionary, actions by regulators that, if undertaken, could have a direct material effect on a company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory practices. The Company’s and the Bank’s capital amounts and classification are also subject to qualitative judgment by the regulators about components, risk weightings, and other factors. 119 Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain minimum amounts and ratios (set forth in the following table) of total capital, Tier 1 capital, and common equity Tier 1 to risk-weighted assets, and of Tier 1 capital to average assets (as defined in the regulations). The tables below illustrate the capital requirements for the Company and the Bank and the actual capital ratios for each entity that exceed these requirements. The dividends that the Bank pays to the Company are limited to the extent necessary for the Bank to meet the regulatory requirements of a “well-capitalized” bank. Some capital ratios for the Company exceed those for the Bank primarily because the $ 10 million trust preferred securities offerings that the Company completed in the fourth quarter of 2005 and the $60 million in Subordinated Notes completed in the fourth quarter of 2025 are included in the Company’s capital for regulatory purposes although they are accounted for as a liability in its financial statements. The trust preferred securities and Subordinated Notes are not included in the Bank's capital ratios. Northrim BanCorp, Inc. Actual Adequately-Capitalized Well-Capitalized (In Thousands) Amount Ratio Amount Ratio Amount Ratio As of December 31, 2025: Common equity tier 1 capital (to risk-weighted assets) $ 275,363 10.38 % $ 119,377 ≥ 4.5 % NA NA Total Capital (to risk-weighted assets) $ 370,333 13.95 % $ 212,377 ≥ 8 % NA NA Tier I Capital (to risk-weighted assets) $ 285,173 10.75 % $ 159,166 ≥ 6 % NA NA Tier I Capital (to average assets) $ 285,173 8.77 % $ 130,068 ≥ 4 % NA NA As of December 31, 2024: Common equity tier 1 capital (to risk-weighted assets) $ 223,362 9.36 % $ 107,386 ≥ 4.5 % NA NA Total Capital (to risk-weighted assets) $ 261,059 10.94 % $ 190,902 ≥ 8 % NA NA Tier I Capital (to risk-weighted assets) $ 233,080 9.76 % $ 143,287 ≥ 6 % NA NA Tier I Capital (to average assets) $ 233,080 7.68 % $ 121,396 ≥ 4 % NA NA Northrim Bank Actual Adequately-Capitalized Well-Capitalized (In Thousands) Amount Ratio Amount Ratio Amount Ratio As of December 31, 2025: Common equity tier 1 capital (to risk-weighted assets) $ 311,964 11.84 % $ 118,567 ≥ 4.5 % $ 171,264 ≥ 6.5 % Total Capital (to risk-weighted assets) $ 337,124 12.79 % $ 210,867 ≥ 8 % $ 263,584 ≥ 10 % Tier I Capital (to risk-weighted assets) $ 311,964 11.84 % $ 158,090 ≥ 6 % $ 210,786 ≥ 8 % Tier I Capital (to average assets) $ 311,964 9.61 % $ 129,850 ≥ 4 % $ 162,312 ≥ 5 % As of December 31, 2024: Common equity tier 1 capital (to risk-weighted assets) $ 218,664 9.20 % $ 106,955 ≥ 4.5 % $ 154,491 ≥ 6.5 % Total Capital (to risk-weighted assets) $ 246,643 10.37 % $ 190,274 ≥ 8 % $ 237,843 ≥ 10 % Tier I Capital (to risk-weighted assets) $ 218,664 9.20 % $ 142,607 ≥ 6 % $ 190,143 ≥ 8 % Tier I Capital (to average assets) $ 218,664 7.24 % $ 120,809 ≥ 4 % $ 151,011 ≥ 5 % As of the most recent notification from its regulatory agencies, the Bank was categorized as "well-capitalized" under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank’s regulatory capital category. Management believes, as of December 31, 2025, that the Company and Bank meets all capital adequacy requirements to which they are subject. 120 NOTE 24 - Income Taxes Components of the provision for income taxes for the periods indicated are as follows: (In Thousands) Current Tax Expense (Benefit) Deferred Expense (Benefit) Total Expense 2025: Federal $ 12,493 ($ 1,068 ) $ 11,425 State 5,329 ( 438 ) 4,891 Amortization of investment in low income housing tax credit partnerships 3,595 — 3,595 Total $ 21,417 ($ 1,506 ) $ 19,911 2024: Federal $ 3,995 ($ 102 ) $ 3,893 State 2,453 ( 50 ) 2,403 Amortization of investment in low income housing tax credit partnerships 3,727 — 3,727 Total $ 10,175 ($ 152 ) $ 10,023 2023: Federal $ 1,120 $ 388 $ 1,508 State 944 192 1,136 Amortization of investment in low income housing tax credit partnerships 3,570 — 3,570 Total $ 5,634 $ 580 $ 6,214 The actual expense for 2025, 2024, and 2023, differs from the “expected” tax expense (computed by applying the U.S. Federal Statutory Tax Rate of 21% for the years ended December 31, 2025, 2024 and 2023) as follows: 2025 2024 2023 (In Thousands) Amount Percent Amount Percent Amount Percent US Federal statutory rate $ 17,749 21.0 % $ 9,869 21.0 % $ 6,638 21.0 % State and local income taxes (net of federal income tax effect) 1 3,864 4.6 % 1,898 4.0 % 897 2.8 % Tax Credits Low income housing tax credits ( 3,098 ) ( 3.7 ) % ( 3,571 ) ( 7.6 ) % ( 3,627 ) ( 11.5 ) % Nontaxable or nondeductible items Tax-exempt interest on investment securities and loans ( 470 ) ( 0.6 ) % ( 456 ) ( 1.0 ) % ( 459 ) ( 1.5 ) % Other Amortization of investment in low income housing tax credit partnerships, net 2,390 2.8 % 3,105 6.6 % 3,192 10.1 % Other ( 524 ) ( 0.6 ) % ( 822 ) ( 1.7 ) % ( 427 ) ( 1.4 ) % Total $ 19,911 23.6 % $ 10,023 21.3 % $ 6,214 19.7 % 1 The state and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category is Alaska. 121 The components of the net deferred tax asset for the periods indicated are as follows: (In Thousands) 2025 2024 2023 Deferred Tax Asset: Allowance for credit losses $ 6,650 $ 6,284 $ 5,347 Loan fees, net of costs 347 660 649 Interest income, nonaccrual loans 331 413 356 Deferred compensation 1,684 1,772 1,674 Equity compensation 918 502 466 Operating lease liabilities 1,689 1,996 2,585 Accrued liabilities 2,319 1,967 941 Unrealized loss, net of gains on available for sale investment securities 191 3,295 6,918 Unrealized loss, net of gains on marketable equity securities — — 126 Other — 234 280 Total Deferred Tax Asset $ 14,129 $ 17,123 $ 19,342 Deferred Tax Liability: Intangible amortization ($ 3,523 ) ($ 3,112 ) ($ 2,746 ) Mortgage servicing rights ( 7,341 ) ( 8,024 ) ( 6,065 ) Depreciation and amortization ( 555 ) ( 1,051 ) ( 1,463 ) Operating lease right-of-use assets ( 1,681 ) ( 1,990 ) ( 2,585 ) Unrealized gain, net of loss on marketable equity securities ( 53 ) ( 6 ) — Other ( 301 ) ( 763 ) ( 719 ) Total Deferred Tax Liability ($ 13,454 ) ($ 14,946 ) ($ 13,578 ) Net Deferred Tax Asset $ 675 $ 2,177 $ 5,764 A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. The primary source of recovery of the deferred tax asset will be future taxable income. Management believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax asset. The deferred tax asset is included in "Other assets" in the Consolidated Balance Sheets. As of December 31, 2025, the Company had no unrecognized tax benefits. The tax years subject to examination by federal taxing authorities and by the State of Alaska are the years ending December 31, 2025, 2024, 2023, and 2022. The amount of cash income taxes paid by the Company for the periods indicated were as follows: (In Thousands) 2025 2024 2023 Federal $ 12,400 $ 4,451 $ 1,500 Alaska 4,875 2,130 475 Other State and Local 316 139 56 Total $ 17,591 $ 6,720 $ 2,031 NOTE 25 - Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis 122 Investment securities available for sale and marketable equity securities: Fair values are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. Servicing rights: MSR and CSR are measured at fair value on a recurring basis. These assets are classified as Level 3 as quoted prices are not available. In order to determine the fair value of MSR and CSR, the present value of net expected future cash flows is estimated. Assumptions used include market discount rates, anticipated prepayment speeds, escrow calculations, delinquency rates, and ancillary fee income net of servicing costs. Derivative instruments: The fair value of the interest rate lock commitments are estimated using quoted or published market prices for similar instruments, adjusted for factors such as pull-through rate assumptions based on historical information, where appropriate. The pull-through rate assumptions are considered Level 3 valuation inputs and are significant to the interest rate lock commitment valuation; as such, the interest rate lock commitment derivatives are classified as Level 3. 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 December 31, 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. Commitments to extend credit and standby letters of credit : The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligation with the counterparties at the reporting date. Assets Subject to Nonrecurring Adjustment to Fair Value: The Company is also required to measure certain assets such as equity method investments, goodwill, intangible assets, loans held for sale, impaired loans, and OREO at fair value on a nonrecurring basis in accordance with GAAP. Any nonrecurring adjustments to fair value usually result from the writedown of individual assets. The Company uses either in-house evaluations or external appraisals to estimate the fair value of OREO and loans individually evaluated for credit losses as of each reporting date. In-house appraisals are considered Level 3 inputs and external appraisals are considered Level 2 inputs. The Company’s determination of which method to use is based upon several factors. The Company takes into account compliance with legal and regulatory guidelines, the amount of the loan, the size of the assets, the location and type of property to be valued and how critical the timing of completion of the analysis is to the assessment of value. Those factors are balanced with the level of internal expertise, internal experience and market information available, versus external expertise available such as qualified appraisers, brokers, auctioneers and equipment specialists. Limitations Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. 123 Estimated fair values as of the periods indicated are as follows: December 31, 2025 December 31, 2024 (In Thousands) Carrying Amount Fair Value Carrying Amount Fair Value Financial assets: Level 1 inputs: Cash, due from banks and deposits in other banks $ 145,906 $ 145,906 $ 62,736 $ 62,736 Investment securities available for sale 201,412 201,412 268,781 268,781 Marketable equity securities 8,392 8,392 8,719 8,719 Level 2 inputs: Investment securities available for sale 214,451 214,451 209,836 209,836 Loans held for sale 100,323 100,323 59,957 59,957 Interest rate swaps 9,436 9,436 14,788 14,788 Retail interest rate contracts — — 49 49 Level 3 inputs: Investment securities held to maturity 26,750 26,750 36,750 35,750 Loans 2,295,499 2,225,114 2,129,263 2,014,070 Purchased receivables, net 101,642 101,642 74,078 74,078 Interest rate lock commitments 923 923 465 465 Mortgage servicing rights 27,474 27,474 26,439 26,439 Commercial servicing rights 2,342 2,342 2,194 2,194 Financial liabilities: Level 2 inputs: Time deposits $ 402,759 405,317 $ 418,370 $ 421,210 Borrowings 12,805 10,361 23,045 19,991 Interest rate swaps 7,999 7,999 13,011 13,011 Retail interest rate contracts 50 50 — — Level 3 inputs: Subordinated debentures 68,924 69,564 10,310 10,897 124 The following table sets forth the balances as of the periods indicated of assets measured at fair value on a recurring basis: (In Thousands) Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2025 Assets: Available for sale securities U.S. Treasury and government sponsored entities $ 388,737 $ 201,412 $ 187,325 $ — Municipal securities — — — — Corporate bonds 4,952 4,952 — — Collateralized loan obligations 22,174 — 22,174 — Total available for sale securities $ 420,661 $ 206,364 $ 214,297 $ — Marketable equity securities $ 8,392 $ 8,392 $ — $ — Total marketable equity securities $ 8,392 $ 8,392 $ — $ — Interest rate swaps $ 9,436 $ — $ 9,436 $ — Interest rate lock commitments 923 — — 923 Mortgage servicing rights 27,474 — — 27,474 Commercial servicing rights 2,342 — — 2,342 Total other assets $ 40,175 $ — $ 9,436 $ 30,739 Liabilities: Interest rate swaps $ 7,999 $ — $ 7,999 $ — Total other liabilities $ 8,049 $ — $ 8,049 $ — December 31, 2024 Assets: Available for sale securities U.S. Treasury and government sponsored entities $ 432,931 $ 259,986 $ 172,945 $ — Municipal securities — — — — Corporate bonds 8,795 8,795 — — Collateralized loan obligations 36,891 — 36,891 — Total available for sale securities $ 478,617 $ 268,781 $ 209,836 $ — Marketable equity securities $ 8,719 $ 8,719 $ — $ — Total marketable equity securities $ 8,719 $ 8,719 $ — $ — Interest rate swaps $ 14,788 $ — $ 14,788 $ — Interest rate lock commitments 465 — — 465 Mortgage servicing rights 26,439 — — 26,439 Commercial servicing rights 2,194 — — 2,194 Retail interest rate contracts 49 — 49 — Total other assets $ 43,935 $ — $ 14,837 $ 29,098 Liabilities: Interest rate swaps $ 13,011 $ — $ 13,011 $ — Total other liabilities $ 13,011 $ — $ 13,011 $ — 125 The following table provides a reconciliation of the assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the years ended December 31, 2025 and 2024: (In Thousands) Beginning balance Change included in earnings Purchases and issuances Sales and settlements Ending balance December 31, 2025 Interest rate lock commitments $ 465 ($ 1,957 ) $ 16,317 ($ 13,902 ) $ 923 Mortgage servicing rights 26,439 ( 3,782 ) 4,817 — 27,474 Commercial servicing rights 2,194 ( 334 ) 482 — 2,342 Total $ 29,098 ($ 6,073 ) $ 21,616 ($ 13,902 ) $ 30,739 December 31, 2024 Interest rate lock commitments $ 342 ($ 1,743 ) $ 14,101 ($ 12,235 ) $ 465 Mortgage servicing rights 19,564 ( 201 ) 7,076 — 26,439 Commercial servicing rights 2,200 ( 52 ) 46 — 2,194 Total $ 22,106 ($ 1,996 ) $ 21,223 ($ 12,235 ) $ 29,098 As of and for the years ending December 31, 2025 and 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) December 31, 2025 Loans individually measured for credit losses $ 2,729 $ — $ — $ 2,729 Other real estate owned — — — — Total $ 2,729 $ — $ — $ 2,729 December 31, 2024 Loans individually measured for credit losses $ — $ — $ — $ — Other real estate owned — — — — Total $ — $ — $ — $ — The following table presents the (gains) losses resulting from nonrecurring fair value adjustments for the periods ended December 31, 2025, 2024 and 2023, respectively: (In Thousands) 2025 2024 2023 Loans individually measured for credit losses $ 142 $ — $ — Other real estate owned — — 123 Total (income) loss from nonrecurring measurements $ 142 $ — $ 123 126 Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) The following table provides 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 December 31, 2025 and 2024: Financial Instrument Valuation Technique - Recurring Basis Unobservable Input Weighted Average or Rate Range December 31, 2025 Interest rate lock commitment External pricing model Pull through rate 91.53 % Mortgage servicing rights Discounted cash flow Constant prepayment rate 5.88 % - 20.96 % Discount rate 9.50 % - 11.00 % Commercial servicing rights Discounted cash flow Constant prepayment rate 3.84 % - 17.55 % Discount rate 12.00 % December 31, 2024 Interest rate lock commitment External pricing model Pull through rate 93.35 % Mortgage servicing rights Discounted cash flow Constant prepayment rate 2.01 % - 14.91 % Discount rate 9.50 % - 11.00 % Commercial servicing rights Discounted cash flow Constant prepayment rate 3.13 % - 18.23 % Discount rate 12.00 % Financial Instrument Valuation Technique - Nonrecurring Basis Unobservable Input Weighted Average or Rate Range December 31, 2025 Loans individually measured for credit losses In-house valuation of collateral Discount rate 10 % 127 NOTE 26 - Segment Information The Company's operations are managed along three reportable operating segments: Community Banking, Home Mortgage Lending, and Specialty Finance. The Company reevaluated our reportable operating segments in 2024 concurrent with the acquisition of SCF, which resulted in the addition of the Specialty Finance segment. 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 December 31, 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. The Specialty Finance segment's principal business focus is factoring, asset based lending and alternative working capital solutions to small and medium sized enterprises, and includes SCF and Northrim Funding Services, which was previously reported in the Community Banking segment prior to the acquisition of SCF. The Company's reportable segments are determined by the Chief Financial Officer and the Chief Executive Officer, whom collectively are the designated chief operating decision maker. The reportable segments are determined based on information provided about the Company's products and services offered. They are also distinguished by the level of information provided to the chief operating decision maker, who uses the information to review performance of various components of the business, which are then aggregated if operating performance, products and services, and customers are similar. The chief operating decision maker evaluates the financial performance of the Company's business components such as by evaluating revenue streams, significant expenses, and budget to actual results in assessing the performance of the Company's segments and in the determination of allocating resources. Segment pretax net income or loss is used to assess the performance of the community banking segment by monitoring the margin between interest income and interest expense and the efficiency ratio specific to the segment. Segment pretax net income or loss is used to assess the performance of the home mortgage lending segment by monitoring the premium received on loan sales, the margin between interest income and interest expense, and the profitability of home mortgage servicing activities. Segment pretax net income or loss is used to assess the performance of the specialty finance segment by monitoring the yield of purchased receivable fees. Accounting policies for segments are the same as those described in Note 1 to the Consolidated Financial Statements. Interest expense included in Part II. Item 8 of this report is allocated to each segment based on average cash utilized to fund the operations of the segment and the average cost of interest-bearing liabilities for the consolidated entity. Indirect salary expense for activities such as general management, accounting and finance, human resources, compliance, information technology, risk management, and internal audit are allocated based on the average percentage of employee time spent working in each specific segment. Financial information for the Company's reportable segments and the reconciliation to the consolidated financial results for the periods indicated is shown in the following tables: 128 December 31, 2025 (In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated Interest income $ 157,060 $ 18,087 $ 3,231 $ 178,378 Interest expense 34,427 5,804 2,538 42,769 Net interest income 122,633 12,283 693 135,609 Provision for credit losses 2,338 1,178 394 3,910 Net interest income after provision for credit losses 120,295 11,105 299 131,699 Net realized gains on mortgage loans sold — 16,777 — 16,777 Change in fair value of mortgage loan commitments, net — 346 — 346 Total production revenue — 17,123 — 17,123 Mortgage servicing revenue — 10,822 — 10,822 Change in fair value of mortgage servicing rights: Due to changes in model inputs of assumptions — ( 1,402 ) — ( 1,402 ) Other — ( 2,380 ) — ( 2,380 ) Total mortgage servicing revenue, net — 7,040 — 7,040 Other mortgage banking revenue — 1,074 — 1,074 Total mortgage banking income — 25,237 — 25,237 Purchased receivable income — — 25,806 25,806 Other operating income 26,582 — ( 422 ) 26,160 Total other operating income 26,582 25,237 25,384 77,203 Salaries and other personnel expense 49,080 22,224 7,033 78,337 Data processing expense 11,395 1,112 618 13,125 Occupancy expense 5,557 1,985 280 7,822 Professional and outside services 2,854 1,032 795 4,681 Marketing expense 3,164 547 17 3,728 Insurance expense 3,120 85 7 3,212 Compensation expense - SCF acquisition payments — — 2,333 2,333 Other operating expense 7,230 2,788 1,127 11,145 Total other operating expense 82,400 29,773 12,210 124,383 Income before provision for income taxes 64,477 6,569 13,473 84,519 Provision for income taxes 14,928 1,767 3,216 19,911 Net income $ 49,549 $ 4,802 $ 10,257 $ 64,608 Total assets $ 2,724,236 $ 390,242 $ 175,795 $ 3,290,273 Loans held for sale $ — $ 100,323 $ — $ 100,323 1-4 family residential properties secured by first liens $ — $ 243,185 $ — $ 243,185 Purchased receivables, net $ — $ — $ 101,642 $ 101,642 Goodwill $ 7,525 $ 7,492 $ 34,857 $ 49,874 129 December 31, 2025 (In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated Interest income $ 157,060 $ 18,087 $ 3,231 $ 178,378 Mortgage banking income - external revenue — 25,237 — 25,237 Mortgage banking income - intersegment revenues — 2,945 — 2,945 Purchased receivable income — — 25,806 25,806 Other operating income 26,582 — ( 422 ) 26,160 183,642 46,269 28,615 258,526 Reconciliation of revenue Elimination of intersegment revenues — ( 2,945 ) — ( 2,945 ) Total consolidated revenues $ 183,642 $ 43,324 $ 28,615 $ 255,581 Less: Interest expense 34,427 5,804 2,538 42,769 Provision for credit losses 2,338 1,178 394 3,910 Segment gross profit 146,877 36,342 25,683 208,902 Less (1) : Salaries and other personnel expense $ 49,080 $ 22,224 $ 7,033 $ 78,337 Data processing expense 11,395 1,112 618 13,125 Occupancy expense 5,557 1,985 280 7,822 Professional and outside services 2,854 1,032 795 4,681 Marketing expense 3,164 547 17 3,728 Insurance expense 3,120 85 7 3,212 Compensation expense - SCF acquisition payments — — 2,333 2,333 Intersegment expense 2,945 — — 2,945 Other segment items (2) 7,230 2,788 1,127 11,145 Segment expense 85,345 29,773 12,210 127,328 Reconciliation of expense Elimination of intersegment expense ($ 2,945 ) $ — $ — ( 2,945 ) Total consolidated expense $ 82,400 $ 29,773 $ 12,210 $ 124,383 Income before provision for income taxes $ 64,477 $ 6,569 $ 13,473 $ 84,519 1 The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. All expenses are allocated to a segment. 2 Other segment items for each reportable segment include: Community banking: OREO (income) expense, net of rental income and gains on sale, director fees, operational charge offs net of recoveries, loan collection and collateral costs, and other miscellaneous operating costs related to community banking activities. Home mortgage lending: OREO (income) expense, net of rental income and gains on sale related home mortgage loans, director fees related at Residential Mortgage, loan collection and collateral costs related to home mortgage loans, and other miscellaneous operating costs related to home mortgage lending activities. Specialty finance: miscellaneous operating costs related to specialty finance activities. 130 December 31, 2024 (In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated Interest income $ 136,495 $ 16,477 $ 947 $ 153,919 Interest expense 34,391 5,249 1,096 40,736 Net interest income (loss) 102,104 11,228 ( 149 ) 113,183 Provision for credit losses 2,276 892 125 3,293 Net interest income (loss) after provision for credit losses 99,828 10,336 ( 274 ) 109,890 Net realized gains on mortgage loans sold — 13,994 — 13,994 Change in fair value of mortgage loan commitments, net — 172 — 172 Total production revenue — 14,166 — 14,166 Mortgage servicing revenue — 9,155 — 9,155 Change in fair value of mortgage servicing rights: Due to changes in model inputs of assumptions — 1,334 — 1,334 Other — ( 1,535 ) — ( 1,535 ) Total mortgage servicing revenue, net — 8,954 — 8,954 Other mortgage banking revenue — 882 — 882 Total mortgage banking income — 24,002 — 24,002 Purchased receivable income — — 7,146 7,146 Other operating income (loss) 10,960 — ( 67 ) 10,893 Total other operating income 10,960 24,002 7,079 42,041 Salaries and other personnel expense 44,864 20,968 2,015 67,847 Data processing expense 9,918 966 102 10,986 Occupancy expense 5,534 1,927 148 7,609 Professional and outside services 2,284 827 1,240 4,351 Marketing expense 2,518 499 11 3,028 Insurance expense 2,690 101 170 2,961 Other operating expense 5,277 2,336 542 8,155 Total other operating expense 73,085 27,624 4,228 104,937 Income before provision for income taxes 37,703 6,714 2,577 46,994 Provision for income taxes 7,359 1,934 730 10,023 Net income $ 30,344 $ 4,780 $ 1,847 $ 36,971 Total assets $ 2,547,709 $ 357,630 $ 136,530 $ 3,041,869 Loans held for sale $ — $ 59,957 $ — $ 59,957 1-4 family residential properties secured by first liens $ — $ 270,966 $ — $ 270,966 Purchased receivables, net $ — $ — $ 74,078 $ 74,078 Goodwill $ 7,525 $ 7,492 $ 35,001 $ 50,018 131 December 31, 2024 (In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated Interest income $ 136,495 $ 16,477 $ 947 $ 153,919 Mortgage banking income - external revenue — 24,002 — 24,002 Mortgage banking income - intersegment revenue — 3,623 — 3,623 Purchased receivable income — — 7,146 7,146 Other operating income (loss) 10,960 — ( 67 ) 10,893 147,455 44,102 8,026 199,583 Reconciliation of revenue Elimination of intersegment revenues — ( 3,623 ) — ( 3,623 ) Total consolidated revenues $ 147,455 $ 40,479 $ 8,026 $ 195,960 Less: Interest expense 34,391 5,249 1,096 40,736 Provision for credit losses 2,276 892 125 3,293 Segment gross profit 110,788 34,338 6,805 151,931 Less (1) : Salaries and other personnel expense $ 44,864 $ 20,968 $ 2,015 $ 67,847 Data processing expense 9,918 966 102 10,986 Occupancy expense 5,534 1,927 148 7,609 Professional and outside services 2,284 827 1,240 4,351 Marketing expense 2,518 499 11 3,028 Insurance expense 2,690 101 170 2,961 Intersegment expense 3,623 — — 3,623 Other segment items (2) 5,277 2,336 542 8,155 Segment expense 76,708 27,624 4,228 108,560 Reconciliation of expense Elimination of intersegment expense ($ 3,623 ) $ — $ — ( 3,623 ) Total consolidated expense $ 73,085 $ 27,624 $ 4,228 $ 104,937 Income before provision for income taxes $ 37,703 $ 6,714 $ 2,577 $ 46,994 1 The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. All expenses are allocated to a segment. 2 Other segment items for each reportable segment include: Community banking: OREO (income) expense, net of rental income and gains on sale, director fees, operational charge offs net of recoveries, loan collection and collateral costs, and other miscellaneous operating costs related to community banking activities. Home mortgage lending: OREO (income) expense, net of rental income and gains on sale related home mortgage loans, director fees related at Residential Mortgage, loan collection and collateral costs related to home mortgage loans, and other miscellaneous operating costs related to home mortgage lending activities. Specialty finance: miscellaneous operating costs related to specialty finance activities. 132 December 31, 2023 (In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated Interest income $ 121,855 $ 9,693 $ 403 $ 131,951 Interest expense 26,300 2,395 — 28,695 Net interest income 95,555 7,298 403 103,256 Provision for credit losses 3,842 — — 3,842 Net interest income after provision for credit losses 91,713 7,298 403 99,414 Net realized gains on mortgage loans sold — 7,828 — 7,828 Change in fair value of mortgage loan commitments, net — ( 102 ) — ( 102 ) Total production revenue — 7,726 — 7,726 Mortgage servicing revenue — 7,368 — 7,368 Change in fair value of mortgage servicing rights: Due to changes in model inputs of assumptions — ( 922 ) — ( 922 ) Other — ( 1,765 ) — ( 1,765 ) Total mortgage servicing revenue, net — 4,681 — 4,681 Other mortgage banking revenue — 356 — 356 Total mortgage banking income — 12,763 — 12,763 Purchased receivable income — — 4,482 4,482 Other operating income 9,130 — — 9,130 Total other operating income 9,130 12,763 4,482 26,375 Salaries and other personnel expense 42,795 17,873 1,073 61,741 Data processing expense 9,091 692 38 9,821 Occupancy expense 5,432 1,839 123 7,394 Professional and outside services 2,305 751 72 3,128 Marketing expense 2,465 462 2 2,929 Insurance expense 2,423 96 — 2,519 Other operating expense 4,742 1,784 123 6,649 Total other operating expense 69,253 23,497 1,431 94,181 Income (loss) before provision for income taxes 31,590 ( 3,436 ) 3,454 31,608 Provision for income taxes 6,175 ( 943 ) 982 6,214 Net income (loss) $ 25,415 ($ 2,493 ) $ 2,472 $ 25,394 Total assets $ 2,496,910 $ 267,706 $ 42,881 $ 2,807,497 Loans held for sale $ — $ 31,974 $ — $ 31,974 1-4 family residential properties secured by first liens $ — $ 203,738 $ — $ 203,738 Purchased receivables, net $ — $ — $ 36,842 $ 36,842 Goodwill $ 7,525 $ 7,492 $ — $ 15,017 133 December 31, 2023 (In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated Interest income $ 121,855 $ 9,693 $ 403 $ 131,951 Mortgage banking income - external revenue — 12,763 — 12,763 Mortgage banking income - intersegment revenue — 1,370 — 1,370 Purchased receivable income — — 4,482 4,482 Other operating income 9,130 — — 9,130 130,985 23,826 4,885 159,696 Reconciliation of revenue Elimination of intersegment revenues — ( 1,370 ) — ( 1,370 ) Total consolidated revenues $ 130,985 $ 22,456 $ 4,885 $ 158,326 Less: Interest expense 26,300 2,395 — 28,695 Provision for credit losses 3,842 — — 3,842 Segment gross profit 100,843 20,061 4,885 125,789 Less (1) : Salaries and other personnel expense $ 42,795 $ 17,873 $ 1,073 $ 61,741 Data processing expense 9,091 692 38 9,821 Occupancy expense 5,432 1,839 123 7,394 Professional and outside services 2,305 751 72 3,128 Marketing expense 2,465 462 2 2,929 Insurance expense 2,423 96 — 2,519 Intersegment expense 1,370 — — 1,370 Other segment items (2) 4,742 1,784 123 6,649 Segment expense 70,623 23,497 1,431 95,551 Reconciliation of expense Elimination of intersegment expense ($ 1,370 ) $ — $ — ( 1,370 ) Total consolidated expense $ 69,253 $ 23,497 $ 1,431 $ 94,181 Income before provision for income taxes $ 31,590 ($ 3,436 ) $ 3,454 $ 31,608 1 The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. All expenses are allocated to a segment. 2 Other segment items for each reportable segment include: Community banking: OREO (income) expense, net of rental income and gains on sale, director fees, operational charge offs net of recoveries, loan collection and collateral costs, and other miscellaneous operating costs related to community banking activities. Home mortgage lending: OREO (income) expense, net of rental income and gains on sale related home mortgage loans, director fees related at Residential Mortgage, loan collection and collateral costs related to home mortgage loans, and other miscellaneous operating costs related to home mortgage lending activities. Specialty finance: miscellaneous operating costs related to specialty finance activities. 134 NOTE 27 - Parent Company Information Balance Sheets at December 31, 2025 2024 (In Thousands) Assets Cash and cash equivalents $ 14,952 $ 4,387 Marketable equity securities 8,392 8,719 Investment in Northrim Bank 362,036 260,957 Investment in NISC 5,028 1,112 Investment in NST2 310 310 Taxes receivable, net 3,051 — Other assets 2,703 2,233 Total Assets $ 396,472 $ 277,718 Liabilities Subordinated debentures $ 68,924 $ 10,310 Other liabilities 1,004 292 Total Liabilities 69,928 10,602 Shareholders' Equity Common stock 5,528 5,518 Additional paid-in capital 10,822 9,311 Retained earnings 309,575 259,311 Accumulated other comprehensive (loss) income 619 ( 7,024 ) Total Shareholders' Equity 326,544 267,116 Total Liabilities and Shareholders' Equity $ 396,472 $ 277,718 Statements of Income for Years Ended: 2025 2024 2023 (In Thousands) Income Interest income $ 612 $ 1,203 $ 1,258 Equity in undistributed earnings from Northrim Bank 57,497 37,334 26,871 Equity in undistributed earnings from NISC 10,611 83 ( 22 ) Gain on sale of marketable equity securities, net — 112 — Unrealized gain (loss) on marketable equity securities 169 465 120 Total Income $ 68,889 $ 39,197 $ 28,227 Expense Interest expense 805 403 400 Administrative and other expenses 5,110 3,381 3,357 Total Expense 5,915 3,784 3,757 Income Before Benefit from Income Taxes 62,974 35,413 24,470 Benefit from income taxes ( 1,634 ) ( 1,558 ) ( 924 ) Net Income $ 64,608 $ 36,971 $ 25,394 135 Statements of Cash Flows for Years Ended: 2025 2024 2023 (In Thousands) Operating Activities: Net income $ 64,608 $ 36,971 $ 25,394 Adjustments to Reconcile Net Income to Net Cash: Gain on sale of securities, net — 112 — Amortization of debt issuance costs 14 — — Equity in undistributed earnings from subsidiaries ( 46,956 ) ( 37,252 ) ( 26,892 ) Gain on sale by PWA ( 14,486 ) — — Change in fair value marketable equity securities ( 169 ) ( 465 ) ( 120 ) Stock-based compensation 1,734 913 937 Changes in other assets and liabilities ( 3,395 ) ( 60 ) ( 1,380 ) Net Cash Provided (Used) by Operating Activities 1,350 219 ( 2,061 ) Investing Activities: Purchases of marketable equity securities — ( 1,964 ) ( 2,297 ) Proceeds from sales/calls/maturities of marketable equity securities 481 6,973 — Investment in Northrim Bank, NISC & NST2 ( 35,928 ) ( 6,157 ) 14,628 Net Cash (Used) Provided by Investing Activities ( 35,447 ) ( 1,148 ) 12,331 Financing Activities: Dividends paid to shareholders ( 14,547 ) ( 13,751 ) ( 13,609 ) Proceeds from issuance of common stock 609 801 555 Proceeds from issuance of subordinated debentures 60,000 — — Payment of debt issuance costs ( 1,400 ) — — Repurchase of common stock — ( 789 ) ( 9,044 ) Net Cash Used by Financing Activities 44,662 ( 13,739 ) ( 22,098 ) Net change in Cash and Cash Equivalents 10,565 ( 14,668 ) ( 11,828 ) Cash and Cash Equivalents at beginning of year 4,387 19,055 30,883 Cash and Cash Equivalents at end of year $ 14,952 $ 4,387 $ 19,055 136 ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS OF ACCOUNTING AND FINANCIAL DISCLOSURE None.