What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-01 compared with 2025-10-27 · 267 added, 355 removed, 286 unchanged (69% of the section changed)

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These risks and uncertainties include:

descriptions of the financial condition, results of operations, asset based lending volumes, asset and credit quality trends and profitability and statements about the expected financial benefits and other effects of the acquisition of Sallyport Commercial Finance, LLC (“Sallyport”) by Northrim Bank;

expected cost savings, synergies and other financial benefits from the acquisition of Sallyport by Northrim Bank might not be realized within the expected time frames and costs or difficulties relating to integration matters might be greater than expected;

the ability of Northrim and Sallyport to execute their respective business plans;

descriptions of Northrim’s financial condition, results of operations, asset based lending volumes, asset and credit quality trends and profitability;

the ability of Northrim to execute its business plans;

potential further increases in interest rates;

the value of securities held in our investment portfolio;

impact of the results of government shutdowns and government initiatives, including tariffs, on the regulatory landscape, natural resource extraction industries, and capital markets;

the impact of declines in the value of commercial and residential real estate markets, high unemployment rates, inflationary pressures and slowdowns in economic growth;

the impact of the results of government shutdowns and government initiatives on the regulatory landscape, natural resource extraction industries, and capital markets;

the impact of declines in the value of commercial and residential real estate markets, high unemployment rates, tariffs, inflationary pressures and slowdowns in economic growth;

changes in banking regulation or actions by bank regulators;

potential further increases in inflation, supply-chain constraints, and potential geopolitical instability, including the war in Ukraine and the conflicts in the Middle East;

potential further increases in inflation, supply-chain constraints, and potential geopolitical instability, including the wars in Ukraine and Iran;

financial stress on borrowers (consumers and businesses) as a result of higher rates or an uncertain economic environment;

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our ability to implement our marketing and growth strategies;

our ability to identify and address cyber-security risks, including security breaches, “denial of service attacks,” “hacking,” and identity theft;

our ability to identify and address cyber-security risks, including security breaches, “denial of service attacks,” “hacking,” and identity theft and increased cyber threats due to artificial intelligence;

disease outbreaks;

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Update on Economic Conditions

The Alaska Department of Labor (“DOL”) has reported Alaska’s seasonally adjusted unemployment rate in August of 2025 was 4.7% compared to the U.S.

rate of 4.3%.

The total of 355,900 payroll jobs in Alaska, not including uniformed military, increased 0.8% or 2,900 jobs between August of 2024 and August of 2025.

This matched the year-over-year increase for the U.S.

of 0.8% for the same period.

According to the DOL, the Oil and Gas sector had the largest growth rate in new jobs of 6% through August compared to the prior year, up 500 direct jobs.

The Construction sector added 1,000 positions for a year-over-year growth rate of 4.8% in August of 2025.

The Manufacturing sector, which is dominated by seafood processing, added 900 jobs and grew 5.7% in the same period.

The larger Health Care sector also grew by 900 jobs for an annual growth rate of 2.1%.

Transportation, Warehousing and Utilities added 300 jobs for a 1.1% growth rate.

Professional and Business Services increased 200 jobs year-over-year through August of 2025, up 0.7%.

The Government sector declined by 100 jobs (0.1%).

Government gained 200 State positions, while losing 100 Federal jobs and 200 Local government jobs in Alaska between August of 2024 and August of 2025.

Other declining sectors include:

Information down 300 jobs or (-6.8%);

Leisure/Hospitality declined 100 jobs (-0.2%);

Wholesale Trade lost 100 jobs (-1.5%) and Financial Activities, down 100 jobs (-0.9%).

Alaska’s seasonally adjusted personal income was $59.4 billion in the second quarter of 2025 according to the Federal Bureau of Economic Analysis (“BEA”).

Alaska had an annualized improvement of 9.7% in the first quarter and 5% in the second quarter of 2025.

This is compared to the national average of 6.4% in the first quarter and 5.5% in second quarter of 2025.

Alaska enjoyed an annual personal income improvement of 5.8% in 2024 compared to the U.S.

increase of 5.6%.

Per capita personal income in Alaska is now estimated at $80,208 according to the BEA, ranking it 12 th highest of the 50 U.S.

Alaska’s Gross State Product (“GSP”) in the second quarter of 2025 reached $74.2 billion according to the BEA.

Alaska’s inflation adjusted “real” GSP increased 1.5% in 2024, 1.8% annualized in the first quarter of 2025, and 2% in the second quarter of 2025.

Alaska’s seasonally adjusted unemployment rate was 4.8% at the end of 2025, compared to 4.4% for the United States, according to the Alaska Department of Labor and Workforce Development.

Alaska had a total of 323,900 payroll jobs in December of 2025 in Alaska, not including uniformed military.

This was an increase of 0.5% or 1,500 jobs from December of 2024.

Alaska’s seasonally adjusted aggregate personal income was $59.2 billion in the third quarter of 2025 according to the Federal Bureau of Economic Analysis (“BEA”).

Alaska enjoyed an annual personal income improvement of 4.4% between the third quarter of 2024 and the third quarter of 2025.

Per capita personal income in Alaska was estimated at $79,850 compared to the U.S.

average of $76,513, according to the BEA, ranking Alaska 14 th highest of the 50 U.S.

Alaska’s Gross State Product (“GSP”) in the third quarter of 2025 reached $75.3 billion according to the BEA.

Alaska’s inflation adjusted “real” GSP increased 1.5% in 2024, and 3.8% annualized through the third quarter of 2025.

The average U.S.

GDP growth rate was 2.8% for 2024, annualized -0.6% in the first quarter of 2025 and 3.8% in the second quarter of 2025.

Alaska’s real GSP improvement in the second quarter of 2025 was led by the Mining, Oil & Gas sector;

Transportation & Warehousing;

Professional, Scientific & Technical Services;

and Manufacturing, but was somewhat offset by decreases in Retail Trade and Government.

Alaska exported $5.9 billion in goods to foreign countries in 2024 according to the U.S.

International Trade Administration.

China is the largest importer of Alaska’s products at $1.5 billion, followed by Australia at $804 million, Japan at $674 million and South Korea at $634 million in 2024.

Fish and related maritime products accounted for the largest volume at $2.1 billion, followed by minerals and ores $2 billion, and primary metals at $992 million in 2024.

Oil & Gas international exports were $380 million because the majority of Alaska’s production is refined and consumed within the United States.

GDP growth rate was 2.8% for 2024, and 4.4% annualized through the third quarter of 2025.

Alaska exported $6.7 billion in goods directly to foreign countries in 2025 according to the U.S.

Census Bureau, a 13.4% increase over 2024 totals.

South Korea took over the top trade spot by importing $1.1 billion in goods directly from Alaska.

This was a 73% increase over 2024.

South Korea imports significant quantities of fish, lead and zinc.

The rapid growth came from $515 million in gold and silver purchases in 2025.

Australia imported over $1 billion in goods, primarily gold, zinc and lead.

Australia’s growth rate in Alaska products was 30% in 2025.

Japan moved up to the third spot with a 38% growth in purchases totaling $927 million in 2025.

Japan has been a leading customer of a large variety of fish products from Alaska for decades and also purchases an array of minerals.

China slipped from first to fourth place due in part to complex U.S.

tariff negotiations.

China’s imports from Alaska dropped 47% from $1.5 billion in 2024 to $803 million in 2025.

Oil & Gas does not contribute a significant amount to international exports ($246 million in 2025) because the majority of Alaska’s production is refined and consumed within the United States.

According to the U.S.

Bureau of Labor Statistics, the Consumer Price Index, or CPI, for the U.S.

increased 2.9% between August of 2024 and August of 2025.

Bureau of Labor Statistics, the Consumer Price Index (“CPI”) for the U.S.

increased 2.4% between February of 2025 and February of 2026.

In Alaska, the rate of increase was lower at 1.5% for the same time period.

The largest increases since last August came from Apparel (+6.9%), Food and beverage (+3.9%), and Housing (+3.8%).

Slower increases or declining costs in Medical Care (+1.2%), Gasoline (+0.9%), Transportation (-1.2%) and Recreation (-1.7%) through August 2025 have helped moderate inflationary pressures in Alaska relative to the U.S.

The monthly average price of Alaska North Slope (“ANS”) crude oil has ranged between a high of $76.39 a barrel in January of 2025 and a low of $67.07 in May of 2025.

The August 2025 average was $69.29.

The largest increases since last February came from Apparel (+9.7%), Motor Fuel (+4.9%), Housing (+3.3%), and Recreation (+2%).

Slower increases or declining costs in Food and Beverage (+1.7%) Medical Care (+1.2%), Education (-1.3%), and Transportation (-3.3%), helped moderate inflationary pressures in Alaska relative to the U.S.

The monthly average price of Alaska North Slope (“ANS”) crude oil ranged between $76.39 a barrel in January of 2025 and $62.70 in December 2025.

Prices began to rise dramatically in 2026 after conflict began in Venezuela and Iran.

ANS was priced at $110 a barrel on March 31, 2026.

The Alaska Department of Revenue (“DOR”) calculated ANS crude oil production was 468 thousand barrels per day (“bpd”) in Alaska’s fiscal year ending June 30, 2025.

Production rose to 469 thousand bpd in fiscal year ending June 30, 2025.

In the Spring 2025 Revenue Forecast published March 12, 2025, the DOR expects production to continue to grow to 663 thousand bpd, or 41% by fiscal year 2034.

In the Fall 2025 Revenue Forecast published December 19, 2025, the DOR expects production to average 457 thousand bpd in fiscal year 2026 and 518 thousand bpd in fiscal year 2027.

Over the next decade it is expected to continue to grow to 621 thousand bpd, or 33% by fiscal year 2036.

This is primarily a result of new production coming on-line in and around the NPR-A region west of Prudhoe Bay.

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The Alaska Permanent Fund is seeded annually by the oil wealth the State continues to save each year and has grown significantly over 40 years of successful investment.

As of August 31, 2025 the fund’s value was $83.26 billion.

According to the DOR it is scheduled to contribute $3.7 billion to Alaska’s General Fund in fiscal year 2025 for general government spending and over $600 million to pay the annual dividend of $1,000 in October to Alaskan residents.

According to the Alaska Multiple Listing Services, the average sales price of a single-family home in Anchorage rose 6.2% in 2024 to $510,015, following a 5.2% increase in 2023.

This was the seventh consecutive year of price increases.

Through September of 2025 prices continued to increase on average 3.7% to $529,097.

The average sales price for single family homes in the Matanuska Susitna Borough rose 3.8% in 2024 to $412,859, after increasing 4% in 2023.

As of February 28, 2026 the fund’s value was $88.8 billion.

According to the DOR it is scheduled to contribute $3.8 billion to Alaska’s General Fund in fiscal year 2026 and $4 billion in fiscal year 2027 for general government spending and to pay the annual dividend in October to Alaskan residents.

According to the Alaska Multiple Listing Services, the average sales price of a single-family home in Anchorage rose 4.4% in 2025 to $532,339, following an increase of 6.2% in 2024 and 5.2% in 2023.

This was the eighth consecutive year of price increases.

The average sales price for single family homes in the Matanuska Susitna Borough rose 6.6% in 2025 to $440,217, after climbing 3.8% in 2024 and 4% in 2023.

This continues a trend of average price increases for more than a decade in the region.

Through September of 2025 prices continued to increase on average 6.7% to $440,366.

These two markets represent where the vast majority of the residential lending activity of Northrim Bank (the “Bank”) occurs.

The Alaska Multiple Listing Services reported a 3.4% increase in the number of units sold in Anchorage when comparing 2024 to 2023.

The first nine months of 2025 saw a 4.7% increase in home sales compared to the same nine months of 2024 in Anchorage.

Last year there was virtually no change in the number of homes sold in the Matanuska Susitna Borough, with only four fewer homes sold in 2024 than in 2023 or -0.2%.

In the first nine months of 2025 the number of units sold has increased by 133 sold or 11.1% in the Matanuska Susitna Borough compared to the first nine months of 2024.

The Board of Governors of the Federal Reserve System lowered its benchmark interest rate target to 4.00%-4.25% as of September 30, 2025 from 4.25%-4.50% as of December 31, 2024.

The prime rate of interest has dropped to 7.25% as of September 30, 2025 compared to 7.50% as of December 31, 2024.

Highlights and Summary of Performance - Third Quarter of 2025

The Company reported net income and earnings per diluted share of $27.1 million and $1.20, respectively, for the third quarter of 2025 compared to net income and earnings per diluted share of $8.8 million and $0.39, respectively, for the third quarter of 2024.

The Company reported net income and earnings per diluted share of $52.2 million and $2.32, respectively for the first nine months of 2025 compared to net income and earnings per diluted share of $26.0 million and $1.17, respectively, for the first nine months of 2024.

The increase in net income for both periods in 2025 compared to the same periods last year is primarily attributable to the gain from the sale of certain assets by Pacific Wealth Advisors, as well as higher net interest income, an increase in purchased receivable income and increased mortgage banking income, which were only partially offset by higher operating expenses and provisions for income taxes.

On September 18, 2025, the Company effected a four-for-one forward split of its common stock, a proportionate increase in the number of authorized shares of 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.

The common stock split is part of the Company's ongoing review of optimal trading and spread levels.

The intended purpose of the split is to enhance stock liquidity, make shares more accessible to a broader base of retail investors, and support increased trading activity.

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

• Net interest margin was 4.83% for the third quarter of 2025, up 54-basis points from the third quarter a year ago.

• Return on average assets (“ROAA”) was 3.32% and return on average equity (“ROAE”) was 35.66% for the third quarter of 2025.

ROAA was 1.22% and ROAE was 13.69% for the third quarter of 2024.

• Portfolio loans were $2.22 billion at September 30, 2025, up 11% from a year ago, primarily due to new customer relationships and expanding market share, as well as retaining certain mortgages originated by Residential Mortgage, a subsidiary of the Bank.

The Company sold $16 million in consumer mortgages in the third quarter of 2025 to reduce the concentration of residential real estate loans and to provide additional liquidity for future commercial and construction loan growth.

• Total deposits were $2.91 billion at September 30, 2025, up 11% from $2.63 billion a year ago.

Non-interest bearing demand deposits increased 14% year-over-year to $872.1 million at September 30, 2025 and represent 30% of total deposits.

• The average cost of interest-bearing deposits was 2.00% at September 30, 2025, down from 2.24% at September 30, 2024.

• Mortgage loan originations were $234.0 million in the third quarter of 2025, down from $248.0 million in the third quarter a year ago.

Mortgage loans funded for sale were $218.2 million in the third quarter of 2025, compared to $210.0 million in the third quarter of 2024.

These two markets represent where the majority of the Bank’s residential lending activity occurs.

The Alaska Multiple Listing Services reported a 0.6% decrease in the number of units sold in Anchorage when comparing 2025 to 2024.

There were 2,222 homes sold in 2025 and 2,235 sold in 2024.

Last year there were 1,766 homes sold in the Matanuska Susitna Borough, compared to 1,632 in 2024, an increase of 8.2%.

The Board of Governors of the Federal Reserve System lowered its benchmark interest rate target to 3.50%-3.75% as of both March 31, 2026 and December 31, 2025.

The prime rate of interest was 6.75% as of both March 31, 2026 and December 31, 2025.

Highlights and Summary of Performance - First Quarter of 2026

The Company reported net income and earnings per diluted share of $13.7 million and $0.61, respectively, for the first quarter of 2026 compared to net income and earnings per diluted share of $13.3 million and $0.60, respectively, for the first quarter of 2025.

The increase in net income in 2026 compared to the period last year is mostly due to an increase in net interest income and higher mortgage banking income, which were partially offset by a higher provision for credit losses and higher other operating expenses.

• Net interest margin was 4.72% for the first quarter of 2026, up 17-basis points from the first quarter a year ago.

• Portfolio loans were $2.36 billion at March 31, 2026, up 11% from a year ago, primarily due to new customer relationships and expanding market share, as well as retaining certain mortgages originated by Residential Mortgage, a subsidiary of the Bank.

• Total deposits were $2.87 billion at March 31, 2026, up 2% from $2.81 billion at December 31, 2025.

Non-interest bearing demand deposits increased 11% year-over-year to $826.4 million at March 31, 2026 and represent 29% of total deposits.

• The average cost of interest-bearing deposits was 1.77% at March 31, 2026, down from 2.01% at March 31, 2025.

• Average purchased receivables and loan balances for the Specialty Finance segment were $132.2 million for the first quarter of 2026, compared to average balances of $97.1 million for the first quarter of 2025.

Other financial measures for the periods indicated are shown in the table below:

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

2025 2024 2025 2024

Three Months Ended March 31,

Return on average assets, annualized 1.69 % 1.76 %

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Nonperforming assets:

Nonperforming assets, net of government guarantees were $13.6 million at September 30, 2025 and $11.6 million at December 31, 2024.

Other Real Estate Owned (“OREO”), net of government guarantees was zero at both September 30, 2025 and December 31, 2024.

Repossessed assets were $50,000 as of September 30, 2025 and $297,000 as of December 31, 2024.

Nonperforming loans, net of government guarantees increased $3.7 million or 49% to $11.3 million as of September 30, 2025 from $7.5 million as of December 31, 2024, primarily due to the addition of seven loans in the first nine months of 2025.

Nonperforming purchased receivables decreased $1.5 million or 40% to $2.3 million as of September 30, 2025 from $3.8 million as of December 31, 2024 as a result of a paydown received on one relationship.

Of the nonperforming assets, net of government guarantees at September 30, 2025, $5.3 million are attributable to the Community Banking segment, $510,000 are attributable to the Home Mortgage Lending segment, and $7.7 million are attributable to the Specialty Finance segment.

Nonperforming assets, net of government guarantees were $15.3 million at March 31, 2026 and $11.4 million at December 31, 2025.

Other Real Estate Owned (“OREO”), net of government guarantees was $1.0 million at March 31, 2026 and zero at December 31, 2025.

Repossessed assets were zero at both March 31, 2026 and December 31, 2025.

Nonperforming loans, net of government guarantees increased $2.9 million or 25% to $14.2 million as of March 31, 2026 from $11.3 million as of December 31, 2025, primarily due to the addition of four loans in the first three months of 2026.

Nonperforming purchased receivables decreased $67,000 or 100% to zero as of March 31, 2026 from $67,000 as of December 31, 2025 as a result of a paydown received on one relationship.

Of the nonperforming assets, net of government guarantees at March 31, 2026, $10.5 million are attributable to the Community Banking segment, $499,000 are attributable to the Home Mortgage Lending segment, and $4.3 million are attributable to the Specialty Finance segment.

Potential problem assets:

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All potential problem loans are individually evaluated for the purposes of establishing an allowance for credit losses.

At September 30, 2025, management had identified $28.7 million potential problem loans, up from $1.6 million at December 31, 2024.

This increase is primarily due to the addition of three relationships which management consider to be isolated, customer specific events that do not impact the ACL beyond the individual analysis of these credits.

RESULTS OF OPERATIONS

Net income for the third quarter of 2025 increased $18.2 million to $27.1 million as compared to $8.8 million for the same period in 2024.

The increase in net income in the third quarter of 2025 as compared to the same quarter a year ago is largely attributable to a $14.2 million gain on sale of certain assets by Pacific Wealth Advisors, as well as a $6.5 million increase in net interest income and a $6.2 million increase in purchased receivable income.

These increases were only partially offset by a $3.6 million increase in other operating expenses and $4.7 million increase in provision for income taxes.

Net income for the first nine months of 2025 increased $26.1 million to $52.2 million as compared to $26.0 million for the same period in 2024.

The increase in net income in the first nine months of 2025 as compared to the same period a year ago is largely attributable to a $17.9 million increase in net interest income, a $15.7 million increase in purchased receivable income, a $14.2 million gain on sale of certain assets by Pacific Wealth Advisors, and a $2.0 million increase in mortgage banking income.

These increases were only partially offset by a $15.4 million increase in other operating expenses and a $8.1 million increase in the provision for income taxes.

At March 31, 2026, management had identified $20.1 million potential problem loans, down slightly from $21.2 million at December 31, 2025.

This decrease is primarily due to paydowns which occurred in the first quarter of 2026.

Summary of Critical Accounting Estimates

Our critical accounting estimates are described in detail in Part II.

Item 7, Management’s Discussion and Analysis, and in Note 1, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

There have been no material changes to the valuation techniques or assumptions within the models that affect our estimates during the first quarter of 2026.

Allowance for Credit Losses Policy :

Management performs a hypothetical sensitivity analysis of our ACL quarterly to understand the impact of a change in a key input on our ACL.

As of March 31, 2026, if the four-quarter U.S.

unemployment rate forecast had been approximately 3% higher and the four-quarter annualized growth rate in the U.S.

Gross Domestic Product had been approximately 13% lower, our ACL for loans would have increased $483,000, or 2%.

As of March 31, 2026, if the four-quarter national unemployment rate forecast had been approximately 28% higher and the four-quarter annualized growth rate in the U.S.

Gross Domestic Product had been approximately 6% lower, which represents management's estimate of long-term mean rates for these economic factors, our ACL for loans would have increased $2.4 million, or 10%.

As of March 31, 2026, if the estimated prepayment and curtailment rates are doubled (with a maximum rate of 100%), our ACL for loans would have decreased $2.2 million, or 9%.

As of March 31, 2026, if the estimated prepayment and curtailment rates are cut in half, our ACL for loans would have increased $1.8 million, or 7%.

These sensitivity analyses include the impact to both the quantitative and qualitative components of our ACL.

Changes in quantitative inputs and qualitative loss factors may not occur in the same direction or magnitude across all segments of our loan portfolio and deterioration in some quantitative inputs and qualitative loss factors may offset improvement in others.

This sensitivity analysis does not represent a change to our expectations of the economic environment but provides a hypothetical result to assess the sensitivity of the ACL to a change in a key input.

This sensitivity analysis does not incorporate changes to management’s judgment of qualitative loss factors.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2026 AS COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2025

Net income for the first quarter of 2026 increased $351,000 to $13.7 million as compared to $13.3 million for the same period in 2025.

The increase in net income in the first quarter of 2026 as compared to the same quarter a year ago is mostly due to a $3.4 million increase in net interest income and a $2.2 million increase in mortgage banking income.

These increases were only partially offset by a $2.5 million increase in other operating expenses and $2.4 million increase in provision for credit losses.

Analysis of Business Segments

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Additional information about segment performance is presented in Note 10 to the Financial Statements included in Part I - Item 1 of this report.

(In Thousands) Three Months Ended September 30, 2025 Three Months Ended September 30, 2024 Nine Months Ended September 30, 2025 Nine Months Ended September 30, 2024

(In Thousands) Three Months Ended March 31, 2026 Three Months Ended March 31, 2025

Community Banking $10,500 $10,788

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Specialty Finance 2,089 1,732

Net income (loss) $27,065 $8,825 $52,167 $26,044

$13,675 $13,324

Community Banking

Net income in the Community Banking segment increased $15.2 million or 214% in the third quarter of 2025 compared to the same period a year ago primarily due to the gain on sale of certain assets by Pacific Wealth Advisors of $14.2 million, as well as an increase in net interest income which totaled $32.3 million in the third quarter of 2025, and $25.9 million in the third quarter of 2024.

Net interest income increased $6.4 million or 25% in the third quarter of 2025 as compared to the third quarter of 2024 mostly due to higher interest income on loans and deposits in banks as well as lower interest expense.

This increase was only partially offset by lower interest income on investments.

The provision for credit losses in the Community Banking segment was $1.6 million in the third quarter of 2025 compared to a provision for credit losses of $1.5 million in the same quarter a year ago.

The increase to the provision for credit losses in the Community Banking segment in the third quarter of 2025 as compared to the same quarter a year ago was primarily a result of increased loan balances as well as an increase in estimated loss rates due to less favorable economic forecasts and trends in qualitative factors.

Other operating expenses in the Community Banking segment totaled $20.0 million in the third quarter of 2025, up $1.2 million or 7% from $18.7 million in the third quarter a year ago.

The increase in the third quarter of 2025 as compared to the same quarter a year ago was mostly due to increases in salaries and other personnel expense, including $641,000 in higher salary expense and a $260,000 increase in group medical expenses, which were only partially offset by a $293,000 decrease in profit share expense.

Additionally, data processing expense and insurance expense increased in the quarter ended September 30, 2025 as compared to the same quarter last year.

Net income in the Community Banking segment increased $19.3 million or 89% in the first nine months of 2025 as compared to the same period a year ago primarily due to the gain on sale of certain assets by Pacific Wealth Advisors of $14.2 million in the third quarter of 2025, as well as increases in net interest income primarily due to higher interest income due to higher earning-asset balances and higher yields.

These changes were only partially offset by higher other operating expenses, primarily due to higher salaries and other personnel expenses, data processing expenses, marketing expenses, and OREO expenses net of gains on sale.

Net income in the Community Banking segment decreased $288,000 or 3% in the first quarter of 2026 compared to the same period a year ago primarily due to an increase in the provision for credit losses and salaries and other personnel expense which were only partially offset by an increase in net interest income which totaled $31.8 million in the first quarter of 2026, and $28.2 million in the first quarter of 2025.

Net interest income increased $3.7 million or 13% in the first quarter of 2026 as compared to the first quarter of 2025 mostly due to higher interest income on loans and deposits in banks as well as lower interest expense on deposits.

The provision for credit losses in the Community Banking segment was $153,000 in the first quarter of 2026 compared to a benefit to the provision for credit losses of $1.8 million in the same quarter a year ago.

The increase to the provision for credit losses in the Community Banking segment in the first quarter of 2026 as compared to the same quarter a year ago was primarily a result of the fact that there were changes in the Company's loss rate regression models for commercial, commercial real estate, and construction loans in the first quarter of 2025.

Other operating expenses in the Community Banking segment totaled $20.4 million in the first quarter of 2026, up $1.8 million or 10% from $18.6 million in the first quarter a year ago.

The increase in the first quarter of 2026 as compared to the same quarter a year ago was mostly due to a $1.6 million increase in salaries and other personnel expense, which includes $771,000 in higher salary expense and a $296,000 increase in group medical expenses, as well as increases in occupancy expense, marketing expense, professional fees, and data processing expense.

These increases were partially offset by a decrease in insurance expense.

Insurance expense decreased due to a decrease in FDIC insurance expense resulting primarily from higher capital ratios.

The issuance of subordinated debentures in the fourth quarter of 2025 positively impacted the Company's risk based capital ratios which benefited the FDIC's calculation for insurance expense.

Home Mortgage Lending

Net income in the Home Mortgage Lending segment increased $579,000 or 45% in the third quarter of 2025 compared to the same period a year ago primarily due to a decrease in the provision for credit losses in the Home Mortgage Lending segment, as well as higher mortgage servicing revenue.

During the third quarter of 2025, mortgage loans funded for sale were $218.2 million, compared to $210.0 million in the third quarter of 2024.

These increases were partially offset by decreases in the net interest income and other operating expenses.

The provision for credit losses in the Home Mortgage Lending segment was $158,000 in the third quarter of 2025 compared to $571,000 in the third quarter of 2024.

The decrease in the provision for credit losses in the third quarter of 2025 in the Home Mortgage Lending segment as compared to the same quarter a year ago was primarily a result of decreased loan balances.

Other operating expenses in the Home Mortgage Lending segment totaled $7.4 million in the third quarter of 2025 compared to $7.6 million in the third quarter a year ago.

The decrease in the third quarter of 2025 as compared to the same quarter a year ago was mostly due to decreases in salaries and other personnel expense due to lower commissions paid to mortgage originators due to lower volume.

The Arizona, Colorado, and Pacific Northwest mortgage expansion markets were responsible for 16% of Residential Mortgage's $218 million total production in the third quarter of 2025 and 20% of $248 million total production in the third quarter a year ago.

The Company reclassified $100 million in consumer mortgages held for investment to held for sale in the first quarter of 2025 and recorded unrealized losses of $1.2 related to this portfolio in the first quarter of 2025.

In the second quarter of 2025, the Company sold $61 million of the $100 million that was reclassified to loans held for sale in the first quarter of 2025 for a total realized loss of $545,000.

In the third quarter of 2025, the Company sold $16 million of the $100 million that was reclassified to loans held for sale in the first quarter of 2025 for a total realized loss of $37,000.

As of September 30, 2025, Northrim serviced 6,475 loans in its $1.60 billion home-mortgage-servicing portfolio, a 37% increase from the $1.17 billion serviced a year ago.

Net income in the Home Mortgage Lending segment increased $1.8 million or 64% in the first nine months of 2025 as compared to the same period a year ago primarily due to higher net interest income due to higher balances of both consumer mortgage loans held for sale and consumer mortgage loans held for investment, as well as higher mortgage banking income due to higher mortgage loans funded for sale.

These increases were only partially offset by higher other operating expenses primarily due to higher originator commissions.

Net income in the Home Mortgage Lending segment increased $282,000 or 35% in the first quarter of 2026 compared to the same period a year ago primarily due to higher mortgage servicing revenue, which was only partially offset by an increase in the provision for credit losses, higher other operating expenses, and lower net interest income in the Home Mortgage Lending segment.

During the first quarter of 2026, mortgage loans funded for sale were $123.4 million, compared to $108.5 million in the first quarter of 2025.

The provision for credit losses in the Home Mortgage Lending segment was $562,000 in the first quarter of 2026 compared to a benefit to the provision for credit losses of $307,000 in the first quarter of 2025.

The increase in the provision for credit losses in the first quarter of 2026 in the Home Mortgage Lending segment as compared to the same quarter a year ago was primarily a result of higher growth in loan balances.

Other operating expenses in the Home Mortgage Lending segment totaled $7.2 million in the first quarter of 2026 compared to $6.5 million in the first quarter a year ago.

The increase in the first quarter of 2026 as compared to the same quarter a year ago was mostly due to increases in salaries and other personnel expense due to higher commissions paid to mortgage originators due to higher volume.

The Arizona, Colorado, and Pacific Northwest mortgage expansion markets were responsible for 35% of Residential Mortgage's $152 million total production in the first quarter of 2026 and 20% of $122 million total production in the first quarter a year ago.

As of March 31, 2026, Northrim serviced 6,637 loans in its $1.64 billion home-mortgage-servicing portfolio, an 11% increase from the $1.48 billion serviced a year ago.

Specialty Finance

The Company reevaluated our reportable operating segments in the fourth quarter of 2024 concurrent with the acquisition of Sallyport Commercial Finance, LLC (“Sallyport”), which resulted in the addition of the Specialty Finance segment.

The Company’s Specialty Finance segment includes Northrim Funding Services and Sallyport.

Northrim Funding Services is a division of the Bank and has offered factoring solutions to small businesses since 2004.

Sallyport is a leading provider of factoring, asset-based lending and alternative working capital solutions to small and medium sized enterprises in the United States, Canada, and the United Kingdom that the Company acquired on October 31, 2024 in an all cash transaction valued at approximately $53.9 million.

The composition of revenues for the Specialty Finance segment are primarily purchased receivable income, but also includes interest income from loans and other fee income.

Net income in the Specialty Finance segment increased $2.5 million or 541% in the third quarter of 2025 compared to the same period a year ago primarily due to the acquisition of Sallyport in the fourth quarter of 2024.

Total pre-tax income for Sallyport for the third quarter of 2025 was $2.1 million.

Net income in the Specialty Finance segment increased $5.1 million or 297% in the first nine months of 2025 as compared to the same period a year ago primarily due to the acquisition of Sallyport.

Total pre-tax income for Sallyport for the first nine months of 2025 was $4.7 million.

Average purchased receivables and loan balances at Sallyport were $68.4 million for the third quarter of 2025 and a yield of 32.9% compared to average balance of $71.0 million for the second quarter of 2025 with a yield of 27.23%, and average balance of $59.9 million for the first quarter of 2025 and a yield of 35.8%.

The yield in the third quarter of 2025 included the recognition of $879,000 in one-time fees collected during the quarter.

The yield excluding this items for the third quarter of 2025 was 27.7%.

The yield in the first quarter of 2025 included the recognition of $899,000 in fee income collected during the quarter related to two nonperforming receivables that was previously deferred and the collection of a $350,000 one-time fee.

The yield excluding these items for the first quarter of 2025 was 27.4%.

Net income in the Specialty Finance segment increased $357,000 or 21% in the first quarter of 2026 compared to the same period a year ago primarily due to increased purchased receivable balances.

Average purchased receivables and loan balances for the Specialty Finance segment were $132.2 million for the first quarter of 2026, compared to average balances of $97.1 million for the first quarter of 2025.

Net Interest Income/Net Interest Margin

Net interest income for the third quarter of 2025 increased 23% or $6.5 million, to $35.3 million as compared to $28.8 million for the third quarter of 2024.

The net interest margin increased 54 basis points to 4.83% in the third quarter of 2025 as compared to 4.29% in the third quarter of 2024.

The increase in net interest income in the third quarter of 2025 compared to the same period in 2024 was primarily the result of increased interest on loans, loans held for sale, and interest bearing deposits in other banks which was only partially offset by a decrease in interest income on investments, as well as an increase in interest expense on interest-bearing deposits and borrowings.

The increase in net interest margin in the third quarter of 2025 as compared to the same period of 2024 was primarily due to a favorable change in the mix of earning-assets towards higher loan balances as a percentage of total earning-assets and higher yields on those assets as well as a decrease in the cost of interest-bearing liabilities.

Net interest income for the first nine months of 2025 increased 22% or $17.9 million, to $100.2 million as compared to $82.3 million for the first nine months of 2024.

The net interest margin increased 45 basis points to 4.68% in the first nine months of 2025 as compared to 4.23% in the first nine months of 2024.

The increase in net interest income in the first nine of 2025 compared to the same period in 2024 was primarily the result of increased interest on loans, loans held for sale, and interest bearing deposits in other banks, which were only partially offset by a decrease in interest income on investments, as well as an increase in interest expense on interest-bearing liabilities.

The increase in net interest margin in the first nine months of 2025 as compared to the same period of 2024 was primarily due to a favorable change in the mix of earning-assets towards higher loan balances as a percentage of total earning-assets and higher yields on those assets, as well as a decrease in the cost of interest-bearing liabilities.

Net interest income for the first quarter of 2026 increased 11% or $3.4 million, to $34.7 million as compared to $31.3 million for the first quarter of 2025.

The net interest margin increased 17 basis points to 4.72% in the first quarter of 2026 as compared to 4.55% in the first quarter of 2025.

The increase in net interest income in the first quarter of 2026 compared to the same period in 2025 was primarily the result of increased interest on loans, loans held for sale, interest bearing deposits in other banks, and long term investments, as well as a decrease in interest expense on deposits, which were only partially offset by an increase in interest expense on borrowings.

The increase in net interest margin in the first quarter of 2026 as compared to the same period of 2025 was primarily due to a favorable change in the mix of earning-assets towards higher loan balances as a percentage of total earning-assets as well as a decrease in the cost of interest-bearing deposits.

Components of Net Interest Margin

The following table compares average balances and rates as well as margins on earning assets for the three-month periods ended September 30, 2025 and 2024.

The following table compares average balances and rates as well as margins on earning assets for the three-month periods ended March 31, 2026 and 2025.

Average yields or costs are calculated on a tax-equivalent basis.

(Dollars in Thousands) Three Months Ended September 30,

(Dollars in Thousands) Three Months Ended March 31,

Interest income/ Average Tax Equivalent

22 unchanged sentences

Total $3,280,769 $3,074,785 $205,984 7 %

Net interest income $35,346 $28,842 $6,504 23 %

Net interest margin 4.83 % 4.29 % 0.54 %

Average loans to average interest-earning assets 75.89 % 72.29 %

Average loans to average total deposits 78.50 % 76.77 %

Average non-interest deposits to average total deposits 28.36 % 28.67 %

Average interest-earning assets to average interest-bearing liabilities 140.77 % 145.37 %

1 Consists of interest bearing deposits in other banks and domestic CDs.

2 Consists of investment securities available for sale, investment securities held to maturity, marketable equity securities, and investment in Federal Home Loan Bank stock.

3 Interest income includes loan fees.

Loan fees recognized during the period and included in the yield calculation totaled $1.3 million and $1.1 million in the third quarter of 2025 and 2024, respectively.

4 Nonaccrual loans are included with a zero effective yield.

Average nonaccrual loans included in the computation of the average loan balances were $8.1 million and $5.0 million in the third quarter of 2025 and 2024, respectively .

5 The Company does not have any fed funds sold or securities purchased with agreements to resell to disclose as part of its total interest-earning assets in the periods presented.

6 Tax-equivalent yields/costs assume a federal tax rate of 21% and state tax rate of 7.43% for a combined tax rate of 28.43%.

The following tables set forth the changes in consolidated net interest income attributable to changes in volume and to changes in interest rates for the three-month periods ending September 30, 2025 and 2024.

Changes attributable to the combined effect of volume and interest rate have been allocated proportionately to the changes due to volume and the changes due to interest rates.

The Company did not have any fed funds sold or securities purchased with agreements to resell for the three-month periods ending September 30, 2025 and 2024.

(In Thousands) Three Months Ended September 30, 2025 vs.

Increase (decrease) due to

Volume Rate Total

Interest Income:

Short-term investments $989 ($54) $935

Taxable long-term investments (1,158) 506 (652)

Loans held for sale 223 1 224

Loans 4,930 1,125 6,055

Total interest income $4,984 $1,578 $6,562

Interest Expense:

Interest-bearing demand $1,236 ($50) $1,186

Savings deposits 9 42 51

Money market deposits (1) 3 2

Time deposits (339) (884) (1,223)

Interest-bearing deposits 905 (889) 16

Borrowings 73 (31) 42

Total interest expense $978 ($920) $58

The following table compares average balances and rates as well as margins on earning assets for the nine-month periods ended September 30, 2025 and 2024.

Average yields or costs are calculated on a tax-equivalent basis.

(Dollars in Thousands) Nine Months Ended September 30,

Interest income/ Average Tax Equivalent

Average Balances Change expense Change Yields/Costs 6

2025 2024 $ % 2025 2024 $ % 2025 2024 Change

Interest-bearing deposits in other banks 1

$61,416 $35,747 $25,669 72 % $2,255 $1,459 $796 55 % 4.84 % 5.34 % (0.50) %

Taxable long-term investments 2

Net interest income (tax equivalent) $35,061 $31,676 $3,385 11 %

Net interest margin (tax equivalent)

4.77 % 4.61 % 0.16 %

Loans held for sale 109,563 63,917 45,646 71 % 5,178 2,942 2,236 76 % 6.30 % 6.14 % 0.16 %

Reconciliation to reported net interest income:

Adjustments for taxable equivalent basis

($400) ($379) ($21) 6 %

Interest-earning assets 5

Net interest income and margin, as reported

$34,661 $31,297 $3,364 11 % 4.72 % 4.55 % 0.17 %

Nonearning assets 307,593 200,619 106,974 53 %

Total $3,167,215 $2,801,260 $365,955 13 %

Interest-bearing demand $1,173,605 $908,142 $265,463 29 % $17,294 $13,454 $3,840 29 % 1.97 % 1.98 % (0.01) %

Savings deposits 250,159 244,385 5,774 2 % 1,057 833 224 27 % 0.56 % 0.46 % 0.10 %

Money market deposits 194,811 205,266 (10,455) (5) % 2,438 2,491 (53) (2) % 1.67 % 1.62 % 0.05 %

Time deposits 396,507 393,386 3,121 1 % 9,589 12,001 (2,412) (20) % 3.23 % 4.07 % (0.84) %

Total interest-bearing deposits 2,015,082 1,751,179 263,903 15 % 30,378 28,779 1,599 6 % 2.02 % 2.20 % (0.18) %

Borrowings 58,404 35,327 23,077 65 % 1,725 1,012 713 70 % 3.92 % 3.76 % 0.16 %

Total interest-bearing liabilities 2,073,486 1,786,506 286,980 16 % 32,103 29,791 2,312 8 % 2.07 % 2.23 % (0.16) %

Non-interest bearing demand deposits 744,199 711,197 33,002 5 %

Other liabilities 61,472 57,097 4,375 8 %

Equity 288,058 246,460 41,598 17 %

Total $3,167,215 $2,801,260 $365,955 13 %

Net interest income $100,235 $82,342 $17,893 22 %

Net interest margin 4.68 % 4.23 % 0.45 %

Average loans to average interest-earning assets 77.63 % 78.14 %

5 unchanged sentences

3 Interest income includes loan fees.

Loan fees recognized during the period and included in the yield calculation totaled $3.6 million and $3.3 million in the first nine months of 2025 and 2024, respectively.

Loan fees recognized during the period and included in the yield calculation totaled $1.2 million and $1.1 million in the first quarter of 2026 and 2025, respectively.

4 Nonaccrual loans are included with a zero effective yield.

Average nonaccrual loans included in the computation of the average loan balances were $7.9 million and $5.3 million in the first nine months of 2025 and 2024, respectively .

Average nonaccrual loans included in the computation of the average loan balances were $13.2 million and $7.6 million in the first quarter of 2026 and 2025, respectively .

5 The Company does not have any fed funds sold or securities purchased with agreements to resell to disclose as part of its total interest-earning assets in the periods presented.

6 Tax-equivalent yields/costs assume a federal tax rate of 21% and state tax rate of 7.43% for a combined tax rate of 28.43%.

The following tables set forth the changes in consolidated net interest income attributable to changes in volume and to changes in interest rates for the nine-month periods ending September 30, 2025 and 2024.

Changes attributable to the combined effect of volume and interest rate have been allocated proportionately to the changes due to volume and the changes due to interest rates.

The Company did not have any fed funds sold or securities purchased with agreements to resell for the nine-month periods ending September 30, 2025 and 2024.

(In Thousands) Nine Months Ended September 30, 2025 vs.

The Company did not have any fed funds sold or securities purchased with agreements to resell for the three-month periods ending March 31, 2026 and 2025.

(In Thousands) Three Months Ended March 30, 2026 vs.

Increase (decrease) due to

17 unchanged sentences

The determination of the amount of the ACL is complex and involves a high degree of judgment and subjectivity.

The following table presents the major categories of credit loss expense for the three and nine-month periods ended September 30, 2025 and 2024:

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

The following table presents the major categories of credit loss expense for the three-month periods ended March 31, 2026 and 2025:

Three Months Ended March 31,

(In Thousands) 2026 2025

2 unchanged sentences

Credit loss (benefit) expense on unfunded commitments

(233) 325 (401) (1)

Credit loss expense on available for sale debt securities — —

3 unchanged sentences

$960 ($1,409)

The increase to the provision for credit losses on loans in the third quarter of 2025 and in the first nine months of 2025 as compared to the same periods a year ago was primarily a result of increased loan balances as well as an increase in estimated loss rates due to less favorable economic forecasts and trends in qualitative factors.

Qualitative factors have increased in 2025 for an increase in adversely classified loans as well as for a slight increase in concentration risk for loans to large borrowers.

The decrease to the provision for unfunded commitments in the third quarter of 2025 and increase in the first nine months of 2025 compared to the same periods a year ago was primarily due to changes in mix of unfunded commitments.

The increase to the provision for credit losses on loans in the first quarter of 2026 as compared to the same period a year ago was primarily a result of higher growth loan balances as well as an increase in individually evaluated loans.

The decrease to the provision for unfunded commitments in the first quarter of 2026 primarily due to changes in the loss rate on unfunded commitments.

Fluctuations in the provision for credit losses in the future will be dependent upon changes in economic conditions and forecasts, as well as loan portfolio composition, quality, and duration.

Other Operating Income

Other operating income for the three-month period ended September 30, 2025 increased $19.7 million, or 170%, to $31.2 million as compared to $11.6 million for the same period in 2024, primarily due to the gain on sale of certain assets by Pacific Wealth Advisors of $14.2 million, as well as a $6.2 million increase in purchased receivable income and $226,000 increase in mortgage banking income in the third quarter of 2025 compared to the same quarter a year ago.

The fair value of marketable equity securities decreased $496,000 in the third quarter of 2025 compared to the same quarter a year ago.

The increase in purchased receivable income in the three-month period ended September 30, 2025 as compared to the same period in 2024 was primarily due to the acquisition of Sallyport in the fourth quarter of 2024.

Other operating income for the nine-month period ended September 30, 2025 increased $31.9 million, or 110%, to $60.9 million as compared to $29.0 million for the same period in 2024, primarily due to a $15.7 million increase in purchased receivable income, as well as the $14.2 million gain on sale of certain assets by Pacific Wealth Advisors and a $2.0 million increase in mortgage banking income in the first nine-months of 2025 compared to the same period a year ago.

The increase in purchased receivable income in the first nine-months of 2025 compared to the same period a year ago was primarily due to the acquisition of Sallyport in the fourth quarter of 2024.

Other operating income for the three-month period ended March 31, 2026 increased $1.8 million, or 14%, to $14.9 million as compared to $13.0 million for the same period in 2025, primarily due to a $2.2 million increase in mortgage banking income in the first quarter of 2026 compared to the same quarter a year ago.

The fair value of marketable equity securities decreased $206,000 in the first quarter of 2026 compared to the same quarter a year ago.

Other Operating Expense

Other operating expense for the third quarter of 2025 increased $3.6 million, or 13%, to $30.3 million as compared to $26.7 million for the same period in 2024.

Other operating expense for the nine-month period ended September 30, 2025 increased $15.4 million, or 20%, to $91.0 million as compared to $75.6 million for the same period in 2024.

The increases in both periods were primarily due to increases in salaries and other personnel expense, compensation expense for Sallyport acquisition payments, and an increase in data processing expense.

The addition of Sallyport on October 31, 2024 was responsible for a significant portion of the increase in total other operating expenses, including $2.4 million in the in the third quarter of 2025 compared to the third quarter of 2024 and $7.5 million in the first nine months of 2025 compared to the same period in the prior year.

On July 4, 2025, the President of the United States signed and enacted the One Big Beautiful Bill Act (“OBBBA”) into law.

Except for certain provisions, the OBBBA is effective for tax years beginning on or after January 1, 2025.

The tax and spending legislation permanently extends key business tax breaks originally enacted under the 2017 Tax Cuts and Jobs Act.

The Company does not expect changes in the law to have a material impact on income tax expense.

For the third quarter of 2025, Northrim recorded a lower effective tax rate as compared to the same period in 2024 primarily as a result of change in mix of how pretax income is allocated to states with varying tax rates as well as an increase in estimated tax deductions related to low income housing tax credit investments.

In the third quarter of 2025, Northrim recorded $7.5 million in state and federal income tax expense, for an effective tax rate of 21.71% compared to $2.8 million and 24.17% for the same period in 2024.

In the nine-month period ended September 30, 2025, Northrim recorded $15.7 million in state and federal income tax expense, for an effective tax rate of 23.18% compared to $7.7 million and 22.71% for the same period in 2024.

The increase in the effective tax rate for the first nine months of 2025 compared to the same period in 2024 is due to a decrease in tax credits and tax exempt interest income as a percentage of pre-tax income in 2025.

ANALYSIS OF FINANCIAL CONDITION

Other operating expense for the first quarter of 2026 increased $2.5 million, or 9%, to $30.6 million as compared to $28.2 million for the same period in 2025.

The increase was primarily due to a $2.3 million increase in salaries and other personnel expense, which was partially offset by a decrease in insurance expense.

The increase in salaries and other personnel expense was primarily due to higher salaries and higher commissions paid to mortgage originators due to higher volume.

The decrease in insurance expense was primarily due to the decrease in FDIC insurance expense resulting primarily from higher capital ratios noted above.

For the first quarter of 2026, Northrim recorded a lower effective tax rate as compared to the same period in 2025 primarily as a result of an increase in tax credits and tax exempt interest income as a percentage of pre-tax income in 2026 as compared to 2025.

In the first quarter of 2026, Northrim recorded $4.3 million in state and federal income tax expense, for an effective tax rate of 23.85% compared to $4.3 million and 24.19% for the same period in 2025.

ANALYSIS OF FINANCIAL CONDITION AT MARCH 31, 2026 COMPARED TO DECEMBER 31, 2025

Balance Sheet Overview

Investment Securities

Investment Securities include investment securities available for sale, investment securities held to maturity, and marketable equity securities, at September 30, 2025 decreased 11% to $464.3 million from $524.1 million at December 31, 2024 primarily due to maturities and calls of available for sale securities during the first nine months of 2025.

The proceeds of these maturities and calls were invested in loans.

Investment Securities include investment securities available for sale, investment securities held to maturity, and marketable equity securities, at March 31, 2026 increased 1% to $460.3 million from $455.8 million at December 31, 2025 primarily due to purchases of available for sale securities during the first three months of 2026.

The table below details portfolio investment balances by portfolio investment type as of the periods indicated:

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Dollar Amount Percent of Total Dollar Amount Percent of Total

7 unchanged sentences

Total $460,342 $455,803

The average estimated duration of the investment portfolio at September 30, 2025, was approximately 2.16 years.

As of September 30, 2025, $80.7 million of available for sale securities with a weighted average yield of 1.15% are scheduled to mature in the next six months, $103.9 million with a weighted average yield of 1.44% are scheduled to mature in six months to one year, and $124.8 million with a weighted average yield of 2.69% are scheduled to mature in the following year, representing a total of $309.4 million or 10% of earning assets that are scheduled to mature in the next 24 months.

The average estimated duration of the investment portfolio at March 31, 2026, was approximately 2.2 years.

As of March 31, 2026, $109.0 million of available for sale securities with a weighted average yield of 1.55% are scheduled to mature in the next six months, $68.3 million with a weighted average yield of 2.15% are scheduled to mature in six months to one year, and $84.8 million with a weighted average yield of 3.41% are scheduled to mature in the following year, representing a total of $262.1 million or 9% of earning assets that are scheduled to mature in the next 24 months.

Loans and Lending Activities

The following table presents the concentration distribution of the loan portfolio, net of deferred fees and costs, as of the dates indicated:

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Dollar Amount Percent of Total Dollar Amount Percent of Total

14 unchanged sentences

Total loans $2,358,702 $2,295,499

Loans increased by $89.7 million, to $2.22 billion at September 30, 2025 from $2.13 billion at December 31, 2024, primarily as a result of increases in commercial real estate and commercial and industrial loans.

These increases were only partially offset by the sale of 1-4 family residential loans secured by first liens in the first nine month of 2025 as well as decreases in other construction, land development and raw land loans.

Loans increased by $63.2 million, to $2.36 billion at March 31, 2026 from $2.30 billion at December 31, 2025, primarily as a result of increases 1-4 family residential loans secured by first liens, other loans, and commercial and industrial loans in the first three month of 2026.

Information about industry concentrations

The Company defines “direct exposure” to the oil and gas industry as companies that it has identified as significantly reliant upon activity related to the oil and gas industry, such as oilfield services, lodging, equipment rental, transportation, and other logistic services specific to the industry.

The Company estimates that $125.3 million, or approximately 6% of loans as of September 30, 2025 have direct exposure to the oil and gas industry as compared to $99.7 million, or approximately 5% of loans as of December 31, 2024.

The Company's unfunded commitments to borrowers that have direct exposure to the oil and gas industry were $79.2 million and $45.8 million at September 30, 2025 and December 31, 2024, respectively.

The portion of the Company's ACL that related to the loans with direct exposure to the oil and gas industry was estimated at $1.8 million as of September 30, 2025 and $1.1 million as of December 31, 2024.

The Company estimates that $127.8 million, or approximately 5% of loans as of March 31, 2026 have direct exposure to the oil and gas industry as compared to $123.4 million, or approximately 5% of loans as of December 31, 2025.

The Company's unfunded commitments to borrowers that have direct exposure to the oil and gas industry were $79.6 million and $88.6 million at March 31, 2026 and December 31, 2025, respectively.

The portion of the Company's ACL that related to the loans with direct exposure to the oil and gas industry was estimated at $2.0 million as of March 31, 2026 and $1.6 million as of December 31, 2025.

The following table details loan balances by loan segment and class of financing receivable for loans with direct oil and gas exposure as of the dates indicated:

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

(In Thousands) March 31, 2026 December 31, 2025

Commercial & industrial loans $117,596 $113,036

5 unchanged sentences

The Company monitors other concentrations within the loan portfolio depending on trends in the current and future estimated economic conditions.

At September 30, 2025, the Company had $139.4 million, or 6% of portfolio loans, in the Healthcare sector, $134.1 million, or 6% of portfolio loans, in the Accommodations sector, $117.3 million, or 5% of portfolio loans, in the Tourism sector, $96.4 million, or 4% of portfolio loans, in the Retail sector, $79.5 million, or 4% of portfolio loans, in the Aviation (non-tourism) sector, $75.2 million, or 3% of portfolio loans, in the Fishing sector, and $55.3 million, or 2% in the Restaurant sector.

The portion of the Company's ACL that related to the loans with exposure to these industries is estimated at the following amounts as of September 30, 2025:

At March 31, 2026, the Company had $150.9 million, or 6% of portfolio loans, in the Accommodations sector, $133.2 million, or 6% of portfolio loans, in the Healthcare sector, $121.3 million, or 5% of portfolio loans, in the Tourism sector, $101.4 million, or 4% of portfolio loans, in the Retail sector, $92.1 million, or 4% of portfolio loans, in the Aviation (non-tourism) sector, $62.5 million, or 3% in the Restaurant sector, and $60.7 million, or 3% of portfolio loans, in the Fishing sector.

The portion of the Company's ACL that related to the loans with exposure to these industries is estimated at the following amounts as of March 31, 2026:

(In Thousands) Tourism Aviation (non-tourism) Healthcare Retail Fishing Restaurant Accommodations Total

2 unchanged sentences

The following table sets forth information regarding our nonperforming loans and total nonperforming assets as of the periods indicated:

September 30, December 31,

March 31, December 31,

(In Thousands) 2026 2025

Nonaccrual loans $9,753 $7,516

Loans 90 days past due and accruing 1,688 17

Total nonperforming loans $11,441 $7,533

Nonperforming loans guaranteed by government 189 —

Net nonperforming loans $11,252 $7,533

Repossessed assets 50 297

Nonperforming purchased receivables 2,253 3,768

Net nonperforming assets $13,555 $11,598

Nonaccrual loans - Community Banking

$10,006 $9,066

Nonaccrual loans - Home Mortgage Lending

Nonaccrual loans - Specialty Finance

Nonaccrual loans - Total

14,781 11,968

Total nonperforming loans - Community Banking

Total nonperforming loans - Home Mortgage Lending

Total nonperforming loans - Specialty Finance

Total nonperforming loans - Total

14,781 11,968

Nonperforming loans guaranteed by gov't - Community Banking

Nonperforming loans guaranteed by gov't - Total

Net nonperforming loans - Community Banking

Net nonperforming loans - Home Mortgage Lending

Net nonperforming loans - Specialty Finance

Net nonperforming loans - Total

14,214 11,329

Other real estate owned - Community Banking

Other real estate owned - Total

Nonperforming purchased receivables - Specialty Finance

Net nonperforming assets - Community Banking

Net nonperforming assets - Home Mortgage Lending

Net nonperforming assets - Specialty Finance

Net nonperforming assets - Total

$15,250 $11,396

Adversely classified loans, net of gov't guarantees - Community Banking

$29,395 $29,447

Adversely classified loans, net of gov't guarantees - Home Mortgage Lending

Adversely classified loans, net of gov't guarantees - Specialty Finance

Adversely classified loans, net of gov't guarantees - Total

$34,338 $33,498

Special mention loans, net of gov't guarantees - Community Banking

$7,985 $10,481

Special mention loans, net of gov't guarantees - Total

$7,985 $10,481

Nonperforming loans, net of government guarantees / portfolio loans

Nonperforming loans, net of government guarantees / portfolio loans, net of government guarantees 0.54 % 0.38 %

0.60 % 0.49 %

Nonperforming loans, net of government guarantees / portfolio loans, net of gov't guarantees 0.64 % 0.53 %

Nonperforming assets, net of government guarantees / total assets

Nonperforming assets, net of government guarantees / total assets net of government guarantees 0.43 % 0.40 %

Adversely classified loans, net of government guarantees $38,599 $9,636

Special mention loans, net of government guarantees $4,876 $19,769

0.45 % 0.35 %

Nonperforming assets, net of government guarantees / total assets net of gov't guarantees 0.48 % 0.36 %

Loans 30-89 days past due and accruing, net of government guarantees / portfolio loans 0.09 % 0.07 %

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portfolio loans, net of government guarantees 0.10 % 0.08 %

Allowance for credit losses / portfolio loans 1.05 % 1.03 %

Allowance for credit losses / portfolio loans, net of government guarantees 1.12 % 1.10 %

Allowance for credit losses / nonperforming loans, net of government

guarantees 208 % 292 %

Gross loan charge-offs for the quarter $1,334 $149

Gross loan recoveries for the quarter ($142) ($200)

Net loan charge-offs (recoveries) for the quarter $1,192 ($51)

Net loan charge-offs (recoveries) year-to-date $1,299 ($215)

Net loan charge-offs (recoveries) for the quarter / average loans, for the quarter 0.05 % — %

Net loan charge-offs (recoveries) year-to-date / average loans,

year-to-date annualized 0.08 % — %

Allowance for credit losses for loans / portfolio loans

1.05 % 1.03 %

Allowance for credit losses for loans / portfolio loans, net of gov't guarantees

1.12 % 1.10 %

Allowance for credit losses for loans / nonperforming loans, net of gov't guarantees 175 % 210 %

Net loan charge-offs (recoveries) year-to-date - Community Banking

Net loan charge-offs (recoveries) year-to-date - Specialty Finance

Net loan charge-offs (recoveries) year-to-date - Total

Net loan charge-offs (recoveries) year-to-date / average loans, year-to-date annualized 0.04 % 0.08 %

Allowance for credit losses for purchased receivables / purchased receivables

Net purchased receivable (recoveries) charge-offs for the quarter ($19) $—

Net purchased receivable charge-offs (recoveries) year-to-date $262 $—

Net purchased receivable (recoveries) charge-offs for the quarter / average purchased receivables,

for the quarter (0.02) % — %

Net purchased receivable charge-offs (recoveries) year-to-date / average purchased receivables,

year-to-date annualized 0.35 % — %

Net purchased receivable charge-offs (recoveries) year-to-date / average

purchased receivables, year-to-date annualized

(0.02) % 2.15 %

Allowance for Credit Losses

The following table sets forth information regarding changes in the ACL as of the periods indicated:

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

Three Months Ended March 31,

(In Thousands) 2026 2025

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Commercial & industrial loans (250) (37)

Agricultural production, including commercial fishing — — — (25)

Consumer loans (2) (13)

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Commercial & industrial loans 37 74

Commercial real estate:

Owner occupied properties 30 — 30 —

Residential real estate:

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Consumer loans — 1

Other loans — — — —

Total recoveries 41 84

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The following table sets forth information regarding changes in the ACL for unfunded commitments as of the periods indicated:

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

Three Months Ended March 31,

(In Thousands) 2026 2025

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

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

Three Months Ended March 31,

(In Thousands) 2026 2025

Balance at beginning of period $— $3,649

Adjustment related to PCD collections payable to sellers 1

(1,513) — (1,513) —

Charge-offs — —

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Balance at end of period $— $3,695

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

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

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.

The ACL for loans held for investment at September 30, 2025 increased $1.3 million from December 31, 2024 primarily due to increases in loan balances as well as an increase in estimated loss rates due to less favorable economic forecasts and trends in qualitative factors.

Qualitative factors have increased in 2025 for an increase in adversely classified loans as well as for a slight increase in concentration risk for loans to large borrowers.

The ACL for loans held for investment at March 31, 2026 increased $1.1 million from December 31, 2025 primarily due to increased loan balances and an increase in the ACL for individually evaluated loans.

While management believes that it uses the best information available to determine the ACL, unforeseen market conditions and other events could result in adjustment to the ACL, and net income could be significantly affected if circumstances differed substantially from the assumptions used in making the final determination of the ACL.

Deposits are the Company’s primary source of funds.

Total deposits increased $226.3 million, or 8%, to $2.91 billion as of September 30, 2025 compared to $2.68 billion as of December 31, 2024, primarily due to new deposit relationships and normal seasonal fluctuations.

Total deposits increased $60.7 million, or 2%, to $2.87 billion as of March 31, 2026 compared to $2.81 billion as of December 31, 2025, primarily due to new deposit relationships and normal seasonal fluctuations.

The following table summarizes the Company's composition of deposits as of the periods indicated:

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

(In thousands) Balance % of total Balance % of total

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Total deposits $2,873,746 $2,813,029

The Company’s mix of deposits continues to contribute to a low cost of funds with balances in transaction accounts representing 86% of total deposits at September 30, 2025 and 84% of total deposits at December 31, 2024.

The Company’s mix of deposits continues to contribute to a low cost of funds with balances in transaction accounts representing 86% of total deposits at March 31, 2026 and 86% of total deposits at December 31, 2025.

The only deposit category with stated maturity dates is certificates of deposit.

At September 30, 2025, the Company had $400.3 million in certificates of deposit as compared to certificates of deposit of $418.4 million at December 31, 2024.

At September 30, 2025, $361.1 million, or 90%, of the Company’s certificates of deposits are scheduled to mature over the next 12 months as compared to $369.7 million, or 88%, of total certificates of deposit at December 31, 2024.

The aggregate amount of certificates of deposit in amounts of $250,000 and greater at September 30, 2025 and December 31, 2024, was $207.8 million and $217.1 million, respectively.

The following table sets forth the amount outstanding of deposits in amounts of $250,000 and greater by time remaining until maturity and percentage of total deposits as of September 30, 2025:

At March 31, 2026, the Company had $391.1 million in certificates of deposit as compared to certificates of deposit of $402.8 million at December 31, 2025.

At March 31, 2026, $365.6 million, or 93%, of the Company’s certificates of deposits are scheduled to mature over the next 12 months as compared to $369.2 million, or 92%, of total certificates of deposit at December 31, 2025.

The aggregate amount of certificates of deposit in amounts of $250,000 and greater at March 31, 2026 and December 31, 2025, was $196.0 million and $208.2 million, respectively.

The following table sets forth the amount outstanding of deposits in amounts of $250,000 and greater by time remaining until maturity and percentage of total deposits as of March 31, 2026:

Time Certificates of Deposit

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Total $196,006 100 %

At September 30, 2025, 76% of total deposits were held in business accounts and 24% of deposit balances were held in consumer accounts.

Northrim had approximately 34,000 deposit customers with an average balance of $63,000 as of September 30, 2025.

Northrim had 31 customers with balances over $10 million as of September 30, 2025 which accounted for $725.7 million, or 26%, of total deposits.

Uninsured deposits totaled approximately $1.19 billion or 41% of total deposits as of September 30, 2025 compared to $1.1 billion or 40% of total deposits as of December 31, 2024.

There was no unusual deposit activity during the first nine months of 2025.

At March 31, 2026, 75% of total deposits were held in business accounts and 25% of deposit balances were held in consumer accounts.

Northrim had approximately 33,000 deposit customers with an average balance of $64,000 as of March 31, 2026.

Northrim had 33 customers with balances over $10 million as of March 31, 2026 which accounted for $721.0 million, or 25%, of total deposits.

Uninsured deposits totaled approximately $1.14 billion or 40% of total deposits as of March 31, 2026 compared to $1.1 billion or 38% of total deposits as of December 31, 2025.

There was no unusual deposit activity during the first three months of 2026.

The Bank is a member of the Federal Home Loan Bank of Des Moines (the “FHLB”).

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FHLB advances 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 Bank’s assets.

At September 30, 2025, our maximum borrowing line from the FHLB was approximately 45% of the Bank’s assets, subject to the FHLB’s collateral requirements.

Based on the Company's current collateral pledged to the FHLB, less outstanding advances, the Company's borrowing line is $438.5 million as of September 30, 2025.

The Company has outstanding advances of $12.9 million as of September 30, 2025 which were originated to match fund low income housing projects that qualify for long term fixed interest rates.

At March 31, 2026, our maximum borrowing line from the FHLB was approximately 45% of the Bank’s assets, subject to the FHLB’s collateral requirements.

Based on the Company's current collateral pledged to the FHLB, less outstanding advances, the Company's borrowing line is $469.9 million as of March 31, 2026.

The Company has outstanding advances of $12.7 million as of March 31, 2026 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%.

Federal Reserve Bank:

The Federal Reserve Bank of San Francisco (the “Federal Reserve Bank”) is holding $70.0 million of securities as collateral to secure the Company's ability to take advances through the discount window on September 30, 2025.

There were no discount window advances outstanding at either September 30, 2025 or December 31, 2024.

There were no discount window advances outstanding at either March 31, 2026 or December 31, 2025.

Other Short-term Borrowings:

The Company is subject to provisions under Alaska state law, which generally limit the amount of outstanding debt to 35% of total assets or $1.15 billion at September 30, 2025 and $1.06 billion at December 31, 2024.

At September 30, 2025 and December 31, 2024, the Company had no short-term (original maturity of one year or less) borrowings that exceeded 30% of shareholders’ equity.

The Company is subject to provisions under Alaska state law, which generally limit the amount of outstanding debt to 15% of total assets or $500.5 million at March 31, 2026 and $490.6 million at December 31, 2025.

At March 31, 2026 and December 31, 2025, the Company had no short-term (original maturity of one year or less) borrowings that exceeded 30% of shareholders’ equity.

Long-term Borrowings.

The Company had no long-term borrowing outstanding other than the FHLB advances noted above as of September 30, 2025 or December 31, 2024.

The Company had no long-term borrowing outstanding other than the FHLB advances noted above as of March 31, 2026 or December 31, 2025.

Junior Subordinated Debentures

At March 31, 2026 and December 31, 2025, the Company had trust preferred securities in the principal amount of $10 million.

These securities carry an interest rate of 90-day CME SOFR plus tenor spread adjustment of 0.26% plus 1.37% per annum, adjusted quarterly.

The securities have a maturity date of March 15, 2036, and are callable by the Company on or after March 15, 2011.

These securities are treated as Tier 1 capital by the Company’s regulators for capital adequacy calculations.

At March 31, 2026 and December 31, 2025, the securities had an interest rate of 5.31% and 5.35%, respectively.

The Company entered into an interest rate swap in the third quarter of 2017 to hedge the variability in cash flows arising out of its junior subordinated debentures, 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 million of junior subordinated debentures held under NST2 at 3.72% through its maturity date.

Net of the impact of the interest rate swap, interest expense on these securities was $93,000 in the first quarter of 2026 and $92,000 in the first quarter of 2025.

The Company also had interest expense of $4,000 in the first quarter of 2026 and $5,000 in the first quarter of 2025 on common securities related to this junior subordinated debt.

Subordinated Debentures

At March 31, 2026 and December 31, 2025, the Company had $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 mature on December 1, 2035 and currently carry interest at a fixed rate of 6.875% per year.

The interest cost to the Company on the Subordinated Notes was $1.0 million in the first quarter of 2026.

The Company incurred debt issuance costs of $1.4 million which will be amortized through December 1, 2035.

The amortization expense amounted to $35,000 in the first quarter of 2026.

The Subordinated Notes are intended to qualify as Tier 2 capital of the Company for regulatory capital purposes.

Liquidity and Capital Resources

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Other available sources of liquidity for the bank holding company include the issuance of debt and the issuance of common or preferred stock.

As of September 30, 2025, the Company has 40.0 million authorized shares of common stock, of which approximately 22.1 million are issued and outstanding, leaving approximately 17.9 million shares available for issuance.

As of March 31, 2026, the Company has 40.0 million authorized shares of common stock, of which approximately 22.2 million are issued and outstanding, leaving approximately 17.8 million shares available for issuance.

Additionally, the Company has 2.5 million authorized shares of preferred stock available for issuance.

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The primary sources of demands on our liquidity are customer demands for withdrawal of deposits and borrowers’ demands that we advance funds against unfunded lending commitments.

The Company had cash and cash equivalents of $212.7 million, or 6% of total assets at September 30, 2025 compared to $62.7 million, or 2% of total assets as of December 31, 2024.

The Company had cash and cash equivalents of $154.9 million, or 5% of total assets at March 31, 2026 compared to $145.9 million, or 4% of total assets as of December 31, 2025.

The increase in cash and cash equivalents since the end of 2025 is primarily due to an increase in deposits.

The Company had other comprehensive income, net of tax, of $1.6 million for the nine-month period ending September 30, 2025 primarily due to unrealized holding gains on available for sale securities.

Accumulated unrealized losses, net of income taxes on available for sale securities, which are recorded in total shareholders' equity, are $1.8 million as of September 30, 2025.

Accumulated unrealized losses, net of income taxes on held to maturity securities, which are not recorded in shareholders' equity, are $191,000 as of September 30, 2025.

The Company had other comprehensive loss, net of tax, of $394,000 for the three-month period ending March 31, 2026 primarily due to unrealized holding gains on available for sale securities.

Accumulated unrealized losses, net of income taxes on available for sale securities, which are recorded in total shareholders' equity, are $927,000 as of March 31, 2026.

Accumulated unrealized losses, net of income taxes on held to maturity securities, which are not recorded in shareholders' equity, are $763,000 as of March 31, 2026.

Management does not believe that liquidation of these securities, which would result in realized losses, will occur prior to maturity of these securities.

As of September 30, 2025, the weighted average maturity of available for sale securities is 2.16 years as compared to 2.40 years as of December 31, 2024.

At September 30, 2025, $184.6 million available for sale securities mature within one year, $124.8 million mature within one to two years, and $35.0 million mature within two to three years.

Our total unfunded commitments to fund loans and letters of credit at September 30, 2025 were $547.6 million.

As of March 31, 2026, the weighted average maturity of available for sale securities is 2.2 years as compared to 2.0 years as of December 31, 2025.

At March 31, 2026, $177.3 million available for sale securities mature within one year, $84.8 million mature within one to two years, and $65.6 million mature within two to three years.

Our total unfunded commitments to fund loans and letters of credit at March 31, 2026 were $625.4 million.

We do not expect that all of these loans are likely to be fully drawn upon at any one time.

At September 30, 2025, certificates of deposit totaling $361.1 million are scheduled to mature over the next 12 months and may be withdrawn from the Bank.

At March 31, 2026, certificates of deposit totaling $365.6 million are scheduled to mature over the next 12 months and may be withdrawn from the Bank.

Similar to loans, we do not expect that these maturing certificates of deposit, or other non-maturity deposits, to be withdrawn from the Bank in a manner that will strain liquidity;

however, unforeseen future circumstances or events may cause higher than anticipated withdrawal of deposits or draws of unfunded commitments to fund new loans.

Management believes that cash requirements to fund future non-deposit and non-borrowing liabilities, including operating lease liabilities and other liabilities, as of September 30, 2025, are not material to the Company's liquidity position as of September 30, 2025.

Management believes that cash requirements to fund future non-deposit and non-borrowing liabilities, including operating lease liabilities and other liabilities, as of March 31, 2026, are not material to the Company's liquidity position as of March 31, 2026.

The Company has other available sources of liquidity to fund unforeseen liquidity requirements.

These include borrowings available through our correspondent banking relationships and our credit lines with the Federal Reserve Bank and the FHLB.

At September 30, 2025, our liquid assets, which include investments and loans maturing within a year, were $1.16 billion.

At March 31, 2026, our liquid assets, which include investments and loans maturing within a year, were $1.06 billion.

Our funds available for borrowing under our existing lines of credit based on loans currently pledged and investments available to be pledged as collateral were $606.2 million.

Given these sources of liquidity and our expectations for customer demands for cash and for our operating cash needs, we believe our sources of liquidity to be sufficient for the foreseeable future.

As shown in the Consolidated Statements of Cash Flows included in Part I - Item 1 “Financial Statements” of this report, net cash provided by operating activities was $104.8 million for the first nine months of 2025, primarily due to net proceeds from the sale of loans held for sale and cash provided by net income, which was only partially offset by cash used in connection with the origination of loans held for sale.

Net cash used by investing activities was $160.4 million for the same period, primarily due to an increase in loans and purchased receivables which were only partially offset by maturities and calls of available for sale securities.

Net cash provided by financing activities in the first nine months of 2025 was $205.5 million, primarily due to increases in deposits which were only partially offset by cash dividends paid to shareholders.

As shown in the Consolidated Statements of Cash Flows included in Part I - Item 1 “Financial Statements” of this report, net cash provided by operating activities was $27.2 million for the first three months of 2026, primarily due to net proceeds from the sale of loans held for sale and cash provided by net income, which was only partially offset by cash used in connection with the origination of loans held for sale.

Net cash used by investing activities was $75.7 million for the same period, primarily due to an increase in loans and purchases of long term investments which were only partially offset by maturities and calls of available for sale and held to maturity securities.

Net cash provided by financing activities in the first three months of 2025 was $57.5 million, primarily due to increases in deposits which were only partially offset by cash dividends paid to shareholders.

Throughout our history, the Company has periodically repurchased for cash a portion of its shares of common stock in the open market.

At September 30, 2025, there are no shares remaining under the repurchase program, and we did not repurchase any shares in the first, second, or third quarters of 2025.

At March 31, 2026, there are no shares remaining under the repurchase program, and we did not repurchase any shares in the first quarter of 2026.

The Company currently has no plans to repurchase shares of its common stock in 2026.

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The requirements address both risk-based capital and leverage capital.

We believe as of September 30, 2025, that the Company and the Bank met all applicable capital adequacy requirements for a “well-capitalized” institution by regulatory standards.

We believe as of March 31, 2026, that the Company and the Bank met all applicable capital adequacy requirements for a “well-capitalized” institution by regulatory standards.

The table below illustrates the capital requirements in effect for the periods noted for the Company and the Bank and the actual capital ratios for each entity that exceed these requirements.

Management intends to maintain capital ratios for the Bank in 2026, exceeding the FDIC’s requirements for the “well-capitalized” classification.

The capital ratios for the Company exceed those for the Bank primarily because the $10 million trust preferred securities offering completed in the fourth quarter of 2005 is included in the Company’s capital for regulatory purposes, although they are accounted for as a long-term debt in our financial statements.

The trust preferred securities are not accounted for on the Bank’s financial statements nor are they included in its capital.

As a result, the Company has $10 million more in regulatory capital than the Bank at September 30, 2025, which explains most of the difference in the capital ratios for the two entities.

Some capital ratios for the Company exceed those for the Bank primarily because the $10 million trust preferred securities offering and the $60 million in Subordinated Notes are included in the Company’s capital for regulatory purposes, although they are accounted for as a long-term debt in our consolidated financial statements.

These items are not accounted for on the Bank’s financial statements nor are they included in its capital.

As a result, the Company has $70 million more in regulatory capital than the Bank at March 31, 2026, which explains most of the difference in the capital ratios for the two entities.

Minimum Required Capital Well-Capitalized Actual Ratio Company Actual Ratio Bank

September 30, 2025

March 31, 2026

Total risk-based capital 8.00% 10.00% 14.14% 13.07%

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Under the rules of the Federal Reserve Bank, a bank holding company such as the Company is generally defined to be “well capitalized” if its Tier 1 risk-based capital ratio is 8.0% or more and its total risk-based capital ratio is 10.0% or more.

Critical Accounting Estimates

SEC guidance requires disclosure of “critical accounting estimates.” The SEC defines “critical accounting estimates” as those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the registrant.

Our critical accounting estimates are described in detail in Part II.

There have been no material changes to the valuation techniques or assumptions within the models that affect our estimates during the first, second or third quarters of 2025.

Allowance for Credit Losses Policy :

Management performs a hypothetical sensitivity analysis of our ACL quarterly to understand the impact of a change in a key input on our ACL.

As of September 30, 2025, if the four-quarter U.S.

unemployment rate forecast had been approximately 5% higher and the four-quarter annualized growth rate in the U.S.

Gross Domestic Product had been approximately 29% lower, our ACL for loans would have increased $620,000, or 3%.

As of September 30, 2025, if the four-quarter national unemployment rate forecast had been approximately 29% higher and the four-quarter annualized growth rate in the U.S.

Gross Domestic Product had been approximately 50% higher, which represents management's estimate of long-term mean rates for these economic factors, our ACL for loans would have increased $1.4 million, or 6%.

As of September 30, 2025, if the estimated prepayment and curtailment rates are doubled (with a maximum rate of 100%), our ACL for loans would have decreased $2.0 million, or 9%.

As of September 30, 2025, if the estimated prepayment and curtailment rates are cut in half, our ACL for loans would have increased $1.5 million, or 7%.

These sensitivity analyses include the impact to both the quantitative and qualitative components of our ACL.

This sensitivity analysis does not incorporate changes to management’s judgment of qualitative loss factors.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our assessment of market risk as of September 30, 2025 indicates that there are no material changes in the quantitative and qualitative disclosures from those in our Annual Report on Form 10-K for the year ended December 31, 2024.

Our assessment of market risk as of March 31, 2026 indicates that there are no material changes in the quantitative and qualitative disclosures from those in our Annual Report on Form 10-K for the year ended December 31, 2025.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis