NORTHRIM BANCORP INC 10-Q

nrim-20260630 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☑ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2026 ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from_____to____ Commission File Number 000-33501 NORTHRIM BANCORP, INC. (Exact name of registrant as specified in its charter) Alaska 92-0175752 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 3111 C Street Anchorage , Alaska 99503 (Address of principal executive offices) (Zip Code) ( 907 ) 562-0062 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None TITLE OF EACH CLASS TRADING SYMBOL NAME OF EXCHANGE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý Yes ¨ No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ý Yes ¨ No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act: Large Accelerated Filer ¨ Accelerated Filer ý Non-accelerated Filer ¨ Smaller Reporting Company ☐ Emerging Growth Company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ý No The number of shares of the issuer’s Common Stock, par value $0.25 per share, outstanding at July 31, 2026 was 22,244,766 . TABLE OF CONTENTS Part I FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Consolidated Balance Sheets 3 Consolidated Statements of Income 4 Consolidated Statements of Comprehensive Income 5 Consolidated Statements of Changes in Shareholders' Equity 6 Consolidated Statements of Cash Flows 8 Notes to the Consolidated Financial Statements 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 51 Item 3. Quantitative and Qualitative Disclosures About Market Risk 74 Item 4. Controls and Procedures 74 Part II OTHER INFORMATION Item 1. Legal Proceedings 74 Item 1A. Risk Factors 75 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 77 Item 5. Other Information 78 Item 6. Exhibits 78 SIGNATURES 79 1 PART I. FINANCIAL INFORMATION These consolidated financial statements should be read in conjunction with the consolidated financial statements, accompanying notes and other relevant information included in Northrim BanCorp, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2025. ITEM 1. FINANCIAL STATEMENTS 2 CONSOLIDATED FINANCIAL STATEMENTS NORTHRIM BANCORP, INC. Consolidated Balance Sheets (Unaudited) June 30, 2026 December 31, 2025 (In Thousands, Except Share Data) ASSETS Cash and due from banks $ 41,948 $ 36,042 Interest bearing deposits in other banks 130,265 109,864 Marketable equity securities 11,315 8,392 Investment securities available for sale, at fair value 411,644 420,661 Investment securities held to maturity, at amortized cost 31,750 26,750 Investment in Federal Home Loan Bank stock 7,187 6,764 Loans held for sale 83,272 100,323 Loans 2,386,328 2,295,499 Allowance for credit losses, loans ( 25,461 ) ( 23,737 ) Net loans 2,360,867 2,271,762 Purchased receivables, net 122,792 101,642 Mortgage servicing rights, at fair value 28,475 27,474 Other real estate owned, net 1,224 — Premises and equipment, net 41,486 39,692 Operating lease right-of-use assets 11,263 5,911 Goodwill 49,874 49,874 Other intangible assets, net 950 950 Other assets 81,074 84,172 Total assets $ 3,415,386 $ 3,290,273 LIABILITIES Deposits: Demand $ 826,271 $ 721,925 Interest-bearing demand 1,281,777 1,242,546 Savings 246,617 250,006 Money market 194,665 195,793 Certificates of deposit 369,458 402,759 Total deposits 2,918,788 2,813,029 Borrowings 81,574 81,729 Operating lease liabilities 11,459 5,941 Other liabilities 55,951 63,030 Total liabilities 3,067,772 2,963,729 SHAREHOLDERS' EQUITY Preferred stock, $ 1 par value, 2,500,000 shares authorized, none issued or outstanding — — Common stock, $ 0.25 par value, 40,000,000 shares authorized, 22,244,766 and 22,111,637 issued and outstanding at June 30, 2026 and December 31, 2025, respectively 5,561 5,528 Additional paid-in capital 10,757 10,822 Retained earnings 331,394 309,575 Accumulated other comprehensive (loss) income, net of tax ( 98 ) 619 Total shareholders' equity 347,614 326,544 Total liabilities and shareholders' equity $ 3,415,386 $ 3,290,273 See notes to consolidated financial statements 3 NORTHRIM BANCORP, INC. Consolidated Statements of Income (Unaudited) Three Months Ended Six Months Ended June 30, June 30, (In Thousands, Except Per Share Data) 2026 2025 2026 2025 Interest and Dividend Income Interest and fees on loans and loans held for sale $ 42,328 $ 40,519 $ 82,305 $ 77,989 Interest on investment securities available for sale 3,212 3,026 6,217 5,978 Dividends on marketable equity securities 180 146 337 291 Interest on investment securities held to maturity 492 473 958 946 Dividends on Federal Home Loan Bank stock 147 120 293 225 Interest on deposits in other banks 795 515 1,940 931 Total Interest and Dividend Income 47,154 44,799 92,050 86,360 Interest Expense Interest expense on deposits 8,777 10,304 17,774 20,239 Interest expense on borrowings 79 809 158 1,047 Interest expense on subordinated debentures 1,162 94 2,321 185 Total Interest Expense 10,018 11,207 20,253 21,471 Net Interest Income 37,136 33,592 71,797 64,889 Provision for credit losses 1,627 1,976 2,587 567 Net Interest Income After Provision for Credit Losses 35,509 31,616 69,210 64,322 Other Operating Income Mortgage banking income 7,138 7,400 13,599 11,651 Purchased receivable income 6,473 5,897 12,605 12,047 Bankcard fees 1,329 1,153 2,418 2,227 Service charges on deposit accounts 912 726 1,723 1,403 Unrealized gain (loss) on marketable equity securities 164 78 ( 92 ) 28 Other income 721 1,386 1,363 2,324 Total Other Operating Income 16,737 16,640 31,616 29,680 Other Operating Expense Salaries and other personnel expense 20,784 20,854 40,290 38,077 Data processing expense 3,482 3,366 6,787 6,470 Occupancy expense 1,825 2,104 3,929 3,993 Professional and outside services 1,428 1,113 2,587 2,228 Marketing expense 686 1,042 1,587 1,714 Compensation expense - Sallyport acquisition payments 500 600 1,000 1,200 Insurance expense 432 756 836 1,773 OREO expense, net rental income and gains on sale 102 2 114 5 Other expense 2,783 2,651 5,514 5,199 Total Other Operating Expense 32,022 32,488 62,644 60,659 Income Before Provision for Income Taxes 20,224 15,768 38,182 33,343 Provision for income taxes 4,882 3,990 9,165 8,241 Net Income $ 15,342 $ 11,778 $ 29,017 $ 25,102 Earnings Per Share, Basic $ 0.69 $ 0.53 $ 1.31 $ 1.14 Earnings Per Share, Diluted $ 0.68 $ 0.52 $ 1.29 $ 1.12 Weighted Average Common Shares Outstanding, Basic 22,244,766 22,087,244 22,205,827 22,083,620 Weighted Average Common Shares Outstanding, Diluted 22,544,448 22,446,232 22,560,798 22,446,936 See notes to consolidated financial statements 4 NORTHRIM BANCORP, INC. Consolidated Statements of Comprehensive Income (Unaudited) 2010 Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2026 2025 2026 2025 Net income $ 15,342 $ 11,778 $ 29,017 $ 25,102 Other comprehensive income (loss), net of tax: Securities available for sale: Unrealized holding (losses) gains arising during the period ($ 528 ) $ 2,628 ($ 1,151 ) $ 6,602 Derivatives and hedging activities: Unrealized holding gains (losses) arising during the period 68 ( 99 ) 74 ( 343 ) Foreign currency translation income 6 145 54 150 Income tax expense related to net unrealized losses (gains) 131 ( 719 ) 306 ( 1,779 ) Other comprehensive (loss) income, net of tax ( 323 ) 1,955 ( 717 ) 4,630 Comprehensive income $ 15,019 $ 13,733 $ 28,300 $ 29,732 See notes to consolidated financial statements 5 NORTHRIM BANCORP, INC. Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss), net of Tax Total Number of Shares Par Value (In Thousands) Balance as of January 1, 2025 22,071 $ 5,518 $ 9,311 $ 259,311 ($ 7,024 ) $ 267,116 Cash dividend on common stock ($ 0.16 per share) — — — ( 3,573 ) — ( 3,573 ) Stock-based compensation expense — — 232 — — 232 Exercise of stock options and vesting of restricted stock units, net 12 3 ( 20 ) — — ( 17 ) Other comprehensive income, net of tax — — — — 2,674 2,674 Net income — — — 13,324 — 13,324 Balance as of March 31, 2025 22,083 $ 5,521 $ 9,523 $ 269,062 ($ 4,350 ) $ 279,756 Cash dividend on common stock ($ 0.16 per share) — — — ( 3,585 ) — ( 3,585 ) Stock-based compensation expense — — 327 — — 327 Exercise of stock options and vesting of restricted stock units, net 4 1 ( 13 ) — — ( 12 ) Other comprehensive income, net of tax — — — — 1,955 1,955 Net income — — — 11,778 — 11,778 Balance as of June 30, 2025 22,087 $ 5,522 $ 9,837 $ 277,255 ($ 2,395 ) $ 290,219 Cash dividend on common stock ($ 0.16 per share) — — — ( 3,591 ) — ( 3,591 ) Stock-based compensation expense — — 363 — — 363 Exercise of stock options and vesting of restricted stock units, net 4 1 ( 17 ) — — ( 16 ) Other comprehensive income, net of tax — — — — 1,623 1,623 Net income — — — 27,065 — 27,065 Balance as of September 30, 2025 22,091 $ 5,523 $ 10,183 $ 300,729 ($ 772 ) $ 315,663 Cash dividend on common stock ($ 0.16 per share) — — — ( 3,595 ) — ( 3,595 ) Stock-based compensation expense — — 812 — — 812 Exercise of stock options and vesting of restricted stock units, net 21 5 ( 173 ) — — ( 168 ) Other comprehensive income, net of tax — — — — 1,391 1,391 Net income — — — 12,441 — 12,441 Balance as of December 31, 2025 22,112 $ 5,528 $ 10,822 $ 309,575 $ 619 $ 326,544 See notes to consolidated financial statements 6 NORTHRIM BANCORP, INC. Consolidated Statements of Changes in Shareholders’ Equity (Continued) (Unaudited) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss), net of Tax Total Number of Shares Par Value (In Thousands) Balance as of January 1, 2026 22,112 $ 5,528 $ 10,822 $ 309,575 $ 619 $ 326,544 Cash dividend on common stock ($ 0.16 per share) — — — ( 3,590 ) — ( 3,590 ) Stock-based compensation expense — — 310 — — 310 Exercise of stock options and vesting of restricted stock units, net 133 33 ( 769 ) — — ( 736 ) Other comprehensive loss, net of tax — — — — ( 394 ) ( 394 ) Net income — — — 13,675 — 13,675 Balance as of March 31, 2026 22,245 $ 5,561 $ 10,363 $ 319,660 $ 225 $ 335,809 Cash dividend on common stock ($ 0.16 per share) — — — ( 3,608 ) — ( 3,608 ) Stock-based compensation expense — — 394 — — 394 Exercise of stock options and vesting of restricted stock units, net — — — — — — Repurchase of common stock — — — — — — Other comprehensive loss, net of tax — — — — ( 323 ) ( 323 ) Net income — — — 15,342 — 15,342 Balance as of June 30, 2026 22,245 $ 5,561 $ 10,757 $ 331,394 ($ 98 ) $ 347,614 See notes to consolidated financial statements 7 NORTHRIM BANCORP, INC. Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, (In Thousands) 2026 2025 Operating Activities: Net income $ 29,017 $ 25,102 Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities: Depreciation and amortization of premises and equipment 1,680 1,780 Depreciation of debt issuance costs 70 — Amortization of investment security premium, net of discount accretion ( 251 ) 55 Unrealized (gain) loss on marketable equity securities 92 ( 28 ) Deferred tax expense 1,729 — Stock-based compensation 704 559 Deferred loan fees and amortization, net of costs ( 252 ) 671 Provision for credit losses 2,587 567 Additions to home mortgage servicing rights carried at fair value ( 2,056 ) ( 2,740 ) Change in fair value of home mortgage servicing rights carried at fair value 1,055 1,673 Change in fair value of commercial servicing rights carried at fair value 161 193 Change in fair value of loans held for sale ( 487 ) ( 60 ) Gain on sale of loans ( 8,405 ) ( 6,671 ) Proceeds from the sale of loans held for sale 410,668 336,860 Origination of loans held for sale ( 362,522 ) ( 358,179 ) Net changes in assets and liabilities: Increase in accrued interest receivable ( 1,968 ) ( 1,072 ) Decrease in other assets 4,530 12,297 (Decrease) increase in other liabilities ( 9,054 ) 1,117 Net Cash Provided by Operating Activities 67,298 12,124 Investing Activities: Investment in securities: Purchases of investment securities available for sale ( 127,337 ) ( 24,691 ) Purchases of marketable equity securities ( 3,016 ) — Purchases of FHLB stock ( 777 ) ( 21,588 ) Purchases of investment securities held to maturity ( 15,000 ) — Proceeds from calls/maturities of securities available for sale 135,455 80,433 Proceeds from calls/maturities of securities held to maturity 10,000 — Proceeds from redemption of FHLB stock 354 18,576 Increase in purchased receivables, net ( 21,771 ) ( 35,081 ) Increase in loans, net ( 114,326 ) ( 112,738 ) Sallyport Commercial Finance, LLC acquisition, net of cash received — 144 Purchases of premises and equipment ( 3,474 ) ( 524 ) Net Cash (Used) by Investing Activities ( 139,892 ) ( 95,469 ) Financing Activities: Increase in deposits 105,759 128,981 (Decrease) increase in borrowings ( 224 ) 39,981 Proceeds from the issuance of common stock 483 ( 1 ) Cash dividends paid ( 7,117 ) ( 7,069 ) Net Cash Provided by Financing Activities 98,901 161,892 Net Change in Cash and Cash Equivalents 26,307 78,547 Cash and Cash Equivalents at Beginning of Period 145,906 62,736 Cash and Cash Equivalents at End of Period $ 172,213 $ 141,283 8 Supplemental Information: Income taxes paid $ 4,947 $ 5,020 Interest paid $ 20,185 $ 21,590 Transfer of loans to other real estate owned $ 1,224 $ — Non-cash lease liability arising from obtaining right of use assets $ 6,325 $ — Cash dividends declared but not paid $ 81 $ 89 See notes to consolidated financial statements 9 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation and Significant Accounting Policies The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying consolidated financial statements have not been audited, and they include the accounts of the Company and its wholly-owned subsidiaries, and the wholly owned subsidiaries of Northrim Bank (the “Bank”). Significant intercompany balances have been eliminated in consolidation. As of December 31, 2025, the Company had one wholly-owned business trust subsidiary, Northrim Statutory Trust 2 (“Trust 2”), that was formed to issue trust preferred securities and related common securities of Trust 2. The Company has not consolidated the accounts of Trust 2 in its consolidated financial statements in accordance with U.S. GAAP. As a result, the junior subordinated debentures issued by the Company to Trust 2 are reflected on the Company’s consolidated balance sheet as junior subordinated debentures. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The Company determined that it operates in three primary operating segments: Community Banking, Home Mortgage Lending, and Specialty Finance. The Company has evaluated subsequent events and transactions for potential recognition or disclosure. Operating results for the interim period ended June 30, 2026 are not necessarily indicative of the results anticipated for the year ending December 31, 2026. These consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The Company’s significant accounting policies are discussed in Note 1 to the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes in our application of these accounting policies in 2026, except for the addition of the following item. Subordinated Debt: The Company’s subordinated debt is recorded at its contractual principal amount net of unamortized debt issuance costs and original issue discounts or premiums, if any. The debt is subordinate in right of payment to all existing and future senior indebtedness of the Company, as defined in the related indenture or credit agreement. Debt issuance costs incurred in connection with subordinated debt are deferred and presented as a direct deduction from the carrying amount of the related debt and are amortized over the term of the debt using the effective interest method. Interest expense related to subordinated debt includes cash interest and the amortization of debt issuance costs and is recognized in interest expense in the consolidated statements of income. Stock Incentive Plans: In May of 2026, the Company's shareholders approved an amendment to the 2025 Stock Incentive Plan to add non-employee directors of the Company to the class of eligible participants who may be issued awards under the 2025 Plan. Common Stock Split On September 18, 2025, the Company effected a four -for-one forward stock split of its common stock, a proportionate increase the number of authorized shares of the common stock from 10,000,000 to 40,000,000 and proportionate decrease in the par value of the common stock from $ 1.00 per share to $ 0.25 per share. All share, equity award and per share amounts presented throughout this Quarterly Report of Form 10-Q have been retrospectively adjusted to reflect the common stock split. 10 Recent Accounting Pronouncements Accounting pronouncements to be implemented in future periods In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”). This updated mandates that public business entities provide detailed disclosures in the notes to the financial statements, breaking down specific expense categories such as purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities included in each relevant expense action. The objective is to enhance transparency, enabling investors to gain a clearer understanding of the nature and impact of these expenses on the Company's financial performance. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and may be applied on a prospective or retrospective basis. The Company intends to adopt ASU 2024-03 retrospectively and does not currently expect the adoption to have a material impact on the Company's consolidated financial statements. In November 2025, the FASB issued ASU 2025‑08, Financial Instruments—Credit Losses (Topic 326): Purchased Loans (“ASU 2025-08”). The amendments in ASU 2025‑08 are intended to simplify and improve the accounting for acquired loans under the Current Expected Credit Losses (“CECL”) model by expanding the use of the “gross‑up” approach currently applied only to purchased credit deteriorated (“PCD”) assets. Under prior generally accepted accounting principles, entities were required to distinguish between PCD and non‑PCD acquired loans, resulting in differing Day 1 accounting and concerns about complexity, comparability, and perceived double‑counting of credit losses for non‑PCD loans. ASU 2025‑08 creates a new category of “purchased seasoned loans,” defined as acquired loans—in a business combination or acquired more than 90 days after origination—other than credit cards, that meet certain criteria. These loans must now be accounted for using the gross‑up approach. This method requires an entity to recognize an allowance for expected credit losses at the acquisition date with a corresponding increase to the loan’s amortized cost basis, eliminating Day 1 credit loss expense while reducing subsequent interest income. Existing guidance for PCD assets remains unchanged. ASU 2025‑08 is effective for the Company for interim and annual reporting periods beginning after December 15, 2026 and must be applied prospectively to loans acquired after the adoption date. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2025‑08, including the accounting for loans acquired in future business combinations or loan portfolio acquisitions. In November 2025, FASB issued ASU 2025‑09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements (“ASU 2025‑09”). The amendments in ASU 2025‑09 clarify and expand certain aspects of hedge accounting to better align financial reporting with the economics of an entity’s risk‑management activities. ASU 2025-09 addresses stakeholder feedback following the implementation of prior hedge accounting guidance and issues arising from the global transition away from LIBOR. The amendments include targeted improvements across several areas of hedge accounting. Among the key changes, ASU 2025‑09 (i) expands the ability to aggregate forecasted transactions with similar risk exposures in cash flow hedges, (ii) introduces a model that facilitates hedge accounting for forecasted interest payments on “choose‑your‑rate” debt instruments, (iii) broadens hedge accounting for forecasted purchases and sales of nonfinancial assets, and (iv) updates guidance related to net written options used as hedging instruments. These improvements are intended to reduce complexity, increase consistency, and enhance the decision‑usefulness of hedge accounting outcomes. ASU 2025‑09 is effective for the Company for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2025‑09 and does not currently expect the adoption to have a material impact on the Company's consolidated financial statements. In December 2025, the FASB issued ASU 2025‑11, Interim Reporting (Topic 270): Narrow‑Scope Improvements (“ASU 2025‑11”). The amendments are intended to improve the clarity and navigability of interim reporting requirements within Topic 270 by clarifying when interim reporting guidance applies, enhancing the organization of required interim disclosures, and specifying the form and content of interim financial statements. The guidance responds to stakeholder feedback that existing interim reporting requirements were difficult to navigate because of the historical origins and accumulated amendments within Topic 270. ASU 2025‑11 adds a disclosure principle requiring entities to disclose events that occur after the end of the most recent annual reporting period that have a material impact on the entity. The amendments also introduce a comprehensive list of required interim disclosures drawn from various Codification topics and clarify the presentation requirements for interim financial statements, including condensed financial statements and accompanying footnotes. Importantly, ASU 2025-11 does not change the fundamental nature of interim reporting nor expand or reduce existing disclosure requirements; rather, it improves clarity and consistency across entities that issue interim financial statements in accordance with generally accepted accounting principles. ASU 2025‑11 is effective for the Company for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of ASU 2025‑11 and does not currently expect the adoption to have a material impact on the Company's consolidated financial statements. 11 In December 2025, the FASB issued ASU 2025‑12, Codification Improvements (“ASU 2025‑12”). This Update is part of the FASB’s ongoing project to address stakeholder‑identified issues in the Accounting Standards Codification. The amendments consist of technical corrections, clarifications, and other incremental improvements intended to enhance the clarity, consistency, and usability of U.S. GAAP. These Codification improvements are not expected to significantly affect current accounting practices or impose substantial costs on most entities. The amendments span a wide range of Topics and include clarifications to diluted earnings‑per‑share calculations, updates to disclosure requirements for certain lease receivables, refinements to the calculation of reference amounts for beneficial interests, clarification of permissible methods for treasury stock retirements, and guidance regarding the transfer and measurement of receivables arising from contracts with customers. Although the updates are largely non‑substantive, certain clarifications may affect how entities apply existing guidance where the prior Codification language was ambiguous or inconsistent. ASU 2025‑12 is effective for the Company for annual reporting periods beginning after December 15, 2026, including interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2025‑12 and does not currently expect the adoption to have a material impact on the Company's consolidated financial statements. 2. Investment Securities Marketable Equity Securities The Company held marketable equity securities with fair values of $ 11.3 million at June 30, 2026 and $ 8.4 million at December 31, 2025, respectively. The realized and unrealized gains (losses) recognized on marketable equity securities in other operating income in the Company's Consolidated Statements of Income were as follows: Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2026 2025 2026 2025 Unrealized gain (loss) on marketable equity securities $ 164 $ 78 ($ 92 ) $ 28 Total $ 164 $ 78 ($ 92 ) $ 28 Debt securities Debt securities have been classified in the financial statements as available for sale or held to maturity. The following table summarizes the amortized cost, estimated fair value, and the Allowance for Credit Losses (“ACL”) of debt securities and the corresponding amounts of gross unrealized gains and losses of available-for-sale securities recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses of held to maturity securities at the periods indicated: (In Thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Fair Value June 30, 2026 Securities available for sale U.S. Treasury and government sponsored entities $ 381,603 $ 399 ($ 2,213 ) $ — $ 379,789 U.S. Agency mortgage-backed securities 4,614 10 ( 4 ) 4,620 Corporate bonds 2,000 — ( 3 ) — 1,997 Collateralized loan obligations 25,249 13 ( 24 ) — 25,238 Total securities available for sale $ 413,466 $ 422 ($ 2,244 ) $ — $ 411,644 (In Thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Fair Value June 30, 2026 Securities held to maturity Corporate bonds $ 31,750 $ — ($ 981 ) $ — $ 30,769 Total securities held to maturity $ 31,750 $ — ($ 981 ) $ — $ 30,769 12 (In Thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Fair Value December 31, 2025 Securities available for sale U.S. Treasury and government sponsored entities $ 389,391 $ 1,717 ($ 2,371 ) $ — $ 388,737 U.S. Agency mortgage-backed securities 4,797 1 — 4,798 Corporate bonds 5,003 — ( 51 ) — 4,952 Collateralized loan obligations 22,141 33 — — 22,174 Total securities available for sale $ 421,332 $ 1,751 ($ 2,422 ) $ — $ 420,661 (In Thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Fair Value December 31, 2025 Securities held to maturity Corporate bonds $ 26,750 $ 426 ($ 578 ) $ — $ 26,598 Total securities held to maturity $ 26,750 $ 426 ($ 578 ) $ — $ 26,598 Gross unrealized losses on available for sale securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2026 and December 31, 2025 were as follows: Less Than 12 Months More Than 12 Months Total (In Thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses June 30, 2026 Securities available for sale U.S. Treasury and government sponsored entities $ 193,087 ($ 1,234 ) $ 131,059 ($ 979 ) $ 324,146 ($ 2,213 ) Corporate bonds — — 1,997 ( 3 ) 1,997 ( 3 ) Collateralized loan obligations 8,976 ( 24 ) — — 8,976 ( 24 ) Total $ 205,738 ($ 1,262 ) $ 133,056 ($ 982 ) $ 338,794 ($ 2,244 ) Securities Held to Maturity Corporate bonds $ 19,780 ($ 220 ) $ 10,989 ($ 761 ) $ 30,769 ($ 981 ) Total $ 19,780 ($ 220 ) $ 10,989 ($ 761 ) $ 30,769 ($ 981 ) December 31, 2025 Securities available for sale U.S. Treasury and government sponsored entities $ 19,992 ($ 8 ) $ 236,387 ($ 2,363 ) $ 256,379 ($ 2,371 ) Corporate bonds — — 4,592 ( 51 ) 4,592 ( 51 ) Total $ 19,992 ($ 8 ) $ 240,979 ($ 2,414 ) $ 260,971 ($ 2,422 ) Securities Held to Maturity Corporate bonds $ — $ — $ 11,172 ($ 578 ) $ 11,172 ($ 578 ) Total $ — $ — $ 11,172 ($ 578 ) $ 11,172 ($ 578 ) Management evaluates available for sale debt securities and securities held to maturity in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors. Consideration is given to the extent to which the fair value is less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value. 13 At June 30, 2026, the Company had 27 available for sale securities in an unrealized loss position without an ACL that have been in a loss position for less than twelve months. There were 15 available for sale securities without an ACL with unrealized losses at June 30, 2026 that have been in a loss position for more than twelve months. At June 30, 2026, the Company had two held to maturity securities in an unrealized loss position without an ACL that have been in a loss position for more than twelve months. There were two held to maturity securities without an ACL with an unrealized loss at June 30, 2026 that had been in a loss position for less than twelve months. Management does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Accordingly, as of June 30, 2026, management believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, primarily changes in interest rates and other market conditions, and therefore no losses have been recognized in the Company's Consolidated Statements of Income . At June 30, 2026 and December 31, 2025, carrying amounts of $ 244.5 million and $ 210.3 million in securities were pledged for deposits and borrowings, respectively. The amortized cost and estimated fair values of available for sale and held to maturity debt securities at June 30, 2026, are distributed by contractual maturity as shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. (In Thousands) Amortized Cost Fair Value June 30, 2026 U.S. Treasury and government sponsored entities Within 1 year $ 151,615 $ 150,676 1-5 years 229,988 229,113 Total $ 381,603 $ 379,789 U.S. Agency mortgage-backed securities 5-10 years $ 4,614 $ 4,620 Total $ 4,614 $ 4,620 Corporate bonds 1-5 years $ 17,000 $ 16,984 5-10 years 16,750 15,782 Total $ 33,750 $ 32,766 Collateralized loan obligations 1-5 years $ 1,249 $ 1,254 Over 10 years 24,000 23,984 Total $ 25,249 $ 25,238 There were no proceeds from sales of investment securities for the three and six-month periods ending June 30, 2026 and 2025. A summary of interest income for the three and six-month periods ending June 30, 2026 and 2025, on available for sale investment securities are as follows: Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2026 2025 2026 2025 U.S. Treasury and government sponsored entities $ 2,802 $ 2,415 $ 5,417 $ 4,739 U.S. Agency mortgage-backed securities 58 49 116 53 Other 352 562 684 1,186 Total taxable interest income $ 3,212 $ 3,026 $ 6,217 $ 5,978 Total tax-exempt interest income $ — $ — $ — $ — Total $ 3,212 $ 3,026 $ 6,217 $ 5,978 14 3. Loans and Allowance for Credit Losses Loans Held for Sale Loans held for sale are comprised entirely of 1-4 family residential mortgage loans as of June 30, 2026 and December 31, 2025. The Company designates loans held for sale as either carried at fair value or the lower of cost or fair value at loan level at origination. Loans Held for Investment The following table presents amortized cost and unpaid principal balance of loans, categorized by the segments used in the Company's CECL methodology to assess credit risk, for the periods indicated: June 30, 2026 December 31, 2025 (In Thousands) Amortized Cost Unpaid Principal Difference Amortized Cost Unpaid Principal Difference Commercial & industrial loans $ 471,215 $ 473,342 ($ 2,127 ) $ 450,826 $ 453,153 ($ 2,327 ) Commercial real estate: Owner occupied properties 443,054 444,880 ( 1,826 ) 433,157 435,050 ( 1,893 ) Non-owner occupied and multifamily properties 769,928 774,340 ( 4,412 ) 763,180 767,617 ( 4,437 ) Residential real estate: 1-4 family residential properties secured by first liens 260,301 260,371 ( 70 ) 243,185 243,167 18 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 79,995 79,125 870 67,116 66,470 646 1-4 family residential construction loans 28,839 29,053 ( 214 ) 39,059 39,311 ( 252 ) Other construction, land development and raw land loans 175,656 177,280 ( 1,624 ) 173,589 175,261 ( 1,672 ) Obligations of states and political subdivisions in the US 39,525 39,692 ( 167 ) 32,434 32,433 1 Agricultural production, including commercial fishing 55,833 56,118 ( 285 ) 47,445 47,682 ( 237 ) Consumer loans 9,877 9,758 119 9,763 9,659 104 Other loans 52,105 52,281 ( 176 ) 35,745 35,860 ( 115 ) Total 2,386,328 2,396,240 ( 9,912 ) 2,295,499 2,305,663 ( 10,164 ) Allowance for credit losses ( 25,461 ) ( 23,737 ) Net loans $ 2,360,867 $ 2,396,240 ($ 9,912 ) $ 2,271,762 $ 2,305,663 ($ 10,164 ) The difference between the amortized cost and unpaid principal balance is net deferred origination fees totaling $ 9.9 million at June 30, 2026 and $ 10.2 million at December 31, 2025. Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $ 11.0 million and $ 9.6 million at June 30, 2026 and December 31, 2025, respectively, and is included in other assets in the Consolidated Balance Sheets . 15 Allowance for Credit Losses The table below presents activity in the ACL related to loans held for investment for the periods indicated. Three Months Ended June 30, Beginning Balance Credit Loss Expense (Benefit) Charge-offs Recoveries Ending Balance (In Thousands) 2026 Commercial & industrial loans $ 6,371 ($ 106 ) ($ 64 ) $ 27 $ 6,228 Commercial real estate: Owner occupied properties 2,498 125 — — 2,623 Non-owner occupied and multifamily properties 5,252 ( 66 ) ( 78 ) — 5,108 Residential real estate: 1-4 family residential properties secured by first liens 6,220 277 — — 6,497 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 1,083 222 — 3 1,308 1-4 family residential construction loans 187 ( 28 ) — — 159 Other construction, land development and raw land loans 2,615 233 — — 2,848 Obligations of states and political subdivisions in the US 140 44 — — 184 Agricultural production, including commercial fishing 212 27 — 1 240 Consumer loans 102 20 — — 122 Other loans 132 12 — — 144 Total $ 24,812 $ 760 ($ 142 ) $ 31 $ 25,461 2025 Commercial & industrial loans $ 7,387 $ 268 ($ 152 ) $ 5 $ 7,508 Commercial real estate: Owner occupied properties 2,442 ( 171 ) — — 2,271 Non-owner occupied and multifamily properties 3,956 227 — — 4,183 Residential real estate: 1-4 family residential properties secured by first liens 4,056 637 — — 4,693 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 769 152 — 7 928 1-4 family residential construction loans 219 51 — — 270 Other construction, land development and raw land loans 1,706 602 — — 2,308 Obligations of states and political subdivisions in the US 123 12 — — 135 Agricultural production, including commercial fishing 187 10 — — 197 Consumer loans 71 11 ( 3 ) 3 82 Other loans 6 4 — — 10 Total $ 20,922 $ 1,803 ($ 155 ) $ 15 $ 22,585 16 Six Months Ended June 30, Beginning Balance Credit Loss Expense (Benefit) Charge-offs Recoveries Ending Balance (In Thousands) 2026 Commercial & industrial loans $ 6,707 ($ 229 ) ($ 314 ) $ 64 $ 6,228 Commercial real estate: Owner occupied properties 2,207 416 — — 2,623 Non-owner occupied and multifamily properties 4,440 746 ( 78 ) — 5,108 Residential real estate: 1-4 family residential properties secured by first liens 5,712 785 — — 6,497 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 1,041 261 — 6 1,308 1-4 family residential construction loans 324 ( 165 ) — — 159 Other construction, land development and raw land loans 2,839 9 — — 2,848 Obligations of states and political subdivisions in the US 143 41 — — 184 Agricultural production, including commercial fishing 202 37 — 1 240 Consumer loans 114 10 ( 2 ) — 122 Other loans 8 136 — — 144 Total $ 23,737 $ 2,047 ($ 394 ) $ 71 $ 25,461 2025 Commercial & industrial loans $ 5,800 $ 1,818 ($ 189 ) $ 79 $ 7,508 Commercial real estate: Owner occupied properties 2,944 ( 673 ) — — 2,271 Non-owner occupied and multifamily properties 3,967 216 — — 4,183 Residential real estate: 1-4 family residential properties secured by first liens 4,364 329 — — 4,693 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 775 139 — 14 928 1-4 family residential construction loans 230 40 — — 270 Other construction, land development and raw land loans 3,589 ( 1,281 ) — — 2,308 Obligations of states and political subdivisions in the US 106 29 — — 135 Agricultural production, including commercial fishing 169 25 — 3 197 Consumer loans 71 24 ( 16 ) 3 82 Other loans 5 5 — — 10 Total $ 22,020 $ 671 ($ 205 ) $ 99 $ 22,585 17 The following table shows gross charge-offs by year of loan origination for the periods indicated: Six Months Ended June 30, (In Thousands) 2026 2025 2024 2023 2022 Prior Total 2026 Commercial & industrial loans $ — $ 64 $ 250 $ — $ — $ — $ 314 Consumer loans — — — 2 — — 2 Total $ — $ 64 $ 250 $ 2 $ 78 $ — $ 394 Credit Quality Information As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management utilizes a loan risk grading system called the Asset Quality Rating (“AQR”) system to assign a risk classification to each of its loans. The risk classification is a dual rating system that contemplates both probability of default and risk of loss given default. Loans are graded on a scale of 1 to 10 and, loans graded 1 – 6 are considered “pass” grade loans. Loans graded 7 or higher are considered “criticized” loans. A description of the general characteristics of the AQR risk classifications are as follows: Pass grade loans – 1 through 6: The borrower demonstrates sufficient cash flow to fund debt service, including acceptable profit margins, cash flows, liquidity and other balance sheet ratios. Historic and projected performance indicates that the borrower is able to meet obligations under most economic circumstances. The borrower has competent management with an acceptable track record. The category does not include loans with undue or unwarranted credit risks that constitute identifiable weaknesses. Criticized loans: Special Mention – 7: A “special mention” credit has weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset at some future date. Substandard – 8: A “substandard” credit is inadequately protected by the current worth and paying capacity of the obligor or by the collateral pledged, if any. Assets so classified must have a well-defined weakness, or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Doubtful – 9: An asset classified “doubtful” has all the weaknesses inherent in one that is classified "substandard-8" with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable. The loan has substandard characteristics, and available information suggests that it is unlikely that the loan will be repaid in its entirety. Loss – 10: An asset classified “loss” is considered uncollectible and of such little value that its continuance on the books is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset, even though partial recovery may be affected in the future. The following tables present the Company's portfolio of risk-rated loans by grade and by year of origination. Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal of loan constitutes a current period origination. Generally, current period renewals of credit are re-underwritten at the point of renewal and considered current period originations for purposes of the table below. June 30, 2026 2026 2025 2024 2023 2022 Prior Total (In Thousands) Commercial & industrial loans Pass $ 71,412 $ 96,278 $ 64,537 $ 48,738 $ 82,868 $ 76,387 $ 440,220 Criticized 2,940 740 3,143 5,931 476 17,765 30,995 Total commercial & industrial loans $ 74,352 $ 97,018 $ 67,680 $ 54,669 $ 83,344 $ 94,152 $ 471,215 Commercial real estate: Owner occupied properties Pass $ 35,717 $ 36,324 $ 73,217 $ 43,269 $ 62,448 $ 172,799 $ 423,774 18 Criticized — 6,002 — — 3,601 9,677 19,280 Total commercial real estate owner occupied properties $ 35,717 $ 42,326 $ 73,217 $ 43,269 $ 66,049 $ 182,476 $ 443,054 Non-owner occupied and multifamily properties Pass $ 16,772 $ 122,905 $ 153,469 $ 67,754 $ 136,033 $ 264,311 $ 761,244 Criticized — — — — 1,057 7,627 8,684 Total commercial real estate non-owner occupied and multifamily properties $ 16,772 $ 122,905 $ 153,469 $ 67,754 $ 137,090 $ 271,938 $ 769,928 Residential real estate: 1-4 family residential properties secured by first liens Pass $ 57,466 $ 42,639 $ 47,485 $ 70,124 $ 31,711 $ 10,188 $ 259,613 Criticized — 218 — 307 — 163 688 Total residential real estate 1-4 family residential properties secured by first liens $ 57,466 $ 42,857 $ 47,485 $ 70,431 $ 31,711 $ 10,351 $ 260,301 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens Pass $ 14,683 $ 22,599 $ 17,911 $ 9,438 $ 5,837 $ 9,018 $ 79,486 Criticized — — — 429 — 80 509 Total residential real estate 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens $ 14,683 $ 22,599 $ 17,911 $ 9,867 $ 5,837 $ 9,098 $ 79,995 1-4 family residential construction loans Pass $ 10,111 $ 14,511 $ 1,770 $ 65 $ — $ 1,863 $ 28,320 Criticized — 519 — — — — 519 Total residential real estate 1-4 family residential construction loans $ 10,111 $ 15,030 $ 1,770 $ 65 $ — $ 1,863 $ 28,839 Other construction, land development and raw land loans Pass $ 25,341 $ 61,280 $ 24,366 $ 33,650 $ 13,327 $ 9,963 $ 167,927 Criticized — — — — 6,277 1,452 7,729 Total other construction, land development and raw land loans $ 25,341 $ 61,280 $ 24,366 $ 33,650 $ 19,604 $ 11,415 $ 175,656 Obligations of states and political subdivisions in the US Pass $ — $ 11,986 $ — $ — $ 27,539 $ — $ 39,525 Criticized — — — — — — — Total obligations of states and political subdivisions in the US $ — $ 11,986 $ — $ — $ 27,539 $ — $ 39,525 Agricultural production, including commercial fishing Pass $ 10,226 $ 3,207 $ 7,403 $ 8,553 $ 7,974 $ 17,883 $ 55,246 Criticized — — 587 — — — 587 Total agricultural production, including commercial fishing $ 10,226 $ 3,207 $ 7,990 $ 8,553 $ 7,974 $ 17,883 $ 55,833 Consumer loans Pass $ 2,656 $ 3,278 $ 1,324 $ 1,290 $ 409 $ 915 $ 9,872 Criticized — 4 — — 1 — 5 Total consumer loans $ 2,656 $ 3,282 $ 1,324 $ 1,290 $ 410 $ 915 $ 9,877 Other loans Pass $ 13,476 $ — $ — $ 328 $ 36,569 $ 1,732 $ 52,105 Criticized — — — — — — — Total other loans $ 13,476 $ — $ — $ 328 $ 36,569 $ 1,732 $ 52,105 Total loans Pass $ 257,860 $ 415,007 $ 391,482 $ 283,209 $ 404,715 $ 565,059 $ 2,317,332 Criticized 2,940 7,483 3,730 6,667 11,412 36,764 68,996 Total loans $ 260,800 $ 422,490 $ 395,212 $ 289,876 $ 416,127 $ 601,823 $ 2,386,328 Total pass loans $ 257,860 $ 415,007 $ 391,482 $ 283,209 $ 404,715 $ 565,059 $ 2,317,332 Government guarantees ( 22,728 ) ( 10,207 ) ( 34,346 ) ( 5,154 ) ( 4,293 ) ( 27,971 ) ( 104,699 ) Total pass loans, net of government guarantees $ 235,132 $ 404,800 $ 357,136 $ 278,055 $ 400,422 $ 537,088 $ 2,212,633 19 Total criticized loans $ 2,940 $ 7,483 $ 3,730 $ 6,667 $ 11,412 $ 36,764 $ 68,996 Government guarantees — ( 64 ) — ( 1,970 ) ( 2,374 ) ( 21,982 ) ( 26,390 ) Total criticized loans, net government guarantees $ 2,940 $ 7,419 $ 3,730 $ 4,697 $ 9,038 $ 14,782 $ 42,606 December 31, 2025 2025 2024 2023 2022 2021 Prior Total (In Thousands) Commercial & industrial loans Pass $ 140,717 $ 73,544 $ 61,463 $ 64,841 $ 24,046 $ 40,558 $ 405,169 Criticized — 3,540 5,905 16,590 12,845 6,777 45,657 Total commercial & industrial loans $ 140,717 $ 77,084 $ 67,368 $ 81,431 $ 36,891 $ 47,335 $ 450,826 Commercial real estate: Owner occupied properties Pass $ 34,589 $ 70,158 $ 61,563 $ 67,334 $ 52,207 $ 126,589 $ 412,440 Criticized 6,002 — — 3,674 — 11,041 20,717 Total commercial real estate owner occupied properties $ 40,591 $ 70,158 $ 61,563 $ 71,008 $ 52,207 $ 137,630 $ 433,157 Non-owner occupied and multifamily properties Pass $ 136,992 $ 119,749 $ 68,208 $ 138,103 $ 67,826 $ 221,420 $ 752,298 Criticized — — — 1,143 — 9,739 10,882 Total commercial real estate non-owner occupied and multifamily properties $ 136,992 $ 119,749 $ 68,208 $ 139,246 $ 67,826 $ 231,159 $ 763,180 Residential real estate: 1-4 family residential properties secured by first liens Pass $ 67,166 $ 53,573 $ 75,846 $ 33,276 $ 2,953 $ 9,684 $ 242,498 Criticized — — 514 — — 173 687 Total residential real estate 1-4 family residential properties secured by first liens $ 67,166 $ 53,573 $ 76,360 $ 33,276 $ 2,953 $ 9,857 $ 243,185 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens Pass $ 21,690 $ 18,943 $ 10,356 $ 5,820 $ 2,924 $ 6,866 $ 66,599 Criticized — — 430 — — 87 517 Total residential real estate 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens $ 21,690 $ 18,943 $ 10,786 $ 5,820 $ 2,924 $ 6,953 $ 67,116 1-4 family residential construction loans Pass $ 23,151 $ 5,946 $ — $ — $ — $ 9,962 $ 39,059 Criticized — — — — — — — Total residential real estate 1-4 family residential construction loans $ 23,151 $ 5,946 $ — $ — $ — $ 9,962 $ 39,059 Other construction, land development and raw land loans Pass $ 53,248 $ 45,743 $ 38,772 $ 13,462 $ 9,175 $ 5,455 $ 165,855 Criticized — — — 6,277 26 1,431 7,734 Total other construction, land development and raw land loans $ 53,248 $ 45,743 $ 38,772 $ 19,739 $ 9,201 $ 6,886 $ 173,589 Obligations of states and political subdivisions in the US Pass $ — $ 4,569 $ — $ 27,864 $ — $ 1 $ 32,434 Criticized — — — — — — — Total obligations of states and political subdivisions in the US $ — $ 4,569 $ — $ 27,864 $ — $ 1 $ 32,434 Agricultural production, including commercial fishing Pass $ 3,142 $ 8,770 $ 7,950 $ 8,924 $ 14,908 $ 3,631 $ 47,325 Criticized — — — — 120 — 120 Total agricultural production, including commercial fishing $ 3,142 $ 8,770 $ 7,950 $ 8,924 $ 15,028 $ 3,631 $ 47,445 Consumer loans Pass $ 4,757 $ 1,848 $ 1,646 $ 507 $ 32 $ 969 $ 9,759 20 Criticized — — 2 2 — — 4 Total consumer loans $ 4,757 $ 1,848 $ 1,648 $ 509 $ 32 $ 969 $ 9,763 Other loans Pass $ — $ — $ 639 $ 33,315 $ 588 $ 1,203 $ 35,745 Criticized — — — — — — — Total other loans $ — $ — $ 639 $ 33,315 $ 588 $ 1,203 $ 35,745 Total loans Pass $ 485,452 $ 402,843 $ 326,443 $ 393,446 $ 174,659 $ 426,338 $ 2,209,181 Criticized 6,002 3,540 6,851 27,686 12,991 29,248 86,318 Total loans $ 491,454 $ 406,383 $ 333,294 $ 421,132 $ 187,650 $ 455,586 $ 2,295,499 Total pass loans $ 485,452 $ 402,843 $ 326,443 $ 393,446 $ 174,659 $ 426,338 $ 2,209,181 Government guarantees ( 17,804 ) ( 29,791 ) ( 19,923 ) ( 4,766 ) ( 10,173 ) ( 17,368 ) ( 99,825 ) Total pass loans, net of government guarantees $ 467,648 $ 373,052 $ 306,520 $ 388,680 $ 164,486 $ 408,970 $ 2,109,356 Total criticized loans $ 6,002 $ 3,540 $ 6,851 $ 27,686 $ 12,991 $ 29,248 $ 86,318 Government guarantees — — ( 1,641 ) ( 16,831 ) ( 11,567 ) ( 12,300 ) ( 42,339 ) Total criticized loans, net government guarantees $ 6,002 $ 3,540 $ 5,210 $ 10,855 $ 1,424 $ 16,948 $ 43,979 21 Past Due Loans: The following tables present an aging of contractually past due loans as of the periods presented: (In Thousands) 30-59 Days Past Due 60-89 Days Past Due Greater Than 90 Days Past Due Total Past Due Current Total Greater Than 90 Days Past Due Still Accruing June 30, 2026 Commercial & industrial loans $ 19 $ — $ 451 $ 470 $ 470,745 $ 471,215 $ — Commercial real estate: Owner occupied properties — — — — 443,054 443,054 — Non-owner occupied and multifamily properties — — 544 544 769,384 769,928 — Residential real estate: 1-4 family residential properties secured by first liens — 874 307 1,181 259,120 260,301 — 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 274 75 372 721 79,274 79,995 — 1-4 family residential construction loans — — — 28,839 28,839 — Other construction, land development and raw land loans — — 1,654 1,654 174,002 175,656 — Obligations of states and political subdivisions in the US — — — — 39,525 39,525 — Agricultural production, including commercial fishing — — — — 55,833 55,833 — Consumer loans 27 4 — 31 9,846 9,877 — Other loans — — — — 52,105 52,105 — Total $ 320 $ 953 $ 3,328 $ 4,601 $ 2,381,727 $ 2,386,328 $ — December 31, 2025 Commercial & industrial loans $ 190 $ — $ 1,500 $ 1,690 $ 449,136 $ 450,826 $ — Commercial real estate: Owner occupied properties — — — — 433,157 433,157 — Non-owner occupied and multifamily properties — — — — 763,180 763,180 — Residential real estate: 1-4 family residential properties secured by first liens 1,505 — 514 2,019 241,166 243,185 — 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 194 — 372 566 66,550 67,116 — 1-4 family residential construction loans — — — — 39,059 39,059 — Other construction, land development and raw land loans — 277 1,377 1,654 171,935 173,589 — Obligations of states and political subdivisions in the US — — — — 32,434 32,434 — Agricultural production, including commercial fishing — — — — 47,445 47,445 — Consumer loans — 2 — 2 9,761 9,763 — Other loans — — — — 35,745 35,745 — Total $ 1,889 $ 279 $ 3,763 $ 5,931 $ 2,289,568 $ 2,295,499 $ — 22 Nonaccrual loans: Nonaccrual loans net of government guarantees totaled $ 21.8 million and $ 12.0 million at June 30, 2026 and December 31, 2025, respectively. The following table presents loans on nonaccrual status and loans on nonaccrual status for the periods presented for which there was no related ACL. All loans with no ACL are individually evaluated for credit losses in the Company's CECL methodology. June 30, 2026 December 31, 2025 (In Thousands) Nonaccrual Nonaccrual With No ACL ACL on Nonaccrual Nonaccrual Nonaccrual With No ACL ACL on Nonaccrual Commercial & industrial loans $ 8,166 $ 5,354 $ 1,248 $ 4,251 $ 1,641 $ 1,248 Commercial real estate: Owner occupied properties 10,844 10,844 — 5,134 2,725 86 Non-owner occupied and multifamily properties 1,601 1,057 47 — — — Residential real estate: 1-4 family residential properties secured by first liens 307 — 43 514 — 60 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 410 372 1 415 372 1 Other construction, land development and raw land loans 1,654 1,654 — 1,654 1,654 — Total nonaccrual loans 22,982 19,281 1,339 11,968 6,392 1,395 Government guarantees on nonaccrual loans ( 1,171 ) ( 1,171 ) — — — — Net nonaccrual loans $ 21,811 $ 18,110 $ 1,339 $ 11,968 $ 6,392 $ 1,395 There was $ 468,000 interest on nonaccrual loans reversed through interest income during the three and six-month periods ending June 30, 2026 and no interest on nonaccrual loans reversed through interest income during the three and six-month periods ending June 30, 2025. There was no interest earned on nonaccrual loans with a principal balance during the three and six -month periods ending June 30, 2026 and June 30, 2025. However, the Company recognized interest income of $ 170,000 and $ 45,000 in the three-month periods ending June 30, 2026 and 2025, respectively, and $ 238,000 and $ 87,000 in the six-month periods ending June 30, 2026 and 2025, respectively, related to interest collected on nonaccrual loans whose principal had been paid down to zero. Loan Modifications: The Company modifies loans to borrowers experiencing financial difficulty as a normal part of our business. These modifications include providing term extensions/modifications, payment modifications, interest rate modifications, or, on rare occasions, principal forgiveness. When principal forgiveness is provided, the amount of forgiveness is charged-off against the ACL. The Company may provide multiple types of concessions on any one loan. The following table shows the amortized cost basis of the loans that were both experiencing financial difficulty and modified during the periods indicated, by class and type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers experiencing financial difficulty as compared to the amortized cost basis of each class of financing receivable is also presented below: Three Months Ended June 30, 2026 Term Modification Term and payment modifications Total Modifications Percentage of Class of Financing Receivable (In Thousands) Commercial real estate: Non-owner occupied and multifamily properties $ — $ 1,057 $ 1,057 0.14 % Total $ — $ 1,057 $ 1,057 0.04 % 23 Three Months Ended June 30, 2025 Payment Modification Term and payment modifications Total Modifications Percentage of Class of Financing Receivable (In Thousands) Commercial real estate: Owner occupied properties $ — $ — $ — — % Total $ — $ — $ — — % Six Months Ended June 30, 2026 Term Modification Term and payment modifications Total Modifications Percentage of Class of Financing Receivable (In Thousands) Commercial real estate: Non-owner occupied and multifamily properties $ — $ 1,057 $ 1,057 0.14 % Total $ — $ 1,057 $ 1,057 0.04 % Six Months Ended June 30, 2025 Term Modification Term and payment modifications Total Modifications Percentage of Class of Financing Receivable (In Thousands) Commercial real estate: Owner occupied properties $ — $ 3,252 $ 3,252 0.73 % Total $ — $ 3,252 $ 3,252 0.15 % The Company has no outstanding unfunded commitments to the borrowers included in the previous table. The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty as of the dates indicated: Three Months Ended June 30, 2026 Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (months) (In Thousands) Commercial real estate: Non-owner occupied and multifamily properties — 2 % 0 Three Months Ended June 30, 2025 Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (months) (In Thousands) Commercial real estate: Non-owner occupied and multifamily properties — — % 0 Six Months Ended June 30, 2026 Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (months) (In Thousands) Commercial real estate: Non-owner occupied and multifamily properties $ — 2 % 0 24 Six Months Ended June 30, 2025 Principal Forgiveness Weighted-Average Interest Rate Reduction Weighted-Average Term Extension (months) (In Thousands) Commercial & industrial loans $ — — % 33 The following table presents the amortized cost basis of loans to borrowers experiencing financial difficulty as of the dates indicated. These are loans that have been modified within twelve months of the dates indicated: (In Thousands) June 30, 2026 December 31, 2025 Commercial & industrial loans $ 208 $ 142 Commercial real estate: Owner occupied properties 3,128 3,193 Residential real estate: 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 372 372 1-4 family residential construction loans — — Other construction, land development and raw land loans 1,376 1,376 Total $ 6,141 $ 5,083 25 The following table presents the amortized cost basis of loans that had a payment default during the periods indicated and were modified in the twelve months before default to borrowers experiencing financial difficulty: Three Months Ended June 30, 2026 Six Months Ended June 30, 2026 Term modification Term and payment modification Term modification Term and payment modification (In Thousands) Commercial real estate: Owner occupied properties $ — $ — $ — $ 703 Residential real estate: 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 372 — 372 — Other construction, land development and raw land loans 1,376 — 1,376 — Total $ 1,748 $ — $ 1,748 $ 703 Three Months Ended June 30, 2025 Six Months Ended June 30, 2025 Term and payment modification Term and payment modification (In Thousands) Commercial real estate: Owner occupied properties $ — $ 3,252 Total $ — $ 3,252 The Company monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the payment performance of loans that have been modified in the last twelve months as of the date indicated: June 30, 2026 Greater Than 89 Days Past Due Total Past Due Current Total (In Thousands) Commercial & industrial loans $ — $ — $ 208 $ 208 Commercial real estate: Owner occupied properties — — 3,128 3,128 Residential real estate: 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 372 372 — 372 Other construction, land development and raw land loans 1,376 1,376 — 1,376 Total $ 1,748 $ 1,748 $ 4,393 $ 6,141 26 June 30, 2025 Greater Than 89 Days Past Due Total Past Due Current Total (In Thousands) Commercial & industrial loans $ — $ — $ 768 $ 768 Commercial real estate: Owner occupied properties 217 217 3,251 3,468 Residential real estate: 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 372 372 — 372 Other construction, land development and raw land loans 1,490 1,490 — 1,490 Total $ 2,079 $ 2,079 $ 4,019 $ 6,098 Upon the Company's determination that a modified loan (or a portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is adjusted by the same amount. 4. Purchased Receivables Purchased receivables are carried at their principal amount outstanding, net of an ACL, and have a maturity of less than one year . Income on purchased receivables is accrued and recognized on the principal amount outstanding using an effective interest method except when management believes doubt exists as to the collectability of the income or principal. There were no nonperforming purchased receivables as of June 30, 2026 and there was one nonperforming purchased receivable with a balance of $ 67,000 as of December 31, 2025 for which management was not accruing income. The following table summarizes the components of net purchased receivables for the dates indicated: (In Thousands) June 30, 2026 December 31, 2025 Purchased receivables $ 123,402 $ 101,642 Allowance for credit losses - purchased receivables ( 610 ) — Total $ 122,792 $ 101,642 The following table sets forth information regarding changes in the ACL on purchased receivables for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2026 2025 2026 2025 Balance at beginning of period $ — $ 3,695 $ — $ 3,649 Charge-offs — ( 281 ) — ( 281 ) Recoveries — — 5 — Charge-offs net of recoveries — ( 281 ) 5 ( 281 ) Foreign currency translation adjustment ( 15 ) — ( 15 ) — Provision for purchased receivables 625 18 620 64 Balance at end of period $ 610 $ 3,432 $ 610 $ 3,432 27 5. Servicing Rights Mortgage servicing rights The following table details the activity in the Company's mortgage servicing rights (“MSR”) for the three and six-month periods ended June 30, 2026 and 2025: Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2026 2025 2026 2025 Balance, beginning of period $ 28,426 $ 26,814 $ 27,474 $ 26,439 Additions for new MSR capitalized 977 1,510 2,056 2,740 Changes in fair value: Due to changes in model inputs of assumptions (1) ( 366 ) ( 355 ) 97 ( 677 ) Other (2) ( 562 ) ( 463 ) ( 1,152 ) ( 996 ) Balance, end of period $ 28,475 $ 27,506 $ 28,475 $ 27,506 (1) Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates. (2) Represents changes due to collection/realization of expected cash flows over time. The following table details information related to our serviced mortgage loan portfolio as of June 30, 2026 and December 31, 2025: (In Thousands) June 30, 2026 December 31, 2025 Balance of mortgage loans serviced for others $ 1,659,395 $ 1,629,528 Weighted average rate of note 4.82 % 4.77 % MSR as a percentage of serviced loans 1.72 % 1.69 % The Company recognized servicing fees of $ 1.6 million and $ 1.4 million during the three-month periods ending June 30, 2026 and 2025, respectively, and $ 3.2 million and $ 2.9 million during the six -month periods ended June 30, 2026 and 2025, respectively, which includes contractually specified servicing fees and ancillary fees as a component of other noninterest income in the Company's Consolidated Statements of Income. 28 The following table outlines the weighted average key assumptions used in measuring the fair value of MSRs and the sensitivity of the current fair value of MSRs to immediate adverse changes in those assumptions as of the dates indicated. See Note 9 for additional information on key assumptions for MSR fair value determinations. (In Thousands) June 30, 2026 December 31, 2025 Fair value of MSRs $ 28,475 $ 27,474 Expected weighted-average life (in years) 8.72 8.82 Key assumptions: Constant prepayment rate 1 10.13 % 10.01 % Impact on fair value from 10% adverse change ($ 1,084 ) ($ 1,022 ) Impact on fair value from 25% adverse change ($ 2,573 ) ($ 2,427 ) Discount rate 10.00 % 10.97 % Impact on fair value from 100 basis point increase ($ 1,163 ) ($ 871 ) Impact on fair value from 200 basis point increase ($ 2,188 ) ($ 1,864 ) Cost to service assumptions ($ per loan) $ 81 $ 81 Impact on fair value from 10% adverse change ($ 243 ) ($ 239 ) Impact on fair value from 25% adverse change ($ 608 ) ($ 597 ) 1 Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior. These sensitivities in the preceding table are hypothetical and caution should be exercised when relying on this data. Changes in value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in the assumption to the change in the value may not be linear. Also, the effect of a variation in a particular assumption on the value of the MSR held is calculated independently without changing any other assumptions. In reality, changes in one factor may result in changes in others, which might magnify or counteract the sensitivities. Commercial servicing rights The commercial servicing rights asset (“CSR”) has a carrying value of $ 2.2 million at June 30, 2026 and $ 2.3 million at December 31, 2025, respectively, and is included in other assets and carried at fair value on the Company's Consolidated Balance Sheets . Total commercial loans serviced for others were $ 280.2 million and $ 296.2 million at June 30, 2026 and December 31, 2025, respectively. Key assumptions used in measuring the fair value of the CSR as of June 30, 2026 and December 31, 2025 include a constant prepayment rate of 11.71 % and a discount rate of 12.00 %. 6. Leases The Company's lease commitments consist primarily of agreements to lease land and office facilities that it occupies to operate several of its retail branch locations that are classified as operating leases and are recognized on the balance sheet as right-of-use (“ROU”) assets and lease liabilities. As of June 30, 2026, the Company has operating lease ROU assets of $ 11.3 million and operating lease liabilities of $ 11.5 million. As of December 31, 2025, the Company had operating lease ROU assets of $ 5.9 million and operating lease liabilities of $ 5.9 million. The Company did not have any agreements that are classified as finance leases as of June 30, 2026 or December 31, 2025. The Company entered into a new seven year lease for the headquarters building for Residential Mortgage, LLC (“RML”) in the first quarter of 2026. Upon commencement, the operating lease ROU assets increased $ 6.3 million and the operating lease liabilities increased $ 6.4 million. 29 The following table presents additional information about the Company's operating leases for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2026 2025 2026 2025 Lease Cost Operating lease cost (1) $ 615 $ 761 $ 1,337 $ 1,469 Short term lease cost (1) 73 78 143 164 Total lease cost $ 688 $ 839 $ 1,480 $ 1,633 Other information Operating leases - operating cash flows $ 1,103 $ 1,371 Weighted average lease term - operating leases, in years 10.11 11.88 Weighted average discount rate - operating leases 3.89 % 3.78 % (1) Expenses are classified within occupancy expense on the Consolidated Statements of Income. The table below reconciles the remaining undiscounted cash flows for the next five years for each twelve-month period presented (unless otherwise indicated) and the total of the subsequent remaining years to the operating lease liabilities recorded on the balance sheet: (In Thousands) Operating Leases 2026 (Six months) $ 1,152 2027 2,113 2028 1,878 2029 1,717 2030 1,378 Thereafter 5,834 Total minimum lease payments $ 14,072 Less: amount of lease payment representing interest ( 2,613 ) Present value of future minimum lease payments $ 11,459 30 7. Derivatives Derivatives swaps related to community banking activities: I nterest rate swaps The Company enters into commercial loan interest rate swap agreements with commercial banking customers which are offset with a corresponding swap agreement with a third party financial institution (“counterparty”). The Company has agreements with its counterparties that contain provisions that provide that if the Company fails to maintain its status as a “well-capitalized” institution under applicable regulatory guidelines, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements. These agreements also require that the Company and the counterparty collateralize any fair value shortfalls that exceed $ 250,000 with eligible collateral, which includes cash and securities backed with the full faith and credit of the federal government. Similarly, the Company could be required to settle its obligations under the agreement if specific regulatory events occur, such as if the Company were issued a prompt corrective action directive or a cease and desist order, or if certain regulatory ratios fall below specified levels. The Company pledged $ 609,000 as of June 30, 2026 and $ 596,000 as of December 31, 2025, in available for sale securities to collateralize fair value shortfalls on interest rate swap agreements. At June 30, 2026, the notional amount of interest rate swaps is made up of 27 variable to fixed rate swaps to commercial loan customers totaling $ 176.7 million with a fair value of negative $ 8.8 million and 27 fixed to variable rate swaps with a counterparty totaling $ 176.7 million with a fair value of $ 8.8 million. Changes in fair value from these 27 interest rate swaps offset each other in the three and six -month periods ending June 30, 2026. The Company recognized no fee income related to interest rate swaps in the three-month periods ending June 30, 2026 and 2025, respectively, and zero and $ 129,000 in fee income related to interest rate swaps in the six -month periods ending June 30, 2026 and 2025, respectively. Interest rate swap income is recorded in other operating income on the Consolidated Statements of Income . None of these interest rate swaps are designated as hedging instruments. The Company has an interest rate swap to hedge the variability in cash flows arising out of a portion of its junior subordinated debentures, which is floating rate debt, by swapping the cash flows with an interest rate swap which receives floating and pays fixed. The Company has designated this interest rate swap as a hedging instrument. The interest rate swap effectively fixes the Company's interest payments on the $ 10.0 million of junior subordinated debentures held under Northrim Statutory Trust 2 (“Trust 2”) at 3.72 % through its maturity date. The floating rate that the dealer pays is equal to the three month CME SOFR plus tenor spread adjustment 0.26 % plus 1.37 %, which reprices quarterly on the payment date. This rate was 5.30 % as of June 30, 2026. The Company pledged $ 130,000 in cash to collateralize initial margin and fair value exposure of our counterparty on this interest rate swap as of June 30, 2026 and December 31, 2025. The fair value of this interest rate swap was $ 1.5 million as of both June 30, 2026 and December 31, 2025, which is included in other assets on the Consolidated Balance Sheet. Changes in the fair value of this interest rate swap are reported in other comprehensive income on the Consolidated Statements of Income . The unrealized gain, net of tax on this interest rate swap was $ 1.1 million as of June 30, 2026 and December 31, 2025. Derivatives related to home mortgage banking activities: Interest rate lock commitments and retail interest rate contracts The Company also uses derivatives to hedge the risk of changes in the fair values of interest rate lock commitments. The Company enters into commitments to originate residential mortgage loans at specific rates; the value of these commitments are detailed in the table below as “interest rate lock commitments”. The Company also hedges the interest rate risk associated with its residential mortgage loan commitments, which are referred to as “retail interest rate contracts” in the table below. Market risk with respect to commitments to originate loans arises from changes in the value of contractual positions due to changes in interest rates. RML had commitments to originate mortgage loans held for sale totaling $ 87.0 million and $ 45.7 million at June 30, 2026 and December 31, 2025, respectively. The fair value of these interest rate lock commitments was $ 1.5 million and $ 923,000 at June 30, 2026 and December 31, 2025, respectively. Changes in the value of RML's interest rate derivatives are recorded in mortgage banking income on the Consolidated Statements of Income . None of these derivatives are designated as hedging instruments. 31 The following table presents the fair value of derivatives not designated as hedging instruments at June 30, 2026 and December 31, 2025: (In Thousands) Asset Derivatives June 30, 2026 December 31, 2025 Balance Sheet Location Fair Value Fair Value Interest rate swaps Other assets $ 8,754 $ 7,999 Interest rate lock commitments Other assets 1,519 923 Total $ 10,273 $ 8,922 (In Thousands) Liability Derivatives June 30, 2026 December 31, 2025 Balance Sheet Location Fair Value Fair Value Interest rate swaps Other liabilities $ 8,754 $ 7,999 Retail interest rate contracts Other liabilities 76 50 Total $ 8,830 $ 8,049 The following table presents the net gains (losses) of derivatives not designated as hedging instruments for periods indicated below: Three Months Ended June 30, Six Months Ended June 30, (In Thousands) Income Statement Location 2026 2025 2026 2025 Retail interest rate contracts Mortgage banking income ($ 61 ) ($ 26 ) $ 9 ($ 335 ) Interest rate lock commitments Mortgage banking income ( 68 ) ( 93 ) 545 787 Total ($ 129 ) ($ 119 ) $ 554 $ 452 Our derivative transactions with counterparties under International Swaps and Derivative Association master agreements include “right of set-off” provisions. “Right of set-off” provisions are legally enforceable rights to offset recognized amounts and there may be an intention to settle such amounts on a net basis. We do not offset such financial instruments for financial reporting purposes. 32 The following table summarizes the derivatives that have a right of offset as of June 30, 2026 and December 31, 2025: June 30, 2026 Gross amounts not offset in the Statement of Financial Position (In Thousands) Gross amounts of recognized assets and liabilities Gross amounts offset in the Statement of Financial Position Net amounts of assets and liabilities presented in the Statement of Financial Position Financial Instruments Collateral Posted Net Amount Asset Derivatives Interest rate swaps $ 8,754 $ — $ 8,754 $ — $ — $ 8,754 Liability Derivatives Interest rate swaps $ 8,754 $ — $ 8,754 $ — $ 8,754 $ — Retail interest rate contracts 76 — 76 — — 76 December 31, 2025 Gross amounts not offset in the Statement of Financial Position (In Thousands) Gross amounts of recognized assets and liabilities Gross amounts offset in the Statement of Financial Position Net amounts of assets and liabilities presented in the Statement of Financial Position Financial Instruments Collateral Posted Net Amount Asset Derivatives Interest rate swaps $ 7,999 $ — $ 7,999 $ — $ — $ 7,999 Liability Derivatives Interest rate swaps $ 7,999 $ — $ 7,999 $ — $ 7,999 $ — Retail interest rate contracts 50 — 50 — — 50 33 8 . Subordinated Debt Junior Subordinated Debentures In December of 2005, the Company formed a wholly-owned Connecticut statutory business trust subsidiary, Trust 2, which issued $ 10 million of guaranteed undivided beneficial interests in the Company’s Junior Subordinated Deferrable Interest Debentures (“Trust Preferred Securities 2”). These debentures qualify as Tier 1 capital under Federal Reserve Board guidelines. All of the common securities of Trust 2 are owned by the Company. The proceeds from the issuance of the common securities and the Trust Preferred Securities 2 were used by Trust 2 to purchase $ 10.3 million of junior subordinated debentures of the Company. Trust 2 is not consolidated in the Company’s financial statements in accordance with GAAP; therefore, the Company has recorded its investment in Trust 2 as an other asset and the subordinated debentures as a liability. The debentures, which represent the sole asset of Trust 2, accrue and pay distributions quarterly at a variable rate of 90-day CME SOFR plus tenor spread adjustment 0.26 % plus 1.37 % per annum, adjusted quarterly, of the stated liquidation value of $ 1,000 per capital security as of December 31, 2024. The interest rate on these debentures was 5.30 % at June 30, 2026 compared to 5.35 % at December 31, 2025. The interest cost to the Company on these debentures was $ 138,000 and $ 155,000 in the second quarters of 2026 and 2025, respectively, and $ 276,000 and $ 309,000 in the first six months of 2026 and 2025, respectively. The Company has entered into contractual arrangements which, taken collectively, fully and unconditionally guarantee payment of: (i) accrued and unpaid distributions required to be paid on the Trust Preferred Securities 2; (ii) the redemption price with respect to any Trust Preferred Securities 2 called for redemption by Trust 2; and (iii) payments due upon a voluntary or involuntary dissolution, winding up or liquidation of Trust 2. The Trust Preferred Securities 2 are mandatorily redeemable upon maturity of the debentures on March 15, 2036, or upon earlier redemption as provided in the indenture. The Company has the right to redeem the debentures purchased by Trust 2 in whole or in part, on or after March 15, 2011. As specified in the indenture, if the debentures are redeemed prior to maturity, the redemption price will be the principal amount and any accrued but unpaid interest. Subordinated Notes In November of 2025, the Company issued and sold $ 60.0 million in aggregate principal amount of its 6.875 % Fixed-to-Floating Rate Subordinated Notes due 2035 (the “Subordinated Notes”). The Subordinated Notes were issued by the Company to the Purchasers at a price equal to 100 % of their face amount. The Subordinated Notes mature on December 1, 2035 and bear interest at a fixed rate of 6.875 % per year, from November 26, 2025 to, but excluding, December 1, 2030 or the date of earlier redemption, payable semi-annually in arrears. From and including December 1, 2030 to, but excluding, the maturity date or earlier redemption date, the interest rate will reset quarterly at a variable rate equal to the then current three-month SOFR, plus 3.48 % per annum, payable quarterly in arrears. As provided in the Subordinated Notes, the interest rate on the Subordinated Notes during the applicable floating rate period may be determined based on a rate other than three-month term SOFR. The interest cost to the Company on these debentures was $ 1.0 million in the second quarter of 2026 and $ 2.1 million in the first six months of 2026. The Company incurred debt issuance costs of $ 1.4 million which will amortize through December 1, 2035. The amortization expense amounted to $ 35,000 in the second quarter of 2026 and $ 70,000 in the first six months of 2026. Prior to December 1, 2030, the Company may redeem the Subordinated Notes, in whole but not in part, only under certain limited circumstances set forth in the indenture governing the Subordinated Notes. On or after December 1, 2030, the Company may redeem the Subordinated Notes, in whole or in part, at its option, on any interest payment date. Any redemption by the Company would be at a redemption price equal to 100 % of the principal amount of the Subordinated Notes being redeemed, together with any accrued and unpaid interest on the Subordinated Notes being redeemed to, but excluding, the date of redemption. The Subordinated Notes are not subject to redemption at the option of the holder. Principal and interest on the Subordinated Notes are subject to acceleration only in limited circumstances in the case of certain bankruptcy and insolvency-related events with respect to the Company. The Subordinated Notes are unsecured, subordinated obligations of the Company, are not obligations of, and are not guaranteed by, any subsidiary of the Company, and rank junior in right of payment to the Company’s current and future senior indebtedness. The Subordinated Notes are intended to qualify as Tier 2 capital of the Company for regulatory capital purposes. 9. Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis Investment securities available for sale and marketable equity securities : Fair values are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. 34 Servicing rights: MSR and CSR are measured at fair value on a recurring basis. These assets are classified as Level 3 as quoted prices are not available. In order to determine the fair value of MSR and CSR, the present value of net expected future cash flows is estimated. Assumptions used include market discount rates, Interest rate swaps: The fair value of the interest rate swap agreements is determined using standard valuation models that calculate the present value of expected future cash flows. These valuation models incorporate observable market inputs, including contractual terms, interest rate yield curves, forward interest rates, and credit risk adjustments. The Company classifies its interest rate swaps within Level 2 of the fair value hierarchy. Interest rate lock commitments: The fair value of the interest rate lock commitments are estimated using quoted or published market prices for similar instruments, adjusted for factors such as pull-through rate assumptions based on historical information, where appropriate. The pull-through rate assumptions are considered Level 3 valuation inputs and are significant to the interest rate lock commitment valuation; as such, the interest rate lock commitment derivatives are classified as Level 3. Retail interest rate contracts: Retail interest rate contracts are valued in a model, which uses as its basis a discounted cash flow technique incorporating credit valuation adjustments to reflect nonperformance risk in the measurement of fair value. Although the Company has determined that the majority of inputs used to value its retail interest rate contracts fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of June 30, 2026, the Company has assessed the significance of the impact of these adjustments on the overall valuation of its retail interest rate contracts and has determined that they are not significant to the overall valuation. As a result, the Company has classified its retail interest rate contract valuations in Level 2 of the fair value hierarchy. Commitments to extend credit and standby letters of credit : The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligation with the counterparties at the reporting date. Assets Subject to Nonrecurring Adjustment to Fair Value The Company is also required to measure certain assets such as equity method investments, goodwill, intangible assets, impaired loans, and Other Real Estate Owned (“OREO”) at fair value on a nonrecurring basis in accordance with GAAP. Any nonrecurring adjustments to fair value usually result from the write-down of individual assets. The Company uses either in-house evaluations or external appraisals to estimate the fair value of OREO and impaired loans as of each reporting date. In-house appraisals are considered Level 3 inputs and external appraisals are considered Level 2 inputs. The Company’s determination of which method to use is based upon several factors. The Company takes into account compliance with legal and regulatory guidelines, the amount of the loan, the size of the assets, the location and type of property to be valued and how critical the timing of completion of the analysis is to the assessment of value. Those factors are balanced with the level of internal expertise, internal experience and market information available, versus external expertise available such as qualified appraisers, brokers, auctioneers and equipment specialists. Limitations Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. 35 Estimated fair values as of the periods indicated, whether or not recognized or recorded at fair value on a recurring basis in the Consolidated Balance Sheets, are as follows: June 30, 2026 December 31, 2025 (In Thousands) Carrying Amount Fair Value Carrying Amount Fair Value Financial assets: Level 1 inputs: Cash, due from banks and deposits in other banks $ 172,213 $ 172,213 $ 145,906 $ 145,906 Investment securities available for sale 238,874 238,874 201,412 201,412 Marketable equity securities 11,315 11,315 8,392 8,392 Level 2 inputs: Investment securities available for sale 172,770 172,770 214,451 214,451 Loans held for sale 83,272 83,272 100,323 100,323 Interest rate swaps 8,754 8,754 7,999 7,999 Interest rate swap - junior subordinated debt 1,510 1,510 1,437 1,437 Level 3 inputs: Investment securities held to maturity 31,750 30,769 26,750 26,750 Loans 2,386,328 2,284,892 2,295,499 2,225,114 Purchased receivables, net 122,792 122,792 101,642 101,642 Interest rate lock commitments 1,519 1,519 923 912 Mortgage servicing rights 28,475 28,475 27,474 27,474 Commercial servicing rights 2,215 2,215 2,342 2,342 Financial liabilities: Level 2 inputs: Time deposits $ 369,458 $ 371,304 $ 402,759 $ 405,317 Borrowings 12,581 10,078 12,805 10,361 Interest rate swaps 8,754 8,754 7,999 7,999 Retail interest rate contracts 76 76 50 50 Level 3 inputs: Junior subordinated debentures 10,310 10,556 10,310 10,950 Subordinated debentures 58,684 57,276 58,614 58,614 36 The following table sets forth the balances as of the periods indicated of assets and liabilities measured at fair value on a recurring basis: (In Thousands) Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) June 30, 2026 Assets: Available for sale securities U.S. Treasury and government sponsored entities $ 379,789 $ 238,874 $ 140,915 $ — U.S. Agency mortgage-backed securities 4,620 — 4,620 — Corporate bonds 1,997 — 1,997 — Collateralized loan obligations 25,238 — 25,238 — Total available for sale securities $ 411,644 $ 238,874 $ 172,770 $ — Marketable equity securities $ 11,315 $ 11,315 $ — $ — Total marketable equity securities $ 11,315 $ 11,315 $ — $ — Loans held for sale $ 83,272 $ — $ 83,272 $ — Interest rate swaps 10,264 — 10,264 — Interest rate lock commitments 1,519 — — 1,519 Mortgage servicing rights 28,475 — — 28,475 Commercial servicing rights 2,215 — — 2,215 Total other assets $ 125,745 $ — $ 93,536 $ 32,209 Liabilities: Interest rate swaps $ 8,754 $ — $ 8,754 $ — Retail interest rate contracts 76 — 76 — Total other liabilities $ 8,830 $ — $ 8,830 $ — December 31, 2025 Assets: Available for sale securities U.S. Treasury and government sponsored entities $ 388,737 $ 201,412 $ 187,325 $ — U.S. Agency mortgage-backed securities 4,798 — 4,798 — Corporate bonds 4,952 4,952 — — Collateralized loan obligations 22,174 — 22,174 — Total available for sale securities $ 420,661 $ 206,364 $ 214,297 $ — Marketable equity securities $ 8,392 $ 8,392 $ — $ — Total marketable securities $ 8,392 $ 8,392 $ — $ — Loans held for sale $ 100,323 $ — $ 100,323 $ — Interest rate swaps 9,436 — 9,436 — Interest rate lock commitments 923 — — 923 Mortgage servicing rights 27,474 — — 27,474 Commercial servicing rights 2,342 — — 2,342 Total other assets $ 140,498 $ — $ 109,759 $ 30,739 Liabilities: Interest rate swaps $ 7,999 $ — $ 7,999 $ — Retail interest rate contracts 50 — 50 — Total other liabilities $ 8,049 $ — $ 8,049 $ — 37 The following tables provide a reconciliation of the assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three and six-month periods ended June 30, 2026 and 2025: (In Thousands) Beginning balance Change included in earnings Purchases and issuances Sales and settlements Ending balance Net change in unrealized gains (losses) relating to items held at end of period Three Months Ended June 30, 2026 Interest rate lock commitments $ 1,580 ($ 646 ) $ 5,338 ($ 4,753 ) $ 1,519 $ 1,519 Mortgage servicing rights 28,426 ( 928 ) 977 — 28,475 — Commercial servicing rights 2,359 ( 159 ) 15 — 2,215 — Total $ 32,365 ($ 1,733 ) $ 6,330 ($ 4,753 ) $ 32,209 $ 1,519 Three Months Ended June 30, 2025 Interest rate lock commitments $ 1,389 ($ 553 ) $ 4,700 ($ 4,240 ) $ 1,296 $ 1,296 Mortgage servicing rights 26,814 ( 818 ) 1,510 — 27,506 — Commercial servicing rights 2,317 ( 120 ) 203 — 2,400 — Total $ 30,520 ($ 1,491 ) $ 6,413 ($ 4,240 ) $ 31,202 $ 1,296 (In Thousands) Beginning balance Change included in earnings Purchases and issuances Sales and settlements Ending balance Net change in unrealized gains (losses) relating to items held at end of period Six Months Ended June 30, 2026 Interest rate lock commitments $ 923 ($ 1,175 ) $ 9,593 ($ 7,822 ) $ 1,519 $ 1,519 Mortgage servicing rights 27,474 ( 1,055 ) 2,056 — 28,475 — Commercial servicing rights 2,342 ( 161 ) 34 — 2,215 — Total $ 30,739 ($ 2,391 ) $ 11,683 ($ 7,822 ) $ 32,209 $ 1,519 Six Months Ended June 30, 2025 Interest rate lock commitments $ 465 ($ 779 ) $ 6,696 ($ 5,086 ) $ 1,296 $ 1,296 Mortgage servicing rights 26,439 ( 1,673 ) 2,740 — 27,506 — Commercial servicing rights 2,194 ( 193 ) 399 — 2,400 — Total $ 29,098 ($ 2,645 ) $ 9,835 ($ 5,086 ) $ 31,202 $ 1,296 There were no changes in unrealized gains and losses for the three and six -month periods ending June 30, 2026 and 2025 included in other comprehensive income for recurring Level 3 fair value measurements and there were no transfers between levels during the three and six -month periods ending June 30, 2026 and 2025. 38 As of and for the periods ending June 30, 2026 and December 31, 2025, except for certain assets as shown in the following table, no impairment or valuation adjustment was recognized for assets recognized at fair value on a nonrecurring basis. For loans individually measured for credit losses, the Company classifies fair value measurements using observable inputs, such as external appraisals, as Level 2 valuations in the fair value hierarchy, and unobservable inputs, such as in-house evaluations, as Level 3 valuations in the fair value hierarchy. (In Thousands) Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) June 30, 2026 Loans individually measured for credit losses $ 851 $ — $ — $ 851 Total $ 851 $ — $ — $ 851 December 31, 2025 Loans individually measured for credit losses $ 2,729 $ — $ — $ 2,729 Total $ 2,729 $ — $ — $ 2,729 39 The following table presents the (gains) losses resulting from nonrecurring fair value adjustments for the six-month periods ended June 30, 2026 and 2025: Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2026 2025 2026 2025 Loans individually measured for credit losses ($ 836 ) $ — ($ 53 ) $ — Total loss from nonrecurring measurements ($ 836 ) $ — ($ 53 ) $ — Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) The following tables provide a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company’s assets and liabilities classified as Level 3 and measured at fair value on a recurring and nonrecurring basis at June 30, 2026 and December 31, 2025: Financial Instrument Valuation Technique - Recurring Basis Unobservable Input Range of Inputs Weighted Average June 30, 2026 Interest rate lock commitment External pricing model Pull through rate 81.32 % - 100.00 % 92.22 % Mortgage servicing rights Discounted cash flow Constant prepayment rate 7.43 % - 18.53 % 10.13 % Discount rate 9.50 % - 10.01 % 10.00 % Commercial servicing rights Discounted cash flow Constant prepayment rate 3.84 % - 17.55 % 11.71 % Discount rate 12.00 % 12.00 % December 31, 2025 Interest rate lock commitment External pricing model Pull through rate 86.22 % - 100.00 % 91.53 % Mortgage servicing rights Discounted cash flow Constant prepayment rate 5.88 % - 20.96 % 10.01 % Discount rate 9.50 % - 11.00 % 10.97 % Commercial servicing rights Discounted cash flow Constant prepayment rate 3.84 % - 17.55 % 11.71 % Discount rate 12.00 % 12.00 % Financial Instrument Valuation Technique - Nonrecurring Basis Unobservable Input Range of Inputs Weighted Average June 30, 2026 Loans individually measured for credit losses Discounted cash flow Discount rate 10.00 % 10.00 % December 31, 2025 Loans individually measured for credit losses Discounted cash flow Discount rate 10.00 % 10.00 % 40 10. Segment Information The Company's operations are managed along three operating segments: Community Banking, Home Mortgage Lending, and Specialty Finance. The Company reevaluated our reportable operating segments in the fourth quarter of 2024 concurrent with the acquisition of Sallyport Commercial Finance, LLC (“SCF”), which resulted in the addition of the Specialty Finance segment. The Community Banking segment's principal business focus is the offering of loan and deposit products to business and consumer customers in its primary market areas. As of June 30, 2026, the Community Banking segment operated 21 branches throughout Alaska. The Home Mortgage Lending segment's principal business focus is the origination and sale of mortgage loans for 1-4 family residential properties, mortgage loan servicing for a portion of mortgage loans sold, and investment in certain 1-4 family residential mortgage loans on our balance sheet. The Specialty Finance segment's principal business focus is factoring, asset based lending and alternative working capital solutions to small and medium sized enterprises, and includes SCF and Northrim Funding Services, which was previously reported in the Community Banking segment prior to the acquisition of SCF. The Company's reportable segments are determined by our Chief Financial Officer and the Chief Executive Officer, whom collectively are the designated chief operating decision maker. The reportable segments are determined based on information provided about the Company's products and services offered. They are also distinguished by the level of information provided to the chief operating decision maker, who uses the information to review performance of various components of the business, which are then aggregated if operating performance, products and services, and customers are similar. The chief operating decision maker evaluates the financial performance of the Company's business components such as by evaluating revenue streams, significant expenses, and budget to actual results in assessing the performance of the Company's segments and in the determination of allocating resources. Segment pretax net income or loss is used to assess the performance of the community banking segment by monitoring the margin between interest income and interest expense and the efficiency ratio specific to the segment. Segment pretax net income or loss is used to assess the performance of the home mortgage lending segment by monitoring the premium received on loan sales, the margin between interest income and interest expense, and the profitability of home mortgage servicing activities. Segment pretax net income or loss is used to assess the performance of the specialty finance segment by monitoring pretax income and the yield of purchased receivable fees. Accounting policies for segments are the same as those described in Note 1 to the Consolidated Financial Statements. Interest expense is allocated to each segment based on average cash utilized to fund the operations of the segment and the average cost of interest-bearing liabilities for the consolidated entity. Indirect salary expense for activities such as general management, accounting and finance, human resources, compliance, information technology, risk management, and internal audit are allocated based on the average percentage of employee time spent working in each specific segment. 41 Summarized financial information for the Company's reportable segments and the reconciliation to the consolidated financial results for the periods presented is shown in the following tables: Three Months Ended June 30, 2026 (In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated Interest income $ 41,124 $ 4,934 $ 1,096 $ 47,154 Interest expense 7,888 1,460 670 10,018 Net interest income 33,236 3,474 426 37,136 Provision for credit losses 503 279 845 1,627 Net interest income after provision for credit losses 32,733 3,195 ( 419 ) 35,509 Net realized gains on mortgage loans sold — 5,408 — 5,408 Change in fair value of mortgage loan commitments, net — ( 202 ) — ( 202 ) Total production revenue — 5,206 — 5,206 Mortgage servicing revenue — 2,568 — 2,568 Change in fair value of mortgage servicing rights: Due to changes in model inputs of assumptions — ( 366 ) — ( 366 ) Other — ( 562 ) — ( 562 ) Total mortgage servicing revenue, net — 1,640 — 1,640 Other mortgage banking revenue — 292 — 292 Total mortgage banking income — 7,138 — 7,138 Purchased receivable income — — 6,473 6,473 Other operating income 3,097 — 29 3,126 Total other operating income 3,097 7,138 6,502 16,737 Salaries and other personnel expense 12,418 6,399 1,967 20,784 Data processing expense 2,977 299 206 3,482 Occupancy expense 1,384 372 69 1,825 Professional and outside services 935 258 235 1,428 Marketing expense 640 40 6 686 Insurance expense 417 15 — 432 Compensation expense - Sallyport acquisition payments — — 500 500 Other operating expense 1,663 739 483 2,885 Total other operating expense 20,434 8,122 3,466 32,022 Income before provision for income taxes 15,396 2,211 2,617 20,224 Provision for income taxes 3,651 604 627 4,882 Net income $ 11,745 $ 1,607 $ 1,990 $ 15,342 42 Three Months Ended June 30, 2026 (In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated Interest income $ 41,124 $ 4,934 $ 1,096 $ 47,154 Mortgage banking income - external revenue — 7,138 — 7,138 Mortgage banking income - intersegment revenues — 924 — 924 Purchased receivable income — — 6,473 6,473 Other operating income 3,097 — 29 3,126 44,221 12,996 7,598 64,815 Reconciliation of revenue Elimination of intersegment revenues — ( 924 ) — ( 924 ) Total consolidated revenues $ 44,221 $ 12,072 $ 7,598 $ 63,891 Less: Interest expense 7,888 1,460 670 10,018 Provision for credit losses 503 279 845 1,627 Segment gross profit 35,830 10,333 6,083 52,246 Less (1) : Salaries and other personnel expense $ 12,418 $ 6,399 $ 1,967 $ 20,784 Data processing expense 2,977 299 206 3,482 Occupancy expense 1,384 372 69 1,825 Professional and outside services 935 258 235 1,428 Marketing expense 640 40 6 686 Insurance expense 417 15 — 432 Compensation expense - Sallyport acquisition payments — — 500 500 Intersegment expense 924 — — 924 Other segment items (2) 1,663 739 483 2,885 Segment expense 21,358 8,122 3,466 32,946 Reconciliation of expense Elimination of intersegment expense ($ 924 ) $ — $ — ( 924 ) Total consolidated expense $ 20,434 $ 8,122 $ 3,466 $ 32,022 Income before provision for income taxes $ 15,396 $ 2,211 $ 2,617 $ 20,224 1 The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. All expenses are allocated to a segment. 2 Other segment items for each reportable segment include: Community Banking: OREO (income) expense, net of rental income and gains on sale, director fees, operational charge offs net of recoveries, loan collection and collateral costs, and other miscellaneous operating costs related to community banking activities. Home Mortgage Lending: OREO (income) expense, net of rental income and gains on sale related home mortgage loans, director fees related at RML, loan collection and collateral costs related to home mortgage loans, and other miscellaneous operating costs related to home mortgage lending activities. Specialty Finance: miscellaneous operating costs related to specialty finance activities. 43 Three Months Ended June 30, 2025 (In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated Interest income $ 38,969 $ 5,048 $ 782 $ 44,799 Interest expense 8,998 1,541 668 11,207 Net interest income 29,971 3,507 114 33,592 Provision for credit losses 1,319 639 18 1,976 Net interest income after provision for credit losses 28,652 2,868 96 31,616 Net realized gains on mortgage loans sold — 5,091 — 5,091 Change in fair value of mortgage loan commitments, net — ( 110 ) — ( 110 ) Total production revenue — 4,981 — 4,981 Mortgage servicing revenue — 2,957 — 2,957 Change in fair value of mortgage servicing rights: Due to changes in model inputs of assumptions — ( 355 ) — ( 355 ) Other — ( 463 ) — ( 463 ) Total mortgage servicing revenue, net — 2,139 — 2,139 Other mortgage banking revenue — 280 — 280 Total mortgage banking income — 7,400 — 7,400 Purchased receivable income — — 5,897 5,897 Other operating income 3,268 — 75 3,343 Total other operating income 3,268 7,400 5,972 16,640 Salaries and other personnel expense 13,360 5,682 1,812 20,854 Data processing expense 2,960 270 136 3,366 Occupancy expense 1,476 556 72 2,104 Professional and outside services 634 258 221 1,113 Marketing expense 894 142 6 1,042 Insurance expense 734 21 1 756 Compensation expense - Sallyport acquisition payments — — 600 600 Other operating expense 1,706 664 283 2,653 Total other operating expense 21,764 7,593 3,131 32,488 Income before provision for income taxes 10,156 2,675 2,937 15,768 Provision (benefit) for income taxes 2,413 746 831 3,990 Net income $ 7,743 $ 1,929 $ 2,106 $ 11,778 44 Three Months Ended June 30, 2025 (In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated Interest income $ 38,969 $ 5,048 $ 782 $ 44,799 Mortgage banking income - external revenue — 7,400 — 7,400 Mortgage banking income - intersegment revenues — 914 — 914 Purchased receivable income — — 5,897 5,897 Other operating income 3,268 — 75 3,343 42,237 13,362 6,754 62,353 Reconciliation of revenue Elimination of intersegment revenues — ( 914 ) — ( 914 ) Total consolidated revenues $ 42,237 $ 12,448 $ 6,754 $ 61,439 Less: Interest expense 8,998 1,541 668 11,207 Provision for credit losses 1,319 639 18 1,976 Segment gross profit 31,920 10,268 6,068 48,256 Less (1) : Salaries and other personnel expense $ 13,360 $ 5,682 $ 1,812 $ 20,854 Data processing expense 2,960 270 136 3,366 Occupancy expense 1,476 556 72 2,104 Professional and outside services 634 258 221 1,113 Marketing expense 894 142 6 1,042 Insurance expense 734 21 1 756 Compensation expense - Sallyport acquisition payments — — 600 600 Intersegment expense 914 — — 914 Other segment items (2) 1,706 664 283 2,653 Segment expense 22,678 7,593 3,131 33,402 Reconciliation of expense Elimination of intersegment expense ($ 914 ) $ — $ — ( 914 ) Total consolidated expense $ 21,764 $ 7,593 $ 3,131 $ 32,488 Income before provision for income taxes $ 10,156 $ 2,675 $ 2,937 $ 15,768 1 The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. All expenses are allocated to a segment. 2 Other segment items for each reportable segment include: Community Banking: OREO (income) expense, net of rental income and gains on sale, director fees, operational charge offs net of recoveries, loan collection and collateral costs, and other miscellaneous operating costs related to community banking activities. Home Mortgage Lending: OREO (income) expense, net of rental income and gains on sale related home mortgage loans, director fees related at RML, loan collection and collateral costs related to home mortgage loans, and other miscellaneous operating costs related to home mortgage lending activities. Specialty Finance: miscellaneous operating costs related to specialty finance activities. 45 Six Months Ended June 30, 2026 (In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated Interest income $ 81,160 $ 9,125 $ 1,765 $ 92,050 Interest expense 16,084 2,855 1,314 20,253 Net interest income 65,076 6,270 451 71,797 Provision for credit losses 656 841 1,090 2,587 Net interest income after provision for credit losses 64,420 5,429 ( 639 ) 69,210 Net realized gains on mortgage loans sold — 8,405 — 8,405 Change in fair value of mortgage loan commitments, net — 518 — 518 Total production revenue — 8,923 — 8,923 Mortgage servicing revenue — 5,235 — 5,235 Change in fair value of mortgage servicing rights: Due to changes in model inputs of assumptions — 97 — 97 Other — ( 1,152 ) — ( 1,152 ) Total mortgage servicing revenue, net — 4,180 — 4,180 Other mortgage banking revenue — 496 — 496 Total mortgage banking income — 13,599 — 13,599 Purchased receivable income — — 12,605 12,605 Other operating income 5,513 — ( 101 ) 5,412 Total other operating income 5,513 13,599 12,504 31,616 Salaries and other personnel expense 24,810 11,674 3,806 40,290 Data processing expense 5,813 599 375 6,787 Occupancy expense 2,949 840 140 3,929 Professional and outside services 1,766 511 310 2,587 Marketing expense 1,396 177 14 1,587 Insurance expense 801 35 — 836 Compensation expense - Sallyport acquisition payments — — 1,000 1,000 Other operating expense 3,289 1,487 852 5,628 Total other operating expense 40,824 15,323 6,497 62,644 Income before provision for income taxes 29,109 3,705 5,368 38,182 Provision for income taxes 6,864 1,012 1,289 9,165 Net income $ 22,245 $ 2,693 $ 4,079 $ 29,017 46 Six Months Ended June 30, 2026 (In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated Interest income $ 81,160 $ 9,125 $ 1,765 $ 92,050 Mortgage banking income - external revenue — 13,599 — 13,599 Mortgage banking income - intersegment revenues — 1,878 — 1,878 Purchased receivable income — — 12,605 12,605 Other operating income 5,513 — ( 101 ) 5,412 86,673 24,602 14,269 125,544 Reconciliation of revenue Elimination of intersegment revenues — ( 1,878 ) — ( 1,878 ) Total consolidated revenues $ 86,673 $ 22,724 $ 14,269 $ 123,666 Less: Interest expense 16,084 2,855 1,314 20,253 Provision for credit losses 656 841 1,090 2,587 Segment gross profit 69,933 19,028 11,865 100,826 Less (1) : Salaries and other personnel expense $ 24,810 $ 11,674 $ 3,806 $ 40,290 Data processing expense 5,813 599 375 6,787 Occupancy expense 2,949 840 140 3,929 Professional and outside services 1,766 511 310 2,587 Marketing expense 1,396 177 14 1,587 Insurance expense 801 35 — 836 Compensation expense - Sallyport acquisition payments — — 1,000 1,000 Intersegment expense 1,878 — — 1,878 Other segment items (2) 3,289 1,487 852 5,628 Segment expense 42,702 15,323 6,497 64,522 Reconciliation of expense Elimination of intersegment expense ($ 1,878 ) $ — $ — ( 1,878 ) Total consolidated expense $ 40,824 $ 15,323 $ 6,497 $ 62,644 Income before provision for income taxes $ 29,109 $ 3,705 $ 5,368 $ 38,182 1 The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. All expenses are allocated to a segment. 2 Other segment items for each reportable segment include: Community Banking: OREO (income) expense, net of rental income and gains on sale, director fees, operational charge offs net of recoveries, loan collection and collateral costs, and other miscellaneous operating costs related to community banking activities. Home Mortgage Lending: OREO (income) expense, net of rental income and gains on sale related home mortgage loans, director fees related at RML, loan collection and collateral costs related to home mortgage loans, and other miscellaneous operating costs related to home mortgage lending activities. Specialty Finance: miscellaneous operating costs related to specialty finance activities. 47 Six Months Ended June 30, 2025 (In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated Interest income $ 75,542 $ 9,440 $ 1,378 $ 86,360 Interest expense 17,420 2,887 1,164 21,471 Net interest income 58,122 6,553 214 64,889 Provision (benefit) for credit losses ( 449 ) 332 684 567 Net interest income after provision for credit losses 58,571 6,221 ( 470 ) 64,322 Net realized gains on mortgage loans sold — 6,671 — 6,671 Change in fair value of mortgage loan commitments, net — 550 — 550 Total production revenue — 7,221 — 7,221 Mortgage servicing revenue — 5,653 — 5,653 Change in fair value of mortgage servicing rights: — — Due to changes in model inputs of assumptions — ( 677 ) — ( 677 ) Other — ( 996 ) — ( 996 ) Total mortgage servicing revenue, net — 3,980 — 3,980 Other mortgage banking revenue — 450 — 450 Total mortgage banking income — 11,651 — 11,651 Purchased receivable income — — 12,047 12,047 Other operating income 5,971 — 11 5,982 Total other operating income 5,971 11,651 12,058 29,680 Salaries and other personnel expense 24,124 10,451 3,502 38,077 Data processing expense 5,630 533 307 6,470 Occupancy expense 2,858 994 141 3,993 Professional and outside services 1,195 514 519 2,228 Marketing expense 1,412 293 9 1,714 Insurance expense 1,722 44 7 1,773 Compensation expense - Sallyport acquisition payments — — 1,200 1,200 Other operating expense 3,404 1,254 546 5,204 Total other operating expense 40,345 14,083 6,231 60,659 Income before provision for income taxes 24,197 3,789 5,357 33,343 Provision for income taxes 5,666 1,056 1,519 8,241 Net income $ 18,531 $ 2,733 $ 3,838 $ 25,102 48 Six Months Ended June 30, 2025 (In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated Interest income $ 75,542 $ 9,440 $ 1,378 $ 86,360 Mortgage banking income - external revenue — 11,651 — 11,651 Mortgage banking income - intersegment revenues — 1,356 — 1,356 Purchased receivable income — — 12,047 12,047 Other operating income 5,971 — 11 5,982 81,513 22,447 13,436 117,396 Reconciliation of revenue Elimination of intersegment revenues — ( 1,356 ) — ( 1,356 ) Total consolidated revenues $ 81,513 $ 21,091 $ 13,436 $ 116,040 Less: Interest expense 17,420 2,887 1,164 21,471 Provision (benefit) for credit losses ( 449 ) 332 684 567 Segment gross profit 64,542 17,872 11,588 94,002 Less (1) : Salaries and other personnel expense $ 24,124 $ 10,451 $ 3,502 $ 38,077 Data processing expense 5,630 533 307 6,470 Occupancy expense 2,858 994 141 3,993 Professional and outside services 1,195 514 519 2,228 Marketing expense 1,412 293 9 1,714 Insurance expense 1,722 44 7 1,773 Compensation expense - Sallyport acquisition payments — — 1,200 1,200 Intersegment expense 1,356 — — 1,356 Other segment items (2) 3,404 1,254 546 5,204 Segment expense 41,701 14,083 6,231 62,015 Reconciliation of expense Elimination of intersegment expense ($ 1,356 ) $ — $ — ( 1,356 ) Total consolidated expense $ 40,345 $ 14,083 $ 6,231 $ 60,659 Income before provision for income taxes $ 24,197 $ 3,789 $ 5,357 $ 33,343 1 The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. All expenses are allocated to a segment. 2 Other segment items for each reportable segment include: Community Banking: OREO (income) expense, net of rental income and gains on sale, director fees, operational charge offs net of recoveries, loan collection and collateral costs, and other miscellaneous operating costs related to community banking activities. Home Mortgage Lending: OREO (income) expense, net of rental income and gains on sale related home mortgage loans, director fees related at RML, loan collection and collateral costs related to home mortgage loans, and other miscellaneous operating costs related to home mortgage lending activities. Specialty Finance: miscellaneous operating costs related to specialty finance activities. 49 June 30, 2026 (In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated Total assets $ 2,808,516 $ 400,520 $ 206,350 $ 3,415,386 Loans held for sale $ — $ 83,272 $ — $ 83,272 Loans $ 2,110,524 $ 260,301 $ 15,503 $ 2,386,328 Purchased receivables, net $ — $ — $ 122,792 $ 122,792 Goodwill $ 7,525 $ 7,492 $ 34,857 $ 49,874 December 31, 2025 (In Thousands) Community Banking Home Mortgage Lending Specialty Finance Consolidated Total assets $ 2,724,236 $ 390,242 $ 175,795 $ 3,290,273 Loans held for sale $ — $ 100,323 $ — $ 100,323 Loans $ 2,034,834 $ 243,167 $ 17,498 $ 2,295,499 Purchased receivables, net $ — $ — $ 101,642 $ 101,642 Goodwill $ 7,525 $ 7,492 $ 34,857 $ 49,874 11. Subsequent Events On July 22, 2026, the Company announced that it entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among Northrim, Whitewater Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), and PBCO Financial Corporation (“PBCO”), pursuant to which the Company will acquire PBCO in an all-stock transaction. Upon the terms and subject to the conditions set forth in the Merger Agreement, (i) PBCO will merge with and into Merger Sub, with Merger Sub surviving the merger, (ii) immediately following the merger of PBCO and Merger Sub, and as a part of a single integrated transaction, Merger Sub will merge with and into the Company, with the Company continuing as the surviving entity, and (iii) promptly following such merger, Northrim Bank (the “Bank”) and People’s Bank of Commerce, a wholly owned subsidiary of PBCO, will merge (the “Bank Merger”), with the Bank continuing as the surviving bank. Pursuant to the terms of the Merger Agreement, PBCO shareholders will receive 1.160 shares of the Company’s common stock for each PBCO share they own. Following closing, PBCO shareholders will own approximately 21 % of the outstanding common stock of the Company. The combined company will have approximately $ 4.2 billion in assets and will expand the Company’s banking footprint into Oregon. The closing of the merger is subject to approvals from the Federal Reserve, the FDIC, the Oregon Department of Consumer and Business Services, Division of Financial Regulation, the Alaska Department of Commerce, Community, and Economic Development, Division of Banking and Securities, the shareholders of the Company, and the shareholders of PBCO. 50 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion should be read in conjunction with the unaudited consolidated financial statements of Northrim BanCorp, Inc. (the “Company”) and the notes thereto presented elsewhere in this report and with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Except as otherwise noted, references to “we”, “our”, “us” or “the Company” refer to Northrim BanCorp, Inc. and its subsidiaries that are consolidated for financial reporting purposes. Note Regarding Forward Looking-Statements This quarterly report on Form 10-Q includes “forward-looking statements,” as that term is defined for purposes of Section 21E of the Securities Exchange Act of 1934, as amended, which are not historical facts. These forward-looking statements describe management’s expectations about future events and developments such as future operating results, growth in loans and deposits, continued success of the Company’s style of banking, and the strength of the local economy. All statements, other than statements of historical fact, regarding our financial position, business strategy, management’s plans and objectives for future operations are forward-looking statements. We use words such as “anticipate,” “believe,” “expect,” “intend” and similar expressions in part to help identify forward-looking statements. Forward-looking statements reflect management’s current plans and expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations, and those variations may be both material and adverse. Forward-looking statements are subject to various risks and uncertainties that may cause our actual results to differ materially and adversely from our expectations as indicated in the forward-looking statements. These risks and uncertainties include: 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; 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; risks related to the proposed merger with PBCO Financial Corporation including, among others, (i) failure to complete the merger or unexpected delays related to the merger or either party’s inability to obtain regulatory, shareholder approvals, or satisfy other closing conditions required to complete the merger, (ii) regulatory approvals resulting in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction, (iii) certain restrictions during the pendency of the merger that may impact the parties’ ability to pursue certain business opportunities or strategic transactions, (iv) diversion of management’s attention from ongoing business operations and opportunities, (v) cost savings and any revenue or expense synergies from the merger may not be fully realized or may take longer than anticipated to be realized, (vi) deposit attrition, customer or employee loss, and/or revenue loss as a result of the announcement of the merger, (viii) expenses related to the merger being greater than expected, and (ix) shareholder litigation that could prevent or delay the closing of the Merger or otherwise negatively impact our business and operations; changes in banking regulation or actions by bank regulators; 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; the general condition of, and changes in, the Alaska economy; our ability to maintain or expand our market share or net interest margin; the sufficiency of our allowance for credit losses and the accuracy of the assumptions or estimates used in preparing our financial statements, including those related to current expected credit losses accounting guidance; our ability to maintain asset quality; 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 and increased cyber threats due to artificial intelligence; disease outbreaks; and our ability to execute our business plan. Further, actual results may be affected by competition on price and other factors with other financial institutions; customer acceptance of new products and services; the regulatory environment in which we operate; and general trends in the local, regional and national banking industry and economy. In addition, there are risks inherent in the banking industry relating to collectability of loans and changes in interest rates . Many of these risks, as well as other risks that may have a material adverse impact on our operations and business, are identified in Part II. Item 1A Risk Factors of this report and Part I. Item 1A in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, as well as in our other filings with the Securities and Exchange Commission. However, you should be aware that these factors are not an exhaustive list, and you should not assume these are the only factors that may cause our actual results to differ from our expectations. In addition, you should note that forward looking statements are made only as of the date of this report and that we do not intend to update any of the forward-looking statements or the uncertainties that may adversely impact those statements, other than as required by law. Recent Developments On July 22, 2026, we announced that we, Whitewater Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), and PBCO Financial Corporation (“PBCO”), the parent company of People’s Bank of Commerce, entered into an 51 Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Northrim will acquire PBCO in an all-stock transaction. Upon the terms and subject to the conditions set forth in the Merger Agreement, (i) PBCO will merge with and into Merger Sub, with Merger Sub surviving the merger (the “Merger”), (ii) immediately following the merger of PBCO and Merger Sub, and as a part of a single integrated transaction, Merger Sub will merge with and into the Company, with the Company continuing as the surviving entity (the “Subsidiary Merger”, and together with the Merger, the “Mergers”), and (iii) promptly following such merger, Northrim Bank (the “Bank”) and People’s Bank of Commerce, a wholly owned subsidiary of PBCO, will merge (the “Bank Merger”), with the Bank continuing as the surviving bank. Pursuant to the terms of the Merger Agreement, PBCO shareholders will receive 1.160 shares of Northrim common stock for each PBCO share they own. The combined company will have approximately $4.2 billion in assets and will expand Northrim’s banking footprint into Oregon. The acquisition is expected to close in the fourth quarter of 2026 or early in the first quarter of 2027, subject to satisfaction of customary closing conditions, including receipt of regulatory, and shareholder approvals. The acquisition reflects a significant strategic investment to diversify the Company’s geographic footprint and position the Company for continued growth while preserving its Alaska-based community banking identity. Update on Economic Conditions Alaska’s seasonally adjusted unemployment rate was 4.6% in May of 2026, compared to 4.3% for the United States, according to the Alaska Department of Labor and Workforce Development. Both rates were unchanged from April of 2026. Alaska had a total of 343,600 payroll jobs in May of 2026 in Alaska, not including uniformed military. This was consistent with May of 2025. Year over year, the private sector grew by 0.9%, while the government sector declined 2.9%. The Federal component lost 1,500 jobs, or -9.8% since May of 2025, the State of Alaska decreased -700 jobs or 2.9% and Local government decreased -0.5%. The largest private sector growth came from Oil & Gas, up 1,000 direct jobs or +11.6%. Transportation, Warehousing and Utilities grew 1,600 jobs or +5.9% and Financial Activities added 200 jobs or +1.9%. Alaska’s seasonally adjusted aggregate personal income was $60 billion in the first quarter of 2026 according to the Federal Bureau of Economic Analysis (“BEA”). Alaska enjoyed an annual personal income improvement of 2.9% between the first quarter of 2025 and the first quarter of 2026. Based on a population estimate of 736,884 people, the per capita personal income in Alaska was $81,386. This is compared to the U.S. average of $77,816, according to the BEA, ranking Alaska 11 th highest of the 50 U.S. states. Alaska’s Gross State Product (“GSP”) in the first quarter of 2026 reached $78.8 billion according to the BEA. Alaska’s inflation adjusted “real” GSP increased 2.1% between the first quarter of 2025 and 2026. The average U.S. GDP growth rate was 2.7% for the same time period. 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 primarily 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 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 (“CPI”) for the U.S. increased 3.8% between April of 2025 and April of 2026. In Alaska, the rate of increase was higher at 4.3% for the same time period. The largest increases since last April came from Motor Fuel (+33.1%), Apparel (+15%), Recreation (+5.3%), and Housing (+4.8%). There were declining costs in New and Used Vehicles (-2.8%), and Education (-2%), to help moderate inflationary pressures in Alaska. 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 conflicts began in Venezuela and Iran. ANS was priced at a monthly average price of $111.17 in April of 2026 and $114.66 a barrel in May of 2026. ANS has been earning a consistent premium over Brent and West Texas crude prices. 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. 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 52 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. A partnership between Santos and Repsol is constructing the new Pikka field and ConocoPhillips is developing the large new Willow field. There are also several smaller new fields in Alaska’s North Slope that are contributing to the State of Alaska’s production growth estimate. The Alaska Permanent Fund is seeded annually by the natural resource wealth the State continues to save each year and has grown significantly over 40 years of successful investment. As of May 31, 2026 the fund’s value was $92.2 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. In the first six months of 2026, prices are up 6.5% on average to $567,221. 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. In the first half of 2026 average prices in the Matanuska Susitna Borough are up 2.9%. This continues a trend of average price increases for more than a decade in the region. These two markets represent where the majority of the Bank’s residential lending activity occurs. The Alaska Multiple Listing Services reported a 1% increase in the number of units sold in Anchorage when comparing January to June 2026 to the same period in 2025. The number of homes sold in the Matanuska Susitna Borough in the first half of 2026 is 1.9% lower than January to June 2025. The Board of Governors of the Federal Reserve System lowered its benchmark interest rate target to 3.50%-3.75% as of both June 30, 2026 and December 31, 2025. The prime rate of interest was 6.75% as of both June 30, 2026 and December 31, 2025. Highlights and Summary of Performance - Second Quarter of 2026 The Company reported net income and earnings per diluted share of $15.3 million and $0.68, respectively, for the second quarter of 2026 compared to net income and earnings per diluted share of $11.8 million and $0.52, respectively, for the second quarter of 2025. The Company reported net income and earnings per diluted share of $29.0 million and $1.29, respectively, for the first six months of 2026 compared to net income and earnings per diluted share of $25.1 million and $1.12, respectively, for the first six months of 2025. The increase in net income for the second quarter of 2026 compared to the same quarter last year was mostly due to an increase in net interest income. The increase in net income for the first six months of 2026 compared to the same period a year ago was primarily due to an increase in net interest income and mortgage banking income, which were partially offset by an increase in the provision for credit losses and other operating expenses. • Net interest margin was 4.96% for the second quarter of 2026, up 30-basis points from the second quarter a year ago. • Portfolio loans were $2.39 billion at June 30, 2026, up 4% from December 31, 2025, 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 $2.92 billion at June 30, 2026, up 4% from $2.81 billion at December 31, 2025. Non-interest bearing demand deposits increased 6% year-over-year to $826.3 million at June 30, 2026 and represent 28% of total deposits. • The average cost of interest-bearing deposits was 1.71% at June 30, 2026, down from 2.04% at June 30, 2025. • Average purchased receivables and loan balances for the Specialty Finance segment were $141.5 million for the second quarter of 2026, compared to average balances of $124.1 million for the second quarter of 2025. Other financial measures for the periods indicated are shown in the table below: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Return on average assets, annualized 1.84 % 1.48 % 1.77 % 1.61 % Return on average shareholders' equity, annualized 17.77 % 16.37 % 17.20 % 17.99 % Dividend payout ratio 23.91 % 30.43 % 25.02 % 28.51 % 53 Nonperforming assets: Nonperforming assets, net of government guarantees were $23.0 million at June 30, 2026 and $11.4 million at December 31, 2025. Other Real Estate Owned (“OREO”), net of government guarantees was $1.2 million at June 30, 2026 and zero at December 31, 2025. Repossessed assets were zero at both June 30, 2026 and December 31, 2025. Nonperforming loans, net of government guarantees increased $10.5 million or 93% to $21.8 million as of June 30, 2026 from $11.3 million as of December 31, 2025, primarily due to the addition of three loans to a single borrower in the first six months of 2026. Nonperforming purchased receivables decreased $67,000 or 100% to zero as of June 30, 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 June 30, 2026, $18.6 million are attributable to the Community Banking segment, $494,000 are attributable to the Home Mortgage Lending segment, and $3.9 million are attributable to the Specialty Finance segment. The increase in nonperforming assets was primarily in the Community Banking segment and was mostly attributable to one relationship which includes both commercial real estate and commercial loans which are well-collateralized. Potential problem assets: Potential problem loans are loans which are currently performing in accordance with contractual terms but that have developed negative indications that the borrower may not be able to comply with present payment terms and which may later be included in nonaccrual or past due. These loans are closely monitored and their performance is reviewed by management on a regular basis. All potential problem loans are individually evaluated for the purposes of establishing an allowance for credit losses. At June 30, 2026, management had identified $11.5 million potential problem loans, down from $21.2 million at December 31, 2025. This decrease is primarily due to the transfer of three loans to a single borrower to nonaccrual status, as well as paydowns which occurred in the first six months 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 second quarter of 2026. Allowance for Credit Losses Policy : Management performs a hypothetical sensitivity analysis of our Allowance for Credit Losses (“ACL”) quarterly to understand the impact of a change in a key input on our ACL. As of June 30, 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 12% lower, our ACL for loans would have increased $519,000, or 2%. As of June 30, 2026, 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 3% lower, which represents management's estimate of long-term mean rates for these economic factors, our ACL for loans would have increased $2.2 million, or 9%. As of June 30, 2026, if the estimated prepayment and curtailment rates are doubled (with a maximum rate of 100%), our ACL for loans would have decreased $2.1 million, or 9%. As of June 30, 2026, if the estimated prepayment and curtailment rates are cut in half, our ACL for loans would have increased $1.7 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 AND SIX MONTHS ENDED JUNE 30, 2026 AS COMPARED TO THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 Net Income Net income for the second quarter of 2026 increased $3.6 million to $15.3 million as compared to $11.8 million for the same period in 2025. The increase in net income in the second quarter of 2026 as compared to the same quarter a year ago is mostly due to a $3.5 million increase in net interest income. Net income for the first six months of 2026 increased $3.9 million to $29.0 million as compared to $25.1 million for the 54 same period in 2025. The increase in net income in the first six months of 2026 as compared to the same period a year ago is mostly due to a $6.9 million increase in net interest income and a $1.9 million increase in mortgage banking income, which were partially offset by a $2.0 million increase in the provision for credit losses and a $2.0 million increase in other operating expenses. Analysis of Business Segments Our business segments are defined as Community Banking, Home Mortgage Lending, and Specialty Finance. The following table summarizes net income from our segments. 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 June 30, 2026 Three Months Ended June 30, 2025 Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 Community Banking $11,745 $7,743 $22,245 $18,531 Home Mortgage Lending 1,607 1,929 2,693 2,733 Specialty Finance 1,990 2,106 4,079 3,838 Net income $15,342 $11,778 $29,017 $25,102 Community Banking Net income in the Community Banking segment increased $4.0 million or 52% in the second quarter of 2026 compared to the same period a year ago primarily due to an increase in net interest income, which totaled $33.2 million in the second quarter of 2026, and $30.0 million in the second quarter of 2025, as well as a decrease in other operating expenses and the provision for credit losses. Net interest income increased $3.3 million or 11% in the second quarter of 2026 as compared to the second quarter of 2025 mostly due to higher interest income on loans, investments, and deposits in banks as well as lower interest expense on deposits. The provision for credit losses in the Community Banking segment was $503,000 in the second quarter of 2026 compared to a provision for credit losses of $1.3 million in the same quarter a year ago. The decrease to the provision for credit losses in the Community Banking segment in the second quarter of 2026 as compared to the same quarter a year ago was primarily a result of larger increases in qualitative factors in the second quarter of 2025 when adversely classified assets, net of government guarantees increased 75% to $32.1 million. Adversely classified assets, net of government guarantees are $28.9 million in the Community Banking segment at June 30, 2026. Other operating expenses in the Community Banking segment totaled $20.4 million in the second quarter of 2026, down $1.3 million or 6% from $21.8 million in the second quarter a year ago. The decrease in the second quarter of 2026 as compared to the same quarter a year ago was mostly due to a $942,000 decrease in salaries and other personnel expense due to lower group medical claims expense and lower accruals for profit sharing and related taxes, as well as a decrease in FDIC insurance expense due to improved regulatory capital ratios and a decrease in marketing expense. These decreases were only partially offset by an increase in professional fees. Net income in the Community Banking segment increased $3.7 million or 20% in the first six months of 2026 as compared to the same period a year ago primarily due to increases in net interest income primarily due to higher interest income due to higher earning-asset balances and higher yields. This increase was only partially offset by an increase the provision for credit losses due to higher loan balances and a higher estimated loss rate due to an increase in estimated loss rates due to trends in qualitative factors, as well as an increase in the provision for income taxes. Home Mortgage Lending Net income in the Home Mortgage Lending segment decreased $322,000 or 17% in the second quarter of 2026 compared to the same period a year ago primarily due to higher other operating expenses and lower mortgage servicing revenue, which was only partially offset by a decrease in the provision for credit losses in the Home Mortgage Lending segment due to lower loan growth. During the second quarter of 2026, mortgage loans funded for sale were $239.1 million, compared to $249.7 million in the second quarter of 2025. The provision for credit losses in the Home Mortgage Lending segment was $279,000 in the second quarter of 2026 compared to a provision for credit losses of $639,000 in the second quarter of 2025. The decrease in the provision for credit 55 losses in the second quarter of 2026 in the Home Mortgage Lending segment as compared to the same quarter a year ago was primarily a result of a lower increase in loan balances primarily due to the the sale of mortgage loans. Other operating expenses in the Home Mortgage Lending segment totaled $8.1 million in the second quarter of 2026 compared to $7.6 million in the second quarter a year ago. The increase in the second 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 group medical expenses. The Arizona, Colorado, and Pacific Northwest mortgage expansion markets were responsible for 27% of Residential Mortgage's $222 million total production in the second quarter of 2026 and 22% of $216 million total production in the second quarter a year ago. As of June 30, 2026, Northrim serviced 6,657 loans in its $1.66 billion home-mortgage-servicing portfolio, a 7% increase from the $1.55 billion serviced a year ago. Net income in the Home Mortgage Lending segment decreased slightly, $40,000 or 1% in the first six months of 2026. An increase in other operating income due to higher mortgage loans funded for sale was offset by increases in other operating expenses primarily due to higher originator commissions and an increase in the the provision for credit losses as compared to the same period a year ago. Specialty Finance Net income in the Specialty Finance segment decreased $116,000 or 6% in the second quarter of 2026 compared to the same period a year ago primarily due to higher other operating expenses, which were only partially offset by increased purchased receivable balances. Net income in the Specialty Finance segment increased $241,000 or 6% in the first six months of 2026 compared to the same period a year ago primarily due to increased purchased receivable balances, which were only partially offset by higher other operating expenses. Average purchased receivables and loan balances for the Specialty Finance segment were $141.5 million for the second quarter of 2026, compared to average balances of $124.1 million for the second quarter of 2025. Net Interest Income/Net Interest Margin Net interest income for the second quarter of 2026 increased 11% or $3.5 million, to $37.1 million as compared to $33.6 million for the second quarter of 2025. The net interest margin increased 30 basis points to 4.96% in the second quarter of 2026 as compared to 4.66% in the second quarter of 2025. The increase in net interest income in the second quarter of 2026 compared to the same period in 2025 was primarily the result of increased interest on loans, interest bearing deposits in other banks, and long term investments, as well as a decrease in interest expense on deposits and borrowings, which were only partially offset by an increase in interest expense on subordinated debentures. The increase in net interest margin in the second 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 and higher average yields on interest-earning assets. Net interest income for the first six months of 2026 increased 11% or $6.9 million, to $71.8 million as compared to $64.9 million for the first six months of 2025. The net interest margin increased 23 basis points to 4.84% in the first six months of 2026 as compared to 4.61% in the first six months of 2025. The increase in net interest income in the first six months of 2026 compared to the same period in 2025 was primarily the result of increased interest on loans, interest bearing deposits in other banks, and long term investments, as well as a decrease in interest expense on deposits and borrowings, which were only partially offset by an increase in interest expense on subordinated debentures. The increase in net interest margin in the first six months 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 and higher yields on those assets, as well as a decrease in the cost of interest-bearing liabilities. 56 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 June 30, 2026 and 2025. Average yields or costs are calculated on a tax-equivalent basis. (Dollars in Thousands) Three Months Ended June 30, Interest income/ Average Tax Equivalent Average Balances Change expense Change Yields/Costs 6 2026 2025 $ % 2026 2025 $ % 2026 2025 Change Interest-bearing deposits in other banks 1 $85,140 $27,216 $57,924 213 % $795 $515 $280 54 % 3.69 % 7.60 % (3.91) % Taxable long-term investments 2 450,388 515,916 (65,528) (13) % 4,281 3,979 302 8 % 3.79 % 3.07 % 0.72 % Loans held for sale 86,526 173,675 (87,149) (50) % 1,343 2,824 (1,481) (52) % 6.21 % 6.50 % (0.29) % Loans 3,4 2,381,119 2,172,482 208,637 10 % 41,190 37,891 3,299 9 % 6.94 % 6.99 % (0.05) % Interest-earning assets 5 3,003,173 2,889,289 113,884 4 % 47,609 45,209 2,400 5 % 6.35 % 6.27 % 0.08 % Nonearning assets 338,827 306,206 32,621 11 % Total $3,342,000 $3,195,495 $146,505 5 % Interest-bearing demand $1,233,708 $1,193,344 $40,364 3 % $5,070 $6,007 ($937) (16) % 1.65 % 2.02 % (0.37) % Savings deposits 244,310 250,580 (6,270) (3) % 334 355 (21) (6) % 0.55 % 0.57 % (0.02) % Money market deposits 200,848 192,123 8,725 5 % 749 801 (52) (6) % 1.50 % 1.67 % (0.17) % Time deposits 378,716 393,053 (14,337) (4) % 2,624 3,141 (517) (16) % 2.78 % 3.21 % (0.43) % Total interest-bearing deposits 2,057,582 2,029,100 28,482 1 % 8,777 10,304 (1,527) (15) % 1.71 % 2.04 % (0.33) % Borrowings 81,625 86,404 (4,779) (6) % 1,241 903 338 37 % 6.08 % 4.14 % 1.94 % Total interest-bearing liabilities 2,139,207 2,115,504 23,703 1 % 10,018 11,207 (1,189) (11) % 1.88 % 2.12 % (0.24) % Non-interest bearing demand deposits 786,791 737,112 49,679 7 % Other liabilities 69,661 54,320 15,341 28 % Equity 346,341 288,559 57,782 20 % Total $3,342,000 $3,195,495 $146,505 5 % Net interest income (tax equivalent) $37,591 $34,002 $3,589 11 % Net interest margin (tax equivalent) 5.01 % 4.72 % 0.29 % Reconciliation to reported net interest income: Adjustments for taxable equivalent basis ($455) ($410) ($45) 11 % Net interest income and margin, as reported $37,136 $33,592 $3,544 11 % 4.96 % 4.66 % 0.30 % Average loans to average interest-earning assets 79.29 % 75.19 % Average loans to average total deposits 83.71 % 78.54 % Average non-interest deposits to average total deposits 27.66 % 26.65 % Average interest-earning assets to average interest-bearing liabilities 140.39 % 136.58 % 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 $1.4 million and $1.2 million in the second 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 $16.4 million and $8.1 million in the second quarter of 2026 and 2025, respectively . 57 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%. 58 The following tables set forth the changes in tax equivalent net interest income attributable to changes in volume and to changes in interest rates for the three-month periods ending June 30, 2026 and 2025. 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 June 30, 2026 and 2025. (In Thousands) Three Months Ended June 30, 2026 vs. 2025 Increase (decrease) due to Volume Rate Total Interest Income: Short-term investments $368 ($88) $280 Taxable long-term investments (501) 803 302 Loans held for sale (1,351) (130) (1,481) Loans 3,610 (311) 3,299 Total interest income $2,126 $274 $2,400 Interest Expense: Interest-bearing demand $197 ($1,134) ($937) Savings deposits (10) (11) (21) Money market deposits 35 (87) (52) Time deposits (111) (406) (517) Interest-bearing deposits 111 (1,638) (1,527) Borrowings (45) 383 338 Total interest expense $66 ($1,255) ($1,189) 59 The following table compares average balances and rates as well as margins on earning assets for the six -month periods ended June 30, 2026 and 2025. Average yields or costs are calculated on a tax-equivalent basis. (Dollars in Thousands) Six Months Ended June 30, Interest income/ Average Tax Equivalent Average Balances Change expense Change Yields/Costs 6 2026 2025 $ % 2026 2025 $ % 2026 2025 Change Interest-bearing deposits in other banks 1 $104,287 $32,563 $71,724 220 % $1,940 $931 $1,009 108 % 3.70 % 5.77 % (2.07) % Taxable long-term investments 2 458,343 519,813 (61,470) (12) % 8,288 7,849 439 6 % 3.61 % 3.05 % 0.56 % Loans held for sale 80,369 110,301 (29,932) (27) % 2,424 3,502 (1,078) (31) % 6.03 % 6.35 % (0.32) % Loans 3,4 2,343,360 2,172,950 170,410 8 % 80,253 74,866 5,387 7 % 6.90 % 6.94 % (0.04) % Interest-earning assets 5 2,986,359 2,835,627 150,732 5 % 92,905 87,148 5,757 7 % 6.26 % 6.19 % 0.07 % Nonearning assets 325,195 299,848 25,347 8 % Total $3,311,554 $3,135,475 $176,079 6 % Interest-bearing demand $1,227,922 $1,173,057 $54,865 5 % $9,999 $11,438 ($1,439) (13) % 1.64 % 1.97 % (0.33) % Savings deposits 244,644 250,955 (6,311) (3) % 643 717 (74) (10) % 0.53 % 0.58 % (0.05) % Money market deposits 199,386 193,039 6,347 3 % 1,477 1,608 (131) (8) % 1.49 % 1.68 % (0.19) % Time deposits 390,363 398,869 (8,506) (2) % 5,655 6,476 (821) (13) % 2.92 % 3.27 % (0.35) % Total interest-bearing deposits 2,062,315 2,015,920 46,395 2 % 17,774 20,239 (2,465) (12) % 1.74 % 2.02 % (0.28) % Borrowings 81,663 61,879 19,784 32 % 2,479 1,232 1,247 101 % 6.10 % 3.96 % 2.14 % Total interest-bearing liabilities 2,143,978 2,077,799 66,179 3 % 20,253 21,471 (1,218) (6) % 1.90 % 2.08 % (0.18) % Non-interest bearing demand deposits 759,773 717,432 42,341 6 % Other liabilities 67,587 58,809 8,778 15 % Equity 340,216 281,435 58,781 21 % Total $3,311,554 $3,135,475 $176,079 6 % Net interest income (tax equivalent) $72,652 $65,677 $6,975 11 % Net interest margin (tax equivalent) 4.89 % 4.66 % 0.23 % Reconciliation to reported net interest income: Adjustments for taxable equivalent basis ($855) ($788) ($67) 9 % Net interest income and margin, as reported $71,797 $64,889 $6,908 11 % 4.84 % 4.61 % 0.23 % Average loans to average interest-earning assets 78.47 % 76.63 % Average loans to average total deposits 83.04 % 79.50 % Average non-interest deposits to average total deposits 26.92 % 26.25 % Average interest-earning assets to average interest-bearing liabilities 139.29 % 136.47 % 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 $2.6 million and $2.3 million in the first six months 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 $14.8 million and $7.8 million in the first six months 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%. 60 61 The following tables set forth the changes in tax equivalent net interest income attributable to changes in volume and to changes in interest rates for the six -month periods ending June 30, 2026 and 2025. 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 six -month periods ending June 30, 2026 and 2025. (In Thousands) Six Months Ended June 30, 2026 vs. 2025 Increase (decrease) due to Volume Rate Total Interest Income: Short-term investments $1,442 ($433) $1,009 Taxable long-term investments (1,065) 1,504 439 Loans held for sale (895) (183) (1,078) Loans 5,838 (451) 5,387 Total interest income $5,320 $437 $5,757 Interest Expense: Interest-bearing demand $516 ($1,955) ($1,439) Savings deposits (18) (56) (74) Money market deposits 52 (183) (131) Time deposits (136) (685) (821) Interest-bearing deposits 414 (2,879) (2,465) Borrowings 97 1,150 1,247 Total interest expense $511 ($1,729) ($1,218) 62 Provision for Credit Losses The provision or benefit for credit loss is the amount of expense or benefit that, based on our judgment, is required to maintain the ACL at an appropriate level under the Company's Current Expected Credit Losses (“CECL”) model. 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 six-month periods ended June 30, 2026 and 2025: Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2026 2025 2026 2025 Credit loss expense on loans held for investment $760 $1,803 $2,047 $671 Credit loss (benefit) expense on unfunded commitments 242 155 (80) (168) Credit loss expense on available for sale debt securities — — — — Credit loss expense on held to maturity securities — — — — Credit loss expense on purchased receivables 625 18 620 64 Total credit loss expense $1,627 $1,976 $2,587 $567 The decrease to the provision for credit losses on loans in the second quarter of 2026 as compared to the same period a year ago was primarily a result of larger increases in qualitative factors in the second quarter of 2025 due to the fact that adversely classified assets, net of government guarantees increased 75% to $32.1 million. The increase to the provision for credit losses on unfunded commitments in the second quarter of 2026 as compared to the same period a year ago was primarily due to higher balances of unfunded commitments. The increase to the provision for credit losses on purchased receivables in the second quarter of 2026 as compared to the same period a year ago was primarily due to an increase in the quantitive allowance for credit losses on pooled purchased receivables due to an increase in concentration of these assets. 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 June 30, 2026 increased $97,000, or 1%, to $16.7 million as compared to $16.6 million for the same period in 2025, primarily due to a $576,000 increase in purchased receivable income in the second quarter of 2026 compared to the same quarter a year ago, as well as increases in bankcard fees and services charges on deposit accounts. The fair value of marketable equity securities increased $86,000 in the second quarter of 2026 compared to the same quarter a year ago. These increases were partially offset by lower mortgage banking income due to lower production and a decrease in other income mostly attributable to lower merchant fees and a decrease in the fair value of commercial servicing rights. Other operating income for the six-month period ended June 30, 2026 increased $1.9 million, or 7%, to $31.6 million as compared to $29.7 million for the same period in 2025, primarily due to a $1.9 million increase in mortgage banking income due to higher production, as well as a $576,000 increase in purchased receivable income in the first six months of 2026 compared to the same period a year ago. Bankcard fees and services charges on deposit accounts also increased in the first six months of 2026 compared to the same period a year ago. These increases were partially offset by a decrease in other income mostly attributable to lower merchant fees and a decrease in the fair value of commercial servicing rights. The fair value of marketable equity securities decreased $120,000 in the first six months of 2026 compared to the same period a year ago. Other Operating Expense Other operating expense for the second quarter of 2026 decreased $466,000, or 1%, to $32.0 million as compared to $32.5 million for the same period in 2025. The decrease was primarily due to lower marketing, insurance, and occupancy expenses. These decreases were partially offset by an increase in professional and outside services and data processing expense. Other operating expense for the six-month period ended June 30, 2026 increased $2.0 million, or 3%, to $62.6 million as compared to $60.7 million for the same period in 2025. The increase was primarily due to a $2.2 million increase in salaries and other personnel expense, as well as increases in data processing expense and professional and other outside services. These increases were partially offset by a decrease in FDIC insurance expense due to improved regulatory capital ratios. 63 Income Taxes For the second quarter of 2026 and first six months of 2026, Northrim recorded a lower effective tax rate as compared to the same periods 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 second quarter of 2026, Northrim recorded $4.9 million in state and federal income tax expense, for an effective tax rate of 24.14% compared to $4.0 million and 25.30% for the same period in 2025. In the first six months of 2026, Northrim recorded $9.2 million in state and federal income tax expense, for an effective tax rate of 24.00% compared to $8.2 million and 24.72% for the same period in 2025. ANALYSIS OF FINANCIAL CONDITION AT JUNE 30, 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 June 30, 2026 decreased slightly to $454.7 million from $455.8 million at December 31, 2025 primarily due to maturities of available for sale securities which were only partially offset by purchases of available for sale securities during the first six months of 2026. The table below details portfolio investment balances by portfolio investment type as of the periods indicated: June 30, 2026 December 31, 2025 Dollar Amount Percent of Total Dollar Amount Percent of Total (In Thousands) Balance % of total Balance % of total U.S. Treasury and government sponsored entities $379,789 83.5 % $388,737 85.2 % U.S. Agency mortgage-backed securities 4,620 1.0 % 4,798 1.1 % Corporate bonds 33,747 7.4 % 31,702 7.0 % Collateralized loan obligations 25,238 5.6 % 22,174 4.9 % Preferred stock 11,315 2.5 % 8,392 1.8 % Total $454,709 $455,803 The average estimated duration of the investment portfolio at June 30, 2026, was approximately 2.5 years, as compared to approximately 2.0 years at December 31, 2025. As of June 30, 2026, $87.0 million of available for sale securities with a weighted average yield of 1.30% are scheduled to mature in the next six months, $63.7 million with a weighted average yield of 3.15% are scheduled to mature in six months to one year, and $87.1 million with a weighted average yield of 3.75% are scheduled to mature in the following year, representing a total of $237.7 million or 8% of earning assets that are scheduled to mature in the next 24 months. 64 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: June 30, 2026 December 31, 2025 Dollar Amount Percent of Total Dollar Amount Percent of Total (In Thousands) Commercial & industrial loans $471,215 19.7 % $450,826 19.6 % Commercial real estate: Owner occupied properties 443,054 18.6 % 433,157 18.9 % Non-owner occupied and multifamily properties 769,928 32.2 % 763,180 33.2 % Residential real estate: 1-4 family residential properties secured by first liens 260,301 10.9 % 243,185 10.6 % 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 79,995 3.4 % 67,116 2.9 % 1-4 family residential construction loans 28,839 1.2 % 39,059 1.7 % Other construction, land development and raw land loans 175,656 7.4 % 173,589 7.6 % Obligations of states and political subdivisions in the US 39,525 1.7 % 32,434 1.4 % Agricultural production, including commercial fishing 55,833 2.3 % 47,445 2.1 % Consumer loans 9,877 0.4 % 9,763 0.4 % Other loans 52,105 2.2 % 35,745 1.6 % Total loans $2,386,328 $2,295,499 Loans increased by $90.8 million, to $2.39 billion at June 30, 2026 from $2.30 billion at December 31, 2025. There were increases in nearly all loan segments, but the largest increases were in commercial and industrial loans, 1-4 family residential loans secured by first liens, other loans, and commercial real estate in the first six months 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 $128.6 million, or approximately 5% of loans as of June 30, 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 $89.0 million and $88.6 million at June 30, 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 $1.5 million as of June 30, 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) June 30, 2026 December 31, 2025 Commercial & industrial loans $117,248 $113,036 Commercial real estate: Owner occupied properties 6,209 4,996 Non-owner occupied and multifamily properties 3,935 4,207 Other loans 1,161 1,203 Total $128,553 $123,442 The Company monitors other concentrations within the loan portfolio depending on trends in the current and future estimated economic conditions. At June 30, 2026, the Company had $153.1 million, or 6% of portfolio loans, in the Accommodations sector, $133.3 million, or 6% of portfolio loans, in the Healthcare sector, $113.4 million, or 5% of portfolio loans, in the Tourism sector, $101.5 million, or 4% of portfolio loans, in the Retail sector, $94.0 million, or 4% of portfolio loans, in the Aviation (non-tourism) sector, $71.2 million, or 3% of portfolio loans, in the Fishing sector, and $64.2 million, or 3% in the Restaurant sector. 65 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 June 30, 2026: (In Thousands) Tourism Aviation (non-tourism) Healthcare Retail Fishing Restaurant Accommodations Total ACL $698 $804 $827 $915 $323 $493 $990 $5,050 66 Credit Quality and Nonperforming Assets The following table sets forth information regarding our nonperforming loans and total nonperforming assets as of the periods indicated: June 30, December 31, (In Thousands) 2026 2025 Nonaccrual loans - Community Banking $18,733 $9,066 Nonaccrual loans - Home Mortgage Lending 306 514 Nonaccrual loans - Specialty Finance 3,943 2,388 Nonaccrual loans - Total 22,982 11,968 Loans 90 days past due and accruing - Community Banking — — Loans 90 days past due and accruing - Home Mortgage Lending — — Loans 90 days past due and accruing - Specialty Finance — — Loans 90 days past due and accruing - Total — — Total nonperforming loans - Community Banking 18,733 9,066 Total nonperforming loans - Home Mortgage Lending 306 514 Total nonperforming loans - Specialty Finance 3,943 2,388 Total nonperforming loans - Total 22,982 11,968 Nonperforming loans guaranteed by gov't - Community Banking 1,171 639 Nonperforming loans guaranteed by gov't - Home Mortgage Lending — — Nonperforming loans guaranteed by gov't - Specialty Finance — — Nonperforming loans guaranteed by gov't - Total 1,171 639 Net nonperforming loans - Community Banking 17,562 8,427 Net nonperforming loans - Home Mortgage Lending 306 514 Net nonperforming loans - Specialty Finance 3,943 2,388 Net nonperforming loans - Total 21,811 11,329 Other real estate owned - Community Banking 1,036 — Other real estate owned - Home Mortgage Lending 188 — Other real estate owned - Specialty Finance — — Other real estate owned - Total 1,224 — Other real estate owned guaranteed by government - Community Banking — — Other real estate owned guaranteed by government - Home Mortgage Lending — — Other real estate owned guaranteed by government - Specialty Finance — — Other real estate owned guaranteed by government - Total — — Repossessed assets - Community Banking — — Repossessed assets - Home Mortgage Lending — — Repossessed assets - Specialty Finance — — Repossessed assets - Total — — Nonperforming purchased receivables - Specialty Finance — 67 Net nonperforming assets - Community Banking 18,598 8,427 Net nonperforming assets - Home Mortgage Lending 494 514 Net nonperforming assets - Specialty Finance 3,943 2,455 Net nonperforming assets - Total $23,035 $11,396 Adversely classified loans, net of gov't guarantees - Community Banking $28,945 $29,447 Adversely classified loans, net of gov't guarantees - Home Mortgage Lending 470 687 Adversely classified loans, net of gov't guarantees - Specialty Finance 3,943 3,364 Adversely classified loans, net of gov't guarantees - Total $33,358 $33,498 67 Special mention loans, net of gov't guarantees - Community Banking $9,030 $10,481 Special mention loans, net of gov't guarantees - Home Mortgage Lending 218 — Special mention loans, net of gov't guarantees - Specialty Finance — — Special mention loans, net of gov't guarantees - Total $9,248 $10,481 Nonperforming loans, net of government guarantees / portfolio loans 0.91 % 0.49 % Nonperforming loans, net of government guarantees / portfolio loans, net of gov't guarantees 0.97 % 0.53 % Nonperforming assets, net of government guarantees / total assets 0.67 % 0.35 % Nonperforming assets, net of government guarantees / total assets net of gov't guarantees 0.70 % 0.36 % Loans 30-89 days past due and accruing, net of government guarantees / portfolio loans 0.05 % 0.07 % Loans 30-89 days past due and accruing, net of government guarantees / portfolio loans, net of government guarantees 0.06 % 0.08 % Allowance for credit losses for loans / portfolio loans 1.07 % 1.03 % Allowance for credit losses for loans / portfolio loans, net of gov't guarantees 1.13 % 1.10 % Allowance for credit losses for loans / nonperforming loans, net of gov't guarantees 117 % 210 % Net loan charge-offs (recoveries) year-to-date - Community Banking $72 $1,429 Net loan charge-offs (recoveries) year-to-date - Home Mortgage Lending — — Net loan charge-offs (recoveries) year-to-date - Specialty Finance 250 364 Net loan charge-offs (recoveries) year-to-date - Total $322 $1,793 Net loan charge-offs (recoveries) for the quarter / average loans, for the quarter — % 0.02 % Net loan charge-offs (recoveries) year-to-date / average loans, year-to-date annualized 0.03 % 0.08 % Allowance for credit losses for purchased receivables / purchased receivables 0.49 % — % Net purchased receivable (recoveries) charge-offs for the quarter / average purchased receivables, for the quarter — % — % Net purchased receivable charge-offs (recoveries) year-to-date / average purchased receivables, year-to-date annualized (0.01) % 2.15 % 68 Allowance for Credit Losses The following table sets forth information regarding changes in the ACL as of the periods indicated: Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2026 2025 2026 2025 Balance at beginning of period $24,812 $20,922 $23,737 $22,020 Charge-offs: Commercial & industrial loans (64) (152) (314) (189) Commercial real estate: Non-owner occupied and multifamily properties (78) — (78) — Consumer loans — (3) (2) (16) Total charge-offs (142) (155) (394) (205) Recoveries: Commercial & industrial loans 27 5 64 79 Residential real estate: 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 3 7 6 14 Agricultural production, including commercial fishing 1 1 1 3 Consumer loans — 2 — 3 Total recoveries 31 15 71 99 Net (charge-offs), recoveries (111) (140) (323) (106) Provision for credit losses 760 1,803 2,047 671 Balance at end of period $25,461 $22,585 $25,461 $22,585 The following table sets forth information regarding changes in the ACL for unfunded commitments as of the periods indicated: Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2026 2025 2026 2025 Balance at beginning of period $2,346 $1,987 $2,668 $2,310 (Benefit) provision for credit losses 242 168 (80) (155) Balance at end of period $2,588 $2,155 $2,588 $2,155 69 The following table sets forth information regarding changes in the ACL for purchased receivables as of the periods indicated: Three Months Ended June 30, Six Months Ended June 30, (In Thousands) 2026 2025 2026 2025 Balance at beginning of period $— $3,695 $— $3,649 Charge-offs — (281) — (281) Recoveries — — 5 — Net (charge-offs), recoveries — (281) 5 (281) Foreign currency translation adjustment (15) — (15) — (Benefit) provision for purchased receivables 625 18 620 64 Balance at end of period $610 $3,432 $610 $3,432 The ACL for loans held for investment at June 30, 2026 increased $1.7 million from December 31, 2025 primarily due to increased loan balances and an increase in qualitative factors to account for the increase in nonperforming loans, net of government guarantee. 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 Deposits are the Company’s primary source of funds. Total deposits increased $105.8 million, or 4%, to $2.92 billion as of June 30, 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: June 30, 2026 December 31, 2025 (In thousands) Balance % of total Balance % of total Demand deposits $826,271 28 % $721,925 26 % Interest-bearing demand 1,281,777 44 % 1,242,546 44 % Savings deposits 246,617 8 % 250,006 9 % Money market deposits 194,665 7 % 195,793 7 % Time deposits 369,458 13 % 402,759 14 % Total deposits $2,918,788 $2,813,029 The Company’s mix of deposits continues to contribute to a low cost of funds with balances in transaction accounts representing 87% of total deposits at June 30, 2026 and 86% of total deposits at December 31, 2025. The only deposit category with stated maturity dates is certificates of deposit. At June 30, 2026, the Company had $369.5 million in certificates of deposit as compared to certificates of deposit of $402.8 million at December 31, 2025. At June 30, 2026, $346.1 million, or 94%, 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 June 30, 2026 and December 31, 2025, was $183.4 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 June 30, 2026: 70 Time Certificates of Deposit of $250,000 or More Percent of Total Deposits (In Thousands) Amount Amounts maturing in: Three months or less $48,444 26 % Over 3 through 6 months 57,256 31 % Over 6 through 12 months 62,382 35 % Over 12 months 15,342 8 % Total $183,424 100 % At June 30, 2026, 76% of total deposits were held in business accounts and 24% of deposit balances were held in consumer accounts. Northrim had approximately 33,000 deposit customers with an average balance of $65,000 as of June 30, 2026. Northrim had 33 customers with balances over $10 million as of June 30, 2026 which accounted for $745.7 million, or 26%, of total deposits. Uninsured deposits totaled approximately $1.14 billion or 39% of total deposits as of June 30, 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 six months of 2026. Borrowings FHLB: The Bank is a member of the Federal Home Loan Bank of Des Moines (the “FHLB”). As a member, the Bank is eligible to obtain advances from the FHLB. 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 June 30, 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 $459.5 million as of June 30, 2026. The Company has outstanding advances of $12.6 million as of June 30, 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 June 30, 2026. There were no discount window advances outstanding at either June 30, 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 15% of total assets or $509.2 million at June 30, 2026 and $490.6 million at December 31, 2025. At June 30, 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 June 30, 2026 or December 31, 2025. 71 Junior Subordinated Debentures At June 30, 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 June 30, 2026 and December 31, 2025, the securities had an interest rate of 5.30% 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 Northrim Statutory Trust 2 at 3.72% through its maturity date. Net of the impact of the interest rate swap, interest expense on these securities was $95,000 in the second quarter of 2026 and $94,000 in the second quarter of 2025. Net of the impact of the interest rate swap, interest expense on these securities was $189,000 in the first six months of 2026 and $185,000 in the first six months of 2025. The Company also had interest expense of $4,000 in the second quarter of 2026 and $5,000 in the second quarter of 2025 and $8,000 in the first six months of 2026 and $9,000 in the first six months of 2025 on common securities related to this junior subordinated debt. Subordinated Notes At June 30, 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 second quarter of 2026 and $2.1 million in the first six months 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 second quarter of 2026 and $70,000 in the first six months of 2026. The Subordinated Notes are intended to qualify as Tier 2 capital of the Company for regulatory capital purposes. Liquidity and Capital Resources The Company is a single bank holding company and its primary ongoing source of liquidity is from dividends received from the Bank. Such dividends arise from the cash flow and earnings of the Bank. Banking regulations and regulatory authorities may limit the amount of, or require the Bank to obtain certain approvals before paying, dividends to the Company. Given that the Bank currently meets, and the Bank anticipates that it will continue to meet, all applicable capital adequacy requirements for a “well-capitalized” institution by regulatory standards, the Company expects to continue to receive dividends from the Bank during the remainder of 2026. 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 June 30, 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. The Bank manages its liquidity through its Asset and Liability Committee. The Bank's primary source of funds are customer deposits. These funds, together with loan repayments, loan sales, maturity and sale of investment securities, borrowed funds, and retained earnings are used to make loans, to acquire securities and other assets, and to fund deposit flows and continuing operations. 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. 72 The Company had cash and cash equivalents of $172.2 million, or 5% of total assets at June 30, 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 loss, net of tax, of $323,000 for the six-month period ending June 30, 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 $1.3 million as of June 30, 2026. Accumulated unrealized losses, net of income taxes on held to maturity securities, which are not recorded in shareholders' equity, are $702,000 as of June 30, 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 June 30, 2026, the weighted average maturity of available for sale securities is 2.5 years as compared to 2.0 years as of December 31, 2025. At June 30, 2026, $150.7 million available for sale securities mature within one year, $87.1 million mature within one to two years, and $84.8 million mature within two to three years. Our total unfunded commitments to fund loans and letters of credit at June 30, 2026 were $656.5 million. We do not expect that all of these loans are likely to be fully drawn upon at any one time. At June 30, 2026, certificates of deposit totaling $346.1 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 June 30, 2026, are not material to the Company's liquidity position as of June 30, 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 June 30, 2026, our liquid assets, which include investments and loans maturing within a year, were $1.11 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 $560.6 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 $67.3 million for the first six 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 $139.9 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 six months of 2026 was $98.9 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 June 30, 2026, there are no shares remaining under the repurchase program, and we did not repurchase any shares in the second quarter of 2026. The Company currently has no plans to repurchase shares of its common stock in 2026. Capital Requirements and Ratios We are subject to minimum capital requirements. Federal banking agencies have adopted regulations establishing minimum requirements for the capital adequacy of banks and bank holding companies. The requirements address both risk-based capital and leverage capital. We believe as of June 30, 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. 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 June 30, 2026, which explains most of the difference in the capital ratios for the two entities. 73 Minimum Required Capital Well-Capitalized Actual Ratio Company Actual Ratio Bank June 30, 2026 Total risk-based capital 8.00% 10.00% 14.46% 13.39% Tier 1 risk-based capital 6.00% 8.00% 11.26% 12.38% Common equity tier 1 capital 4.50% 6.50% 10.90% 12.38% Leverage ratio 4.00% 5.00% 9.32% 10.26% See Note 23 of the Consolidated Financial Statements in Part II. Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2025 for a detailed discussion of the capital ratios. The requirements for “well-capitalized” come from the Prompt Corrective Action rules. See Part I. Item 1 - Business - Supervision and Regulation in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. These rules apply to the Bank but not to the Company. 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. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our assessment of market risk as of June 30, 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. ITEM 4. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures As of the end of the period covered by this report, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934). Our principal executive and financial officers supervised and participated in this evaluation. Based on this evaluation, our principal executive and financial officers each concluded that as of June 30, 2026, the disclosure controls and procedures are effective in timely alerting them to material information required to be included in the periodic reports to the Securities and Exchange Commission. The design of any system of controls is based in part upon various assumptions about the likelihood of future events, and there can be no assurance that any of our plans, products, services or procedures will succeed in achieving their intended goals under future conditions. Changes in Internal Control over Disclosure and Reporting There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15-d-15(f) of the Securities Exchange Act of 1934) that occurred during the quarterly period ended June 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS During the normal course of its business, the Company is a party to various debtor-creditor legal actions, disputes, claims, and litigation related to the conduct of its banking business. These include cases filed as a plaintiff in collection and 74 foreclosure cases, and the enforcement of creditors’ rights in bankruptcy proceedings. Management does not expect that the resolution of these matters will have a material effect on the Company’s business, financial position, results of operations, or cash flows. ITEM 1A. RISK FACTORS For information regarding risk factors, please refer to Part I. Item 1A in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as updated by the Company's periodic filings with the SEC. These factors could materially and adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this Quarterly Report on Form 10-Q. The Company believes that there has been no material change in its risk factors as previously disclosed in the Company's Form 10-K for the year ended December 31, 2025 other than as set forth below. The Merger Agreement may be terminated in accordance with its terms and the Mergers may not be completed. The Merger Agreement is subject to a number of conditions which must be fulfilled in order to complete the Mergers. Those conditions include, among other things: (i) approval by each of the Company’s shareholders and the PBCO shareholders of certain matters relating to the Mergers at each company’s respective special meeting; (ii) the receipt of required regulatory approvals, including the approval of the Federal Reserve, the FDIC, the Oregon Department of Consumer and Business Services, Division of Financial Regulation; and the Alaska Department of Commerce, Community, and Economic Development, Division of Banking and Securities; and (iii) the absence of any order, injunction, decree, or other law preventing or making illegal the completion of the Mergers, the Bank Merger or any of the other transactions contemplated by the Merger Agreement. Each party’s obligation to complete the Merger is also subject to certain additional customary conditions, including (a) subject to applicable materiality standards, the accuracy of the representations and warranties of the other party, (b) the performance in all material respects by the other party of its obligations under the Merger Agreement and (c) the receipt by each party of an opinion from its counsel to the effect that the Mergers should qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986. These conditions to the closing of the Mergers may not be fulfilled in a timely manner or at all, and, accordingly, the Mergers may not be completed. In addition, the parties can mutually decide to terminate the Merger Agreement at any time, before or after the requisite shareholder approvals, or Northrim or PBCO may unilaterally elect to terminate the Merger Agreement in certain other circumstances. Regulatory approvals may not be received, may take longer than expected, or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company following the Mergers. Before the Mergers and the Bank Merger may be completed, various approvals, consents and non-objections must be obtained from the Federal Reserve, the FDIC, the Oregon Department of Consumer and Business Services, Division of Financial Regulation, the Alaska Department of Commerce, Community, and Economic Development, Division of Banking and Securities, and other regulatory authorities in the United States. In determining whether to grant these approvals, such regulatory authorities consider a variety of factors, including the regulatory standing of each party. These approvals could be delayed or not obtained at all, including due to an adverse development in either party’s regulatory standing or in any other factors considered by regulators when granting such approvals; governmental, political, or community group inquiries, investigations, or opposition; or changes in legislation or the political environment generally. The approvals that are granted may impose terms and conditions, limitations, obligations, or costs, or place restrictions on the conduct of the combined company’s business or require changes to the terms of the transactions contemplated by the Merger Agreement. There can be no assurance that regulators will not impose any such conditions, limitations, obligations, or restrictions and that such conditions, limitations, obligations, or restrictions will not have the effect of delaying the completion of any of the transactions contemplated by the Merger Agreement, imposing additional material costs on or materially limiting the revenues of the combined company following the Mergers or otherwise reducing the anticipated benefits of the Mergers if the Mergers were consummated successfully within the expected timeframe. In addition, there can be no assurance that any such conditions, terms, obligations, or restrictions will not result in the delay or abandonment of the Mergers. Additionally, the completion of the Mergers is conditioned on the absence of certain orders, injunctions or decrees by any court or regulatory agency of competent jurisdiction that would prohibit or make illegal the completion of any of the transactions contemplated by the Merger Agreement. In addition, despite the parties’ commitments to using their reasonable best efforts to comply with conditions imposed by regulators, under the terms of the Merger Agreement, neither Northrim nor PBCO, nor any of their respective subsidiaries, is permitted (without the written consent of the other party), to take any action, or commit to take any action, or agree to any condition or restriction, in connection with obtaining the required permits, consents, approvals and authorizations of 75 governmental entities that would reasonably be expected to have a material adverse effect on the combined company and its subsidiaries, taken as a whole, after giving effect to the Mergers and the Bank Merger. Failure to complete the Mergers could negatively impact Northrim. If the Mergers are not completed for any reason, including as a result of Northrim shareholders or PBCO shareholders failing to approve certain matters in connection with the Mergers at each company’s respective special meeting, there may be various adverse consequences and Northrim may experience negative reactions from the financial markets and from its customers and employees. For example, Northrim’s business may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the Mergers, without realizing any of the anticipated benefits of completing the Mergers. Also, Northrim has devoted significant internal resources to the pursuit of the Mergers and the expected benefit of those resource allocations would be lost if the Mergers are not completed. Additionally, if the Merger Agreement is terminated, the market price of Northrim’s common stock could decline to the extent that current market prices reflect a market assumption that the Mergers will be beneficial and will be completed. Northrim also could be subject to litigation related to any failure to complete the Mergers or to proceedings commenced against Northrim to perform its obligations under the Merger Agreement. Combining Northrim and PBCO may be more difficult, costly or time-consuming than expected, and Northrim may fail to realize the anticipated benefits of the Mergers. Northrim and PBCO have operated and, until the completion of the Mergers, will continue to operate independently. The success of the Mergers, including anticipated benefits and cost savings, will depend, in part, on our ability to successfully combine and integrate the businesses of Northrim and PBCO in a manner that permits growth opportunities and does not materially disrupt the existing customer relations nor result in decreased revenues due to loss of customers. It is possible that the integration process could result in the loss of key employees, the disruption of either company’s ongoing businesses or inconsistencies in standards, controls, procedures, and policies that adversely affect the combined company’s ability to maintain relationships with clients, customers, depositors, and employees or to achieve the anticipated benefits and cost savings of the Mergers. The loss of key employees could adversely affect Northrim’s ability to successfully conduct its business, which could have an adverse effect on Northrim’s financial results and the value of its common stock. If Northrim experiences difficulties with the integration process, the anticipated benefits of the Mergers may not be realized fully or at all, or may take longer to realize than expected. As with any merger of financial institutions, there also may be business disruptions that cause Northrim or PBCO to lose customers or cause customers to remove their accounts from Northrim or PBCO and move their business to competing financial institutions. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on each of Northrim and PBCO during this transition period and for an undetermined period after completion of the Mergers on the combined company. In addition, the actual cost savings of the Mergers could be less than anticipated. The combined company may be unable to retain Northrim and/or PBCO personnel successfully after the Mergers are completed. The success of the Mergers will depend in part on the combined company’s ability to retain the talent and dedication of key employees currently employed by Northrim and PBCO. It is possible that these employees may decide not to remain with Northrim or PBCO, as applicable, while the Mergers are pending or with the combined company after the Mergers are consummated. If Northrim and PBCO are unable to retain key employees, including management, who are critical to the successful integration and future operations of the companies, Northrim and PBCO could face disruptions in their operations, loss of existing customers, loss of key information, expertise, or know-how and unanticipated additional recruitment costs. In addition, following the Mergers, if key employees terminate their employment, the combined company’s business activities may be adversely affected, and management’s attention may be diverted from successfully hiring suitable replacements, all of which may cause the combined company’s business to suffer. Northrim and PBCO also may not be able to locate or retain suitable replacements for any key employees who leave either company. Northrim will be subject to business uncertainties and contractual restrictions while the Mergers are pending. Uncertainty about the effect of the Mergers on employees and customers may have an adverse effect on Northrim. These uncertainties may impair Northrim’s ability to attract, retain and motivate key personnel until the Mergers are completed, and could cause customers and others that deal with Northrim to seek to change existing business relationships with Northrim. In addition, subject to certain exceptions, Northrim has agreed to operate its business in the ordinary course prior to closing in all material respects. These restrictions may prevent Northrim from pursuing attractive business opportunities that may arise prior to the completion of the Mergers. 76 Northrim has incurred and is expected to incur substantial costs related to the Mergers and integration. Both Northrim and PBCO will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the Merger Agreement. These costs include legal, financial advisory, accounting, consulting, and other advisory fees, retention, severance and employee benefit-related costs, public company filing fees and other regulatory fees, financial printing and other printing costs, closing, integration, and other related costs. Some of these costs are payable by Northrim regardless of whether or not the Mergers are completed. Shareholder litigation related to the Mergers could prevent or delay the completion of the Mergers, result in the payment of damages or otherwise negatively impact the business and operations of Northrim. Shareholders may bring claims in connection with the proposed Mergers and, among other remedies, may seek damages or an injunction preventing the Mergers from closing. If any plaintiff were successful in obtaining an injunction prohibiting Northrim or PBCO from completing the Mergers or any other transactions contemplated by the Merger Agreement, then such injunction may delay or prevent the effectiveness of the Mergers and could result in costs to Northrim, including costs in connection with the defense or settlement of any shareholder lawsuits filed in connection with the Mergers. Further, such lawsuits and the defense or settlement of any such lawsuits may have an adverse effect on the financial condition and results of operations of Northrim. The Merger Agreement limits Northrim’s ability to pursue acquisition proposals. The Merger Agreement prohibits Northrim from soliciting, initiating, knowingly encouraging, or knowingly facilitating certain third-party acquisition proposals. These provisions might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of Northrim from considering or proposing such an acquisition. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS (a)-(b) Not applicable (c) There were no stock repurchases by the Company during the three-month period ending June 30, 2026. 77 ITEM 5. OTHER INFORMATION Rule 10b5-1 Trading Plans During the quarter ended June 30, 2026, none of the Company’s directors or executive officers adopted , modified or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.” ITEM 6. EXHIBITS 10.1 First Amendment to Northrim BanCorp, Inc. 2025 Stock Incentive Plan (Incorporated by reference to Exhibit D to the Company’s Proxy Statement filed with the SEC on April 14, 2026). 31.1 Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) 31.2 Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) 32.1 Certification of Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 32.2 Certification of Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 104 The cover page for the Company's Quarterly Report on 10-Q for the quarter ended June 30, 2026 - formatted in Inline XBRL (included in Exhibit 101) 78 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NORTHRIM BANCORP, INC. July 31, 2026 By /s/ Michael G. Huston Michael G. Huston Chairman, President and Chief Executive Officer (Principal Executive Officer) July 31, 2026 By /s/ Jed W. Ballard Jed W. Ballard Executive Vice President, Chief Financial Officer (Principal Financial and Accounting Officer) 79