NORTHRIM BANCORP INC 10-Q

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