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What changed in Citizens Community Bancorp Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Citizens Community Bancorp Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+217 added−209 removedSource: 10-K (2026-03-05) vs 10-K (2025-03-13)

Top changes in Citizens Community Bancorp Inc.'s 2025 10-K

217 paragraphs added · 209 removed · 177 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

12 edited+4 added−5 removed111 unchanged
Biggest changeThe likelihood and timing of any changes, and the impact such changes may have on the Company and the Bank, are difficult to predict, including any changes resulting from changes in the U.S. presidential administration and U.S. Congress.
Biggest changeThe likelihood and timing of any changes, and the impact such changes may have on the Company and the Bank, are difficult to predict, including any changes resulting from the U.S. presidential administration and U.S. Congress. In addition, bank regulatory agencies may issue enforcement actions, policy statements, interpretive letters and similar written guidance applicable to the Company or the Bank.
The Bank is a federally chartered National Bank serving customers in Wisconsin and Minnesota through 22 full-service branch locations. Its primary markets include the Chippewa Valley Region in Wisconsin, the Twin Cities and Mankato markets in Minnesota, and various rural communities around these areas.
The Bank is a federally chartered National Bank serving customers in Wisconsin and Minnesota through 21 full-service branch locations. Its primary markets include the Chippewa Valley Region in Wisconsin, the Twin Cities and Mankato markets in Minnesota, and various rural communities around these areas.
The DOJ clarified that it will assess competition considerations in connection with bank and bank holding company mergers using its 2023 Merger Guidelines, which is the general merger review framework the DOJ now uses to evaluate transactions in all segments of the economy, and the 2024 Banking Addendum.
The DOJ clarified that it will assess competition considerations in connection with bank and bank holding company mergers using its 2023 Merger Guidelines, which is the general merger review framework the DOJ used to evaluate transactions in all segments of the economy, and the 2024 Banking Addendum.
As a member, the Bank is required to purchase and maintain stock in the FHLB of Chicago based on activity and membership requirements. As of December 31, 2024, the Bank had $3.9 million in FHLB stock, which was in compliance with this requirement. The Bank receives dividends on its FHLB stock. Community Reinvestment Act.
As a member, the Bank is required to purchase and maintain stock in the FHLB of Chicago based on activity and membership requirements. As of December 31, 2025, the Bank had $3.7 million in FHLB stock, which was in compliance with this requirement. The Bank receives dividends on its FHLB stock. Community Reinvestment Act.
We believe our human capital efforts, which include employee training, employee health and benefits packages, and engaging employees in volunteer activities in the communities that we serve, all contribute to our success in attracting, retaining and motivating strong employee talent. At March 13, 2025, we had 207 full-time employees and 232 total employees, company-wide.
We believe our human capital efforts, which include employee training, employee health and benefits packages, and engaging employees in volunteer activities in the communities that we serve, all contribute to our success in attracting, retaining and motivating strong employee talent. At March 5, 2026, we had 217 full-time employees and 238 total employees, company-wide.
Our primary activities consist of holding the stock of our wholly-owned subsidiary bank, Citizens Community Federal N.A. (the “Bank”), and providing commercial, agricultural and consumer banking activities through the Bank. At December 31, 2024, we had approximately $1.749 billion in total assets, $1.488 billion in deposits, and $179.1 million in equity. Citizens Community Federal N.A.
Our primary activities consist of holding the stock of our wholly-owned subsidiary bank, Citizens Community Federal N.A. (the “Bank”), and providing commercial, agricultural and consumer banking activities through the Bank. At December 31, 2025, we had approximately $1.782 billion in total assets, $1.524 billion in deposits, and $187.9 million in equity. Citizens Community Federal N.A.
Deposits are insured by the Deposit Insurance Fund (“DIF”) of the Federal Deposit Insurance Corporation (“FDIC”) up to statutory limits. At December 31, 2024, our total deposits were $1.488 billion including interest bearing deposits of $1.235 billion and non-interest bearing deposits of $0.253 billion. Borrowings.
Deposits are insured by the Deposit Insurance Fund (“DIF”) of the Federal Deposit Insurance Corporation (“FDIC”) up to statutory limits. At December 31, 2025, our total deposits were $1.524 billion including interest bearing deposits of $1.260 billion and non-interest bearing deposits of $0.264 billion. Borrowings.
The Bank is subject to a number of anti-money laundering laws (“AML”) and regulations. The Bank Secrecy Act of 1970 (“BSA”) and subsequent laws and regulations require the Bank to take steps to prevent the use of the Bank or its systems from facilitating the flow of illegal or illicit money or terrorist funds.
The Bank Secrecy Act of 1970 (“BSA”) and subsequent laws and regulations require the Bank to take steps to prevent the use of the Bank or its systems from facilitating the flow of illegal or illicit money or terrorist funds.
Our total gross outstanding loans, before net deferred loan costs and unamortized discounts on acquired loans, as of December 31, 2024, were $1.372 billion, consisting of $1.081 billion in commercial/agricultural real estate loans, $146.7 million in C&I/agricultural operating loans, $135.3 million in residential mortgage loans and $9.0 million in consumer installment loans.
Our total gross outstanding loans, before net deferred loan costs and unamortized discounts on acquired loans, as of December 31, 2025, were $1.343 billion, consisting of $1.074 billion in commercial/agricultural real estate loans, $139.3 million in C&I/agricultural operating loans, $123.8 million in residential mortgage loans and $6.2 million in consumer installment loans.
As a company listed on the NASDAQ Global Market, we are subject to NASDAQ standards for listed companies. The Company is currently a “smaller reporting company” which allows us to provide certain simplified and scaled disclosures in our filings with the SEC.
The Company is currently a “smaller reporting company” which allows us to provide certain simplified and scaled disclosures in our filings with the SEC.
Section 404 of SOX requires management of the Company to undertake a periodic assessment of the adequacy and effectiveness of the Company’s internal control over financial reporting.
Section 404 of SOX requires management of the Company to undertake a periodic assessment of the adequacy and effectiveness of the Company’s internal control over financial reporting. As an “accelerated filer,” we are subject to the provisions of Section 404(b) of the Sarbanes-Oxley Act.
The 2024 Banking Addendum provides guidance on how the DOJ will assess competition in the context of bank and bank holding company mergers.
The 2024 Banking Addendum provided guidance on how the DOJ would apply heightened scrutiny to assess competition in the context of bank and bank holding company mergers. In May 2025, the FDIC rescinded its 2024 policy statement on bank merger review and reinstated prior guidance.
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In addition, bank regulatory agencies may issue enforcement actions, policy statements, interpretive letters and similar written guidance applicable to the Company or the Bank.
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As a company listed on the NASDAQ Global Market, we are subject to NASDAQ standards for listed companies. On June 29, 2025, the FTSE selected Citizens Community Bancorp, Inc. for inclusion in the Russell 3000 ® Index as part of the 2025 annual reconstitution.
Removed
In addition, we are currently considered a “non-accelerated filer” and will maintain that status for so long as the Company’s annual revenues are less than $100 million, and its public float is more than $75 million but less than $700 million.
Added
The OCC also rescinded the 2024 policy statement and reinstated regulatory provisions providing for expedited processing of bank mergers under its pre-2024 policies. The current administration is seeking to implement a regulatory reform agenda that is significantly different than that of the prior administration, impacting the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies.
Removed
If the Company were to be classified as an “accelerated filer” rather than a “non-accelerated filer,” which we believe is probable in 2025, then we would become subject to the provisions of Section 404(b) of the Sarbanes-Oxley Act.
Added
We may be required to implement different compliance procedures and modify our policies and activities to comply with changes set forth by the current administration.
Removed
An analysis under the 2023 Merger Guidelines and 2024 Banking Addendum may include consideration of theories of harm and relevant markets not considered under the 1995 Bank Merger Guidelines, which focused primarily on concentrations of deposits and branches. Whether and how the guidance might be further changed or interpreted by the new administration is uncertain.
Added
This may cause us to incur additional costs and expenses, and dedicate additional resources, to achieve compliance with any changes from the current administration, which can impact our financial condition and the results of our operations. Bank Regulation Anti-Money Laundering and OFAC Regulation . The Bank is subject to a number of anti-money laundering laws (“AML”) and regulations.
Removed
Pause on Major Federal Reserve Rulemaking On February 28, 2025, Michael Barr stepped down as vice chair of supervision of the Federal Reserve. The Federal Reserve stated that it will not issue any major rulemaking until a new vice chair for supervision is confirmed by the U.S. Senate. Bank Regulation Anti-Money Laundering and OFAC Regulation .

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

44 edited+21 added−6 removed100 unchanged
Biggest changeIn addition, the widespread adoption of new technologies, including internet and mobile banking services, could require us to make substantial expenditures to modify or adapt our existing products and services. Also, these and other capital investments in our business may not produce expected growth in earnings anticipated at the time of the expenditure.
Biggest changeWe face increasing pressure to provide products and services at lower prices, which can reduce our net interest margin and revenues from our fee-based products and services. In addition, the widespread adoption of new technologies, including internet and mobile banking services, could require us to make substantial expenditures to modify or adapt our existing products and services.
Factors considered by the Company in evaluating the overall adequacy of the allowance include historical net loan losses, the level and composition of nonaccrual, past due and modifications, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region 15 where the Company operates.
Factors considered by the Company in evaluating the overall adequacy of the allowance include historical net loan losses, the level and composition of nonaccrual, past due and 15 modifications, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates.
Acquiring other banks or financial service companies, as well as other geographic and product expansion activities, involve various risks including: • risks of unknown or contingent liabilities; • unanticipated costs and delays; • risks that acquired new businesses do not perform consistent with our growth and profitability expectations; • risks of entering new markets or product areas where we have limited experience; • risks that growth will strain our infrastructure, staff, internal controls and management, which may require additional personnel, time and expenditures; • exposure to potential asset quality issues with acquired institutions; • difficulties, expenses and delays of integrating the operations and personnel of acquired institutions, and start-up delays and costs of other expansion activities; • potential disruptions to our business; • possible loss of key employees and customers of acquired institutions; • potential short-term decreases in profitability; and • diversion of our management’s time and attention from our existing operations and business.
Acquiring other banks or financial service companies, as well as other geographic and product expansion activities, involve various risks including: • risks of unknown or contingent liabilities; • unanticipated costs and delays; • risks that acquired new businesses do not perform consistent with our growth and profitability expectations; • risks of entering new markets or product areas where we have limited experience; • risks that growth will strain our infrastructure, staff, internal controls and management, which may require additional personnel, time and expenditures; • exposure to potential asset quality issues with acquired institutions; 18 • difficulties, expenses and delays of integrating the operations and personnel of acquired institutions, and start-up delays and costs of other expansion activities; • potential disruptions to our business; • possible loss of key employees and customers of acquired institutions; • potential short-term decreases in profitability; and • diversion of our management’s time and attention from our existing operations and business.
In addition, our reputation and client relationships may be damaged as a result of our practices related to climate change, including our involvement, or our customers’ involvement, in certain industries or projects, in the absence of mitigation and/or transition measures, associated with causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change.
In addition, our reputation and client relationships may be damaged as a result of our practices related to climate change, including our involvement, or our customers’ involvement, in certain industries 19 or projects, in the absence of mitigation and/or transition measures, associated with causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change.
Consequently, stockholders of the Company may be less likely to benefit from the rapid increases in stock prices that may result from tender offers or similar efforts to acquire control of other non-bank companies. Investors should be aware of these requirements when acquiring shares of our stock. 19 Our reporting obligations as a public company are costly.
Consequently, stockholders of the Company may be less likely to benefit from the rapid increases in stock prices that may result from tender offers or similar efforts to acquire control of other non-bank companies. Investors should be aware of these requirements when acquiring shares of our stock. Our reporting obligations as a public company are costly.
We cannot predict whether any other tax legislation will be enacted in the future or whether any such changes to existing federal or state tax law would have a material adverse effect on our business, financial condition and results of operations. We are subject to changes in accounting principles, policies or guidelines.
We cannot predict whether any other tax legislation will be enacted in the future or whether any such changes to existing federal or state tax law would have a material adverse effect on our business, financial condition and results of operations. 20 We are subject to changes in accounting principles, policies or guidelines.
Any such acquisitions could be funded through cash from operations, the issuance of equity and/or the incurrence of additional indebtedness, which amount may be material, or a combination thereof. Any acquisition could be dilutive to our earnings and 17 stockholders’ equity per share of our common stock. Also, acquisitions are subject to various regulatory approvals.
Any such acquisitions could be funded through cash from operations, the issuance of equity and/or the incurrence of additional indebtedness, which amount may be material, or a combination thereof. Any acquisition could be dilutive to our earnings and stockholders’ equity per share of our common stock. Also, acquisitions are subject to various regulatory approvals.
The ability of a 16 financial institution to meet its current financial obligations is a function of its balance sheet structure, its ability to liquidate assets and its access to alternative sources of funds. We seek to ensure our funding needs are met by maintaining an appropriate level of liquidity through asset/liability management.
The ability of a financial institution to meet its current financial obligations is a function of its balance sheet structure, its ability to liquidate assets and its access to alternative sources of funds. We seek to ensure our funding needs are met by maintaining an appropriate level of liquidity through asset/liability management.
Thus, our common stock will be less liquid than the stock of 18 companies with broader public ownership, and as a result, the trading prices for our shares of common stock may be more volatile, which may make it difficult for investors to resell shares at the volume, prices and times desired.
Thus, our common stock will be less liquid than the stock of companies with broader public ownership, and as a result, the trading prices for our shares of common stock may be more volatile, which may make it difficult for investors to resell shares at the volume, prices and times desired.
This is done, in part, by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve, delivering superior service to our customers and caring about our customers and associates.
This is done, in part, by recruiting, hiring and retaining employees who share our core values of being 16 an integral part of the communities we serve, delivering superior service to our customers and caring about our customers and associates.
A significant decline in general economic conditions caused by inflation, recession, tariffs, unemployment, changes in securities markets, rate cuts by the Federal Reserve, changes in housing market prices, geopolitical uncertainties, natural disasters, pandemics and election outcomes or other factors could impact economic conditions and, in turn, could have a material adverse effect on our financial condition and results of operations.
A significant decline in general economic conditions caused by inflation, recession, trade policies, tariffs, unemployment, changes in securities markets, rate cuts by the Federal Reserve, changes in housing market prices, geopolitical uncertainties, natural disasters, pandemics and election outcomes or other factors could impact economic conditions and, in turn, could have a material adverse effect on our financial condition and results of operations.
Adverse economic conditions may result from a variety of factors including domestic and global economic and political developments, including civil unrest, terrorism, foreign investment restrictions, various political or military action, such as the armed conflict between Ukraine and Russia and corresponding sanctions imposed by the United States and other countries or the conflict in Israel and the surrounding areas, geopolitical events (including China-Taiwan and U.S.-China relations), and new or evolving legal and regulatory requirements on business investment, hiring, migration, labor supply and global supply chains.
Adverse economic conditions may result from a variety of factors including domestic and global economic and political developments, including civil unrest, terrorism, foreign investment restrictions, various political or military action, such as the armed conflict between Ukraine and Russia and corresponding sanctions imposed by the United States and other countries or the conflict in the Middle East and the surrounding areas, geopolitical events (including China-Taiwan and U.S.-China relations), and new or evolving legal and regulatory requirements on business investment, hiring, migration, labor supply and global supply chains.
The Company has pledged 100% of Bank stock as collateral for the loan and credit facilities provided for by the Business Note Agreement. The inability to receive dividends from the Bank could have an adverse effect on our business and financial condition.
The Company has pledged 100% of the Bank’s stock as collateral for the loan and credit facilities provided for by the Business Note Agreements. The inability to receive dividends from the Bank could have an adverse effect on our business and financial condition.
Inflation may have an adverse impact on our business and on our customers. Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. The annual inflation rate as of December 2024 was 2.9% measured by consumer price index.
Inflation may have an adverse impact on our business and on our customers. Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. The annual inflation rate as of December 2025 was 2.7% measured by consumer price index.
The system of supervision and regulation applicable to us establishes a comprehensive framework for our operations and is intended primarily for the protection of the DIF, our depositors and the public, rather than our stockholders.
The system of supervision and regulation applicable to us establishes a comprehensive framework for our operations and is intended primarily for the protection of the DIF, our depositors and the public, rather than our stockholders. The current U.S.
This public uncertainty and concern could potentially affect the Bank despite its relatively high percentage of deposits (82% as of December 31, 2024) that are either insured or collateralized and its balance sheet liquidity 14 and collateralized borrowing capacity being well in excess of the uninsured deposit balances.
This public uncertainty and concern could potentially affect the Bank despite its relatively high percentage of deposits (79% as of December 31, 2025) that are either insured or collateralized and its balance sheet liquidity and collateralized borrowing capacity being well in excess of the uninsured deposit balances.
The Company’s ability to pay dividends is also subject to the terms of its Subordinated Note Purchase Agreements dated August 27, 2020 and March 11, 2022 and Business Note Agreement dated June 26, 2019 each of which prohibits the Company from declaring or paying dividends while an event of default has occurred and is continuing under each respective agreement.
The Company’s ability to pay dividends is also subject to the terms of its Subordinated Note Purchase Agreement dated March 11, 2022 and Business Note Agreements dated June 26, 2019 and October 30, 2025, each of which prohibits the Company from declaring or paying dividends while an event of default has occurred and is continuing under each respective agreement.
Although the Bank manages lending risks through its underwriting and credit administration policies, no assurance can be given that such risks will not materialize, in which event, our financial condition, results of operations, cash flows and business prospects could be materially adversely affected.
Although the Bank manages lending risks through its underwriting and credit administration policies, no assurance can be given that such risks will not materialize, in which event, our financial condition, results of operations, cash flows and business prospects could be materially adversely affected. Future pandemics could materially affect our results of operations, financial position and/or liquidity .
Customers may decide not to use banks to complete their financial transactions, which could result in a loss of income to us. Technology and other changes are allowing customers to complete financial transactions that historically have involved banks at one or both ends of the transaction.
Customers may decide to use emerging financial technologies such as cryptocurrencies rather than banks to complete their financial transactions, which could result in a loss of income to us. Technology and other changes are allowing customers to complete financial transactions that historically have involved banks at one or both ends of the transaction.
The Company will continue to monitor the ongoing events concerning these three banks as well as any future potential bank failures and volatility within the banking industry generally, together with any responsive measures taken by the banking regulators to mitigate or manage potential turmoil in the banking industry. We are subject to interest rate risk.
The Company will continue to monitor any future potential bank failures and volatility within the banking industry generally, together with any responsive measures taken by the banking regulators to mitigate or manage potential turmoil in the banking industry. We are subject to interest rate risk.
Liquidity measures the ability to meet current and future cash flow needs as they become due. The liquidity of a financial institution reflects its ability to meet loan requests, to accommodate possible outflows in deposits, and to take advantage of interest rate market opportunities.
We could experience an unexpected inability to obtain needed liquidity. Liquidity measures the ability to meet current and future cash flow needs as they become due. The liquidity of a financial institution reflects its ability to meet loan requests, to accommodate possible outflows in deposits, and to take advantage of interest rate market opportunities.
Competition may affect our results. Competition in the banking and financial services industry is intense. Our profitability depends upon our continued ability to compete in our primary market area. We face strong competition in originating loans, in seeking deposits and in offering other banking services.
Competitive pressure from others in the financial services industry, including non-depository institutions, may affect our results. Competition in the banking and financial services industry is intense. Our profitability depends upon our continued ability to compete in our primary market area. We face strong competition in originating loans, in seeking deposits and in offering other banking services.
At December 31, 2024, $142.9 million of our securities, were classified as available-for-sale (AFS) and $85.5 million were classified as held to maturity (“HTM”). The estimated fair value of our AFS securities portfolio may increase or decrease depending on market conditions. Our AFS securities portfolio is comprised of fixed-rate, and to a lesser extent, floating rate securities.
At December 31, 2025, $134.1 million of our securities, were classified as available-for-sale (AFS) and $80.2 million were classified as held to maturity (“HTM”). The estimated fair value of our AFS securities portfolio may increase or decrease depending on market conditions. Our AFS securities portfolio is comprised of fixed-rate, and to a lesser extent, floating rate securities.
Our future success depends, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements.
Our future success depends, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations.
Additionally, the techniques used by cyber criminals change frequently, may not be recognized until launched (or may evade detection for considerable time), can be initiated from a variety of sources, and may increase in frequency and effectiveness by the use of artificial intelligence.
Additionally, the techniques used by cyber criminals change frequently, may not be recognized until launched (or may evade detection for considerable time), can be initiated from a variety of sources.
Any system of controls, however well-designed and operated, is based in part on certain assumptions and can provide only reasonable assurances that the objectives of the system are met.
Any system of controls, however well-designed and operated, is based in part on certain assumptions and can provide only reasonable assurances that the objectives of the system are met. Management believes that our internal controls over financial reporting are currently effective.
Our business, financial condition and results of operations are impacted by tax policy implemented at the federal and state level.
Changes in federal or state tax laws could adversely affect our business, financial condition and results of operations. Our business, financial condition and results of operations are impacted by tax policy implemented at the federal and state level.
There are approximately 9.6 million shares of our common stock held by nonaffiliates as of March 13, 2025.
There are approximately 9.2 million shares of our common stock held by nonaffiliates as of March 5, 2026.
There is an increasing concern over the risks of climate change and related environmental sustainability matters. The physical risks of climate change include discrete events, such as flooding and wildfires, and longer-term shifts in climate patterns, such as extreme heat, and more frequent and prolonged drought.
The physical risks of climate change include discrete events, such as flooding and wildfires, and longer-term shifts in climate patterns, such as extreme heat, and more frequent and prolonged drought.
The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology driven by new or modified products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs.
The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven innovations (such as the use of artificial intelligence and machine learning), products and services as well as evolving industry standards. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs.
Additionally, customers may decide to remove money from accounts with us in favor of other banks or other types of cash management products, such as emerging financial technologies, including digital wallets, non-fungible tokens and digital currencies and cryptocurrencies.
Additionally, customers may decide to remove money from accounts with us in favor of other banks or other types of cash management products, such as emerging financial technologies, including digital wallets, non-fungible tokens and digital currencies and cryptocurrencies. Competition from payment and exchange services in ways that were not previously possible may adversely affect our results of operations.
Additionally, we are subject to reputational risk associated with environmental, social and governance, issues – including different perspectives on the meaning of these issues. Such differing perspectives may expose us to increased scrutiny and criticism. Maintaining or increasing our market share may depend on lowering prices and market acceptance of new products and services.
Additionally, we are subject to reputational risk associated with environmental, social and governance issues – including different perspectives on the meaning of these issues. Such differing perspectives may expose us to increased scrutiny and criticism.
Regulatory approval is required for acquisitions we seek to consummate. Among other things, our regulators consider our capital, liquidity, profitability, regulatory compliance and levels of goodwill and intangibles when considering acquisition and expansion proposals. If we are unable to find suitable acquisition candidates, this component of our growth strategy may be lost.
Regulatory approval is required for acquisitions we seek to consummate. Among other things, our regulators consider our capital, liquidity, profitability, regulatory compliance and levels of goodwill and intangibles when considering acquisition and expansion proposals.
For example, customers can now pay bills and transfer funds directly without going through a bank. The process of eliminating banks as intermediaries, known as disintermediation, could result in the loss of fee income, as well as the loss of customer deposits.
For example, customers can now pay bills and transfer funds directly without going through a bank. These advances have also allowed financial institutions and other companies to provide electronic and internet-based financial solutions. The process of eliminating banks as intermediaries, known as disintermediation, could result in the loss of fee income, as well as the loss of customer deposits.
COVID-19 presented, and any future pandemics (including new variants of COVID-19) could present, the following risks, among others: inflation; increased unemployment levels; disruptions in global supply chains and financial markets; adverse legislative or regulatory actions; operational disruptions; increased general and administrative expenses; financial market disruption; and an economic downturn.
Future pandemics could present, the following risks, among others: inflation; increased unemployment levels; disruptions in global supply chains and financial markets; adverse legislative or regulatory actions; operational disruptions; increased general and administrative expenses; financial market disruption; and an economic downturn. These risks could materially and adversely impact our results of operations, financial position and/or liquidity.
Among other things, trading of a relatively small volume of our common stock may have a greater impact on the trading price of our stock than would be the case if our public float were larger. Climate change manifesting as physical or transition risks could adversely affect our operations, businesses, and customers.
Among other things, trading of a relatively small volume of our common stock may have a greater impact on the trading price of our stock than would be the case if our public float were larger.
Any change in such regulation and oversight, whether in the form of regulatory policy, new regulations or legislation, or additional deposit insurance premiums could have a material impact on our operations.
Additionally, different approaches to regulation by different jurisdictions, including potentially conflicting state-level regulation, could increase compliance costs or risks of non-compliance. Any change in such regulation and oversight, whether in the form of regulatory policy, new regulations or legislation, or additional deposit insurance premiums could have a material impact on our operations.
We may not be able to effectively implement new technology driven products and services or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business and, in turn, our financial condition and results of operations.
Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business and, in turn, our financial condition and results of operations. Our business may be adversely affected by an increasing prevalence of fraud and other financial crimes.
Acquisition and expansion activities may disrupt our business, dilute existing stockholders and adversely affect our operating results. We seek to expand through acquisition and are evaluating potential acquisitions and expansion opportunities in the normal course of our business. We cannot assure you that we will be able to adequately or profitably manage the ongoing integration of any future acquisitions.
If we are unable to find suitable acquisition candidates, this component of our growth strategy may be lost. Acquisition and expansion activities may disrupt our business, dilute existing stockholders and adversely affect our operating results. We seek to expand through acquisition and are evaluating potential acquisitions and expansion opportunities in the normal course of our business.
Cybersecurity refers to the combination of technologies, processes and procedures established to protect information technology systems and data from unauthorized access, attack, or damage. Our business involves the storage and transmission of customers’ personal information.
RISKS RELATED TO OUR BUSINESS AND OPERATIONS We rely on network and information systems and other technologies, and, as a result, we are subject to various cybersecurity risks. Cybersecurity refers to the combination of technologies, processes and procedures established to protect information technology systems and data from unauthorized access, attack, or damage.
We may not be successful in introducing new products and services, achieving market acceptance of our products and services, or developing and maintaining loyal customers, which in turn, could adversely affect our results of operations and profitability. We could experience an unexpected inability to obtain needed liquidity.
Also, these and other capital investments in our business may not produce expected growth in earnings anticipated at the time of the expenditure. We may not be successful in introducing new products and services, achieving market acceptance of our products and services, or developing and maintaining loyal customers, which in turn, could adversely affect our results of operations and profitability.
Section 404(b) requires that an independent registered public accounting firm provide an attestation report on the Company’s internal control over financial reporting and the operating effectiveness of these controls, making the public reporting process more costly. Changes in federal or state tax laws could adversely affect our business, financial condition and results of operations.
As an “accelerated filer,” we are subject to the provisions of Section 404(b) of the Sarbanes-Oxley Act. Section 404(b) requires that an independent registered public accounting firm provide an attestation report on the Company’s internal control over financial reporting and the operating effectiveness of these controls, making the public reporting process more costly.
The election of a new President together with changes in the membership of Congress, including change in control of the Senate, will likely lead to changes in the laws or policies applicable to us and the agencies that regulate us.
Presidential administration together with the membership of Congress, will likely lead to changes in the laws or policies applicable to us and the agencies that regulate us. Further, some of the laws and regulations finalized in the prior administration that are applicable to financial institutions are subject to ongoing litigation creating further uncertainty.
Our success depends, in part, on our ability to adapt our products and services to evolving industry standards and customer demands. We face increasing pressure to provide products and services at lower prices, which can reduce our net interest margin and revenues from our fee-based products and services.
Maintaining or increasing our market share may depend on lowering prices and market acceptance of new products and services. Our success depends, in part, on our ability to adapt our products and services to evolving industry standards and customer demands.
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Future pandemics (including new variants of COVID-19), could materially affect our results of operations, financial position and/or liquidity .
Added
Our business involves the storage and transmission of customers’ personal information.
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These risks could materially and adversely impact our results of operations, financial position and/or liquidity. RISKS RELATED TO OUR BUSINESS AND OPERATIONS We rely on network and information systems and other technologies, and, as a result, we are subject to various Cybersecurity risks.
Added
Additionally, emerging technologies, including the use of automation, artificial intelligence and robotics, introduces new information security risks and exposure for us and for our third-party service providers, and, additionally, such technologies may be used to identify vulnerabilities.
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Our business may be adversely affected by an increasing prevalence of fraud and other financial crimes.
Added
Such technologies have also resulted in a substantial increase in the volume and sophistication of cyberattacks against financial and other institutions, including the use of generative artificial intelligence to conduct more sophisticated social engineering attacks.
Removed
Further, some of the laws and regulations finalized in the prior administration that are applicable to financial institutions are subject to ongoing litigation creating further uncertainty. Additionally, different approaches to regulation by different jurisdictions, including potentially conflicting state-level regulation, could increase compliance costs or risks of non-compliance.
Added
In addition, institutions larger than the Company may have the advantage of being perceived by the 14 public as more secure in times of financial uncertainty as evidenced by the migration of deposits to large banks in response to such banks’ failures.
Removed
In addition, the Company is currently considered a “non-accelerated filer” and will maintain that status for so long as the Company’s annual revenues are less than $100 million, and its public float is more than $75 million but less than $700 million.
Added
Credit union competitors benefit from competitive advantages, including the credit union exemption from paying federal income tax and can, therefore, more aggressively price many products and services.
Removed
If the Company were to be classified as an “accelerated filer” rather than a “non-accelerated filer,” which we believe is probable in 2025, then we would become subject to the provisions of Section 404(b) of the Sarbanes-Oxley Act.
Added
The impact of the existing regulatory framework and any future changes to it could negatively affect our ability to compete with these institutions, which could have a material adverse effect on our results of operations. We expect that competition in the financial services industry will remain intense, with new competitors in the financial services industry continuing to emerge.
Added
For example, technological advances and the growth of e-commerce have made it possible for non-depository institutions to offer products and services that traditionally were banking products. Actions by competitors could put pressure on the pricing of our products and services. In addition, advocacy by non-banking competitors for exemptions from regulatory requirements could significantly disadvantage traditional financial institutions.
Added
The rise in technological advances in the financial services industry has led to simpler opportunities for consumers to shop for higher deposit interest rates at banks across the country, which may offer higher rates because they have few or no physical branches and open deposit accounts electronically.
Added
Further, in 2025, the United States passed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the “GENIUS Act”), which provides a regulatory framework for the issuance and adoption of stablecoins in the United States.
Added
The passage of the GENIUS Act may result in increased competition from issuers of stablecoins and providers of related technology, as well as non-bank competitors and financial institutions that offer to hold stablecoin reserve assets or custody stablecoins.
Added
In response to ESG developments (including, in particular DEI initiatives), there are increasing instances of “anti-ESG” legislation and anti-DEI executive orders, adverse media coverage, regulation, and litigation that could have unintended impacts on ordinary banking operations and increase litigation or reputational risk related to actions we choose to take and impact the results of our operations.
Added
Our success in the competitive environment in which we operate requires investment of capital and human resources in innovation, particularly in light of the current “FinTech” environment, in which the financial services industry is undergoing rapid technological changes and financial institutions are investing significantly in evaluating new technologies, such as artificial intelligence, machine learning, blockchain and other distributed ledger technologies, and developing potentially industry-changing new products, services and industry standards.
Added
Our investment is directed at generating new products and services, and adapting existing products and services to the evolving standards and demands of the marketplace. Among other things, investing in innovation helps us maintain a mix of products and services that keeps pace with our competitors and achieve acceptable margins.
Added
However, many 17 of our competitors have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology driven products and services or be successful in marketing these products and services to our customers.
Added
While management will continue to assess our controls and procedures and take action to remediate any future issues, there can be no guarantee of the effectiveness of these controls and procedures on an ongoing basis.
Added
Additionally, as the Company grows through acquisitions and pursues new initiatives that improve our operations and cost structure, the Company is also expanding and improving its information technologies, resulting in a larger technological presence, utilization of “cloud” computing services, and corresponding exposure to cybersecurity risk.
Added
Certain new technologies, such as use of artificial intelligence, present new and significant cybersecurity safety risks that must be analyzed and addressed before implementation. If we fail to assess and identify cybersecurity risks associated with acquisitions and new initiatives, we may become increasingly vulnerable to such risks.
Added
We cannot assure you that we will be able to adequately or profitably manage the ongoing integration of any future acquisitions.
Added
In addition, on June 29, 2025, the FTSE selected Citizens Community Bancorp, Inc. for inclusion in the Russell 3000® Index as part of the 2025 annual reconstitution.
Added
If our common stock does not continue to remain on the Russell 3000® Index and is removed because it does not meet the criteria for continued inclusion in such index, index funds, institutional investors, or other holders attempting to track the composition of that index may be required to sell our common stock, which would adversely impact the price and the frequency at which it trades.
Added
Climate change manifesting as physical or transition risks could adversely affect our operations, businesses, and customers. There is an increasing concern over the risks of climate change and related environmental sustainability matters.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe CISO reports to the Risk Committee and is responsible for implementing and maintaining our enterprise cybersecurity organization. The CISO will maintain an Incident Response Plan. The CISO ensures that the Incident Response Plan is tested annually and will present testing results to the Risk Committee.
Biggest changeThe Chief Information Security Officer (“CISO”) and the Chief Technology Officer (“CTO”) are key management roles responsible for assessing and managing material risks from cybersecurity threats. The CISO reports to the Risk Committee and is responsible for implementing and maintaining our enterprise cybersecurity organization. The CISO maintains an Incident Response Plan.
These reports cover, but are not limited to, the Company’s cybersecurity posture, overall status of the Company’s compliance with the Cybersecurity Program, threat environment, material cybersecurity risks and events, Cybersecurity Program improvements and effectiveness, and other material matters related to the Cybersecurity Program. 21
These reports cover, but are not limited to, the Company’s cybersecurity posture, overall status of the Company’s compliance with the Cybersecurity Program, threat environment, material cybersecurity risks 21 and events, Cybersecurity Program improvements and effectiveness, and other material matters related to the Cybersecurity Program. 22
The CISO will ensure security incidents are logged and maintained. The CTO provides our Cybersecurity Program with the technical and functional resources to achieve its strategic goals and objectives, and partners and collaborates with the CISO. The Risk Committee is responsible for overseeing the Company’s management of cybersecurity risk, including oversight into appropriate risk mitigation, strategies, processes, systems, and controls.
The CTO provides our Cybersecurity Program with the technical and functional resources to achieve its strategic goals and objectives, and partners and collaborates with the CISO. The Risk Committee is responsible for overseeing the Company’s management of cybersecurity risk, including oversight into appropriate risk mitigation, strategies, processes, systems, and controls.
The CISO and/or its delegate will share applicable threat information to ensure Board members and staff are informed on the evolving threat environment. The CISO is responsible for ensuring the Board of Directors and staff are trained annually on cybersecurity and information security awareness. Additionally, the CISO ensures staff is adequately trained on Incident Response Plan procedures.
The CISO is responsible for ensuring the Board of Directors and staff are trained annually on cybersecurity and information security awareness. Additionally, the CISO ensures staff is adequately trained on Incident Response Plan procedures. The CISO ensures security incidents are logged and maintained.
Overseen by the Board of Directors and its Risk Committee, we regularly review, and as appropriate, adapt our Cybersecurity Program to an evolving landscape of emerging threats, evaluate effectiveness of key security controls, and assess cybersecurity best practices. 20 The Chief Information Security Officer (“CISO”) and the Chief Technology Officer (“CTO”) are key management roles responsible for assessing and managing material risks from cybersecurity threats.
Overseen by the Board of Directors and the Bank’s Risk Oversight Committee (the “Risk Committee”), we regularly review, and as appropriate, adapt our Cybersecurity Program to an evolving landscape of emerging threats, evaluate effectiveness of key security controls, and assess cybersecurity best practices.
Added
The CISO ensures that the Incident Response Plan is tested annually and presents testing results to the Risk Committee. The CISO and/or its delegate shares applicable threat information to ensure Board members and staff are informed on the evolving threat environment.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed2 unchanged
Biggest changeAt December 31, 2024, the Bank had a total of 22 full-service branch offices located in the Wisconsin cities of Altoona, Barron, Eau Claire, Ellsworth, Ettrick, La Crosse, Ladysmith, Lake Hallie, Mondovi, Osseo, Rice Lake, Spooner, Strum and Tomah (2); and the Minnesota cities of Albert Lea, Blue Earth, Fairmont, Faribault, Mankato, Oakdale, and Wells.
Biggest changeAt December 31, 2025, the Bank had a total of 21 full-service branch offices located in the Wisconsin cities of Altoona, Barron, Eau Claire, Ellsworth, Ettrick, La Crosse, Ladysmith, Lake Hallie, Mondovi, Osseo, Rice Lake, Spooner, Strum and Tomah (2); and the Minnesota cities of Albert Lea, Blue Earth, Fairmont, Mankato, Oakdale, and Wells.
Of these, the Bank owns 19 and leases the remaining 3 branch offices. Management believes that our current facilities are adequate to meet our present and immediately foreseeable needs. For more information on our properties and equipment, see Note 5, Office Properties and Equipment of Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K.
Of these, the Bank owns 19 and leases the remaining 2 branch offices. Management believes that our current facilities are adequate to meet our present and immediately foreseeable needs. For more information on our properties and equipment, see Note 5, Office Properties and Equipment of Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−0 removed5 unchanged
Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 1, 2024 - October 31, 2024 — $ — — 332,663 November 1, 2024 - November 30, 2024 93,894 $ 14.55 93,894 238,769 December 1, 2024 - December 31, 2024 — $ — — 238,769 Total 93,894 $ 14.55 93,894 ITEM 6.
Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 1, 2025 - October 31, 2025 100,000 $ 15.65 100,000 263,748 November 1, 2025 - November 30, 2025 150,000 $ 16.13 150,000 113,748 December 1, 2025 - December 31, 2025 — $ — — 113,748 Total 250,000 $ 15.94 250,000 ITEM 6.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Historically, trading in shares of our common stock has been limited. Citizens Community Bancorp, Inc. common stock is traded on the NASDAQ Global Market under the symbol “CZWI”. We had approximately 532 stockholders of record at March 13, 2025.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Historically, trading in shares of our common stock has been limited. Citizens Community Bancorp, Inc. common stock is traded on the NASDAQ Global Market under the symbol “CZWI”. We had approximately 507 stockholders of record at March 5, 2026.
Securities Authorized for Issuance Under Equity Compensation Plans For information relating to securities authorized for issuance under equity compensation plans, see Part III, Item 12. 22 Purchases of Equity Securities by the Issuer On July 25, 2024, the Board of Directors authorized a stock repurchase program of 5% of the outstanding shares on that date or 512,709 shares.
Securities Authorized for Issuance Under Equity Compensation Plans For information relating to securities authorized for issuance under equity compensation plans, see Part III, Item 12. 23 Purchases of Equity Securities by the Issuer On July 24, 2025, the Board of Directors authorized a stock repurchase program of 5% of the outstanding shares on that date or 499,000 shares in open market or private transactions.
As of the beginning of the quarter ended December 31, 2024, 332 thousand shares were available for purchase under the 2024 share repurchase program. During the quarter ended December 31, 2024, 94 thousand shares were repurchased under the program. As of December 31, 2024, an additional 238 thousand shares remain available for repurchase under the 2024 share repurchase program.
As of the beginning of the quarter ended December 31, 2025, 363,748 shares were available for purchase under the 2025 share repurchase program. During the quarter ended December 31, 2025, 250,000 shares were repurchased under the program. As of December 31, 2025, an additional 113,748 shares remain available for repurchase under the 2025 share repurchase program.
During the continuance of an event of default under its Subordinated Note Purchase Agreements entered into with certain accredited purchasers in August 2020 and March 2022, the Company would be restricted from declaring or paying any dividends on its capital stock.
During the continuance of an event of default under its Subordinated Note Purchase Agreement dated March 11, 2022, or its Business Note Agreements dated June 26, 2019 or October 30, 2025, the Company would be restricted from declaring or paying any dividends on its capital stock.
Added
The timing and amount of any share repurchases under the new authorization will be determined by management based on market conditions and other considerations. The new share repurchase authorization does not obligate the Company to repurchase any shares of its common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe amortized cost and market values of our investment securities by asset categories as of the dates indicated below were as follows: Available-for-sale securities Amortized Cost Fair Value December 31, 2024 U.S. government agency obligations $ 13,853 $ 13,753 Mortgage-backed securities 87,762 68,386 Corporate debt securities 44,931 41,716 Asset-backed securities 19,058 18,996 Total available-for-sale securities $ 165,604 $ 142,851 December 31, 2023 U.S. government agency obligations $ 16,655 $ 16,576 Mortgage-backed securities 91,091 73,480 Corporate debt securities 47,158 41,174 Asset-backed securities 24,840 24,513 Total available-for-sale securities $ 179,744 $ 155,743 Held to maturity securities Amortized Cost Fair Value December 31, 2024 Obligations of states and political subdivisions $ 500 $ 478 Mortgage-backed securities 85,004 65,144 Total held-to-maturity securities $ 85,504 $ 65,622 December 31, 2023 Obligations of states and political subdivisions $ 600 $ 565 Mortgage-backed securities 90,629 72,697 Total held to maturity securities $ 91,229 $ 73,262 31 The amortized cost and fair values of our investment securities by maturity, as of December 31, 2024 were as follows: Available-for-sale securities Amortized Cost Estimated Fair Value Due in one year or less $ 4,526 $ 4,487 Due after one year through five years 8,652 8,715 Due after five years through ten years 41,380 38,033 Due after ten years 23,284 23,230 Total securities with contractual maturities 77,842 74,465 Mortgage-backed securities 87,762 68,386 Total available-for-sale securities $ 165,604 $ 142,851 Held to maturity securities Amortized Cost Estimated Fair Value Due in one year or less $ 100 $ 100 Due after one year through five years 400 378 Due after five years through ten years — — Total securities with contractual maturities 500 478 Mortgage-backed securities 85,004 65,144 Total held-to-maturity securities $ 85,504 $ 65,622 The amortized cost and fair values of our investment securities by maturity, as of December 31, 2023 were as follows: Available-for-sale securities Amortized Cost Estimated Fair Value Due in one year or less $ — $ — Due after one year through five years 13,986 13,703 Due after five years through ten years 45,549 39,701 Due after ten years 29,118 28,859 Total securities with contractual maturities 88,653 82,263 Mortgage-backed securities 91,091 73,480 Total available-for-sale securities $ 179,744 $ 155,743 Held to maturity securities Amortized Cost Estimated Fair Value Due in one year or less $ 100 $ 100 Due after one year through five years 500 465 Due after five years through ten years — — Total securities with contractual maturities 600 565 Mortgage-backed securities 90,629 72,697 Total held-to-maturity securities $ 91,229 $ 73,262 32 The following tables show the fair value and gross unrealized losses of securities with unrealized losses, as of the dates indicated below, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position: Less than 12 Months 12 Months or More Total Available-for-sale securities Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses December 31, 2024 U.S. government agency obligations $ 5,472 $ 25 $ 3,334 $ 103 $ 8,806 $ 128 Mortgage-backed securities 2,732 112 65,654 19,264 68,386 19,376 Corporate debt securities — — 36,806 3,326 36,806 3,326 Asset-backed securities 939 1 12,210 104 13,149 105 Total available-for-sale securities $ 9,143 $ 138 $ 118,004 $ 22,797 $ 127,147 $ 22,935 December 31, 2023 U.S. government agency obligations $ 3,776 $ 5 $ 3,627 $ 151 $ 7,403 $ 156 Mortgage-backed securities — — 73,476 17,611 73,476 17,611 Corporate debt securities 3,350 76 35,916 5,914 39,266 5,990 Asset-backed securities 3,348 22 20,008 317 23,356 339 Total available-for-sale securities $ 10,474 $ 103 $ 133,027 $ 23,993 $ 143,501 $ 24,096 Unrealized losses reflected in the preceding tables have not been included in results of operations because the unrealized loss was not due to credit impairment.
Biggest changeThe amortized cost and market values of our investment securities by asset categories as of the dates indicated below were as follows: Available-for-sale securities Amortized Cost Estimated Fair Value December 31, 2025 U.S. government agency obligations $ 10,811 $ 10,773 Mortgage-backed securities 82,264 66,684 Corporate debt securities 42,394 40,682 Student loan asset-backed securities 16,149 15,964 Total available-for-sale securities $ 151,618 $ 134,103 December 31, 2024 U.S. government agency obligations $ 13,853 $ 13,753 Mortgage-backed securities 87,762 68,386 Corporate debt securities 44,931 41,716 Student loan asset-backed securities 19,058 18,996 Total available-for-sale securities $ 165,604 $ 142,851 Held-to-maturity securities Amortized Cost Estimated Fair Value December 31, 2025 Obligations of states and political subdivisions $ 400 $ 388 Mortgage-backed securities 79,810 63,729 Total held-to-maturity securities $ 80,210 $ 64,117 December 31, 2024 Obligations of states and political subdivisions $ 500 $ 478 Mortgage-backed securities 85,004 65,144 Total held-to-maturity securities $ 85,504 $ 65,622 31 The amortized cost and fair values of our investment securities by maturity, as of December 31, 2025 were as follows: Available-for-sale securities Amortized Cost Estimated Fair Value Due in one year or less $ 2,013 $ 2,006 Due after one year through five years 8,533 8,574 Due after five years through ten years 38,403 36,617 Due after ten years 20,405 20,222 Total securities with contractual maturities 69,354 67,419 Mortgage-backed securities 82,264 66,684 Total available-for-sale securities $ 151,618 $ 134,103 Held-to-maturity securities Amortized Cost Estimated Fair Value Due in one year or less $ 100 $ 100 Due after one year through five years 300 288 Due after five years through ten years — — Total securities with contractual maturities 400 388 Mortgage-backed securities 79,810 63,729 Total held-to-maturity securities $ 80,210 $ 64,117 The amortized cost and fair values of our investment securities by maturity, as of December 31, 2024 were as follows: Available-for-sale securities Amortized Cost Estimated Fair Value Due in one year or less $ 4,526 $ 4,487 Due after one year through five years 8,652 8,715 Due after five years through ten years 41,380 38,033 Due after ten years 23,284 23,230 Total securities with contractual maturities 77,842 74,465 Mortgage-backed securities 87,762 68,386 Total available-for-sale securities $ 165,604 $ 142,851 Held-to-maturity securities Amortized Cost Estimated Fair Value Due in one year or less $ 100 $ 100 Due after one year through five years 400 378 Due after five years through ten years — — Total securities with contractual maturities 500 478 Mortgage-backed securities 85,004 65,144 Total held-to-maturity securities $ 85,504 $ 65,622 32 The following tables show the fair value and gross unrealized losses of securities with unrealized losses, as of the dates indicated below, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position: Less than 12 Months 12 Months or More Total Available-for-sale securities Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses December 31, 2025 U.S. government agency obligations $ 1,275 $ 4 $ 5,997 $ 49 $ 7,272 $ 53 Mortgage-backed securities — — 66,684 15,580 66,684 15,580 Corporate debt securities 2,075 48 25,134 1,816 27,209 1,864 Student loan asset-backed securities 4,308 13 10,783 182 15,091 195 Total available-for-sale securities $ 7,658 $ 65 $ 108,598 $ 17,627 $ 116,256 $ 17,692 December 31, 2024 U.S. government agency obligations $ 5,472 $ 25 $ 3,334 $ 103 $ 8,806 $ 128 Mortgage-backed securities 2,732 112 65,654 19,264 68,386 19,376 Corporate debt securities — — 36,806 3,326 36,806 3,326 Student loan asset-backed securities 939 1 12,210 104 13,149 105 Total available-for-sale securities $ 9,143 $ 138 $ 118,004 $ 22,797 $ 127,147 $ 22,935 Unrealized losses reflected in the preceding tables have not been included in results of operations because the unrealized loss was not due to credit impairment.
To ensure that the ACL is maintained at an adequate level, a detailed analysis is performed on a quarterly basis and an appropriate provision is made to adjust the allowance. The entire ACL balance is available for any loan that, in management’s judgment, should be charged off. The determination of the ACL requires significant judgement to estimate credit losses.
To ensure that the ACL is maintained at an adequate level, a detailed analysis is performed on a quarterly basis and an appropriate provision is made to adjust the allowance. The entire ACL balance is available for any loan that, in management’s judgment, should be charged off. The determination of the ACL requires significant judgment to estimate credit losses.
The Company’s $3.175 million negative provision for credit losses in 2024 was largely due to the impact of improving forecasted future economic conditions by Moody’s, who the Company utilizes for economic forecasts and the impact of balance sheet optimization, which resulted in loan portfolio shrinkage.
The $3.175 million negative provision for credit losses in 2024 was largely due to the impact of improving forecasted future economic conditions by Moody’s, who the Company utilizes for economic forecasts and the impact of balance sheet optimization, which resulted in loan portfolio shrinkage.
The valuation of MSRs and related amortization thereon are based on numerous factors, assumptions, and judgments, such as those for: changes in the mix of loans, interest rates, prepayment speeds, and default rates. Changes in these factors, assumptions and judgments may have a material effect on the valuation and amortization of MSRs.
The valuation of MSRs and related amortization thereon are based on numerous factors, assumptions, and judgments, such as those for: changes in the mix of 43 loans, interest rates, prepayment speeds, and default rates. Changes in these factors, assumptions and judgments may have a material effect on the valuation and amortization of MSRs.
The MD&A should be read in conjunction with our consolidated financial statements, related notes, the selected financial data and the statistical information presented elsewhere in this Annual Report on Form 10-K for a more complete understanding of the following discussion and analysis. Unless otherwise noted, years refer to the Company’s fiscal years ended December 31, 2024 and December 31, 2023.
The MD&A should be read in conjunction with our consolidated financial statements, related notes, the selected financial data and the statistical information presented elsewhere in this Annual Report on Form 10-K for a more complete understanding of the following discussion and analysis. Unless otherwise noted, years refer to the Company’s fiscal years ended December 31, 2025 and December 31, 2024.
As the Company’s commercial lending function started after the Great Recession, the Company’s historical credit experience is insufficient to estimate expected credit loss. The Company utilized peer information to supplement expected loss experience. Peer selection was a review of institutions with comparable asset size, geography, and portfolio concentrations. Management judgement is required at each point in the measurement process.
As the Company’s commercial lending function started after the Great Recession, the Company’s historical credit experience is insufficient to estimate expected credit loss. The Company utilized peer information to supplement expected loss experience. Peer selection was a review of institutions with comparable asset size, geography, and portfolio concentrations. Management judgment is required at each point in the measurement process.
See Note 11, “Commitments and Contingencies”; “Financial Instruments with Off-Balance Sheet Risk” of “Notes to Consolidated Financial Statements” which are included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K, for further detail. 49 Capital Resources.
See Note 11, “Commitments and Contingencies”; “Financial Instruments with Off-Balance Sheet Risk” of “Notes to Consolidated Financial Statements” which are included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K, for further detail. 48 Capital Resources.
If there are significant charge-offs against the ACL, or we otherwise determine that the ACL is inadequate, we will need to record an additional provision in the future. Non-Interest Income . The following table reflects the various components of non-interest income for 2024 and 2023, respectively.
If there are significant charge-offs against the ACL, or we otherwise determine that the ACL is inadequate, we will need to record an additional provision in the future. Non-Interest Income . The following table reflects the various components of non-interest income for 2025 and 2024, respectively.
While the Bank does not have approved brokered certificate lines of credit with counter parties at December 31, 2024, we believe that the Bank could access this market, which provides an additional potential source of liquidity.
While the Bank does not have approved brokered certificate lines of credit with counter parties at December 31, 2025, we believe that the Bank could access this market, which provides an additional potential source of liquidity.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The following discussion sets forth management’s discussion and analysis of our results of operations for the year ended December 31, 2024 and December 31, 2023, and our financial position as of December 31, 2024 and December 31, 2023, respectively.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The following discussion sets forth management’s discussion and analysis of our results of operations for the year ended December 31, 2025 and December 31, 2024, and our financial position as of December 31, 2025 and December 31, 2024, respectively.
PERFORMANCE SUMMARY The following is a summary of some of the significant factors that affected our operating results for the twelve months ended December 31, 2024, compared to the same 2023 period.
PERFORMANCE SUMMARY The following is a summary of some of the significant factors that affected our operating results for the twelve months ended December 31, 2025, compared to the same 2024 period.
Significant loan concentrations are considered to exist for a financial entity when the amounts of loans to multiple borrowers engaged in similar activities cause them to be similarly impacted by economic or other conditions. As illustrated above, at December 31, 2024, the largest loan concentration we identified was commercial real estate loans which comprised 52% of our total loan portfolio.
Significant loan concentrations are considered to exist for a financial entity when the amounts of loans to multiple borrowers engaged in similar activities cause them to be similarly impacted by economic or other conditions. As illustrated above, at December 31, 2025, the largest loan concentration we identified was commercial real estate loans which comprised 51% of our total loan portfolio.
(5) Senior notes, entered into by the Company in June 2019 consist of the following: (a) A term note, which was subsequently refinanced in March 2022, modified in February of 2023, and refinanced in May 2024, requiring quarterly interest-only payments through January 2029, and quarterly principal and interest payments thereafter.
(4) Senior notes, entered into by the Company consist of the following: (a) A term note, which was originally entered into in June 2019 and subsequently refinanced in March 2022, modified in February of 2023, and refinanced in May 2024, requiring quarterly interest-only payments through January 2029, and quarterly principal and interest payments thereafter.
Our borrowing arrangement with the FHLB calls for pledging certain qualified real estate, commercial and industrial loans, and borrowing up to 75% of the value of those loans, not to exceed 35% of the Bank’s total assets. Currently, we have approximately $424.7 million available to borrow under this arrangement, supported by loan collateral as of December 31, 2024.
Our borrowing arrangement with the FHLB calls for pledging certain qualified real estate, commercial and industrial loans, and borrowing up to 75% of the value of those loans, not to exceed 35% of the Bank’s total assets. Currently, we have approximately $433.7 million available to borrow under this arrangement, supported by loan collateral as of December 31, 2025.
As of December 31, 2024, there were no borrowings outstanding on this Federal Reserve Bank line of credit. As of December 31, 2024, the Bank has pledged certain of its U.S. Government Agency securities with a carrying value of $0.3 million and mortgage-backed securities with a carrying value of $1.8 million as collateral against specific municipal deposits.
As of December 31, 2025, there were no borrowings outstanding on this Federal Reserve Bank line of credit. As of December 31, 2025, the Bank has pledged certain of its U.S. Government Agency securities with a carrying value of $0.2 million and mortgage-backed securities with a carrying value of $1.8 million as collateral against specific municipal deposits.
(b) The Company’s Subordinated Note Purchase Agreement entered into with certain purchasers in March 2022, which bears a fixed interest rate of 4.75% for five years. In April 2027, the fixed interest rate will be reset quarterly to equal the three-month term Secured Overnight Financing Rate plus 329 basis points.
(b) The Company’s Subordinated Note Purchase Agreement entered into with certain purchasers in March 2022, which bears a fixed interest rate of 4.75% for five years. In April 2027, the fixed interest rate will be reset quarterly to equal the three-month term SOFR plus 329 basis points.
The Company recorded a $3.175 million negative provision for credit losses largely due to the impact of improving forecasted future economic conditions, as forecasted by Moody’s, who the Company utilizes for economic forecasts and the impact of balance sheet optimization, which resulted in loan portfolio shrinkage.
The $3.175 million of negative provision for credit losses in 2024 was largely due to the impact of improving forecasted future economic conditions, as forecasted by Moody’s, who the Company utilizes for economic forecasts and the impact of balance sheet optimization, which resulted in loan portfolio shrinkage.
The note is callable by the Bank when, and anytime after, the floating rate is initially set. Interest-only payments are due semi-annually each year during the fixed interest period and quarterly during the floating interest period.
The note is callable by the Bank when, and any time after, the floating rate is initially set. Interest-only payments are due semi-annually each year during the fixed interest period and quarterly during the floating interest period.
Interest is variable, based on US Prime rate minus 75 basis points with a floor rate of 3.00%.
Interest is variable, based on US Prime rate minus 75 basis points with a floor rate of 4.00%.
Loan amounts, their contractual maturities and weighted average interest rates at December 31, 2023 are shown below.
Loan amounts, their contractual maturities and weighted average interest rates at December 31, 2024, are shown below.
In our opinion, the allowance, when taken as a whole, reflects estimated probable loan losses in our loan portfolio. 25 STATEMENT OF OPERATIONS ANALYSIS Twelve months ended December 31, 2024 vs. Twelve months ended December 31, 2023 Net Interest Income.
In our opinion, the allowance, when taken as a whole, reflects estimated probable loan losses in our loan portfolio. 26 STATEMENT OF OPERATIONS ANALYSIS Twelve months ended December 31, 2025 vs. Twelve months ended December 31, 2024 Net Interest Income.
Also presented is the weighted average yield on interest earning assets on a tax-equivalent basis, rates paid on interest bearing liabilities and the resultant spread at December 31, 2024 and December 31, 2023. Non-accruing loans average balances are included in the table with the loans carrying a zero yield.
Also presented is the weighted average yield on interest earning assets, rates paid on interest bearing liabilities and the resultant spread at December 31, 2025 and December 31, 2024. Non-accruing loans average balances are included in the table with the loans carrying a zero yield.
Net interest margin exceeds interest rate spread because non-interest-bearing sources of funds (“net free funds”), principally demand deposits and stockholders’ equity, also support interest earning assets. The narrative below discusses net interest income, interest rate spread, and net interest margin. Net interest income was $46.5 million for 2024 compared to $48.3 million for 2023.
Net interest margin exceeds interest rate spread because non-interest-bearing sources of funds (“net free funds”), principally demand deposits and stockholders’ equity, also support interest earning assets. The narrative below discusses net interest income, interest rate spread, and net interest margin. Net interest income was $51.2 million for 2025 compared to $46.5 million for 2024.
The amortized cost of MSR assets decreased as amortization exceeded additions due to loan sales, resulting in the unpaid balances of one-to-four family residential real estate loans serviced for others to decrease as of December 31, 2024, to $479.6 million from $495.5 million at December 31, 2023.
The amortized cost of MSR assets decreased as amortization exceeded additions due to loan sales, resulting in the unpaid balances of one-to-four family residential real estate loans serviced for others to decrease as of December 31, 2025, to $474.0 million from $479.6 million at December 31, 2024.
As of December 31, 2024, the Bank also has mortgage-backed securities with a carrying value of $0.1 million pledged as collateral to the Federal Home Loan Bank of Des Moines.
As of December 31, 2025, the Bank also has mortgage-backed securities with a carrying value of $0.4 million pledged as collateral to the Federal Home Loan Bank of Des Moines.
At December 31, 2024, our on-balance sheet liquidity ratio increased to 11.75% percent from 11.4% at December 31, 2023, 48 remaining above our internal requirement of 10%. This was largely due to reductions in the AFS and HTM investment portfolios. There are no material customers or industry deposit concentrations.
At December 31, 2025, our on-balance sheet liquidity ratio increased to 14.8% percent from 11.75% at December 31, 2024, 47 remaining above our internal requirement of 10%. This was largely due to reductions in the AFS and HTM investment portfolios. There are no material customers or industry deposit concentrations.
The fair market value of the Company’s MSR asset was $5.2 million at December 31, 2024, and $5.6 million at December 31, 2023. At December 31, 2024, and December 31, 2023, the Company did not have an MSR impairment, or related valuation allowance.
The fair market value of the Company’s MSR asset was $4.7 million at December 31, 2025, and $5.2 million at December 31, 2024. At December 31, 2025, and December 31, 2024, the Company did not have an MSR impairment, or related valuation allowance.
At December 31, 2023, the Bank pledged certain of its mortgage-backed securities with a carrying value of $29.2 million as collateral to secure a line of credit with the Federal Reserve Bank. As of December 31, 2023, there were no borrowings outstanding on this Federal Reserve Bank line of credit.
At December 31, 2024, the Bank pledged certain of its mortgage-backed securities with a carrying value of $34.0 million as collateral to secure a line of credit with the Federal Reserve Bank. As of December 31, 2024, there were no borrowings outstanding on this Federal Reserve Bank line of credit.
The increase in Bank Owned Life Insurance death benefit or the twelve months ended December 31, 2024, compared to the same period in 2023 BOLI is due to the passing of an employee in 2024. 29 Non-Interest Expense. The following table reflects the various components of non-interest expense for 2024 and 2023.
The decrease in Bank Owned Life Insurance death benefit for the twelve months ended December 31, 2025, compared to the same period in 2024 BOLI, was due to the passing of an employee in 2024. 29 Non-Interest Expense. The following table reflects the various components of non-interest expense for 2025 and 2024.
These increases were partially offset by: 1) the repurchase of approximately 476 thousand shares of its common stock, which reduced equity by $6.1 million and 2) the payment of the annual cash dividend, paid in February to common stockholders of $0.32 per share which was a 10% increase from the prior year dividend amount of $0.29 per share, or $3.3 million.
These increases were partially offset by: (1) the repurchase of approximately 385 thousand shares of the Company’s common stock, which reduced equity by $6.1 million and (2) the payment of the annual cash dividend, paid in February to common stockholders of $0.36 per share which was a 12.5% increase from the prior year dividend amount of $0.32 per share, or $3.3 million.
In addition, there are $2.9 million of commitments for contributions of capital to an SBIC and an investment company at December 31, 2024. These commitments totaled $3.4 million of commitments at December 31, 2023.
In addition, there were $3.2 million of commitments for contributions of capital to an SBIC and an investment company at December 31, 2025. These commitments totaled $2.9 million of commitments at December 31, 2024.
Return on average assets for the twelve months ended December 31, 2024, was 0.76%, compared to 0.71% for the twelve months ended December 31, 2023. The return on average equity was 7.84% for the twelve months ended December 31, 2024, and 7.87% for the comparable period in 2023.
Return on average assets for the twelve months ended December 31, 2025, was 0.82%, compared to 0.76% for the twelve months ended December 31, 2024. The return on average equity was 7.89% for the twelve months ended December 31, 2025, and 7.84% for the comparable period in 2024.
As of December 31, 2023, the Bank has pledged certain of its U.S. Government Agency securities with a carrying value of $0.5 million and mortgage-backed securities with a carrying value of $1.9 million as collateral against specific municipal deposits. As of December 31, 2023, the Bank also has mortgage-backed securities with a carrying value of $0.2 million and U.S.
As of December 31, 2024, the Bank has pledged certain of its U.S. Government Agency securities with a carrying value of $0.3 million and mortgage-backed securities with a carrying value of $1.8 million as collateral against specific municipal deposits.
These instruments include unused commitments for lines of credit, overdraft protection lines of credit and home equity lines of credit, as well as commitments to extend credit. As of December 31, 2024, the Company has approximately $137.0 in unused loan commitments, compared to approximately $210.4 million in unused loan commitments as of December 31, 2023.
These instruments include unused commitments for lines of credit, overdraft protection lines of credit and home equity lines of credit, as well as commitments to extend credit. As of December 31, 2025, the Company had approximately $198.8 in unused loan commitments, compared to approximately $137.0 million in unused loan commitments as of December 31, 2024.
Uninsured deposits at December 31, 2024, were $428.0 million, or 29% of total deposits, and $427.5 million, or 28% of total deposits at December 31, 2023, with the difference being an increase in fully secured government deposits. 46 Federal Home Loan Bank (FHLB) advances and other borrowings.
Uninsured deposits at December 31, 2025, were $478.4 million, or 31% of total deposits, and $428.0 million, or 29% of total deposits at December 31, 2024, with the difference being an increase in fully secured government deposits. 45 Federal Home Loan Bank (FHLB) advances and other borrowings.
We reported net income of $13.75 million for the twelve months ended December 31, 2024, compared to net income of $13.06 million for the twelve months ended December 31, 2023. Diluted earnings per share were $1.34 for the twelve months ended December 31, 2024, compared to $1.25 for the twelve months ended December 31, 2023.
We reported net income of $14.42 million for the twelve months ended December 31, 2025, compared to net income of $13.75 million for the twelve months ended December 31, 2024. Diluted earnings per share were $1.46 for the twelve months ended December 31, 2025, compared to $1.34 for the twelve months ended December 31, 2024.
Uninsured deposits at December 31, 2024, were $428.0 million, or 29% of total deposits, and $427.5 million, or 28% of total deposits at December 31, 2023, with the difference being an increase in fully secured government deposits.
Uninsured deposits at December 31, 2025, were $478.4 million, or 31% of total deposits, and $428.0 million, or 29% of total deposits at December 31, 2024, with the difference being an increase in fully secured government deposits.
On-balance sheet liquidity, collateralized borrowing and uncommitted federal funds availability was $724.8 million, or 273% of uninsured and uncollateralized deposits at December 31, 2024. At December 31, 2023, on-balance sheet liquidity, collateralized borrowing and uncommitted federal funds availability was $673.6 million, or 244% of uninsured and uncollateralized deposits.
On-balance sheet liquidity, collateralized borrowing and uncommitted federal funds availability was $792 million, or 245% of uninsured and uncollateralized deposits at December 31, 2025. At December 31, 2024, on-balance sheet liquidity, collateralized borrowing and uncommitted federal funds availability was $724.8 million, or 273% of uninsured and uncollateralized deposits.
Although $329.6 million of our $350.4 million (94%) CD portfolio will mature within the next 12 months, we have historically retained a majority of our maturing CD’s. In 2024, retail non-maturity interest-bearing accounts were approximately flat with a growth in certificate accounts.
Although $330.2 million of our $347.3 million (95%) CD portfolio will mature within the next 12 months, we have historically retained a majority of our maturing CD’s. In 2024, retail non-maturity interest-bearing accounts were approximately flat with growth in certificate accounts.
A summary of Federal Home Loan Bank (FHLB) advances and other borrowings at December 31, 2024 and December 31, 2023 is as follows: December 31, 2024 December 31, 2023 Stated Maturity Amount Range of Stated Rates Stated Maturity Amount Range of Stated Rates Federal Home Loan Bank advances (1), (2), (3), (4) 2024 $ — — % — % 2024 $ 64,530 — % 5.45 % 2025 5,000 1.45 % 1.45 % 2025 5,000 1.45 % 1.45 % 2028 10,000 3.82 % 3.82 % Federal Home Loan Bank advances $ 5,000 $ 79,530 Other borrowings: Senior notes (5) 2039 $ 12,000 6.75 % 7.75 % 2034 $ 18,083 6.75 % 7.75 % Subordinated notes (6) 2030 $ 15,000 6.00 % 6.00 % 2030 $ 15,000 6.00 % 6.00 % 2032 35,000 4.75 % 4.75 % 2032 35,000 4.75 % 4.75 % $ 50,000 $ 50,000 Unamortized debt issuance costs (394) (618) Total other borrowings $ 61,606 $ 67,465 Totals $ 66,606 $ 146,995 (1) The FHLB advances bear fixed rates, require interest-only monthly payments, and are collateralized by a blanket lien on pre-qualifying first mortgages, home equity lines, multi-family loans and certain other loans which had pledged balances of $1,075,001 and $1,106,267 at December 31, 2024 and 2023, respectively.
A summary of Federal Home Loan Bank (FHLB) advances and other borrowings at December 31, 2025, and December 31, 2024, is as follows: December 31, 2025 December 31, 2024 Stated Maturity Amount Range of Stated Rates Stated Maturity Amount Range of Stated Rates Federal Home Loan Bank advances (1), (2), (3) 2025 $ 0 — % — % 2025 $ 5,000 1.45 % 1.45 % Federal Home Loan Bank advances $ 0 $ 5,000 Other borrowings: Senior notes (4) 2039 $ 12,000 6.00 % 6.75 % 2039 $ 12,000 6.75 % 7.75 % 2040 5,000 6.00 % 6.25 % 0 $ 17,000 $ 12,000 Subordinated notes (5) 2030 $ 0 — % — % 2030 $ 15,000 6.00 % 6.00 % 2032 35,000 4.75 % 4.75 % 2032 35,000 4.75 % 4.75 % $ 35,000 $ 50,000 Unamortized debt issuance costs (196) (394) Total other borrowings $ 51,804 $ 61,606 Totals $ 51,804 $ 66,606 (1) The FHLB advances bear fixed rates, require interest-only monthly payments, and are collateralized by a blanket lien on pre-qualifying first mortgages, home equity lines, multi-family loans and certain other loans which had pledged balances of $1.018 billion and $1.075 billion at December 31, 2025 and 2024, respectively.
The Company utilized a balance sheet optimization strategy in 2024, which resulted in the runoff of non-strategic loan relationship with the proceeds used to reduced more expensive borrowings and wholesale deposits. 24 CRITICAL ACCOUNTING ESTIMATES Our consolidated financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”).
The Company utilized a balance sheet optimization strategy in 2025, which resulted in the runoff of non-strategic loan relationships with the proceeds used to reduce all borrowings at the Bank and reductions in wholesale deposits. 25 CRITICAL ACCOUNTING ESTIMATES Our consolidated financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”).
See the remainder of this section for a more thorough discussion. Unless otherwise stated, all monetary amounts in the tables set forth in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, other than share, per share and capital ratio amounts, are stated in thousands.
Unless otherwise stated, all monetary amounts in the tables (but not the narrative) set forth in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, other than share, per share and capital ratio amounts, are stated in thousands.
The fair market value of the Company’s MSR asset as a percentage of its servicing portfolio at December 31, 2024, and December 31, 2023, were 1.09% and 1.13%, respectively. Intangible Assets. We have intangible assets of $1.0 million at December 31, 2024, compared to $1.7 million at December 31, 2023.
The fair market value of the Company’s MSR asset as a percentage of its servicing portfolio at December 31, 2025, and December 31, 2024, was 0.98% and 1.09%, respectively. Intangible Assets. We had intangible assets of $0.4 million at December 31, 2025, compared to $1.0 million at December 31, 2024.
The decrease in net gains on equity securities for the twelve months ended December 31, 2024, compared to the same period in 2023 is primarily due to the change in valuations of equity securities.
The increase in net gains on equity securities for the twelve months ended December 31, 2025, compared to the same period in 2024, was primarily due to the income recognized on the change in valuations of equity securities.
Government Agencies with a carrying value of $0.4 million pledged as collateral to the Federal Home Loan Bank of Des Moines. Loans. Total loans outstanding, net of deferred loan fees and costs, decreased to $1.37 billion at December 31, 2024, from $1.46 billion at December 31, 2023.
As of December 31, 2024, the Bank also has mortgage-backed securities with a carrying value of $0.5 million pledged as collateral to the Federal Home Loan Bank of Des Moines. Loans. Total loans outstanding, net of deferred loan fees and costs, decreased to $1.34 billion at December 31, 2025, from $1.37 billion at December 31, 2024.
At December 31, 2024, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $424,658 compared to $370,569 as of December 31, 2023. (2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $81,000 and $217,530, during the twelve months ended December 31, 2024 and December 31, 2023, respectively.
At December 31, 2025, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $434 million compared to $425 million as of December 31, 2024. (2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $5.0 million and $81.0 million, during the twelve months ended December 31, 2025 and December 31, 2024, respectively.
December 31, 2024 and Twelve Months Ended December 31, 2023 and Twelve Months Ended ACL - Unfunded Commitments - beginning of period $ 1,250 $ — Cumulative effect of ASU 2016-13 adoption — 1,537 Reversals to ACL - Unfunded Commitments via provision for credit losses charged to operations (916) (287) ACL - Unfunded Commitments - end of period $ 334 $ 1,250 Nonperforming Loans, Potential Problem Loans and Foreclosed Properties.
December 31, 2025 and Twelve Months Ended December 31, 2024 and Twelve Months Ended ACL - Unfunded Commitments - beginning of period $ 334 $ 1,250 Additions (reversals) to ACL - Unfunded Commitments via provision for credit losses charged to operations 156 (916) ACL - Unfunded Commitments - end of period $ 490 $ 334 Nonperforming Loans, Potential Problem Loans and Foreclosed Properties.
Uninsured and uncollateralized deposits were $265.4 million, or 18% of total deposits, at December 31, 2024, and $275.8 million, or 18% of total deposits at December 31, 2023.
Uninsured and uncollateralized deposits were $323.5 million, or 21% of total deposits at December 31, 2025, and $265.4 million, or 18% of total deposits, at December 31, 2024.
Total benefit, i.e., negative provision, for credit losses for the twelve months ended December 31, 2024, was $3.175 million, compared to negative provision of $0.475 million for the twelve months ended December 31, 2023.
Total provision for credit losses for the twelve months ended December 31, 2025, was $1.950 million, compared to negative provision of $3.175 million for the twelve months ended December 31, 2024.
The intangible assets at December 31, 2024, were comprised of core deposit intangible assets arising from 2017 and 2019 acquisitions. Amortization of these intangibles was $0.7 million in 2024. Amortization expense is scheduled to be $0.6 million in 2025 and $0.4 million in 2026. Foreclosed and repossessed assets.
The intangible assets at December 31, 2025, consisted of core deposit intangible assets arising from a 2017 acquisition. Intangible assets associated with a 2019 acquisition became fully amortized during 2025. Amortization of these intangibles was $0.6 million in 2025, and $0.7 million in 2024. Amortization expense is scheduled to be $0.4 million in 2026. Deposits.
The increase in loan fees and services charges for the twelve months ended December 31, 2024, compared to the same period in 2023 is primarily due to higher fees collected due to loan payoffs.
The decrease in loan fees and service charges for the twelve months ended December 31, 2025, compared to the same period in 2024, was primarily due to lower fees collected due to loan payoffs.
Cash and cash equivalents increased from $37.1 million at December 31, 2023, to $50.2 million at December 31, 2024, largely due to an increase in interest-bearing balances. Investment Securities. We manage our securities portfolio to provide liquidity, manage interest rate risk, and enhance income. Our investment portfolio is comprised of securities available-for-sale (“AFS”) and securities held to maturity (“HTM”).
Cash and Cash Equivalents. Cash and cash equivalents increased from $50.2 million at December 31, 2024, to $118.9 million at December 31, 2025, largely due to an increase in interest-bearing balances. Investment Securities. We manage our securities portfolio to provide liquidity, manage interest rate risk, and enhance income.
Actual For Capital Adequacy Purposes To Be Well Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio As of December 31, 2024 Total capital (to risk weighted assets) $ 225,432 15.6 % $ 115,755 > = 8.0 % $ 144,693 > = 10.0 % Tier 1 capital (to risk weighted assets) 207,749 14.4 % 86,816 > = 6.0 % 115,755 > = 8.0 % Common equity tier 1 capital (to risk weighted assets) 207,749 14.4 % 65,112 > = 4.5 % 94,051 > = 6.5 % Tier 1 leverage ratio (to adjusted total assets) 207,749 11.9 % 69,787 > = 4.0 % 87,234 > = 5.0 % As of December 31, 2023 Total capital (to risk weighted assets) $ 228,092 14.6 % $ 124,883 > = 8.0 % $ 156,104 > = 10.0 % Tier 1 capital (to risk weighted assets) 208,726 13.4 % 93,662 > = 6.0 % 124,883 > = 8.0 % Common equity tier 1 capital (to risk weighted assets) 208,726 13.4 % 70,247 > = 4.5 % 101,468 > = 6.5 % Tier 1 leverage ratio (to adjusted total assets) 208,726 11.5 % 72,479 > = 4.0 % 90,599 > = 5.0 % At December 31, 2024, the Bank was categorized as “Well Capitalized” under Prompt Corrective Action Provisions, as determined by the OCC, our primary regulator.
Actual For Capital Adequacy Purposes To Be Well Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio As of December 31, 2025 Total capital (to risk weighted assets) $ 212,898 14.6 % $ 116,492 > = 8.0 % $ 145,615 > = 10.0 % Tier 1 capital (to risk weighted assets) 194,639 13.4 % 87,369 > = 6.0 % 116,492 > = 8.0 % Common equity tier 1 capital (to risk weighted assets) 194,639 13.4 % 65,527 > = 4.5 % 94,650 > = 6.5 % Tier 1 leverage ratio (to adjusted total assets) 194,639 11.3 % 68,711 > = 4.0 % 85,888 > = 5.0 % As of December 31, 2024 Total capital (to risk weighted assets) $ 225,432 15.6 % $ 115,755 > = 8.0 % $ 144,693 > = 10.0 % Tier 1 capital (to risk weighted assets) 207,749 14.4 % 86,816 > = 6.0 % 115,755 > = 8.0 % Common equity tier 1 capital (to risk weighted assets) 207,749 14.4 % 65,112 > = 4.5 % 94,051 > = 6.5 % Tier 1 leverage ratio (to adjusted total assets) 207,749 11.9 % 69,787 > = 4.0 % 87,234 > = 5.0 % At December 31, 2025, the Bank was categorized as “Well Capitalized” under Prompt Corrective Action Provisions, as determined by the OCC, our primary regulator.
Approximately 89% of our total gross loans are secured by real estate. 35 The following table sets forth, as of December 31, 2024 and December 31, 2023 respectively the fixed and adjustable-rate loans in our loan portfolio: December 31, 2024 December 31, 2023 Amount Percent Amount Percent Fixed rate loans: Real estate loans: Commercial/Agricultural real estate $ 426,840 31.2 % $ 457,931 31.3 % Residential mortgage 37,691 2.8 % 44,740 3.1 % Total fixed rate real estate loans 464,531 34.0 % 502,671 34.4 % Non-real estate loans: C&I/Agricultural Operating 107,899 7.9 % 116,193 7.9 % Consumer installment 8,982 0.7 % 12,722 0.9 % Total fixed rate non-real estate loans 116,881 8.6 % 128,915 8.8 % Total fixed rate loans 581,412 42.6 % 631,586 43.2 % Adjustable-rate loans: Real estate loans: Commercial/Agricultural real estate 654,602 47.8 % 714,986 49.0 % Residential mortgage 97,606 7.1 % 87,160 6.0 % Total adjustable-rate real estate loans 752,208 54.9 % 802,146 55.0 % Non-real estate loans: C&I/Agricultural operating 38,758 2.8 % 31,164 2.1 % Consumer installment — — % 1 — % Total adjustable-rate non-real estate loans 38,758 2.8 % 31,165 2.1 % Total adjustable-rate loans 790,966 57.7 % 833,311 57.1 % Gross loans 1,372,378 1,464,897 Unearned net deferred fees and costs and loans in process (2,547) (0.2) % (2,900) (0.2) % Unamortized discount on acquired loans (850) (0.1) % (1,205) (0.1) % Total loans (net of unearned income) 1,368,981 100.0 % 1,460,792 100.0 % Allowance for credit losses (20,549) (22,908) Total loans receivable, net $ 1,348,432 $ 1,437,884 Commercial real estate (“CRE”) lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property or the business conducted on the property securing the loan.
Approximately 89% of our total gross loans are secured by real estate. 35 The following table sets forth, as of December 31, 2025 and December 31, 2024, respectively, the fixed and adjustable-rate loans in our loan portfolio: December 31, 2025 December 31, 2024 Amount Percent Amount Percent Fixed rate loans: Real estate loans: Commercial/Agricultural real estate $ 463,101 34.6 % $ 426,840 31.2 % Residential mortgage 31,210 2.3 % 37,691 2.8 % Total fixed rate real estate loans 494,311 36.9 % 464,531 34.0 % Non-real estate loans: C&I/Agricultural Operating 96,551 7.2 % 107,899 7.9 % Consumer installment 6,221 0.5 % 8,982 0.7 % Total fixed rate non-real estate loans 102,772 7.7 % 116,881 8.6 % Total fixed rate loans 597,083 44.6 % 581,412 42.6 % Adjustable-rate loans: Real estate loans: Commercial/Agricultural real estate 610,598 45.5 % 654,602 47.8 % Residential mortgage 92,554 6.9 % 97,606 7.1 % Total adjustable-rate real estate loans 703,152 52.4 % 752,208 54.9 % Non-real estate loans: C&I/Agricultural operating 42,731 3.2 % 38,758 2.8 % Total adjustable-rate non-real estate loans 42,731 3.2 % 38,758 2.8 % Total adjustable-rate loans 745,883 55.6 % 790,966 57.7 % Gross loans 1,342,966 1,372,378 Unearned net deferred fees and costs and loans in process (2,528) (0.2) % (2,547) (0.2) % Unamortized discount on acquired loans (113) — % (850) (0.1) % Total loans (net of unearned income) 1,340,325 100.0 % 1,368,981 100.0 % Allowance for credit losses (22,401) (20,549) Total loans receivable, net $ 1,317,924 $ 1,348,432 Commercial real estate (“CRE”) lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property or the business conducted on the property securing the loan.
Such taxing authorities may require that changes in the amount of tax expense or the amount of the valuation allowance be recognized when their interpretations differ from those of management, based on their judgments about information available to them at the time of their examinations.
Such taxing authorities may require that changes in the amount of tax expense or the amount of the valuation allowance be recognized when their interpretations differ from those of management, based on their judgments about information available to them at the time of their examinations. 30 BALANCE SHEET ANALYSIS Total assets increased by $33.2 million to $1.78 billion at December 31, 2025, from $1.75 billion at December 31, 2024.
The Company’s planned balance sheet optimization resulted in the runoff of largely non-strategic loans. 34 The following table reflects the composition, or mix, of our loan portfolio at December 31, 2024 and December 31, 2023: December 31, 2024 December 31, 2023 Amount Percent Amount Percent Real Estate Loans: Commercial/Agricultural real estate: Commercial real estate $ 709,018 51.8 % $ 750,531 51.4 % Agricultural real estate 73,130 5.3 % 83,350 5.7 % Multi-family real estate 220,805 16.1 % 228,095 15.6 % Construction and land development 78,489 5.7 % 110,941 7.6 % Residential mortgage: Residential mortgage 132,341 9.7 % 129,021 8.8 % Purchased HELOC loans 2,956 0.2 % 2,880 0.2 % Total real estate loans 1,216,739 88.8 % 1,304,818 89.3 % C&I/Agricultural operating and Consumer installment loans: C&I/Agricultural operating: Commercial and industrial ("C&I") 115,657 8.4 % 121,666 8.3 % Agricultural operating 31,000 2.3 % 25,691 1.8 % Consumer installment: Originated indirect paper 3,970 0.4 % 6,535 0.5 % Other consumer 5,012 0.4 % 6,187 0.4 % Total C&I/Agricultural operating and Consumer installment loans 155,639 11.5 % 160,079 11.0 % Gross loans 1,372,378 100.3 % 1,464,897 100.3 % Unearned net deferred fees and costs and loans in process (2,547) (0.2) % (2,900) (0.2) % Unamortized discount on acquired loans (850) (0.1) % (1,205) (0.1) % Total loans (net of unearned income and deferred expense) 1,368,981 100.0 % 1,460,792 100.0 % Allowance for credit losses (20,549) (22,908) Total loans receivable, net $ 1,348,432 $ 1,437,884 Our loan portfolio is diversified by types of borrowers and industry groups within the market areas that we serve.
In 2025 and 2024, the Company’s planned balance sheet optimization resulted in a reduction in loan balances which focused on the runoff of non-strategic loan relationships. 34 The following table reflects the composition, or mix, of our loan portfolio at December 31, 2025 and December 31, 2024: December 31, 2025 December 31, 2024 Amount Percent Amount Percent Real Estate Loans: Commercial/Agricultural real estate: Commercial real estate $ 683,108 51.0 % $ 709,018 51.8 % Agricultural real estate 69,136 5.2 % 73,130 5.3 % Multi-family real estate 245,688 18.3 % 220,805 16.1 % Construction and land development 75,767 5.6 % 78,489 5.7 % Residential mortgage: Residential mortgage 122,025 9.1 % 132,341 9.7 % Purchased HELOC loans 1,739 0.1 % 2,956 0.2 % Total real estate loans 1,197,463 89.3 % 1,216,739 88.8 % C&I/Agricultural operating and Consumer installment loans: C&I/Agricultural operating: Commercial and industrial ("C&I") 105,907 7.9 % 115,657 8.4 % Agricultural operating 33,375 2.5 % 31,000 2.3 % Consumer installment: Originated indirect paper 2,224 0.2 % 3,970 0.4 % Other consumer 3,997 0.3 % 5,012 0.4 % Total C&I/Agricultural operating and Consumer installment loans 145,503 10.9 % 155,639 11.5 % Gross loans 1,342,966 100.2 % 1,372,378 100.3 % Unearned net deferred fees and costs and loans in process (2,528) (0.2) % (2,547) (0.2) % Unamortized discount on acquired loans (113) — % (850) (0.1) % Total loans (net of unearned income and deferred expense) 1,340,325 100.0 % 1,368,981 100.0 % Allowance for credit losses (22,401) (20,549) Total loans receivable, net $ 1,317,924 $ 1,348,432 Our loan portfolio is diversified by types of borrowers and industry groups within the market areas that we serve.
At December 31, 2024, the deposit portfolio composition was 57% consumer, 28% commercial, 13% public, and 2% wholesale deposits. At December 31, 2023, our deposit portfolio composition was 54% consumer, 28% commercial, 12% public and 6% wholesale deposits.
At December 31, 2025, the deposit portfolio composition was largely unchanged from the prior quarter at 58% consumer, 28% commercial, 12% public, and 2% wholesale deposits. At December 31, 2024, the deposit portfolio composition was 57% consumer, 28% commercial, 13% public, and 2% wholesale deposits.
The following table lists the portfolio characteristics of our major commercial real estate loan portfolio at December 31, 2024: Non-Owner Occupied CRE Owner- Occupied CRE Multi-family CRE Construction and Development CRE Loan Balance Outstanding in Millions $ 471 $ 238 $ 221 $ 78 Number of Loans 746 385 129 91 Average Loan Size in Millions $ 0.6 $ 0.6 $ 1.7 $ 0.9 Approximate Weighted Average LTV 52 % 51 % 62 % 74 % Weighted Average Seasoning in Months 44 41 41 NA Trailing 12 Month Net Charge-Offs 0.00 % 0.00 % 0.00 % 0.00 % Criticized Loans in Millions $ 7.6 $ 4.2 $ 0.0 $ 0.1 Criticized Loans as a Percent of Total 1.6 % 1.7 % 0.0 % 0.1 % 36 The table below lists the above CRE portfolio by geographical location: Non-Owner Occupied CRE Owner- Occupied CRE Multi-family CRE Construction and Development CRE Wisconsin 52 % 79 % 63 % 55 % Minnesota 20 % 17 % 33 % 7 % Other 28 % 4 % 4 % 38 % The following table further disaggregates the composition of our commercial real estate loan portfolio by selected industry components at December 31, 2024: Campground Hotel Restaurant Office Loan Balance Outstanding in Millions $ 139 $ 88 $ 59 $ 28 Number of Loans 68 20 78 71 Average Loan Size in Millions $ 2.0 $ 4.4 $ 0.8 $ 0.4 Approximate Weighted Average LTV 49 % 51 % 48 % 58 % Weighted Average Seasoning in Months 38 48 38 44 Trailing 12 Month Net Charge-Offs 0.00 % (0.04) % 0.00 % 0.00 % Criticized Loans in Millions $ 0.0 $ 4.0 $ 0.0 $ 0.5 Criticized Loans as a Percent of Total 0.0 % 4.6 % 0.1 % 1.8 % The table below lists our CRE portfolio selected industry components by geographical location: Campground Hotel Restaurant Office Wisconsin 21 % 38 % 57 % 83 % Minnesota 0 % 41 % 27 % 8 % Other 79 % 21 % 16 % 9 % 37 Loan amounts, their contractual maturities and weighted average interest rates at December 31, 2024 are shown below.
The following table lists the portfolio characteristics of our major commercial real estate loan portfolio at December 31, 2025: Non-Owner Occupied CRE Owner- Occupied CRE Multi-family CRE Construction and Development CRE Loan Balance Outstanding in Millions $ 443 $ 240 $ 246 $ 76 Number of Loans 719 377 125 84 Average Loan Size in Millions $ 0.6 $ 0.6 $ 2.0 $ 0.9 Approximate Weighted Average LTV 51 % 49 % 61 % 72 % Weighted Average Seasoning in Months 48 48 46 17 Trailing 12 Month Net Charge-Offs 0.00 % 0.00 % 0.00 % 0.00 % Criticized Loans in Millions $ 6.3 $ 19.0 $ 9.0 $ 0.1 Criticized Loans as a Percent of Total 1.4 % 7.9 % 3.7 % 0.1 % 36 The table below lists the above CRE portfolio by geographical location: Non-Owner Occupied CRE Owner- Occupied CRE Multi-family CRE Construction and Development CRE Wisconsin 48 % 79 % 64 % 59 % Minnesota 22 % 15 % 26 % 3 % Other 30 % 6 % 10 % 38 % The following table further disaggregates the composition of our commercial real estate loan portfolio by selected industry components at December 31, 2025: Campground Hotel Restaurant Office Loan Balance Outstanding in Millions $ 149 $ 95 $ 62 $ 32 Number of Loans 69 20 84 71 Average Loan Size in Millions $ 2.2 $ 4.7 $ 0.7 $ 0.5 Approximate Weighted Average LTV 48 % 56 % 48 % 47 % Weighted Average Seasoning in Months 43 46 46 40 Trailing 12 Month Net Charge-Offs 0.00 % 0.00 % 0.00 % 0.00 % Criticized Loans in Millions $ 0.0 $ 3.3 $ 3.3 $ 0.2 Criticized Loans as a Percent of Total 0.0 % 3.5 % 5.3 % 0.5 % The table below lists our CRE portfolio selected industry components by geographical location: Campground Hotel Restaurant Office Wisconsin 16 % 36 % 60 % 83 % Minnesota 0 % 40 % 26 % 9 % Other 84 % 24 % 14 % 8 % 37 Loan amounts, their contractual maturities and weighted average interest rates at December 31, 2025, are shown below.
The accrual of interest income is discontinued according to the following schedules: • Commercial/agricultural real estate loans, past due 90 days or more; • Commercial and industrial/agricultural operating loans past due 90 days or more; • Closed ended consumer installment loans past due 120 days or more; and • Residential mortgage and open ended consumer installment loans past due 180 days or more. 42 The following table identifies the various components of non-performing assets and other balance sheet information as of the dates indicated below and changes in the ACL for the periods then ended: December 31, 2024 and twelve months ended December 31, 2023 and twelve months ended Nonperforming assets: Nonaccrual loans Commercial real estate $ 4,594 $ 10,359 Agricultural real estate 6,222 391 Construction and land development 103 54 Commercial and industrial (“C&I”) 597 — Agricultural operating 793 1,180 Residential mortgage 858 1,167 Consumer installment 1 33 Total nonaccrual loans 13,168 13,184 Accruing loans past due 90 days or more 186 389 Total nonperforming loans (“NPLs”) 13,354 13,573 Other real estate owned 891 1,795 Other collateral owned 24 — Total nonperforming assets (“NPAs”) $ 14,269 $ 15,368 Average outstanding loan balance $ 1,430,631 $ 1,430,035 Loans, end of period $ 1,368,981 $ 1,460,792 Total assets, end of period $ 1,748,519 $ 1,851,391 ACL - Loans, at beginning of period $ 22,908 $ 17,939 Cumulative effect of ASU 2016-13 adoption — 4,706 Loans charged off: Commercial/Agricultural real estate (39) (46) C&I/Agricultural operating (143) — Residential mortgage (4) (78) Consumer installment (35) (36) Total loans charged off (221) (160) Recoveries of loans previously charged off: Commercial/Agricultural real estate 56 489 C&I/Agricultural operating 36 47 Residential mortgage 7 42 Consumer installment 22 33 Total recoveries of loans previously charged off: 121 611 Net loan recoveries/(charge-offs) (“NCOs”) (100) 451 (Reversals)/additions to ACL - Loans via provision for credit losses charged to operations (2,259) (188) ACL - Loans, at end of period $ 20,549 $ 22,908 Ratios: ACL to NCOs (annualized) N/M N/M NCOs (annualized) to average loans (0.01) % 0.03 % ACL to total loans 1.50 % 1.57 % NPLs to total loans 0.98 % 0.93 % NPAs to total assets 0.82 % 0.83 % N/M means not meaningful 43 Nonaccrual Loans Roll Forward Quarter Ended December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Balance, beginning of period $ 15,042 $ 8,352 $ 8,413 $ 13,184 $ 13,456 Additions 1,054 7,486 352 961 538 Charge offs (138) — — — — Transfers to OREO (201) (124) — — (23) Return to accrual status — — — — — Payments received (2,515) (641) (411) (5,767) (781) Other, net (74) (31) (2) 35 (6) Balance, end of period $ 13,168 $ 15,042 $ 8,352 $ 8,413 $ 13,184 Nonaccrual loans remained flat at approximately $13.2 million at both December 31, 2024, and December 31, 2023, with one large loan payoff in the second quarter and other payments received offsetting the addition of a $7.3 million relationship secured by collateral in the forestry services industry.
The accrual of interest income is discontinued according to the following schedules: • Commercial/agricultural real estate loans past due 90 days or more; • Commercial and industrial/agricultural operating loans past due 90 days or more; • Closed ended consumer installment loans past due 120 days or more; and • Residential mortgage and open ended consumer installment loans past due 180 days or more. 41 The following table identifies the various components of non-performing assets and other balance sheet information as of the dates indicated below and changes in the ACL for the periods then ended: December 31, 2025 and twelve months ended December 31, 2024 and twelve months ended Nonperforming assets: Nonaccrual loans Commercial real estate $ 4,652 $ 4,594 Agricultural real estate 464 6,222 Multi-family real estate 8,970 — Construction and land development — 103 Commercial and industrial (“C&I”) 1,282 597 Agricultural operating — 793 Residential mortgage 485 858 Consumer installment — 1 Total nonaccrual loans 15,853 13,168 Accruing loans past due 90 days or more 1 186 Total nonperforming loans (“NPLs”) 15,854 13,354 Other real estate owned 850 891 Other collateral owned 7 24 Total nonperforming assets (“NPAs”) $ 16,711 $ 14,269 Average outstanding loan balance $ 1,347,088 $ 1,430,631 Loans, end of period $ 1,340,325 $ 1,368,981 Total assets, end of period $ 1,781,755 $ 1,748,519 ACL - Loans, at beginning of period $ 20,549 $ 22,908 Loans charged off: Commercial/Agricultural real estate (51) (39) C&I/Agricultural operating (94) (143) Residential mortgage — (4) Consumer installment (22) (35) Total loans charged off (167) (221) Recoveries of loans previously charged off: Commercial/Agricultural real estate 92 56 C&I/Agricultural operating 51 36 Residential mortgage 53 7 Consumer installment 29 22 Total recoveries of loans previously charged off: 225 121 Net loan recoveries/(charge-offs) (“NCOs”) 58 (100) Additions (reversals) to ACL - Loans via provision for credit losses charged to operations 1,794 (2,259) ACL - Loans, at end of period $ 22,401 $ 20,549 Ratios: ACL to NCOs (annualized) N/M N/M NCOs (annualized) to average loans 0.00 % (0.01) % ACL to total loans 1.67 % 1.50 % NPLs to total loans 1.18 % 0.98 % NPAs to total assets 0.94 % 0.82 % N/M means not meaningful 42 Nonaccrual Loans Roll Forward Quarter Ended December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2024 Balance, beginning of period $ 15,614 $ 11,609 $ 13,091 $ 13,168 $ 15,042 Additions 483 9,958 600 694 1,054 Charge offs — (7) (72) (21) (138) Transfers to OREO — — — — (201) Payments received (244) (5,934) (1,992) (752) (2,515) Other, net — (12) (18) 2 (74) Balance, end of period $ 15,853 $ 15,614 $ 11,609 $ 13,091 $ 13,168 Nonaccrual loans increased by $2.7 million to $15.9 million at December 31, 2025, from $13.2 million at December 31, 2024, with a third quarter 2025 multi-family loan addition, partially offset by the payoff of a relationship secured by collateral in the forestry services industry.
At December 31, 2023, our deposit portfolio composition was 54% consumer, 28% commercial, 12% public and 6% wholesale deposits. Uninsured and uncollateralized deposits were $265.4 million, or 18% of total deposits, at December 31, 2024, and $275.8 million, or 18% of total deposits at December 31, 2023.
At December 31, 2024, the deposit portfolio composition was 57% consumer, 28% commercial, 13% public, and 2% wholesale deposits. Uninsured and uncollateralized deposits were $323.5 million, or 21% of total deposits at December 31, 2025, and $265.4 million, or 18% of total deposits, at December 31, 2024.
(b) A $5,000 line of credit, maturing August 1, 2025, that remains undrawn upon. 47 (6) Subordinated notes resulted from the following: (a) The Company’s Subordinated Note Purchase Agreement entered into with certain purchasers in August 2020, which bears a fixed interest rate of 6.00% for five years.
(c) The $5.0 million line of credit was terminated by the Company in October 2025. 46 (5) Subordinated notes resulted from the following: (a) The Company’s Subordinated Note Purchase Agreement entered into with certain purchasers in August 2020, which bore a fixed interest rate of 6.00% for five years.
We continually monitor non-performing loan relationships and will adjust our provision, as necessary, if changing facts and circumstances require a change in the ACL. In addition, a decline in the quality of our loan portfolio as a result of general economic conditions, factors affecting particular borrowers or our market areas, or otherwise, could all affect the adequacy of our ACL.
In addition, a decline in the quality of our loan portfolio as a result of general economic conditions, factors affecting particular borrowers or our market areas, or otherwise, could all affect the adequacy of our ACL.
We also had borrowing capacity of $24.9 million at the Federal Reserve Bank. The Bank maintains $70 million of uncommitted federal funds purchased lines with correspondent banks as part of our contingency funding plan. In addition, the Company has a $5.0 million revolving line of credit which is available as needed for general liquidity purposes.
We also had borrowing capacity of $24.5 million at the Federal Reserve Bank. The Bank maintains $70 million of uncommitted federal funds purchased lines with correspondent banks as part of our contingency funding plan.
Management has determined that the Company neither intends to sell, nor will it be required to sell each debt security before its anticipated recovery, and therefore recovery of cost will occur. 33 The composition of our investment securities portfolio by credit rating as of the periods indicated below was as follows: December 31, December 31, 2024 2023 Available-for-sale securities Amortized Cost Fair Value Amortized Cost Fair Value U.S. government agency $ 94,327 $ 74,910 $ 98,977 $ 81,351 AAA 7,210 7,148 9,695 9,508 AA 19,136 19,077 23,913 23,709 A 5,950 5,620 8,200 7,292 BBB 38,981 36,096 38,959 33,883 Non-rated — — — — Total available for sale securities $ 165,604 $ 142,851 $ 179,744 $ 155,743 December 31, December 31, 2024 2023 Held to maturity securities Amortized Cost Fair Value Amortized Cost Fair Value U.S. government agency $ 85,004 $ 65,144 $ 90,629 $ 72,697 AAA — — — — AA — — — — A 500 478 600 565 Total $ 85,504 $ 65,622 $ 91,229 $ 73,262 At December 31, 2024, the Bank pledged certain of its mortgage-backed securities with a carrying value of $34.0 million as collateral to secure a line of credit with the Federal Reserve Bank.
Management has determined that the Company neither intends to sell, nor will it be required to sell, each debt security before its anticipated recovery, and therefore recovery of cost will occur. 33 The composition of our investment securities portfolio by credit rating as of the periods indicated below was as follows: December 31, December 31, 2025 2024 Available-for-sale securities Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value U.S. government agency $ 93,075 $ 77,458 $ 94,327 $ 74,910 AAA 4,613 4,595 7,210 7,148 AA 11,536 11,369 19,136 19,077 A 2,250 2,097 5,950 5,620 BBB 40,144 38,584 38,981 36,096 Total available-for-sale securities $ 151,618 $ 134,103 $ 165,604 $ 142,851 December 31, December 31, 2025 2024 Held-to-maturity securities Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value U.S. government agency $ 79,810 $ 63,729 $ 85,004 $ 65,144 A 400 388 500 478 Total held-to-maturity securities $ 80,210 $ 64,117 $ 85,504 $ 65,622 At December 31, 2025, the Bank pledged certain of its mortgage-backed securities with a carrying value of $32.1 million as collateral to secure a line of credit with the Federal Reserve Bank.
Income tax expense recorded in the accompanying Consolidated Statements of Operations involves interpretation and application of certain accounting pronouncements and federal and state tax codes and is, therefore, considered a critical accounting policy. We undergo examinations by various taxing authorities.
The reduction in tax rate was larger due to an increase in tax credits, partially due to a 2025 purchased tax credit investment. Income tax expense recorded in the accompanying Consolidated Statements of Operations involves interpretation and application of certain accounting pronouncements and federal and state tax codes. We undergo examinations by various taxing authorities.
This decrease was largely due to losses on equity securities, largely offset by higher gain on sale of loans, due to an approximate equal increase in SBA gains and mortgage gains and an increase in loan fees and service charges primarily due to higher fees collected on loan payoffs.
This increase was largely due to: (1) higher gains on equity securities; (2) higher gain on sale of loans, due to an increase in SBA gains and mortgage gains, with SBA being about two thirds of the increase; partially offset by (3) lower fee income on deposit activity, due to lower activity; and (4) a decrease in loan fees and service charges primarily due to lower fees collected on loan payoffs.
The decrease in other expenses for the twelve months ended December 31, 2024, compared to the same period in 2023 is primarily due to lower loan origination costs due to lower loan volumes in 2024. Income Taxes. Income tax provision was $3.7 million in 2024 compared to $5.9 million for 2023.
The decrease in other expenses for the twelve months ended December 31, 2025, compared to the same period in 2024 was primarily due to lower SBA recourse expense. Income Taxes. Income tax provision was $3.0 million in 2025 compared to $3.7 million for 2024. The 2025 effective tax rate was 17.3% compared to 21.2% for 2024.
Term Extension Loan Class Amortized Cost Basis at December 31, 2024 % of Total Class of Financing Receivables Commercial real estate $ 225 0.03 % Commercial and industrial $ 741 0.64 % Residential mortgage $ 20 0.02 % Other-Than-Insignificant Payment Delay Loan Class Amortized Cost Basis at December 31, 2024 % of Total Class of Financing Receivables Commercial real estate $ 1,182 0.17 % Commercial and industrial $ 822 0.71 % Residential mortgage $ 236 0.18 % Term Extension and Principal Forgiveness Loan Class Amortized Cost Basis at December 31, 2024 % of Total Class of Financing Receivables Other consumer $ 2 0.04 % 44 The table below shows a summary of criticized loans, split by special mention and substandard balances, as of the past five quarter-ends.
Term Extension Loan Class Amortized Cost Basis at December 31, 2025 % of Total Class of Financing Receivables Commercial and industrial $ 48 0.05 % Other-Than-Insignificant Payment Delay Loan Class Amortized Cost Basis at December 31, 2025 % of Total Class of Financing Receivables Commercial real estate $ 4,264 0.63 % Agricultural real estate $ 192 0.28 % Residential mortgage $ 120 0.10 % The table below shows a summary of criticized loans, split by special mention and substandard balances, as of the past five quarter-ends.
Twelve months ended December 31, % Change From prior year 2024 2023 2024 over 2023 Non-interest Expense: Compensation and related benefits $ 22,741 $ 21,106 7.75% Occupancy 5,159 5,431 (5.01)% Data processing 6,530 5,951 9.73% Amortization of intangible assets 715 755 (5.30)% Mortgage servicing rights expense, net 534 615 (13.17)% Advertising, marketing and public relations 793 734 8.04% FDIC premium assessment 798 812 (1.72)% Professional services 1,763 1,524 15.68% (Losses) gains on repossessed assets, net 294 62 374.19% Other 2,979 3,152 (5.49)% Total non-interest expense $ 42,306 $ 40,142 5.39% Non-interest expense (annualized) / Average assets 2.34 % 2.19 % Compensation expense increased for the twelve months ended December 31, 2024, compared to the same period in 2023 largely due to higher incentive compensation and merit increases.
Twelve months ended December 31, % Change From prior year 2025 2024 2025 over 2024 Non-interest Expense: Compensation and related benefits $ 23,875 $ 22,741 4.99% Occupancy 4,975 5,159 (3.57)% Data processing 6,775 6,530 3.75% Amortization of intangible assets 584 715 (18.32)% Mortgage servicing rights expense, net 621 534 16.29% Advertising, marketing and public relations 906 793 14.25% FDIC premium assessment 773 798 (3.13)% Professional services 1,777 1,763 0.79% Losses on repossessed assets, net 33 294 (88.78)% Other 2,617 2,979 (12.15)% Total non-interest expense $ 42,936 $ 42,306 1.49% Non-interest expense (annualized) / Average assets 2.45 % 2.34 % Compensation expense increased for the twelve months ended December 31, 2025, compared to the same period in 2024 largely due to higher incentive compensation and merit increases.
Allowance for Credit Losses - Loans. We maintain an allowance for credit losses to absorb probable and inherent losses in our loan portfolio. The allowance is based on ongoing, quarterly assessments of the estimated lifetime losses in our loan portfolio.
The allowance is based on ongoing, quarterly assessments of the estimated lifetime losses in our loan portfolio.
This irrevocable standby letter of credit (“LOC”) is supported by loan collateral as an alternative to directly pledging investment securities on behalf of a municipal customer as collateral for their interest-bearing deposit balances. The Bank’s current unused borrowing capacity, supported by loan collateral, was approximately $424.7 million at December 31, 2024.
The Bank has an irrevocable Standby Letter of Credit Master Reimbursement Agreement with the Federal Home Loan Bank. This irrevocable standby letter of credit (“LOC”) is supported by loan collateral as an alternative to directly pledging investment securities on behalf of a municipal customer as collateral for their interest-bearing deposit balances.
Total stockholders’ equity was $179.1 million at December 31, 2024, compared to $173.3 million at December 31, 2023. The increase in stockholders’ equity included the Company’s net income of $13.8 million, a decrease in the unrealized loss on available-for-sale securities of $0.9 million, net of tax, due to lower interest rates and restricted stock amortization of $0.6 million.
The increase in stockholders’ equity included the Company’s net income of $14.4 million and a decrease in the unrealized loss on available-for-sale securities of $3.9 million, net of tax, due to lower interest rates.
Securities held to maturity decreased to $85.5 million at December 31, 2024, compared to $91.2 million at December 31, 2023. The decrease was largely due to principal repayments. The unrealized loss on the held to maturity portfolio increased by $1.9 million during the year to $19.8 million at December 31, 2024.
The decrease was largely due to principal repayments. The unrecognized loss on the held to maturity portfolio decreased by $3.8 million during the year to $16.1 million at December 31, 2025.
The allowance for loan losses, prior to the ASU 2016-13 transition, was $17.9 million at December 31, 2022, representing 1.27% of loans receivable. 39 40 Allowance for Credit Losses - Loans Roll Forward (in thousands, except ratios) Twelve Months Ended December 31, 2024 December 31, 2023 Allowance for Credit Losses (“ACL”) ACL - Loans, at beginning of period $ 22,908 $ 17,939 Cumulative effect of ASU 2016-13 adoption — 4,706 Loans charged off: Commercial/Agricultural real estate (39) (46) C&I/Agricultural operating (143) — Residential mortgage (4) (78) Consumer installment (35) (36) Total loans charged off (221) (160) Recoveries of loans previously charged off: Commercial/Agricultural real estate 56 489 C&I/Agricultural operating 36 47 Residential mortgage 7 42 Consumer installment 22 33 Total recoveries of loans previously charged off: 121 611 Net loan recoveries/(charge-offs) (“NCOs”) (100) 451 (Reversals)/additions to ACL - Loans via provision for credit losses charged to operations (2,259) (188) ACL - Loans, at end of period $ 20,549 $ 22,908 Average outstanding loan balance $ 1,430,631 $ 1,430,035 Ratios: NCOs (annualized) to average loans 0.01 % (0.03) % Allowance for Credit Losses - Loans Activity by Segment (in thousands, except ratios) Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Total Twelve months ended December 31, 2024 Allowance for Credit Losses - Loans: ACL - Loans, at beginning of period $ 18,784 $ 1,105 $ 2,744 $ 275 $ 22,908 Charge-offs (39) (143) (4) (35) (221) Recoveries 56 36 7 22 121 (Reversals)/additions to ACL - Loans via provision for credit losses charged to operations (2,285) 332 (258) (48) (2,259) ACL - Loans, at end of period $ 16,516 $ 1,330 $ 2,489 $ 214 $ 20,549 Allowance for Credit Losses - Loans to Percentage (in thousands, except ratios) December 31, 2024 December 31, 2023 Loans, end of period $ 1,368,981 $ 1,460,792 ACL - Loans $ 20,549 $ 22,908 ACL - Loans to loans, end of period 1.50 % 1.57 % 41 Allowance for Credit Losses - Unfunded Commitments: (in thousands) In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $0.334 million at December 31, 2024 and $1.250 million at December 31, 2023, classified in other liabilities on the consolidated balance sheets.
The Allowance for Credit Losses - Unfunded Commitments on off-balance sheet exposures is included in other liabilities on the consolidated balance sheet. 39 Allowance for Credit Losses - Loans (in thousands, except ratios) Twelve Months Ended December 31, 2025 December 31, 2024 Allowance for Credit Losses (“ACL”) ACL - Loans, at beginning of period $ 20,549 $ 22,908 Loans charged off: Commercial/Agricultural real estate (51) (39) C&I/Agricultural operating (94) (143) Residential mortgage — (4) Consumer installment (22) (35) Total loans charged off (167) (221) Recoveries of loans previously charged off: Commercial/Agricultural real estate 92 56 C&I/Agricultural operating 51 36 Residential mortgage 53 7 Consumer installment 29 22 Total recoveries of loans previously charged off: 225 121 Net loan recoveries/(charge-offs) (“NCOs”) 58 (100) Additions (reversals) to ACL - Loans via provision for credit losses charged to operations 1,794 (2,259) ACL - Loans, at end of period $ 22,401 $ 20,549 Average outstanding loan balance $ 1,347,088 $ 1,430,631 Ratios: NCOs (annualized) to average loans 0.00 % (0.01) % Allowance for Credit Losses - Loans Activity by Segment (in thousands, except ratios) Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Total Twelve months ended December 31, 2025 Allowance for Credit Losses - Loans: ACL - Loans, at beginning of period $ 16,516 $ 1,330 $ 2,489 $ 214 20,549 Charge-offs (51) (94) — (22) (167) Recoveries 92 51 53 29 225 Additions (reversals) to ACL - Loans via provision for credit losses charged to operations 1,097 1,071 (312) (62) 1,794 ACL - Loans, at end of period $ 17,654 $ 2,358 $ 2,230 $ 159 $ 22,401 Allowance for Credit Losses - Loans Percentage (in thousands, except ratios) December 31, 2025 December 31, 2024 Loans, end of period $ 1,340,325 $ 1,368,981 ACL - Loans $ 22,401 $ 20,549 ACL - Loans as a percentage of loans, end of period 1.67 % 1.50 % 40 Allowance for Credit Losses - Unfunded Commitments: (in thousands) In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $0.490 million at December 31, 2025, and $0.334 million at December 31, 2024, classified in other liabilities on the consolidated balance sheets.
Twelve months ended December 31, 2024 Twelve months ended December 31, 2023 Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Average interest earning assets: Cash and cash equivalents $ 20,864 $ 1,150 5.51 % $ 18,469 $ 1,010 5.47 % Loans receivable 1,430,631 79,738 5.57 % 1,430,035 73,577 5.15 % Interest bearing deposits — — — % 63 1 1.59 % Investment securities 238,851 7,977 3.34 % 257,020 8,606 3.35 % Other investments 12,816 750 5.85 % 16,274 1,054 6.48 % Total interest earning assets $ 1,703,162 $ 89,615 5.26 % $ 1,721,861 $ 84,248 4.89 % Average interest bearing liabilities: Savings accounts $ 171,069 $ 1,684 0.98 % $ 200,087 $ 1,427 0.71 % Demand deposits 353,107 8,083 2.29 % 359,866 6,727 1.87 % Money market accounts 371,909 11,725 3.15 % 306,020 6,976 2.28 % CD’s 366,634 16,493 4.50 % 317,376 10,619 3.35 % Total deposits $ 1,262,719 $ 37,985 3.01 % $ 1,183,349 $ 25,749 2.18 % FHLB advances and other borrowings 99,731 5,156 5.17 % 208,373 10,150 4.87 % Total interest bearing liabilities $ 1,362,450 $ 43,141 3.17 % $ 1,391,722 $ 35,899 2.58 % Net interest income $ 46,474 $ 48,349 Interest rate spread 2.09 % 2.31 % Net interest margin 2.73 % 2.81 % Average interest earning assets to average interest bearing liabilities 1.25 1.24 27 Rate/Volume Analysis.
Twelve months ended December 31, 2025 Twelve months ended December 31, 2024 Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Average interest earning assets: Cash and cash equivalents $ 59,930 $ 2,553 4.26 % $ 20,864 $ 1,150 5.51 % Loans receivable 1,347,088 77,500 5.75 % 1,430,631 79,738 5.57 % Investment securities 222,528 7,020 3.15 % 238,851 7,977 3.34 % Other investments 12,415 557 4.49 % 12,816 750 5.85 % Total interest earning assets $ 1,641,961 $ 87,630 5.34 % $ 1,703,162 $ 89,615 5.26 % Average interest bearing liabilities: Savings accounts $ 159,860 $ 1,335 0.84 % $ 171,069 $ 1,684 0.98 % Demand deposits 372,972 7,876 2.11 % 353,107 8,083 2.29 % Money market accounts 364,727 10,071 2.76 % 371,909 11,725 3.15 % CD’s 343,311 13,820 4.03 % 366,634 16,493 4.50 % Total deposits $ 1,240,870 $ 33,102 2.67 % $ 1,262,719 $ 37,985 3.01 % FHLB advances and other borrowings 57,890 3,344 5.78 % 99,731 5,156 5.17 % Total interest bearing liabilities $ 1,298,760 $ 36,446 2.81 % $ 1,362,450 $ 43,141 3.17 % Net interest income $ 51,184 $ 46,474 Interest rate spread 2.53 % 2.09 % Net interest margin 3.12 % 2.73 % Average interest earning assets to average interest bearing liabilities 1.26 1.25 27 Rate/Volume Analysis.
Twelve months ended December 31, Change from prior year 2024 2023 2024 over 2023 Non-interest Income: Service charges on deposit accounts $ 1,924 $ 1,949 (1.28)% Interchange income 2,247 2,324 (3.31)% Loan servicing income 2,271 2,218 2.39% Gain on sale of loans 2,216 1,692 30.97% Loan fees and service charges 996 432 130.56% Net realized gains on debt securities — 12 (100.00)% Net (losses) gains on equity securities (856) 447 (291.50)% Bank Owned Life Insurance (BOLI) death benefit 184 — N/M Other 1,125 1,176 (4.34)% Total non-interest income $ 10,107 $ 10,250 (1.40)% N/M means not meaningful The increase in gain on sale of loans for the twelve months ended December 31, 2024, compared to the same period in 2023 is due to an approximately equal increase in SBA loans sold and higher mortgage gains.
Twelve months ended December 31, Change from prior year 2025 2024 2025 over 2024 Non-interest Income: Service charges on deposit accounts $ 1,763 $ 1,924 (8.37)% Interchange income 2,186 2,247 (2.71)% Loan servicing income 2,366 2,271 4.18% Gain on sale of loans 2,925 2,216 31.99% Loan fees and service charges 676 996 (32.13)% Net gains (losses) on equity securities 234 (856) 127.34% Bank Owned Life Insurance (BOLI) death benefit — 184 N/M Other 993 1,125 (11.73)% Total non-interest income $ 11,143 $ 10,107 10.25% N/M means not meaningful The increase in gain on sale of loans for the twelve months ended December 31, 2025, compared to the same period in 2024 was split between an increase in SBA loans sold and higher mortgage gains, with about two-thirds of the increase due to higher SBA loans sold.
Actual For Capital Adequacy Purposes Amount Ratio Amount Ratio As of December 31, 2024 Total capital (to risk weighted assets) $ 232,926 16.1 % $ 115,914 > = 8.0 % Tier 1 capital (to risk weighted assets) 165,243 11.4 % 86,936 > = 6.0 % Common equity tier 1 capital (to risk weighted assets) 165,243 11.4 % 65,202 > = 4.5 % Tier 1 leverage ratio (to adjusted total assets) 165,243 9.5 % 69,867 > = 4.0 % As of December 31, 2023 Total capital (to risk weighted assets) $ 230,160 14.7 % $ 124,883 > = 8.0 % Tier 1 capital (to risk weighted assets) 160,794 10.3 % 93,662 > = 6.0 % Common equity tier 1 capital (to risk weighted assets) 160,794 10.3 % 70,247 > = 4.5 % Tier 1 leverage ratio (to adjusted total assets) 160,794 8.9 % 72,479 > = 4.0 % 50 Selected Quarterly Financial Data The following is selected financial data summarizing the results of operations for each quarter as of the periods indicated below: Year ended December 31, 2024: March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 Interest dividend income $ 22,679 $ 22,463 $ 22,512 $ 21,961 Interest expense 10,774 10,887 11,227 10,253 Net interest income before provision for credit losses 11,905 11,576 11,285 11,708 Provision for credit losses (800) (1,525) (400) (450) Net interest income after provision for credit losses 12,705 13,101 11,685 12,158 Non-interest income 3,264 1,913 2,921 2,009 Non-interest expense 10,777 10,299 10,421 10,809 Income before provision for income taxes 5,192 4,715 4,185 3,358 Provision for income taxes 1,104 1,040 899 656 Net income attributable to common stockholders $ 4,088 $ 3,675 $ 3,286 $ 2,702 Basic earnings per share $ 0.39 $ 0.35 $ 0.32 $ 0.27 Diluted earnings per share $ 0.39 $ 0.35 $ 0.32 $ 0.27 Cash dividends paid $ 0.32 $ — $ — $ — Year ended December 31, 2023: March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 Interest dividend income $ 19,673 $ 20,777 $ 21,772 $ 22,026 Interest expense 6,878 9,091 9,651 10,279 Net interest income before provision for loan losses 12,795 11,686 12,121 11,747 Provision for loan losses 50 450 (325) (650) Net interest income after provision for loan losses 12,745 11,236 12,446 12,397 Non-interest income 2,292 2,913 2,565 2,480 Non-interest expense 10,121 9,846 9,969 10,206 Income before provision for income taxes 4,916 4,303 5,042 4,671 Provision for income taxes 1,254 1,097 2,544 978 Net income $ 3,662 $ 3,206 $ 2,498 $ 3,693 Basic earnings per share $ 0.35 $ 0.31 $ 0.24 $ 0.35 Diluted earnings per share $ 0.35 $ 0.31 $ 0.24 $ 0.35 Cash dividends paid $ 0.29 $ — $ — $ —
Actual For Capital Adequacy Purposes Amount Ratio Amount Ratio As of December 31, 2025 Total capital (to risk weighted assets) $ 222,910 15.3 % $ 116,686 > = 8.0 % Tier 1 capital (to risk weighted assets) 169,621 11.6 % 87,514 > = 6.0 % Common equity tier 1 capital (to risk weighted assets) 169,621 11.6 % 65,636 > = 4.5 % Tier 1 leverage ratio (to adjusted total assets) 169,621 9.9 % 68,806 > = 4.0 % As of December 31, 2024 Total capital (to risk weighted assets) $ 232,926 16.1 % $ 115,914 > = 8.0 % Tier 1 capital (to risk weighted assets) 165,243 11.4 % 86,936 > = 6.0 % Common equity tier 1 capital (to risk weighted assets) 165,243 11.4 % 65,202 > = 4.5 % Tier 1 leverage ratio (to adjusted total assets) 165,243 9.5 % 69,867 > = 4.0 % 49 Selected Quarterly Financial Data The following is selected financial data summarizing the results of operations for each quarter as of the periods indicated below: Year ended December 31, 2025: March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025 Interest and dividend income $ 21,103 $ 22,502 $ 22,254 $ 21,771 Interest expense 9,509 9,191 9,040 8,706 Net interest income before provision for credit losses 11,594 13,311 13,214 13,065 (Provision reversal) provision for credit losses (250) 1,350 650 200 Net interest income after provision for credit losses 11,844 11,961 12,564 12,865 Non-interest income 2,593 2,836 3,022 2,692 Non-interest expense 10,463 10,750 11,051 10,672 Income before provision for income taxes 3,974 4,047 4,535 4,885 Provision for income taxes 777 777 853 614 Net income attributable to common stockholders $ 3,197 $ 3,270 $ 3,682 $ 4,271 Basic earnings per share $ 0.32 $ 0.33 $ 0.37 $ 0.44 Diluted earnings per share $ 0.32 $ 0.33 $ 0.37 $ 0.44 Cash dividends paid $ 0.36 $ — $ — $ — Year ended December 31, 2024: March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 Interest and dividend income $ 22,679 $ 22,463 $ 22,512 $ 21,961 Interest expense 10,774 10,887 11,227 10,253 Net interest income before provision for credit losses 11,905 11,576 11,285 11,708 Provision reversal for credit losses (800) (1,525) (400) (450) Net interest income after provision for credit losses 12,705 13,101 11,685 12,158 Non-interest income 3,264 1,913 2,921 2,009 Non-interest expense 10,777 10,299 10,421 10,809 Income before provision for income taxes 5,192 4,715 4,185 3,358 Provision for income taxes 1,104 1,040 899 656 Net income attributable to common stockholders $ 4,088 $ 3,675 $ 3,286 $ 2,702 Basic earnings per share $ 0.39 $ 0.35 $ 0.32 $ 0.27 Diluted earnings per share $ 0.39 $ 0.35 $ 0.32 $ 0.27 Cash dividends paid $ 0.32 $ — $ — $ —
(3) The weighted-average interest rates on FHLB borrowings, with maturities less than twelve months, outstanding as of December 31, 2024 and December 31, 2023 were 1.45% and 4.16%, respectively. (4) In June 2024, the FHLB called the $10,000, 3.82% advance maturing in 2028.
(3) There were no FHLB borrowings outstanding as of December 31, 2025. The weighted-average interest rates on FHLB borrowings, with maturities less than twelve months, outstanding as of December 31, 2024 was 1.45%.
The following table shows interest income from average interest earning assets, expressed in dollars and yields, and interest expense on average interest bearing liabilities, expressed in dollars and rates.
The increase in the net interest margin was largely due to lower liability costs of 0.36%. Average Balances, Net Interest Income, Yields Earned and Rates Paid. The following table shows interest income from average interest earning assets, expressed in dollars and yields, and interest expense on average interest bearing liabilities, expressed in dollars and rates.
Non-interest expense increased approximately 5% or $2.2 million primarily due to a $1.6 million increase in compensation due to higher incentive compensation and merit increases. When comparing year-over-year results, changes in net interest income, provision for credit losses, non-interest income and non-interest expense are primarily due to the items discussed above.
When comparing year-over-year results, changes in net interest income, provision for credit losses, non-interest income and non-interest expense are primarily due to the items discussed above. See the remainder of this section for a more thorough discussion.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe percent change in net interest income over one year horizon at December 31, 2024 compared to December 31, 2023 is largely due to the impact of a 100 basis point reduction in short-term interest rates in the third and fourth quarter with an increase of approximately 70 basis points in the ten year Treasury rate at December 31, 2024 compared to December 31, 2023, which results in a shifting in results in the +300bp (similar to +2 and 200bp (similar to +300bp) and -200bp scenarios (similar to -200bp)).
Biggest changeThe yearly changes in both the Economic Value of Equity and changes in Interest Income tables at December 31, 2025, from December 31, 2024, is largely due to the impact of more loans repricing in 2026 than in 2025 and the impact of the 75 basis point reduction in short-term interest rates in 2025, with a decrease of approximately 40 basis points in the ten year Treasury rate at December 31, 2025, compared to December 31, 2024.
In monitoring interest rate risk, we continually analyze and manage assets and liabilities based on their payment streams and interest rates, the timing of their maturities, and their sensitivity to actual or potential changes in market interest rates. 51 In order to manage the potential for adverse effects of material and prolonged increases in interest rates on our results of operations, we adopted asset and liability management policies to better align the maturities and re-pricing terms of our interest earning assets and interest-bearing liabilities.
In monitoring interest rate risk, we continually analyze and manage assets and liabilities based on their payment streams and interest rates, the timing of their maturities, and their sensitivity to actual or potential changes in market interest rates. 50 In order to manage the potential for adverse effects of material and prolonged increases in interest rates on our results of operations, we adopted asset and liability management policies to better align the maturities and re-pricing terms of our interest earning assets and interest-bearing liabilities.
At times, depending on the level of general interest rates, the relationship between long- and short-term interest rates, market conditions and competitive factors, the ALCO may determine to increase the Bank’s interest rate risk position somewhat in order to maintain or improve its net interest margin. 52 The following table sets forth, at December 31, 2024 and December 31, 2023 an analysis of our interest rate risk as measured by the estimated changes in Economic Value of Equity (“EVE”) resulting from an immediate and permanent shift in the yield curve (up 300 basis points and down 200 basis points).
At times, depending on the level of general interest rates, the relationship between long- and short-term interest rates, market conditions and competitive factors, the ALCO may determine to increase the Bank’s interest rate risk position somewhat in order to maintain or improve its net interest margin. 51 The following table sets forth, at December 31, 2025 and December 31, 2024, an analysis of our interest rate risk as measured by the estimated changes in Economic Value of Equity (“EVE”) resulting from an immediate and permanent shift in the yield curve (up 300 basis points and down 200 basis points).
The table below presents our projected change in net interest income for the various rate shock levels at December 31, 2024, and December 31, 2023.
The table below presents our projected change in net interest income for the various rate shock levels at December 31, 2025, and December 31, 2024.
Percent Change in Net Interest Income Over One Year Horizon Change in Interest Rates in Basis Points (“bp”) Rate Shock in Rates (1) At December 31, 2024 At December 31, 2023 +300 bp (8)% (13)% +200 bp (5)% (8)% +100 bp (3)% (4)% -100 bp 2% 4% -200 bp 3% 7% - (1) Assumes an immediate and parallel shift in the yield curve at all maturities.
Percent Change in Net Interest Income Over One Year Horizon Change in Interest Rates in Basis Points (“bp”) Rate Shock in Rates (1) At December 31, 2025 At December 31, 2024 +300 bp (4)% (8)% +200 bp (2)% (5)% +100 bp (1)% (3)% -100 bp (1)% 2% -200 bp (1)% 3% - (1) Assumes an immediate and parallel shift in the yield curve at all maturities.
Percent Change in Economic Value of Equity (EVE) Change in Interest Rates in Basis Points (“bp”) Rate Shock in Rates (1) At December 31, 2024 At December 31, 2023 +300 bp 2% 0% +200 bp 2% 0% +100 bp 1% 0% -100 bp (1)% 0% -200 bp (4)% (2)% (1) Assumes an immediate and parallel shift in the yield curve at all maturities.
Percent Change in Economic Value of Equity (EVE) Change in Interest Rates in Basis Points (“bp”) Rate Shock in Rates (1) At December 31, 2025 At December 31, 2024 +300 bp 6% 2% +200 bp 4% 2% +100 bp 2% 1% -100 bp (4)% (1)% -200 bp (8)% (4)% (1) Assumes an immediate and parallel shift in the yield curve at all maturities.
The assumptions used to measure and assess interest rate risk include interest rates, loan prepayment rates, deposit decay (runoff) rates, and the market values of certain assets under differing interest rate scenarios. Actual values may differ from those projections set forth above should market conditions vary from the assumptions used in preparing the analysis.
Note: The table above may not be indicative of future results. The assumptions used to measure and assess interest rate risk include interest rates, loan prepayment rates, deposit decay (runoff) rates, and the market values of certain assets under differing interest rate scenarios.
Further, the computations do not contemplate any actions we may undertake in response to changes in interest rates. 53
Actual values may differ from those projections set forth above should market conditions vary from the assumptions used in preparing the analysis. Further, the computations do not contemplate any actions we may undertake in response to changes in interest rates. 52
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Note: The table above may not be indicative of future results.

Other CZWI 10-K year-over-year comparisons