10q10k10q10k.net

What changed in First Western Financial Inc's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of First Western Financial 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.

+338 added−424 removedSource: 10-K (2026-02-27) vs 10-K (2025-03-07)

Top changes in First Western Financial Inc's 2025 10-K

338 paragraphs added · 424 removed · 279 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

89 edited+9 added−22 removed253 unchanged
Biggest changeIn reviewing applications seeking approval of merger and acquisition transactions, the bank regulatory authorities generally consider, among other things, the competitive effect and public benefits of the transactions, the financial and managerial resources and future prospects of the combined organization (including the capital position of the combined organization), the applicant’s performance record under the Community Reinvestment Act, (see the section captioned "Community Reinvestment Act" included below in this item), fair housing laws and the effectiveness of the subject organizations in combating money laundering activities.
Biggest changeThe BHC Act requires every bank holding company to obtain the prior approval of the Federal Reserve before: (i) acquiring more than 5% of the voting stock of any bank or other bank holding company; (ii) acquiring all or substantially all of the assets of any bank or bank holding company; or (iii) merging or consolidating with any other bank holding company. 19 Table of Contents In reviewing applications seeking approval of merger and acquisition transactions, the bank regulatory authorities generally consider, among other things, the competitive effect and public benefits of the transactions, the financial and managerial resources and future prospects of the combined organization (including the capital position of the combined organization), the applicant’s performance record under the Community Reinvestment Act, (see the section captioned "Community Reinvestment Act" included below in this item), fair housing laws and the effectiveness of the subject organizations in combating money laundering activities.
As a bank holding company, we are subject to inspection, examination, supervision, and regulation by the Board of Governors of the Federal Reserve System (the "Federal Reserve"). The Bank, which is our subsidiary, is a Colorado-chartered commercial bank and is not a member of the Federal Reserve System (a "state nonmember bank").
As a bank holding company, we are subject to inspection, examination, supervision, and regulation by the Board of Governors of the Federal Reserve System (Federal Reserve). The Bank, which is our subsidiary, is a Colorado-chartered commercial bank and is not a member of the Federal Reserve System (a "state nonmember bank").
The Company’s earnings and activities are affected by legislation, by regulations and by local legislative and administrative bodies and decisions of courts in the jurisdictions in which we conduct business. These include limitations on the ability of the Bank to pay dividends to the Company and the Company’s ability to pay dividends to its shareholders.
Dividends. The Company’s earnings and activities are affected by legislation, by regulations and by local legislative and administrative bodies and decisions of courts in the jurisdictions in which we conduct business. These include limitations on the ability of the Bank to pay dividends to the Company and the Company’s ability to pay dividends to its shareholders.
In accordance with the Gramm-Leach-Bliley Act of 1999 (the "GLB Act"), federal banking regulators adopted rules that limit the ability of banks and other financial institutions to disclose nonpublic information about consumers to nonaffiliated third parties.
In accordance with the Gramm-Leach-Bliley Act of 1999 (GLB Act), federal banking regulators adopted rules that limit the ability of banks and other financial institutions to disclose nonpublic information about consumers to nonaffiliated third parties.
Under federal law, including the Bank Secrecy Act and Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the "USA PATRIOT Act"), certain types of financial institutions, including insured depository institutions, must maintain anti-money laundering programs that include established internal policies, procedures and controls; a designated compliance officer; an ongoing training program; and testing of the program by an independent audit function.
Under federal law, including the Bank Secrecy Act and Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), certain types of financial institutions, including insured depository institutions, must maintain anti-money laundering programs that include established internal policies, procedures and controls; a designated compliance officer; an ongoing training program; and testing of the program by an independent audit function.
Other areas of current CFPB focus include consumer protections for prepaid cards, payday lending, debt collection, overdraft services and privacy notices. The CFPB has been particularly active in issuing rules and guidelines concerning residential mortgage lending and servicing, issuing numerous rules and guidance related to residential mortgages.
Other areas of CFPB focus include consumer protections for prepaid cards, payday lending, debt collection, overdraft services and privacy notices. The CFPB has been particularly active in issuing rules and guidelines concerning residential mortgage lending and servicing, issuing numerous rules and guidance related to residential mortgages.
The Company’s CRE concentrations are discussed in the "Risk Factors" section below. 26 Table of Contents Interstate Banking and Branching Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1999 (the "Riegle-Neal Act"), a bank holding company may acquire banks in states other than its home state, subject to any state requirement that the bank has been organized and operating for a minimum period of time, not to exceed five years, and to certain deposit market-share limitations.
The Company’s CRE concentrations are discussed in the "Risk Factors" section below. 25 Table of Contents Interstate Banking and Branching Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1999 (Riegle-Neal Act), a bank holding company may acquire banks in states other than its home state, subject to any state requirement that the bank has been organized and operating for a minimum period of time, not to exceed five years, and to certain deposit market-share limitations.
For example, FDIC regulations provide that higher capital may be required to take adequate account of, among other things, interest rate risk and the risks posed by concentrations of credit, nontraditional activities or securities trading activities. As of December 31, 2024 an d 2023, the Bank exceeded all regulatory minimum capital requirements. Prompt Corrective Regulatory Action.
For example, FDIC regulations provide that higher capital may be required to take adequate account of, among other things, interest rate risk and the risks posed by concentrations of credit, nontraditional activities or securities trading activities. As of December 31, 2025 an d 2024, the Bank exceeded all regulatory minimum capital requirements. Prompt Corrective Regulatory Action.
"Critically undercapitalized" institutions are subject to the appointment of a receiver or conservator. As of December 31, 2024 and 2023, the Bank qualified as "well capitalized" under the prompt corrective action rules. Deposit Insurance Assessments. All of a depositor’s accounts at an insured bank, including all noninterest-bearing transaction accounts, are insured by the FDIC up to $250,000.
"Critically undercapitalized" institutions are subject to the appointment of a receiver or conservator. As of December 31, 2025 and 2024, the Bank qualified as "well capitalized" under the prompt corrective action rules. Deposit Insurance Assessments. All of a depositor’s accounts at an insured bank, including all noninterest-bearing transaction accounts, are insured by the FDIC up to $250,000.
As of December 31, 2024, management believes the allowance for credit losses is adequate to absorb losses in our loan portfolio. Sound risk management practices and appropriate levels of capital are essential elements of the commercial real estate lending program. Concentrations of commercial real estate exposures add a dimension of risk that compounds the risk inherent in individual loans.
As of December 31, 2025, management believes the allowance for credit losses is adequate to absorb losses in our loan portfolio. Sound risk management practices and appropriate levels of capital are essential elements of the commercial real estate lending program. Concentrations of commercial real estate exposures add a dimension of risk that compounds the risk inherent in individual loans.
These rules require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to a nonaffiliated third party. The privacy provisions of the GLB Act affect how consumer information is transmitted through diversified financial companies and conveyed to outside vendors. 25 Table of Contents Anti-Money Laundering.
These rules require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to a nonaffiliated third party. The privacy provisions of the GLB Act affect how consumer information is transmitted through diversified financial companies and conveyed to outside vendors. 24 Table of Contents Anti-Money Laundering.
We employ experienced banking and business development teams who provide superior client service, value-add lending solutions and competitive pricing to market our lending products and services. 7 Table of Contents As of December 31, 2024, our loan portfolio contained a balanced and diverse mix of loans, as shown below: Gross Loans (1) (1) Gross loans excludes $7.3 million in consumer and other loans acc ounted for under the fair value option.
We employ experienced banking and business development teams who provide superior client service, value-add lending solutions and competitive pricing to market our lending products and services. 7 Table of Contents As of December 31, 2025, our loan portfolio contained a balanced and diverse mix of loans, as shown below: Gross Loans (1) (1) Gross loans excludes $3.2 million in consumer and other loans acc ounted for under the fair value option.
We deliver our services though our twenty local boutique private trust bank offices, loan production offices, and trust offices. This allows us to use multi-discipline sales and client service teams, in-market, to ensure we are meeting each client’s comprehensive set of needs.
We deliver our services though our nineteen local boutique private trust bank offices, loan production offices, and trust offices. This allows us to use multi-discipline sales and client service teams, in-market, to ensure we are meeting each client’s comprehensive set of needs.
Under the FDIC’s prompt corrective action regulations, an institutions capitalization is deemed to be as follows: • "Well capitalized" if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a CET1 risk-based capital ratio of 6.5% or greater and a leverage capital ratio of 5.0% or greater. • "Adequately capitalized" if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a CET1 risk-based capital ratio of 4.5% or greater and a leverage capital ratio of 4.0% or greater. • "Undercapitalized" if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a CET1 risk-based capital ratio of less than 4.5% or a leverage capital ratio of less than 4.0%. • "Significantly undercapitalized" if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a CET1 capital ratio of less than 3.0% or a leverage capital ratio of less than 3.0%. • "Critically undercapitalized" if it has a ratio of tangible equity to total assets that is equal to or less than 2.0%.
Under the FDIC’s prompt corrective action regulations, an institutions capitalization is deemed to be as follows: • "Well capitalized" if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a CET1 risk-based capital ratio of 6.5% or greater and a leverage capital ratio of 5.0% or greater. • "Adequately capitalized" if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a CET1 risk-based capital ratio of 4.5% or greater and a leverage capital ratio of 4.0% or greater. • "Undercapitalized" if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a CET1 risk-based capital ratio of less than 4.5% or a leverage capital ratio of less than 4.0%. • "Significantly undercapitalized" if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a CET1 capital ratio of less than 3.0% or a leverage capital ratio of less than 3.0%. 22 Table of Contents • "Critically undercapitalized" if it has a ratio of tangible equity to total assets that is equal to or less than 2.0%.
The Federal Reserve’s monetary policies have materially affected the operating results of commercial banks in the past and are expected to continue to do so in the future. The nature of future monetary policies and the effects of these policies on the Bank’s business and earnings cannot be predicted. 29 Table of Contents
The Federal Reserve’s monetary policies have materially affected the operating results of commercial banks in the past and are expected to continue to do so in the future. The nature of future monetary policies and the effects of these policies on the Bank’s business and earnings cannot be predicted. 28 Table of Contents
In general, however, banks with assets of $10 billion or less, such as the Bank, will continue to be examined for consumer compliance by their primary federal bank regulator. Much of the CFPB’s rulemaking has focused on mortgage lending and servicing, including an important rule requiring lenders to ensure that prospective buyers have the ability to repay their mortgages.
In general, however, banks with assets of $10 billion or less, such as the Bank, will continue to be examined for consumer compliance by their primary federal bank regulator. 23 Table of Contents Much of the CFPB’s rulemaking has focused on mortgage lending and servicing, including an important rule requiring lenders to ensure that prospective buyers have the ability to repay their mortgages.
We offer our services through a branded network of boutique private trust bank offices, loan production offices, and trust offices, which we believe are strategically located in affluent and high-growth markets in twenty locations across Colorado, Arizona, Wyoming, Montana, and California.
We offer our services through a branded network of boutique private trust bank offices, loan production offices, and trust offices, which we believe are strategically located in affluent and high-growth markets in nineteen locations across Colorado, Arizona, Wyoming, Montana, and California.
The FDIC may also direct state nonmember banks that are poorly rated or subject to written supervisory actions not to pay dividends in order to ensure adequate capital exists to support their risk profile. In 2009, the Federal Reserve issued a supervisory letter providing greater clarity to its policy statement on the payment of dividends by bank holding companies.
The FDIC may also direct state nonmember banks that are poorly rated or subject to written supervisory actions not to pay dividends in order to ensure adequate capital exists to support their risk profile. 20 Table of Contents In 2009, the Federal Reserve issued a supervisory letter providing greater clarity to its policy statement on the payment of dividends by bank holding companies.
In addition, our credit policies provide guidelines for personal guarantees, an environmental review, loans to employees, executive officers and directors, problem loan identification, maintenance of an adequate allowance for credit losses, and other matters relating to lending practices. 10 Table of Contents We believe that an important part of our assessment of client risk is the ongoing completion of periodic risk rating reviews.
In addition, our credit policies provide guidelines for personal guarantees, an environmental review, loans to employees, executive officers and directors, problem loan identification, maintenance of an adequate allowance for credit losses, and other matters relating to lending practices. We believe that an important part of our assessment of client risk is the ongoing completion of periodic risk rating reviews.
There is a statutory presumption of compliance with this requirement for mortgages that meet the requirements to be deemed "qualified mortgages." The CFPB rule defines the key threshold terms "ability to repay" and "qualified mortgage." 24 Table of Contents The CFPB has actively issued enforcement actions against both large and small entities and to entities across the entire financial service industry.
There is a statutory presumption of compliance with this requirement for mortgages that meet the requirements to be deemed "qualified mortgages." The CFPB rule defines the key threshold terms "ability to repay" and "qualified mortgage." The CFPB has actively issued enforcement actions against both large and small entities and to entities across the entire financial service industry.
We attempt to identify potential problem loans early in an effort to seek aggressive resolution of these situations before the loans become a loss, record any necessary charge-offs promptly and management believes the allowance for credit losses is adequate to absorb losses in our portfolio. Lending Limits.
We attempt to identify potential problem loans early in an effort to seek aggressive resolution of these situations before the loans become a loss, record any necessary charge-offs promptly and management believes the allowance for credit losses is adequate to absorb losses in our portfolio. 10 Table of Contents Lending Limits.
A change in statutes, regulations or regulatory policies applicable to the Company or any of its subsidiaries could have a material effect on our business. Monetary Policy and Economic Environment The policies of regulatory authorities, including the monetary policy of the Federal Reserve, can have a significant effect on the operating results of bank holding companies and their subsidiaries.
A change in statutes, regulations or regulatory policies applicable to the Company or any of its subsidiaries could have a material effect on our business. 27 Table of Contents Monetary Policy and Economic Environment The policies of regulatory authorities, including the monetary policy of the Federal Reserve, can have a significant effect on the operating results of bank holding companies and their subsidiaries.
In addition, these rules include greater recognition of collateral and guarantees, and revised capital treatment for derivatives and repo-style transactions. 18 Table of Contents The federal bank regulators have modified certain aspects of the Basel III Capital Rules since the rules were initially published, and additional modifications may be made in the future.
In addition, these rules include greater recognition of collateral and guarantees, and revised capital treatment for derivatives and repo-style transactions. The federal bank regulators have modified certain aspects of the Basel III Capital Rules since the rules were initially published, and additional modifications may be made in the future.
If an insured depository institution fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, non-deposit creditors, including the parent bank holding company, with respect to any extensions of credit they have made to such insured depository institution.
If an insured depository institution fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, non-deposit creditors, including the parent bank holding company, with respect to any extensions of credit they have made to such insured depository institution. Consumer Financial Protection.
We believe the benefits of being part of our Company means you are appreciated and valued, you can build meaningful relationships, and have a sense of mutual accountability. None of our associates are represented by any collective bargaining unit or are parties to a collective bargaining agreement.
We believe the benefits of being part of our Company means you are appreciated and valued, you can build meaningful relationships, and have a sense of mutual accountability. 15 Table of Contents None of our associates are represented by any collective bargaining unit or are parties to a collective bargaining agreement.
A violation of these restrictions may result in the assessment of substantial civil monetary penalties on the affected bank or any officer, director, employee, agent, or other person participating in the conduct of the affairs of that bank, the imposition of a cease and desist order, and other regulatory sanctions.
A violation of these restrictions may result in the assessment of substantial civil monetary penalties on the affected bank or any officer, director, employee, agent, or other person participating in the conduct of the affairs of that bank, the imposition of a cease and desist order, and other regulatory sanctions. Safety and Soundness Standards.
We are building career paths, development opportunities and accountabilities into each role so that throughout the associates lifecycle there is opportunity to master skills and pursue professional and personal growth. People First is also about building connection and community with the Company.
We are building role-based development opportunities and accountabilities into each role so that throughout the associates lifecycle there is opportunity to master skills and pursue professional and personal growth. People First is also about building connection and community with the Company.
For example, a bank holding company controlling such an institution can be required to obtain prior Federal Reserve approval of proposed distributions, or might be required to consent to a merger or to divest the troubled institution or other affiliates. 22 Table of Contents State Law Restrictions.
For example, a bank holding company controlling such an institution can be required to obtain prior Federal Reserve approval of proposed distributions, or might be required to consent to a merger or to divest the troubled institution or other affiliates. State Law Restrictions.
The average maturity on our commercial and industrial portfolio was 3.7 years with an average remaining term of 1.7 years. This portfolio primarily consists of term loans and lines of credit which are mostly dependent on the strength of the industries of the related borrowers and the success of their businesses. Commercial Real Estate, Owner Occupied and Non-Owner Occupied .
The average maturity on our commercial and industrial portfolio was 5.2 years with an average remaining term of 2.3 years. This portfolio primarily consists of term loans and lines of credit which are mostly dependent on the strength of the industries of the related borrowers and the success of their businesses. Commercial real estate, Owner occupied and Non-owner occupied .
Any company that proposes to acquire "control," as those terms are defined in the BHC Act and Federal Reserve regulations, of a bank holding company or to acquire 25% or more of any class of voting securities of a bank holding company would be required to seek the Federal Reserve’s prior approval under the BHC Act to become a bank holding company. 20 Table of Contents Dividends.
Any company that proposes to acquire "control," as those terms are defined in the BHC Act and Federal Reserve regulations, of a bank holding company or to acquire 25% or more of any class of voting securities of a bank holding company would be required to seek the Federal Reserve’s prior approval under the BHC Act to become a bank holding company.
The amount of gain or loss on the sale of loans is primarily driven by market conditions and changes in interest rates, as well as our pricing and asset liability management strategies. 13 Table of Contents • Treasury Management.
The amount of gain or loss on the sale of loans is primarily driven by market conditions and changes in interest rates, as well as our pricing and asset liability management strategies. • Treasury Management.
Human Capital Overview As of December 31, 2024 , we had 321 assoc iates. We strive to recruit and retain team-oriented, respectful, problem solvers. We serve our internal team with the same approach we serve our clients, with an adaptive, entrepreneurial spirit.
Human Capital Overview As of December 31, 2025 , we had 320 assoc iates. We strive to recruit and retain team-oriented, respectful, problem solvers. We serve our internal team with the same approach we serve our clients, with an adaptive, entrepreneurial spirit.
The Company filed an election and became a financial holding company in 2006. 19 Table of Contents Sound Banking Practices. Bank holding companies and their non-banking subsidiaries are prohibited from engaging in activities that represent unsafe or unsound banking practices.
The Company filed an election and became a financial holding company in 2006. Sound Banking Practices. Bank holding companies and their non-banking subsidiaries are prohibited from engaging in activities that represent unsafe or unsound banking practices.
Most of our lending activity and credit exposure, including real estate collateral for many of our loans, are concentrated in Colorado, Arizona, Wyoming, Montana, and California, as approximately 81.2% of the loans in our loan portfolio as of December 31, 2024 were made to borrowers who live in or conduct business in those states.
Most of our lending activity and credit exposure, including real estate collateral for many of our loans, are concentrated in Colorado, Arizona, Wyoming, Montana, and California, as approximately 83.0% of the loans in our loan portfolio as of December 31, 2025 were made to borrowers who live in or conduct business in those states.
As of December 31, 2024 and 2023, we had brokered deposits of $134.5 million and $165.4 million, respectively. We have experienced banking and business development teams who we believe provide superior client service, creative cash management solutions and competitive pricing to market our depository products and services.
As of December 31, 2025 and 2024, we had brokered deposits of $115.8 million and $134.5 million, respectively. We have experienced banking and business development teams who we believe provide superior client service, creative cash management solutions and competitive pricing to market our depository products and services.
Our compensation program includes competitive salary/hourly pay and incentive pay in the form of an annual bonus and stock awards to officers and certain members of the management team.
Our compensation program includes competitive salary/hourly pay and incentive pay in the form of quarterly bonuses and annual stock awards to officers and certain members of the management team.
Loans held for investment accounted for under the fair value option are also classified within this line item and had an unpaid principal balance of $7.5 million as of December 31, 2024. Consumer and other loans were $17.5 million, or 0.7% of our loan portfolio, excluding $7.3 million in consumer and other loans accounted for under the fair value option.
Loans held for investment accounted for under the fair value option are also classified within this line item and had an unpaid principal balance of $3.2 million as of December 31, 2025. Consumer and other loans were $19.6 million, or 0.7% of our loan portfolio, excluding $3.2 million in consumer and other loans accounted for under the fair value option.
While we typically originate loans with adjustable rates and maturities up to 30 years, as of December 31, 2024, the average term on our 1-4 family portfolio was 20.8 years with an average remaining term of 18.3 years.
While we typically originate loans with adjustable rates and maturities up to 30 years, as of December 31, 2025, the average term on our 1-4 family portfolio was 23.6 years with an average remaining term of 20.3 years.
Our strategic commitment to learning and development ensures the Company’s leadership and management teams continue to grow at a pace consistent with our financial growth goals. 16 Table of Contents Compensation and Benefits We offer a total rewards program to attract and retain team-oriented, respectful, problem solvers.
Our strategic commitment to learning and development ensures the Company’s leadership and management teams continue to grow at a pace consistent with our financial growth goals. Compensation and Benefits We offer a total rewards program to attract and retain team-oriented, respectful, problem solvers who have a growth mindset.
Our commercial and industrial loans generally have variable interest rates and terms that typically range from one to five years. Fixed-rate commercial and industrial loan maturities are generally short-term, with three to five-year maturities, including periodic interest rate resets. As of December 31, 2024, commercial and industrial loans were $220.3 million, or 9.1% of our total loan portfolio.
Our commercial and industrial loans generally have variable interest rates and terms that typically range from one to five years. Fixed-rate commercial and industrial loan maturities are generally short-term, with three to five-year maturities, including periodic interest rate resets. As of December 31, 2025, commercial and industrial loans were $225.3 million, or 8.5% of our total loan portfolio.
As of December 31, 2024 , the carrying value of our investment portfolio totaled $75.7 million with an average y ield of 3.5%. Our investment policy outlines investment type limitations, security mix parameters, authorization guidelines and risk management guidelines. The policy authorizes us to invest in a variety of investment securities, subject to various limitations.
As of December 31, 2025 , the carrying value of our investment portfolio totaled $140.6 million with an average y ield of 4.2%. Our investment policy outlines investment type limitations, security mix parameters, authorization guidelines and risk management guidelines. The policy authorizes us to invest in a variety of investment securities, subject to various limitations.
Banking laws, regulations, and policies affect the operations of the Company and its subsidiaries. Investors should understand that the primary objective of the U.S. bank regulatory regime is the protection of depositors, the Deposit Insurance Fund ("DIF"), and the banking system as a whole, not the protection of the Company’s shareholders.
Investors should understand that the primary objective of the U.S. bank regulatory regime is the protection of depositors, the Deposit Insurance Fund (DIF) , and the banking system as a whole, not the protection of the Company’s shareholders.
Our cash, securities and other loan portfolio consists of consumer and commercial purpose loans, which are primarily secured by securities managed and under custody with us, cash on deposit with us or life insurance policies. As of December 31, 2024, loans secured with cash, marketable securities and other were $119.8 million, or 5.0% of our total loan portfolio.
Our cash, securities and other loan portfolio consists of consumer and commercial purpose loans, which are primarily secured by securities managed and under custody with us, cash on deposit with us or life insurance policies. As of December 31, 2025, loans secured with cash, marketable securities and other were $164.7 million, or 6.3% of our total loan portfolio.
Our Chief Risk Officer, together with our central underwriting, credit administration and loan operations teams, provides credit oversight. We periodically review all credit risk portfolios to ensure that the risk identification processes are functioning properly and that our credit standards are followed.
Our Executive Director, Banking and Mortgages, together with our central underwriting, credit administration and loan operations teams, provides credit oversight. We periodically review all credit risk portfolios to ensure that the risk identi fication processes are functioning properly and that our credit standards are followed.
Sales and marketing support is provided centrally but delivered locally. • Our investment platform is controlled by our central investment research group, which has a strong research focus and includes many associates who have Chartered Financial Analyst designations, with oversight by our Chief Investment Officer and our Investment Policy Committee. • Operational support for these profit center and product group teams is provided by our central trust and investment management support center team.
Sales and marketing support is provided centrally but delivered locally. • Our investment platform is controlled by our central investment research group, which has a strong research focu s and includes many associates who have Chartered Financial Analyst designations, with oversight by our Executive Director, Wealth and Fiduciary and our Inv estment Policy Committee. 13 Table of Contents • Operational support for these profit center and product group teams is provided by our central trust and investment management support center team.
Our ALCO and management review the status of our investment portfolio at least ten times per year. 14 Table of Contents Our Markets Our strategic market area is defined by metropolitan areas in the Western United States having strong long-term economic growth prospects, a significant wealth demographic measured by growth in high net worth households, a dynamic commercial business landscape and the ability to sustain one or more of our profit centers.
Our Markets Our strategic market area is defined by metropolitan areas in the Western United States having strong long-term economic growth prospects, a significant wealth demographic measured by growth in high net worth households, a dynamic commercial business landscape and the ability to sustain one or more of our profit centers.
You may also obtain copies of our annual, quarterly and special reports, proxy statements and certain other information filed by the Company with the SEC, as well as amendments thereto, free of charge from the Company’s website, https://myfw.gcs-web.com/investor-relations. These documents are posted to our website after we have filed them with the SEC.
Electronic copies of our SEC filings are available to the public at the SEC’s website at https://www.sec.gov. You may also obtain copies of our annual, quarterly and special reports, proxy statements and certain other information filed by the Company with the SEC, as well as amendments thereto, free of charge from the Company’s website, https://myfw.gcs-web.com/investor-relations.
We require independent appraisals or evaluations from a list of approved appraisers on all loans secured by commercial real estate. As of December 31, 2024, owner occupied commercial real estate loans were $172.0 million, or 7.1% of our total loan portfolio, and non-owner occupied commercial real estate loans were $611.2 million, or 25.3% of our total loan portfolio.
We require independent appraisals or evaluations from a list of approved appraisers on all loans secured by commercial real estate. As of December 31, 2025, owner occupied commercial real estate loans were $204.1 million, or 7.7% of our total loan portfolio, and non-owner occupied commercial real estate loans were $809.9 million, or 30.6% of our total loan portfolio.
The NDAA includes the Anti-Money Laundering Act of 2020 (AML Act) and, within the AML Act, the Corporate Transparency Act (CTA). The AML Act seeks to strengthen, modernize, and streamline the existing AML regime by promoting innovation, regulatory reform, and industry engagement through forums, such as the Bank Secrecy Act Advisory Group (BSAAG) and FinCEN Exchange.
The AML Act seeks to strengthen, modernize, and streamline the existing AML regime by promoting innovation, regulatory reform, and industry engagement through forums, such as the Bank Secrecy Act Advisory Group (BSAAG) and FinCEN Exchange.
As of December 31, 2024, we provided fiduciary and advisory services on $7.32 billion of trust and investment management assets ("AUM"), and we had total assets of $2.92 billion, total loans excluding mortgage loans held for sale and loans held for sale of $2.43 billion, total deposits of $2.51 billion, and total shareholders’ equity of $252.3 million.
As of December 31, 2025, we provided fiduciary and advisory services on $7.28 billion of trust and investment management assets (AUM), and we had total assets of $3.15 billion, total loans excluding mortgage loans held for sale of $2.65 billion, total deposits of $2.75 billion, and total shareholders’ equity of $265.6 million.
It is an essential principle of safety and soundness that a banking organization’s redemption and repurchases of regulatory capital instruments, including common stock, from investors be consistent with the organization’s current and prospective capital needs.
Among these powers is the ability to proscribe the payment of dividends by banks and bank holding companies. Stock Redemptions and Repurchases. It is an essential principle of safety and soundness that a banking organization’s redemption and repurchases of regulatory capital instruments, including common stock, from investors be consistent with the organization’s current and prospective capital needs.
As of December 31, 2024, construction and development loans were $314.5 million, or 13.0% of our total loan portfolio. 9 Table of Contents Concentrations .
As of December 31, 2025, construction and development loans were $189.1 million, or 7.1% of our total loan portfolio. 9 Table of Contents Concentrations .
As of December 31, 2024, 1-4 family residential loans were $962.9 million, or 39.8% of our total loan portfolio, consisting of $133.6 million and $829.3 million of fixed-rate and adjustable-rate loans, respectively.
As of December 31, 2025, 1-4 family residential loans were $1.03 billion , or 39.1% of our total loan portfolio, consisting of $123.6 million and $910.1 million of fixed-rate and adjustable-rate loans, respectively.
A change in such statutes or regulations, including changes in how they are interpreted or implemented, could have a material effect on our business. In addition to laws and regulations, state and federal bank regulatory agencies may issue policy statements, interpretive letters and similar written guidance pursuant to such laws and regulations, which are binding on us and our subsidiaries.
In addition to laws and regulations, state and federal bank regulatory agencies may issue policy statements, interpretive letters and similar written guidance pursuant to such laws and regulations, which are binding on us and our subsidiaries.
For the year ended December 31, 2024, non-interest income was $27.7 million or 30.7% of total income before non-interest expense and net interest income, before the provision for credit losses, was $64.3 million, or 71.4% of total income before non-interest expense.
For the year ended December 31, 2025, Total non-interest income was $26.6 million or 27.4% of Total income before non-interest expense and Net interest income, before Provision for credit losses, was $75.4 million, or 77.8% of Total income before Non-interest expense.
The Bank is examined from time to time by its primary federal banking regulator, the FDIC, and the CDB and is charged for the cost of such an examination.
The Federal Reserve may examine a bank holding company and any of its subsidiaries, and charge the company for the cost of such an examination. 21 Table of Contents The Bank is examined from time to time by its primary federal banking regulator, the FDIC, and the CDB and is charged for the cost of such an examination.
Our Asset and Liability Committee ("ALCO") and management are responsible for implementation of the investment policy and monitoring of our investment performance.
Our Asset and Liability Committee (ALCO) and management are responsible for implementation of the investment policy and monitoring of our investment performance. Our ALCO and management review the status of our investment portfolio at least ten times per year.
As of December 31, 2024 , total deposits we re $2.51 billion, a n decrease of $14.8 million, or 0.6%, compared to $2.53 billion as of December 31, 2023. 11 Table of Contents As of December 31, 2024 , our deposit portfolio contained a diverse mix of deposits, as shown below: Deposits Trust and Investment Management, Advisory We offer sophisticated wealth advisory and planning services including investment management, trusts and estate services, philanthropic services, insurance planning and retirement consulting.
As of December 31, 2025 , our deposit portfolio contained a diverse mix of deposits, as shown below: Deposits 11 Table of Contents Trust and Investment Management, Advisory We offer sophisticated wealth advisory and planning services including investment management, trusts and estate services, philanthropic services, insurance planning and retirement consulting.
Annual Reporting; Examinations. The Company is required to file an annual report with the Federal Reserve and to provide such additional information as the Federal Reserve may require. The Federal Reserve may examine a bank holding company and any of its subsidiaries, and charge the company for the cost of such an examination.
Annual Reporting; Examinations. The Company is required to file an annual report with the Federal Reserve and to provide such additional information as the Federal Reserve may require.
The impact of Basel IV on us will depend on the manner in which it is implemented by the federal bank regulators. In accordance with the Economic Growth, Regulatory Relief, and Consumer Protection Act (the "Regulatory Relief Act"), discussed below, the federal banking agencies published final rules implementing the community bank leverage ratio in November 2019.
In accordance with the Economic Growth, Regulatory Relief, and Consumer Protection Act (Regulatory Relief Act), discussed below, the federal banking agencies published final rules implementing the community bank leverage ratio in November 2019.
The Consumer Financial Protection Bureau ("CFPB") has broad rulemaking authority for a wide range of consumer financial laws that apply to all banks. The CFPB is authorized to issue rules for both bank and non-bank companies that offer consumer financial products and services, subject to consultation with the prudential banking regulators.
The CFPB is authorized to issue rules for both bank and non-bank companies that offer consumer financial products and services, subject to consultation with the prudential banking regulators.
As of December 31, 2024 , total AUM was $7.32 billion, an increase of $568.0 million, or 8.4%, compared to $6.75 billion as of December 31, 2023. 12 Table of Contents As of December 31, 2024 , we provided fiduciary and advisory services on $7.32 billion of trust and investment management assets, as shown below: Trust and Investment Management Assets Our investment management platform combines a broad range of asset and sub asset classes meeting the needs of both taxable and tax-free private client accounts as well as trust investment services.
As of December 31, 2025 , we provided fiduciary and advisory services on $7.28 billion of trust and investment management assets, as shown below: Trust and Investment Management Assets Our investment management platform combines a broad range of asset and sub asset classes meeting the needs of both taxable and tax-free private client accounts as well as trust investment services.
Regulation of the Company The Bank Holding Company Act of 1956, as amended ("BHC Act"), and other federal laws subject bank holding companies to particular restrictions on the types of activities in which they may engage, and to a range of supervisory requirements and activities, including regulatory enforcement actions for violations of laws and regulations. Permitted Activities.
The Company and the Bank have not made an election to use the community bank leverage ratio framework but may make such an election in the future if determined to be possible and advantageous. 18 Table of Contents Regulation of the Company The Bank Holding Company Act of 1956, as amended (BHC Act), and other federal laws subject bank holding companies to particular restrictions on the types of activities in which they may engage, and to a range of supervisory requirements and activities, including regulatory enforcement actions for violations of laws and regulations.
Most provisions of the final rule will become effective on January 1, 2026, and the data reporting requirements will become effective on January 1, 2027. Safety and Soundness Standards. Under the FDIC Improvement Act ("FDICIA"), each federal banking agency has prescribed, by regulation, non-capital safety and soundness standards for institutions under its authority.
Under the FDIC Improvement Act (FDICIA), each federal banking agency has prescribed, by regulation, non-capital safety and soundness standards for institutions under its authority.
Other Products In addition to the traditional loan, deposit and trust and investment management products and services, our profit centers are supported by a central team of specialized product experts in our "product groups," which include experienced professionals in commercial banking, investment management, wealth planning, risk management/insurance, personal trust, retirement planning and tax-advantaged products, and mortgage lending.
By combining internal research and a dedicated team of accredited specialized advisors like Chartered Financial Analysts and Certified Financial Planners with our pairing of proprietary and third-party investment options, we create unique solutions tailored to the specific needs of each of our clients. 12 Table of Contents Other Products In addition to the traditional loan, deposit and trust and investment management products and services, our profit centers are supported by a central team of specialized product experts in our "product groups," which include experienced professionals in commercial banking, investment management, wealth planning, risk management/insurance, personal trust, retirement planning and tax-advantaged products, and mortgage lending.
Our corporate governance guidelines, including our code of business conduct and ethics applicable to all of our associates, officers and directors, as well as the charters of our audit committee, compensation committee and corporate governance and nominating committee are available at https://myfw.gcs-web.com/investor-relations. The foregoing information is also available in print to any shareholder who requests it from the Company.
These documents are posted to our website after we have filed them with the SEC. Our corporate governance guidelines, including our code of business conduct and ethics applicable to all of our associates, officers and directors, as well as the charters of our audit committee, compensation committee and corporate governance and nominating committee are available at https://myfw.gcs-web.com/investor-relations.
Except as explicitly provided, information furnished by the Company and information on, or accessible through, the SEC’s or the Company’s website is not incorporated into this Annual Report on Form 10-K or our other securities filings and is not a part of them. Supervision and Regulation The U.S. banking industry is highly regulated under federal and state law.
The foregoing information is also available in print to any shareholder who requests it from the Company. Except as explicitly provided, information furnished by the Company and information on, or accessible through, the SEC’s or the Company’s website is not incorporated into this Annual Report on Form 10-K or our other securities filings and is not a part of them.
Under this rule, banking organizations that are SEC registrants must generally disclose information about a material cybersecurity incident within four business days of determining it is material with periodic updates as to the status of the incident in subsequent filings as necessary. 28 Table of Contents Anti-Money Laundering Act of 2020 On January 1, 2021, Congress enacted the National Defense Authorization Act (NDAA), which included significant reforms to the U.S. anti-money laundering (AML) regime.
Under this rule, banking organizations that are SEC registrants must generally disclose information about a material cybersecurity incident within four business days of determining it is material with periodic updates as to the status of the incident in subsequent filings as necessary.
The extent to which any such additional future assessments will impact our future deposit insurance expense is currently uncertain. Consumer Financial Protection. The Bank is subject to a number of federal and state consumer protection laws that extensively govern its relationship with its clients.
The Bank is subject to a number of federal and state consumer protection laws that extensively govern its relationship with its clients.
Assessments are based on an institution’s average consolidated total assets less average tangible equity, subject to adjustments for certain types of institutions, including custodial banks. 23 Table of Contents The FDIC may terminate a depository institution’s deposit insurance upon a finding that the institution’s financial condition is unsafe or unsound or that the institution has engaged in unsafe or unsound practices or has violated any applicable rule, regulation, order, or condition enacted or imposed by the institution’s regulatory agency.
The FDIC may terminate a depository institution’s deposit insurance upon a finding that the institution’s financial condition is unsafe or unsound or that the institution has engaged in unsafe or unsound practices or has violated any applicable rule, regulation, order, or condition enacted or imposed by the institution’s regulatory agency.
On September 9, 2022, the U.S. federal banking regulators announced their intent to revise regulatory capital requirements to align them with the regulatory capital standards that were finalized by the Basel Committee in December 2017, however a proposed rule has not yet been issued.
Under the Basel framework, these standards were generally effective on January 1, 2023, with an aggregate output floor phasing in through January 1, 2028 . On September 9, 2022, the U.S. federal banking regulators announced their intent to revise regulatory capital requirements to align them with the regulatory capital standards that were finalized by the Basel Committee in December 2017.
As such, the Bank is subject to regulation, supervision, and examination by both the Colorado Division of Banking (the "CDB") and the Federal Deposit Insurance Corporation ("FDIC").
As such, the Bank is subject to regulation, supervision, and examination by both the Colorado Division of Banking (CDB) and the Federal Deposit Insurance Corporation (FDIC). In addition, we expect that any additional businesses that we may invest in or acquire will be regulated by various state and/or federal banking regulators.
In addition, the U.S. federal banking regulators stated that Community banking organizations would not be impacted by the proposal. Under the current U.S. capital rules, operational risk capital requirements and a capital floor apply only to advanced approaches institutions, and not to the Company or the Bank.
Under the current U.S. capital rules, operational risk capital requirements and a capital floor apply only to advanced approaches institutions, and not to the Company or the Bank. The impact of Basel IV on us will depend on the manner in which it is implemented by the federal bank regulators.
The Act also calls for FinCEN to work closely with regulatory, national security, and law enforcement partners to identify risks and priorities and provide valuable feedback to the financial industry. The CTA establishes uniform beneficial ownership reporting requirements for corporations, limited liability companies, and other similar entities formed or registered to do business in the United States.
The Act also calls for FinCEN to work closely with regulatory, national security, and law enforcement partners to identify risks and priorities and provide valuable feedback to the financial industry.
The final rules of Basel III also established a "capital conservation buffer" of 2.5% above new regulatory minimum capital ratios. The minimum capital ratios inclusive of the capital conservation buffer are as follows: (i) a CET1 ratio of 7.0%; (ii) a Tier 1 capital ratio of 8.5%; and (iii) a total capital ratio of 10.5%.
These ratios are common equity Tier 1 capital (CET1), Tier 1 capital and total capital (as defined in the regulations) to risk-weighted assets (as defined in the regulations), and Tier 1 capital (as defined in the regulations) to average assets (as defined in the regulations). 17 Table of Contents The final rules of Basel III also established a "capital conservation buffer" of 2.5% above new regulatory minimum capital ratios.
Enterprise Risk Management We place significant emphasis on our holistic approach to integrated risk management that provides oversight, control, and discipline to support strategic initiative and business objectives and to promote a risk-aware culture. We utilize the COSO 2017 ERM Framework to govern the process of anticipating, identifying, assessing, managing, optimizing, and monitoring risks within the organization.
We utilize the COSO 2017 ERM Framework to govern the process of anticipating, identifying, assessing, managing, optimizing, and monitoring risks within the organization. Our Enterprise Risk Management (ERM) Committee oversees our ERM program.
In addition, business resiliency testing and planning ensures the capability of critical vendors to fail over to fully-hot replicated systems that provide complete redundancy in the event of a disaster.
In addition, business resiliency testing and planning ensures the capability of critical vendors to fail over to fully-hot replicated systems that provide complete redundancy in the event of a disaster. 14 Table of Contents Enterprise Risk Management We place significant emphasis on our holistic approach to integrated risk management that provides oversight, control, and discipline to support strategic initiative and business objectives and to promote a risk-aware culture.
These local teams have personal and professional networks and relationships with centers of influence to market our wealth advisory products and services.
These local teams have personal and professional networks and relationships with centers of influence to market our wealth advisory products and services. As of December 31, 2025 , total AUM was $7.28 billion, a decrease of $43.0 million, or 0.6%, compared to $7.32 billion as of December 31, 2024.
Our Enterprise Risk Management ("ERM") Committee oversees our ERM program. This group contains key members of management including the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, and the Chief Risk Officer.
This group contains key members of ma nagement including the Chief Operating Officer, Chief Financial Officer, Executive Director Legal and Governance, and the Executive Director Risk, Human Capital, and Operations.
The safeguard provision of the FTC's Gramm-Leach Bliley Act (GLBA) requires the Bank to take steps to protect their clients' information. The law requires the Bank to create a written information security plan that outlines its strategy for protecting customer/client information.
The law requires the Bank to create a written information security plan that outlines its strategy for protecting customer/client information. The Bank must have reasonable administrative, technical, and physical safeguards to protect the security, confidentiality, and integrity of client information.

… 40 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

62 edited+18 added−23 removed218 unchanged
Biggest changeSummary of Risk Factors The following is a summary of the principal risks that we believe could adversely affect our business, financial condition or results of operations: Risks Related to Our Business – Geographic concentration in Colorado, Arizona, Wyoming, Montana, and California. – The soundness of other financial institutions could adversely affect us. – Negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses. – Changes in interest rates could reduce our net interest margins and net interest income. – If we are unable to continue to originate residential real estate loans and sell them into the secondary market for a profit, our earnings could decrease. – Our commercial loan portfolio involves risks specific to commercial borrowers. – We may be subject to claims and litigation pertaining to our fiduciary responsibilities. – We may be adversely affected by the soundness of certain securities brokerage firms. – The investment management contracts we have with our clients are terminable without cause and on relatively short notice by our clients. – Changes to the level or type of investment activity by our clients may reduce our fee revenue. – The trust wealth management fees we receive may decrease as a result of poor investment performance, in either relative or absolute terms, which could decrease our revenues and net earnings. – Our allowance for credit losses may not be adequate to cover actual losses. – Increased credit risk, including as a result of deterioration in economic conditions, could require us to increase our allowance for credit losses and could have a material adverse effect on our results of operations and financial condition. – Our business and operations may be adversely affected in numerous and complex ways by external business disruptors in the financial services industry – The development and use of Artificial Intelligence ("AI") presents risks and challenges that may adversely impact the Company’s business. – Liquidity risk could adversely affect our ability to fund operations and hurt our financial condition. – We may not be able to maintain a strong core deposit base or other low-cost funding sources. – We receive substantial deposits and assets under management as a result of referrals by professionals, such as attorneys, accountants, and doctors, and such referrals are dependent upon the continued positive interaction with and financial health of those referral sources. – Our largest trust client accounts for 37.8% of our total assets under management. – The success of our business depends on achieving our strategic objectives, including through acquisitions which may not increase our profitability and may adversely affect our future operating results. – We face intense competition from other banks and financial institutions and other wealth and investment management firms that could hurt our business. – We may not be successful in implementing our internal growth strategy or be able to manage the risks associated with our anticipated growth through opening new boutique private trust bank offices, which could have a material adverse effect on our business, financial condition and results of operations. – Our goodwill or other intangible assets may become impaired. – We are required to make significant estimates and assumptions in the preparation of our financial statements and our estimates and assumptions may not be accurate. – Fraud, breaches of our information security, and cybersecurity attacks could adversely affect us. 30 Table of Contents – We rely on communications, information, operating and financial control systems technology and related services from third-party service providers and we may suffer an interruption in those systems. – Our ability to attract and retain clients and key associates could be adversely affected if our reputation is harmed. – We may incur significant losses due to ineffective risk management processes and strategies. – New lines of business or new products and services may subject us to additional risks. – We rely on customer and counterparty information, which subjects us to risks if that information is not accurate or is incomplete. – A future pandemic, epidemic, or highly contagious disease could adversely impact our business and financial results. – Unstable global economic conditions may have serious adverse consequences on our business, financial condition, and operations.
Biggest changeSummary of Risk Factors The following is a summary of the principal risks that we believe could adversely affect our business, financial condition or results of operations: Risks Related to Our Business – Geographic concentration in Colorado, Arizona, Wyoming, Montana, and California. – Negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses. – Changes in interest rates could reduce our net interest margins and net interest income. – If we are unable to continue to originate residential real estate loans and sell them into the secondary market for a profit, our earnings could decrease. – Our commercial loan portfolio involves risks specific to commercial borrowers. – Fraud, breaches of our information security, and cybersecurity attacks could adversely affect us. – We rely on communications, information, operating, and financial control systems technology and related services from third-party service providers, including reliance on cloud-based vendors, and we may suffer an interruption in those systems. – We may be subject to claims and litigation pertaining to our fiduciary responsibilities. – Negative developments affecting the banking industry and resulting media coverage have eroded customer confidence in the banking system. – We may be adversely affected by the soundness of certain securities brokerage firms. – The investment management contracts we have with our clients are terminable without cause and on relatively short notice by our clients. – Changes to the level or type of investment activity by our clients may reduce our fee revenue. – The trust wealth management fees we receive may decrease as a result of poor investment performance, in either relative or absolute terms, which could decrease our revenues and net earnings. – Our allowance for credit losses may not be adequate to cover actual losses. – Increased credit risk, including as a result of deterioration in economic conditions, could require us to increase our allowance for credit losses and could have a material adverse effect on our results of operations and financial condition. – Our business and operations may be adversely affected in numerous and complex ways by external business disruptors in the financial services industry – The development and use of Artificial Intelligence (AI) presents risks and challenges that may adversely impact the Company’s business. – Liquidity risk could adversely affect our ability to fund operations and hurt our financial condition. – We may not be able to maintain a strong core deposit base or other low-cost funding sources. – We receive substantial deposits and assets under management as a result of referrals by professionals, such as attorneys, accountants, and doctors, and such referrals are dependent upon the continued positive interaction with and financial health of those referral sources. – Our largest trust client accounts for 36.8% of our total assets under management and 4.6% of our total Trust and investment management fees. – The success of our business depends on achieving our strategic objectives, including through acquisitions which may not increase our profitability and may adversely affect our future operating results. – We face intense competition from other banks and financial institutions and other wealth and investment management firms that could hurt our business. 29 Table of Contents – We may not be successful in implementing our internal growth strategy or be able to manage the risks associated with our anticipated growth through opening new boutique private trust bank offices, which could have a material adverse effect on our business, financial condition and results of operations. – Our goodwill or other intangible assets may become impaired. – We are required to make significant estimates and assumptions in the preparation of our financial statements and our estimates and assumptions may not be accurate. – Our ability to attract and retain clients and key associates could be adversely affected if our reputation is harmed. – We may incur significant losses due to ineffective risk management processes and strategies. – New lines of business or new products and services may subject us to additional risks. – We rely on customer and counterparty information, which subjects us to risks if that information is not accurate or is incomplete. – Severe weather, natural disasters, acts of war or terrorism, pandemics, and other adverse external events could significantly impact our business and customers. – Unstable global economic conditions may have serious adverse consequences on our business, financial condition, and operations.
Our ability to attract and retain clients and key associates could be adversely affected if our reputation is harmed. Our ability to attract and retain clients and key associates could be adversely affected if our reputation is harmed.
Our ability to attract and retain clients and key associates could be adversely affected if our reputation is harmed.
Our governing documents include provisions that: • Empower our Board of Directors, without shareholder approval, to issue our preferred stock, the terms of which, including voting power, are to be set by our Board of Directors; • Provide that directors may only be removed from office for cause; • Eliminate cumulative voting in elections of directors; • Permit our Board of Directors to alter, amend or repeal our amended and restated bylaws or to adopt new bylaws; • Prohibit shareholder action by less than unanimous written consent, thereby requiring virtually all actions to be taken at a meeting of the shareholders; • Require shareholders that wish to bring business before annual or special meetings of shareholders, or to nominate candidates for election as directors at our annual meeting of shareholders, to provide timely notice of their intent in writing; and • Enable our Board of Directors to increase, between annual meetings, the number of persons serving as directors and to fill the vacancies created as a result of the increase by a majority vote of the directors present at a meeting of directors.
Our governing documents include provisions that: • Empower our Board of Directors, without shareholder approval, to issue our preferred stock, the terms of which, including voting power, are to be set by our Board of Directors; 47 Table of Contents • Provide that directors may only be removed from office for cause; • Eliminate cumulative voting in elections of directors; • Permit our Board of Directors to alter, amend or repeal our amended and restated bylaws or to adopt new bylaws; • Prohibit shareholder action by less than unanimous written consent, thereby requiring virtually all actions to be taken at a meeting of the shareholders; • Require shareholders that wish to bring business before annual or special meetings of shareholders, or to nominate candidates for election as directors at our annual meeting of shareholders, to provide timely notice of their intent in writing; and • Enable our Board of Directors to increase, between annual meetings, the number of persons serving as directors and to fill the vacancies created as a result of the increase by a majority vote of the directors present at a meeting of directors.
Our failure to comply with privacy, data protection and information security laws could result in potentially significant regulatory or governmental investigations or actions, litigation, fines, sanctions and damage to our reputation, which could have a material adverse effect on our business, financial condition or results of operations. 45 Table of Contents We can be subject to legal and regulatory proceedings, investigations and inquiries related to conduct risk.
Our failure to comply with privacy, data protection and information security laws could result in potentially significant regulatory or governmental investigations or actions, litigation, fines, sanctions and damage to our reputation, which could have a material adverse effect on our business, financial condition or results of operations. 44 Table of Contents We can be subject to legal and regulatory proceedings, investigations and inquiries related to conduct risk.
The foregoing factors should not be construed as exhaustive. This summary of risk factors should be read in conjunction with the more detailed risk factors below. 31 Table of Contents Risks Related to Our Business Our banking, trust and wealth advisory operations are geographically concentrated in Colorado, Arizona, Wyoming Montana, and California, leading to significant exposure to those markets.
The foregoing factors should not be construed as exhaustive. This summary of risk factors should be read in conjunction with the more detailed risk factors below. 30 Table of Contents Risks Related to Our Business Our banking, trust and wealth advisory operations are geographically concentrated in Colorado, Arizona, Wyoming Montana, and California, leading to significant exposure to those markets.
Any changes in any federal or state banking statute, regulation or governmental policy, including changes which occ urred in 2024 an d may occ ur in 2025 and beyond during the current and future administration, could affect us in substantial and unpredictable ways, including ways that may adversely affect our business, results of operations, financial condition or prospects.
Any changes in any federal or state banking statute, regulation or governmental policy, including changes which occ urred in 2025 an d may occ ur in 2026 and beyond during the current and future administration, could affect us in substantial and unpredictable ways, including ways that may adversely affect our business, results of operations, financial condition or prospects.
While we believe that our allowance for credit losses was appropriate at December 31, 2024 , there is no assurance that it will be sufficient to cover future credit losses. In the event of a deterioration in economic conditions, we may be required to increase our allowance in future periods, which would reduce our earnings.
While we believe that our allowance for credit losses was appropriate at December 31, 2025 , there is no assurance that it will be sufficient to cover future credit losses. In the event of a deterioration in economic conditions, we may be required to increase our allowance in future periods, which would reduce our earnings.
We anticipate that these costs will materially increase our general and administrative expenses and such increases will reduce our profitability. 46 Table of Contents If we fail to maintain effective internal control over financial reporting, we may not be able to report our financial results accurately and timely.
We anticipate that these costs will materially increase our general and administrative expenses and such increases will reduce our profitability. 45 Table of Contents If we fail to maintain effective internal control over financial reporting, we may not be able to report our financial results accurately and timely.
We may issue new debt securities, which would be senior to our common stock and may cause the market price of our common stock to decline. We have issued $18.0 million aggregate principal amount of subordinated notes due 2030, $15.0 million due 2031 and $20.0 million due 2032.
We may issue new debt securities, which would be senior to our common stock and may cause the market price of our common stock to decline. We have issued $10.0 million aggregate principal amount of subordinated notes due 2030, $15.0 million due 2031, and $20.0 million due 2032.
Additionally, any such loss of funds could result in lower loan originations, which could materially negatively impact our growth strategy. 37 Table of Contents We receive substantial deposits and assets under management as a result of referrals by professionals, such as attorneys, accountants, and doctors, and such referrals are dependent upon the continued positive interaction with and financial health of those referral sources.
Additionally, any such loss of funds could result in lower loan originations, which could materially negatively impact our growth strategy. We receive substantial deposits and assets under management as a result of referrals by professionals, such as attorneys, accountants, and doctors, and such referrals are dependent upon the continued positive interaction with and financial health of those referral sources.
Further issuances of our common stock could be dilutive to holders of our common stock. 47 Table of Contents Our common stock is subordinate to our existing and future indebtedness, and is effectively subordinated to all the indebtedness and other non-common equity claims against our subsidiaries.
Further issuances of our common stock could be dilutive to holders of our common stock. 46 Table of Contents Our common stock is subordinate to our existing and future indebtedness, and is effectively subordinated to all the indebtedness and other non-common equity claims against our subsidiaries.
Since we commence d our banking business in 2004, we have grown our banking franchise and now have twenty locations in Colorado, Arizona, Wyoming, Montana, and California including a centralized operations center in downtown Denver.
Since we commence d our banking business in 2004, we have grown our banking franchise and now have nineteen locations in Colorado, Arizona, Wyoming, Montana, and California including a centralized operations center in downtown Denver.
Any of these risks could expose the Company to liability or adverse legal or regulatory consequences and harm the Company’s reputation and the public perception of its business or the effectiveness of its security measures. Liquidity risk could adversely affect our ability to fund operations and hurt our financial condition.
Any of these risks could expose the Company to liability or adverse legal or regulatory consequences and harm the Company’s reputation and the public perception of its business or the effectiveness of its security measures. 37 Table of Contents Liquidity risk could adversely affect our ability to fund operations and hurt our financial condition.
Any of these occurrences could have a material adverse effect on our business, financial condition, results of operations and prospects. Increased credit risk, including as a result of deterioration in economic conditions, could require us to increase our allowance for credit losses and could have a material adverse effect on our results of operations and financial condition.
Any of these occurrences could have a material adverse effect on our business, financial condition, results of operations and prospects. 36 Table of Contents Increased credit risk, including as a result of deterioration in economic conditions, could require us to increase our allowance for credit losses and could have a material adverse effect on our results of operations and financial condition.
There are many factors that may affect the market price and trading volume of our common stock, including, without limitation: • Actual or anticipated fluctuations in our operating results, financial condition or asset quality; • Changes in economic or business conditions; • The effects of, and changes in, trade, monetary and fiscal policies, including the interest rate policies of the Federal Reserve; • Publication of research reports about us, our competitors, or the financial services industry generally, or changes in, or failure to meet, securities analysts’ estimates of our financial and operating performance, or lack of research reports by industry analysts or ceasing of coverage; • Operating and stock price performance of companies that investors deemed comparable to us; • Additional or anticipated sales of our common stock or other securities by us or our existing shareholders; • Additions or departures of key personnel; • Prevailing market conditions, including increased general market volatility associated with recent fears of pandemics; • Perceptions in the marketplace regarding our competitors or us; • Significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving our competitors or us; • Other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services; and • Other news, announcements or disclosures (whether by us or others) related to us, our competitors, our primary markets or the financial services industry.
There are many factors that may affect the market price and trading volume of our common stock, including, without limitation: • Actual or anticipated fluctuations in our operating results, financial condition or asset quality; • Changes in economic or business conditions; • The effects of, and changes in, trade, monetary and fiscal policies, including the interest rate policies of the Federal Reserve; • Publication of research reports about us, our competitors, or the financial services industry generally, or changes in, or failure to meet, securities analysts’ estimates of our financial and operating performance, or lack of research reports by industry analysts or ceasing of coverage; • Operating and stock price performance of companies that investors deemed comparable to us; • Additional or anticipated sales of our common stock or other securities by us or our existing shareholders; • Additions or departures of key personnel; • Perceptions in the marketplace regarding our competitors or us; • Significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving our competitors or us; • Other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services; and • Other news, announcements or disclosures (whether by us or others) related to us, our competitors, our primary markets or the financial services industry.
A decline in the fair value of the assets under management caused by a decline in general economic conditions would decrease our wealth management fee income. 35 Table of Contents Investment performance is one of the most important factors in retaining existing clients and competing for new wealth management clients.
A decline in the fair value of the assets under management caused by a decline in general economic conditions would decrease our wealth management fee income. Investment performance is one of the most important factors in retaining existing clients and competing for new wealth management clients.
The Company or its third-party (or fourth party) vendors, clients or counterparties may develop or incorporate AI technology in certain business processes, services, or products. The development and use of AI presents a number of risks and challenges to the Company’s business.
The development and use of AI presents risks and challenges that may adversely impact the Company’s business. The Company or its third-party (or fourth party) vendors, clients or counterparties may develop or incorporate AI technology in certain business processes, services, or products. The development and use of AI presents a number of risks and challenges to the Company’s business.
Although the Company takes significant steps to mitigate cybersecurity risk across a range of functions, such measures can never eliminate the risk entirely or provide absolute security. We rely on communications, information, operating and financial control systems technology and related services from third-party service providers and we may suffer an interruption in those systems.
Although the Company takes significant steps to mitigate cybersecurity risk across a range of functions, such measures can never eliminate the risk entirely or provide absolute security. We rely on communications, information, operating and financial control systems technology and related services from third-party service providers, including reliance on cloud-based vendors, and we may suffer an interruption in those systems.
We also have increased risks from losses of bank deposit clients due to the large deposits we hold from certain clients. For example, as of December 31, 2024, 32.0% of our total deposits consisted of our 10 largest depositors. Loss of any one of these deposit clients would have an outsized impact on our results of operations.
We also have increased risks from losses of bank deposit clients due to the large deposits we hold from certain clients. For example, as of December 31, 2025, 36.3% of our total deposits consisted of our 10 largest depositors. Loss of any one of these deposit clients would have an outsized impact on our results of operations.
Our business act ivities and credit exposure, including real estate collateral for many of our loans, are concentrated in Colorado, Arizona, Wyoming, Montana, and California. As of December 31, 2024, 81.2% of the loans in our loan portfolio were made to borrowers who live in or conduct business in those states.
Our business act ivities and credit exposure, including real estate collateral for many of our loans, are concentrated in Colorado, Arizona, Wyoming, Montana, and California. As of December 31, 2025, 83.0% of the loans in our loan portfolio were made to borrowers who live in or conduct business in those states.
This includes a sustained downturn in the oil and gas market, which is important for the general economic health of Colorado in particular. A prolonged period of low oil prices could have a material adverse effect on our results of operations and financial condition. The soundness of other financial institutions could adversely affect us.
This includes a sustained downturn in the oil and gas market, which is important for the general economic health of Colorado in particular. A prolonged period of low oil prices could have a material adverse effect on our results of operations and financial condition.
Increased market volatility may materially and adversely affect the market price of our common stock, which could make it difficult to sell your shares at the volume, prices and times desired.
Increased market volatility may materially and adversely affect the market price of our common stock, which could make it difficult to sell your shares at the volume, prices and times desired. ITEM 1B: UNRESOLVED STAFF COMMENTS None.
If those systems and review processes prove to be ineffective in identifying and managing risks, or testing scenarios reveal real-life failures of technology, we could be subjected to increased regulatory scrutiny and regulatory restrictions could be imposed on our business, including on our potential future business lines, as a result of which our business and operating results could be adversely affected. 41 Table of Contents New lines of business or new products and services may subject us to additional risks.
If those systems and review processes prove to be ineffective in identifying and managing risks, or testing scenarios reveal real-life failures of technology, we could be subjected to increased regulatory scrutiny and regulatory restrictions could be imposed on our business, including on our potential future business lines, as a result of which our business and operating results could be adversely affected.
The market value of real estate can fluctuate significantly in a short period of time. As a result, adverse developments affecting real estate values and the liquidity of real estate in our primary markets could increase the credit risk associated with our loan portfolio, and could result in losses that adversely affect credit quality, financial condition and results of operations.
As a result, adverse developments affecting real estate values and the liquidity of real estate in our primary markets could increase the credit risk associated with our loan portfolio, and could result in losses that adversely affect credit quality, financial condition and results of operations.
In such an instance, management should employ heightened risk management practices, including board and management oversight and strategic planning, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing. As of December 31, 2024, our CRE 1 Concentration level was 115.5% and our CRE 2 Concentration level was 225.9%.
In such an instance, management should employ heightened risk management practices, including board and management oversight and strategic planning, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing. As of December 31, 2025, our CRE 1 Concentration level was 64.0% and our CRE 2 Concentration level was 277.2%.
Our loan portfolio includes a significant number of commercial loans, which involve risks specific to commercial borrowers. Our loan portfolio includes a significant amount of commercial real estate loans and commercial lines of credit. Our typical commercial borrower is a small or medium-sized privately owned Colorado business entity.
Our loan portfolio includes a significant amount of commercial real estate loans and commercial lines of credit. Our typical commercial borrower is a small or medium-sized privately owned Colorado business entity.
We may experience operational challenges in connection with the adoption of or failure to adopt new technology, which could result in unintended consequences or expenses as a result of the technology's limitations, our failure to use new technology effectively or at all, not fully realizing the anticipated benefits from such new technology, or the cost to implement or remedy any challenges associated with the adoption of new technology in a timely manner. 36 Table of Contents The development and use of AI presents risks and challenges that may adversely impact the Company’s business.
We may experience operational challenges in connection with the adoption of or failure to adopt new technology, which could result in unintended consequences or expenses as a result of the technology's limitations, our failure to use new technology effectively or at all, not fully realizing the anticipated benefits from such new technology, or the cost to implement or remedy any challenges associated with the adoption of new technology in a timely manner.
In addition to clients, the third parties with whom we interact and upon whom we rely include financial counterparties; financial intermediaries such as clearing agents, exchanges and clearing houses; vendors; regulators; providers of critical infrastructure such as internet access and electrical power; and other parties for whom we process transactions.
In addition to clients, the third parties with whom we interact and upon whom we rely include financial counterparties; financial intermediaries such as clearing agents, exchanges and clearing houses; vendors including providers of cloud-based technology solutions and outsourced data hosting or processing services; regulators; providers of critical infrastructure such as internet access and electrical power; and other parties for whom we process transactions.
From time to time, we may implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts. We may invest significant time and resources in developing and marketing new lines of business or new products and services.
New lines of business or new products and services may subject us to additional risks. From time to time, we may implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts.
We may not be successful in implementing our internal growth strategy or be able to manage the risks associated with our anticipated growth through opening new boutique private trust bank offices, which could have a material adverse effect on our business, financial condition and results of operations.
If we are not successful in retaining existing and attracting new investment management clients, our business, financial condition, results of operations and prospects may be materially and adversely affected. 39 Table of Contents We may not be successful in implementing our internal growth strategy or be able to manage the risks associated with our anticipated growth through opening new boutique private trust bank offices, which could have a material adverse effect on our business, financial condition and results of operations.
We derive a portion of our non-interest income from the origination of residential real estate loans and the subsequent sale of such loans into the secondary market. If we are unable to continue to originate and sell residential real estate loans at historical or greater levels, our residential real estate loan volume would decrease, which could decrease our earnings.
If we are unable to continue to originate residential real estate loans and sell them into the secondary market for a profit, our earnings could decrease. We derive a portion of our non-interest income from the origination of residential real estate loans and the subsequent sale of such loans into the secondary market.
If we are unable to compete effectively with those banking or other financial services businesses, we could find it more difficult to attract new and retain existing clients and our net interest margins, net interest income and investment management fees could decline, which would materially adversely affect our business, results of operations and prospects, and could cause us to incur losses in the future. 38 Table of Contents In addition, our ability to successfully attract and retain investment advisory and wealth management clients is dependent on our ability to compete with competitors’ investment products, level of investment performance, client services and marketing and distribution capabilities.
If we are unable to compete effectively with those banking or other financial services businesses, we could find it more difficult to attract new and retain existing clients and our net interest margins, net interest income and investment management fees could decline, which would materially adversely affect our business, results of operations and prospects, and could cause us to incur losses in the future.
As a result, our operating results are more vulnerable to adverse changes in the real estate market than other financial institutions with more diversified loan portfolios, and we could incur losses in the event of changes in economic conditions that disproportionately affect the real estate markets. 32 Table of Contents Real estate values in many of our markets have generally experienced periods of fluctuation over the last five years.
As a result, our operating results are more vulnerable to adverse changes in the real estate market than other financial institutions with more diversified loan portfolios, and we could incur losses in the event of changes in economic conditions that disproportionately affect the real estate markets.
For the year ended December 31, 2024, non-interest income represented approximately 30.7% of our total income before non-interest expense.
For the year ended December 31, 2025, non-interest income represented approximately 27.4% of our total income before non-interest expense.
Interest rates are highly sensitive to many factors that are beyond our control, including (among others) general and regional and local economic conditions, the monetary policies of the Federal Reserve, bank regulatory requirements, competition from other banks and financial institutions and a change over time in the mix of our loans and investment securities, on the one hand, and on our deposits and other liabilities, on the other hand.
Also, changes in interest rates might also impact the values of equity and debt securities under management and administration, which may have a negative impact on fee income. 31 Table of Contents Interest rates are highly sensitive to many factors that are beyond our control, including (among others) general and regional and local economic conditions, the monetary policies of the Federal Reserve, bank regulatory requirements, competition from other banks and financial institutions and a change over time in the mix of our loans and investment securities, on the one hand, and on our deposits and other liabilities, on the other hand.
As of December 31, 2024, our directors and executive officers beneficially owned an aggregate of 1,459,535 shares, or approximately 15.0% of our shares of common stock.
As of December 31, 2025, our directors and executive officers beneficially owned an aggregate of 1,265,928 shares, or approximately 13.0% of our shares of common stock.
Sales of substantial amounts of our common stock (including shares of our common stock issued in connection with an acquisition or under a compensation or incentive plan), or the perception that such sales could occur, may adversely affect prevailing market prices for our common stock and could impair our ability to raise capital through future sales of our securities.
Sales of substantial amounts of our common stock (including shares of our common stock issued in connection with an acquisition or under a compensation or incentive plan), or the perception that such sales could occur, may adversely affect prevailing market prices for our common stock and could impair our ability to raise capital through future sales of our securities. 48 Table of Contents The market price of our common stock may be highly volatile, which may make it difficult for you to resell your shares at the volume, prices and times desired.
The recognition of a significant charge to earnings in our consolidated financial statements resulting from any impairment of our goodwill or other intangible assets could have a material adverse effect on our financial condition and results of operations. 39 Table of Contents We are required to make significant estimates and assumptions in the preparation of our financial statements and our estimates and assumptions may not be accurate.
The recognition of a significant charge to earnings in our consolidated financial statements resulting from any impairment of our goodwill or other intangible assets could have a material adverse effect on our financial condition and results of operations.
The Company also experiences and responds to cybersecurity threats. 40 Table of Contents Although we have not experienced a material cybersecurity event to date, there is no assurance that there will not be a cybersecurity attack resulting in material adverse effect in the future.
In addition, the cost and operational consequences of responding to breaches and implementing remediation measures could be significant. The Company also experiences and responds to cybersecurity threats. Although we have not experienced a material cybersecurity event to date, there is no assurance that there will not be a cybersecurity attack resulting in material adverse effect in the future.
As of December 31, 2024, approximately $1.91 billion, or 78.9%, of our total loans were loans with real estate as a primary or secondary component of collateral.
As of December 31, 2025, approximately $2.23 billion, or 84.2%, of our total loans were loans with real estate as a primary or secondary component of collateral.
Conversely, in a declining interest rate environment, our earnings could be adversely affected if the interest rates we are able to charge on loans or other investments decline more quickly than those we pay on deposits and borrowings. 33 Table of Contents If we are unable to continue to originate residential real estate loans and sell them into the secondary market for a profit, our earnings could decrease.
Conversely, in a declining interest rate environment, our earnings could be adversely affected if the interest rates we are able to charge on loans or other investments decline more quickly than those we pay on deposits and borrowings.
These clients also, by their nature, are often able to exert considerable market influence, and this, combined with strong competitive forces in the markets for our services, has resulted in, and may continue to result in, significant pressure to reduce the fees we charge for our services in both our asset servicing and asset management business lines.
These clients also, by their nature, are often able to exert considerable market influence, and this, combined with strong competitive forces in the markets for our services, has resulted in, and may continue to result in, significant pressure to reduce the fees we charge for our services in both our asset servicing and asset management business lines. 35 Table of Contents The trust wealth management fees we receive may decrease as a result of poor investment performance, in either relative or absolute terms, which could decrease our revenues and net earnings.
While the Company has had no historic losses as a result of these indemnities, we could be required to repurchase the mortgage loans or reimburse the purchaser of our loans for losses incurred. Both of these situations could have an adverse effect on the profitability of our mortgage lending activities and negatively impact our net income.
While the Company has had no historic losses as a result of these indemnities, we could be required to repurchase the mortgage loans or reimburse the purchaser of our loans for losses incurred.
The banking laws, regulations and policies applicable to us govern matters ranging from the maintenance of adequate capital, safety and soundness, mergers and changes in control to the general business operations conducted by us, including permissible types, amounts and terms of loans and investments, the amount of reserves held against deposits, restrictions on dividends, imposition of specific accounting requirements, establishment of new offices and the maximum interest rate that may be charged on loans. 43 Table of Contents We are subject to changes in federal and state banking statutes, regulations and governmental policies, or the interpretation or implementation of them, and are subject to changes and increased complexity in regulatory requirements as governments and regulators continue reforms intended to strengthen the stability of the financial system and protect key markets and participants.
The banking laws, regulations and policies applicable to us govern matters ranging from the maintenance of adequate capital, safety and soundness, mergers and changes in control to the general business operations conducted by us, including permissible types, amounts and terms of loans and investments, the amount of reserves held against deposits, restrictions on dividends, imposition of specific accounting requirements, establishment of new offices and the maximum interest rate that may be charged on loans.
If interest rates increase after we originate the loans, our ability to market those loans is impaired as the profitability on the loans decreases. These fluctuations can have an adverse effect on the revenue we generate from residential real estate loans and in certain instances, could result in a loss on the sale of the loans.
These fluctuations can have an adverse effect on the revenue we generate from residential real estate loans and in certain instances, could result in a loss on the sale of the loans.
As a result, a material decrease in the volume of those trust assets by that client could materially reduce our assets under management, which would adversely affect our non-interest income and, therefore, our results of operations.
As a result, a material decrease in the volume of those trust assets by that client could materially reduce our assets under management, which would adversely affect our non-interest income and, therefore, our results of operations. 38 Table of Contents The success of our business depends on achieving our strategic objectives, including through acquisitions which may not increase our profitability and may adversely affect our future operating results.
The Company's products, services, and systems may be used in critical Company, client, or third-party operations, or involve the storage, processing, and transmission of sensitive data, including valuable intellectual property, other proprietary or confidential data, regulated data, and personal information of associates, clients, and others.
The risk of such attacks to the Company includes attempted breaches not only of our own products, services, and systems, but also those of clients, contractors, business partners, vendors, and other third parties. 33 Table of Contents The Company's products, services, and systems may be used in critical Company, client, or third-party operations, or involve the storage, processing, and transmission of sensitive data, including valuable intellectual property, other proprietary or confidential data, regulated data, and personal information of associates, clients, and others.
Failure to comply with any such laws, regulations or regulatory policies could result in sanctions by regulatory agencies, restrictions on our business activities, civil money penalties or damage to our reputation, all of which could adversely affect our business, results of operations, financial condition or prospects.
Failure to comply with any such laws, regulations or regulatory policies could result in sanctions by regulatory agencies, restrictions on our business activities, civil money penalties or damage to our reputation, all of which could adversely affect our business, results of operations, financial condition or prospects. 42 Table of Contents Federal and state banking agencies periodically conduct examinations of our business, including compliance with laws and regulations, and our failure to comply with any supervisory actions which we are, or may become, subject to as a result of such examinations may adversely affect us.
Our largest trust client accounts for 37.8% of our total assets under management. As of December 31, 2024, our largest trust client accounted for, in the aggregate, 37.8% of our total assets under management and 3.8% of our non-interest income.
Our largest trust client accounts for 36.8% of our total assets under management and 4.6% of our total Trust and investment management fees. As of December 31, 2025, our largest trust client accounted for, in the aggregate, 36.8% of our total assets under management and 4.6% of our total Trust and investment management fees.
If required payments on our subordinated debentures are not made or are deferred, or dividends on any preferred stock we may issue are not paid, we will be prohibited from paying dividends on our common stock. 48 Table of Contents Our corporate organizational documents and provisions of federal and state law to which we are subject contain certain provisions that could have an anti-takeover effect and may delay, make more difficult or prevent an attempted acquisition that you may favor or an attempted replacement of our Board of Directors or management.
Our corporate organizational documents and provisions of federal and state law to which we are subject contain certain provisions that could have an anti-takeover effect and may delay, make more difficult or prevent an attempted acquisition that you may favor or an attempted replacement of our Board of Directors or management.
If new regulations continue to increase and we are unable to make technology upgrades, our ability to originate mortgage loans will be reduced or eliminated. Additionally, we sell a large portion of our residential real estate loans to third-party investors, and rising interest rates could negatively affect our ability to generate suitable profits on the sale of such loans.
Additionally, we sell a large portion of our residential real estate loans to third-party investors, and rising interest rates could negatively affect our ability to generate suitable profits on the sale of such loans. If interest rates increase after we originate the loans, our ability to market those loans is impaired as the profitability on the loans decreases.
We conduct appropriate due diligence on such customer information and, where practical and economical, we engage valuation and other experts or sources of information to assist with assessing collateral and other customer risks. Our financial results could be adversely affected if the financial statements, collateral value or other financial information provided by clients or counterparties are incorrect.
We conduct appropriate due diligence on such customer information and, where practical and economical, we engage valuation and other experts or sources of information to assist with assessing collateral and other customer risks.
If these claims and legal actions are not resolved in a manner favorable to us, we may be exposed to significant financial liability or our reputation could be damaged. Either of these results may adversely impact demand for our products and services or otherwise have a material adverse effect on our business, financial condition or results of operations.
If these claims and legal actions are not resolved in a manner favorable to us, we may be exposed to significant financial liability or our reputation could be damaged.
We may, at some point, be considered to have a concentration in the future, or our risk management practices may be found to be deficient, which could result in increased reserves and capital costs as well as potential regulatory enforcement action. 44 Table of Contents We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.
We may, at some point, be considered to have a concentration in the future, or our risk management practices may be found to be deficient, which could result in increased reserves and capital costs as well as potential regulatory enforcement action.
The issuance of any shares of our common stock in the future also would, and equity-related securities could, dilute the percentage ownership interest held by shareholders prior to such issuance. 49 Table of Contents In addition, we may issue shares of our common stock or other securities from time to time as consideration for future acquisitions and investments and pursuant to compensation and incentive plans.
The issuance of any shares of our common stock in the future also would, and equity-related securities could, dilute the percentage ownership interest held by shareholders prior to such issuance.
Additionally, the adoption of CECL methodology for determining our allowance for credit losses in 2023 has increased the complexity, and associated risk, of the analysis and processes relying on management judgment.
Additionally, the adoption of CECL methodology for determining our allowance for credit losses has increased the complexity, and associated risk, of the analysis and processes relying on management judgment. 40 Table of Contents Our ability to attract and retain clients and key associates could be adversely affected if our reputation is harmed.
Such an occurrence could negatively impact our ability to retain existing or attract new clients and, as a result, could have a material adverse effect on our business, financial condition, results of operations and prospects. 34 Table of Contents The investment management contracts we have with our clients are terminable without cause and on relatively short notice by our clients, which makes us vulnerable to short-term declines in the performance of the securities under our management.
Such an occurrence could negatively impact our ability to retain existing or attract new clients and, as a result, could have a material adverse effect on our business, financial condition, results of operations and prospects.
Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Any such actions could have a material adverse effect on our business, financial condition, results of operations and prospects.
Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation.
We face a risk of noncompliance and enforcement action with Anti-Money Laundering and Combating the Financing of Terrorism ("AML/CFT") laws and regulations.
Any such actions could have a material adverse effect on our business, financial condition, results of operations and prospects. 43 Table of Contents We face a risk of noncompliance and enforcement action with Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) laws and regulations.
We derive a significant amount of our revenues primarily from investment management fees based on assets under management. As such, fluctuations in the equity and debt markets can have a direct impact upon our net earnings.
We derive a significant amount of our revenues primarily from investment management fees based on assets under management.
A rising interest rate environment, general economic conditions, market volatility, or other factors beyond our control could adversely affect our ability to originate residential real estate loans. The financial services industry is experiencing an increase in regulations and compliance requirements related to mortgage loan originations necessitating technology upgrades and other changes.
The financial services industry is experiencing an increase in regulations and compliance requirements related to mortgage loan originations necessitating technology upgrades and other changes. If new regulations continue to increase and we are unable to make technology upgrades, our ability to originate mortgage loans will be reduced or eliminated.
A sustained decline in the value of the assets that we manage or otherwise administer or service for others, could have an adverse effect on related fee income and demand for our services. Unstable global economic conditions may have serious adverse consequences on our business, financial condition, and operations.
Furthermore, the occurrence of any such event in the future could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations. Unstable global economic conditions may have serious adverse consequences on our business, financial condition, and operations.
Removed
The lack of soundness of other financial institutions or financial market utilities may adversely affect the Company. The Company’s ability to engage in routine funding and other transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial institutions are interdependent because of trading, clearing, counterparty or other relationships.
Added
Real estate values in many of our markets have generally experienced periods of fluctuation over the last five years. The market value of real estate can fluctuate significantly in a short period of time.
Removed
Defaults by, or rumors or questions about, one or more financial institutions or financial market utilities, or the financial services industry generally, may lead to market-wide liquidity problems and losses of client, creditor and counterparty confidence and could lead to losses or defaults by other financial institutions, or the Company.
Added
If we are unable to continue to originate and sell residential real estate loans at historical or greater levels, our residential real estate loan volume would decrease, which could decrease our earnings. A rising interest rate environment, general economic conditions, market volatility, or other factors beyond our control could adversely affect our ability to originate residential real estate loans.
Removed
Bank failures in 2023 caused general uncertainty regarding the adequacy of liquidity of banks, in particular regional banks, which in turn generated significant market volatility among publicly traded bank holding companies.
Added
Both of these situations could have an adverse effect on the profitability of our mortgage lending activities and negatively impact our net income. 32 Table of Contents Our loan portfolio includes a significant number of commercial loans, which involve risks specific to commercial borrowers.
Removed
Although we were not directly impacted by these bank failures, the resulting speed and with which news, including social media outlets, led depositors to withdraw or attempt to withdraw funds from these and other financial institutions, as well as the volatile impact to stock prices, could have a material effect on the Company’s operations.
Added
Either of these results may adversely impact demand for our products and services or otherwise have a material adverse effect on our business, financial condition or results of operations. 34 Table of Contents Negative developments affecting the banking industry and resulting media coverage have eroded customer confidence in the banking system.
Removed
Also, changes in interest rates might also impact the values of equity and debt securities under management and administration, which may have a negative impact on fee income.
Added
Any future bank failures or similar events adversely affecting the banking industry may negatively impact customer confidence in the safety and soundness of regional banks and may generate market volatility among publicly traded bank holding companies and, in particular, regional banks like the Company.
Removed
The trust wealth management fees we receive may decrease as a result of poor investment performance, in either relative or absolute terms, which could decrease our revenues and net earnings. We derive a significant amount of our revenues primarily from investment management fees based on assets under management.
Added
As a result, customers may choose to maintain deposits with larger financial institutions or invest in higher yielding short-term fixed income securities, all of which could materially adversely impact the Company's liquidity, loan funding capacity, net interest margin, capital, and results of operations.
Removed
The success of our business depends on achieving our strategic objectives, including through acquisitions which may not increase our profitability and may adversely affect our future operating results.
Added
While the Department of the Treasury, the Federal Reserve, and the FDIC historically have taken action to ensure that depositors of failed banks had access to their deposits, including uninsured deposit accounts, there is no guarantee that regional bank failures or bank runs will not occur in the future and, if they were to occur, they may have a material and adverse impact on customer and investor confidence in regional banks negatively impacting the Company's liquidity, capital, results of operations, and stock price.
Removed
If we are not successful in retaining existing and attracting new investment management clients, our business, financial condition, results of operations and prospects may be materially and adversely affected.
Added
The investment management contracts we have with our clients are terminable without cause and on relatively short notice by our clients, which makes us vulnerable to short-term declines in the performance of the securities under our management.
Removed
The risk of such attacks to the Company includes attempted breaches not only of our own products, services, and systems, but also those of clients, contractors, business partners, vendors, and other third parties.
Added
In addition, our ability to successfully attract and retain investment advisory and wealth management clients is dependent on our ability to compete with competitors’ investment products, level of investment performance, client services and marketing and distribution capabilities.

… 23 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

8 edited+0 added−0 removed5 unchanged
Biggest changeFor more information on our cybersecurity related risks, see Item 1A Risk Factors. Governance The Company’s information security officer ("ISO") leads the Company’s overall cybersecurity function and reports to our Chief Risk Officer ("CRO"). The Company's CRO has 30 years of experience in banking and risk management and has experience in various technology oversight roles.
Biggest changeFor more information on our cybersecurity related risks, see Item 1A Risk Factors. Governance The Company’s information security officer (ISO) leads the Company’s overall cybersecurity function and reports to our Executive Director Risk, Human Capital, and Operations, who has 23 years of experience in banking and risk management.
The Company leverages recognized security frameworks and guidelines, such as the National Institute of Standards and Technology Framework Cybersecurity Framework and Federal Financial Institution Examination Counsel ("FFIEC") guidelines, to organize, assess, and improve the Program.
The Company leverages recognized security frameworks and guidelines, such as the National Institute of Standards and Technology Cybersecurity Framework and Federal Financial Institution Examination Counsel (FFIEC) guidelines, to organize, assess, and improve the Program.
ITEM 1C: CYBERSECURITY Cybersecurity Risk Management and Strategy The Company maintains an information security program (the “Program”) to identify, assess, and manage material risks to its business, operations, and assets related to cybersecurity threats.
ITEM 1C: CYBERSECURITY Cybersecurity Risk Management and Strategy The Company maintains an information security program (the Program) to identify, assess, and manage material risks to its business, operations, and assets related to cybersecurity threats.
Additional cybersecurity and privacy education and awareness are periodically provided to employees utilizing various delivery methods such as phishing campaigns, training sessions, and informational articles. • Third-party service provider risk management: The Company’s third-party risk management program applies a risk-based approach to the assessment, onboarding, and ongoing due diligence of key third-party service providers, including the assessment and mitigation of cybersecurity-related risks. • Engagement of third-party assessors and consultants: We periodically engage third-party experts and consultants to conduct assessments and tests of our security controls, such as penetration tests and framework assessments.
Additional cybersecurity and privacy education and awareness are periodically provided to employees utilizing various delivery methods such as phishing campaigns, training sessions, and informational articles. • Third-party service provider risk management: The Company’s third-party risk management program applies a risk-based approach to the assessment, onboarding, and ongoing due diligence of key third-party service providers, including the assessment and mitigation of cybersecurity-related risks. 49 Table of Contents • Engagement of third-party assessors and consultants: We periodically engage third-party experts and consultants to conduct assessments and tests of our security controls, such as penetration tests and framework assessments.
The Company also engages a third-party managed detection and response service provider to monitor Company systems for cybersecurity threats. We also consider cybersecurity-related risks, along with other top risks for the Company, as part of our overall enterprise risk management (“ERM”) process.
The Company also engages a third-party managed detection and response service provider to monitor Company systems for cybersecurity threats. We also consider cybersecurity-related risks, along with other top risks for the Company, as part of our overall enterprise risk management (ERM) process.
In addition, any cybersecurity incident assessed as being, or potentially becoming, material is escalated for further assessment and then reported to designated members of our senior management and, if necessary, the Audit Committee. 51 Table of Contents
In addition, any cybersecurity incident assessed as being, or potentially becoming, material is escalated for further assessment and then reported to designated members of our senior management and, if necessary, the Audit Committee. 50 Table of Contents
Our ISO works with stakeholders across the Company, including with our technology group, to maintain the cybersecurity program. Our executive leadership team is actively engaged in the oversight and strategic direction of our Program and meets with the CRO to review and discuss the Company’s Program, including emerging cybersecurity risks, threats, and industry trends.
Our ISO works with stakeholders across the Company, including with our technology group, to maintain the cybersecurity program. Our executive leadership team is actively engaged in the oversight and strategic direction of our Program and meets with the Executive Director Risk, Human Capital, and Operations to review and discuss the Company’s Program, including emerging cybersecurity risks, threats, and industry trends.
Our Board of Directors (the “Board”) considers cybersecurity risk as part of its risk management oversight function and has delegated to the Audit Committee oversight of cybersecurity risks. The Audit Committee receives updates from the CRO and other Company management on cybersecurity matters at least annually.
Our Board of Directors considers cybersecurity risk as part of its risk management oversight function and has delegated to the Audit Committee oversight of cybersecurity risks. The Audit Committee receives updates from the Executive Director Risk, Human Capital, and Operations and other Company management on cybersecurity matters at least annually.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−1 removed2 unchanged
Biggest changeCollins, Greenwood Village, and Loveland, in addition to single locations in Phoenix, Arizona and Cheyenne, Wyoming; and one trust office located in in Century City, California . We o wn our Wyoming locations in Jackson Hole, Pinedale, and Rock Springs, while all remaining locations are leased.
Biggest changeCollins, Greenwood Village, and Loveland, in addition to a location in Cheyenne, Wyoming; and one trust office located in in Century City, California . We o wn our Wyoming locations in Jackson Hole, Pinedale, and Rock Springs, while all remaining locations are leased. W e believe that our facilities are suitable and adequate to meet our present needs.
The chart below describes our locations, which we believe are strategically located in affluent and high-growth markets in twenty locations (listed below) across Colorado, Arizona, Wyoming, Montana, and California: Colorado Arizona Wyoming Montana California Downtown Denver (1) Phoenix Jackson Hole Bozeman Century City (3) Aspen Phoenix (2) Pinedale Boulder Scottsdale Rock Springs Cherry Creek Cheyenne (2) Denver Tech Center / Cherry Hills Ft.
The chart below describes our locations, which we believe are strategically located in affluent and high-growth markets in nineteen locations (listed below) across Colorado, Arizona, Wyoming, Montana, and California: Colorado Arizona Wyoming Montana California Downtown Denver (1) Phoenix Jackson Hole Bozeman Century City (3) Aspen Scottsdale Pinedale Boulder Rock Springs Cherry Creek Cheyenne (2) Denver Tech Center / Cherry Hills Ft.
Including our corporate headquarters, the Bank ope rates twenty profit centers, which consists of fourteen boutique private trust bank offices with two locations in Arizona, eight locations in Colorado, three locations in Wyoming, and one location in Bozeman, Montana; five loan production offices with three Colorado locations in Ft.
Including our corporate headquarters, the Bank ope rates nineteen profit centers, which consists of fourteen boutique private trust bank offices with two locations in Arizona, eight locations in Colorado, three locations in Wyoming, and one location in Montana; four loan production offices with three Colorado locations in Ft.
Removed
W e believe that our facilities are suitable and adequate to meet our present needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed4 unchanged
Biggest changeMINE SAFETY DISCLOSURES Not applicable. 52 Table of Contents PART II
Biggest changeMINE SAFETY DISCLOSURES Not applicable. 51 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+3 added−0 removed8 unchanged
Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans The information concerning the ownership of shares of our common stock by certain beneficial owners and management required by this item is incorporated herein by reference from our definitive proxy statement for our 2025 Annual Meeting of Shareholders, a copy of which will be filed with the SEC no later than 120 days after the end of our fiscal year. 53 Table of Contents The following table sets forth information as of December 31, 2024, regarding our equity compensation plans that provide for the award of equity securities or the grant of options to purchase equity securities of the Company to employees and directors of First Western and its subsidiaries: (A) (B) (C) Plan Category Number of securities to be issued upon exercise of outstanding options or vesting of outstanding restricted stock grants Weighted average exercise price of outstanding options Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A) Equity compensation plans approved by shareholders 454,808 $ 25.30 468,753 Equity compensation plans not approved by shareholders — — — Total 454,808 468,753 Issuer Purchases of Equity Securities Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publically announced plans or programs Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (2) October 1, 2024 through October 31, 2024 — $ — — 194,499 November 1, 2024 through November 30, 2024 1,233 20.41 — 194,499 December 1, 2024 through December 31, 2024 — — — 194,499 _____________________________ (1) These shares relate to the net settlement by employees related to vested, restricted stock awards and do not impact the shares available for repurchase.
Biggest changeThe following table sets forth information as of December 31, 2025, regarding our equity compensation plans that provide for the award of equity securities or the grant of options to purchase equity securities of the Company to employees and directors of First Western and its subsidiaries: (A) (B) (C) Plan Category Number of securities to be issued upon exercise of outstanding options or vesting of outstanding restricted stock grants Weighted average exercise price of outstanding options Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A) Equity compensation plans approved by shareholders 387,928 $ 26.77 519,957 Equity compensation plans not approved by shareholders — — — Total 387,928 519,957 52 Table of Contents Issuer Purchases of Equity Securities Total number of shares purchased Average price paid per share Total number of shares purchased as part of publically announced plans or programs (3) Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (3) October 1, 2025 through October 31, 2025 — $ — — $ 4,698,690 November 1, 2025 through November 30, 2025 4,175 (1) 23.00 — 4,698,690 December 1, 2025 through December 31, 2025 29,237 (2) 25.76 — 4,698,690 _____________________________ (1) These shares relate to the net settlement by employees related to vested, restricted stock awards and do not impact the shares available for repurchase.
Holders of Record As of March 5, 2025, there were approximately 119 ho lders of record of our common stock. Dividend Policy We have not declared or paid any dividends on our common stock and we do not currently anticipate paying any cash dividends on our common stock in the foreseeable future.
Holders of Record As of February 25, 2026 , there were approximately 109 ho lders of record of our common stock. Dividend Policy We have not declared or paid any dividends on our common stock and we do not currently anticipate paying any cash dividends on our common stock in the foreseeable future.
They were purchased at an average price paid per share of $20.41. Net settlements represent instances where employees elect to satisfy their income tax liability related to the vesting of restricted stock through the surrender of a proportionate number of the vested shares to the Company. (2) These shares relate to the 2024 Repurchase Plan.
They were purchased at an average price paid per share of $23.00. Net settlements represent instances where employees elect to satisfy their income tax liability related to the vesting of restricted stock or exercising of stock options through the surrender of a proportionate number of the vested shares to the Company.
Refer to Note 11 - Shareholders' Equity for further information.
Refer to Note 11 - Shareholders' Equity for further information. ITEM 6: [Reserved] 53 Table of Contents
Added
Securities Authorized for Issuance under Equity Compensation Plans The information concerning the ownership of shares of our common stock by certain beneficial owners and management required by this item is incorporated herein by reference from our definitive proxy statement for our 2026 Annual Meeting of Shareholders, a copy of which will be filed with the SEC no later than 120 days after the end of our fiscal year.
Added
(2) 29,011 shares relate to the net settlement by employees related to the exercising of stock options on a cashless basis. 226 shares relate to the net settlement by employees related to the tax liability of the exercising of stock options. They were purchased at an average price paid per share of $25.76.
Added
These net settlements do not impact the shares available for repurchase. Net settlements represent instances where employees elect to satisfy their income tax liability related to the vesting of restricted stock or exercising of stock options through the surrender of a proportionate number of the vested shares to the Company. (3) These shares relate to the 2025 Repurchase Plan.

Item 7. Management's Discussion & Analysis

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

110 edited+29 added−99 removed65 unchanged
Biggest changeTreasury debt $ — — % $ 246 0.01 % $ — — % $ — — % Corporate bonds — — 3,995 0.34 19,410 1.20 173 * GNMA mortgage-backed securities – residential — — 35 * 27 * 31,299 1.07 FNMA mortgage-backed securities – residential — — 3,137 0.21 812 0.02 8,060 0.37 Government GMO and MBS – commercial — — 112 0.01 1,391 0.06 3,573 0.10 Corporate CMO and MBS — — 15 * 357 0.03 3,153 0.16 Total debt securities held-to-maturity $ — — % $ 7,540 0.57 % $ 21,997 1.31 % $ 46,258 1.70 % Maturity as of December 31, 2023 One Year or Less One to Five Years Five to Ten Years After Ten Years (dollars in thousands) Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Debt securities held-to-maturity: U.S.
Biggest changeMaturity as of December 31, 2025 One Year or Less One to Five Years Five to Ten Years After Ten Years (dollars in thousands) Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Debt securities available-for-sale: Residential mortgage-backed securities issued by U.S. government agencies and sponsored enterprises $ — — % $ — — % $ — — % $ 45,623 4.87 % Total available-for-sale $ — — $ — — $ — — $ 45,623 4.87 Debt securities held-to-maturity: U.S. treasuries $ — — % $ 248 3.74 % $ — — % $ — — % U.S. government agencies and sponsored enterprises — — 360 3.78 395 2.75 2,657 3.99 Residential mortgage-backed securities issued by U.S. government agencies and sponsored enterprises 10 3.24 4,761 4.82 1,291 2.14 53,777 3.46 Residential mortgage-backed securities - other — — 11 4.76 305 5.02 435 4.03 Commercial mortgage-backed securities issued by U.S. government agencies and sponsored enterprises — — — — 6,000 4.61 138 2.01 Corporate bonds — — 6,690 6.62 17,966 5.25 — — Total held-to-maturity $ 10 3.24 $ 12,070 5.77 $ 25,957 4.91 $ 57,007 3.49 67 Table of Contents Maturity as of December 31, 2024 One Year or Less One to Five Years Five to Ten Years After Ten Years (dollars in thousands) Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Debt securities held-to-maturity: U.S. treasuries $ — — % $ 246 3.74 % $ — — % $ — — % U.S. government agencies and sponsored enterprises — — 35 8.07 938 3.34 2,901 4.09 Residential mortgage-backed securities issued by U.S. government agencies and sponsored enterprises — — 3,250 5.06 1,291 1.91 42,678 2.70 Residential mortgage-backed securities - other — — 15 5.38 357 5.61 506 4.17 Commercial mortgage-backed securities issued by U.S. government agencies and sponsored enterprises — — — — — — 173 1.94 Corporate bonds — — 3,995 6.43 19,410 4.69 — — Total held-to-maturity $ — — $ 7,541 5.76 $ 21,996 4.49 $ 46,258 2.80 _____________________________ (*) Represents percentages that are insignificant Allowance for Credit Losses for Debt Securities Management measures expected credit losses on debt securities on a collective basis by major security type.
The amounts reported as OREO are supported by recent appraisals, with the appraised values adjusted, where applicable, for expected transaction fees likely to be incurred upon sale of the property. We incur recurring expenses relating to OREO in the form of maintenance, taxes, insurance and legal fees, among others, until the OREO parcel is disposed.
The amounts reported as OREO are supported by recent appraisals, with the appraised values adjusted, where applicable, for expected transaction fees likely to be incurred upon sale of the property. We incur recurring expenses relating to OREO in the form of maintenance, taxes, insurance, and legal fees, among others, until the OREO property is disposed.
The majority of our held-to-maturity investment portfolio consists of debt securities issued by U.S. government entities and agencies and we consider the risk of credit loss to be zero and, therefore, we do not record an ACL. The Company's non-government backed debt securities include private label CMO and MBS as well as corporate bonds.
The majority of our held-to-maturity investment portfolio consists of debt securities issued by U.S. government entities and agencies and we consider the risk of credit loss to be zero and, therefore, we do not record an ACL. The Company's non-government backed debt securities include private label MBS as well as corporate bonds.
Events that may trigger goodwill impairment include deterioration in economic conditions, increased competitive environment, negative trends in overall financial performance, legal or regulatory proceedings, loss of key personnel, and change in strategy or sustained decreases in share value. We performed a qualitative goodwill assessment as of October 31, 2024.
Events that may trigger goodwill impairment include deterioration in economic conditions, increased competitive environment, negative trends in overall financial performance, legal or regulatory proceedings, loss of key personnel, and change in strategy or sustained decreases in share value. We performed a qualitative goodwill assessment as of October 31, 2025.
A sensitivity analysis of our ACL was performed as of September 30, 2024 to estimate credit losses by increasing and decreasing model inputs such as economic forecasts including HPI, GDP, and national unemployment, the forecast period, the forecast reversion period, and prepayment rates, among others.
A sensitivity analysis of our ACL was performed as of September 30, 2025 to estimate credit losses by increasing and decreasing model inputs such as economic forecasts including HPI, GDP, and national unemployment, the forecast period, the forecast reversion period, and prepayment rates, among others.
Management believes the financial strength of the Bank’s clientele and the diversity of the portfolio continues to mitigate the credit risk within the portfolio. Non-Interest Income The year ended December 31, 2024 compared with the year ended December 31, 2023 .
Management believes the financial strength of the Bank’s clientele and the diversity of the portfolio continues to mitigate the credit risk within the portfolio. Non-Interest Income The year ended December 31, 2025 compared with the year ended December 31, 2024 .
Data processing costs are primarily impacted by the number of loan, deposit and trust accounts we have and the level of transactions processed for our clients. • Marketing —costs related to promoting our business through advertising, promotions, charitable events, sponsorships, donations, and other marketing-related expenses.
Data processing costs are primarily impacted by the number of loan, deposit and trust accounts we have and the level of transactions processed for our clients. 55 Table of Contents • Marketing —costs related to promoting our business through advertising, promotions, charitable events, sponsorships, donations, and other marketing-related expenses.
Additionally, borrowings from the Paycheck Protection Program Loan Facility ("PPPLF") from the Federal Reserve decreased from $3.5 million as of December 31, 2023 to $2.0 million as of December 31, 2024 due to the pay down of PPP loans . Borrowing from the PPPLF facility is expected to trend in the same direction as the PPP loan balances.
Additionally, borrowings from the Paycheck Protection Program Loan Facility (PPPLF) from the Federal Reserve decreased from $2.0 million as of December 31, 2024 to $0.5 million as of December 31, 2025 due to the pay down of PPP loans . Borrowing from the PPPLF facility is expected to trend in the same direction as the PPP loan balances.
The majority of our assets and liabilities are on the Wealth Management segment balance sheet and the increase in Income before taxes is primarily attributable to an increases in Net interest income, after provision for credit losses and Non-interest income, partially offset by increases in Non-interest expense.
The majority of our assets and liabilities are on the Wealth Management segment balance sheet. The increase in Income before income taxes was primarily attributable to an increase in Net interest income, after provision for credit losses, partially offset by an increase in Non-interest expense.
Occupancy and equipment costs are primarily impacted by the number of locations we occupy. 56 Table of Contents • Professional services —costs related to legal, accounting, tax, consulting, personnel recruiting, insurance and other outsourcing arrangements. Professional services costs are primarily impacted by corporate activities requiring specialized services.
Occupancy and equipment costs are primarily impacted by the number of locations we occupy. • Professional services —costs related to legal, accounting, tax, consulting, personnel recruiting, insurance and other outsourcing arrangements. Professional services costs are primarily impacted by corporate activities requiring specialized services.
In addition, loans in this portfolio are collateralized with other sources of collateral. This segment of our portfolio is affected by a variety of local and national economic factors affecting borrowers’ employment prospects, income levels, and overall economic sentiment.
In addition, loans in this portfolio are collateralized with other sources of collateral. This segment of our portfolio is affected by a variety of local and national economic factors affecting borrowers’ employment prospects, income levels, and overall economic sentiment. • Consumer and other— consists of unsecured consumer loans.
From 2004, when we opened our first profit center, until December 31, 2024, we have expanded our footprint into fourteen full service profit centers, five loan production offices, and one trust office located across five states.
From 2004, when we opened our first profit center, until December 31, 2025, we have expanded our footprint into fourteen full service profit centers, four loan production offices, and one trust office located across five states.
(4) Includes $0.6 million of pr incipal balance of loans held for sale as of December 31, 2024. • Cash, Securities, and Other— consists of consumer and commercial purpose loans that are primarily secured by securities managed and under custody with us, cash on deposit with us or life insurance policies.
(3) Includes $0.0 and $0.6 million of pr incipal balance of loans held for sale as of December 31, 2025 and 2024, respectively. • Cash, securities, and other— consists of consumer and commercial purpose loans that are primarily secured by securities managed and under custody with us, cash on deposit with us or life insurance policies.
In all cases, loans are placed on non-accrual status or charged off if collection of interest or principal is considered doubtful. OREO represents assets acquired through, or in lieu of, foreclosure.
In all cases, loans are placed on non-accrual status or charged off if collection of interest or principal is considered doubtful. 71 Table of Contents OREO represents assets acquired through, or in lieu of, foreclosure.
(8) Net interest margin is equal to net interest income divided by average interest-earning assets. 59 Table of Contents The following table presents the dollar amount of changes in interest income and interest expense for the periods presented, for each component of interest-earning assets and interest-bearing liabilities, and distinguishes between changes attributable to volume and interest rates.
(7) Net interest margin is equal to net interest income divided by average interest-earning assets. 58 Table of Contents The following table presents the dollar amount of changes in interest income and interest expense for the periods presented, for each component of interest-earning assets and interest-bearing liabilities, and distinguishes between changes attributable to volume and interest rates.
Loan reviews include monitoring past due rates, non-performing trends, concentrations, LTV’s, among other qualitative factors.
Loan reviews include monitoring past due rates, non-performing trends, concentrations, LTVs, among other qualitative factors.
The amount of interest income that would have been recognized on loans accounted for on a non-accrual basis pursuant to contractual terms was $6.8 million and $4.0 million for the years ended December 31, 2024 and 2023, respectively. We had amortized cost of $48.7 million and $50.8 million in non-performing assets as of December 31, 2024 and 2023, respectively.
The amount of interest income that would have been recognized on loans accounted for on a non-accrual basis pursuant to contractual terms was $2.4 million and $6.8 million for the years ended December 31, 2025 and 2024, respectively. We had amortized cost of $19.6 million and $48.7 million in non-performing assets as of December 31, 2025 and 2024, respectively.
As of December 31, 2024, the Bank’s capital ratios exceeded the current well capitalized regulatory requirements established under Basel III. 57 Table of Contents Results of Operations Overview The year ended December 31, 2024 compared with the year ended December 31, 2023 .
As of December 31, 2025, the Bank’s capital ratios exceeded the current well capitalized regulatory requirements established under Basel III. 56 Table of Contents Results of Operations Overview The year ended December 31, 2025 compared with the year ended December 31, 2024 .
Income Tax The Company recorded an income tax provision of $3.1 million and $1.8 million for the years ended December 31, 2024 and 2023, respectively, reflecting an effective tax rate 26.8% and 26.0%, respectively. Segment Reporting We have two reportable operating segments: Wealth Management and Mortgage.
Income Tax The Company recorded an income tax provision of $3.9 million and $3.1 million for the years ended December 31, 2025 and 2024, respectively, reflecting an effective tax rate of 22.8% and 26.8%, respectively. Segment Reporting We have two reportable operating segments: Wealth Management and Mortgage.
The amount of gain or loss on the sale of loans is primarily driven by market conditions and changes in interest rates, as well as our pricing and asset liability management strategies. As of December 31, 2024 and 2023, we had Mortgage loans held for sale of $25.5 million and $7.3 million , respectively, in residential mortgage loans we originated.
The amount of gain or loss on the sale of loans is primarily driven by market conditions and changes in interest rates, as well as our pricing and asset liability management strategies. As of December 31, 2025 and 2024, we had Mortgage loans held for sale of $40.2 million and $25.5 million , respectively, in residential mortgage loans we originated.
Contractual maturities may differ from expected maturities because issuers can have the right to call or prepay obligations without penalties. Our debt securities are taxable securities. The weighted average yield for each range of maturities was calculated using the yield on each security within that range weighted by the amortized cost of each security as of December 31, 2024.
Contractual maturities may differ from expected maturities because issuers can have the right to call or prepay obligations without penalties. Our investments are taxable securities. The weighted average yield for each range of maturities was calculated using the yield on each security within that range weighted by the amortized cost of each security.
Non-Performing Assets Non-performing assets include non-accrual loans and OREO. The accrual of interest on loans is discontinued at the time the loan becomes 90 or more days delinquent unless the loan is well secured and in the process of collection or renewal due to maturity. Past due status is based on the contractual terms of the loan.
The accrual of interest on loans is discontinued at the time the loan becomes 90 or more days delinquent unless the loan is well secured and in the process of collection or renewal due to maturity. Past due status is based on the contractual terms of the loan.
The decrease was primarily due to changes in temporary differences, most notably the decrease in Allowance for credit losses and stock compensation as of and during the year ended December 31, 2024. Deposits Our deposit products include money market accounts, demand deposit accounts, time-deposit accounts (typically certificates of deposit), interest checking accounts, and saving accounts.
The increase was primarily due to changes in temporary differences, most notably the increase in Allowance for credit losses as of and during the year ended December 31, 2025. Deposits Our deposit products include money market accounts, demand deposit accounts, time-deposit accounts (typically certificates of deposit), interest checking accounts, and saving accounts.
(2) Excludes mortgage loans held for sale of $25.5 million and $7.3 million as of December 31, 2024 and 2023, respectively. Excludes $7.3 million and $13.7 million of loans held for investment accounted for under fair value option as of December 31, 2024 and 2023, respectively.
(2) Excludes mortgage loans held for sale of $40.2 million and $25.5 million as of December 31, 2025 and 2024, respectively. Excludes $3.2 million and $7.3 million of loans held for investment accounted for under fair value option as of December 31, 2025 and 2024, respectively.
(2) Excludes average outstanding balances of mortgage loans held for sale of $18.0 million and $11.5 million for the years ended December 31, 2024 and 2023, respectively. Excludes average outstanding balances of loans held for investment under the fair value option of $10.6 million and $18.5 million for the years ended December 31, 2024 and 2023, respectively.
(2) Excludes average outstanding balances of mortgage loans held for sale of $25.0 million and $18.0 million for the years ended December 31, 2025 and 2024, respectively. Excludes average outstanding balances of loans held for investment under the fair value option of $5.3 million and $10.6 million for the years ended December 31, 2025 and 2024, respectively.
This also includes realized gains or losses on charge-offs and recoveries. • Bank fees —income generated through bank-related service charges such as: electronic transfer fees, treasury management fees, bill pay fees, servicing fees for Main Street Lending Program (“MSLP”), loan prepayment penalty fees, loan interest rate swap fees, and other banking fees.
This also includes realized gains or losses on charge-offs and recoveries. • Bank fees —income generated through bank-related service charges such as: electronic transfer fees, treasury management fees, bill pay fees, loan prepayment penalty fees, loan interest rate swap fees, and other banking fees.
We work to identify potential losses in a timely manner and proactively manage the problem credits to minimize losses. For the years ended December 31, 2024 and 2023, we recorded $1.9 million and $10.4 million Provision for credit losses, respectively.
We work to identify potential losses in a timely manner and proactively manage the problem credits to minimize losses. For the years ended December 31, 2025 and 2024, we recorded $5.0 million and $1.9 million Provision for credit losses, respectively.
On average, the balances are small and geographically disbursed across our footprint. Specifically, our CRE portfolio has an average loan balance of $2.47 million with a weighted average loan-to-value ratio (“LTV”) of 52.9% as of December 31, 2024.
On average, the balances are small and geographically disbursed across our footprint. Specifically, our CRE portfolio has an average loan balance of $3.10 million and $2.47 million with a weighted average loan-to-value ratio (LTV) of 54.3% and 52.9% as of December 31, 2025 and 2024, respectively.
We have identified our Allowance for Credit Losses ("ACL") and Goodwill as being critical because our policies require management to use significant judgement and use subjective and complex measurements about matters that are inherently uncertain and because of the likelihood that materially different amounts would be reported under different conditions or using different assumptions.
We have identified our Allowance for credit losses (ACL), the evaluation of goodwill impairment, and the fair value of certain financial instruments as being critical because our policies require management to use significant judgment and use subjective and complex measurements about matters that are inherently uncertain and because of the likelihood that materially different amounts would be reported under different conditions or using different assumptions.
We reported Net income available to common shareholders of $8.5 million for the year ended December 31, 2024, compared to $5.2 million of Net income available to common shareholders for the year ended December 31, 2023, a $3.2 million, or 63.5% increase.
We reported Net income available to common shareholders of $13.2 million for the year ended December 31, 2025, compared to $8.5 million of Net income available to common shareholders for the year ended December 31, 2024, a $4.7 million, or 55.3% increase.
As of December 31, 2024, the Compan y has $7.3 million in loans accounted for under the fair value option with an unpaid principal balance of $7.5 million. As of December 31, 2023, the Company had $13.7 million in loans accounted for under the fair value option with an unpaid principal balance $14.1 million.
As of December 31, 2024, the Company had $7.3 million in loans accounted for under the fair value option with an unpaid principal balance $7.5 million.
As of December 31, 2024, the ACL had an ending balance of $18.3 million compared to the prior year ending balance of $23.9 million. The ACL is an estimate that is subject to uncertainty due to the various assumptions and judgments used in the estimation process.
As of December 31, 2025, the ACL had an ending balance of $21.4 million compared to the prior year ending balance of $18.3 million. 78 Table of Contents The ACL is an estimate that is subject to uncertainty due to the various assumptions and judgments used in the estimation process.
Management will continue evaluating the economic conditions at future reporting periods for triggering events. Goodwill totaled $30.4 million as of December 31, 2024 and 2023. As of December 31, 2024 and 2023, there has not been any impairment of goodwill identified or recorded.
Management will continue evaluating the economic conditions at future reporting periods for triggering events. Goodwill totaled $30.4 million as of December 31, 2025 and 2024. As of December 31, 2025 and 2024, there has not been any impairment of goodwill identified or recorded. See Note 6 – Goodwill and Other Intangible Assets for further information on Goodwill.
The allocation for credit losses by category should neither be interpreted as an indication of future charge-offs, nor as an indication that charge-offs in future periods will necessarily occur in these amounts or in the indicated proportions.
The following presents the allocation of the ACL among loan categories and other summary information. The allocation for credit losses by category should neither be interpreted as an indication of future charge-offs, nor as an indication that charge-offs in future periods will necessarily occur in these amounts or in the indicated proportions.
The test is performed at the reporting unit level by applying a fair value-based test using discounted estimated future net cash flows. Impairment exists when the carrying amount of the goodwill exceeds estimated fair values. The estimate is considered to have a low level of uncertainty unless a triggering event occurs.
The test is performed at the reporting unit level. Impairment exists when the carrying amount of the goodwill exceeds estimated fair values. The estimate is considered to have a low level of uncertainty unless a triggering event occurs.
We evaluate the comparative levels and trends of the line items in our Consolidated Balance Sheets and Statements of Income as well as various financial ratios that are commonly used in our industry.
We evaluate the comparative levels and trends of the line items in our Consolidated Balance Sheets and Statements of Income as well as various financial ratios that are commonly used in our industry. The primary factors we use to evaluate our results of operations include net interest income, non-interest income, and non-interest expense.
Total average deposits for the year ended December 31, 2024 were $2.44 billion, an increase of $78.2 million, or 3.3%, compared to $2.36 billion for the year ended December 31, 2023.
Total average deposits for the year ended December 31, 2025 were $2.59 billion, an increase of $151.9 million, or 6.2%, compared to $2.44 billion for the year ended December 31, 2024.
The decrease in Net loss on loans accounted for under the fair value option of $1.0 million, or 50.3% was primarily attributable to overall improved performance of the portfolio.
Net gain (loss) on loans accounted for under the fair value option —The increase in Net gain on loans accounted for under the fair value option of $1.0 million, or 100.6%, was primarily attributable to lower charge-offs and overall improved performance of the portfolio.
As of and for the year ended December 31, 2024, we had $2.92 billion in total assets, $90.1 million in total revenues, and provided fiduciary and advisory services on $7.32 billion of assets under management ("AUM").
As of and for the year ended December 31, 2025, we had $3.15 billion in total assets, $96.9 million in total revenues, and provided fiduciary and advisory services on $7.28 billion of assets under management (AUM).
As of December 31, 2023, the Company did not own OREO properties. The Company had $0.7 million and $1.7 million of interest reversed on non-accrual loans during the years ended December 31, 2024 and 2023, respectively.
The Company reversed $0.1 million and $0.7 million of interest income on non-accrual loans during the years ended December 31, 2025 and 2024, respectively.
For the year ended December 31, 2024, our Income before income taxes was $11.6 million, a $4.5 million, or 63.4%, increase from the year ended December 31, 2023.
For the year ended December 31, 2025, our Income before income taxes was $17.1 million, a $5.5 million, or 47.5%, increase from the year ended December 31, 2024.
The following table presents, during the periods shown, the composition of our funding sources and the average assets in which those funds are invested as a percentage of average total assets for the periods presented: Average Percentage for the Year Ended December 31, 2024 2023 Sources of Funds: Deposits: Noninterest-bearing 14.55 % 18.12 % Interest-bearing 71.21 65.79 FHLB and Federal Reserve borrowings 2.42 4.71 Subordinated notes 1.85 1.85 Other liabilities 1.25 0.88 Shareholders’ equity 8.72 8.65 Total 100.00 % 100.00 % Uses of Funds: Total loans 84.75 % 87.21 % Investment securities 2.69 2.81 Correspondent bank stock 0.19 0.29 Mortgage loans held for sale 0.63 0.41 Loans held at fair value 0.37 0.66 Interest-bearing deposits in other financial institutions 6.01 4.17 Noninterest-earning assets 5.36 4.45 Total 100.00 % 100.00 % Average noninterest-bearing deposits to total average deposits 16.97 % 21.59 % Average loans to total average deposits 99.78 104.85 Average interest-bearing deposits to total average deposits 83.03 78.41 Our primary source of funds is interest-bearing and noninterest-bearing deposits, and our primary use of funds is loans.
Access to purchased funds include the ability to borrow from FHLB, other correspondent banks, and the use of brokered deposits. 76 Table of Contents The following presents the composition of our funding sources and the average assets in which those funds are invested as a percentage of average total assets for the periods presented: Average Percentage for the Year Ended December 31, 2025 2024 Sources of Funds: Deposits: Noninterest-bearing 11.75 % 14.55 % Interest-bearing 74.96 71.21 FHLB and Federal Reserve borrowings 1.91 2.42 Subordinated notes 1.56 1.85 Other liabilities 1.21 1.25 Shareholders’ equity 8.61 8.72 Total 100.00 % 100.00 % Uses of Funds: Total loans 83.41 % 85.12 % Investment securities 3.61 2.69 Correspondent bank stock 0.22 0.19 Mortgage loans held for sale 0.83 0.63 Interest-bearing deposits in other financial institutions 6.89 6.05 Noninterest-earning assets 5.04 5.32 Total 100.00 % 100.00 % Average noninterest-bearing deposits to total average deposits 13.55 % 16.97 % Average loans to total average deposits 96.81 99.78 Average interest-bearing deposits to total average deposits 86.45 83.03 Our primary source of funds is interest-bearing and noninterest-bearing deposits, and our primary use of funds is loans.
Our deferred tax assets, net, are valued based on the amounts that are expected to be recovered in the future utilizing the tax rates in effect at the time recognized. Our deferred tax assets, net for the year ended December 31, 2024, decreased $3.3 million, or 51.9%, from December 31, 2023.
Our deferred tax assets, net, are valued based on the amounts that are expected to be recovered in the future utilizing the tax rates in effect at the time recognized. Deferred tax assets, net as of December 31, 2025 were $4.0 million an increase of $0.9 million, or 30.0%, from December 31, 2024.
Our accounting policies and procedures, including those identified as being critical, are described in further detail in Note 1 – Organization and Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements. ACL: Our ACL policies govern the processes and procedures used to estimate potential for credit losses in our loan receivables and held-to-maturity debt securities.
Our accounting policies and procedures, including those identified as being critical, are described in further detail in Note 1 – Organization and Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements.
The Allowance for credit losses for loans represents Management’s best estimate of current expected credit losses on loans considering available information, from internal and external sources, relevant to assessing collectability over the loans’ contractual terms, adjusted for expected prepayments when appropriate.
Allowance for Credit Losses on Loans The ACL for loans represents Management’s best estimate of CECL on loans considering available information, from internal and external sources, relevant to assessing collectability over the loans’ contractual terms, adjusted for expected prepayments when appropriate. Our quantitative discounted cash flow models use twelve-month economic forecasts including; HPI, GDP, and national unemployment.
This portfolio primarily consists of term loans and lines of credit which are dependent on the strength of the industries of the related borrowers and the success of their businesses.
This portfolio primarily consists of term loans and lines of credit which are dependent on the strength of the industries of the related borrowers and the success of their businesses. 69 Table of Contents One of the larger categories of the Company’s loan portfolio is Commercial Real Estate (CRE).
We perform periodic and systematic detailed reviews of our loan portfolio to assess overall collectability. The level of the ACL on loans reflects our estimate of the losses expected in the loan portfolio over the assets’ contractual term.
The level of the ACL on loans reflects our estimate of the losses expected in the loan portfolio over the assets’ contractual term.
For the year ended December 31, 2024 compared to the year ended December 31, 2023, Non-interest income increased $5.7 million, or 26.1%, to $27.7 million.
For the year ended December 31, 2025 compared to the year ended December 31, 2024, Non-interest income decreased $1.1 million, or 4.0%, to $26.6 million.
(2) Includes $7.5 million and $14.1 million of unpaid principal balance of loans held for investment accounted for under the fair value option as o f December 31, 2024 and 2023, respectively. (3) Include s $25.2 million and $7.1 million of u npaid principal balance of mortgage loans held for sale as of December 31, 2024 and 2023, respectively.
(3) Excludes Mortgage loans held for sale of $40.2 million and $25.5 million as of December 31, 2025 and 2024, respectively. Excludes $3.2 million and $7.3 million of loans held for investment accounted for under the fair value option as of December 31, 2025 and 2024, respectively.
Debt securities held-to-maturity are carried at cost, adjusted for the amortization of premiums and the accretion of discounts using the level-yield method over the remaining period until maturity. As of December 31, 2024 and 2023, all our investments in debt securities were classified as held-to-maturity.
Debt securities for which we have the intent and ability to hold to their maturity are classified as Held-to-maturity debt securities and are recorded at amortized cost. Debt securities HTM are carried at cost, adjusted for the amortization of premiums and the accretion of discounts using the level-yield method over the remaining period until maturity.
(6) Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities. (7) Net interest income is the difference between income earned on interest-earning assets and expense paid on interest-bearing liabilities.
These balances are included in the margin calculations in these tables. (4) Tax-equivalent yield adjustments are immaterial. (5) Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities. (6) Net interest income is the difference between income earned on interest-earning assets and expense paid on interest-bearing liabilities.
Non-Interest Income Non-interest income primarily consists of the following: • Trust and investment management fees —fees and other sources of income charged to clients for managing their trust and investment assets, providing financial planning consulting services, 401(k) and retirement advisory consulting services, and other wealth management services.
Net interest income is primarily impacted by changes in market interest rates, the slope of the yield curve, and interest we earn on interest-earning assets or pay on interest-bearing liabilities. 54 Table of Contents Non-Interest Income Non-interest income primarily consists of the following: • Trust and investment management fees —fees and other sources of income charged to clients for managing their trust and investment assets, providing financial planning consulting services, 401(k) and retirement advisory consulting services, and other wealth management services.
As of December 31, 2024 and 2023, our holding company and Bank were in compliance with all applicable regulatory capital requirements, and the Bank was classified as "well capitalized," for purposes of the prompt corrective action regulations. As we continue to grow our operations and maintain capital requirements, our regulatory capital levels may decrease depending on our level of earnings.
As of December 31, 2025 and 2024, our holding company and Bank were in compliance with all applicable regulatory capital requirements, and the Bank was classified as "well capitalized," for purposes of the prompt corrective action regulations. See Note 22 – Regulatory Capital Matters for capital amounts and ratios .
Mortgage loans originated and held for investment purposes are recorded in the Wealth Management segment, as this segment provides ongoing services to our clients. 62 Table of Contents The following presents key metrics related to our segments during the periods presented: Year Ended December 31, 2024 (dollars in thousands) Wealth Management Mortgage Consolidated Income (1) $ 84,027 $ 6,044 $ 90,071 Income before taxes 10,629 950 11,579 Profit margin 12.6 % 15.7 % 12.9 % Year Ended December 31, 2023 (dollars in thousands) Wealth Management Mortgage Consolidated Income (1) $ 79,151 $ 3,547 $ 82,698 Income (loss) before taxes 9,660 (2,599) 7,061 Profit margin 12.2 % (73.3) % 8.5 % _____________________________ (1) Net interest income after provision for credit losses plus non-interest income.
The following presents key metrics related to our segments during the periods presented: Year Ended December 31, 2025 (dollars in thousands) Wealth Management Mortgage Consolidated Income (1) $ 90,996 $ 5,918 $ 96,914 Income before income taxes 16,410 664 17,074 Profit margin 18.0 % 11.2 % 17.6 % 61 Table of Contents Year Ended December 31, 2024 (dollars in thousands) Wealth Management Mortgage Consolidated Income (1) $ 84,027 $ 6,044 $ 90,071 Income before income taxes 10,629 950 11,579 Profit margin 12.6 % 15.7 % 12.9 % _____________________________ (1) Net interest income after provision for credit losses plus non-interest income.
The primary factors we use to evaluate our results of operations include net interest income, non-interest income and non-interest expense. 55 Table of Contents Net Interest Income Net interest income represents interest income less interest expense. We generate interest income on interest-earning assets, primarily loans and investment securities. We incur interest expense on interest-bearing liabilities, primarily interest-bearing deposits and borrowings.
Net Interest Income Net interest income represents interest income less interest expense. We generate interest income on interest-earning assets, primarily loans and investment securities. We incur interest expense on interest-bearing liabilities, primarily interest-bearing deposits and borrowings.
Total shareholders’ equity increased $9.6 million, or 3.9%, to $252.3 million as of December 31, 2024.
Total shareholders’ equity increased $13.2 million, or 5.2%, to $265.6 million as of December 31, 2025.
These changes were predominately due to the migration of one loan relationship out of non-performing loans and into OREO, as well as pay downs, charge-offs, and write-downs, offset by additions to non-performing loans. 74 Table of Contents The following presents the amortized cost basis of non-performing loans as of the dates indicated: As of December 31, (dollars in thousands) 2024 2023 Non-accrual loans by category Cash, Securities, and Other $ 1,704 $ 1,704 Consumer and Other — 7,504 Construction and Development — 2,719 1-4 Family Residential — 3,016 Owner Occupied CRE — 3,980 Commercial and Industrial 11,048 31,893 Total non-performing loans 12,752 50,816 OREO (1) 35,929 — Total non-performing assets $ 48,681 $ 50,816 Non-accrual loans to total loans (2) 0.53 % 2.02 % Non-performing assets to total assets 1.67 % 1.71 % Allowance for credit losses to non-accrual loans 143.74 % 47.09 % Accruing loans 90 or more days past due $ — $ 285 _____________________________ (1) Held at the lower of cost or market as described in Note 16.
The following presents the amortized cost basis of non-performing loans as of the dates indicated: As of December 31, (dollars in thousands) 2025 2024 Non-accrual loans by category Cash, securities, and other $ 1,704 $ 1,704 Commercial and industrial 14,855 11,048 Total non-performing loans 16,559 12,752 OREO (1) 3,040 35,929 Total non-performing assets $ 19,599 $ 48,681 Non-accrual loans to total loans (2) 0.63 % 0.53 % Non-performing assets to total assets 0.62 % 1.67 % Allowance for credit losses to non-accrual loans 129.50 % 143.74 % Accruing loans 90 or more days past due $ — $ — _____________________________ (1) Held at the lower of cost or market as described in Note 16.
As of December 31, 2024 2023 (dollars in thousands) Amount % (1) Amount % (1) Cash, Securities and Other $ 410 5.0 % $ 961 5.6 % Consumer and Other 185 0.7 124 1.1 Construction and Development 5,184 13.0 7,945 13.7 1-4 Family Residential 5,200 39.8 4,370 36.9 Non-Owner Occupied CRE 4,340 25.3 2,325 21.6 Owner Occupied CRE 654 7.1 1,034 7.8 Commercial and Industrial 2,357 9.1 7,172 13.3 Total allowance for credit losses $ 18,330 100.0 % $ 23,931 100.0 % _____________________________ (1) Represents the percentage of loans to total loans in the respective category. 78 Table of Contents Allowance for credit losses - off-balance sheet credit exposure The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company.
As of December 31, 2025 2024 (dollars in thousands) Amount % (1) Amount % (1) Cash, securities and other $ 1,150 6.3 % $ 410 5.0 % Consumer and other 138 0.7 185 0.7 Construction and development 2,210 7.1 5,184 13.0 1-4 family residential 5,846 39.1 5,200 39.8 Non-owner occupied CRE 4,359 30.6 4,340 25.3 Owner occupied CRE 846 7.7 654 7.1 Commercial and industrial 6,892 8.5 2,357 9.1 Total allowance for credit losses $ 21,441 100.0 % $ 18,330 100.0 % _____________________________ (1) Represents the percentage of loans to total loans in the respective category.
Changes attributable to both rate and volume that cannot be separated have been allocated to volume: Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Increase (Decrease) Due to Change in: Total Increase (Decrease) (dollars in thousands) Volume Rate Interest-earning assets: Interest-bearing deposits in other financial institutions $ 2,773 $ 356 $ 3,129 Debt securities (87) 282 195 Correspondent bank stock (258) 101 (157) Loans (2,381) 6,595 4,214 Mortgage loans held for sale 410 1 411 Loans held at fair value (477) (222) (699) Total (decrease) increase in interest income $ (20) $ 7,113 $ 7,093 Interest-bearing liabilities: Interest-bearing deposits 7,090 9,991 17,081 FHLB and Federal Reserve borrowings (2,613) (616) (3,229) Subordinated notes 13 9 22 Total increase in interest expense $ 4,490 $ 9,384 $ 13,874 Decrease in net interest income $ (4,510) $ (2,271) $ (6,781) Provision for Credit Losses We have a dedicated problem loan resolution team comprised of associates from our credit, senior leadership, risk, and accounting teams that meets frequently to ensure that watch list and problem credits are identified early and actively managed.
Changes attributable to both rate and volume that cannot be separated have been allocated to volume: Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Increase (Decrease) Due to Change in: Total Increase (Decrease) (dollars in thousands) Volume Rate Interest-earning assets: Interest-bearing deposits in other financial institutions $ 1,485 $ (1,341) $ 144 Debt securities 1,301 521 1,822 Correspondent bank stock 120 (7) 113 Loans 4,273 766 5,039 Mortgage loans held for sale 409 (66) 343 Loans held at fair value (311) (14) (325) Total increase (decrease) in interest income $ 7,277 $ (141) $ 7,136 Interest-bearing liabilities: Interest-bearing deposits 7,608 (10,688) (3,080) FHLB and Federal Reserve borrowings (474) (59) (533) Subordinated notes (332) 37 (295) Total increase (decrease) in interest expense $ 6,802 $ (10,710) $ (3,908) Increase in net interest income $ 475 $ 10,569 $ 11,044 Provision for Credit Losses We have a dedicated problem loan resolution team comprised of associates from our credit, senior leadership, risk, and accounting teams that meets frequently to ensure that watch list and problem credits are identified early and actively managed.
Net Interest Income The year ended December 31, 2024 compared with the year ended December 31, 2023 . For the year ended December 31, 2024, Net interest income, before Provision for credit losses, was $64.3 million, a decrease of $6.8 million, or 9.6%, compared to the year ended December 31, 2023.
Net Interest Income The year ended December 31, 2025 compared with the year ended December 31, 2024 . For the year ended December 31, 2025, Net interest income, before Provision for credit losses, was $75.4 million, an increase of $11.0 million, or 17.2%, compared to the year ended December 31, 2024.
The increase in Net interest income, after provision for credit losses was driven by a decrease in Provision for credit losses primarily due to a decrease in provisions related to individually analyzed loans and an increase in Total interest and dividend income due to an increase in total average interest-earning assets and average yield, offset partially by an increase in Total interest expense due to an increase in total average interest-bearing liabilities and average rate.
The increase in Net interest income, after provision for credit losses, was primarily driven by increases in net interest margin and average interest-earning assets, partially offset by an increase in Provision for credit losses.
This $3.5 million decrease in provision on individually analyzed loans for the year ended December 31, 2024 was primarily due to the migration of one loan relationship out of non-performing loans and into OREO, pay downs, and charge-offs. 77 Table of Contents The following presents summary information regarding our allowance for credit losses for the periods presented: Year Ended December 31, (dollars in thousands) 2024 2023 Average loans outstanding (1)(2) $ 2,437,398 $ 2,479,175 Total loans outstanding at end of period (3) $ 2,418,282 $ 2,517,189 Allowance for credit losses at beginning of period $ 23,931 $ 17,183 Impact of adopting ASU 2016-13 — 3,470 Provision for credit losses 3,439 12,077 Charge-offs: Consumer and Other (50) (101) Commercial and Industrial (9,352) (8,737) Total charge-offs (9,402) (8,838) Recoveries: Consumer and Other 29 22 1-4 Family Residential 6 13 Commercial and Industrial 327 4 Total recoveries 362 39 Net charge-offs (9,040) (8,799) Allowance for credit losses at end of period $ 18,330 $ 23,931 Allowance for credit losses to total loans 0.76 % 0.95 % Net charge-offs to average loans 0.37 0.35 _____________________________ (1) Average balances are average daily balances.
The remaining $1.9 million of provision on loans for the year ended December 31, 2025 was related to net charge-offs. 73 Table of Contents The following presents summary information regarding our ACL for the periods presented: Year Ended December 31, (dollars in thousands) 2025 2024 Average loans outstanding (1)(2) $ 2,511,988 $ 2,437,398 Total loans outstanding at end of period (3) $ 2,646,302 $ 2,418,282 Allowance for credit losses at beginning of period $ 18,330 $ 23,931 Provision for credit losses 4,993 3,439 Charge-offs: Consumer and other — (50) Non-owner occupied CRE (111) — Commercial and industrial (2,031) (9,352) Total charge-offs (2,142) (9,402) Recoveries: Consumer and other 5 29 1-4 family residential 15 6 Commercial and industrial 240 327 Total recoveries 260 362 Net charge-offs (1,882) (9,040) Allowance for credit losses at end of period $ 21,441 $ 18,330 Allowance for credit losses to total loans 0.81 % 0.76 % Net charge-offs to average loans 0.07 0.37 _____________________________ (1) Average balances are average daily balances.
(2) Represents monthly averages. (3) Non-accrual loans are included in the respective average loan balances. Income, if any, is not recognized until all principal has been repaid.
(2) Non-accrual loans are included in the respective average loan balances. Income, if any, is not recognized until all principal has been repaid. (3) Mortgage loans held for sale are included in the interest-earning assets above, with interest income recognized in the Interest and dividend income on loans, including fees line in the Consolidated Statements of Income.
The increase was primarily due to Net income for the year and a $0.7 million increase in Additional paid-in capital driven by stock-based compensation expense. 66 Table of Contents Assets Under Management Year Ended December 31, (dollars in millions) 2024 2023 Managed Trust Balance as of Beginning of Period $ 1,913 $ 1,802 New relationships 8 10 Closed relationships (19) (11) Contributions 74 51 Withdrawals (289) (277) Market change, net 331 338 Ending Balance $ 2,018 $ 1,913 Yield* 0.17 % 0.18 % Directed Trust Balance as of Beginning of Period $ 1,622 $ 1,285 New relationships — — Closed relationships (6) (5) Contributions 108 214 Withdrawals (132) (40) Market change, net 342 168 Ending Balance $ 1,934 $ 1,622 Yield* 0.09 % 0.07 % Investment Agency Balance as of Beginning of Period $ 1,607 $ 1,618 New relationships 28 56 Closed relationships (28) (82) Contributions 98 78 Withdrawals (288) (240) Market change, net 167 177 Ending Balance $ 1,584 $ 1,607 Yield* 0.77 % 0.77 % Custody Balance as of Beginning of Period $ 545 $ 493 New relationships 8 9 Closed relationships (4) (20) Contributions 145 90 Withdrawals (199) (109) Market change, net 94 82 Ending Balance $ 589 $ 545 Yield* 0.05 % 0.04 % 401(k)/Retirement Balance as of Beginning of Period $ 1,066 $ 909 New relationships 10 3 Closed relationships (127) (4) Contributions 164 124 Withdrawals (108) (101) Market change, net 191 135 Ending Balance (1) $ 1,196 $ 1,066 Yield* 0.13 % 0.15 % Total Assets Under Management as of Beginning of Period $ 6,753 $ 6,107 New relationships 54 78 Closed relationships (184) (122) Contributions 589 557 Withdrawals (1,016) (767) Market change, net 1,125 900 Total Assets Under Management $ 7,321 $ 6,753 Yield* 0.26 % 0.28 % _____________________________ (*) Trust and investment management fees divided by period-end balance.
The increase was primarily due to Net income for the year. 65 Table of Contents Assets Under Management Year Ended December 31, (dollars in millions) 2025 2024 Managed Trust Balance as of Beginning of Period $ 2,018 $ 1,913 New relationships 5 8 Closed relationships (1) (19) Contributions 43 74 Withdrawals (201) (289) Market change, net 37 331 Ending Balance $ 1,901 $ 2,018 Yield* 0.17 % 0.17 % Directed Trust Balance as of Beginning of Period $ 1,934 $ 1,622 New relationships — — Closed relationships (7) (6) Contributions 201 108 Withdrawals (196) (132) Market change, net 82 342 Ending Balance $ 2,014 $ 1,934 Yield* 0.09 % 0.09 % Investment Agency Balance as of Beginning of Period $ 1,584 $ 1,607 New relationships 15 28 Closed relationships (29) (28) Contributions 81 98 Withdrawals (186) (288) Market change, net 170 167 Ending Balance $ 1,635 $ 1,584 Yield* 0.72 % 0.77 % Custody Balance as of Beginning of Period $ 589 $ 545 New relationships 3 8 Closed relationships (3) (4) Contributions 164 145 Withdrawals (204) (199) Market change, net 26 94 Ending Balance $ 575 $ 589 Yield* 0.06 % 0.05 % Total Assets Under Management Excluding 401(k)/Retirement Balances at Beginning of Period $ 6,125 $ 5,687 New relationships 23 44 Closed relationships (40) (57) Contributions 489 425 Withdrawals (787) (908) Market change, net 315 934 Total Assets Under Management Excluding 401(k)/Retirement Balances $ 6,125 $ 6,125 Yield* 0.28 % 0.29 % 401(k)/Retirement Balance $ 1,153 $ 1,196 Yield* 0.13 % 0.13 % Total Assets Under Management $ 7,278 $ 7,321 Yield* 0.25 % 0.26 % _____________________________ (*) Trust and investment management fees divided by period-end balance.
Total money market accounts as of December 31, 2024 were $1.51 billion, an increase of $127.5 million, or 9.2%, compared to $1.39 billion as of December 31, 2023. Interest checking accounts decreased $8.1 million, or 5.5%, to $139.4 million compared to December 31, 2023.
Money market deposit accounts as of December 31, 2025 were $1.91 billion, an increase of $400.0 million, or 26.4%, compared to $1.51 billion as of December 31, 2024. Interest checking accounts decreased $17.1 million, or 12.3%, to $122.3 million compared to December 31, 2024.
During the years ended December 31, 2024 and 2023, the Company recognized $0.3 million and $0.4 million , respectively, of fees related to new interest rate swaps, which are included in the Bank fees line of the Condensed Consolidated Statements of Income Liquidity and Capital Resources Liquidity resources primarily include interest-bearing and noninterest-bearing deposits which primarily contribute to our ability to raise funds to support asset growth, acquisitions, and meet deposit withdrawals and other payment obligations.
As of December 31, 2025 and 2024, the Company was in compliance with the covenant requirements. Liquidity and Capital Resources Liquidity resources primarily include Interest-bearing and Noninterest-bearing deposits which contribute to our ability to raise funds to support asset growth, acquisitions, and meet deposit withdrawals and other payment obligations.
Credit policies are robust and are updated as needed to meet the strategic and risk mitigation goals of the company. 72 Table of Contents The contractual maturity ranges of loans in our loan portfolio and the amount of such loans with fixed and floating interest rates in each maturity range, at amortized cost as of the dates noted, are summarized in the following tables: As of December 31, 2024 (dollars in thousands) One Year or Less One Through Five Years Five Through Fifteen Years After Fifteen Years Total Cash, Securities, and Other $ 40,409 (1) $ 76,386 (1) $ 2,376 $ 663 $ 119,834 Consumer and Other 10,129 5,430 712 1,211 17,482 Construction and Development 120,043 187,101 124 7,213 314,481 1-4 Family Residential 99,641 141,450 26,106 695,704 962,901 Non-Owner Occupied CRE 123,471 403,385 71,889 12,494 611,239 Owner Occupied CRE 11,903 97,600 54,942 7,574 172,019 Commercial and Industrial 91,564 84,459 44,303 — 220,326 Total loans $ 497,160 $ 995,811 $ 200,452 $ 724,859 $ 2,418,282 Loans accounted for under the fair value option (2) 257 6,895 131 — 7,283 Total loans $ 497,417 $ 1,002,706 $ 200,583 $ 724,859 $ 2,425,565 Amounts with fixed rates 220,192 650,979 100,903 31,371 1,003,445 Amounts with floating rates 277,225 351,727 99,680 693,488 1,422,120 Total loans $ 497,417 $ 1,002,706 $ 200,583 $ 724,859 $ 2,425,565 As of December 31, 2023 (dollars in thousands) One Year or Less One Through Five Years Five Through Fifteen Years After Fifteen Years Total Cash, Securities, and Other $ 70,558 (1) $ 67,101 (1) $ 1,611 $ 677 $ 139,947 Consumer and Other 18,425 6,175 1,206 1,222 27,028 Construction and Development 106,993 180,210 51,253 7,060 345,516 1-4 Family Residential 43,275 172,349 34,053 678,288 927,965 Non-Owner Occupied CRE 34,328 334,516 161,669 13,179 543,692 Owner Occupied CRE 13,491 93,844 79,610 8,916 195,861 Commercial and Industrial 120,061 187,240 29,879 — 337,180 Total loans $ 407,131 $ 1,041,435 $ 359,281 $ 709,342 $ 2,517,189 Loans accounted for under the fair value option (2) 105 13,163 458 — 13,726 Total loans $ 407,236 $ 1,054,598 $ 359,739 $ 709,342 $ 2,530,915 Amounts with fixed rates 141,485 699,578 235,132 23,903 1,100,098 Amounts with floating rates 265,751 355,020 124,607 685,439 1,430,817 Total loans $ 407,236 $ 1,054,598 $ 359,739 $ 709,342 $ 2,530,915 _____________________________ (1) Includes PPP loans.
The Company believes its credit policies are robust and are updated as needed to meet the strategic and risk mitigation goals of the company. 70 Table of Contents The contractual maturity ranges of loans in our loan portfolio and the amount of such loans with fixed and floating interest rates in each maturity range, at amortized cost as of the dates noted, are summarized in the following: As of December 31, 2025 (dollars in thousands) One Year or Less One Through Five Years Five Through Fifteen Years After Fifteen Years Total Cash, securities, and other $ 69,446 $ 94,628 $ — $ 652 $ 164,726 Consumer and other 14,793 3,571 — 1,232 19,596 Construction and development 99,622 87,609 873 977 189,081 1-4 family residential 112,094 93,557 38,157 789,857 1,033,665 Non-owner occupied CRE 249,127 484,339 69,078 7,331 809,875 Owner occupied CRE 33,101 113,678 50,086 7,213 204,078 Commercial and industrial 68,006 132,347 24,928 — 225,281 Total loans $ 646,189 $ 1,009,729 $ 183,122 $ 807,262 $ 2,646,302 Loans accounted for under the fair value option (1) 678 2,504 — — 3,182 Total loans $ 646,867 $ 1,012,233 $ 183,122 $ 807,262 $ 2,649,484 Amounts with fixed rates 300,949 624,158 94,365 23,091 1,042,563 Amounts with floating rates 345,918 388,075 88,757 784,171 1,606,921 Total loans $ 646,867 $ 1,012,233 $ 183,122 $ 807,262 $ 2,649,484 As of December 31, 2024 (dollars in thousands) One Year or Less One Through Five Years Five Through Fifteen Years After Fifteen Years Total Cash, securities, and other $ 40,409 $ 76,386 $ 2,376 $ 663 $ 119,834 Consumer and other 10,129 5,430 712 1,211 17,482 Construction and development 120,043 187,101 124 7,213 314,481 1-4 family residential 99,641 141,450 26,106 695,704 962,901 Non-owner occupied CRE 123,471 403,385 71,889 12,494 611,239 Owner occupied CRE 11,903 97,600 54,942 7,574 172,019 Commercial and industrial 91,564 84,459 44,303 — 220,326 Total loans $ 497,160 $ 995,811 $ 200,452 $ 724,859 $ 2,418,282 Loans accounted for under the fair value option (1) 257 6,895 131 — 7,283 Total loans $ 497,417 $ 1,002,706 $ 200,583 $ 724,859 $ 2,425,565 Amounts with fixed rates 220,192 650,979 100,903 31,371 1,003,445 Amounts with floating rates 277,225 351,727 99,680 693,488 1,422,120 Total loans $ 497,417 $ 1,002,706 $ 200,583 $ 724,859 $ 2,425,565 _____________________________ (1) Loans accounted for under the fair value option are disclosed at fair value rather than amortized cost Non-Performing Assets Non-performing assets include non-accrual loans and OREO.
The increase in average deposits for the year ended December 31, 2024, compared to the same period in 2023, was driven primarily by Interest-bearing deposits due to new and expanded deposit relationships offset partially by a decline in Noninterest-bearing deposits. 79 Table of Contents The following table presents the average balances and average rates paid on deposits during the periods presented: For the Year Ended December 31, 2024 2023 (dollars in thousands) Average Balance Average Rate Average Balance Average Rate Deposits Money market deposit accounts $ 1,384,589 4.18 % $ 1,296,139 3.86 % Interest checking accounts 136,960 0.33 177,522 0.38 Uninsured time deposits 62,573 4.49 63,813 3.68 Other time deposits 428,766 5.00 297,286 4.16 Total time deposits 491,339 4.93 361,099 4.08 Savings accounts 15,340 0.09 19,257 0.06 Total interest-bearing deposits 2,028,228 4.07 1,854,017 3.53 Noninterest-bearing accounts 414,514 510,506 Total deposits $ 2,442,742 3.38 % $ 2,364,523 2.77 % Average noninterest-bearing deposits to average total deposits was 17.0% and 21.6% for the years ended December 31, 2024 and 2023, respectively.
The following presents the average balances and average rates paid on deposits during the periods presented: For the Year Ended December 31, 2025 2024 (dollars in thousands) Average Balance Average Rate Average Balance Average Rate Deposits Money market deposit accounts $ 1,732,021 3.65 % $ 1,384,589 4.18 % Interest checking accounts 128,861 0.22 136,960 0.33 Uninsured time deposits 65,090 4.06 62,573 4.49 Other time deposits 303,852 4.41 428,766 5.00 Total time deposits 368,942 4.35 491,339 4.93 Savings accounts 13,149 0.07 15,340 0.09 Total interest-bearing deposits 2,242,973 3.54 2,028,228 4.07 Noninterest-bearing accounts 351,698 414,514 Total deposits $ 2,594,671 3.06 % $ 2,442,742 3.38 % Average Noninterest-bearing deposits to average total deposits was 13.6% and 17.0% for the years ended December 31, 2025 and 2024, respectively.
The increase in non-interest income was primarily due to a $2.1 million increase in Net gain on mortgage loans driven by higher average gain on sale margins and origination volumes, $0.7 million increase in Risk management and insurance fees due to an increase in insurance client agreements, $0.9 million decrease in impairment to the carrying value of a contingent consideration asset, and $1.0 million decrease in Net losses on loans accounted for under the fair value option. 60 Table of Contents The following table presents the significant categories of our non-interest income during the periods presented: Year Ended December 31, Change (dollars in thousands) 2024 2023 $ % Non-interest income: Trust and investment management fees $ 19,193 $ 18,788 $ 405 2.2 % Net gain on mortgage loans 4,912 2,826 2,086 73.8 Net loss on loans held for sale (105) (178) 73 41.0 Bank fees 2,036 2,022 14 0.7 Risk management and insurance fees 1,664 919 745 81.1 Income on company-owned life insurance 431 378 53 14.0 Net loss on loans accounted for under the fair value option (999) (2,010) 1,011 50.3 Unrealized loss recognized on equity securities (33) (22) (11) (50.0) Other 581 (775) 1,356 175.0 Total non-interest income $ 27,680 $ 21,948 $ 5,732 26.1 Trust and investment management fees —For the year ended December 31, 2024 compared to the same period in 2023, our Trust and investment management fees increased by $0.4 million, or 2.2%, to $19.2 million.
The decrease in non-interest income was primarily driven by decreases in Risk management and insurance fees, Trust and investment management fees, and Bank fees, partially offset by an increase in Net gain on loans accounted for under the fair value option. 59 Table of Contents The following table presents the significant categories of our Non-interest income during the periods presented: Year Ended December 31, Change (dollars in thousands) 2025 2024 $ % Non-interest income: Trust and investment management fees $ 18,452 $ 19,193 $ (741) (3.9) % Net gain on mortgage loans 4,443 4,912 (469) (9.5) Net gain (loss) on loans held for sale 222 (105) 327 311.4 Bank fees 1,345 2,036 (691) (33.9) Risk management and insurance fees 551 1,664 (1,113) (66.9) Income on company-owned life insurance 455 431 24 5.6 Net gain (loss) on loans accounted for under the fair value option 6 (999) 1,005 100.6 Net gain on other real estate owned 459 — 459 n/a Unrealized gain (loss) recognized on equity securities 14 (33) 47 142.4 Other 624 581 43 7.4 Total non-interest income $ 26,571 $ 27,680 $ (1,109) (4.0) Trust and investment management fees —The decrease in Trust and investment management fees of $0.7 million, or 3.9%, was primarily attributable to lower investment agency and managed trust fees.
Technology and information system costs related to enhancements of our information technology infrastructure, and Occupancy and equipment costs related to additional rent expense on the extension of a lease in 2024. 61 Table of Contents The following presents the significant categories of our non-interest expense for the periods presented: Year Ended December 31, Change (dollars in thousands) 2024 2023 $ % Non-interest expense: Salaries and employee benefits $ 45,040 $ 45,202 $ (162) (0.4) % Occupancy and equipment 8,282 7,597 685 9.0 Professional services 7,951 7,638 313 4.1 Technology and information systems 4,170 3,497 673 19.2 Data processing 4,179 4,539 (360) (7.9) Marketing 1,208 1,540 (332) (21.6) Amortization of other intangible assets 226 250 (24) (9.6) Other 7,436 5,374 2,062 38.4 Total non-interest expense $ 78,492 $ 75,637 $ 2,855 3.8 Occupancy and equipment— The increase in Occupancy and equipment of $0.7 million, or 9.0%, was driven by additional rent expense related to the extension of a lease in 2024.
The increase in Non-interest expense of 1.7% to $79.8 million was driven by increases in Salaries and employee benefits and Data processing, partially offset by a decrease in Professional services. 60 Table of Contents The following presents the significant categories of our Non-interest expense for the periods presented: Year Ended December 31, Change (dollars in thousands) 2025 2024 $ % Non-interest expense: Salaries and employee benefits $ 46,118 $ 45,040 $ 1,078 2.4 % Occupancy and equipment 8,228 8,282 (54) (0.7) Professional services 7,685 7,951 (266) (3.3) Technology and information systems 4,257 4,170 87 2.1 Data processing 4,790 4,179 611 14.6 Marketing 1,220 1,208 12 1.0 Amortization of other intangible assets 206 226 (20) (8.8) Other 7,336 7,436 (100) (1.3) Total non-interest expense $ 79,840 $ 78,492 $ 1,348 1.7 Salaries and employee benefits— The increase in Salaries and employee benefits of $1.1 million, or 2.4%, was primarily driv en by salary increases.
The decrease in average loans outstanding for the year ended December 31, 2024 compared to the same periods in 2023 was primarily due to net declines in the Cash, Securities and Other, Construction and Development, and Commercial and Industrial portfolios, offset by net growth in the 1-4 Family Residential and Non-Owner Occupied Commercial Real Estate portfolios.
The increase was primarily driven by growth in the Non-owner occupied commercial real estate, 1-4 family residential, Cash, securities, and Other, and Owner occupied commercial real estate portfolios, partially offset by a decrease in the Construction and development portfolio.
The increase in Interest-bearing deposit rates was primarily attributable to the continued elevated interest rate environment and highly competitive deposit market. 58 Table of Contents The following table presents an analysis of Net interest income and Net interest margin for the periods presented, using daily average balances for each major category of interest-earning assets and interest-bearing liabilities, the interest earned or paid, and the average rate earned or paid on those assets or liabilities: For the Year Ended December 31, 2024 2023 (dollars in thousands) Average Balance (1) Interest Income / Expense Average Yield / Rate Average Balance (1) Interest Income / Expense Average Yield / Rate Assets Interest-earning assets: Interest-bearing deposits in other financial institutions $ 171,290 $ 8,840 5.16 % $ 117,562 $ 5,711 4.86 % Debt securities (2) 76,650 2,658 3.47 79,150 2,463 3.11 Correspondent bank stock 5,322 463 8.70 8,285 620 7.48 Loans (3) 2,437,398 138,922 5.70 2,479,175 134,708 5.43 Mortgage loans held for sale (4) 18,037 1,132 6.28 11,499 721 6.27 Loans held at fair value 10,560 636 6.02 18,478 1,335 7.22 Total interest-earning assets (5) 2,719,257 152,651 5.61 2,714,149 145,558 5.36 Allowance for credit losses (23,718) (21,468) Noninterest-earning assets 152,588 125,401 Total assets $ 2,848,127 $ 2,818,082 Liabilities and Shareholders’ Equity Interest-bearing liabilities: Interest-bearing deposits $ 2,028,228 82,541 4.07 $ 1,854,017 65,460 3.53 FHLB and Federal Reserve borrowings 69,044 2,836 4.11 132,667 6,065 4.57 Subordinated notes 52,444 2,950 5.63 52,216 2,928 5.61 Total interest-bearing liabilities 2,149,716 88,327 4.11 2,038,900 74,453 3.65 Noninterest-bearing liabilities: Noninterest-bearing deposits 414,514 510,506 Other liabilities 35,610 24,913 Total noninterest-bearing liabilities 450,124 535,419 Total shareholders’ equity 248,287 243,763 Total liabilities and shareholders’ equity $ 2,848,127 $ 2,818,082 Net interest rate spread (6) 1.50 1.71 Net interest income (7) $ 64,324 $ 71,105 Net interest margin (8) 2.37 2.62 _____________________________ (1) Average balance represents daily averages, unless otherwise noted.
The increase in average interest-bearing deposits was primarily driven by growth in money market deposit accounts. 57 Table of Contents The following table presents an analysis of Net interest income and net interest margin for the periods presented, using daily average balances for each major category of interest-earning assets and interest-bearing liabilities, the interest earned or paid, and the average rate earned or paid on those assets or liabilities: For the Year Ended December 31, 2025 2024 (dollars in thousands) Average Balance (1) Interest Income / Expense Average Yield / Rate Average Balance (1) Interest Income / Expense Average Yield / Rate Assets Interest-earning assets: Interest-bearing deposits in other financial institutions $ 206,276 $ 9,044 4.38 % $ 172,411 $ 8,900 5.16 % Debt securities 108,020 4,480 4.15 76,650 2,658 3.47 Correspondent bank stock 6,715 576 8.58 5,322 463 8.70 Loans (2) 2,511,988 143,901 5.73 2,437,398 138,862 5.70 Mortgage loans held for sale (3) 24,954 1,475 5.91 18,037 1,132 6.28 Loans held at fair value 5,277 311 5.89 10,560 636 6.02 Total interest-earning assets (4) 2,863,230 159,787 5.58 2,720,378 152,651 5.61 Noninterest-earning assets 129,178 127,749 Total assets $ 2,992,408 $ 2,848,127 Liabilities and Shareholders’ Equity Interest-bearing liabilities: Interest-bearing deposits $ 2,242,973 79,461 3.54 $ 2,028,228 82,541 4.07 FHLB and Federal Reserve borrowings 57,258 2,303 4.02 69,044 2,836 4.11 Subordinated notes 46,615 2,655 5.70 52,444 2,950 5.63 Total interest-bearing liabilities 2,346,846 84,419 3.60 2,149,716 88,327 4.11 Noninterest-bearing liabilities: Noninterest-bearing deposits 351,698 414,514 Other liabilities 36,214 35,610 Total noninterest-bearing liabilities 387,912 450,124 Total shareholders’ equity 257,650 248,287 Total liabilities and shareholders’ equity $ 2,992,408 $ 2,848,127 Net interest rate spread (5) 1.98 1.50 Net interest income (6) $ 75,368 $ 64,324 Net interest margin (7) 2.63 2.36 _____________________________ (1) Average balance represents daily averages.
(3) Excludes Mortgage loans held for sale of $25.5 million and $7.3 million as of December 31, 2024 and 2023, respectively. Excludes Loans held for sale of $0.3 million and $0.0 million as of December 31, 2024 and 2023, respectively.
(2) Include s $39.5 million and $25.2 million of u npaid principal balance of Mortgage loans held for sale as of December 31, 2025 and 2024, respectively.
The release of provision related to off-balance sheet commitments for the year ended December 31, 2024 was predominately due to decreases in non-cancellable commitments.. The Company maintains a credit management program which includes internal and external loan review along with recurring portfolio monitoring activities to address the changing environment.
The provision recorded for the year ended December 31, 2025 was primarily due to loan growth, charge-offs, and specific reserves related to individually analyzed loans, partially offset by favorable mix shifts within our portfolio. The Company maintains a credit management program which includes internal and external loan review along with recurring portfolio monitoring activities to address the changing environment.
Time deposit accounts decreased $25.0 million, or 5.0%, to $471.4 million as of December 31, 2024. Interest checking accounts decreased $8.1 million, or 5.5%, to $139.4 million compared to December 31, 2023.
Money market deposit accounts increased $400.0 million, or 26.4%, to $1.91 billion as of December 31, 2025 compared to December 31, 2024. Time deposit accounts decreased $118.9 million, or 25.2%, to $352.5 million as of December 31, 2025 compared to December 31, 2024. Interest checking accounts decreased $17.1 million, or 12.3%, to $122.3 million compared to December 31, 2024.
The current amortization of this income is being recognized over a five-year period from the time of origination, however, if a loan receives full forgiveness from the SBA or if the borrower repays the loan, the remaining income will be recognized upon payoff. 70 Table of Contents The following presents our loan portfolio by type of loan as of the dates noted: As of December 31, 2024 2023 (dollars in thousands) Amount % of Total Amount % of Total Cash, Securities, and Other (1) $ 119,834 5.0 % $ 139,947 5.6 % Consumer and Other 17,482 0.7 27,028 1.1 Construction and Development 314,481 13.0 345,516 13.7 1-4 Family Residential 962,901 39.8 927,965 36.9 Non-Owner Occupied CRE 611,239 25.3 543,692 21.6 Owner Occupied CRE 172,019 7.1 195,861 7.8 Commercial and Industrial 220,326 9.1 337,180 13.3 Total loans held for investment at amortized cost $ 2,418,282 100.0 % $ 2,517,189 100.0 % Loans accounted for under the fair value option (2) 7,283 13,726 Total loans held for investment $ 2,425,565 $ 2,530,915 Mortgage loans held for sale, at fair value (3) $ 25,455 $ 7,254 Loans held for sale, at fair value (4) $ 251 $ — _____________________________ (1) Includes PPP loans of $2.0 million an d $4.2 million as of December 31, 2024 and 2023, respectively.
See Note 16 – Fair Value in the Notes to the Consolidated Financial Statements. 68 Table of Contents The following presents our loan portfolio by type of loan as of the dates noted: As of December 31, 2025 2024 (dollars in thousands) Amount % of Total Amount % of Total Cash, securities, and other $ 164,726 6.3 % $ 119,834 5.0 % Consumer and other 19,596 0.7 17,482 0.7 Construction and development 189,081 7.1 314,481 13.0 1-4 family residential 1,033,665 39.1 962,901 39.8 Non-owner occupied CRE 809,875 30.6 611,239 25.3 Owner occupied CRE 204,078 7.7 172,019 7.1 Commercial and industrial 225,281 8.5 220,326 9.1 Total loans held for investment at amortized cost $ 2,646,302 100.0 % $ 2,418,282 100.0 % Portfolio layer method basis adjustment for hedged portfolio 939 — Loans accounted for under the fair value option (1) 3,182 7,283 Total loans held for investment $ 2,650,423 $ 2,425,565 Mortgage loans held for sale, at fair value (2) $ 40,176 $ 25,455 Loans held for sale, at fair value (3) $ — $ 251 _____________________________ (1) Includes $3.2 million and $7.5 million of unpaid principal balance of Loans held for investment accounted for under the fair value option as o f December 31, 2025 and 2024, respectively.
Loans not meeting any of the three criteria above are considered to be pass-rated loans. 75 Table of Contents As of December 31, 2024 and 2023, non-performing loans of $12.8 million and $50.8 million, respectively, were included in the substandard category in the table below.
As of December 31, 2025 and 2024, non-accrual loans of $16.6 million and $12.8 million, respectively, were included in the substandard category in the table above.
The following presents the amortized cost basis of loans by credit quality indicator, by class of financing receivable, as of the dates noted: December 31, 2024 Pass Special Mention Substandard Doubtful Not Rated Total Cash, Securities, and Other (1) $ 118,130 $ — $ 1,704 $ — $ — $ 119,834 Consumer and Other (2) 17,482 — — — 7,283 24,765 Construction and Development 310,196 — 4,285 — — 314,481 1-4 Family Residential 962,901 — — — — 962,901 Non-Owner Occupied CRE 611,239 — — — — 611,239 Owner Occupied CRE 169,573 — 2,446 — — 172,019 Commercial and Industrial 192,484 9,120 18,722 — — 220,326 Total $ 2,382,005 $ 9,120 $ 27,157 $ — $ 7,283 $ 2,425,565 December 31, 2023 Pass Special Mention Substandard Doubtful Not Rated Total Cash, Securities, and Other (1) $ 138,243 $ — $ 1,704 $ — $ — $ 139,947 Consumer and Other (2) 19,528 — 7,500 — 13,726 40,754 Construction and Development 328,454 14,343 2,719 — — 345,516 1-4 Family Residential 924,949 — 3,016 — — 927,965 Non-Owner Occupied CRE 538,693 4,999 — — — 543,692 Owner Occupied CRE 191,881 — 3,980 — — 195,861 Commercial and Industrial 302,276 649 34,255 — — 337,180 Total $ 2,444,024 $ 19,991 $ 53,174 $ — $ 13,726 $ 2,530,915 _____________________________ (1) Includes PPP loans of $2.0 million an d $4.2 million as of December 31, 2024 and 2023, respectively.
Credit Quality Indicators The following presents the amortized cost basis of loans by credit quality indicator (see Note 4 – Loans and Allowance for Credit Losses for credit quality indicator descriptions), by class of financing receivable, as of the dates noted: December 31, 2025 Pass Special Mention Substandard Doubtful Not Rated Total Cash, securities, and other $ 163,022 $ — $ 1,704 $ — $ — $ 164,726 Consumer and other (1) 19,546 — 50 — 3,182 22,778 Construction and development 175,980 12,124 977 — — 189,081 1-4 family residential 1,030,754 2,909 2 — — 1,033,665 Non-owner occupied CRE 741,153 — 68,722 — — 809,875 Owner occupied CRE 204,078 — — — — 204,078 Commercial and industrial 197,325 — 27,956 — — 225,281 Total $ 2,531,858 $ 15,033 $ 99,411 $ — $ 3,182 $ 2,649,484 72 Table of Contents December 31, 2024 Pass Special Mention Substandard Doubtful Not Rated Total Cash, securities, and other $ 118,130 $ — $ 1,704 $ — $ — $ 119,834 Consumer and other (1) 17,482 — — — 7,283 24,765 Construction and development 310,196 — 4,285 — — 314,481 1-4 family residential 962,901 — — — — 962,901 Non-owner occupied CRE 611,239 — — — — 611,239 Owner occupied CRE 169,573 — 2,446 — — 172,019 Commercial and industrial 192,484 9,120 18,722 — — 220,326 Total $ 2,382,005 $ 9,120 $ 27,157 $ — $ 7,283 $ 2,425,565 _____________________________ (1) Includes $3.2 million and $7.3 million of loans held for investment accounted for under the fair value option as of December 31, 2025 and 2024, respectively.
The increase in Non-interest expense was driven by increases in Technology and information systems expenses, Occupancy and equipment costs, and Other expenses. 63 Table of Contents Mortgage As of and for the Year Ended December 31, (dollars in thousands) 2024 2023 $ Change % Change Total interest and dividend income $ 1,132 $ 721 $ 411 57.0 % Total interest expense — — — — Provision for credit losses — — — — Net interest income, after provision for credit losses 1,132 721 411 57.0 Net gain on mortgage loans 4,912 2,826 2,086 73.8 Total income before non-interest expense 6,044 3,547 2,497 70.4 Salaries and employee benefits expense 3,598 4,546 (948) (20.9) Depreciation and amortization expense 30 33 (3) (9.1) All other non-interest expense (1) 1,466 1,567 (101) (6.4) Income (loss) before income taxes $ 950 $ (2,599) $ 3,549 136.6 Total assets $ 27,422 $ 8,850 $ 18,572 209.9 % _____________________________ (1) All other non-interest expense primarily includes Occupancy and equipment, Data processing, and Other.
The increase in Non-interest expense was primarily driven by increases in Salaries and employee benefits and Data processing, partially offset by a decrease in Professional services. 62 Table of Contents Mortgage As of and for the Year Ended December 31, (dollars in thousands) 2025 2024 $ Change % Change Total interest and dividend income $ 1,475 $ 1,132 $ 343 30.3 % Total interest expense — — — — Provision for credit losses — — — — Net interest income, after provision for credit losses 1,475 1,132 343 30.3 Net gain on mortgage loans 4,443 4,912 (469) (9.5) Total income before non-interest expense 5,918 6,044 (126) (2.1) Salaries and employee benefits expense 3,669 3,598 71 2.0 Depreciation and amortization expense 19 30 (11) (36.7) All other non-interest expense 1,566 1,466 100 6.8 Income before income taxes $ 664 $ 950 $ (286) (30.1) Total assets $ 42,281 $ 27,422 $ 14,859 54.2 % The Mortgage segment reported Income before income tax of $0.7 million for the year ended December 31, 2025, compared to $1.0 million for the same period in 2024.
Our accounts are federally insured by the FDIC up to the legal maximum amount. Total deposits decreased by $14.8 million, or 0.6%, to $2.51 billion as of December 31, 2024 from December 31, 2023. The decrease was driven primarily by operating account fluctuations and clients using liquidity for strategic investments.
Our accounts are federally insured by the FDIC up to the legal maximum amount. Total deposits increased by $232.4 million, or 9.2%, to $2.75 billion as of December 31, 2025 from December 31, 2024.

… 158 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed11 unchanged
Biggest changeThe following presents the sensitivity in net interest income and fair value of equity as of the dates indicated, using a parallel ramp scenario: As of December 31, 2024 2023 Change in Interest Rates (Basis Points) Percent Change in Net Interest Income Percent Change in Fair Value of Equity Percent Change in Net Interest Income Percent Change in Fair Value of Equity 200 0.94 % (8.37) % (5.19) % (11.03) % 100 (2.51) (2.30) (2.82) (5.90) Base — — — — -100 5.11 6.94 2.38 3.16 -200 16.86 2.97 8.27 (5.27) The model simulations as of December 31, 2024 imply that our balance sheet maintains a similar interest rate risk profile compared to our balance sheet as of December 31, 2023.
Biggest changeThe following presents the sensitivity in net interest income and fair value of equity as of the dates indicated, using a static balance sheet and parallel shock scenario: As of December 31, 2025 2024 Change in Interest Rates (Basis Points) Percent Change in Net Interest Income Percent Change in Fair Value of Equity Percent Change in Net Interest Income Percent Change in Fair Value of Equity 200 7.76 % (3.45) % 0.94 % (8.37) % 100 5.72 (0.26) 2.51 (2.30) Base — — — — -100 2.26 3.59 5.11 6.94 -200 9.68 (2.52) 16.86 2.97 The model simulations as of December 31, 2025 imply that our balance sheet maintains a similar interest rate risk profile compared to our balance sheet as of December 31, 2024.
Interest rates do not necessarily move in the same direction or magnitude as prices of general goods and services, while other operating expenses can be correlated with the impact of general levels of inflation. 86 Table of Contents
Interest rates do not necessarily move in the same direction or magnitude as prices of general goods and services, while other operating expenses can be correlated with the impact of general levels of inflation. 81 Table of Contents

Other MYFW 10-K year-over-year comparisons