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What changed in NORTHRIM BANCORP INC's 10-K — 2024 vs 2025

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

+438 added−420 removedSource: 10-K (2026-03-06) vs 10-K (2025-03-10)

Top changes in NORTHRIM BANCORP INC's 2025 10-K

438 paragraphs added · 420 removed · 321 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

80 edited+58 added−30 removed83 unchanged
Biggest changeManagement believes that calculated, sustainable organic and inorganic market share growth coupled with good asset quality, an appropriate core deposit and capital base, operational efficiency, diversified sources of other operating income, and consistent profitability is the most appropriate means of increasing shareholder value.
Biggest changeManagement believes that calculated, sustainable organic and inorganic market share growth coupled with good asset quality, an appropriate core deposit and capital base, operational efficiency, diversified sources of other operating income, and consistent profitability are the most appropriate means of increasing shareholder value. 3 Our business strategy emphasizes commercial lending products and services through relationship banking with businesses and professional individuals in our Community Banking segment, mortgage origination and sale, mortgages held for investment, and mortgage servicing activities through our Mortgage Banking segment, and factoring, asset based lending, and alternative working capital lending through our Specialty Finance segment.
We also offer our employees other flexible work options, such as variable work hours, condensed workweeks and part-time hours. There have been no material impacts to our operations due 4 to the increase in these alternative working arrangements, and we are pleased to provide our employees with more flexibility to accommodate their needs.
We also offer our employees other flexible work options, such as variable work hours, condensed workweeks and part-time hours. There have been no material impacts to our operations due to the increase in these 4 alternative working arrangements, and we are pleased to provide our employees with more flexibility to accommodate their needs.
Supervision and Regulation The Company is a bank holding company within the meaning of the Bank Holding Company Act of 1956 (the “BHC Act”) registered with and subject to examination by the FRB.
Supervision and Regulation of the Company The Company is a bank holding company within the meaning of the Bank Holding Company Act of 1956 (the “BHC Act”) registered with and subject to examination by the FRB.
While state government revenue from oil royalties is immediately and 8 directly impacted by a drop in oil prices, we believe that the large scale and nature of oil wells in Alaska are such that project commitments that currently exist will most likely not be disrupted by short-term price volatility.
While state government revenue from oil royalties is immediately and directly impacted by a drop in oil prices, we believe that the large scale and nature of oil wells in Alaska are such that project commitments that currently exist will most likely not be disrupted by short-term price volatility.
Based on information from Rain Coast Data, over one million cruise ship tourists have visited Southeast Alaska annually in recent years, including 1.7 million in 2023 and 1.2 million in 2022. Additionally, the Cruise Lines International Association has reported that 1.7 million cruise ship visitors visited Southeast Alaska in 2024.
Based on information from Rain Coast Data, over one million cruise ship tourists have visited Southeast Alaska annually in recent years, including 1.7 million in 2023 and 1.2 million in 2022. Additionally, the Cruise Lines International Association has reported that 1.7 million cruise ship visitors visited Southeast Alaska in 2024 and 2025.
The public may also obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, including the Company, that file electronically with the SEC.
The public may also obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, including the Company, that file electronically with the SEC. 16
These include limitations on the ability of the Bank to pay dividends to the Company, numerous federal and state consumer protection laws imposing requirements on the making, enforcement, and collection of consumer loans, and restrictions on and regulation of the sale of mutual funds and other uninsured investment products to customers.
These regulations include limitations on the ability of the Bank to pay dividends to the Company, numerous federal and state consumer protection laws imposing requirements on the making, enforcement, and collection of consumer loans, and restrictions on and regulation of the sale of mutual funds and other uninsured investment products to customers.
The regulations establish five capital categories; under the Rules, a bank generally is: “well capitalized” if it has a total risk-based capital ratio of 10.0% or more, a Tier 1 risk-based capital ratio of 8.0% or more, a common equity Tier 1 risk-based ratio of 6.5% or more, and a leverage capital ratio of 5.0% or more, and is not subject to any written agreement, order or capital directive to meet and maintain a specific capital level for any capital measure; 12 “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or more, a Tier 1 risk-based capital ratio of 6.0% or more, a common equity Tier 1 risk-based ratio of 4.5% or more, and a leverage capital ratio of 4.0% or more; “undercapitalized” if it has a total risk-based capital ratio less than 8.0%, a Tier 1 risk-based capital ratio less than 6.0%, a common equity risk-based ratio less than 4.5% or a leverage capital ratio less than 4.0%; “significantly undercapitalized” if it has a total risk-based capital ratio less than 6.0%, a Tier 1 risk-based capital ratio less than 4.0%, a common equity risk-based ratio less than 3.0% or a leverage capital ratio less than 3.0%; and “critically undercapitalized” if it has a ratio of tangible equity to total assets that is equal to or less than 2.0%.
The regulations establish five capital categories; under the Rules, a bank generally is: “well capitalized” if it has a total risk-based capital ratio of 10.0% or more, a Tier 1 risk-based capital ratio of 8.0% or more, a common equity Tier 1 risk-based ratio of 6.5% or more, and a leverage capital ratio of 5.0% or more, and is not subject to any written agreement, order or capital directive to meet and maintain a specific capital level for any capital measure; 14 “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or more, a Tier 1 risk-based capital ratio of 6.0% or more, a common equity Tier 1 risk-based ratio of 4.5% or more, and a leverage capital ratio of 4.0% or more; “undercapitalized” if it has a total risk-based capital ratio less than 8.0%, a Tier 1 risk-based capital ratio less than 6.0%, a common equity risk-based ratio less than 4.5% or a leverage capital ratio less than 4.0%; “significantly undercapitalized” if it has a total risk-based capital ratio less than 6.0%, a Tier 1 risk-based capital ratio less than 4.0%, a common equity risk-based ratio less than 3.0% or a leverage capital ratio less than 3.0%; and “critically undercapitalized” if it has a ratio of tangible equity to total assets that is equal to or less than 2.0%.
Specialty Finance Purchase of accounts receivable, asset based lending, and alternative working capital solutions: We provide short and medium-term working capital to customers in Alaska, multiple states in the continental United States, and to a lessor extent in Canada and the United Kingdom through subsidiaries of SCF by purchasing their accounts receivable and by providing asset based lending and other alternative working capital products through our Specialty Finance segment, which includes activities at NFS and SCF.
Specialty Finance Purchase of accounts receivable, asset based lending, and alternative working capital solutions: We provide short and medium-term working capital to customers in Alaska, multiple states in the continental United States, and to a lessor extent in Canada and the United Kingdom through affiliates of SCF by purchasing their accounts receivable and by providing asset based lending and other alternative working capital products through our Specialty Finance segment, which includes activities at NFS and SCF.
Other Dodd-Frank Act changes include: (i) tightened capital requirements for the Bank and the Company; (ii) new requirements on parties engaged in residential mortgage origination, brokerage, lending and securitization; (iii) expanded restrictions on affiliate and insider transactions; (iv) enhanced restrictions on management compensation and related governance procedures; (v) creation of a federal Consumer Financial Protection Bureau (the "CFPB") with broad authority to regulate consumer financial 10 products and services; and (vi) restrictions and prohibitions on the ability of banking entities to engage in proprietary trading and to invest in or have certain relationships with hedge funds and private equity funds.
Other Dodd-Frank Act changes include: (i) tightened capital requirements for the Bank and the Company; (ii) new requirements on parties engaged in residential mortgage origination, brokerage, lending and securitization; (iii) expanded restrictions on affiliate and insider transactions; (iv) enhanced restrictions on management compensation and related governance procedures; (v) creation of a federal CFPB with broad authority to regulate consumer financial products and services; and (vi) restrictions and prohibitions on the ability of banking entities to engage in proprietary trading and to invest in or have certain relationships with hedge funds and private equity funds.
We believe that these strategies will continue to benefit the Company in 2025, and we intend to continue to grow our balance sheet through increasing our market share. The Company’s business strategy also stresses the importance of customer deposit relationships to support its lending activities.
We believe that these strategies will continue to benefit the Company in 2026, and we intend to continue to grow our balance sheet through increasing our market share. The Company’s business strategy also stresses the importance of customer deposit relationships to support its lending activities.
A number of other federal and state consumer protection laws extensively govern the Bank’s relationship with its customers.
Consumer Protection Regulations A number of other federal and state consumer protection laws extensively govern the Bank’s relationship with its customers.
Approximately 40% of the Company's employees are working remotely as of December 31, 2024 either on a full- or part-time basis, including employees that work remotely part-time and work in the office part-time, which we refer to as a "hybrid" work from home arrangement.
Approximately 40% of the Company's employees are working remotely as of December 31, 2025 either on a full- or part-time basis, including employees that work remotely part-time and work in the office part-time, which we refer to as a "hybrid" work from home arrangement.
Other Services : In addition to our traditional deposit and lending services, we offer our customers several convenience services: Mobile Web and Mobile APP Banking, consumer online account opening, Personal Finance, Online Documents, Consumer Debit Cards, Business Debit Cards, My Rewards for consumer debit cards, retail lockbox services, card controls, Consumer Credit Cards, Business Credit Cards, Corporate Purchase Cards, Integrated Payables, home equity advantage access cards, telebanking, and automated teller services.
Other Services : In addition to our traditional deposit and lending services, we offer our customers several convenience services: Mobile Web and Mobile APP Banking, consumer online account opening, Personal Finance, Online Documents, Consumer Debit Cards, Business Debit Cards, retail lockbox services, card controls, Consumer Credit Cards, Business Credit Cards, Corporate Purchase Cards, Integrated Payables, home equity advantage access cards, telebanking, and automated teller services.
Management intends to maintain capital ratios for the Bank in 2025 that exceed the FDIC’s requirements for the “well-capitalized” capital requirement classification. The dividends that the Bank pays to the Company will be limited to the extent necessary for the Bank to meet the regulatory requirements of a “well-capitalized” bank.
Management intends to maintain capital ratios for the Bank in 2026 that exceed the FDIC’s requirements for the “well-capitalized” capital requirement classification. The dividends that the Bank pays to the Company will be limited to the extent necessary for the Bank to meet the regulatory requirements of a “well-capitalized” bank.
There are various legal restrictions on the extent to which a bank holding company and certain of its nonbank subsidiaries can borrow or otherwise obtain credit from their banking subsidiaries or engage in certain other transactions with or involving those banking subsidiaries.
Restrictions on Lending, Insider Transactions, and Affiliate Transactions There are various legal restrictions on the extent to which a bank holding company and certain of its nonbank subsidiaries can borrow or otherwise obtain credit from their banking subsidiaries or engage in certain other transactions with or involving those banking subsidiaries.
The FDIC provides insurance coverage for certain deposits held by the Bank through the Deposit Insurance Fund, which the FDIC maintains by assessing depository institutions an insurance premium. The Bank is assessed deposit insurance premiums by the FDIC using a risk-based assessment rate and an adjusted average total assets.
FDIC Insurance Assessments The FDIC provides insurance coverage for certain deposits held by the Bank through the DIF, which the FDIC maintains by assessing depository institutions an insurance premium. The Bank is assessed deposit insurance premiums by the FDIC using a risk-based assessment rate and an adjusted average total assets.
In addition, Northrim provides for a strong work/life balance, including generous paid time off and paid parental leave. Employee Profile We consider our relations with our employees to be highly satisfactory. We had 503 full-time equivalent employees at December 31, 2024. None of our employees are covered by a collective bargaining agreement.
In addition, Northrim provides for a strong work/life balance, including generous paid time off and paid parental leave. Employee Profile We consider our relations with our employees to be highly satisfactory. We had 516 full-time equivalent employees at December 31, 2025. None of our employees are covered by a collective bargaining agreement.
Of the 1-4 family residential mortgages originated by the company in 2024, 79% were located in Alaska. Residential mortgage choices include several products from AHFC including first-time homebuyer, veteran's and rural community programs; Federal Housing Authority, or "FHA" loans; Veterans Affairs, or "VA" loans; and various conventional mortgages.
Of the 1-4 family residential mortgages originated by the Company in 2025, 74% were located in Alaska. Residential mortgage choices include several products from AHFC including first-time homebuyer, veteran's and rural community programs; Federal Housing Authority, or "FHA" loans; Veterans Affairs, or "VA" loans; and various conventional mortgages.
The Company has grown to be the third largest commercial bank in Alaska in terms of deposits, with $2.7 billion in total deposits and $3.0 billion in total assets at December 31, 2024. Effective October 31, 2024, the Company completed its acquisition of Sallyport Commercial Finance, LLC (“SCF”), and its subsidiaries.
The Company has grown to be the third largest commercial bank in Alaska in terms of deposits, with $2.8 billion in total deposits and $3.3 billion in total assets at December 31, 2025. Effective October 31, 2024, the Company completed its acquisition of Sallyport Commercial Finance, LLC (“SCF”), and its subsidiaries.
In 2024, 31% of our revenue was derived from the residential housing market in the form of loan fees and interest on mortgage loans, interest and fees on residential construction and land development loans, gains on the sale or mortgage loans, and mortgage servicing income as compared to 24% and 25% in 2023 and 2022, respectively.
In 2025, 26% of our revenue was derived from the residential housing market in the form of loan fees and interest on mortgage loans, interest and fees on residential construction and land development loans, gains on the sale or mortgage loans, and mortgage servicing income as compared to 31% and 24% in 2024 and 2023, respectively.
The Company also recently enhanced its paid parental leave program for employees following the birth of a child or the placement of a child in connection with an adoption, and increased base wages for all Community Banking employees below the level of Senior Vice President.
The Company also enhanced its paid parental leave program for employees following the birth of a child or the placement of a child in connection with an adoption, and increased base wages for all Bank employees below the level of Senior Vice President.
In 2024, the Company overhauled employee healthcare options for employees that included new benefit plans that provided additional coverage options. This included a new essential core option at no cost for employee only coverage. Beginning in 2025, the Company increased its 401(k) match for Community Banking employees to 100% of employee deferrals up to 6% annually.
In 2024, the Company overhauled employee healthcare options for employees that included new benefit plans that provided additional coverage options. This included a new essential care option at no cost for employee only coverage. Beginning in 2025, the Company increased its 401(k) match for Bank employees to 100% of employee deferrals up to 6% annually.
Part of the POMV concept creates an allocation of a portion of investment earnings to unrestricted revenue instead of restricted revenue. According to the DOR, in 2024 and 2023, investment earnings allocated from the Alaska Permanent Fund under the POMV represented $3.7 billion, or 55%, and $3.5 billion, or 49%, respectively, of unrestricted State revenues.
Part of the POMV concept creates an allocation of a portion of investment earnings to unrestricted revenue instead of restricted revenue. According to the DOR, in 2025 and 2024, investment earnings allocated from the Alaska Permanent Fund under the POMV represented $3.8 billion, or 60%, and $3.7 billion, or 55%, respectively, of unrestricted State revenues.
The Company strives to continuously evaluate our human capital polices for improvement and alignment with current best practices. The Company recently added the Juneteenth National Independence Day and Indigenous People's Day to our lineup of paid holidays for employees.
The Company strives to continuously evaluate our human capital polices for improvement and alignment with current best practices. In the last several years, the Company added the Juneteenth National Independence Day and Indigenous People's Day to our lineup of paid holidays for employees.
Sallyport Commercial Finance CAN, LLC, holds a 100% interest in Sallyport Commercial Finance ULC, located in Canada. • Northrim Building, LLC (“NBL”) is a wholly-owned subsidiary of the Bank that owns and operates the Company’s main office facility at 3111 C Street in Anchorage. • Northrim Building LO, LLC is a wholly-owned subsidiary of the Bank that owns and operates the Company’s community branch facilities at 2270 E. 37th Avenue in Anchorage and 2491 Tongass Avenue in Ketchikan.
Sallyport Commercial Finance CAN, LLC, holds a 100% interest in Sallyport Commercial Finance ULC, located in Canada. • Northrim Building, LLC (“NBL”) owns and operates the Company’s main office facility at 3111 C Street in Anchorage. • Northrim Building LO, LLC owns and operates the Company’s community branch facilities at 2270 E. 37th Avenue in Anchorage and 2491 Tongass Avenue in Ketchikan.
The distribution was $1,702 per eligible resident in 2024 for an aggregate distribution of approximately $1.06 billion. The Anchorage Economic Development Corporation estimates that, for most Anchorage households, distributions from the Alaska Permanent Fund Corporation exceed other Alaska taxes to which those households are subject. Competition We operate in a highly competitive and concentrated banking environment.
The distribution was $1,000 per eligible resident in 2025 for an aggregate distribution of approximately $619.6 million. The Anchorage Economic Development Corporation estimates that, for most Anchorage households, distributions from the Alaska Permanent Fund Corporation exceed other Alaska taxes to which those households are subject. Competition We operate in a highly competitive and concentrated banking environment.
As of December 31, 2024, Alaska's Constitutional Budget Reserve was $2.8 billion and the Alaska Permanent Fund had a balance of $79.6 billion. Investment revenue generated by the Alaska Permanent Fund is also used to pay an annual dividend to every eligible Alaskan citizen.
As of December 31, 2025, Alaska's Constitutional Budget Reserve was $2.9 billion and the Alaska Permanent Fund had a balance of $86.3 billion. Investment revenue generated by the Alaska Permanent Fund is also used to pay an annual dividend to every eligible Alaskan citizen.
Bank holding companies, such as the Company, are subject to a variety of restrictions on the activities in which they can engage and the acquisitions they can make.
Notice and Approval Requirements Related to Control, Investments, and Activities Bank holding companies, such as the Company, are subject to a variety of restrictions on the activities in which they can engage and the acquisitions they can make.
The Gramm-Leach-Bliley Act (the “GLB Act”) also included extensive consumer privacy provisions. These provisions, among other things, limit the ability of banks and other financial institutions to disclose nonpublic consumer information to non-affiliated third parties. The regulations require disclosure of privacy policies and allow consumers to prevent certain personal information from being shared with non-affiliated third parties.
These provisions, among other things, limit the ability of banks and other financial institutions to disclose nonpublic consumer information to non-affiliated third parties. The regulations require disclosure of privacy policies and allow consumers to prevent certain personal information from being shared with non-affiliated third parties.
These and other laws subject the Bank to substantial regulatory oversight and, among other things, require disclosures of the cost of credit and terms of deposit accounts, provide substantive consumer rights, prohibit discrimination in credit transactions, regulate the use of credit report information, provide financial privacy protections, prohibit unfair, deceptive and abusive practices, and restrict the Bank’s ability to raise interest rates.
These and other laws subject the Bank to substantial regulatory oversight and, among other things, require disclosures of the cost of credit and terms of deposit accounts, provide substantive consumer rights, prohibit discrimination in credit transactions, regulate the use of credit report information, provide financial privacy protections, prohibit unfair, deceptive and abusive practices, and restrict the Bank’s ability to raise interest rates. 15 Privacy, Data Protection, and Cybersecurity The Gramm-Leach-Bliley Act (the “GLB Act”) also included extensive consumer privacy provisions.
Northrim had 26 customers with balances over $10 million as of December 31, 2024, which accounted for $612.9 million, or 24%, of total deposits. 6 Home Mortgage Lending Lending Services: The Company originates 1-4 family residential mortgages, most of which we sell to the secondary market.
Northrim had 32 customers with balances over $10 million as of December 31, 2025, which accounted for $707.8 million, or 25%, of total deposits. 6 Home Mortgage Lending Lending Services: The Company originates 1-4 family residential mortgages through RML, most of which we sell to the secondary market.
Through NISC, we own 21% of the total outstanding equity interest in Pacific Wealth Advisors, LLC (“PWA”), an investment advisory, trust, and wealth management business located in Seattle, Washington.
Through NISC, we own 21% of the total outstanding equity interest in Pacific Wealth Advisors, LLC (“PWA”), an investment advisory, trust, and wealth management business located in Seattle, Washington. PWA is a holding company that owns Pacific Portfolio Consulting, LLC and Pacific Portfolio Trust Company.
Several of our deposit services and products are: 5 • A specialized business checking account customized to account activity; • A money market deposit account; • A “Jump-Up” certificate of deposit (“CD”) that allows additional deposits with the opportunity to increase the rate to the current market rate for a similar term CD; • A savings account that is priced like a money market account that allows additional deposits, quarterly withdrawals without penalty, and tailored maturity dates; • A Bank-On certified consumer checking account; • IntraFi® Network Deposits℠ and business sweep; • Consumer online banking, mobile app, and mobile deposit; • Business online banking, business mobile app, and business mobile deposit; and • Instantly issued debit cards for business and consumer accounts at account opening.
Several of our deposit services and products are: • A specialized business checking account customized to account activity; • A money market deposit account; 5 • A “Jump-Up” certificate of deposit (“CD”) that allows additional deposits with the opportunity to increase the rate to the current market rate for a similar term CD; • An 'Alaska Savings' account meant for higher balances with added flexibility; • A Bank-On certified consumer checking account; • IntraFi® Network Deposits℠ and business sweep; • Consumer online banking, mobile app, and mobile deposit; • Business online banking, business mobile app, and business mobile deposit; and • Instantly issued debit cards for business and consumer accounts at account opening.
Total deposits were $2.68 billion at December 31, 2024, up 8% from $2.49 billion a year ago. At December 31, 2024, 73% of total deposits were held in business accounts and 27% of deposit balances were held in consumer accounts. Northrim had approximately 34,000 deposit customers with an average balance of $61,000 as of December 31, 2024.
Total deposits were $2.81 billion at December 31, 2025, up 5% from $2.68 billion a year ago. At December 31, 2025, 74% of total deposits were held in business accounts and 26% of deposit balances were held in consumer accounts. Northrim had approximately 34,000 deposit customers with an average balance of $62,000 as of December 31, 2025.
The Dodd-Frank Act permanently increased the maximum amount of deposit insurance coverage to $250,000 per depositor and deposit insurance assessments paid by the Bank are now based on the Bank’s total assets.
Dodd-Frank Act The Dodd-Frank Act significantly modified and expanded the legal and regulatory requirements imposed on banks and other financial institutions. The Dodd-Frank Act permanently increased the maximum amount of deposit insurance coverage to $250,000 per depositor and deposit insurance assessments paid by the Bank are now based on the Bank’s total assets.
To address issues related to pay discrimination, we do not ask potential candidates about their current or previous compensation during the hiring process, and we incorporate equal and fair pay reviews into every employment compensation decision.
To address issues related to pay discrimination, we do not ask potential candidates about their current or previous compensation during the hiring process, and we incorporate equal and fair pay reviews into every employment compensation decision. Products and Services Community Banking Lending Services: We have an emphasis on commercial and real estate lending.
Approximately 35% of the workforce identify as a member of a racial minority, 8% identify as individuals with a disability, and 3% identify as veterans. In executive and senior management positions, 39% identify as women and 61% as men as of December 31, 2024.
Approximately 35% of the workforce identify as a member of a racial minority, 6% identify as individuals with a disability, and 2% identify as veterans. In executive and senior management positions, 33% identify as women and 67% as men as of December 31, 2025.
Such priority creditors would include the FDIC, which succeeds to the position of insured depositors to the extent it has made payments to such depositors. The Bank is subject to the Community Reinvestment Act of 1977 (“CRA”).
Such priority 13 creditors would include the FDIC, which succeeds to the position of insured depositors to the extent it has made payments to such depositors.
We offer a wide array of commercial and consumer loan and deposit products, investment products, and electronic banking services over the Internet; • Northrim Investment Services Company (“NISC”) was formed in November 2002.
We operate in Washington State through Northrim Funding Services (“NFS”), a division of the Bank started in 2004 engaged in the factoring business. We offer a wide array of commercial and consumer loan and deposit products, investment products, and electronic banking services over the Internet; • Northrim Investment Services Company (“NISC”) was formed in November 2002.
The Company has $619.4 million non-owner occupied commercial real estate loans as of December 31, 2024 of which 18% are apartments, 16% are retail centers, 15% are office class A or B, 12% are office / warehouse, 9% are hotels, 8% are mini warehouse and self-storage, 5% are warehouse, and 17% are other.
The Company has $767.6 million non-owner occupied commercial real estate loans as of December 31, 2025 of which 21% are apartments, 13% are retail centers, 13% are office class A or B, 12% are hotels, 10% are office / warehouse, 6% are mini warehouse and self-storage, 6% are warehouse, and 19% are other.
The FDIC or the Division could take the position that paying a dividend would constitute an unsafe or unsound banking practice. In addition, recent capital rules may affect the Bank's ability to pay dividends.
Under Alaska law, the Bank is not permitted to pay or declare a dividend in an amount greater than its undivided profits. The FDIC or the Division could also take the position that paying a dividend would constitute an unsafe or unsound banking practice. In addition, recent capital rules may affect the Bank's ability to pay dividends to the Company.
We believe that the current capital levels of the Company and the Bank are in compliance with the standards under the Rules including the conservation buffer. In addition to the minimum capital standards, the federal banking agencies have issued regulations to implement a system of "prompt corrective action." These regulations apply to the Bank but not the Company.
Prompt Corrective Action In addition to the minimum capital standards, the federal banking agencies have issued regulations to implement a system of "prompt corrective action." These regulations apply to the Bank but not the Company.
The Company is also subject to the information, proxy solicitation, insider trading restrictions and other requirements of the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act of 1934”), including certain requirements under the Sarbanes-Oxley Act of 2002. 14 Available Information The Company’s annual report on Form 10-K and quarterly reports on Form 10-Q, as well as its current reports on Form 8-K and proxy statement filings (and all amendments thereto), which are filed with the SEC, are accessible free of charge at our website at http://www.northrim.com as soon as reasonably practicable after filing with the SEC.
Available Information The Company’s annual report on Form 10-K and quarterly reports on Form 10-Q, as well as its current reports on Form 8-K and proxy statement filings (and all amendments thereto), which are filed with the SEC, are accessible free of charge at our website at http://www.northrim.com as soon as reasonably practicable after filing with the SEC.
We estimate that as of December 31, 2024 the Company had $138.0 million, or 6% of total portfolio loans, in the Healthcare sector; $117.0 million, or 5% of portfolio loans, in the Tourism sector; $104.3 million, or 5% in the Accommodations sector; $87.4 million, or 4% in Retail loans; $84.6 million, or 4% of portfolio loans, in the Aviation (non-tourism) sector; $76.5 million, or 4% in the Fishing sector; and $55.1 million, or 3% in the Restaurants and Breweries sector.
We estimate that as of December 31, 2025 the Company had $145.5 million, or 6% of total portfolio loans, in the Healthcare sector; $137.2 million, or 6% in the Accommodations sector; $117.6 million, or 5% of portfolio loans, in the Tourism sector; $97.9 million, or 4% in Retail loans; $89.2 million, or 4% of portfolio loans, in the Aviation (non-tourism) sector; $64.6 million, or 3% in the Restaurants and Breweries sector; and $57.6 million, or 2% in the Fishing sector.
Long Term Economic Factors We believe the long-term growth of the Alaska economy will most likely be impacted by large scale natural resource development projects. Several multi-billion dollar projects can potentially advance in the moderate-term. Some of these projects include copper, gold and molybdenum production at the proposed Donlin Gold mine and continued exploration in the National Petroleum Reserve Alaska.
Several multi-billion dollar projects can potentially advance in the moderate-term. Some of these projects include copper, gold and molybdenum production at the proposed Donlin Gold mine and continued exploration in the National Petroleum Reserve Alaska.
Of the 503 full-time equivalent employees, 329 were Community Banking employees, 142 were Home Mortgage Lending employees, and 32 were Specialty Finance employees. Among the Company's full-time equivalent employees as of December 31, 2024, 65% identify as women and 35% as men.
Of the 516 full-time equivalent employees, 332 were Community Banking employees, 154 were Home Mortgage Lending employees, and 30 were Specialty Finance employees. Among the Company's full-time equivalent employees as of December 31, 2025, 63% identify as women and 37% as men.
Under longstanding FRB policy and under the Dodd-Frank Act, a bank holding company is required to act as a source of financial strength for its subsidiary banks.
Source of Strength Under longstanding FRB policy and under the Dodd-Frank Act, a bank holding company is required to act as a source of financial strength for its subsidiary bank. The Company could be required to commit resources to its subsidiary bank in circumstances where it might not do so, absent such requirement.
A decline in real estate values in the greater Anchorage, Matanuska-Susitna Valley, Fairbanks, and Southeast Alaska areas could significantly reduce the value of the real estate collateral securing our real estate loans and could increase the likelihood of defaults under these loans.
A decline in real estate values in the greater Anchorage, Matanuska-Susitna Valley, Fairbanks, and Southeast Alaska areas could significantly reduce the value of the real estate collateral securing our real estate loans and could increase the likelihood of defaults under these loans. 8 Long Term Economic Factors We believe the long-term growth of the Alaska economy will most likely be impacted by large scale natural resource development projects.
The four possible ratings are outstanding, satisfactory, needs to improve and substantial noncompliance. A financial institution’s CRA rating can affect an institution’s future business. In its most recent CRA examination, the Bank received a “Satisfactory” rating from the FDIC.
The FDIC assigns one of four possible ratings to the Bank’s CRA performance and makes the rating and the examination reports publicly available. The four possible ratings are outstanding, satisfactory, needs to improve and substantial noncompliance. A financial institution’s CRA rating can affect an institution’s future business.
The Bank is regulated by the Federal Deposit Insurance Corporation (the "FDIC") and the State of Alaska Department of Commerce, Community and Economic Development, Division of Banking and Securities. The Bank has 20 branch locations throughout the State of Alaska. We operate in Washington State through Northrim Funding Services (“NFS”), a factoring business that the Bank started in 2004.
The Bank is regulated by the Federal Deposit Insurance Corporation (the “FDIC”) and the State of Alaska Department of Commerce, Community and Economic Development, Division of Banking and Securities (the “Division”). The Bank has 20 branch locations throughout the State of Alaska.
If the injunction on the final rule is lifted, compliance with the majority of the final rule's provisions will not be required until January 1, 2026, and the data reporting requirements of the final rule will not take effect until January 1, 2027. 13 The Bank is also subject to the Bank Secrecy Act (the “BSA”) and other anti-money laundering laws and regulations including the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”) and the Anti-Money Laundering Act of 2020 (the “AMLA”).
Anti-Money-Laundering Regulations The Bank is also subject to the Bank Secrecy Act (the “BSA”) and other anti-money laundering laws and regulations including the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”) and the Anti-Money Laundering Act of 2020 (the “AMLA”).
The Rules apply to both depository institutions (such as the Bank) and their holding companies (such as the Company). The Rules reflect, in part, certain standards initially adopted by the Basel Committee on Banking Supervision in December 2010 (which standards are commonly referred to as “Basel III”) as well as requirements contemplated by the Dodd-Frank Act.
The Rules reflect, in part, certain standards initially adopted by the Basel Committee on Banking Supervision in December 2010 (which standards are commonly referred to as “Basel III”) as well as requirements contemplated by the Dodd-Frank Act. The Rules recognize three types, or tiers, of capital: common equity Tier 1 capital, additional Tier 1 capital and Tier 2 capital.
An institution that does not meet the conservation buffer will be subject to restrictions on certain activities including payment of dividends, stock repurchases and discretionary bonuses to executive officers. The Rules set forth the manner in which certain capital elements are determined, including but not limited to, requiring certain deductions related to mortgage servicing rights and deferred tax assets.
An institution that does not meet the conservation buffer will be subject to restrictions on certain activities including payment of dividends, stock repurchases and discretionary bonuses to executive officers.
Deposit Services : Our deposit services include business and personal noninterest-bearing checking accounts and interest-bearing time deposits, checking accounts, savings accounts, and individual retirement accounts. Our interest-bearing accounts generally earn interest at rates established by management based on competitive market factors and management’s desire to increase or decrease certain types or maturities of deposits.
Deposit Services : Our deposit services include business and personal noninterest-bearing checking accounts and interest-bearing time deposits, checking accounts, savings accounts, and individual retirement accounts. Our interest-bearing accounts generally earn interest at rates established by management in accordance with management’s deposit growth strategy.
The Alaska Department of Revenue (“DOR”) calculated ANS crude oil production was 461 thousand barrels per day (“bpd”) in Alaska’s fiscal year ending June 30, 2024 and is projected to increase to 467 thousand bpd in Alaska’s fiscal year 2025. The DOR expects production to continue to grow rapidly to 657 thousand bpd by fiscal year 2034.
The Alaska Department of Revenue (“DOR”) calculated ANS crude oil production was 468 thousand barrels per day (“bpd”) in Alaska’s fiscal year ending June 30, 2025. In the Fall 2025 Revenue Forecast published December 19, 2025, the DOR expects production to average 457 thousand bpd in fiscal year 2026 and 518 thousand bpd in fiscal year 2027.
PWA is a holding company that owns Pacific Portfolio Consulting, LLC and Pacific Portfolio Trust Company; • Northrim Statutory Trust 2 (“NST2”), an entity that we formed in December 2005 to facilitate a trust preferred securities offering by the Company. The Bank has four direct wholly-owned subsidiaries: • Northrim Capital Investments Co.
PWA sold all of its operating assets in 2025, including all of the assets of Pacific Portfolio Consulting, LLC and all of its interest in Pacific Portfolio Trust Company; • Northrim Statutory Trust 2 (“NST2”), an entity that we formed in December 2005 to facilitate a trust preferred securities offering by the Company.
The CRA requires that the Bank help meet the credit needs of the communities it serves, including low and moderate income neighborhoods, consistent with the safe and sound operation of the institution. The FDIC assigns one of four possible ratings to the Bank’s CRA performance and makes the rating and the examination reports publicly available.
Community Reinvestment Act The Bank is subject to the Community Reinvestment Act of 1977 (“CRA”). The CRA requires that the Bank help meet the credit needs of the communities it serves, including low and moderate income neighborhoods, consistent with the safe and sound operation of the institution.
Some insurance companies and brokerage firms compete for deposits by offering rates that are higher than may be appropriate for the Company in relation to its asset and liability management objectives. However, we offer a wide array of deposit products and services and believe we can compete effectively through relationship based pricing and effective delivery of “Superior Customer First Service”.
Some insurance companies and brokerage firms compete for deposits by offering rates that are higher than may be appropriate for the Company in relation to its asset and 9 liability management objectives.
There was virtually no change in the number of homes sold in the Matanuska Susitna Borough, with only four fewer homes sold in 2024 than in 2023 or 0.2%. A material portion of our loans at December 31, 2024, were secured by real estate located in greater Anchorage, Matanuska-Susitna Valley, Fairbanks, and Southeast Alaska.
A material portion of our loans at December 31, 2025, were secured by real estate located in greater Anchorage, Matanuska-Susitna Valley, Fairbanks, and Southeast Alaska.
With certain exceptions, federal law imposes limitations on, and requires collateral for, extensions of credit by insured depository institutions, such as the Bank, to their non-bank affiliates, such as the Company. In addition, capital rules may affect the Company's ability to pay dividends.
With certain exceptions, federal law imposes limitations on, and requires collateral for, extensions of credit by insured depository institutions, such as the Bank, to their non-bank affiliates, such as the Company. Transactions between the Company and the Bank are quantitatively and qualitatively restricted under Sections 23A and 23B of the Federal Reserve Act and Federal Reserve Regulation W.
At June 30, 2024, the date of the most recently available information from the FDIC, the Bank had approximately a 16% share of the Alaska bank deposits, 19% in the Anchorage area, 21% in Juneau, 21% in Matanuska-Susitna, 18% in Sitka, 13% in Fairbanks, 12% in the Kenai Peninsula, 11% in Nome, 9% in Ketchikan, and 5% in Kodiak. 9 The following table sets forth market share data for the banks having a presence in Alaska as of June 30, 2024, the most recent date for which comparative deposit information is available.
At June 30, 2025, the date of the most recently available information from the FDIC, the Bank had approximately a 18% share of the Alaska bank deposits, 20% in the Anchorage area, 23% in Juneau, 22% in Matanuska-Susitna, 22% in Sitka, 14% in Fairbanks, 14% in the Kenai Peninsula, 64% in Nome, 9% in Ketchikan, and 8% in Kodiak.
The Division and the FDIC also have authority to prohibit banks under their supervision from engaging in what they consider to be unsafe or unsound practices. There also are certain limitations on the ability of the Company to pay dividends to its shareholders.
The Division and the FDIC also have authority to prohibit banks under their supervision from engaging in what they consider to be unsafe or unsound practices. Dividends Various federal and state statutory provisions limit the amount of dividends that subsidiary banks can pay to their holding companies without regulatory approval.
Financial institution Number of branches Total deposits (in thousands) Market share of total bank deposits Northrim Bank (1) 20 $2,480,330 15.7 % Wells Fargo Bank Alaska (1) 37 6,779,209 42.7 % First National Bank Alaska (1) 27 3,698,631 23.3 % Key Bank (1) 10 1,138,684 7.2 % First Bank (1) 9 772,277 4.9 % Mt.
Financial institution Number of branches Total deposits (in thousands) Market share of total bank deposits Northrim Bank (1) 20 $2,812,725 17.5 % Wells Fargo Bank Alaska (1) 37 6,771,111 42.2 % First National Bank Alaska (1) 27 3,586,204 22.4 % Key Bank (1) 10 1,092,955 6.8 % First Bank (1) 9 798,785 5.0 % Mt.
Additionally, approximately 37% of our loan portfolio at December 31, 2024 is attributable to 30 large borrowing relationships. Moreover, our business activities are currently focused primarily in the state of Alaska.
Additionally, approximately 20% of our loan portfolio at December 31, 2025 is attributable to 28 large borrowing relationships. Large borrowing relationships are defined as loan relationships with an aggregate commitment amount greater than or equal to 50% of the Bank's Legal Lending Limit to one borrower. Moreover, our business activities are currently focused primarily in the state of Alaska.
This was the seventh consecutive year of price increases. The average sales price for single family homes in the Matanuska Susitna Borough rose 3.9% in 2024 to $412,907, after increasing 4% in 2023. This continues a trend of average price increases for more than a decade in the region.
The average sales price for single family homes in the Matanuska Susitna Borough rose 6.6% in 2025 to $440,237, after climbing 3.8% in 2024 and 4% in 2023. This continues a trend of average price increases for more than a decade in the region. These two markets represent where the vast majority of the Bank’s residential lending activity occurs.
SCF provides factoring, asset based lending and alternative working capital solutions to small and medium sized enterprises in the United States and, through its subsidiaries, in Canada and the United Kingdom. SCF holds a 100% interest in Sallyport Commercial Finance CAN, LLC, a holding company, and a 40% interest in Sallyport Commercial Finance LTD, located in the United Kingdom.
SCF holds a 100% interest in Sallyport Commercial Finance CAN, LLC, a holding company, and a 40% interest in Sallyport Commercial Finance LTD, located in the United Kingdom.
Key sectors of the Alaska economy are the oil industry, government and military spending, and the fishing, mining, tourism, air cargo, transportation, and construction industries, as well as health services. Recent Economic Developments The Alaska Department of Labor (“DOL”) has reported Alaska’s seasonally adjusted unemployment rate in November 2024 was 4.6% compared to the U.S. rate of 4.2%.
Key sectors of the Alaska economy are the oil industry, government and military spending, and the fishing, mining, tourism, air cargo, transportation, and construction industries, as well as health services.
The Company could be required to commit resources to its subsidiary bank in circumstances where it might not do so, absent such requirement. 11 Both the Company and the Bank are required to maintain minimum levels of regulatory capital, under capital requirement rules (the “Rules”) of federal banking regulators (including the FDIC and the FRB).
Capital Adequacy Both the Company and the Bank are required to maintain minimum levels of regulatory capital, under capital requirement rules (the “Rules”) of federal banking regulators (including the FDIC and the FRB). The Rules apply to both depository institutions (such as the Bank) and their holding companies (such as the Company).
McKinley Bank (1) 5 535,180 3.4 % Denali State Bank (1) 5 436,311 2.8 % Total bank branches 113 $15,840,622 100 % (1) FDIC Summary of Deposits as of June 30, 2024.
McKinley Bank (1) 5 519,136 3.2 % Denali State Bank (1) 5 463,259 2.9 % Total bank branches 113 $16,044,175 100 % (1) FDIC Summary of Deposits as of June 30, 2025.
We support and cultivate an open and respectful environment where everyone can actively contribute, have equal access to opportunities and resources, be themselves, and realize their potential. This is reflected in our policies, which encourage individual values, strengths and protections to provide gender diversity and equality in the workplace and are reinforced through our annual anti-harassment training.
This is reflected in our policies, which encourage individual values, strengths and protections to provide equality for all in the workplace and are reinforced through our annual anti-harassment training.
The Company’s affiliated trust company, Pacific Portfolio Trust Company, is regulated as a non-depository trust company under the trust company laws of the State of Washington and is subject to supervision and examination by the Washington State Department of Financial Institutions. The Bank's subsidiary, SCF, is subject to supervision and regulation by the California Department of Financial Protection and Innovation.
Supervision and Regulation of SCF The Bank's subsidiary, SCF, is subject to supervision and regulation by the California Department of Financial Protection and Innovation (the “DFPI”).
Two significant oil production projects, Willow and Pikka, have been sanctioned and are under development, with first oil expected from Pikka in 2026 and from Willow in 2029. Both of these projects should continue to generate activity on the North Slope with an estimated $1.5 billion in oil and gas construction spending on these projects forecasted for 2025.
Two significant oil production projects, Willow and Pikka, have been sanctioned and are under development, with first oil expected from Pikka in 2026 and from Willow in 2029.
We also compete with full service investment firms for non-bank financial products and services offered by PWA and through retail investment advisory services and annuity investment products that we offer through a third-party vendor. Currently, there are seven commercial banks operating in Alaska.
However, we offer a wide array of deposit products and services and believe we can compete effectively through relationship based pricing and effective delivery of “Superior Customer First Service”. We also compete with full service investment firms for non-bank financial products and services through retail investment advisory services and annuity investment products that we offer through a third-party vendor.
The Bank is required to file periodic reports with the FDIC and the Division and is subject to periodic examinations and evaluations by those regulatory authorities. These examinations must be conducted every 12 months, except that certain “well-capitalized” banks may be examined every 18 months.
The FDIC insures the Bank’s deposits and also examines, supervises, and regulates the Bank. The Bank is required to file periodic reports with the FDIC and the Division and is subject to periodic examinations and evaluations by those regulatory authorities.
There are also a number of smaller new fields in Alaska’s North Slope that are contributing to the State of Alaska’s production growth estimates. According to the Alaska Multiple Listing Services, the average sales price of a single family home in Anchorage rose 6.2% in 2024 to $509,994, following a 5.2% increase in 2023.
According to the Alaska Multiple Listing Services, the average sales price of a single-family home in Anchorage rose 4.4% in 2025 to $532,301, following an increase of 6.2% in 2024 and 5.2% in 2023. This was the eighth consecutive year of price increases in the Anchorage market.
This is primarily a result of new production coming on-line in and around the NPR-A region west of Prudhoe Bay. A partnership between Santos and Repsol is constructing the new Pikka field and ConocoPhillips is developing the large new Willow field.
Over the next decade it is expected to continue to grow to 621 thousand bpd, or 33% by fiscal year 2036. This is primarily a result of new production coming on-line in and around the NPR-A region west of Prudhoe Bay.
In the third quarter of 2024 Alaska GSP increased at an annualized rate of 2.2%, compared to the average U.S. growth rate of 3.1%. Alaska’s real GSP improvement in the third quarter of 2024 was primarily caused by growth in the Health Care, Trade, Transportation and Warehousing sectors.
Alaska’s inflation adjusted “real” GSP increased 1.5% in 2024, 1.8% annualized in the first quarter of 2025, and 2% in the second quarter of 2025. The average U.S. GDP growth rate was 2.8% for 2024, annualized -0.6% in the first quarter of 2025 and 3.8% in the second quarter of 2025.
The BEA also calculated Alaska’s seasonally adjusted personal income at $55.7 billion in the third quarter of 2024. This was an annualized improvement in the third quarter of 3.3% for Alaska, compared to the national average of 3.2%. Alaska enjoyed an annual personal income improvement of 3.8% in 2023.
This is compared to the national average of 6.4% in the first quarter and 5.5% in the second quarter of 2025. Alaska enjoyed an annual personal income improvement of 5.8% in 2024 compared to the U.S. increase of 5.6%.
Approximately 10% of those in executive and senior management positions identify as a member of a racial minority, 6% identify as individuals with a disability, and 6% identify as veterans. Diversity, Equity, and Inclusion We strive to ensure a respectful, diverse, and inclusive environment and experience for all of our employees.
Approximately 7% of those in executive and senior management positions identify as a member of a racial minority, 13% identify as individuals with a disability, and 3% identify as veterans. Workplace Practices We support and cultivate an open and respectful environment where everyone can actively contribute, have equal access to opportunities and resources, be themselves, and realize their potential.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAlthough forecasts have varied, many economists are projecting that, while indicators of U.S. economic performance, such as income growth, may be strong and levels of inflation may continue to decrease, the U.S. economy may be flat or experience a modest decrease in gross domestic output in 2025 while inflation is expected to remain elevated relative to historic levels in the coming quarters.
Biggest changeThe ongoing economic and geopolitical instability increases the risk of an economic recession. Although forecasts have varied, many economists are projecting a modest increase in gross domestic output in 2026, slightly higher 19 unemployment, and moderation of inflation in coming quarters, however, other forecasts indicate that the U.S. economy may be flat.
These changes are likely to impact the rulemaking, supervision, examination and enforcement priorities and policies of the agencies and likely will continue to do so over the next several years. The potential impact of any changes in agency personnel, policies and priorities on the financial services sector, including the Bank, cannot be predicted at this time.
These changes are likely to continue to impact the rulemaking, supervision, examination and enforcement priorities and policies of the agencies and likely will continue to do so over the next several years. The potential impact of any changes in agency personnel, policies and priorities on the financial services sector, including the Bank, cannot be predicted at this time.
We may be adversely affected by risks associated with potential acquisitions. • We may incur impairment of goodwill. • Our allowance for credit losses may be insufficient. • We are subject to lending concentration risks. • Our commercial real estate lending may expose us to increased lending risks. • Residential mortgage lending is a market sector that experiences significant volatility and is influenced by many factors beyond our control. • Our information systems or those of our third-party vendors may be subject to an interruption or breach in security, including as a result of cyber-attacks. • A failure in or breach of the Company's operational systems, information systems, or infrastructure, or those of the Company's third party vendors and other service providers, may result in financial losses, or loss of customers. 15 • Our business is highly reliant on third party vendors. • We continually encounter technological change, and we may have fewer resources than many of our competitors to continue to invest in technological improvements. • Our business, financial condition and results of operations are subject to risk from changes in customer behavior. • Consumers may decide not to use banks to complete their financial transactions. • If we do not comply with the agreements governing servicing of loans, if these agreements change materially, or if others allege non-compliance, our business and results of operations may be harmed. • Certain hedging strategies that we use to manage interest rate risk may be ineffective to offset any adverse changes in the fair value of these assets due to changes in interest rates and market liquidity. • We may be unable to attract and retain key employees and personnel. • Our internal controls may be ineffective. • Liquidity risk could impair our ability to fund operations and jeopardize our financial conditions. • A failure of a significant number of our borrowers, guarantors and related parties to perform in accordance with the terms of their loans would have an adverse impact on our results of operations.
We may be adversely affected by risks associated with potential acquisitions. • We may incur impairment of goodwill. • Our allowance for credit losses may be insufficient. • We are subject to lending concentration risks. • Our commercial real estate lending may expose us to increased lending risks. • Residential mortgage lending is a market sector that experiences significant volatility and is influenced by many factors beyond our control. • Our information systems or those of our third-party vendors may be subject to an interruption or breach in security, including as a result of cyber-attacks. • A failure in or breach of the Company's operational systems, information systems, or infrastructure, or those of the Company's third party vendors and other service providers, may result in financial losses, or loss of customers. • Our business is highly reliant on third party vendors. • We continually encounter technological change, and we may have fewer resources than many of our competitors to continue to invest in technological improvements. • Our business, financial condition and results of operations are subject to risk from changes in customer behavior. • Consumers may decide not to use banks to complete their financial transactions. • If we do not comply with the agreements governing servicing of loans, if these agreements change materially, or if others allege non-compliance, our business and results of operations may be harmed. • Certain hedging strategies that we use to manage interest rate risk may be ineffective to offset any adverse changes in the fair value of these assets due to changes in interest rates and market liquidity. • We may be unable to attract and retain key employees and personnel. • Our internal controls may be ineffective. • Liquidity risk could impair our ability to fund operations and jeopardize our financial conditions. 17 • A failure of a significant number of our borrowers, guarantors and related parties to perform in accordance with the terms of their loans would have an adverse impact on our results of operations.
A security breach or other significant disruption could: disrupt the proper functioning of our 21 networks and systems and therefore our operations and/or those of certain of our customers; result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of confidential, sensitive or otherwise valuable information of ours or our customers, including account numbers and other financial information; result in a violation of applicable privacy, data breach and other laws, subjecting the Bank to additional regulatory scrutiny and exposing the Bank to civil litigation, governmental fines and possible financial liability; require significant management attention and resources to remedy the damages that result; or harm our reputation or cause a decrease in the number of customers that choose to do business with us or reduce the level of business that our customers do with us.
A security breach or other significant disruption could: disrupt the proper functioning of our networks and systems and therefore our operations and/or those of certain of our customers; result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of confidential, sensitive or otherwise valuable information of ours or our customers, including account numbers and other financial information; result in a violation of applicable privacy, data breach and other laws, subjecting the Bank to additional regulatory scrutiny and exposing the Bank to civil litigation, governmental fines and possible financial liability; require significant management attention and resources to remedy the damages that result; or harm our reputation or cause a decrease in the number of customers that choose to do business with us or reduce the level of business that our customers do with us.
Changes in monetary policy, including changes in interest rates, could influence not only the interest we receive on loans and investments and the amount of interest we pay on deposits and borrowings, but such changes could also affect (i) our ability to originate loans and obtain deposits; (ii) the fair value of our financial assets and liabilities; and (iii) the average duration of our mortgage portfolio and other interest-earning assets.
Changes in monetary policy, including 18 changes in interest rates, could influence not only the interest we receive on loans and investments and the amount of interest we pay on deposits and borrowings, but such changes could also affect (i) our ability to originate loans and obtain deposits; (ii) the fair value of our financial assets and liabilities; and (iii) the average duration of our mortgage portfolio and other interest-earning assets.
It is the policy of the FRB that bank holding companies should pay cash dividends on common stock only out of net income available over the past year and only if the prospective rate of earnings retention is consistent with the organization’s current and expected future capital needs, asset quality and overall financial condition.
It is the policy of the FRB that bank holding companies should pay cash dividends on common stock only out of net income available over the past year and only if the prospective rate of earnings retention is consistent with the organization’s current 28 and expected future capital needs, asset quality and overall financial condition.
Any increase in the allowance for credit losses on loans, securities and/or off-balance sheet credit exposures will result in a decrease in net income and, possibly, capital, and may have a material adverse effect on our business, financial condition and results of operations. We are subject to concentration risks.
Any increase in the allowance for credit losses on loans, securities and/or off-balance sheet credit exposures will result in a decrease in net income and, possibly, capital, and may have a material adverse effect on our business, financial condition and results of operations. We are subject to lending concentration risks.
Our business operations could also suffer to the extent the Bank cannot utilize its branch network due to a natural disaster or other weather-related damage. 29 The soundness of other financial institutions could adversely affect us. Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions.
Our business operations could also suffer to the extent the Bank cannot utilize its branch network due to a natural disaster or other weather-related damage. The soundness of other financial institutions could adversely affect us. Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions.
Although the Company has implemented safeguards and business continuity plans, our business operations may be adversely affected by significant and widespread disruption to our physical infrastructure or operating systems that support our business and our customers, resulting in financial losses or loss of customers. Our business is highly reliant on third party vendors.
Although the Company has implemented safeguards and business continuity plans, our business 23 operations may be adversely affected by significant and widespread disruption to our physical infrastructure or operating systems that support our business and our customers, resulting in financial losses or loss of customers. Our business is highly reliant on third party vendors.
Many of our servicing agreements require adherence to general servicing standards, and certain contractual provisions delegate judgment over various servicing matters to us. If the terms of these servicing agreements change, we may sustain higher costs. Our servicing practices, and the judgments that we make in our servicing of loans, could also be questioned by parties to these agreements.
Many of our servicing agreements require adherence to general servicing standards, and certain contractual provisions delegate 24 judgment over various servicing matters to us. If the terms of these servicing agreements change, we may sustain higher costs. Our servicing practices, and the judgments that we make in our servicing of loans, could also be questioned by parties to these agreements.
A deterioration in economic conditions in the United States and our regional markets could result in an increase in loan 17 delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for our products and services, all of which, in turn, would adversely affect our business, financial condition and results of operations.
A deterioration in economic conditions in the United States and our regional markets could result in an increase in loan delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for our products and services, all of which, in turn, would adversely affect our business, financial condition and results of operations.
These types of threats may result from human error, fraud or malice on the part of external or internal parties, or from accidental technological failure. Further, to access our products and services our customers may use computers and mobile devices that are beyond our security control systems.
These types of threats may result from human error, fraud or malice on the 22 part of external or internal parties, or from accidental technological failure. Further, to access our products and services our customers may use computers and mobile devices that are beyond our security control systems.
As part of our general growth strategy, we periodically expand our business through acquisitions such as the acquisition of SCF in October 2024. Although our business strategy emphasizes organic expansion, from time to time in the ordinary course of business, we also engage in discussions with potential acquisition targets.
As part of our general growth strategy, we periodically expand our business through acquisitions such as the acquisition of SCF in October 2024. Although our business strategy emphasizes organic expansion, from time to time in the ordinary course 20 of business, we also engage in discussions with potential acquisition targets.
Furthermore, if any charge-offs related to loans, securities or off-balance sheet credit exposures in future periods exceed our allowances for credit losses on loans, securities or off-balance sheet credit exposures, we will need to recognize additional credit loss expense to increase the applicable allowance.
Furthermore, if any charge-offs related to loans, securities or off- 21 balance sheet credit exposures in future periods exceed our allowances for credit losses on loans, securities or off-balance sheet credit exposures, we will need to recognize additional credit loss expense to increase the applicable allowance.
The timing of and prospects for any such action are uncertain at this time. The loss of these revenue streams and the lower cost of deposits as a source of funds could have a material adverse effect on our financial condition and results of operations.
The prospects for any such action are uncertain at this time. The loss of these revenue streams and the lower cost of deposits as a source of funds could have a material adverse effect on our financial condition and results of operations.
Any failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, results of operations, and financial condition. 23 Liquidity risk could impair our ability to fund operations and jeopardize our financial conditions. Liquidity is essential to our business.
Any failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, results of operations, and financial condition. Liquidity risk could impair our ability to fund operations and jeopardize our financial conditions. Liquidity is essential to our business.
The prospects for the enactment of major banking reform legislation under the new Congress are unclear at this time. Moreover, the turnover of the Presidential Administration in 2025 resulted in certain changes in the leadership and senior staffs of the federal banking agencies and the Treasury Department.
The prospects for the enactment of major banking reform legislation under the new Congress are unclear at this time. 26 Moreover, the turnover of the Presidential Administration in 2025 resulted in certain changes in the leadership and senior staffs of the federal banking agencies and the Treasury Department.
The effect and duration of demonstrations, protests, or other factors is uncertain, and we cannot ensure there will not be further political or social unrest in the future or that there will not be other events that could lead to social, political, and economic disruptions.
The 30 effect and duration of demonstrations, protests, or other factors is uncertain, and we cannot ensure there will not be further political or social unrest in the future or that there will not be other events that could lead to social, political, and economic disruptions.
Some additional factors that may cause the price of our common stock to fluctuate include: 28 •general conditions in the financial markets and real estate markets. •macro-economic and political conditions in the U.
Some additional factors that may cause the price of our common stock to fluctuate include: •general conditions in the financial markets and real estate markets. •macro-economic and political conditions in the U.
Our customers and employees have been, and will continue to be, targeted by parties using fraudulent e-mails and other communications in attempts to misappropriate passwords, payment card numbers, bank account information or other personal information or to introduce viruses or other malware through “trojan horse” programs to our customers’ computers.
Our customers and employees have been, and will continue to be, targeted by parties using artificial intelligence, fraudulent e-mails and other communications in attempts to misappropriate passwords, payment card numbers, bank account information or other personal information or to introduce viruses or other malware through “trojan horse” programs to our customers’ computers.
The actual amount and timing of future share repurchases, if any, will depend on market and economic conditions, applicable SEC rules, federal and state regulatory restrictions, and various other factors, including the recently implemented 1% excise tax on repurchases of stock.
The actual amount and timing of future share repurchases, if any, will depend on market and economic conditions, applicable SEC rules, federal and state regulatory restrictions, and various other factors, including the 1% excise tax on repurchases of stock.
Severe weather events of increasing strength and frequency due to climate change cannot be predicted and may be exacerbated by global climate change, natural disasters, including volcanic eruptions and earthquakes, and other adverse 30 external events could have a significant impact on our ability to conduct business or upon third parties who perform operational services for us.
In addition, severe weather events of increasing strength and frequency due to climate change cannot be predicted and may be exacerbated by global climate change, natural disasters, including volcanic eruptions and earthquakes, and other adverse external events could have a significant impact on our ability to conduct business or upon third parties who perform operational services for us.
Approximately 75% of the Bank’s loan portfolio at December 31, 2024 consisted of loans secured by commercial and residential real estate mostly located in Alaska. Additionally, all of the Company's loans held for sale are secured by residential real estate.
Approximately 75% of the Bank’s loan portfolio at December 31, 2025, consisted of loans secured by commercial and residential real estate mostly located in Alaska. Additionally, all of the Company's loans held for sale are secured by residential real estate.
For example, legislation enacted in 2017 resulted in a reduction in our federal corporate tax rate from 35% in 2017 to 21% in 2018, which had a favorable impact on our earnings and capital generation abilities.
For example, legislation enacted in 2017, and extended in 2025, resulted in a reduction in our federal corporate tax rate from 35% in 2017 to 21% in 2018, which had a favorable impact on our earnings and capital generation abilities.
Fiscal challenges facing the U.S. government could negatively impact financial markets which in turn could have an adverse effect on our financial position or results of operations.
Fiscal challenges facing the U.S. government, including government shutdowns, could negatively impact financial markets which in turn could have an adverse effect on our financial position or results of operations.
The nature, timing, and economic and political effects of potential changes to the current legal and regulatory frameworks affecting the financial services industry remain highly uncertain. Climate change, severe weather, natural disasters, and other external events could significantly impact our business.
The nature, timing, and economic and political effects of potential changes to the current legal and regulatory frameworks affecting the financial services industry remain highly uncertain. Climate change, related legislative and regulatory initiatives, severe weather, natural disasters, and other external events could significantly impact our business.
Certain characteristics of digital asset transactions, such as the speed with which such transactions can be 22 conducted, the ability to transact without the involvement of regulated intermediaries, the ability to engage in transactions across multiple jurisdictions, and the anonymous nature of the transactions, are appealing to certain consumers notwithstanding the various risks posed by such transactions as illustrated by the current and ongoing market volatility.
Certain characteristics of digital asset transactions, such as agentic artificial intelligence, the speed with which such transactions can be conducted, the ability to transact without the involvement of regulated intermediaries, the ability to engage in transactions across multiple jurisdictions, and the anonymous nature of the transactions, are appealing to certain consumers notwithstanding the various risks posed by such transactions as illustrated by the current and ongoing market volatility.
We are operating in an uncertain economic environment. The pandemic caused a global economic slowdown, and while we have seen economic recovery, continuing supply chain issues, fluctuations in oil prices, labor shortages and inflation risk are affecting the continued recovery.
We are operating in an uncertain economic environment. The pandemic caused a global economic slowdown, and while we have seen economic recovery, continuing supply chain issues, implementation of tariffs, fluctuations in oil prices, labor shortages and inflation risk are affecting the continued recovery.
Although agendas are expected to vary substantially from the agenda of the prior Democratic administration, congressional committees with jurisdiction over the banking sector may continue to pursue, oversight in a variety of areas, including improving competition in the banking sector and changes to the oversight of bank mergers and acquisitions, and establishing a regulatory framework for digital assets and markets.
Although agendas are expected to vary substantially from the agenda of the prior Democratic administration, congressional committees with jurisdiction over the banking sector may continue to pursue, oversight in a variety of areas, including improving competition in the banking sector and establishing a regulatory framework for digital assets and markets.
Our access to deposits can be impacted by the liquidity needs of our customers as a substantial portion of our liabilities are demand while a substantial portion of our assets are loans that cannot be sold in the same timeframe. Historically, we have been able to meet its cash flow needs as necessary.
Our access to deposits can be impacted by the liquidity needs of our customers as a substantial portion of our liabilities are demand while a substantial portion of our assets are loans that cannot be sold in the same timeframe. Historically, we have 25 been able to meet its cash flow needs as nec essary.
The FDIC insures deposits at FDIC-insured financial institutions, including the Bank. The FDIC charges insured financial institutions premiums to maintain the Deposit Insurance Fund ("DIF") at a specific level. Historically, unfavorable economic conditions increased bank failures and these additional failures decreased the DIF.
The FDIC insures deposits at FDIC-insured financial institutions, including the Bank. The FDIC charges insured financial institutions premiums to maintain the DIF at a specific level. Historically, unfavorable economic conditions increased bank failures and these additional failures decreased the DIF.
Federal budget deficit concerns and the potential for political conflict over legislation to fund U.S. government operations and raise the U.S. government’s debt limit may increase the possibility of a default by the U.S. government on its debt obligations, related credit-rating downgrades, or an economic recession in the United States.
As evidenced by the U.S. government shutdown in November 2025, federal budget deficit concerns and the potential for political conflict over legislation to fund U.S. government operations and raise the U.S. government’s debt limit may increase the possibility of a default by the U.S. government on its debt obligations, related credit-rating downgrades, or an economic recession in the United States.
Regulatory, Legislative and Legal Risk Factors • We operate in a highly regulated environment and changes of or significant increases in banking or other laws and regulations or governmental fiscal or monetary policies could adversely affect us. • We face risks related to the adoption of future legislation and potential changes in federal regulatory agency leadership, policies, and priorities. • Fiscal challenges facing U.S. government could negatively impact financial markets which in turn could have an adverse effect on our financial position or results of operations. • Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, Anti-Money Laundering Act of 2020, Real Estate Settlement Procedures Act, Truth-in-Lending Act or other laws and regulations could result in fines, sanctions or other adverse consequences. • Deposit insurance premiums could increase further in the future. • Climate change and related legislative and regulatory initiatives may result in operational changes and expenditures that could significantly impact our business.
Regulatory, Legislative and Legal Risk Factors • We operate in a highly regulated environment and changes of or significant increases in banking or other laws and regulations or governmental fiscal or monetary policies could adversely affect us. • We face risks related to the adoption of future legislation and potential changes in federal regulatory agency leadership, policies, and priorities. • Fiscal challenges facing U.S. government, including government shutdowns, could negatively impact financial markets which in turn could have an adverse effect on our financial position or results of operations. • Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, Anti-Money Laundering Act of 2020, Real Estate Settlement Procedures Act, Truth-in-Lending Act or other laws and regulations could result in fines, sanctions or other adverse consequences. • Deposit insurance premiums could increase further in the future.
In addition, the recent increase and future increase, as is currently expected, in interest rates has in the past, and may in the future, materially and adversely affect our future loan origination volume and margins. Our information systems or those of our third-party vendors may be subject to an interruption or breach in security, including as a result of cyber-attacks.
In addition, any increase in interest rates has in the past, and may in the future, materially and adversely affect our future loan origination volume and margins. Our information systems or those of our third-party vendors may be subject to an interruption or breach in security, including as a result of cyber-attacks.
Inflation has continued to be heightened in 2024 at levels not seen for over 40 years. Inflationary pressures are currently expected to continue in 2025. Inflation could lead to increased costs to our customers, making it more difficult for them to repay their loans or other obligations increasing our credit risk.
Inflation has continued to be heightened in recent years at levels not seen for over 40 years. Inflationary pressures are currently expected to moderate but continue in 2026. Inflation could lead to increased costs to our customers, making it more difficult for them to repay their loans or other obligations increasing our credit risk.
Although management has established disaster recovery policies and procedures, there can be no assurance of the effectiveness of such policies and procedures, and the occurrence of any such event could have a material adverse effect on our business, financial condition and results of operations.
Although management has established disaster recovery policies and procedures, there can be no assurance of the effectiveness of such policies and procedures, and the occurrence of any such event could have a material adverse effect on our business, financial condition and results of operations. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If our judgment was incorrect, or if events or circumstances change, and an impairment of goodwill was deemed to exist, we would be required to record a non-cash charge to earnings in our financial statements during 19 the period in which such impairment is determined to exist.
Our evaluation of the fair value of goodwill involves a substantial amount of judgment. If our judgment was incorrect, or if events or circumstances change, and an impairment of goodwill was deemed to exist, we would be required to record a non-cash charge to earnings in our financial statements during the period in which such impairment is determined to exist.
In addition, the Bank’s customers experienced and likely will continue to experience varying effects from both the individual and business tax provisions of the Tax Act and other future changes in tax law and such effects, whether positive or negative, may have a corresponding impact on our business and the economy as a whole.
In addition, the Bank’s customers experienced and likely will continue to experience varying effects from both the individual and business tax provisions of the One Big Beautiful Bill Act adopted on July 4, 2025 and other future changes in tax law and such effects, whether positive or negative, may have a corresponding impact on our business and the economy as a whole.
Although the FOMC lowered rates slightly in 2024, and as of December 31, 2024, the target range for the federal funds rate had been decreased to 4.25% to 4.50%, it remains uncertain whether the FOMC may return to increase the target range for the federal funds rate to attain a monetary policy sufficiently restrictive to return inflation to more normalized levels, begin to reduce the federal funds rate or leave the rate at its current level for a lengthy period of time.
Although the Federal Open Market Committee ( “ FOMC ”) lowered rates slightly in 2025, and as of December 31, 2025, the target range for the federal funds rate had been decreased to 3.50% to 3.75%, it remains uncertain whether the FOMC may return to increase the target range for the federal funds rate to attain a monetary policy sufficiently restrictive to return inflation to more normalized levels, begin to reduce the federal funds rate or leave the rate at its current level for a lengthy period of time.
Approximately 49% of the Bank’s loan portfolio at December 31, 2024 consisted of commercial real estate loans and 10% consisted of commercial construction, land development and raw land loans. Commercial construction and commercial real estate loans typically involve larger loan balances to single borrowers or groups of related borrowers.
Approximately 52% of the Bank’s loan portfolio at December 31, 2025, consisted of commercial real estate loans and 8% consisted of commercial construction, land development and raw land loans. Commercial construction and commercial real estate loans typically involve larger loan balances to single borrowers or groups of related borrowers.
Stock Ownership Risk Factors • Our ability to pay dividends, repurchase our shares, or to repay our indebtedness depends upon liquid assets held by the Company and the results of operations of our subsidiaries and their ability to pay dividends. • There can be no assurance that the Company will continue to repurchase stock. • The market price for our common stock may be volatile. • There may be future sales or other dilution of the Company’s equity, which may adversely affect the market price of our common stock. • The Company’s business or the value of its common stock could be negatively affected as a result of actions by activist shareholders.
Stock Ownership Risk Factors • Our ability to pay dividends, repurchase our shares, or to repay our indebtedness depends upon liquid assets held by the Company and the results of operations of our subsidiaries and their ability to pay dividends. • There can be no assurance that the Company will continue to repurchase stock. • The market price for our common stock may be volatile. • There may be future sales or other dilution of the Company’s equity, which may adversely affect the market price of our common stock.
We may not have any remedies available to us against third parties for such losses, or the remedies might not be as broad as the remedies available to the Alaska Housing Finance Corporation against us.
We may not have any remedies available to us against third parties for such losses, or the remedies might not be as broad as the remedies available to the AHFC against us.
The pervasiveness of cyber security incidents in general and the risks of cyber-crime are complex and continue to evolve. In addition, following COVID-19, we have modified our business practices with a portion of our employees working remotely from their homes. The continuation of these work-from-home measures also introduces additional operational risk, including increased cybersecurity risk.
The pervasiveness of cyber security incidents in general and the risks of cyber-crime are complex and continue to evolve. A portion of our employees are working remotely from their homes, and the continuation of these work-from-home measures also introduces additional operational risk, including increased cybersecurity risk.
General Risk Factors • Natural disasters and adverse weather could negatively affect real estate property values and Bank operations. • The soundness of other financial institutions could adversely affect us. • The financial services business is intensely competitive and our success will depend on our ability to compete effectively. • We are a community bank and our ability to maintain our reputation is critical to the success of our business and the failure to do so could materially adversely affect our performance. • Social, political, and economic instability, unrest, and other circumstances beyond our control could adversely affect our business operations. 16 • Climate change, severe weather, natural disasters, and other external events could significantly impact our business. • Increasing, complex and evolving regulatory, stakeholder, and other third party expectations on ESG matters could adversely affect our reputation, our access to capital and the market price of our securities.
General Risk Factors • Natural disasters and adverse weather could negatively affect real estate property values and Bank operations. • The soundness of other financial institutions could adversely affect us. • The financial services business is intensely competitive and our success will depend on our ability to compete effectively. • We are a community bank and our ability to maintain our reputation is critical to the success of our business and the failure to do so could materially adversely affect our performance. • Social, political, and economic instability, unrest, and other circumstances beyond our control could adversely affect our business operations. • Climate change, related legislative and regulatory initiatives, severe weather, natural disasters, and other external events could significantly impact our business.
Consumers can also complete transactions, such as paying bills and/or transferring funds directly without the assistance of banks. Transactions utilizing digital assets, including cryptocurrencies, stablecoins and other similar assets, have increased substantially over the course of the last several years.
Consumers can also complete transactions, such as paying bills and/or transferring funds directly without the assistance of banks. Transactions utilizing digital assets, including cryptocurrencies, stablecoins and other similar assets, have increased substantially over the course of the last several years and are expected to continue following the passage of the GENIUS Act in 2025.
As of December 31, 2024. we had 26 customers with balances over $10 million, which accounted for $612.9 million, or 24%, of total deposits. If a sufficiently large number of depositors, or a smaller number of significant depositors, sought to withdraw their deposits for whatever reason, we may be unable to obtain the necessary funding at favorable term.
As of December 31, 2025, we had 32 customers with balances over $10 million, which accounted for $707.8 million, or 25%, of total deposits. If a suffic iently large number of depositors, or a smaller number of significant depositors, sought to withdraw their deposits for whatever reason, we may be unable to obtain the necessary funding at favorable term.
Further, an initiative by the CFPB, as prompted by the current Presidential Administration, to promote “open and decentralized banking” through the proposal of a Personal Financial Data Rights rule designed to facilitate the transfer of customer information at the direction of the customer to other financial institutions could lead to greater competition for products and services among banks and nonbanks alike if a final rule is adopted.
Further, an initiative by the CFPB to promote “open and decentralized banking” through the proposal of a Personal Financial Data Rights rule designed to facilitate the transfer of customer information at the direction of the customer to other financial institutions is expected to go into effect in 2026 and could lead to greater competition for products and services among banks and nonbanks alike.
Regulators have significant discretion and authority to prevent or remedy practices that they deem to be unsafe or unsound, or violations of laws or regulations by financial institutions and holding companies in the performance of their supervisory and enforcement duties.
Regulators have significant discretion and authority to prevent or remedy practices that they deem to be unsafe or unsound, or violations of laws or regulations by financial institutions and holding companies in the performance of their supervisory and enforcement duties. The exercise of regulatory authority may have a negative impact on our financial condition and results of operations.
If the U.S. government were to significantly reduce federal funding, including as a result of DOGE, such a reduction could have a material adverse impact on certain customers of the Bank.
If the U.S. government were to significantly reduce federal funding, including as a result of DOGE, such a reduction could have a material adverse impact on certain customers of the Bank. The potential impact of any reduction in federal spending on our customers, and the Bank, cannot be predicted as this time.
In connection with prior political disputes over U.S. fiscal and budgetary issues leading to the U.S. government shutdown in 2011, S&P lowered its long term sovereign credit rating on the U.S. from AAA to AA+.
In connection with prior political disputes over U.S. fiscal and budgetary issues leading to previous U.S. government shutdowns, S&P lowered its long term sovereign credit rating on the U.S. from AAA to AA+. In November 2025, a 43 day shutdown occurred and the potential for further U.S. government shutdowns in 2026 remains.
Holders of our common stock have no preemptive rights that entitle holders to purchase their pro rata share of any offering of shares of any class or series and, therefore, such sales or offerings could result in dilution to our shareholders.
Holders of our common stock have no preemptive rights that entitle 29 holders to purchase their pro rata share of any offering of shares of any class or series and, therefore, such sales or offerings could result in dilution to our shareholders. General Risk Factors Natural disasters and adverse weather could negatively affect real estate property values and Bank operations.
The credit quality of these loans may also deteriorate more than expected which may result in losses that exceed the estimates that are currently included in our allowance for loan losses, which could adversely affect our financial condition and results of operations. 20 Residential mortgage lending is a market sector that experiences significant volatility and is influenced by many factors beyond our control.
The credit quality of these loans may also deteriorate more than expected which may result in losses that exceed the estimates that are currently included in our allowance for loan losses, which could adversely affect our financial condition and results of operations.
The potential impact of any reduction in federal spending on our customers, and the Bank, cannot be predicted as this time. 25 Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, Anti-Money Laundering Act of 2020, Real Estate Settlement Procedures Act, Truth-in-Lending Act or other laws and regulations could result in fines, sanctions or other adverse consequences.
Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, Anti-Money Laundering Act of 2020, Real Estate Settlement Procedures Act, Truth-in-Lending Act or other laws and regulations could result in fines, sanctions or other adverse consequences.
In particular, interest rates are highly sensitive to many factors that are beyond our control, including global, domestic and local economic conditions and the policies of various governmental and regulatory agencies and, specifically, the FRB.
Any contraction of economic activity, including an economic recession, may adversely affect our asset quality, deposit levels and loan demand and, therefore, our earnings. In particular, interest rates are highly sensitive to many factors that are beyond our control, including global, domestic and local economic conditions and the policies of various governmental and regulatory agencies and, specifically, the FRB.
We cannot accurately predict the full effects of recent or future legislation or the various other governmental, regulatory, monetary and fiscal initiatives which have been and may be enacted on the financial markets and on the Company.
Additionally, our business is affected significantly by the fiscal and monetary policies of the U.S. federal government and its agencies, including the FRB. We cannot accurately predict the full effects of recent or future legislation or the various other governmental, regulatory, monetary and fiscal initiatives which have been and may be enacted on the financial markets and on the Company.
Our inability to receive dividends from the Bank could adversely affect our business, financial condition, results of operations and prospects.
The availability of dividends from the Bank is limited by the Bank's earnings and capital, as well as various statutes and regulations. Our inability to receive dividends from the Bank could adversely affect our business, financial condition, results of operations and prospects.
The FDIC may continue to increase the assessment rates or impose additional special assessments in the future to restore and then steadily increase the DIF to these statutory target levels. Any increase in the Bank's FDIC premiums could have an adverse effect on its business, financial condition and results of operations.
The FDIC may continue to increase the assessment rates or impose additional special assessments in the future to restore and then steadily increase the DIF to these statutory target levels.
In particular, the oil industry plays a significant role in the Alaskan economy. Our business is and will remain sensitive to economic factors that relate to these industries and local and regional business conditions.
These areas rely primarily upon the natural resources industries, particularly oil production, as well as tourism and government and U.S. military spending for their economic success. In particular, the oil industry plays a significant role in the Alaskan economy. Our business is and will remain sensitive to economic factors that relate to these industries and local and regional business conditions.
The Company earns revenue from the residential mortgage lending activities primarily in the form of gains on the sale of mortgage loans that we originate and sell to the secondary market. Residential mortgage lending in general has experienced substantial volatility in recent periods primarily due to changes in interest rates and other market forces beyond our control.
Residential mortgage lending in general has experienced substantial volatility in recent periods primarily due to changes in interest rates and other market forces beyond our control.
At December 31, 2024, approximately 75% of loans are secured by real estate and 3% are unsecured. Approximately 22% are for general commercial uses, including professional, retail, and small businesses, and are secured by non-real estate assets. Repayment is expected from the borrowers’ cash flow or, secondarily, the collateral.
Approximately 22% are for general commercial uses, including professional, retail, and small businesses, and are secured by non-real estate assets. Repayment is expected from the borrowers’ cash flow or, secondarily, the collateral. Our exposure to credit loss, if any, is the outstanding amount of the loan if the collateral is proved to be of no value.
Continued economic uncertainty and a recessionary or stagnant economy could result in financial stress on the Bank's borrowers, which could adversely affect our business, financial condition and results of operations.
Continued economic uncertainty and a recessionary or stagnant economy could result in financial stress on the Bank's borrowers, which could adversely affect our business, financial condition and results of operations. In addition, Alaska is highly dependent on foreign trade, particularly with respect to China, Australia, Japan, and South Korea and uncertain tariff policies may negatively impact foreign trade.
Accounting, Tax and Financial Risks Changes in the federal, state, or local tax laws may negatively impact our financial performance. We are subject to changes in tax law that could increase our effective tax rates. These law changes may be retroactive to previous periods and as a result could negatively affect our current and future financial performance.
These law changes may be retroactive to previous periods and as a result could negatively affect our current and future financial performance.
Our concentration of operations in the Anchorage, Matanuska-Susitna Valley, Fairbanks and Southeast areas of Alaska makes us more sensitive to downturns in those areas. Substantially all of our business is derived from the Anchorage, Matanuska-Susitna Valley, Fairbanks, Southeast, and Kenai Peninsula areas of Alaska. The majority of our lending has been with Alaska businesses and individuals.
Substantially all of our business is derived from the Anchorage, Matanuska-Susitna Valley, Fairbanks, Southeast, and Kenai Peninsula areas of Alaska. The majority of our lending has been with Alaska businesses and individuals. At December 31, 2025, approximately 75% of loans are secured by real estate and 3% are unsecured.
Conditions such as changes in interest rates, money supply, levels of employment and other factors beyond our control may have a negative impact on economic activity. Any contraction of economic activity, including an economic recession, may adversely affect our asset quality, deposit levels and loan demand and, therefore, our earnings.
Conditions such as changes in interest rates, money supply, levels of employment and other factors beyond our control may have a negative impact on economic activity. Additionally, an open conflict or war across any region, including, but not limited to, the conflict in Iran, could have a material adverse effect on our results of operations.
We could be required to apply a new or revised standard retroactively, resulting in our restating prior period financial statements in material amounts. 27 Stock Ownership Risk Factors Our ability to pay dividends, repurchase our shares, or to repay our indebtedness depends upon liquid assets held by the Company and the results of operations of our subsidiaries and their ability to pay dividends.
Stock Ownership Risk Factors Our ability to pay dividends, repurchase our shares, or to repay our indebtedness depends upon liquid assets held by the Company and the results of operations of our subsidiaries and their ability to pay dividends. The Company is a separate legal entity from our subsidiaries and does not have significant operations of its own.
Treasury could lead to new taxes that would limit the ability of the Company to pursue growth and return profits to shareholders. If these conditions or similar ones develop, we could experience adverse effects on our financial condition and results of operations.
If these conditions or similar ones develop, we could experience adverse effects on our financial condition and results of operations. Our concentration of operations in the Anchorage, Matanuska-Susitna Valley, Fairbanks and Southeast areas of Alaska makes us more sensitive to downturns in those areas.
There can be no assurance that the Company will continue to repurchase stock. During 2024, the Company repurchased 15,034 shares of common stock at an average price of $52.46 per share under its previously announced share repurchase program.
There can be no assurance that the Company will continue to repurchase stock. During 2025, the Company did not repurchase any shares of common stock. The Board of Directors has not presently authorized any repurchases of its common stock for 2026.
Removed
The tightening of the FRB’s monetary policies, including repeated and aggressive increases in target range for the federal funds rate as well as the conclusion of the FRB’s tapering of asset purchases, together with ongoing economic and geopolitical instability, increases the risk of an economic recession.
Added
Treasury could lead to new taxes that would limit the ability of the Company to pursue growth and return profits to shareholders. ▪ Regulatory changes or limitations on the 8(a) Business Development Program administered by the U.S. Small Business Administration could negatively and disproportionately impact certain of our customers.
Removed
Our exposure to credit loss, if any, is the outstanding amount of the loan if the collateral is proved to be of no value. These areas rely primarily upon the natural resources industries, 18 particularly oil production, as well as tourism and government and U.S. military spending for their economic success.
Added
Residential mortgage lending is a market sector that experiences significant volatility and is influenced by many factors beyond our control. The Company earns revenue from the residential mortgage lending activities primarily in the form of gains on the sale of mortgage loans that we originate and sell to the secondary market.
Removed
Our evaluation of the fair value of goodwill involves a substantial amount of judgment.
Added
With the advent of artificial intelligence, these cybersecurity threats are more sophisticated and prevalent than ever before.
Removed
The exercise of regulatory authority may have a negative impact on our financial condition and results of operations. 24 Additionally, our business is affected significantly by the fiscal and monetary policies of the U.S. federal government and its agencies, including the FRB.
Added
Any increase in the Bank's FDIC premiums could have an adverse effect on its business, financial condition and results of operations. 27 Accounting, Tax and Financial Risks Changes in the federal, state, or local tax laws may negatively impact our financial performance. We are subject to changes in tax law that could increase our effective tax rates.
Removed
In 2024, Congress narrowly averted a government shutdown by passing a continuing resolution and if a budget or another continuing resolution is not passed by March 14, 2025, the U.S. government would again be faced with a government shutdown.
Added
We could be required to apply a new or revised standard retroactively, resulting in our restating prior period financial statements in material amounts.
Removed
In part due to repeated debt-limit political standoffs and last-minute resolutions, in 2023 a rating agency downgraded the U.S. long-term foreign-currency issuer default rating to AA+ from AAA and reiterated the AA+ rating in August 2024 .
Added
Concerns over the long-term impacts of climate change have led to governmental efforts around the world to mitigate those impacts. As a result, political and social attention to the issue of climate change has increased.
Removed
Climate change and related legislative and regulatory initiatives may result in operational changes and expenditures that could significantly impact our business. The current and anticipated effects of climate change are creating an increasing level of concern for the state of the global environment. As a result, political and social attention to the issue of climate change has increased.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+3 added−3 removed6 unchanged
Biggest changeTo our knowledge, cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected the Company, including its business strategy, results of operations or financial condition. With regard to the possible impact of future cybersecurity threats or incidents, see Part I. Item 1A, Risk Factors — Operational, Strategic and Business Risks.
Biggest changeCybersecurity threats have not materially affected the Company's business strategy, results of operations, or financial condition. For additional information regarding cybersecurity risks, see Part I, Item 1A, Risk Factors. Governance The Board of Directors oversees cybersecurity risk, with assistance from the Audit Committee.
We also periodically engage external partners to conduct annual audits of our systems, test our systems infrastructure, and suggest improvements . Through these channels and others, we work to proactively identify potential vulnerabilities in our information security system.
We conduct periodic tabletop exercises and simulations to test preparedness and response capabilities. We also periodically engage external partners to conduct annual audits of our systems, test our systems infrastructure, and suggest improvements. Through these channels and others, we work to proactively identify potential vulnerabilities in our information security system.
The Company’s Computer Security Incident Response Team immediately investigates system alerts that may indicate the presence of a cybersecurity threat or incident and escalates information regarding the threat or incident as necessary to address it in a timely manner. The Company also maintains a computer security incident response plan with formalized workflows and playbooks .
The Company’s Computer Security Incident Response Team immediately investigates system alerts that may indicate the presence of a cybersecurity threat or incident and escalates information regarding the threat or incident as necessary to address it in a timely manner.
We also recognize that we are exposed to cybersecurity threats associated with our use of third-party service providers. To minimize the risk and vulnerabilities to our own systems stemming from such use, our Cybersecurity Program Manager and other subject matter experts monitor and identify known cybersecurity threats and incidents at third-party service providers on a regular basis.
To minimize the risk and vulnerabilities to our own systems stemming from such use, our Cybersecurity Program Manager and other subject matter experts monitor and identify known cybersecurity threats and incidents at third-party service providers on a regular basis.
Governance Management of cybersecurity risk is the responsibility of the full Board of Directors, with additional assistance from the Audit Committee. The Board of Directors also devotes significant time and attention to the oversight of cybersecurity and information security risk and receives an operational risk update that includes a review of cybersecurity and information security risk.
The Board of Directors also devotes significant time and attention to the oversight of cybersecurity and information security risk and receives an operational risk update that includes a review of cybersecurity and information security risk.
Senior management meets regularly with the Company’s risk-management team and internal and external auditors to evaluate the effectiveness of the Company’s systems, controls, and management processes with respect to cybersecurity risks. The results of key assessments are reported in summary to our Board of Directors periodically.
Senior management meets regularly with the Company’s risk-management team and internal and external auditors to evaluate the effectiveness of the Company’s systems, controls, and management processes with respect to cybersecurity risks.
If 32 management determines a material cybersecurity incident has occurred, the Company’s policies require management to promptly inform the Audit Committee with follow-up information to the full Board of Directors.
The Company maintains processes designed to identify, escalate, and report cybersecurity incidents in accordance with applicable law and regulation. If management determines a material cybersecurity incident has occurred, the Company’s policies require management to promptly inform the Audit Committee with follow-up information to the full Board of Directors.
ITEM 1C. CYBERSECURITY Risk Management and Strategy The Company continuously monitors its information systems to proactively assess, identify, and manage risks from vulnerabilities and assess cybersecurity threats. The Company’s process for identifying and assessing material risks from cybersecurity threats operates alongside the Company’s broader overall risk assessment process.
The Company maintains a cybersecurity risk management program designed to identify, assess, manage, and mitigate material risks from cybersecurity threats. The Company’s process for identifying and assessing material risks from cybersecurity threats operates alongside the Company’s broader overall risk assessment process.
The computer security incident response plan, among other things, provides for inter-departmental coordination and management of cybersecurity threats or incidents to quickly assess the impact, mitigate risks to information systems, and work to resolve vulnerabilities. We periodically conduct simulation exercises involving employees at various levels of the organization.
The Company maintains a written incident response plan with defined escalation procedures and cross functional coordination designed to assess impact, contain threats, and remediate vulnerabilities. The incident response plan, among other things, provides for inter-departmental coordination and management of cybersecurity threats or incidents to quickly assess the impact, mitigate risks to information systems, and work to resolve vulnerabilities.
Removed
The Company has established written policies and procedures to ensure that significant cybersecurity incidents are immediately investigated, addressed through the coordination of various internal departments, and publicly reported (to the extent required by applicable law).
Added
ITEM 1C. CYBERSECURITY Risk Management and Strategy The Company recognizes that the security of our banking operations is critical to protecting our customers and maintaining our reputation. The cybersecurity landscape is constantly evolving and the advent of artificial intelligence has increased the risks.
Removed
Under the direction of the Chief Information Officer, the Information Security Officer is responsible for cybersecurity and business continuity, which includes security architecture, security operations, incident response, IT risk and compliance, and security awareness and training. The Information Security Officer has over 40 years of security & risk management experience among other disciplines.
Added
The results of key assessments are reported in summary to our Board of Directors periodically. 31 We also recognize that we are exposed to cybersecurity threats associated with our use of third-party service providers.
Removed
The Cybersecurity Program Manager who reports directly to and supports the Information Security Officer in various aspects of cybersecurity and business continuity in the Company is a Certified Information Systems Security Professional (CISSP) and a Certified Information Systems Auditor (CISA), The other members of the Company’s information security organization also have extensive cybersecurity, business, and technology experience and hold certifications in their area of expertise. 33
Added
The Information Security Officer leads the Company's cybersecurity program, including security operations, incident response, risk and compliance, and security awareness. The cybersecurity team includes professionals with relevant industry experience and certifications. 32

Item 2. Properties

Properties — owned and leased real estate

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Biggest changePioneer Avenue, Suite 211, Homer, AK Traditional Leased 34 The following sets forth information about our Home Mortgage Lending branch locations, operated by RML: Locations Leased/Owned Main Office at Calais 100 Calais Drive, Anchorage, AK Leased ReMax/Dynamic Office 3350 Midtown Place, Suite 101, Anchorage, AK Leased Keller Williams Office 3035 C Street, Suite 103, Anchorage, AK Leased Fairbanks Office 324 Old Steese Highway, Suite 7, Fairbanks, AK Leased Juneau Office 8800 Glacier Highway, #232, Juneau, AK Leased Kodiak Office 2695 Mill Bay Road, Kodiak, AK Leased Soldotna Office 44384 Sterling Highway, Suite 102, Soldotna, AK Leased Wasilla Northrim Branch 850 E USA Circle, Suite B, Wasilla, AK Leased Glendale Office 17505 N. 79th Avenue, Suite 411, Glendale, AZ Leased Meridian Office 2541 E.
Biggest changeValley Way, Palmer, AK Traditional - expected to open in 2026 Leased 33 The following sets forth information about our Home Mortgage Lending branch locations, operated by RML: Locations Leased/Owned Main Office at Centerpoint 3700 Centerpoint Drive, Suite 500, Anchorage, AK Leased Fairbanks Office 324 Old Steese Highway, Suite 7, Fairbanks, AK Leased Kodiak Office 2695 Mill Bay Road, Kodiak, AK Leased Soldotna Office 44384 Sterling Highway, Suite 102, Soldotna, AK Leased Wasilla Northrim Branch 850 E USA Circle, Suite B, Wasilla, AK Leased Glendale Office 17505 N. 79th Avenue, Suite 411, Glendale, AZ Leased Longmont Office 601 S Bowen Street, Suite 119, Longmont, CO 80501 Leased Meridian Office 2541 E.
Gala Street, Suite 200, Meridian, ID Leased Portland Office 5933 NE Win Sivers Drive, Suite 205, Office 244, Portland, OR Leased Scottsdale Office 7047 E.
Gala Street, Suite 200, Meridian, ID Leased Grants Pass Office 1539 NE F Street, Grants Pass, OR Leased Portland Office 5933 NE Win Sivers Drive, Suite 205, Office 244, Portland, OR Leased Scottsdale Office 7047 E.
Added
Pioneer Avenue, Suite 211, Homer, AK Traditional Leased Palmer Financial Center 585 S.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS The Company from time to time may be involved with disputes, claims and litigation related to the conduct of its banking business. Management does not expect that the resolution of these matters will have a material effect on the Company’s business, financial position, results of operations or cash flows. 35 ITEM 4.
Biggest changeITEM 3. LEGAL PROCEEDINGS The Company from time to time may be involved with disputes, claims and litigation related to the conduct of its banking business. Management does not expect that the resolution of these matters will have a material effect on the Company’s business, financial position, results of operations or cash flows. ITEM 4.
MINE SAFETY DISCLOSURES Not applicable. 36 PART II
MINE SAFETY DISCLOSURES Not applicable. 34 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs many of our shares of common stock are held of record in "street name" by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of beneficial holders of our common stock represented by these record holders.
Biggest changeAs many of our shares of common stock are held of record in "street name" by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of beneficial holders of our common stock represented by these record holders. Repurchase of Securities At December 31, 2025, there were zero shares currently available for repurchase.
Equity Compensation Plan Information The following table sets forth information regarding securities authorized for issuance under the Company’s equity plans as of December 31, 2024. Additional information regarding the Company’s equity plans is presented in Note 22 of the Notes to Consolidated Financial Statements included in Part II. Item 8 of this report.
Equity Compensation Plan Information The following table sets forth information regarding securities authorized for issuance under the Company’s equity plans as of December 31, 2025. Additional information regarding the Company’s equity plans is presented in Note 22 of the Notes to Consolidated Financial Statements included in Part II. Item 8 of this report.
The Company may to continue to repurchase its stock from time to time depending upon market conditions, but we can make no assurances that we will continue this program and the Board of Directors has not presently authorized any repurchases of its common stock for 2025.
The Company may to continue to repurchase its stock from time to time depending upon market conditions, but we can make no assurances that we will continue this program and the Board of Directors has not presently authorized any repurchases of its common stock for 2026.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the NASDAQ Global Select Stock Market under the symbol, “NRIM.” At March 10, 2025, the number of shareholders of record of our common stock was 194.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the NASDAQ Global Select Stock Market under the symbol, “NRIM.” At March 6, 2026, the number of shareholders of record of our common stock was 190.
Small Cap Banks Index, comprised of publicly traded banks with a market capitalization between $133 million to $19.3 billion and average of $2.0 billion, which are located in the United States.
Small Cap Banks Index is comprised of publicly traded banks with a market capitalization between $104 million to $27.2 billion and average of $2.0 billion, which are located in the United States.
The definition of total return includes appreciation in market value of the stock, as well as the actual cash and stock dividends paid to shareholders. The comparable indices utilized are the Russell 3000 Index, representing approximately 98% of the U.S. equity market, and the S&P U.S.
The definition of total return includes appreciation in market value of the stock, as well as the actual cash and stock dividends paid to shareholders. The comparable indices utilized are the Russell 3000 Index and the S&P U.S. Small Cap Banks Index. The S&P U.S.
Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) Equity compensation plans approved by security holders 1 148,014 $19.98 131,134 Total 148,014 $19.98 131,134 1 Consists of the Company's 2023 Stock Incentive Plan, which replaced the 2020 Stock Incentive Plan (the “2020 Plan”) We do not have any equity compensation plans that have not been approved by our shareholders. 37 Stock Performance Graph The graph shown below depicts the total return to shareholders during the period beginning after December 31, 2019, and ending December 31, 2024.
Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) Equity compensation plans approved by security holders 1 617,499 $3.80 1,300,000 Total 617,499 $3.80 1,300,000 1 Consists of the Company's 2025 Stock Incentive Plan, which replaced the 2023 Stock Incentive Plan (the “2023 Plan”) We do not have any equity compensation plans that have not been approved by our shareholders. 35 Five-Year Stock Performance Graph The graph shown below depicts the total return to shareholders during the period beginning after December 31, 2020, and ending December 31, 2025.
There were no stock repurchases by the Company during the three-month period ending December 31, 2024.
The Company repurchased 60,136 shares in 2024 and 834,692 shares in 2023. There were no stock repurchases by the Company during the three-month period ending December 31, 2025.
The graph assumes that the value of the investment in the Company’s common stock and each of the two indices was $100 on December 31, 2019, and that all dividends were reinvested. Period Ending Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 Northrim BanCorp, Inc. 100.00 92.82 122.96 160.74 177.44 251.82 Russell 3000 100.00 120.89 151.91 122.73 154.59 191.39 S&P U.S.
The graph assumes that the value of the investment in the Company’s common stock and each of the two indices was $100 on December 31, 2020, and that all dividends were reinvested. Period Ending Index 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 Northrim BanCorp, Inc. 100.00 132.47 173.17 191.16 271.29 381.14 Russell 3000 100.00 125.66 101.53 127.88 158.32 185.47 S&P U.S.
Removed
Repurchase of Securities At December 31, 2024, there were 110,000 shares available for repurchase under the previously announced stock repurchase program, which lapsed on December 31, 2024, leaving zero shares currently available for repurchase. The Company repurchased 15,034 shares in 2024 and 208,673 shares in 2023.
Added
SmallCap Banks 100.00 139.21 122.74 123.35 145.82 160.37 36 ITEM 6. [RESERVED]
Removed
SmallCap Banks 100.00 90.82 126.43 111.47 112.03 132.44 38 ITEM 6. [RESERVED]

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe portion of the Company's ACL that related to the loans with exposure to these industries is estimated at the following amounts as of December 31, 2024: (In Thousands) Tourism Aviation (non-tourism) Healthcare Retail Fishing Restaurants and Breweries Accommodations Total ACL $686 $694 $1,034 $837 $398 $441 $969 $5,059 53 Credit Quality and Nonperforming Assets The following table sets forth information regarding our nonperforming loans and total nonperforming assets for the periods indicated: December 31, December 31, (In Thousands) 2024 2023 Nonaccrual loans $7,516 $6,069 Loans 90 days past due and accruing 17 — Total nonperforming loans $7,533 $6,069 Nonperforming loans guaranteed by government — (1,067) Net nonperforming loans $7,533 $5,002 Nonperforming purchased receivables 3,768 808 Net nonperforming assets $11,598 $5,810 Nonperforming loans, net of government guarantees / portfolio loans 0.35 % 0.28 % Nonperforming loans, net of government guarantees / portfolio loans, net of government guarantees 0.38 % 0.30 % Nonperforming assets, net of government guarantees / total assets 0.38 % 0.21 % Nonperforming assets, net of government guarantees / total assets net of government guarantees 0.40 % 0.21 % Adversely classified loans, net of government guarantees $9,636 $7,057 Special mention loans, net of government guarantees $19,769 $6,580 Loans 30-89 days past due and accruing, net of government guarantees /portfolio loans 0.03 % 0.03 % Loans 30-89 days past due and accruing, net of government guarantees / portfolio loans, net of government guarantees 0.03 % 0.03 % Allowance for credit losses - loans / portfolio loans 1.03 % 0.97 % Allowance for credit losses - loans / portfolio loans, net of government guarantees 1.10 % 1.02 % Allowance for credit losses - loans / nonperforming loans, net of government guarantees 292 % 345 % Allowance for credit losses - purchased receivables / purchased receivables 4.69 % — % Allowance for credit losses - purchased receivables / nonperforming purchased receivables 96.84 % — % Gross loan charge-offs for the quarter $149 $281 Gross loan recoveries for the quarter ($200) ($185) Net loan (recoveries) charge-offs for the quarter ($51) $96 Net loan (recoveries) charge-offs year-to-date ($215) ($38) Net loan (recoveries) charge-offs for the quarter / average loans, for the quarter 0.00 % 0.01 % Net loan (recoveries) charge-offs year-to-date / average loans, year-to-date annualized (0.01) % 0.00 % The Company’s nonperforming assets, net of government guarantees increased to $11.6 million at December 31, 2024 as compared to $5.8 million at December 31, 2023.
Biggest changeThe portion of the Company's ACL that related to the loans with exposure to these industries is estimated at the following amounts as of December 31, 2025: (In Thousands) Tourism Aviation (non-tourism) Healthcare Retail Fishing Restaurants and Breweries Accommodations Total ACL $674 $810 $787 $875 $244 $471 $889 $4,750 57 Credit Quality and Nonperforming Assets The following table sets forth information regarding our nonperforming loans and total nonperforming assets for the periods indicated: December 31, December 31, (In Thousands) 2025 2024 Nonaccrual loans - Community Banking $9,066 $4,337 Nonaccrual loans - Home Mortgage Lending 514 233 Nonaccrual loans - Specialty Finance 2,388 2,946 Nonaccrual loans - Total 11,968 7,516 Loans 90 days past due and accruing - Community Banking — 17 Loans 90 days past due and accruing - Total — 17 Total nonperforming loans - Community Banking 9,066 4,354 Total nonperforming loans - Home Mortgage Lending 514 233 Total nonperforming loans - Specialty Finance 2,388 2,946 Total nonperforming loans - Total 11,968 7,533 Nonperforming loans guaranteed by gov't - Community Banking 639 — Nonperforming loans guaranteed by gov't - Total 639 — Net nonperforming loans - Community Banking 8,427 4,354 Net nonperforming loans - Home Mortgage Lending 514 233 Net nonperforming loans - Specialty Finance 2,388 2,946 Net nonperforming loans - Total 11,329 7,533 Repossessed assets - Community Banking — 297 Repossessed assets - Total — 297 Nonperforming purchased receivables - Specialty Finance 67 3,768 Net nonperforming assets - Community Banking 8,427 4,651 Net nonperforming assets - Home Mortgage Lending 514 233 Net nonperforming assets - Specialty Finance 2,455 6,714 Net nonperforming assets - Total $11,396 $11,598 Adversely classified loans, net of gov't guarantees - Community Banking $29,447 $6,332 Adversely classified loans, net of gov't guarantees - Home Mortgage Lending 687 358 Adversely classified loans, net of gov't guarantees - Specialty Finance 3,364 2,946 Adversely classified loans, net of gov't guarantees - Total $33,498 $9,636 Special mention loans, net of gov't guarantees - Community Banking $10,481 $19,769 Special mention loans, net of gov't guarantees - Total $10,481 $19,769 Nonperforming loans, net of government guarantees / portfolio loans 0.49 % 0.35 % Nonperforming loans, net of government guarantees / portfolio loans, net of gov't guarantees 0.53 % 0.38 % Nonperforming assets, net of government guarantees / total assets 0.35 % 0.38 % Nonperforming assets, net of government guarantees / total assets net of gov't guarantees 0.36 % 0.40 % Loans 30-89 days past due and accruing, net of government guarantees / portfolio loans 0.07 % 0.11 % Loans 30-89 days past due and accruing, net of government guarantees / portfolio loans, net of government guarantees 0.08 % 0.11 % Allowance for credit losses for loans / portfolio loans 1.03 % 1.03 % Allowance for credit losses for loans / portfolio loans, net of gov't guarantees 1.10 % 1.10 % Allowance for credit losses for loans / nonperforming loans, net of gov't guarantees 210 % 292 % 58 Net loan charge-offs (recoveries) year-to-date - Community Banking $1,429 ($320) Net loan charge-offs (recoveries) year-to-date - Specialty Finance 364 105 Net loan charge-offs (recoveries) year-to-date - Total $1,793 ($215) Net loan charge-offs (recoveries) year-to-date / average loans, year-to-date annualized 0.08 % (0.01) % Allowance for credit losses for purchased receivables / purchased receivables — % 4.69 % Net purchased receivable charge-offs (recoveries) year-to-date / average purchased receivables, year-to-date annualized 2.15 % — % The Company’s nonperforming assets, net of government guarantees decreased slightly to $11.4 million at December 31, 2025 as compared to $11.6 million at December 31, 2024 as some nonperforming asset were paid off or charged off in 2025 and were replaced by new nonperforming assets.
Management believes that tax-equivalent net interest margin is a useful financial measure because it enables investors to evaluate net interest margin excluding tax expense in order to monitor our effectiveness in growing higher interest yielding assets and managing our costs of interest bearing liabilities over time on a fully tax equivalent basis.
Management believes that net interest margin tax-equivalent is a useful financial measure because it enables investors to evaluate net interest margin excluding tax expense in order to monitor our effectiveness in growing higher interest yielding assets and managing our costs of interest bearing liabilities over time on a fully tax equivalent basis.
See reconciliation to net interest margin, the most comparable GAAP measurement below. 5 In managing our business, we review the efficiency ratio exclusive of intangible asset amortization, which is a non-GAAP performance measurement. Management believes that this is a useful financial measurement because we believe this presentation provides investors with a more accurate picture of our operating efficiency.
See reconciliation to net interest margin, the most comparable GAAP measurement below. 5 In managing our business, we review the adjusted efficiency ratio exclusive of intangible asset amortization, which is a non-GAAP performance measurement. Management believes that this is a useful financial measurement because we believe this presentation provides investors with a more accurate picture of our operating efficiency.
A bank is included in the peer group for each loan segment in 2024 under the following circumstances: • The percentage the balance of the loan segment compared to total loans over a five year look back period is within 0.5 standard deviations of the Company's data; • The percentage of total charge offs for the loan segment over a five year look back period is within 0.25 standard deviations of the Company's data; and • The percentage of total charge offs for the loan segment during the recessionary period from the fourth quarter of 2008 to the fourth quarter of 2012 is within 0.25 standard deviations of the Company's data.
A bank is included in the peer group for each loan segment in 2025 and 2024 under the following circumstances: • The percentage the balance of the loan segment compared to total loans over a five year look back period is within 0.5 standard deviations of the Company's data; • The percentage of total charge offs for the loan segment over a five year look back period is within 0.25 standard deviations of the Company's data; and • The percentage of total charge offs for the loan segment during the recessionary period from the fourth quarter of 2008 to the fourth quarter of 2012 is within 0.25 standard deviations of the Company's data.
Similar to loans, we do not expect that these maturing certificates of deposit, or other non-maturity deposits, to be withdrawn from the Bank in a manner that will strain liquidity; however, 59 unforeseen future circumstances or events may cause higher than anticipated withdrawal of deposits or draws of unfunded commitments to fund new loans.
Similar to loans, we do not expect that these maturing certificates of deposit, or other non-maturity deposits, to be withdrawn from the Bank in a manner that will strain liquidity; however, unforeseen future circumstances or events may cause higher than anticipated withdrawal of deposits or draws of unfunded commitments to fund new loans.
Taxable long-term investments consist of U.S. treasury and government sponsored entities, corporate bonds, collateral loan obligations, municipal securities, marketable equity securities, and Federal Home Loan Bank stock. 4 Consists of interest bearing deposits in other banks and domestic CDs. 5 The Company does not have any fed funds sold or securities purchased with agreements to resell to disclose as part of its total interest-earning assets in the periods presented. 6 Tax-equivalent yield/costs assume a federal tax rate of 21% and a state tax rate of 7.43% for a combined tax rate of 28.43%. 45 The following table sets forth the changes in consolidated net interest income attributable to changes in volume and to changes in interest rates for the periods indicated.
Taxable long-term investments consist of U.S. treasury and government sponsored entities, corporate bonds, collateral loan obligations, municipal securities, marketable equity securities, and Federal Home Loan Bank stock. 4 Consists of interest bearing deposits in other banks and domestic CDs. 5 The Company does not have any fed funds sold or securities purchased with agreements to resell to disclose as part of its total interest-earning assets in the periods presented. 6 Tax-equivalent yield/costs assume a federal tax rate of 21% and a state tax rate of 7.43% for a combined tax rate of 28.43%. 49 The following table sets forth the changes in consolidated net interest income attributable to changes in volume and to changes in interest rates for the periods indicated.
See reconciliation to efficiency ratio, the most comparable GAAP measurement below. 6 Number of banking offices does not include RML, NFS, or SCF locations. 2024 number of banking offices includes 20 full service branches. 2023 number of banking offices includes 19 full service branches and one loan production office. 2022 number of banking offices includes 18 full service branches and one loan production office. 2021 number of banking offices includes 17 full service branches and one loan production office. 2020 number of banking offices includes 16 full service branches and one loan production office.
See reconciliation to efficiency ratio, the most comparable GAAP measurement below. 6 Number of banking offices does not include RML, NFS, or SCF locations. 2025 and 2024 number of banking offices includes 20 full service branches. 2023 number of banking offices includes 19 full service branches and one loan production office. 2022 number of banking offices includes 18 full service branches and one loan production office. 2021 number of banking offices includes 17 full service branches and one loan production office. 2020 number of banking offices includes 16 full service branches and one loan production office.
As of December 31, 2024, management utilizes and forecasts U.S. unemployment and U.S. gross domestic product as the loss drivers for all of the loan pools that utilize the DCF method. The Company added U.S. gross domestic product as a loss driver in 2024 because we determined that there is better model fit using this multi-factor model.
As of December 31, 2025 and 2024 management utilizes and forecasts U.S. unemployment and U.S. gross domestic product as the loss drivers for all of the loan pools that utilize the DCF method. The Company added U.S. gross domestic product as a loss driver in 2024 because we determined that there is better model fit using this multi-factor model.
These loans may be secured or unsecured, but any loans for these purposes that are secured by real estate are included in a real estate category. The Company utilizes the weighted average remaining life method to quantitatively estimate credit losses for this pool. Consumer - Loans used for personal use, which may be secured or unsecured, and customer overdrafts.
These loans may be secured or unsecured, but any loans for these purposes that are secured by real estate are 44 included in a real estate category. The Company utilizes the weighted average remaining life method to quantitatively estimate credit losses for this pool. Consumer - Loans used for personal use, which may be secured or unsecured, and customer overdrafts.
Other assumptions relevant to the discounted cash flow model to derive the quantitative allowance include the LGD, which is the estimate of loss for a defaulted loan, prepayment speeds, and the discount rate applied to future cash flows.
Other assumptions relevant to the discounted cash flow model to derive the quantitative allowance include the LGD, which is the estimate of loss for a defaulted loan, prepayment 43 speeds, and the discount rate applied to future cash flows.
There can be no assurance that changes in circumstances, estimates or assumptions may result in additional impairment of all, or some portion of, goodwill or other intangible assets. The Company performed its annual goodwill impairment testing at December 31, 2024 and 2023 in accordance with the policy described in Note 1 to the financial statements included in Part II.
There can be no assurance that changes in circumstances, estimates or assumptions may result in additional impairment of all, or some portion of, goodwill or other intangible assets. The Company performed its annual goodwill impairment testing at December 31, 2025 and 2024 in accordance with the policy described in Note 1 to the financial statements included in Part II.
The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
FHLB advances are dependent on the availability of acceptable collateral such as marketable securities or real estate loans, although all FHLB advances are secured by a blanket pledge of the Company’s assets. At December 31, 2024, our maximum borrowing line from the FHLB was approximately 45% of the Bank’s assets, subject to the FHLB’s collateral requirements.
FHLB advances are dependent on the availability of acceptable collateral such as marketable securities or real estate loans, although all FHLB advances are secured by a blanket pledge of the Company’s assets. At December 31, 2025, our maximum borrowing line from the FHLB was approximately 45% of the Bank’s assets, subject to the FHLB’s collateral requirements.
See reconciliation to shareholders' equity to total assets, the most comparable GAAP measurement below. 41 4 Tax-equivalent net interest margin is a non-GAAP performance measurement in which interest income on non-taxable investments and loans is presented on a tax-equivalent basis using a combined federal and state statutory rate of 28.43%.
See reconciliation to shareholders' equity to total assets, the most comparable GAAP measurement below. 40 4 Net interest margin tax-equivalent is a non-GAAP performance measurement in which interest income on non-taxable investments and loans is presented on a tax-equivalent basis using a combined federal and state statutory rate of 28.43%.
We believe that the positive inputs to the qualitative assessment noted above outweigh the negative inputs for all of the Company's operating segments, and we therefore concluded that it is more likely than not that the fair value of the Company exceeds its carrying value at December 31, 2024 and that no potential impairment existed at that time.
We believe that the positive inputs to the qualitative assessment noted above outweigh the negative inputs for all of the Company's operating segments, and we therefore concluded that it is more likely than not that the fair value of the Company exceeds its carrying value at December 31, 2025 and that no potential impairment existed at that time.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II. Item 7 of our Annual Report on Form 10-K for fiscal year ended December 31, 2023.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II. Item 7 of our Annual Report on Form 10-K for fiscal year ended December 31, 2024.
Federal banking agencies have adopted regulations establishing minimum requirements for the capital adequacy of banks and bank holding companies. The requirements address both risk-based capital and leverage capital. We believe as of December 31, 2024, that the Company and the Bank met all applicable capital adequacy requirements for a “well-capitalized” institution by regulatory standards.
Federal banking agencies have adopted regulations establishing minimum requirements for the capital adequacy of banks and bank holding companies. The requirements address both risk-based capital and leverage capital. We believe as of December 31, 2025, that the Company and the Bank met all applicable capital adequacy requirements for a “well-capitalized” institution by regulatory standards.
Average nonaccrual loans included in the computation of the average loans were $5.4 million, $7.1 million, and $8.6 million in 2024, 2023 and 2022, respectively. 3 Consists of investment securities available for sale, investment securities held to maturity, marketable equity securities, and investment in Federal Home Loan Bank stock.
Average nonaccrual loans included in the computation of the average loans were $8.6 million, $5.4 million, and $7.1 million in 2025, 2024 and 2023, respectively. 3 Consists of investment securities available for sale, investment securities held to maturity, marketable equity securities, and investment in Federal Home Loan Bank stock.
The Company may continue to repurchase its stock from time-to-time depending upon market conditions, but we can make no assurances that we will continue this program and the Board of Directors has not presently authorized any repurchases of its common stock for 2025.
The Company may continue to repurchase its stock from time-to-time depending upon market conditions, but we can make no assurances that we will continue this program and the Board of Directors has not presently authorized any repurchases of its common stock for 2026.
Management believes that cash requirements to fund future non-deposit liabilities, including operating lease liabilities, other liabilities, or borrowings as of December 31, 2024, are not material to the Company's liquidity position as of December 31, 2024. The Company has other available sources of liquidity to fund unforeseen liquidity needs.
Management believes that cash requirements to fund future non-deposit liabilities, including operating lease liabilities, other liabilities, or borrowings as of December 31, 2025, are not material to the Company's liquidity position as of December 31, 2025. The Company has other available sources of liquidity to fund unforeseen liquidity needs.
The Company has identified the following pools of financial assets with similar risk characteristics for measuring expected credit losses under CECL, which are unchanged as of December 31, 2024 and December 31, 2023: Commercial & industrial - Commercial loans are loans for commercial, corporate and business purposes.
The Company has identified the following pools of financial assets with similar risk characteristics for measuring expected credit losses under CECL, which are unchanged as of December 31, 2025 and December 31, 2024: Commercial & industrial - Commercial loans are loans for commercial, corporate and business purposes.
Management performs a hypothetical sensitivity analysis of our ACL quarterly to understand the impact of a change in a key input on our ACL. As of December 31, 2024, management utilized the Federal Reserve's median forecasts of national unemployment and national gross domestic product.
Management performs a hypothetical sensitivity analysis of our ACL quarterly to understand the impact of a change in a key input on our ACL. As of December 31, 2025, management utilized the Federal Reserve's median forecasts of national unemployment and national gross domestic product.
Given that the Bank currently meets and the Bank anticipates that it will continue to meet, all applicable capital adequacy requirements for a “well-capitalized” institution by regulatory standards, the Company expects to continue to receive dividends from the Bank during 2025.
Given that the Bank currently meets and the Bank anticipates that it will continue to meet, all applicable capital adequacy requirements for a “well-capitalized” institution by regulatory standards, the Company expects to continue to receive dividends from the Bank during 2026.
Assumptions used include market discount rates, anticipated prepayment speeds, escrow calculations, delinquency rates and ancillary fee income net of servicing costs. 64 A sensitivity analysis of our servicing rights was performed as of December 31, 2024. See Note 8 to the financial statements included in Part II. Item 8 of this report for the results of this analysis.
Assumptions used include market discount rates, anticipated prepayment speeds, escrow calculations, delinquency rates and ancillary fee income net of servicing costs. A sensitivity analysis of our servicing rights was performed as of December 31, 2025. See Note 8 to the financial statements included in Part II. Item 8 of this report for the results of this analysis.
This sensitivity analysis does not represent a change to our expectations of the economic environment but provides a hypothetical result to assess the sensitivity of the ACL to a change in key inputs. This sensitivity analysis does not incorporate changes to management’s judgment of qualitative loss factors.
This sensitivity analysis does not represent a change to our expectations of the economic environment but provides a hypothetical result to assess the sensitivity of the ACL to a change in a key input. This sensitivity analysis does not incorporate changes to management’s judgment of qualitative loss factors.
The table below illustrates the capital requirements in effect in 2024 for the Company and the Bank and the actual capital ratios for each entity that exceed these requirements. Management intends to maintain capital ratios for the Bank in 2025 exceeding the FDIC’s requirements for the “well-capitalized” classification.
The table below illustrates the capital requirements in effect in 2025 for the Company and the Bank and the actual capital ratios for each entity that exceed these requirements. Management intends to maintain capital ratios for the Bank in 2026 exceeding the FDIC’s requirements for the “well-capitalized” classification.
The Company utilizes the weighted average remaining life method to quantitatively estimate credit losses for this pool. 63 In addition to the quantitative portion of the ACL derived using either the DCF or weighted average remaining life method, the Company also considers the effects of the following qualitative factors in its calculation of expected losses in the loan portfolio: • Lending strategy, policies, and procedures; • Quality of internal loan review; • Lending management and staff; • Trends in underlying collateral values; • Competition, legal, and regulatory changes; • Economic and business conditions including fluctuations in the price of Alaska North slope crude oil; • Inflation and monetary policy in the United States; • Changes in trends, volume and severity of adversely classified loans, nonaccrual loans, and delinquencies; • Concentration of credit; and • Changes in the nature and volume of the loan portfolio.
In addition to the quantitative portion of the ACL derived using either the DCF or weighted average remaining life method, the Company also considers the effects of the following qualitative factors in its calculation of expected losses in the loan portfolio: • Lending strategy, policies, and procedures; • Quality of internal loan review; • Lending management and staff; • Trends in underlying collateral values; • Competition, legal, and regulatory changes; • Economic and business conditions including fluctuations in the price of Alaska North slope crude oil; • Inflation and monetary policy in the United States; • Changes in trends, volume and severity of adversely classified loans, nonaccrual loans, and delinquencies; • Concentration of credit; and • Changes in the nature and volume of the loan portfolio.
The Company's regression models for PD as of December 31, 2024 utilize peer historical loan level default data. Peers for this purpose include banks in the United States with total assets between $1 billion and $5 billion whose loan portfolios share certain characteristics with the Company's loan portfolio.
The Company's regression models for PD as of December 31, 2025 and 2024 utilize peer historical loan level default data. Peers for this purpose include banks in the United States with total assets between $1 billion and $5 billion whose loan portfolios share certain characteristics with the Company's loan portfolio. Peers differ by loan segment.
Item 8 of this report. At December 31, 2024, the Company performed its annual impairment test by performing a qualitative assessment.
Item 8 of this report. At December 31, 2025, the Company performed its annual impairment test by performing a qualitative assessment.
These advances have original terms of either 18 or 20 years with 30 year amortization periods and fixed interest rates ranging from 1.23% to 3.25%. The Company paid $389,000 and $330,000 in interest on these advances in 2024 and 2023, respectively.
These advances have original terms of either 18 or 20 years with 30 year amortization periods and fixed interest rates ranging from 1.23% to 3.25%. The Company paid $310,000 and $389,000 in interest on these advances in 2025 and 2024, respectively.
Significant positive inputs to the qualitative assessment included the Company’s increasing net income as compared to historical trends; the Company's increasing market share for deposits in our markets; results of regulatory examinations; peer comparisons of the Company's net interest margin; trends in the Company’s cash flows; improvements in the Alaskan economy in 2024; increases in the Company's market share of mortgage originations; increases in purchased receivable income following the acquisition of SCF, and increases in the Company's stock price.
Significant positive inputs to the qualitative assessment included the Company’s increasing net income as compared to historical trends; the Company's increasing market share for deposits in our markets; results of regulatory examinations; peer comparisons of the Company's net interest margin; trends in the Company’s cash flows; increases in the Company's market 45 share of mortgage originations; increases in purchased receivable income following the acquisition of SCF, and increases in the Company's stock price.
The Company's Audit Committee provides board oversight of the ACL process and reviews and approves the ACL methodology on a quarterly basis. CECL is not prescriptive in the methodology used to determine the expected credit loss estimate. Therefore, management has flexibility in selecting the methodology.
The Company's Audit Committee provides board oversight of the ACL process and reviews and approves the ACL methodology on a quarterly basis. The current expected credit loss model (“CECL”) is not prescriptive in the methodology used to determine the expected credit loss estimate. Therefore, management has flexibility in selecting the methodology.
Additionally, the Company has a short-term $9.8 million advance from the FHLB outstanding as of December 31, 2024 at an interest rate of 4.62% which resets daily. There were no additional advances outstanding as of December 31, 2023.
Additionally, the Company had a short-term $9.8 million advance from the FHLB outstanding as of December 31, 2024 at an interest rate of 4.62% which resets daily. There were no additional advances outstanding as of December 31, 2025.
Under the rules of the Federal Reserve Bank, a bank holding company such as the Company is generally defined to be "well capitalized" if its Tier 1 risk-based capital ratio is 8.0% or more and its total risk-based capital ratio is 10.0% or more.
Under the rules of the Federal Reserve Bank, a bank holding company such as the Company is generally defined to be “well capitalized” if its Tier 1 risk-based capital ratio is 8.0% or more and its total risk-based capital ratio is 10.0% or more.
The Company's effective tax rate increased to 21.3% in 2024 from 19.7% in 2023, primarily due to a decrease in tax exempt income and low income housing tax credits as a percentage of pre-tax income in 2024 compared to 2023. 48 FINANCIAL CONDITION Investment Securities The composition of our investment securities portfolio, which includes securities available for sale, held-to-maturity investments, and marketable equity securities, reflects management’s investment strategy of maintaining an appropriate level of liquidity while providing a relatively stable source of interest income.
The Company's effective tax rate increased to 23.6% in 2025 from 21.3% in 2024, primarily due to a decrease in tax exempt income and low income housing tax credits as a percentage of pre-tax income in 2025 compared to 2024. 52 FINANCIAL CONDITION Investment Securities The composition of our investment securities portfolio, which includes securities available for sale, held-to-maturity investments, and marketable equity securities, reflects management’s investment strategy of maintaining an appropriate level of liquidity while providing a relatively stable source of interest income.
The average maturity of the investment portfolio was approximately 2.4 years at December 31, 2024 as compared to approximately 2.8 years at December 31, 2023. Investment securities may be pledged as collateral to secure public deposits or borrowings.
The average maturity of the investment portfolio was approximately 2.0 years at December 31, 2025 as compared to approximately 2.4 years at December 31, 2024. Investment securities may be pledged as collateral to secure public deposits or borrowings.
The primary sources of demands on our liquidity are customer demands for withdrawal of deposits and borrowers’ demands that we advance funds against unfunded lending commitments. The Company had cash and cash equivalents of $62.7 million, or 2% of total assets at December 31, 2024 compared to $118.5 million, or 4% of total assets as of December 31, 2023.
The primary sources of demands on our liquidity are customer demands for withdrawal of deposits and borrowers’ demands that we advance funds against unfunded lending commitments. The Company had cash and cash equivalents of $145.9 million, or 4% of total assets at December 31, 2025 compared to $62.7 million, or 2% of total assets as of December 31, 2024.
Loan fees recognized during the period and included in the yield calculation totaled $4.5 million, $4.4 million and $8.5 million for 2024, 2023 and 2022, respectively. 2 Nonaccrual loans are included with a zero effective yield.
Loan fees recognized during the period and included in the yield calculation totaled $4.9 million, $4.5 million and $4.4 million for 2025, 2024 and 2023, respectively. 2 Nonaccrual loans are included with a zero effective yield.
There was interest income of $241,000 and $656,000 recognized in net income for 2024 and 2023, respectively, related to interest collected on nonaccrual loans whose principal had been paid down to zero.
There was interest income of $214,000 and $241,000 recognized in net income for 2025 and 2024, respectively, related to interest collected on nonaccrual loans whose principal had been paid down to zero.
Our underwriting policies and procedures for loans to facilitate the sale of OREO are no different than our standard loan policies and procedures. At December 31, 2024, management had identified potential problem loans of $1.6 million as compared to potential problem loans of $1.9 million at December 31, 2023.
Our underwriting policies and procedures for loans to facilitate the sale of OREO are no different than our standard loan policies and procedures. At December 31, 2025, management had identified potential problem loans of $21.2 million as compared to potential problem loans of $1.6 million at December 31, 2024.
These limitations apply to the borrower’s total outstanding indebtedness and commitments to us, including the indebtedness of any guarantor. Generally, we are permitted to make loans to one borrower of up to 15% of the unimpaired capital and surplus of the Bank. The legal lending limit for the Bank was $37.0 million at December 31, 2024.
These limitations apply to the borrower’s total outstanding indebtedness and commitments to us, including the indebtedness of any guarantor. Generally, we are permitted to make loans to one borrower of up to 15% of the unimpaired capital and surplus of the Bank. The legal lending limit for the Bank was $50.4 million at December 31, 2025.
The Company's unfunded commitments to borrowers that have direct exposure to the oil and gas industry were $45.8 million and $38.6 million at December 31, 2024 and 2023, respectively.
The Company's unfunded commitments to borrowers that have direct exposure to the oil and gas industry were $88.6 million and $45.8 million at December 31, 2025 and 2024, respectively.
The capital ratios for the Company exceed those for the Bank primarily because the $10 million trust preferred securities offering is included in the Company’s capital for regulatory purposes, although they are accounted for as a long-term debt in our consolidated financial statements.
Some capital ratios for the Company exceed those for the Bank primarily because the $10 million trust preferred securities offering and the $60 million in Subordinated Notes are included in the Company’s capital for regulatory purposes, although they are accounted for as a long-term debt in our consolidated financial statements.
This sensitivity analysis includes the impact to both the quantitative and qualitative components of our ACL. Changes in quantitative inputs and qualitative loss factors may not occur in the same direction or magnitude across all segments of our loan portfolio and deterioration in some quantitative inputs and qualitative loss factors may offset improvement in others.
These sensitivity analyses include the impact to both the quantitative and qualitative components of our ACL. Changes in quantitative inputs and qualitative loss factors may not occur in the same direction or magnitude across all segments of our loan portfolio and deterioration in some quantitative inputs and qualitative loss factors may offset improvement in others.
Investment securities designated as available for sale comprised 91% of the portfolio as of December 31, 2024 and are available to meet liquidity requirements in a contingency situation. Our investment portfolio consists primarily of government sponsored entity securities, corporate securities, and collateralized loan obligations.
Investment securities designated as available for sale comprised 92% of the portfolio as of December 31, 2025 and are available to meet liquidity requirements in a contingency situation. Our investment portfolio consists primarily of government sponsored entity securities, corporate securities, mortgage-backed securities, and collateralized loan obligations.
The Company has outstanding advances of $13.2 million and $13.7 million as of December 31, 2024 and 2023, respectively, which were originated to match fund low income housing projects that qualify for long term fixed interest rates.
The Company has outstanding 62 advances of $12.8 million and $13.2 million as of December 31, 2025 and 2024, respectively, which were originated to match fund low income housing projects that qualify for long term fixed interest rates.
Financing activities provided cash in 2023 due to increases in deposits that were only partially offset by the payment of cash dividends to shareholders and the repurchase of shares of the Company's common stock. Throughout our history, the Company has periodically repurchased for cash a portion of its shares of common stock in the open market.
Financing activities provided cash in 2024 due to increases in deposits that were only partially offset by the repayment of borrowings and the payment of cash dividends to shareholders. 64 Throughout our history, the Company has periodically repurchased for cash a portion of its shares of common stock in the open market.
Based on the Company's current collateral pledged to the FHLB, less outstanding advances, the Company's borrowing line is $331.1 million as of December 31, 2024.
Based on the Company's current collateral pledged to the FHLB, less outstanding advances, the Company's borrowing line is $433.1 million as of December 31, 2025.
The portion of the Company's ACL that related to the loans with direct exposure to the oil and gas industry was estimated at $1.1 million and $884,000 as of December 31, 2024 and 2023, respectively.
The portion of the Company's ACL that related to the loans with direct exposure to the oil and gas industry was estimated at $1.6 million and $1.1 million as of December 31, 2025 and 2024, respectively.
Data processing expense, occupancy expense, insurance expense, marketing expense and professional and outside services also increased in 2024 compared to 2023 due to the increase in branch locations, increased customer and transaction volume, increased FDIC insurance costs associated with asset growth, and increased professional and outside services related to the acquisition of SCF.
Data processing expense, occupancy expense, insurance expense, marketing expense and professional and outside services also increased in 2025 compared to 2024 due to the increase in branch locations, increased customer and transaction volume, and increased FDIC insurance costs associated with asset growth.
These include borrowings available through our correspondent banking relationships and our credit lines with the Federal Reserve Bank and the FHLB. At December 31, 2024, our liquid assets, which include investments and loans maturing within a year, were $1.01 billion. Our funds available for borrowing under our existing lines of credit were $566.8 million.
These include borrowings available through our correspondent banking relationships and our credit lines with the Federal Reserve Bank and the FHLB. At December 31, 2025, our liquid assets, which include investments and loans maturing within a year, were $1.06 billion. Our funds available for borrowing under our existing lines of credit were $578.6 million.
The trust preferred securities are not accounted for on the Bank’s financial statements nor are they included in its capital. As a result, the Company has $10 million more in regulatory capital than the Bank at December 31, 2024 and 2023, respectively, which explains most of the difference in the capital ratios for the two entities.
These items are not accounted for on the Bank’s financial statements nor are they included in its capital. As a result, the Company has $70 million more in regulatory capital than the Bank at December 31, 2025 and $10 million more at December 31, 2024, respectively, which explains most of the difference in the capital ratios for the two entities.
The Company determined that an ACL of $22.0 million, or 1.03% of portfolio loans, is appropriate as of December 31, 2024 based on our analysis of the current credit quality of the portfolio and forecasted economic conditions.
The Company determined that an ACL of $23.7 million, or 1.03% of portfolio loans, is appropriate as of December 31, 2025 based on our analysis of the current credit quality of the portfolio and forecasted economic conditions.
The aggregate amount of certificates of deposit in amounts of $250,000 or more at December 31, 2024 and 2023, was $217.1 million and $142.1 million, respectively.
The aggregate amount of certificates of deposit in amounts of $250,000 or more at December 31, 2025 and 2024, was $208.2 million and $217.1 million, respectively.
Changes in net interest income are influenced by yields and the level and relative mix of interest-earning assets and interest-bearing liabilities. Net interest income in 2024 was $113.2 million, compared to $103.3 million in 2023.
Changes in net interest income are influenced by yields and the level and relative mix of interest-earning assets and interest-bearing liabilities. Net interest income in 2025 was $135.6 million, compared to $113.2 million in 2024.
The Company had $49.2 million CDARS certificates of deposits at December 31, 2024 and $48.1 million CDARS certificates of deposits at December 31, 2023. Uninsured deposits totaled $1.1 billion or 40% of total deposits as of December 31, 2024 compared to $1.0 billion or 41% of total deposits as of December 31, 2023.
The Company had $50.0 million CDARS certificates of deposits at December 31, 2025 and $49.2 million CDARS certificates of deposits at December 31, 2024. Uninsured deposits totaled $1.1 billion or 38% of total deposits as of December 31, 2025 compared to $1.1 billion or 40% of total deposits as of December 31, 2024.
The Company estimates that $99.7 million, or approximately 5% of loans as of December 31, 2024 have direct exposure to the oil and gas industry as compared to $96.1 million, or approximately 5% of loans as of December 31, 2023.
The Company estimates that $123.4 million, or approximately 5% of loans as of December 31, 2025 have direct exposure to the oil and gas industry as compared to $99.7 million, or approximately 5% of loans as of December 31, 2024.
The ACL for loans increased to $22.0 million at December 31, 2024 compared to $17.3 million at December 31, 2023 primarily due to an increase in loan balances, net of guarantees.
The ACL for loans increased to $23.7 million at December 31, 2025 compared to $22.0 million at December 31, 2024 primarily due to an increase in loan balances, net of guarantees.
As of December 31, 2024, if the four-quarter national unemployment rate forecast had been approximately 35% higher and the four-quarter national gross domestic product forecast been 4% higher, which represent forecasts at approximately the historical mean, our ACL for loans would have increased $2.7 million, or 13%.
As of December 31, 2025, if the four-quarter national unemployment rate forecast had been approximately 30% higher and the four-quarter national gross domestic product forecast been 5% higher, which represent forecasts at approximately the historical mean, our ACL for loans would have increased $2.2 million, or 10%.
These factors were only partially offset by an increase in the cost of interest-bearing liabilities. • Loans increased 19% to $2.13 billion at December 31, 2024 compared to $1.79 billion at December 31, 2023, and deposits increased 8% to $2.68 billion at December 31, 2024 compared to $2.49 billion at December 31, 2023. • Nonperforming loans, net of government guarantees, increased to $7.5 million at the end of 2024 compared to $5.0 million at the end of 2023, while total adversely classified loans, net of government guarantees at December 31, 2024 increased to $9.6 million from $7.1 million at December 31, 2023.
These factors were only partially offset by an increase in the cost of interest-bearing liabilities. • Loans increased 8% to $2.30 billion at December 31, 2025 compared to $2.13 billion at December 31, 2024, and deposits increased 5% to $2.81 billion at December 31, 2025 compared to $2.68 billion at December 31, 2024. • Nonperforming loans, net of government guarantees, increased to $11.3 million at the end of 2025 compared to $7.5 million at the end of 2024, while total adversely classified loans, net of government guarantees at December 31, 2025 increased to $33.5 million from $9.6 million at December 31, 2024.
The Company is subject to provisions under Alaska state law which generally limits the amount of outstanding debt to 35% of total assets or $1.1 billion at December 31, 2024 and $975.9 million at December 31, 2023. Junior Subordinated Debentures On December 16, 2005, the Company’s subsidiary, NST2, issued trust preferred securities in the principal amount of $10 million.
The Company is subject to provisions under Alaska state law which generally limits the amount of outstanding debt to 15% of total assets or $490.6 million at December 31, 2025 and $454.1 million at December 31, 2024. Subordinated Debentures On December 16, 2005, the Company’s subsidiary, NST2, issued trust preferred securities in the principal amount of $10 million.
The following table details loan balances by loan segment and class of financing receivable for loans with direct oil and gas exposure as of the dates indicated: (In Thousands) December 31, 2024 December 31, 2023 Commercial & industrial loans $87,935 $77,917 Commercial real estate: Owner occupied properties 5,611 11,410 Non-owner occupied and multifamily properties 4,828 5,434 Other loans 1,282 1,357 Total loans $99,656 $96,118 The Company monitors other concentrations within the loan portfolio depending on trends in the current and future estimated economic conditions.
The following table details loan balances by loan segment and class of financing receivable for loans with direct oil and gas exposure as of the dates indicated: (In Thousands) December 31, 2025 December 31, 2024 Commercial & industrial loans $113,036 $87,935 Commercial real estate: Owner occupied properties 4,996 5,611 Non-owner occupied and multifamily properties 4,207 4,828 Other loans 1,203 1,282 Total loans $123,442 $99,656 The Company monitors other concentrations within the loan portfolio depending on trends in the current and future estimated economic conditions.
The increase in 2024 as compared to 2023 was primarily the result of increased interest on loans which was only partially offset by decreases of interest income on available for sale securities and deposits in other banks, as well as an increase in interest expense on deposits.
The increase in 2025 as compared to 2024 was primarily the result of increased interest on loans and deposits in other banks which was only partially offset by a decrease in interest income on available for sale securities, as well as an increase in interest expense on deposits, borrowings, and junior subordinated debentures.
(In Thousands) 2024 2023 2022 2021 2020 2019 Net interest income (9) $113,183 $103,256 $95,115 $80,827 $70,665 $64,442 Other operating income 42,041 26,375 34,077 52,263 63,328 37,346 Total revenue 155,224 129,631 129,192 133,090 133,993 101,788 Other operating expense 104,937 94,181 88,852 89,196 89,114 76,838 Less intangible asset amortization — 17 25 37 48 60 Adjusted other operating expense $104,937 $94,164 $88,827 $89,159 $89,066 $76,778 Efficiency ratio 67.60 % 72.64 % 68.76 % 66.99 % 66.47 % 75.43 % 9 Amount represents net interest income before provision for credit losses.
(In Thousands) 2025 2024 2023 2022 2021 2020 Net interest income (9) $135,609 $113,183 $103,256 $95,115 $80,827 $70,665 Other operating income 77,203 42,041 26,375 34,077 52,263 63,328 Total revenue 212,812 155,224 129,631 129,192 133,090 133,993 Other operating expense 124,383 104,937 94,181 88,852 89,196 89,114 Efficiency ratio 58.45 % 67.60 % 72.65 % 68.78 % 67.02 % 66.51 % (In Thousands) 2025 2024 2023 2022 2021 2020 Net interest income (9) $135,609 $113,183 $103,256 $95,115 $80,827 $70,665 Other operating income 77,203 42,041 26,375 34,077 52,263 63,328 Total revenue 212,812 155,224 129,631 129,192 133,090 133,993 Other operating expense 124,383 104,937 94,181 88,852 89,196 89,114 Less intangible asset amortization — — 17 25 37 48 Adjusted other operating expense $124,383 $104,937 $94,164 $88,827 $89,159 $89,066 Adjusted efficiency ratio 58.45 % 67.60 % 72.64 % 68.76 % 66.99 % 66.47 % 9 Amount represents net interest income before provision for credit losses.
The largest increase was in salaries and other personnel expense. Salaries and other personnel expense increased $3.1 million in the Home Mortgage Lending segment due to increased mortgage production which resulted in higher loan officer commissions.
Salaries and other personnel expense increased $1.3 million in the Home Mortgage Lending segment due to increased mortgage production which resulted in higher loan officer commissions, as well as higher medical claims.
The Company utilizes the DCF method to quantitatively estimate credit losses for this pool. 62 Commercial real estate - This category of loans consists of the following loan types: Owner occupied - This category includes non-farm, non-residential real estate loans for a variety of commercial property types and purposes, including owner occupied commercial real estate loans primarily secured by commercial office or industrial buildings, warehouses or retail buildings where the owner of the building occupies the property.
Commercial real estate - This category of loans consists of the following loan types: Owner occupied - This category includes non-farm, non-residential real estate loans for a variety of commercial property types and purposes, including owner occupied commercial real estate loans primarily secured by commercial office or industrial buildings, warehouses or retail buildings where the owner of the building occupies the property.
Investment securities at December 31, 2024 decreased $163.8 million, or 24%, to $524.1 million from $687.8 million at December 31, 2023. The decrease at December 31, 2024 as compared to December 31, 2023 came from investment maturities and calls that were used to fund growth in portfolio loans.
Investment securities at December 31, 2025 decreased $68.3 million, or 13%, to $455.8 million from $524.1 million at December 31, 2024. The decrease at December 31, 2025 as compared to December 31, 2024 came from investment maturities and calls that were used to fund growth in portfolio loans.
Other available sources of liquidity for the bank holding company include the issuance of debt and the issuance of common or preferred stock. As of December 31, 2024, the Company has 10.0 million authorized shares of common stock, of which approximately 5.5 million are issued and outstanding, leaving approximately 4.5 million shares available for issuance.
Other available sources of liquidity for the bank holding company include the issuance of debt and the issuance of common or preferred stock. As of December 31, 2025, the Company has 40.0 million authorized shares of common stock, of which approximately 22.1 million are issued and outstanding, leaving approximately 17.9 million shares available for issuance.
The following table sets forth information regarding changes in the ACL for unfunded commitments for the years indicated: (In Thousands) 2024 2023 2022 Balance at beginning of period $2,418 $1,970 $1,096 Provision for credit losses (108) 448 874 Balance at end of period $2,310 $2,418 $1,970 While management believes that it uses the best information available to determine the ACL, unforeseen market conditions and other events could result in an adjustment to the ACL, and net income could be significantly affected if circumstances differed substantially from the assumptions used in making the final determination of the ACL.
The ongoing impacts of the CECL methodology will be dependent upon changes in economic conditions and forecasts, as well as loan portfolio composition, quality, and duration. 60 The following table sets forth information regarding changes in the ACL for unfunded commitments for the years indicated: (In Thousands) 2025 2024 2023 Balance at beginning of period $2,310 $2,418 $1,970 Provision for credit losses 358 (108) 448 Balance at end of period $2,668 $2,310 $2,418 While management believes that it uses the best information available to determine the ACL, unforeseen market conditions and other events could result in an adjustment to the ACL, and net income could be significantly affected if circumstances differed substantially from the assumptions used in making the final determination of the ACL.
These uses of cash were only partially offset by proceeds from maturities and sales of investment securities. Net cash used by investing activities was $254.9 million in 2023 primarily due to increases in loans and to a lesser extent, purchases of available for sale and held to maturity securities and an increase in purchased receivables.
Net cash used by investing activities was $223.4 million in 2025 primarily due to an increase in loans and purchased receivables and purchases of available for sale securities. These uses of cash were only partially offset by proceeds from maturities and sales of investment securities.
If the four-quarter national unemployment rate forecast had been approximately 10% higher and the four-quarter national gross domestic product forecast been 42% lower, which represents the Federal Reserve's more conservative forecasts, our ACL for loans would have increased $1.4 million, or 7%.
If the four-quarter national unemployment rate forecast had been approximately 5% higher and the four-quarter national gross domestic product forecast been 13% lower, which represents the Federal Reserve's more conservative forecasts, our ACL for loans would have increased $537,000, or 2%.
The only deposit category with stated maturity dates is certificates of deposit. At December 31, 2024, we had $418.4 million in certificates of deposit, of which $369.7 million, or 88%, are scheduled to mature in 2025. The Company’s certificates of deposit increased to $418.4 million during 2024 as compared to $331.3 million at December 31, 2023.
The only deposit category with stated maturity dates is certificates of deposit. At December 31, 2025, we had $402.8 million in certificates of deposit, of which $369.2 million, or 92%, are scheduled to mature in 2026. The Company’s certificates of deposit decreased to $402.8 million during 2025 as compared to $418.4 million at December 31, 2024.
The ACL as a percentage of total portfolio loans, net of government guarantees was 1.10% at December 31, 2024 compared to 1.02% at December 31, 2023. 39 • The aggregate cash dividends paid by the Company in 2024 rose 1% to $13.8 million from $13.6 million paid in 2023.
The 37 ACL for loans as a percentage of total portfolio loans, net of government guarantees was 1.10% at both December 31, 2025 and December 31, 2024. • The aggregate cash dividends paid by the Company in 2025 rose 5% to $14.5 million from $13.8 million paid in 2024.
The Company received proceeds from the guarantee in the third quarter of 2023 and first quarter of 2024 which were recorded as a gain on sale of OREO. 54 The following summarizes OREO activity for the periods indicated: (In Thousands) 2024 2023 2022 Balance, beginning of the year $— $— $5,638 Transfers from loans — 273 — Proceeds from the sale of other real estate owned (392) (1,079) (5,224) Gain (loss) on sale of other real estate owned, net 392 929 (414) Impairment on other real estate owned — (123) — Balance, end of year — — — Government guarantees — — — Balance, end of year, net of government guarantees $— $— $— The Company did not make any loans to facilitate the sale of OREO in 2024, 2023, or 2022.
The following summarizes OREO activity for the periods indicated: (In Thousands) 2025 2024 2023 Balance, beginning of the year $— $— $— Transfers from loans — — 273 Proceeds from the sale of other real estate owned — (392) (1,079) Gain (loss) on sale of other real estate owned, net — 392 929 Impairment on other real estate owned — — (123) Balance, end of year — — — Government guarantees — — — Balance, end of year, net of government guarantees $— $— $— The Company did not make any loans to facilitate the sale of OREO in 2025, 2024, or 2023.
Purchased Receivables Purchased receivable balances increased at December 31, 2024 to $74.1 million from $36.8 million at December 31, 2023, and year-to-date average purchased receivable balances were $38.7 million and $24.8 million in 2024 and 2023, respectively. Purchased receivable income was $7.1 million and $4.5 million in 2024 and 2023, respectively.
Purchased Receivables Purchased receivable balances increased at December 31, 2025 to $101.6 million from $74.1 million at December 31, 2024, and year-to-date average purchased receivable balances were $101.0 million and $38.7 million in 2025 and 2024, respectively. Purchased receivable income was $25.8 million and $7.1 million in 2025 and 2024, respectively.
The following tables show the allocation of the ACL and the percent of loans in each category to total loans and the ratio of net loan charge-offs to average loans outstanding by loan segment for the years indicated: 2024 % of Loans (1) Net loan charge-offs (recoveries) to average loans (In Thousands) Amount Commercial & industrial loans $5,800 22 % (0.05) % Commercial real estate: Owner occupied properties 2,944 20 % — % Non-owner occupied and multifamily properties 3,967 29 % — % Residential real estate: 1-4 family residential properties secured by first liens 4,364 13 % — % 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 775 2 % (0.05) % 1-4 family residential construction loans 230 2 % — % Other construction, land development and raw land loans 3,589 10 % — % Obligations of states and political subdivisions in the US 106 1 % — % Agricultural production, including commercial fishing 169 2 % 0.04 % Consumer loans 71 — % 0.01 % Other loans 5 — % — % Total $22,020 100 % (0.01) % 1 Represents percentage of this category of loans to total portfolio loans. 55 2023 % of Loans (1) Net loan charge-offs (recoveries) to average loans (In Thousands) Amount Commercial & industrial loans $3,438 24 % (0.03) % Commercial real estate: — Owner occupied properties 2,867 20 % — % Non-owner occupied and multifamily properties 3,294 29 % — % Residential real estate: 1-4 family residential properties secured by first liens 3,470 11 % 0.04 % 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 551 2 % (0.08) % 1-4 family residential construction loans 191 2 % — % Other construction, land development and raw land loans 3,127 8 % — % Obligations of states and political subdivisions in the US 80 2 % — % Agricultural production, including commercial fishing 168 2 % — % Consumer loans 81 — % 0.39 % Other loans 3 — % — % Total $17,270 101 % — % 1 Represents percentage of this category of loans to total portfolio loans.
The following tables show the allocation of the ACL and the percent of loans in each category to total loans and the ratio of net loan charge-offs to average loans outstanding by loan segment for the years indicated: 2025 % of Loans (1) Net loan charge-offs (recoveries) to average loans (In Thousands) Amount Commercial & industrial loans $6,707 21 % 0.37 % Commercial real estate: Owner occupied properties 2,207 19 % (0.01) % Non-owner occupied and multifamily properties 4,440 33 % — % Residential real estate: 1-4 family residential properties secured by first liens 5,712 11 % — % 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 1,041 3 % (0.04) % 1-4 family residential construction loans 324 2 % — % Other construction, land development and raw land loans 2,839 8 % — % Obligations of states and political subdivisions in the US 143 1 % — % Agricultural production, including commercial fishing 202 2 % (0.01) % Consumer loans 114 — % 0.75 % Other loans 8 — % — % Total $23,737 100 % 0.08 % 1 Represents percentage of this category of loans to total portfolio loans. 2024 % of Loans (1) Net loan charge-offs (recoveries) to average loans (In Thousands) Amount Commercial & industrial loans $5,800 24 % (0.05) % Commercial real estate: — Owner occupied properties 2,944 20 % — % Non-owner occupied and multifamily properties 3,967 29 % — % Residential real estate: 1-4 family residential properties secured by first liens 4,364 13 % — % 1-4 family residential properties secured by junior liens and revolving secured by 1-4 family first liens 775 2 % (0.05) % 1-4 family residential construction loans 230 2 % — % Other construction, land development and raw land loans 3,589 10 % — % Obligations of states and political subdivisions in the US 106 1 % — % Agricultural production, including commercial fishing 169 2 % 0.04 % Consumer loans 71 — % 0.01 % Other loans 5 — % — % Total $22,020 103 % (0.01) % 1 Represents percentage of this category of loans to total portfolio loans.
Trends in Miscellaneous Financial Data (1) Years Ended December 31, (In thousands, except per share data and shares outstanding amounts) 2024 2023 2022 2021 2020 2019 Five Year Compound Growth Rate (Unaudited) Net interest income $113,183 $103,256 $95,115 $80,827 $70,665 $64,442 12 % Provision (benefit) for credit losses 3,293 3,842 1,846 (4,099) 2,432 (1,175) NM Other operating income 42,041 26,375 34,077 52,263 63,328 37,346 2 % Compensation expense, RML acquisition payments — — — — — 468 NM Other operating expense 104,937 94,181 88,852 89,196 89,114 76,370 7 % Income before provision for income taxes 46,994 31,608 38,494 47,993 42,447 26,125 12 % Provision for income taxes 10,023 6,214 7,753 10,476 9,559 5,434 13 % Net income $36,971 $25,394 $30,741 $37,517 $32,888 $20,691 12 % Year End Balance Sheet Assets $3,041,869 $2,807,497 $2,674,318 $2,724,719 $2,121,798 $1,643,996 13 % Loans 2,129,263 1,789,497 1,501,785 1,413,886 1,444,050 1,043,371 15 % Deposits 2,680,189 2,485,055 2,387,211 2,421,631 1,824,981 1,372,351 14 % Shareholders' equity 267,116 234,718 218,629 237,817 221,575 207,117 5 % Common shares outstanding 5,518,210 5,513,459 5,700,728 6,014,813 6,251,004 6,558,809 (3) % Average Balance Sheet Assets $2,861,012 $2,690,347 $2,641,008 $2,432,599 $1,936,047 $1,555,707 13 % Earning assets 2,647,615 2,492,240 2,469,383 2,260,778 1,758,839 1,386,557 14 % Loans 1,910,156 1,643,943 1,415,125 1,478,318 1,339,908 1,010,098 14 % Deposits 2,520,449 2,364,245 2,354,881 2,125,080 1,638,216 1,276,407 15 % Shareholders' equity 251,499 227,244 224,773 239,214 211,721 208,602 4 % Basic common shares outstanding 5,502,797 5,601,471 5,765,088 6,180,801 6,354,687 6,708,622 (4) % Diluted common shares outstanding 5,583,983 5,661,460 5,829,412 6,249,313 6,431,367 6,808,209 (4) % Per Common Share Data Basic earnings $6.72 $4.53 $5.33 $6.07 $5.18 $3.08 17 % Diluted earnings $6.62 $4.49 $5.27 $6.00 $5.11 $3.04 17 % Book value per share $48.41 $42.57 $38.35 $39.54 $35.45 $31.58 9 % Tangible book value per share (2) $39.17 $39.68 $35.55 $36.88 $32.88 $29.12 6 % Cash dividends per share $2.46 $2.40 $1.82 $1.50 $1.38 $1.26 14 % 40 Years Ended December 31, (In thousands, except per share data and shares outstanding amounts) 2024 2023 2022 2021 2020 2019 Five Year Compound Growth Rate (Unaudited) Performance Ratios Return on average assets 1.29 % 0.94 % 1.16 % 1.54 % 1.70 % 1.33 % (1) % Return on average equity 14.70 % 11.17 % 13.68 % 15.68 % 15.53 % 9.92 % 8 % Equity/assets 8.78 % 8.36 % 8.18 % 8.73 % 10.44 % 12.60 % (7) % Tangible common equity/tangible assets (3) 7.23 % 7.84 % 7.62 % 8.19 % 9.76 % 11.73 % (9) % Net interest margin 4.28 % 4.14 % 3.85 % 3.58 % 4.02 % 4.65 % (2) % Net interest margin (tax equivalent) (4) 4.33 % 4.21 % 3.89 % 3.60 % 4.05 % 4.70 % (2) % Non-interest income/total revenue 27.08 % 20.35 % 26.38 % 39.27 % 47.26 % 36.69 % (6) % Efficiency ratio (5) 67.60 % 72.64 % 68.76 % 66.99 % 66.47 % 75.43 % (2) % Dividend payout ratio 36.63 % 53.59 % 34.17 % 25.02 % 26.66 % 40.79 % (2) % Asset Quality Nonperforming loans, net of government guarantees $7,533 $5,002 $6,430 $10,672 $10,048 $13,951 (12) % Nonperforming assets, net of government guarantees 11,598 5,810 6,430 15,031 16,289 19,946 (10) % Nonperforming loans, net of government guarantees/portfolio loans 0.35 % 0.28 % 0.43 % 0.75 % 0.70 % 1.34 % (24) % Net charge-offs (recoveries)/average loans (0.01) % — % (0.08) % 0.07 % 0.03 % (0.07) % (32) % Allowance for credit losses/portfolio loans 1.03 % 0.97 % 0.92 % 0.83 % 1.46 % 1.83 % (11) % Nonperforming assets, net of government guarantees/assets 0.38 % 0.21 % 0.24 % 0.55 % 0.77 % 1.21 % (21) % Other Data Effective tax rate 21 % 20 % 20 % 22 % 23 % 21 % — % Number of banking offices (6) 20 20 19 18 17 16 5 % Community Banking employees (FTE) 329 325 329 315 305 304 2 % Home Mortgage Lending employees (FTE) 142 140 133 130 126 120 3 % Specialty Finance employees (FTE) 32 7 7 6 7 7 36 % Total number of employees (FTE) 503 472 469 451 438 431 3 % 1 These unaudited schedules provide selected financial information concerning the Company that should be read in conjunction with Part II Item 7.
The Company continued to maintain strong regulatory capital ratios with Tier 1 Capital to Risk Adjusted Assets of 10.67% at December 31, 2025. 38 Trends in Miscellaneous Financial Data (1) Years Ended December 31, (In thousands, except per share data and shares outstanding amounts) 2025 2024 2023 2022 2021 2020 Five Year Compound Growth Rate (Unaudited) Net interest income $135,609 $113,183 $103,256 $95,115 $80,827 $70,665 14 % Provision (benefit) for credit losses 3,910 3,293 3,842 1,846 (4,099) 2,432 10 % Other operating income 77,203 42,041 26,375 34,077 52,263 63,328 4 % Compensation expense, SCF acquisition payments 2,333 — — — — — NM Other operating expense 122,050 104,937 94,181 88,852 89,196 89,114 6 % Income before provision for income taxes 84,519 46,994 31,608 38,494 47,993 42,447 15 % Provision for income taxes 19,911 10,023 6,214 7,753 10,476 9,559 16 % Net income $64,608 $36,971 $25,394 $30,741 $37,517 $32,888 14 % Year End Balance Sheet Assets $3,290,273 $3,041,869 $2,807,497 $2,674,318 $2,724,719 $2,121,798 9 % Loans 2,295,499 2,129,263 1,789,497 1,501,785 1,413,886 1,444,050 10 % Deposits 2,813,029 2,680,189 2,485,055 2,387,211 2,421,631 1,824,981 9 % Shareholders' equity 326,544 267,116 234,718 218,629 237,817 221,575 8 % Common shares outstanding 22,111,637 22,072,840 22,053,836 22,802,912 24,059,252 25,004,016 (2) % Average Balance Sheet Assets $3,200,933 $2,861,012 $2,690,347 $2,641,008 $2,432,599 $1,936,047 11 % Earning assets 2,891,393 2,647,615 2,492,240 2,469,383 2,260,778 1,758,839 10 % Loans 2,205,270 1,910,156 1,643,943 1,415,125 1,478,318 1,339,908 10 % Deposits 2,784,343 2,520,449 2,364,245 2,354,881 2,125,080 1,638,216 11 % Shareholders' equity 297,479 251,499 227,244 224,773 239,214 211,721 7 % Basic common shares outstanding 22,088,891 22,011,188 22,405,884 23,060,352 24,723,204 25,418,748 (3) % Diluted common shares outstanding 22,485,351 22,335,932 22,645,840 23,313,648 24,997,252 25,725,468 (3) % Per Common Share Data Basic earnings $2.92 $1.68 $1.13 $1.33 $1.52 $1.30 18 % Diluted earnings $2.87 $1.66 $1.12 $1.32 $1.50 $1.28 18 % Book value per share $14.77 $12.10 $10.64 $9.59 $9.89 $8.86 11 % Tangible book value per share (2) $12.47 $9.79 $9.92 $8.89 $9.22 $8.22 9 % Cash dividends per share $0.64 $0.62 $0.60 $0.46 $0.38 $0.35 13 % 39 Years Ended December 31, (In thousands, except per share data and shares outstanding amounts) 2025 2024 2023 2022 2021 2020 Five Year Compound Growth Rate (Unaudited) Performance Ratios Return on average assets 2.02 % 1.29 % 0.94 % 1.16 % 1.54 % 1.70 % 4 % Return on average equity 21.72 % 14.70 % 11.17 % 13.68 % 15.68 % 15.53 % 7 % Equity/assets 9.92 % 8.78 % 8.36 % 8.18 % 8.73 % 10.44 % (1) % Tangible common equity/tangible assets (3) 8.51 % 7.23 % 7.84 % 7.62 % 8.19 % 9.76 % (3) % Net interest margin 4.69 % 4.28 % 4.14 % 3.85 % 3.58 % 4.02 % 3 % Net interest margin (tax equivalent) (4) 4.74 % 4.33 % 4.21 % 3.89 % 3.60 % 4.05 % 3 % Non-interest income/total revenue 36.28 % 27.08 % 26.38 % 26.38 % 39.27 % 47.26 % (5) % Adjusted efficiency ratio (5) 58.45 % 67.60 % 72.64 % 68.76 % 66.99 % 66.47 % (3) % Dividend payout ratio 21.89 % 36.63 % 53.59 % 34.17 % 25.02 % 26.66 % (4) % Asset Quality Nonperforming loans, net of government guarantees $11,329 $7,533 $5,002 $6,430 $10,672 $10,048 2 % Nonperforming assets, net of government guarantees 11,396 11,598 5,810 6,430 15,031 16,289 (7) % Nonperforming loans, net of government guarantees/portfolio loans 0.49 % 0.35 % 0.28 % 0.43 % 0.75 % 0.70 % (7) % Net charge-offs (recoveries)/average loans 0.08 % (0.01) % — % (0.08) % 0.07 % 0.03 % 22 % Allowance for credit losses/portfolio loans 1.03 % 1.03 % 0.97 % 0.92 % 0.83 % 1.46 % (7) % Nonperforming assets, net of government guarantees/assets 0.35 % 0.38 % 0.21 % 0.24 % 0.55 % 0.77 % (15) % Other Data Effective tax rate 24 % 21 % 20 % 20 % 22 % 23 % 1 % Number of banking offices (6) 20 20 20 19 18 17 3 % Community Banking employees (FTE) 332 329 325 329 315 305 2 % Home Mortgage Lending employees (FTE) 154 142 140 133 130 126 4 % Specialty Finance employees (FTE) 30 32 7 7 6 7 34 % Total number of employees (FTE) 516 503 472 469 451 438 3 % 1 These unaudited schedules provide selected financial information concerning the Company that should be read in conjunction with Part II Item 7.
Mortgage banking income consists of gross income from the origination and sale of mortgages as well as mortgage loan servicing fees and is the largest component of other operating income at 57% of total other operating income in 2024 and 48% in 2023.
Mortgage banking income consists of gross income from the origination and sale of mortgages as well as mortgage loan servicing fees and comprised 33% of total other operating income in 2025 and 57% in 2024.
During 2024 and 2023, net interest margins were 4.28% and 4.14%, respectively.
During 2025 and 2024, net interest margins were 4.69% and 4.28%, respectively.
Interest income on loans increased $26.1 million in 2024 as compared to 2023 due to an increase in interest rates and higher net average interest-earning asset balances. Interest expense increased $12.0 million in 2024 as compared to the prior year as a result of higher interest rates and higher average interest-bearing deposit balances.
Interest income on loans increased $25.4 million in 2025 as compared to 2024 due to an increase in interest rates and higher average balances. Interest expense increased $2.0 million in 2025 as compared to the prior year as a result of higher interest rates and higher average interest-bearing deposit and borrowing balances.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+2 added−2 removed15 unchanged
Biggest changeEstimated maturity or repricing at December 31, 2024 (In Thousands) Within 1 year 1-5 years >5 years Total Interest -Earning Assets: Interest bearing deposits in other banks $20,635 $— $— $20,635 Investments securities and FHLB Stock 166,940 325,639 36,838 529,417 Loans 906,342 973,225 251,367 2,130,934 Loans held for sale 59,957 — — 59,957 Total interest-earning assets $1,153,874 $1,298,864 $288,205 $2,740,943 Percent of total interest-earning assets 42.10 % 47.39 % 10.51 % 100.00 % Interest-Bearing Liabilities: Interest-bearing demand accounts $1,108,404 $— $— $1,108,404 Money market accounts 196,290 — — 196,290 Savings accounts 250,900 — — 250,900 Certificates of deposit 372,338 44,465 1,567 418,370 Securities sold under repurchase agreements 9,800 — — 9,800 Borrowings 441 1,874 10,930 13,245 Junior subordinated debentures — — 10,310 10,310 Total interest-bearing liabilities $1,938,173 $46,339 $22,807 $2,007,319 Percent of total interest-bearing liabilities 96.56 % 2.31 % 1.14 % 100.01 % Interest sensitivity gap ($784,299) $1,252,525 $265,398 $733,624 Cumulative interest sensitivity gap ($784,299) $468,226 $733,624 Cumulative interest sensitivity gap as a percentage of total interest-earning assets (28.6) % 17.1 % 26.8 % As stated previously, certain shortcomings, including those described below, are inherent in the method of analysis presented in the foregoing table.
Biggest changeEstimated maturity or repricing at December 31, 2025 (In Thousands) Within 1 year 1-5 years >5 years Total Interest -Earning Assets: Interest bearing deposits in other banks $109,864 $— $— $109,864 Investments securities and FHLB Stock 247,047 197,757 17,763 462,567 Loans 976,004 1,112,059 205,632 2,293,695 Loans held for sale 100,323 — — 100,323 Total interest-earning assets $1,433,238 $1,309,816 $223,395 $2,966,449 Percent of total interest-earning assets 48.32 % 44.15 % 7.53 % 100.00 % Interest-Bearing Liabilities: Interest-bearing demand accounts $1,242,546 $— $— $1,242,546 Money market accounts 195,793 — — 195,793 Savings accounts 250,006 — — 250,006 Certificates of deposit 370,490 30,702 1,567 402,759 Securities sold under repurchase agreements — — — — Borrowings 453 1,919 10,433 12,805 Subordinated debentures — — 68,924 68,924 Total interest-bearing liabilities $2,059,288 $32,621 $80,924 $2,172,833 Percent of total interest-bearing liabilities 94.78 % 1.50 % 3.72 % 100.00 % Interest sensitivity gap ($626,050) $1,277,195 $142,471 $793,616 Cumulative interest sensitivity gap ($626,050) $651,145 $793,616 Cumulative interest sensitivity gap as a percentage of total interest-earning assets (21.1) % 22.0 % 26.8 % As stated previously, certain shortcomings, including those described below, are inherent in the method of analysis presented in the foregoing table.
Although analysis of interest rate gap (the difference between the repricing of interest-earning assets and interest-bearing liabilities during a given period of time) is one standard tool for the measurement of exposure to interest rate risk, we believe that because interest rate gap analysis does not address all factors that can affect earnings performance it should not be 65 used as the primary indicator of exposure to interest rate risk and the related volatility of net interest income in a changing interest rate environment.
Although analysis of interest rate gap (the difference between the repricing of interest-earning assets and interest-bearing liabilities during a given period of time) is one standard tool for the measurement of exposure to interest rate risk, we believe that because interest rate gap analysis does not address all factors that can affect earnings performance it should not be used as the primary indicator of exposure to interest rate risk and the related volatility of net interest income in a changing interest rate environment.
The following table sets forth the estimated maturity or repricing, and the resulting interest rate gap, of our interest-earning assets (which exclude nonaccrual loans and net unearned loan fees) and interest-bearing liabilities at December 31, 2024. The amounts shown below could be significantly affected by external factors such as changes in prepayment assumptions, early withdrawals of deposits, and competition.
The following table sets forth the estimated maturity or repricing, and the resulting interest rate gap, of our interest-earning assets (which exclude nonaccrual loans and net unearned loan fees) and interest-bearing liabilities at December 31, 2025. The amounts shown below could be significantly affected by external factors such as changes in prepayment assumptions, early withdrawals of deposits, and competition.
Market risks such as foreign currency exchange risk and commodity price risk do not arise in the normal course of the Company's business, except for our limited foreign currency exposure in Canada and the United Kingdom through the recent acquisition of SCF.
Market risks such as foreign currency exchange risk and commodity price risk do not arise in the normal course of the Company's business, except for our limited foreign currency exposure in Canada and the United Kingdom through the acquisition of SCF in 2024.
The Company uses derivatives in the Home Mortgage Lending segment, including commitments to originate residential mortgage loans at fixed prices, and it enters into forward delivery contracts to sell mortgage-backed securities to broker/dealers at specific prices and dates in order to hedge the interest rate risk in its residential mortgage loan commitments.
The Company uses derivatives in the Home Mortgage Lending segment, including commitments to originate residential mortgage loans at fixed prices, and it enters into forward delivery contracts to sell mortgage-backed securities to broker/dealers at specific prices and dates in order to hedge the interest rate risk in its residential mortgage loan commitments. 66 The Company does not use derivatives outside of these activities in the Home Mortgage Lending segment to manage our interest rate risk exposures.
Moreover, the ability of many borrowers to service their adjustable-rate debt may decrease in the event of an increase in market interest rates. 66 While the analysis above sets forth the estimated maturity or repricing and the resulting interest rate gap of our interest-earning assets and interest-bearing liabilities, the following tables show the estimated impact on net interest income and net income at one and two year time horizons with instantaneous parallel rate shocks of up 100, 200, 300 and 400 basis points and down 100, 200, 300 and 400 basis point.
While the analysis above sets forth the estimated maturity or repricing and the resulting interest rate gap of our interest-earning assets and interest-bearing liabilities, the following tables show the estimated impact on net interest income and net income at one and two year time horizons with instantaneous parallel rate shocks of up 100, 200, 300 and 400 basis points and down 100, 200, 300 and 400 basis point.
The Company does not use derivatives outside of these activities in the Home Mortgage Lending segment to manage our interest rate risk exposures. However, the Company does enter into commercial loan interest rate swap agreements in its Community Banking segment in order to provide commercial loan customers the ability to convert from variable to fixed interest rates.
However, the Company does enter into commercial loan interest rate swap agreements in its Community Banking segment in order to provide commercial loan customers the ability to convert from variable to fixed interest rates.
The trends in the estimated impact on net income under the stated interest rate scenarios differ from the table above primarily due to the inclusion of the estimated impact of changes in other operating income and expense related to mortgage banking activities: 1st Year Change in net income from base scenario Percentage change 2nd Year Change in net income from base scenario Percentage change (In Thousands) Scenario: Up 400 basis points ($409) (0.95) % $18,564 34.53 % Up 300 basis points ($407) (0.94) % $13,648 25.39 % Up 200 basis points ($393) (0.91) % $8,843 16.45 % Up 100 basis points ($329) (0.76) % $4,212 7.83 % Up 50 basis points ($170) (0.39) % $2,126 3.96 % Down 50 basis points $375 0.87 % ($2,013) (3.75) % Down 100 basis points $1,290 2.99 % ($3,488) (6.49) % Down 200 basis points $2,661 6.16 % ($6,896) (12.83) % Down 300 basis points $4,403 10.19 % ($9,906) (18.43) % Down 400 basis points $6,628 15.34 % ($12,157) (22.61) % 67
The trends in the estimated impact on net income under the stated interest rate scenarios differ from the table above primarily due to the inclusion of the estimated impact of changes in other operating income and expense related to mortgage banking activities: 1st Year Change in net income from base scenario Percentage change 2nd Year Change in net income from base scenario Percentage change (In Thousands) Scenario: Up 400 basis points $5,144 11.73 % $25,079 50.33 % Up 300 basis points $3,573 8.15 % $18,230 36.59 % Up 200 basis points $2,214 5.05 % $11,742 23.57 % Up 100 basis points $1,003 2.29 % $5,689 11.42 % Up 50 basis points $466 1.06 % $2,841 5.70 % Down 50 basis points ($261) (0.60) % ($2,702) (5.42) % Down 100 basis points $181 0.41 % ($4,642) (9.32) % Down 200 basis points $683 1.56 % ($8,889) (17.84) % Down 300 basis points $1,489 3.40 % ($12,524) (25.13) % Down 400 basis points $2,882 6.57 % ($14,456) (29.01) % 68
Removed
Due to the various assumptions used for this modeling and potential balance sheet strategies management may implement to mitigate interest rate risk, no assurance can be given that projections will reflect actual results.
Added
Moreover, the ability of many borrowers to service their adjustable-rate debt may decrease in the event of an increase in market interest rates.
Removed
The following table shows the estimated impact on net interest income under the stated interest rate scenarios: 1st Year Change in net interest income from base scenario Percentage change 2nd Year Change in net interest income from base scenario Percentage change (In Thousands) Scenario: Up 400 basis points $6,210 4.77 % $30,227 21.04 % Up 300 basis points $4,531 3.48 % $22,322 15.54 % Up 200 basis points $2,867 2.20 % $14,558 10.13 % Up 100 basis points $1,265 0.97 % $7,014 4.88 % Up 50 basis points $659 0.51 % $3,566 2.74 % Down 50 basis points ($837) (0.64) % ($3,861) (2.96) % Down 100 basis points ($1,731) (1.33) % ($7,779) (5.41) % Down 200 basis points ($3,360) (2.58) % ($15,457) (10.76) % Down 300 basis points ($4,518) (3.47) % ($22,630) (15.75) % Down 400 basis points ($5,066) (3.89) % ($28,843) (20.08) % The following table shows the estimated impact on net income under the stated interest rate scenarios.
Added
Due to the various assumptions used for this modeling and potential balance sheet strategies management may implement to mitigate interest rate risk, no assurance can be given that projections will reflect actual results. 67 The following table shows the estimated impact on net interest income under the stated interest rate scenarios: 1st Year Change in net interest income from base scenario Percentage change 2nd Year Change in net interest income from base scenario Percentage change (In Thousands) Scenario: Up 400 basis points $13,239 9.31 % $38,473 25.69 % Up 300 basis points $9,569 6.73 % $28,121 18.78 % Up 200 basis points $6,167 4.34 % $18,227 12.17 % Up 100 basis points $2,951 2.07 % $8,883 5.93 % Up 50 basis points $1,464 1.03 % $4,471 2.98 % Down 50 basis points ($1,642) (1.15) % ($4,732) (3.16) % Down 100 basis points ($3,135) (2.20) % ($9,240) (6.17) % Down 200 basis points ($5,864) (4.12) % ($17,979) (12.00) % Down 300 basis points ($8,206) (5.77) % ($25,944) (17.32) % Down 400 basis points ($9,808) (6.90) % ($31,754) (21.20) % The following table shows the estimated impact on net income under the stated interest rate scenarios.

Other NRIM 10-K year-over-year comparisons