FNRN

FIRST NORTHERN COMMUNITY BANCORP

NASDAQ · FINANCIALS · SAVINGS INSTITUTION, FEDERALLY CHARTERED

17.11

+0.13 +0.77%

USD · close Oct 30

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MKT CAP $280.5MP/E 12.8DIV YIELD —FCF YIELD 2.26%REV TTM —NET INCOME $22.6M +10.5%NET CASH $113.4M52W 12.43 – 18.80SEC XBRL · TTM TO Invalid Date

How FNRN rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

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words, now 12,297

New in FY2025

Changes in U.S. and Foreign Government Policies, Including the Imposition of or Further Increases in Tariffs and Changes to Existing Trade Agreements, Could Have a Material Adverse Effect on the Bank ’ s Customers, Which, in Turn, Could Adversely Affect Our Business, Financial Condition and Results of Operations In February 2025, the Trump Administration announced that it would be imposing increases in tariffs on goods imported to the U.S. from Canada, Mexico, and China, and, in April 2025, the Administration announced the imposition of increased tariffs on goods imported to the U.S. from other countries.
As a consequence, other countries, in retaliation to the U.S.’s tariff measures, announced the imposition of increased levels of tariffs on goods exported to such countries by companies in the U.S.
The Trump Administration has announced agreements in principle regarding tariffs with certain significant trading partners of the United States, including (among others) the European Union, the United Kingdom, Japan and South Korea.
It remains uncertain whether such agreements in principle will lead to definitive agreements with such trading partners and, if so, on what terms and whether agreements with other trading partners will eventually be consummated.
More recently, the U.S. government has introduced new tariffs and tariff-related measures and has indicated that other potential tariff measures and modifications to existing tariffs continue to be under consideration.
President Trump imposed many of these tariffs by invoking authority under the International Emergency Economic Powers Act (IEEPA).
Supreme Court ruled that President Trump could not invoke the IEEPA to unilaterally set tariffs on imports, thereby invalidating those tariffs implemented using IEEPA.
The Trump Administration responded by announcing the imposition of new tariffs under alternative legal authorities to replace the IEEPA tariffs, including an executive order imposing a global surcharge on most imports (initially 10%, with an announcement on February 21, 2026, that the tariff rate would be 15%), effective for 150 days.
The tariff environment continues to remain highly dynamic, and the specific tariffs applicable to goods imported into the U.S. continue to evolve, as do import tariffs charged by other countries.
These tariffs could be of particular concern to U.S. companies operating in the agricultural sector who export agricultural goods to other countries.
The Company’s customers include a number of agricultural businesses, which could be negatively affected.
As a result of these changes to U.S. and foreign government trade policies, there may be changes to existing trade agreements, greater restrictions on free trade generally, the imposition of or significant further increases in tariffs on goods imported into the U.S., and adverse responses by foreign governments to U.S. trade policies, among other possible changes.
The extent and duration of any tariffs, and the resulting impact on economic conditions generally and on our customers’ businesses in particular are uncertain and depend on various factors, such as negotiations between the U.S. and other countries, the responses of such countries, and exemptions or exclusions that may be granted.
A significant trade disruption or the establishment or further increase of any tariffs, trade protection measures or restrictions could result in lost sales, adversely impacting our banking customers and their businesses, including our agricultural business customers.
In addition, international trade disputes, including those related to tariffs, could result in inflationary pressures and/or adversely impact global supply chains, which could increase the costs of doing business for our banking customers.
Changes in U.S. social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the countries where our banking customers currently sell products, including agricultural products, and any resulting negative sentiments towards the U.S. and U.S. businesses as a result of such changes, could also have a material adverse effect on our banking customers’ business, financial condition, results of operations and cash flows.
If these events negatively affect our banking clients, or general economic conditions nationally, in California, or in the markets we serve, our business, financial condition and results of operations could be adversely affected.
Negative Developments in the Banking Industry, and any Legislative and/or Bank Regulatory Actions that may Result, Could Adversely Affect our Business Operations, Results of Operations and Financial Condition.
While the Company has taken actions which aim to maintain adequate and diversified sources of funding and management believes that its liquidity measures are reasonable in light of the nature of the Bank’s customer base, there can be no assurance that such actions will be sufficient in the event of a sudden liquidity crisis.
These bank failures may also result in potentially adverse changes to laws or regulations governing banks and bank holding companies, enhanced regulatory supervision and examination policies and priorities, and/or the imposition of restrictions through regulatory supervisory or enforcement activities, including higher capital requirements and/or an increase in the Bank’s deposit insurance assessments.
The FDIC has proposed that Congress consider, and legislation has been introduced in Congress proposing, various changes in the FDIC insurance program, including possible increases in the deposit insurance limit for certain types of accounts, such as business payment accounts.
The FRB also pursued a highly accommodative monetary policy aimed at keeping interest rates at historically low levels, In January 2022, due to elevated levels of inflation and corresponding pressure to raise interest rates, the FRB began slowing the pace of its bond purchasing and increasing the target range for the federal funds rate over time, before beginning to reduce interest rates in 2024, which reductions continued in 2025.
Despite these rate cuts, the FRB has signaled caution in easing monetary policy.
At its January 2026 meeting, the FRB, citing continued elevated uncertainty about the economic outlook, low job gains, and inflation that remains somewhat elevated, determined to maintain the target range for the federal funds rate at 3‑1/2 to 3‑3/4 percent.
Monetary policy has contributed to and may continue to result in elevated market interest rates and a flat and/or inverted yield curve.
Changes to monetary policy may adversely impact U.S. economic activity and have adverse consequences on our customers’ and our earnings and operations.
During his second term, President Trump has regularly pushed for the FRB to cut short-term interest rates, threatened to fire the FRB Chairman, and taken steps to remove another member of the FRB’s governing board, and, in January 2026, the U.S. attorney’s office in the District of Columbia opened a criminal investigation into the FRB Chairman over the central bank’s renovation of its Washington headquarters.
These actions have the potential to threaten the independence of the FRB, and the outcome of these actions, and their impact on interest rates, financial markets, borrowing costs and the U.S. economy in general, cannot be predicted at this time.
A prolonged federal government shutdown, as well as broader issues surrounding the federal budgeting process and governance, may also contribute to market volatility and disruptions and recessionary risk.
As noted previously, the Trump Administration recently imposed increased tariffs on goods imported to the U.S. from other countries.
More recently, the U.S. government has introduced agreements in principle regarding tariffs with certain trading partners of the United States, new tariffs and tariff-related measures and has indicated that other potential tariff measures and modifications to existing tariffs continue to be under consideration.
See “Changes in U.S. and Foreign Government Policies, Including the Imposition of or Further Increases in Tariffs and Changes to Existing Trade Agreements, Could Have a Material Adverse Effect on the Bank’s Customers, Which, in Turn, Could Adversely Affect Our Business, Financial Condition and Results of Operations,” above in these “Risk Factors” in this Annual Report on Form 10-K.
International trade disputes, including those related to tariffs, could result in inflationary pressures and/or adversely impact global supply chains, which could increase the costs of doing business for our banking customers.
Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange, and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets, which could have resulting material adverse effects on general economic conditions nationally, in California, or in our local markets.
Some economists have predicted that the Administration’s steep new tariffs could curtail growth and result in price increases for American consumers, ultimately increasing the likelihood of a U.S. recession.
Additionally, financial markets may be adversely affected by the current or anticipated impact of military conflict, including the recent military actions in Iran and the Middle East, escalating military tension between Russia and Ukraine, terrorism and other geopolitical events.
Any of these developments could adversely affect our business, financial condition and results of operations.
In May 2025, Moody’s lowered the U.S. government’s long-term issuer and senior unsecured ratings from “Aaa” to “Aa1”.
This downgrade means that all three major credit rating agencies have downgraded the U.S. credit rating below their top rating.
A prolonged federal government shutdown, as well as broader issues surrounding the federal budgeting process and governance, may further contribute to the possibility of a downgrade of the U.S. sovereign credit rating.

and 39 more.

Gone since FY2024

Recent Negative Developments in the Banking Industry, and any Legislative and/or Bank Regulatory Actions that may Result, Could Adversely Affect our Business Operations, Results of Operations and Financial Condition.
While the Company has taken actions to maintain adequate and diversified sources of funding and management believes that its liquidity measures are reasonable in light of the nature of the Bank’s customer base, there can be no assurance that such actions will be sufficient in the event of a sudden liquidity crisis.
These recent events may also result in potentially adverse changes to laws or regulations governing banks and bank holding companies, enhanced regulatory supervision and examination policies and priorities, and/or the imposition of restrictions through regulatory supervisory or enforcement activities, including higher capital requirements and/or an increase in the Bank’s deposit insurance assessments.
The FDIC has proposed that Congress consider various changes in the FDIC insurance program, including possible increases in the deposit insurance limit for certain types of accounts, such as business payment accounts.
The FRB also pursued a highly accommodative monetary policy aimed at keeping interest rates at historically low levels.
The more recent tightening of the Federal Reserve’s monetary policies, including repeated and aggressive increases in target range for the federal funds rate as well as the conclusion of the Federal Reserve’s tapering of asset purchases, together with ongoing economic and geopolitical instability, increases the risk of an economic recession.
The Federal Reserve has signaled caution in easing monetary policy citing strong robust GDP growth, and persistent inflation as reasons to delay rate cuts.
The long-term impact of this situation, including the impact to the Bank's investment securities portfolio and other assets, cannot be predicted.
For additional information, see “The Bank’s Dependence on Real Estate Lending Increases Our Risk of Losses”, below Although the Bank manages lending risks through its underwriting and credit administration policies, no assurance can be given that such risks will not materialize, in which event, the Company’s financial condition, results of operations, cash flows, and business prospects could be materially adversely affected.
Increases in the Allowance for Credit Losses Would Adversely Affect the Bank’s Financial Condition and Results of Operations The Bank’s allowance for credit losses on loans was approximately $15.9 million, or 1.49% of total loans, at December 31, 2024, compared to $16.6 million, or 1.55% of total loans, at December 31, 2023, and 143.5% of total non-performing loans net of guaranteed portions at December 31, 2024, compared to 199.1% of total non-performing loans, net of guaranteed portions at December 31, 2023.
Reversal of provision for credit losses totaled $0.3 million for the year ended December 31, 2024, and provision for credit losses totaled $1.1 million for the year ended December 31, 2023 .
The reversal of provision for credit losses in 2024 was primarily due to decreases in loans outstanding and unfunded commitments.
At December 31, 2024, real estate mortgage (excluding loans held-for-sale) and construction loans (residential and other) comprised approximately 90% and 3%, respectively, of the total loans in the Bank’s portfolio.
At December 31, 2024, all of the Bank’s real estate mortgage and construction loans and approximately 1% of its commercial loans were secured fully or in part by deeds of trust on underlying real estate.
Real estate valuations are influenced by demand, and demand is driven by economic factors such as employment rates and interest rates, which have been, and may continue to be, affected by the pandemic.
Continued volatility in fuel prices and energy costs and drought conditions in California could also adversely affect businesses in several of these industries.
In February 2025, the new Trump Administration announced that it would be imposing increases in tariffs on goods imported to the U.S. from Canada, Mexico, and China and has also indicated that tariffs may be imposed at increased levels on imports to the U.S. from other countries.
If other countries, in retaliation to the U.S.’s tariff measures, were to impose increased levels of tariffs on goods exported to such countries by companies in the U.S. such tariff increases may negatively impact companies in the U.S. whose business involves exports to other countries.
This could be of particular concern to U.S. companies operating in the agricultural sector who export to other countries.
The Company’s customers included a number of agricultural business, which could be negatively affected.
Preliminary indications have been that the new Trump Administration tariff increases to Canada and Mexico may be delayed or decreased if such countries adopt various policies urged by the U.S., such as enhanced border security and control measures.
The outcome of this process cannot be predicted with any certainty at this time.
The fire damage caused resulted in adverse economic impacts to those affected markets and beyond and on the Bank's customers.
For additional information, see "Our Operations, Business and Customers Could be Materially Adversely Affected by the Physical Effects of Climate Change, as well as Governmental and Societal Responses to Climate Change," The long-term impact of these developments on the markets we serve cannot be predicted at this time.
Several of California’s Largest Home Insurance Providers Have Recently Paused or Severely Limited Their Issuance of New Policies, or Their Renewal of Existing Policies, in the State, Which Could Increase the Bank’s Risk of Loss in its Loan Portfolio At December 31, 2024, loans secured by real estate comprised approximately 87% of the total loans in the Bank’s portfolio.
At December 31, 2024, all of the Bank’s real estate mortgage and construction loans were secured fully or in part by deeds of trust on underlying real estate.
The recent catastrophic fires in Southern California, with preliminary estimates of resulting property damage and other claims exceeding $30 billion, are expected to further exacerbate these challenges.
There can be no assurance that these regulatory actions, or other proposed legislation, will increase insurance availability or stabilize and strengthen California’s insurance market. particularly in light of the recent catastrophic fires in Southern California.
However, this could change at any time, particularly since GSE reform was a priority during the first Trump Administration.
GSE reform could again become a subject under active consideration and if adopted, could well have a substantial impact on the mortgage market and could reduce our income from mortgage originations by increasing mortgage costs or lowering originations.
The target range remained unchanged through much of 2024 until the FOMC decreased the rate 100 basis points during the last four months of the year.
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 will further decrease the target range for the federal funds rate to attain a monetary policy sufficiently restrictive to return inflation to more normalized levels, further reduce the federal funds rate or leave the rate at its current elevated level for a lengthy period of time.
As noted previously, the new Trump Administration has taken steps to increase tariffs on goods imported to the U.S. from certain countries.
Retaliation by such countries through the imposition of higher tariffs on exports from the U.S. appears to be a possibility.
The imposition of increased tariffs on imports and exports is believed by some economists to entail the possibility of increased inflationary pressures on the U.S. economy.
The impact of these developments on the business of our clients and on our business cannot be predicted with certainty but could present challenges in 2025 and beyond.
The FRB initiated a series of significant interest rate increases in response to the recent economic developments.
For additional information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Net Interest Income" below in this Annual Report on Form 10-K.
The impact of these developments cannot be predicted with certainty, but they could have potentially adverse impacts on our customers and on our business, results of operations and financial condition.

and 9 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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