Financial Performance - The company delivered over 14.4 million patient visits in 2025, generating system-wide sales of approximately $532.4 million, compared to $530.3 million in 2024[21]. - The company has increased annual system-wide sales from $22.3 million in 2012 to $532.4 million in 2025, while expanding the number of clinics from 33 to 960[45]. - System-wide same-store sales for 2025 increased by $2.1 million, remaining flat on a percentage basis, reflecting the resilience of the business model[57]. - The company experienced flat comparable sales for the full year 2025, indicating potential challenges in maintaining growth[112]. - The company experienced net losses in both 2023 and 2024, despite achieving profitability from 2018 through 2022 and again in 2025[139]. Clinic Operations and Expansion - As of December 31, 2025, the company operated 960 clinics, with an additional 82 franchise licenses sold but not yet developed, and 57 letters of intent for future clinic licenses[22]. - The company completed 41 clinic divestitures in 2025, marking a significant step towards transitioning to a pure-play franchisor model[26]. - The company has granted franchises for an additional 82 clinics and executed letters of intent for 57 future clinic licenses, indicating ongoing expansion efforts[63]. - The company operates over 960 clinics across 43 states, making it the largest chiropractic franchisor in the U.S., with a brand size approximately six times larger than the next largest chain as of December 2025[47]. - The company refranchised 31 clinics in Arizona and New Mexico for $8.3 million in cash, with an agreement to open an additional 10 clinics in the same region[210]. Patient Engagement and Market Position - The company attracted an average of 827 new patients per clinic in 2025, significantly higher than the industry average of 364 new patients[39]. - According to a patient survey, 36% of new patients in 2024 had never tried chiropractic care before visiting the company, up from 16% in 2013[29]. - The highest-performing clinic in the system saw monthly sales increase from approximately $45 thousand in January 2012 to approximately $165 thousand in December 2025, indicating significant growth potential[46]. - The chiropractic services market in the U.S. is valued at approximately $21.9 billion annually, with a projected 10% growth in chiropractor employment from 2023 to 2033[34]. - There is a growing interest among Americans in seeking effective, affordable natural solutions for general wellness, which presents an opportunity for the company to accelerate the growth of its network[218]. Financial Strategy and Royalties - The company collects a 7.0% royalty on gross sales from franchised clinics and a national marketing fee of 2.0% of gross sales[22]. - The company is focused on increasing royalty income through the acceleration of clinic openings and refranchising remaining company-owned clinics[59]. - The company relies on franchise fees and royalties as it executes its refranchising strategy, which may lead to decreased total revenue as company-owned clinics are sold[138]. - The company plans to generate significant proceeds from refranchising to create capital allocation opportunities, including reinvestment in the brand and potential mergers or acquisitions[215]. Regulatory and Compliance Issues - The regulatory environment is becoming more complex, with new privacy laws requiring additional investment in compliance programs[68]. - The company is subject to various federal regulations, including the Fair Labor Standards Act, which may increase labor costs due to minimum wage increases effective January 1, 2026[84]. - The company believes it is in substantial compliance with applicable laws regarding the corporate practice of chiropractic, despite ongoing scrutiny in several states[80]. - The company has retained legal counsel in response to investigations by state boards regarding its business model, with some investigations being closed without findings of violation[75]. - The company is subject to extensive federal, state, and local laws, including those governing franchisor-franchisee relationships and data privacy, which could lead to significant compliance costs[153]. Cybersecurity and Data Privacy - The company experienced a data breach in November 2022, affecting a limited number of individuals, but it was determined that the breach did not result in the release of sensitive personal information[70]. - The company has a robust privacy compliance program and implemented security training systems to enhance cybersecurity awareness among employees[190]. - The company is committed to continuous monitoring and updating of cybersecurity measures in alignment with ISO 27001 standards[191]. - The Cybersecurity Subcommittee of the Board of Directors oversees cybersecurity efforts, meeting quarterly to discuss strategies and incidents[183]. - Compliance with evolving privacy and security laws may result in increased costs and operational constraints[165]. Workforce and Recruitment - The company emphasizes the importance of attracting and retaining a diverse and engaged workforce to support its ongoing success[90]. - The company continues to enhance its recruitment strategies and strengthen relationships with chiropractic colleges to attract qualified candidates[93]. - The nationwide labor shortage has negatively impacted the company's ability to recruit qualified chiropractors, leading to reduced net revenues[108]. - The company is committed to providing market competitive compensation and benefits, including comprehensive medical coverage and retirement savings plans[97]. - As of December 31, 2025, the company employed approximately 202 full-time and 128 part-time employees[91]. Economic and Market Challenges - Inflation has increased labor costs and interest rates, which may reduce discretionary spending and adversely affect the company's business[109]. - Economic conditions, including high inflation expected to persist through at least 2026, could adversely affect consumer discretionary spending and clinic traffic[122]. - The company anticipates that fiscal 2026 will be a volatile macroeconomic environment with elevated levels of cost inflation[110]. - The company anticipates that 2026 will continue to be a volatile macroeconomic environment due to unfavorable global economic or political conditions, including labor shortages and inflation[219]. Legal and Liability Concerns - Malpractice claims have been a concern, with the company maintaining minimum professional liability insurance coverage of $1.0 million per occurrence and $3.0 million in annual aggregate[157]. - The company faces potential liabilities due to evolving federal and state regulations regarding joint employer status, which could impact operational costs and franchisee relationships[146]. - Changes in ethical guidelines and operating standards for chiropractors could adversely affect the company's business operations[156]. - The company may face substantial costs related to intellectual property litigation, which could divert resources and affect financial performance[159].

Loan Portfolio - Total loans increased to $3,605.9 million in 2025, up from $3,147.1 million in 2024, representing a growth of 14.5%[37] - The commercial real estate non-owner occupied loans accounted for 40% of the total loan portfolio in 2025, compared to 43% in 2024[37] - The residential real estate loans increased to $1,068.4 million, representing 30% of the total loan portfolio, up from 28% in 2024[37] - The top 10 loans in the non-owner occupied commercial real estate portfolio represent approximately 18.1% of total commercial real estate loans outstanding[38] - Delinquencies in the commercial real estate segment were less than 0.02% as of December 31, 2025[38] - The weighted average loan-to-value ratio for the top 10 loans in the non-owner occupied segment was 61.0% as of December 31, 2025[38] - The total commercial loan portfolio had a pass rating of 95%[38] Non-Performing Assets - Non-performing loans increased to $11,586, representing 0.32% of total loans, up from 0.22% in the previous year[43] - The total non-performing assets amount to $13,789, which is 0.29% of total assets, slightly down from 0.31% the previous year[43] Credit Losses - The allowance for credit losses (ACL) at the end of the year is $34,052, which is 0.94% of total loans, compared to 0.91% the previous year[46] Investment Portfolio - The investment portfolio's total amortized cost is $644,953, with a fair value of $597,424[50] - The weighted average yield for debt securities is 3.44%, with specific yields of 5.70% for securities within 1 year and 3.07% for those over 10 years[50] Customer Service and Operations - The company operates 22 full-service branches in Maine, 30 in New Hampshire, and 10 in Vermont, serving over 144,000 customers across these states[20][21][22][23] - The company emphasizes quality customer service and local decision-making to compete effectively in the financial services market[33] Fee Income - Fee income is fundamental to profitability, driven by trust and treasury management services, customer derivatives, and secondary market mortgage sales[18] - Customer-related deposit fees are a significant source of fee income, primarily from debit card interchange fees[56] Deposits - The company’s total deposits were composed of 17% non-interest bearing demand, 28% interest-bearing demand, 17% savings, 12% money market, and 26% time deposits in 2025[57] - Estimated uninsured non-maturity deposits increased to $424.6 million as of December 31, 2025, compared to $404.7 million in 2024, reflecting a growth of about 4.7%[59] - The total estimated uninsured time deposits were $112.4 million in 2025, up from $85.3 million in 2024, marking an increase of approximately 31.5%[59] - The average balance of interest-bearing demand deposits for 2025 was $1,003,074 thousand with a weighted average rate of 1.41%, consistent with 2024[57] - Time deposits for 2025 totaled $909,629 thousand with a weighted average rate of 3.79%, down from 4.30% in 2024, indicating a decrease of approximately 11.88% in the rate[57] - The scheduled maturities of time deposits greater than $250 thousand totaled $230,105 thousand as of December 31, 2025[59] Employee and Compensation - The company had 530 full-time equivalent employees as of December 31, 2025, with no union representation, emphasizing a focus on talent and growth potential[68] - The company’s compensation strategy is rooted in a pay-for-performance philosophy, aligning colleague contributions with organizational success[70] Capital Adequacy - The Bank is considered "well capitalized" under the FDIC's prompt corrective action rules, meeting all required capital ratios[102] - The minimum common equity Tier 1 capital to risk-weighted assets ratio required is 4.5%, with a minimum Tier 1 capital ratio of 6.0% and total capital ratio of 8.0%[99] - The capital adequacy rules require banks to maintain a capital conservation buffer of more than 2.5% of total risk-weighted assets to avoid restrictions on dividends and bonuses[101] Regulatory Compliance - The Bank must comply with consumer protection laws, including the Equal Credit Opportunity Act and the Fair Credit Reporting Act, to avoid enforcement actions and penalties[112] - The Bank is required to implement a comprehensive written information security program to protect customer information and respond to data breaches[114] - The Bank must report any cash transactions involving at least $10,000 and file suspicious activity reports for transactions over $5,000 that may involve illegal funds[117] Interest Rate Risk Management - The Bank's interest rate sensitivity modeling indicates that the balance sheet was asset sensitive over the one- and two-year horizons as of December 31, 2025[301] - A 200 basis point decline in interest rates is expected to result in a deterioration of net interest income by $8,358 thousand (5.1%) over the first year and $20,741 thousand (12.0%) over the second year[302] - Conversely, a 200 basis point increase in interest rates is projected to improve net interest income by $8,607 thousand (5.3%) in the first year and $17,446 thousand (10.1%) in the second year[302] - The Bank's Asset Liability Management Policy establishes interest rate risk limits to control variability of net interest income under different rate scenarios[297] - Interest rate risk management is overseen by the Bank's Asset and Liability Committee (ALCO), which meets regularly to review balance sheet structure and formulate strategies[292] - The sensitivity analysis does not represent a forecast and is based on numerous assumptions regarding interest rate levels and customer behavior[306] - The Bank utilizes a widely recognized interest rate risk model to simulate the behavior of interest income and expense under different interest rate scenarios[298] - As of December 31, 2024, the Bank's asset sensitivity was lower in down rate scenarios compared to the current year, indicating a shift in risk profile[305] - The Bank's interest rate risk measurement techniques incorporate re-pricing and cash flow attributes of balance sheet instruments to assess potential changes in net interest income[296] Trust Management Services - As of December 31, 2025, total assets under management (AUM) for trust management services reached $3.0 billion, up from $2.8 billion in 2024, representing a growth of approximately 7.14%[67]

Financial Performance - In 2025, the company reported a net interest income of $11.67 million, a decrease of 43.0% from $20.48 million in 2024[238]. - Interest income from loans fell to $32.22 million in 2025, down 25.3% from $43.15 million in 2024[238]. - The net income attributable to common shareholders improved to $1.84 million in 2025, compared to a loss of $43.88 million in 2024, marking a 104.2% increase[238]. - Operating expenses decreased by 16.4% to $13.10 million in 2025 from $15.67 million in 2024[238]. - Net cash provided by operating activities fell to $2.7 million in 2025 from $12.9 million in 2024, a decrease of 384.2%[278]. - Net cash provided by investing activities decreased by $50.6 million, or 172.3%, to $29.4 million in 2025[278]. - Book value per common share decreased to $2.46 in 2025 from $2.64 in 2024, a decline of $0.18 year over year[270]. Asset and Liability Management - Total assets decreased by $32.0 million, or 6.5%, to $460.0 million as of December 31, 2025, primarily due to debt reduction[272]. - Total liabilities decreased by $25.2 million, or 8.1%, to $285.1 million, driven by the repayment of unsecured notes and credit facilities[273]. - Total shareholders' equity decreased by $6.8 million, or 3.7%, to $174.9 million, impacted by common stock dividends of $9.5 million and Series A Preferred stock dividends of $4.5 million[275]. Debt and Financing Activities - The company issued $100 million in Senior Secured Notes due 2030, with $90 million drawn as of December 31, 2025, at an interest rate of 9.875%[222]. - The company issued $100.0 million in Senior Secured Notes due 2030 to reposition its capital structure, with $90.0 million drawn as of December 31, 2025[248]. - Long-term cash needs include principal and interest payments on outstanding indebtedness totaling $173.2 million maturing in late 2026 and 2027, along with preferred stock dividends and funding for new mortgage loans[280]. - Total contractual obligations as of December 31, 2025, amount to $38.527 million, with $26.089 million due within one year[284]. - Management believes that maturing notes payable will be addressed through a combination of operating cash flow, credit facility capacity, and potential capital markets transactions[280]. Loan and Investment Performance - Average loans held for investment were $376.4 million in 2025, down from $468.8 million in 2024, with an effective yield of 8.6% compared to 9.2%[243]. - Interest income from loans decreased year over year, primarily due to lower net loan originations, with average total performing loans at $269.3 million in 2025 versus $366.6 million in 2024[243]. - The provision for credit losses related to loans held for investment significantly decreased by 87.8% to $3.28 million compared to $26.93 million in 2024[238]. Market and Operational Outlook - The company plans to address upcoming unsecured note maturities through operating cash flow, asset resolutions, and capital market activity[225]. - The company projects that its current cash balances, availability on debt facilities, and anticipated cash flows from operations will be sufficient to fund operations for the next 12 months[279]. - The company continues to evaluate capital market access and balance sheet positioning in advance of upcoming debt maturities[280]. - The company is not a party to any off-balance sheet transactions that could affect liquidity or capital resource availability[282]. - Recent accounting pronouncements impacting the company are detailed in the financial statements[285]. - The company is classified as a "smaller reporting company" and is not required to provide certain market risk disclosures[286]. Property Transactions - The company successfully sold an office property in Westport, Connecticut, generating net cash proceeds of approximately $19.9 million and a book gain of about $4.0 million[222]. - The company completed a noncash transaction to acquire 100% of the membership interests of a condominium entity with a net book value of approximately $39.9 million[226].

Loan Portfolio - The Bank's total loans, gross, amounted to $2,624 million as of December 31, 2025, showing an increase from $2,308 million in 2024[39] - The composition of the loan portfolio includes 97.96% in mortgage loans, with multifamily residential loans making up 28.83% of the total[39] - The Bank's principal lending activity focuses on real estate-secured loans, including multifamily and nonresidential property loans[35] - As of December 31, 2025, the total loan portfolio amounted to $2,624.9 million, with multifamily loans representing 28.8% at $756.5 million[49] - One-to-four family investor-owned loans totaled $307.3 million, accounting for 11.7% of the total loans, with 87.0% of this amount secured by two-to-four family properties[42] - Nonresidential loans reached $526.2 million, making up 20.0% of the total loan portfolio, with 87.9% of this amount secured by loans exceeding $1.0 million[50] - Construction and land loans totaled $854.01 million, representing 32.5% of the total loan portfolio, with multifamily residential construction loans accounting for $681.6 million[55] - The largest concentration of nonresidential loans is in retail and wholesale properties, totaling $127.1 million, or 24.1% of the nonresidential portfolio[51] - C&I loans and lines of credit constituted $53.1 million, or 2.02% of the total loan portfolio as of December 31, 2025[62] - Total loans originated in 2025 reached $1,167.1 million, compared to $888.2 million in 2024, marking a significant increase of 31.4%[70] - Total mortgage loans originated in 2025 were $1,058.1 million, a substantial increase from $873.8 million in 2024[70] Loan Performance and Credit Quality - Total nonaccrual loans reached $26.453 million in 2025, an increase from $22.531 million in 2024[85] - The total non-performing loans to total gross loans ratio was 1.02% as of December 31, 2025, compared to 1.00% in 2024[85] - Total non-performing assets to total assets ratio was 0.83% as of December 31, 2025, up from 0.76% in 2024[85] - Delinquent loans totaled $11.926 million for 30-59 days past due and $26.863 million for 90 days or more past due as of December 31, 2025[83] - Substandard loans increased by $4.9 million, or 17.8%, to $32.2 million at December 31, 2025, compared to $27.3 million at December 31, 2024[89] - Special mention loans rose by $1.4 million, or 6.6%, to $21.9 million at December 31, 2025, from $20.6 million at December 31, 2024[90] - The Allowance for Credit Losses (ACL) at the end of 2025 was $25.4 million, up from $22.5 million at the end of 2024[102] - The provision for loan losses for 2025 was $4.5 million, compared to $1.5 million in 2024[102] - The ACL as a percentage of nonperforming loans was 94.74% at December 31, 2025, down from 97.98% at December 31, 2024[102] - The ACL as a percentage of total loans remained stable at 0.97% for both 2025 and 2024[102] - The net charge-offs were $1.5 million for the year ended December 31, 2025, compared to $5.2 million for the year ended December 31, 2024[104] Deposits and Funding - The Bank's market share of deposits in Bronx County is 2.08% as of June 30, 2025, representing its largest market share at the county level[34] - The Bank aims to grow core deposits by increasing mission-driven deposits and cross-selling deposit products to commercial customers[28] - The Bank has seen a decrease in reliance on time deposits, with an increasing portion of deposits coming from internet sources and large banks[32] - Total deposits increased to $2,046.6 million in 2025, up from $1,895.2 million in 2024, reflecting a net increase of $151.4 million[126] - Interest-bearing deposits accounted for 89.87% of total deposits in 2025, with an average rate of 3.54%[123] - Uninsured deposits represented $454.5 million, or 22.0%, of total deposits as of December 31, 2025, compared to $435.9 million, or 22.8%, in 2024[124] - The average balance of money market accounts increased to $901.7 million in 2025, with an average rate of 4.01%[123] - Certificates of deposit totaled $704.5 million as of December 31, 2025, with varying interest rates across different brackets[128] - The portion of uninsured time deposits exceeding the $250,000 FDIC insurance limit was $202.5 million[131] Regulatory Compliance and Risk Management - The Bank's strategy includes building Ponce Bank 2.0 to ensure risk management and compliance controls align with strategic priorities[28] - The Bank's underwriting guidelines for loans include a maximum loan-to-value ratio of 70% for purchases and 65% for refinances, with a minimum debt service coverage ratio of 1.20x[43] - The Bank's loan approval process includes detailed evaluations of borrower creditworthiness and property valuations[78] - The performance of appraisers is periodically assessed using scorecards to ensure quality in loan evaluations[77] - The Bank's non-real estate lending decisions are based on borrower cash flows and credit histories[79] - Collection efforts for delinquent loans commence the day after the grace period, typically on the 17th of the month[81] - The Loan Committee reviews appraisals and loan applications, with significant credit exposures requiring Board of Directors approval[78] - The Bank is subject to examination and supervision primarily by the OCC and secondarily by the FDIC[135] - The Bank's operations are subject to various federal and state consumer protection laws, including the Truth-In-Lending Act and the Equal Credit Opportunity Act[168] - The Bank must adopt and maintain written policies for extensions of credit secured by real estate, including prudent underwriting standards[170] Investment Portfolio - The investment portfolio included $29.3 million of FHLBNY stock as of December 31, 2025, compared to $29.2 million as of December 31, 2024[108] - The Bank purchased $10.7 million of FRBNY stock during the year ended December 31, 2025, in connection with its conversion to a national bank[108] - The investment policy allows for investments in U.S. Treasury securities and corporate bonds, reviewed annually by the Board of Directors[106] - The total available-for-sale securities amounted to $105,950 million, an increase from $92,196 million in 2024, reflecting a growth of approximately 14.5%[110] - The total held-to-maturity securities reached $272,982 million as of December 31, 2025, compared to $268,875 million in 2024, indicating a growth of about 1.0%[110] - The carrying value of mortgage-backed securities decreased to $355.2 million in 2025 from $410.3 million in 2024, representing a decline of approximately 13.4%[112] - The weighted average yield on the investment securities portfolio is calculated based on the yield to maturity weighted for the size of each debt security[114] - The company primarily invests in mortgage-backed securities backed by one-to-four family residential mortgages, which are more liquid than individual mortgage loans due to an active trading market[113] Capital and Dividends - The Bank's capital exceeded all applicable regulatory requirements as of December 31, 2025[147] - The capital requirements mandate a minimum common equity Tier 1 capital ratio of 4.5%, Tier 1 capital ratio of 6.0%, and total capital ratio of 8.0%[142] - The Company paid required dividends on its Preferred Stock amounting to $1.1 million and $0.6 million for the years ended December 31, 2025, and 2024, respectively[181] - The Company has no federal net operating loss carryforwards as of December 31, 2025[191] - The Company has post-2015 carryforwards available of $58.0 million for New York State purposes and $20.3 million for New York City purposes[194] Future Outlook and Regulatory Environment - The Bank is facing significant competition from both traditional financial institutions and non-core financial service providers, impacting its growth potential[33] - Future regulations may impact the Company's operating environment and financial condition unpredictably[195] - The federal regulatory agencies have issued guidance on concentrations in commercial real estate lending, requiring heightened risk management practices if concentrations are present[171] - The Company is subject to the Bank Holding Company Act of 1956 and is regulated by the Federal Reserve Board, which has enforcement authority over its activities[176] - The Federal Reserve Board requires bank holding companies to serve as a source of strength to their subsidiary depository institutions[180]

Financial Performance and Stock Information - The company completed its initial public offering (IPO) in June 2025, selling 10,875,000 shares at a public offering price of $15.00 per share, resulting in net proceeds of $4.5 million[18]. - As of December 31, 2025, the company had 64,060,082 shares of common stock outstanding after the IPO and reorganization[21]. - The company repurchased $58.9 million of stock to support a follow-on equity offering, reducing the ownership of JCF Stockholders to 53.1%[24]. - Jefferson Capital, Inc. (JCAP) stock started at $100.0 on June 30, 2025, and ended at $124.0 by December 31, 2025, reflecting a 24% increase[213]. - In comparison, the Nasdaq Financial 100 (IXF) index started at $100.0 and ended at $101.3, showing a modest increase of 1.3% over the same period[214]. - The Nasdaq Global Market Composite Index (NQGM) also showed a slight increase from $100.0 to $112.4, which is a 12.4% rise[214]. - The stock performance comparisons are based on an initial investment of $100, with dividends assumed to be reinvested[212]. - Future issuances of common stock may dilute existing shareholders and adversely affect the market price of the stock[186]. Client and Revenue Concentration - The company's top five clients accounted for 45.2% and 55.3% of purchases for the years ended December 31, 2025 and 2024, respectively, with the top client representing 23.6% and 32.8% of purchases[17]. - A significant portion of the company's purchases is concentrated with a few large sellers, with the top client representing 23.6% of purchases in 2025, indicating potential vulnerability to changes in supplier relationships[85]. Regulatory Compliance and Legal Risks - The company is subject to various federal, state, local, and international laws governing debt collection practices, which include compliance with the Fair Debt Collection Practices Act (FDCPA) and Fair Credit Reporting Act (FCRA) among others[43]. - The Dodd-Frank Act established the Consumer Financial Protection Bureau (CFPB), which has the authority to enforce federal consumer financial laws and supervise debt collectors, including the company[44]. - The CFPB can impose monetary penalties ranging from $5,000 per day for ordinary violations to $1 million per day for knowing violations of federal consumer financial laws[47]. - The CFPB issued Regulation F in October 2020, which clarifies prohibitions on harassment and abuse by debt collectors, and includes provisions for communication methods such as text and email[49]. - The company must comply with the California Consumer Privacy Act (CCPA), which imposes stringent requirements on data privacy and security for California residents[54]. - State laws may limit the interest rates and fees that can be imposed on consumers, as well as the time frame for filing legal actions to enforce consumer accounts[57]. - The company is required to maintain licenses for debt recovery services in various states, and failure to comply with licensing requirements could lead to sanctions or restrictions on operations[56]. - The CFPB and FTC have increased scrutiny on debt collection practices, leading to potential investigations and enforcement actions against the industry[48]. - The company must adhere to laws regarding automated dialing equipment and telemarketing practices, which have resulted in numerous class-action lawsuits in recent years[55]. - Changes in regulatory frameworks or new legislation could have a material impact on the company's operations and ability to collect receivables[52]. - The company is subject to extensive federal and state consumer protection laws that regulate credit card issuers, impacting operations related to receivables from credit card transactions[59]. - Federal statutes limit consumer liability for unauthorized credit card charges, which may affect the company's ability to recover amounts owed on receivables[60]. - Compliance with various Canadian laws, including the Bankruptcy and Insolvency Act and the Personal Information Protection and Electronic Documents Act, is critical to avoid fines and operational restrictions[62][65]. - The U.K. Financial Conduct Authority (FCA) regulates debt collection practices, emphasizing consumer protection and requiring firms to treat customers fairly[67][70]. - The implementation of the Consumer Duty in July 2023 sets higher standards for consumer care in the U.K., impacting operational practices[69]. - Compliance failures with government regulations in the collections industry could lead to penalties, fines, and damage to the company's reputation, adversely impacting financial condition[112]. Operational Risks and Challenges - The company anticipates fluctuations in sales levels from quarter to quarter, with competitive pricing in the portfolio purchasing market favoring larger participants[28]. - The company faces risks related to the availability of nonperforming loans, which are essential for maintaining profitability and operational efficiency[82]. - Regulatory changes in the credit card and consumer lending industry may reduce the availability of credit to consumers, impacting future nonperforming loan purchases[84]. - An increase in personal bankruptcy and insolvency filings could lead to a decline in collections, as most receivables are unsecured[87]. - Bankruptcy protections may prevent collection actions on receivables, potentially leading to write-offs of uncollectible amounts[88]. - Outsourcing and offshoring activities to third parties could disrupt operations if these providers fail to meet obligations, impacting financial condition and reputation[89]. - Disruptions at the co-sourced operation in Mumbai could result in service interruptions, harming customer relationships and reducing revenues[90]. - The company may not be able to collect sufficient amounts on nonperforming loans to fund operations, which could adversely impact financial results[86]. - Changes in tax provisions or exposure to additional tax liabilities could adversely affect the company's financial condition and results of operations[120]. - Recent changes in U.S. trade policy, including tariffs, could indirectly impact the company's business by increasing consumer financial stress and default rates[121]. Technology and Cybersecurity - The company employs proprietary statistical and behavioral models for account-level valuation, allowing accurate portfolio valuation and maximizing future collections[26]. - The company faces risks related to the use of machine learning and AI technologies, which could harm its reputation and lead to liability if not managed properly[143]. - The proprietary technology platforms contain third-party open-source software components, which could compromise the proprietary nature of the company's platform if license terms are not complied with[140]. - The company has developed a cybersecurity risk management program based on ISO/IEC 27001 certification and other recognized frameworks[199]. - The cybersecurity risk management program includes risk assessments, a dedicated security team, and employee training[203]. - The Board of Directors oversees cybersecurity risks through the Compliance and Risk Committee, which receives quarterly reports from management[202]. - The management team responsible for cybersecurity includes individuals with certifications such as CISSP, CISM, and CISA, ensuring expertise in risk management[206]. - Cybersecurity risks pose a significant threat to the company's information technology systems and Confidential Information, potentially leading to financial losses and reputational damage[130]. - The company may incur significant costs related to compliance with privacy and cybersecurity legal obligations, which could impede product development and increase operating costs[127]. Governance and Corporate Structure - The company is classified as an "emerging growth company" and is not required to comply with certain reporting requirements, which may affect the attractiveness of its common stock to investors[173]. - The company has a majority of voting power controlled by JCF Stockholders, qualifying it as a "controlled company" under Nasdaq rules, which exempts it from certain corporate governance requirements[169]. - The JCF Stockholders control approximately 67.6% of the voting power for the company's common stock, allowing them significant influence over corporate decisions[159]. - The company has the right to designate four nominees for its board of directors, which will decline as the ownership of JCF Stockholders decreases[163]. - The company is in the process of establishing effective internal controls over financial reporting to comply with Section 404 of the Sarbanes-Oxley Act, which may impact investor confidence[181]. - The company has 12 months from ceasing to be a "controlled company" to have a majority of independent directors on its board[170]. - The company is subject to increased legal and financial compliance costs as a public entity, which may strain resources and distract management from growth strategies[175]. - The company may pursue acquisition opportunities that could enhance its investment, but these may not be available to it due to conflicts of interest with JCF Stockholders[164]. Employee and Operational Structure - The company has 1,120 full-time employees (FTE) across nine offices in the U.S., U.K., and Colombia as of December 31, 2025[41]. - The company has additional offices in multiple locations, including Minneapolis, Sartell, Denver, San Antonio, Basingstoke, London, Paisley, London (Ontario), Toronto, and Bogota[208]. - The company has reserved approximately 6,739,713 shares of common stock for future equity grants under the 2025 Plan, including 477,542 options granted since the IPO[185]. - The company is dependent on cash dividends and distributions from subsidiaries to meet obligations, which may be restricted by agreements governing subsidiary indebtedness[195].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended December 31, 2025 or ☐ TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to Commission File Number: 0-24006 NEKTAR THERAPEUTICS (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation ...

Financial Performance - Reported a net loss of $4.3 million for Q4 2025, translating to $(0.23) per diluted share, and a full-year net loss of $11.9 million, or $(0.63) per diluted share[12] - Total revenues for the three months ended December 31, 2025, were $24,291,000, a slight increase from $23,969,000 in the same period of 2024[19] - Total revenues for 2025 reached $93,567 million, a 0.4% increase from $93,179 million in 2024[75] - Total expenses for the three months ended December 31, 2025, were $27,759,000, up from $27,386,000 in the same period of 2024[19] - Total expenses for the twelve months ended December 31, 2025 were $51,705 million, compared to $45,070 million in 2024, indicating a rise of 14.7%[88] Funds from Operations - Funds from Operations (FFO) for Q4 2025 was $0.26 per diluted share, while the full-year FFO was $1.12 per diluted share[12] - Adjusted Funds from Operations (AFFO) for Q4 2025 was $0.34 per diluted share, with a full-year AFFO of $1.45 per diluted share[12] - Funds from operations for the three months ended December 31, 2025, were $4,877,000, slightly down from $5,133,000 in the same period of 2024[22] - Adjusted funds from operations per common share for the three months ended December 31, 2025, were $0.34, compared to $0.37 in 2024[23] Net Operating Income - Combined Same Store Portfolio Net Operating Income (NOI) increased by 0.2% in Q4 2025 compared to Q4 2024, but decreased by 0.8% for the full year 2025 compared to 2024[12] - Total consolidated revenues for Q4 2025 reached $28,886,000, reflecting a 1.1% increase from Q4 2024[54] - Total combined net operating income for Q4 2025 was $15,301,000, a slight increase of 0.2% compared to Q4 2024[54] - Same store NOI for the twelve months ended December 31, 2025 was $49,946 million, down from $50,084 million in 2024, reflecting a decrease of 0.3%[80] Property Acquisitions and Investments - Acquired 1322 North, a 214-unit property in Auburn, AL, for $36.5 million, and Oaks at Victory, a 150-unit property in Savannah, GA, for $23.0 million in 2025[12] - The company invested $18,250,000 in two joint ventures, with expected annual returns of 13%[26] - The company acquired two properties in 2025, with a total purchase price of $59,500,000[28] Share Repurchase and Dividends - Total shares repurchased in 2025 reached 321,060 at a weighted average price of $15.53[12] - Declared a dividend of $0.25 per share for Q1 2026, consistent with the previous quarter[12] - The company's stock repurchase activity for the year totaled 321,060 shares at an average cost of $15.53 per share, amounting to $4,986,394[30] - The company has authorized up to $10,000,000 for share repurchases through December 31, 2028, with $5,037,000 remaining available as of February 27, 2026[31] Debt and Liabilities - Total debt outstanding was $652,316,000, with consolidated mortgages payable at $471,083,000[17] - Total liabilities increased from $508,549 million in 2024 to $532,613 million in 2025, an increase of approximately 4.7%[25] - The weighted average interest rate on total principal payments due is 4.19%[43] - The debt service coverage ratio for the quarter ended December 31, 2025, was 1.37[44] Occupancy and Rental Revenue - Average occupancy rate for Q4 2025 was 93.4%, slightly down from 93.6% in Q4 2024[14] - Average monthly rental revenue per occupied unit increased to $1,419 in Q4 2025 from $1,405 in Q4 2024[14] - The overall occupancy rate for the consolidated portfolio was 94.3% as of December 31, 2025[51] - The average rent per occupied unit across the consolidated portfolio was $1,373 for Q4 2025[51] Regional Performance - In Texas, the weighted average rent per occupied unit was $1,438, with a 92.9% occupancy rate[49] - In Georgia, revenues decreased by 2.1% to $10,319 million in 2025 from $10,538 million in 2024[75] - Texas reported a revenue decline of 3.7%, with 2025 revenues at $8,932 million compared to $9,278 million in 2024[75] - Virginia experienced a revenue increase of 5.4%, reaching $5,123 million in 2025, up from $4,860 million in 2024[75] Operating Expenses - The company reported a payroll expense of $2,847,000 for Q4 2025, which is a 13.7% increase from Q4 2024[54] - Property operating expenses for 2025 were $43,621 million, up 1.2% from $43,095 million in 2024[75] - The company reported a 6.1% increase in property operating expenses in Georgia, rising from $1,271,000 in 2024 to $1,349,000 in 2025[73] Assets - Total assets decreased from $713,463 million in 2024 to $709,813 million in 2025, a decline of approximately 0.9%[25] - The total assets as of December 31, 2025 were $382,713 million, with BRT's share being $194,136 million[90]

Property Ownership and Acquisitions - As of December 31, 2025, the company wholly owns 21 multi-family properties with a total of 5,420 units and a carrying value of $595.2 million[20] - The company acquired an 80% interest in two multi-family properties with a total of 364 units for an aggregate purchase price of $59.5 million, including $40.1 million of mortgage debt at a weighted average interest rate of 4.34%[24] - The company has preferred equity investments in two multi-family properties with a carrying value of $17.7 million[20] - The company emphasizes acquiring multi-family properties that provide stable risk-adjusted total returns, particularly in the Southeast United States and Texas[31] - The company has been opportunistic in pursuing acquisitions without mandating specific criteria, focusing on value-add opportunities[31] - The company has a policy that any multi-family property acquisition opportunity with more than 100 units must first be offered to it before affiliated entities can acquire it[37] - The company generally pays 35% to 50% of the purchase price in cash for acquisitions, with the balance financed through mortgage debt[34] Financial Performance and Revenue - As of December 31, 2025, the total number of multi-family properties owned is 21, with a total of 5,420 units generating rental and other revenue of $95.265 million[29] - The highest rental revenue is generated from properties in Tennessee, totaling $14.341 million, accounting for 15% of the total rental revenue[29] - Properties owned by unconsolidated joint ventures generated $49.891 million in rental and other revenues, with Texas contributing 41% of this total[30] - The company reported a rental and other revenue breakdown by state, with Tennessee contributing $14.341 million (15%), Mississippi $12.956 million (14%), and Alabama $11.404 million (12%)[29] Occupancy and Rental Rates - The average physical occupancy rate across the multi-family properties is 93.9% for 2025, with specific properties like Silvana Oaks Apartments at 93.9% and Crossings of Bellevue at 97.5%[25] - The average monthly rental rate per occupied unit across the properties is not explicitly stated, but specific properties show rates such as $1,576 for Silvana Oaks and $1,449 for Avalon Apartments[25] - The average physical occupancy across the multi-family properties is generally high, with notable occupancy rates such as 97.5% for Crossings of Bellevue in Nashville, TN, and 96.6% for Village at Lakeside in Auburn, AL[25] - The average occupancy rate for the properties has shown slight fluctuations, with some properties experiencing a decrease in occupancy from previous years, such as Parkway Grande dropping to 92.8% in 2025 from 97.1% in 2021[25] Financing and Debt Management - The company refinanced four mortgages totaling $58.0 million with new mortgages totaling $87.7 million, resulting in a decrease of $1.2 million in annual principal payments but an increase of $1.8 million in annual interest expense[24] - The weighted average interest rate on mortgage debt for wholly-owned properties was 4.22% with a remaining term to maturity of 6.3 years as of December 31, 2025[45] - The weighted average interest rate for the new replacement mortgages is 4.97%, compared to 4.38% for the prior mortgages, with an expected increase in annual interest expense of $1.8 million[24] - The principal amount of mortgage debt outstanding for properties where the company is the carve-out guarantor is approximately $468 million[49] - Total principal payments due for consolidated properties in 2026 are projected to be $32.17 million, with total payments due across all properties amounting to $764.54 million[47] Employee and Operational Management - As of December 31, 2025, the company had 12 salaried employees, with one individual dedicating approximately 50% of their time to company activities[63] - The company offers a competitive benefits program, including annual cash bonuses, stock awards, and healthcare benefits, contributing to employee satisfaction and long tenure[66] - The company emphasizes employee satisfaction, as indicated by the long tenure of most employees[66] - The company is committed to professional development opportunities for employees, fostering a supportive work environment[66] - The company utilizes a shared services agreement for part-time personnel and resources, optimizing operational efficiency[64] Market Conditions and Competition - The company operates primarily in the Southeastern United States and Texas, with properties located in 11 states[20] - The company competes with larger real estate investment trusts and private investors for multi-family properties, which may affect acquisition opportunities[56] - The company anticipates challenges in acquiring properties due to competition and limited opportunities, which may affect cash flows and income expectations[16] - The company monitors its portfolio to identify properties for potential sale based on market conditions and reinvestment opportunities[38] Environmental and Regulatory Compliance - The company is subject to federal, state, and municipal environmental regulations, with potential liabilities that could be material, although no material claims are currently pending[62] - The company has no material claims or pending issues regarding environmental damage, indicating a stable compliance status[62] Leadership Changes - The company’s Chief Financial Officer, George E. Zweier, resigned effective February 27, 2026, with Isaac Kalish appointed as the new CFO[69] - Isaac Kalish has been appointed as the new Chief Financial Officer following George E. Zweier's resignation[73]

Financial Position and Funding - The company has incurred an accumulated deficit of $460.2 million as of December 31, 2025, and expects to continue incurring significant losses for the foreseeable future [175]. - The company has $63.8 million in cash, cash equivalents, and investments as of December 31, 2025, which is expected to fund operations into the second quarter of 2027 [176]. - The company may need to raise additional capital through various means, including equity and debt financing, to continue its operations and development programs [176]. - The company anticipates that funding for the COVID-19 vaccine candidate will come from the 2024 ATI-RRPV Contract, which has a total funding amount of approximately $316.0 million [182]. - The company may need to seek alternative funding sources if government funding under the 2024 ATI-RRPV Contract is discontinued, which could negatively impact revenues and cash flows [182]. Research and Development - The company anticipates significant increases in research and development expenses for its tablet vaccines, including those for norovirus, coronavirus, and HPV-related conditions [175]. - The company is developing oral vaccines administered by tablet, but the development of its norovirus and coronavirus vaccine candidates is still at an early stage [184]. - The company expects to require substantial additional capital to complete the development and commercialization of its tablet vaccine candidates for norovirus, coronavirus, influenza, and HPV [190]. - Clinical trials are expensive and time-consuming, with significant risks of failure at any stage, which could delay or prevent marketing approval for the tablet vaccine candidates [228]. - The company must conduct extensive and costly preclinical studies and clinical trials to demonstrate safety and efficacy, with uncertain outcomes that could materially harm business if unfavorable [298]. Regulatory Challenges - The regulatory pathway for coronavirus vaccines is evolving, presenting potential unforeseen challenges for the company [169]. - The company may face significant delays or failures in obtaining regulatory approvals, which could adversely affect its business and financial condition [186]. - The FDA may impose additional requirements for preclinical studies, potentially delaying the initiation of Phase 1 studies for HPV therapeutic vaccine candidates [228]. - The process of obtaining marketing approvals is expensive and can take many years, with substantial discretion given to regulatory authorities [259]. - Compliance with state and federal healthcare regulatory laws is critical, as violations could lead to substantial penalties and harm the company's operations [270]. Market Competition - The company faces significant competition from other biotechnology and pharmaceutical companies in the vaccine development space [169]. - The company faces intense competition from larger pharmaceutical companies and must demonstrate compelling advantages in efficacy, convenience, and safety to succeed in the market [242]. - The COVID-19 vaccine market is highly competitive, with Pfizer-BioNTech, Moderna, and Novavax having approved vaccines in the U.S. [253]. - The company anticipates facing intense competition as new vaccines enter the market and advanced technologies become available [250]. - The company faces significant competition in securing collaborations, which may affect its ability to fund product development and commercialization [334]. Manufacturing and Supply Chain - The company may face challenges in scaling up manufacturing capacity for its vaccine candidates, which could affect the number of doses produced [188]. - The company currently depends on single-source vendors for key components of its tablet vaccine candidates, which poses a risk to manufacturing and supply [327]. - The company relies on third-party contractors for clinical trials and manufacturing, which may lead to compliance issues or delays if they fail to meet obligations [301]. - The company’s ability to manufacture product candidates in sufficient quantities for commercialization is critical, and any issues in scaling up production could delay market entry [324]. - Delays in third-party contract manufacturing could adversely affect the company's ability to conduct clinical trials and commercialize product candidates [345]. Legal and Liability Risks - The company is subject to ongoing legal proceedings that may result in substantial costs and divert management's attention, adversely impacting business operations [217]. - The company faces significant product liability exposure related to its tablet vaccine candidates, which could lead to substantial liabilities and limit commercialization efforts [276]. - Product liability insurance coverage is currently up to $10 million per claim, but may not be adequate to cover all potential liabilities [277]. - The company could incur substantial expenses and face significant liabilities if involved in patent litigation or other legal proceedings [361]. - The company’s relationships with healthcare providers and third-party payors are subject to strict healthcare laws, which could expose it to legal and financial risks [335]. Strategic Partnerships and Collaborations - The company expects to enter into license and collaboration agreements, but reliance on partners may result in reduced revenues if they do not perform as expected [308]. - The company may seek collaborations for product development, but failure to establish these on commercially reasonable terms could alter its commercialization plans [333]. - The company acknowledges that favorable results in preclinical studies and early-stage clinical trials do not guarantee success in late-stage clinical trials, which may lead to delays or failures in product development [294]. - If the company fails to secure additional strategic partnerships for unpartnered product candidates, it may incur increased costs and risks associated with development, potentially leading to a higher cash burn rate [338]. - Strategic partnerships or acquisitions may not yield the expected benefits, and the company may encounter difficulties in integrating acquired businesses profitably [339]. Market Acceptance and Revenue Generation - The company faces risks related to market acceptance of its product candidates, which may not generate significant revenues if they do not gain meaningful acceptance in their intended markets [314]. - The company expects sales from its tablet vaccine candidates for coronavirus and norovirus to generate substantially all of its revenues for the foreseeable future [268]. - The company may face challenges in obtaining adequate reimbursement from third-party payers, which could negatively impact revenues and profitability [311]. - The company relies on adequate reimbursement and insurance coverage for its product candidates, and any limitations could restrict revenue generation [210]. - Seasonal fluctuations in influenza vaccine sales could lead to unpredictable royalty revenues and significant variations in operating results [289].

Loan Portfolio - As of December 31, 2025, the company's owner-occupied commercial real estate (CRE) loans totaled $461.7 million, representing 20.5% of loans held for investment (HFI) [122] - The company's construction and development loans, non-owner occupied CRE loans, and non-real estate secured loans financing CRE activities amounted to $683.3 million, or 30.4% of loans HFI as of December 31, 2025 [122] - A significant portion of the loan portfolio, $1.77 billion or 78.7% of loans HFI, is secured by real estate as the primary collateral as of December 31, 2025 [123] - As of December 31, 2025, $628.8 million, or 28.0% of the total loan portfolio, was secured by one-to-four family residential loans, which are sensitive to regional economic conditions [125] - Approximately $392.8 million, or 17.5% of loans HFI, were commercial and industrial loans, which are subject to the ongoing business operations of borrowers [127] - Health care loans amounted to $194.3 million, representing 8.6% of loans held for investment (HFI) as of December 31, 2025, highlighting the company's largest industry concentration [142] - Energy loans totaled $27.7 million, or 1.2% of loans HFI, as of December 31, 2025, indicating exposure to volatility in oil and natural gas prices [143] - 94.4% of loans HFI were made to borrowers in Louisiana, emphasizing the company's concentration in a region vulnerable to natural disasters [144] Credit Risk and Allowance - The allowance for credit losses (ACL) totaled $23.4 million, approximately 1.04% of loans HFI as of December 31, 2025, indicating potential underestimation of credit losses [128] - Nonperforming assets (NPAs) stood at $3.5 million, or 0.11% of total assets as of December 31, 2025, which could adversely affect net income [131] - The company may face increased credit risk due to potential deterioration in the credit quality of its CRE loan portfolio, necessitating higher provisions for credit losses [122] - The company may face increased credit losses due to negative conditions in the health care sector, which could impact the quality of its loan portfolio [142] - The company may need to make additional provisions for credit losses in the future, either due to management decisions or regulatory requirements [129] Liquidity and Funding - As of December 31, 2025, the company had $560.2 million in unfunded credit commitments to customers, indicating potential increased borrowing needs during challenging economic conditions [141] - Liquidity is essential for the company, with deposits being the most important source of funds, and a decrease in deposit balances could adversely affect liquidity [157] - The company has not utilized brokered or internet deposits historically to meet liquidity needs, relying instead on traditional funding sources [158] - Access to funding sources could be impaired by disruptions in financial markets or negative expectations about the financial services industry, impacting the company's ability to originate loans and meet obligations [159] Regulatory and Compliance Risks - The company operates in a highly regulated environment, subject to extensive regulations that govern operations, corporate governance, and executive compensation, which could lead to regulatory actions or penalties if not complied with [185] - The company is subject to capital requirements under Basel III, which may limit growth opportunities and require additional capital to support operations [188] - The subsidiary, Red River Bank, must meet minimum capital requirements imposed by the FDIC, with potential consequences for non-compliance including restrictions on operations and capital distributions [189] - Future changes in tax laws may adversely affect the company's income tax expense and overall profitability [193] - The company faces potential liabilities and increased costs due to federal and state consumer lending laws aimed at preventing predatory lending practices [194] - The company is unable to control FDIC insurance premiums, which could increase and negatively impact profitability [196] - Regulatory changes may increase operational costs and impact the company's ability to conduct business as historically practiced [192] - The company must comply with laws that may restrict its ability to originate certain mortgage loans, potentially increasing operational costs and liability risks [195] Strategic Initiatives - The company’s strategy includes opportunistic new market expansion and strategic acquisitions, which carry risks such as startup costs and regulatory approvals [149] - The company plans to continue establishing de novo banking centers as part of its organic growth strategy, requiring state and federal regulatory approvals for new acquisitions and banking centers [186] - The company may need to raise additional capital in the future to meet regulatory requirements and fund growth, which depends on various external factors [156] Management and Operational Risks - The company relies heavily on its executive management team and key employees, and unexpected loss of their services could negatively impact business performance [161] - The company faces risks related to data security, including unauthorized access and cyber-attacks, which could harm its reputation and require significant resources for remediation [162][163] - The company utilizes statistical and quantitative models for decision-making, and faulty data or modeling could lead to regulatory scrutiny and impact decision-making ability [169] Shareholder and Dividend Considerations - As of December 31, 2025, directors and named executive officers owned approximately 16.5% of the outstanding shares, potentially allowing them to significantly influence shareholder votes [177] - The company has no outstanding long-term debt as of December 31, 2025, but future indebtedness may be senior to common stock, affecting dividend payments [178] - The board of directors has the authority to issue up to 1,000,000 shares of preferred stock without shareholder approval, which may negatively impact common stock market price [179] - The company's dividend policy may change without notice, and its ability to pay dividends is subject to restrictions based on financial conditions and regulatory requirements [180] Market and Economic Factors - Changes in interest rates could significantly impact net interest income, which is a primary component of the company's earnings [134] - Securities analysts' coverage is crucial for maintaining visibility in financial markets; unfavorable reports could lead to a decline in stock price [184]