What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-06 compared with 2025-11-04 · 189 added, 283 removed, 568 unchanged (45% of the section changed)

12 unchanged sentences

• higher lending risks associated with our commercial and agricultural banking activities;

• future pandemics (including new variants of COVID-19);

• future pandemics;

• cybersecurity risks;

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• the sufficiency of allowance for credit losses;

• competitive pressures among depository and other financial institutions;

• disintermediation risk;

• competitive pressures from others in the financial services industry, including non-depository institutions;

• disintermediation risk (including the use of emerging financial technologies, such as cryptocurrencies);

• our ability to maintain our reputation;

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• our ability to successfully execute our acquisition growth strategy;

• risks posed by acquisitions and other expansion opportunities, including difficulties and delays in integrating the acquired business operations or fully realizing the cost savings and other benefits;

• risks posed by acquisitions and other expansion opportunities, including difficulties and delays in integrating acquired business operations or fully realizing the cost savings and other benefits;

• restrictions on our ability to pay dividends;

• the potential volatility of our stock price;

• volatility of our stock price (including possible removal from the Russell 3000® Index and related indexes);

• accounting standards for credit losses;

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The forward-looking statements made herein are only made as of the date of this filing and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances occurring after the date of this report.

The following discussion sets forth management’s discussion and analysis of our consolidated financial condition as of September 30, 2025, and our consolidated results of operations for the nine months ended September 30, 2025, compared to the same period in the prior fiscal year ended September 30, 2024.

The following discussion sets forth management’s discussion and analysis of our consolidated financial condition as of March 31, 2026, and our consolidated results of operations for the three months ended March 31, 2026, compared to the same period in the prior fiscal year ended March 31, 2025.

This discussion should be read in conjunction with the interim consolidated financial statements and the condensed notes thereto included with this report and with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes related thereto included in our 2025 10-K.

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PERFORMANCE SUMMARY

The following is a summary of some of the significant factors that affected our operating results for the three and nine months ended September 30, 2025, and September 30, 2024.

Compared to the third quarter of 2024, the third quarter of 2025 net interest income increased $1.9 million.

The third quarter 2025 increase from the same period in 2024 was largely due to:

(1) $1.3 million in lower liability expense due to 50 basis point lower cost of funds;

(2) $0.4 million of interest income recognized on the payoff of nonaccrual loans and loans with purchase credit discounts;

(3) $0.4 million of accretion on the aforementioned payoffs;

and (4) with higher asset yields offsetting a 4% decrease in interest-earning assets.

The total provision for credit losses for the third quarter ended September 30, 2025, was $0.650 million compared to a negative provision for credit losses of $0.400 million for the quarter ended September 30, 2024.

The third quarter of 2025 provision was largely due to:

(1) the impact of changes in credit quality, i.e.

changes in reserve on impaired loans, and the impact of delinquent loans at June 30, 2025, becoming current at September 30, 2025;

(2) net shrinkage of the loan portfolio of $0.1 million;

(3) $51 thousand of net recoveries;

(4) a decrease in off-balance sheet commitments for new construction loan originations of $0.1 million.

The total benefit, i.e., negative provision, for credit losses for the third quarter ended September 30, 2024, of $0.400 million, was due to decreases in the ACL related to on-balance sheet ACL of $0.1 million;

and reductions in off-balance sheet reserves to fund commitments of $0.3 million.

Non-interest income increased $0.1 million in the third quarter of 2025, compared to the third quarter of 2024, primarily due to higher gains on sale of loans.

Non-interest expense increased $0.7 million in the third quarter of 2025 from $10.4 million in the third quarter of 2024.

The increase was primarily due to an increase in compensation expense due to annual employee pay raises, higher incentive accruals, and higher medical costs.

Provision for income taxes decreased to $0.85 million in the third quarter of 2025, from $0.9 million in the third quarter of 2024, primarily due to a lower effective tax rate.

The decrease in the effective tax rate was primarily due to the positive impact of higher permanent tax deductions in 2025.

For the nine months ended September 30, 2025, net interest income increased $3.4 million from the same period in 2024.

The increase in net interest income was largely due to:

(1) lower liability interest costs of 33 basis points;

(2) income from the payoff of nonaccrual loans and loans with purchase credit discounts, which increased $0.8 million;

partially offset by the impact of a 4% decrease in interest-earnings assets.

The total provision for credit losses for the nine months ended September 30, 2025, was $1.750 million compared to a negative provision for credit losses of $2.725 million for the nine months ended September 30, 2024.

The 2025 provision for ACL was primarily due to the impact of higher reserves on impaired loans and the impact of higher delinquencies.

For the nine months ended 2024, the total provision for ACL was a negative provision of $2.725 million.

The decrease was primarily due to:

(1) the $0.9 million impact of loan portfolio decreases and credit quality improvements;

(2) $0.6 million due to improvements in the Moody’s economic scenario assumptions utilized by our third party provider;

(3) reduction in off-balance sheet ACL to fund loan commitments of $0.9 million;

(4) a decrease in the allowance for credit losses of $0.5 million, largely in the first quarter;

and (5) net recoveries.

Non-interest income increased $0.4 million for the nine-month period ended September 30, 2025, compared to the same period in 2024, primarily due to:

(1) $0.6 million higher gain on equity securities, and (2) higher gain on sale of loans of $0.4 million, partially offset by the (3) Bank Owned Life Insurance death benefit of $0.2 million recognized in the second quarter of 2024, and (4) lower service charges on deposit accounts, loan fees and service charges due to lower customer activity.

Non-interest expense increased $0.8 million in the nine-month period ended September 30, 2025, compared to the same period in 2024, primarily due to higher compensation expense for the reason discussed above, partially offset by the establishment in the first quarter 2024 of the SBA recourse reserve of $0.4 million.

Provision for income taxes decreased to $2.4 million in the nine months ended September 30, 2025, compared to the same period in 2024, due to a decrease in pre-tax income and a lower effective tax rate.

The decrease in the effective tax rate was primarily due to the positive impact of higher permanent tax deductions in 2025.

When comparing year-over-year results, changes in net interest income, provision for credit losses, non-interest income, non-interest expense, and provision for income taxes are primarily due to the items discussed above.

See the remainder of this section for a more thorough discussion.

We reported net income of $3.7 million and $10.1 million, or $0.37 and $1.02 per diluted share for the three and nine months ended September 30, 2025, compared to net income of $3.3 million and $11.0 million, or $0.32 and $1.07 per diluted share for the three and nine months ended September 30, 2024, respectively.

We reported net income of $3.8 million or $0.39 per diluted share for the three months ended March 31, 2026, compared to net income of $3.2 million or $0.32 per diluted share for the three months ended March 31, 2025, respectively.

The following is a summary of some of the significant factors that affected our operating results for the three months ended March 31, 2026, and March 31, 2025.

Compared to the first quarter of 2025, the first quarter of 2026 net interest income increased $1.4 million.

The first quarter 2026 increase from the same period in 2025 was largely due to:

(1) a 20 basis point increase in loan yields due to new loan originations and existing loans repricing at higher rates;

and (2) a 28 basis point decrease in deposits costs;

(3) a reduction in other borrowings, largely due to the redemption of subordinated debt on September 1, 2025, partially offset by a lower average balance of loans with growth in lower yielding interest-bearing cash.

The total provision for credit losses for the first quarter ended March 31, 2026, was $0.75 million compared to a negative provision for credit losses of $0.25 million for the quarter ended March 31, 2025.

The first quarter of 2026 provision was largely due to:

(1) a net increase of $0.4 million, with increases in reserves on impaired loans, partially offset by loss rates on collectively evaluated loans;

(2) modest charge-offs of $0.2 million;

(3) an increase in economic scenarios based on information provided by our third-party model provider of $0.1 million;

and (4) the net impact of new loan growth, net of a decrease in the portfolio duration of $0.05 million.

The first quarter ended March 31, 2025, negative provision for credit losses was primarily due to decreases in ACL related to:

(1) on-balance sheet ACL of $0.1 million, and (2) reductions in off-balance sheet reserves to fund commitments of $0.3 million.

Non-interest income increased $0.5 million in the first quarter of 2026, compared to the first quarter of 2025, primarily due to higher gains on the sale of loans, due in part to the backlog of SBA loans unable to be sold during the fourth quarter of 2025, due to the government shutdown and then sold in the first quarter of 2026.

Non-interest expense increased $0.2 million in the first quarter of 2026 from $10.5 million in the first quarter of 2025.

The increase was primarily due to an increase in compensation due to the full quarter impact of the 2025 annual employee pay raises and benefit expenses, partially offset by lower data processing costs.

Provision for income taxes increased to $0.88 million in the first quarter of 2026, from $0.78 million in the first quarter of 2025, primarily due to the impact of a 2025 tax credit investment.

CRITICAL ACCOUNTING ESTIMATES

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Allowance for Credit Losses

We adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), “Measurement of Credit Losses on Financial Instruments” through a cumulative-effect adjustment on January 1, 2023.

We have selected a loss estimation methodology, utilizing a third-party model.

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For loans that are not collateral dependent, the allowance for credit losses is based on the present value of expected future cash flows discounted at the loan’s original effective interest rate through the repayment period;

and (2) a collective allowance

for loans not specifically identified in (1) above.

and (2) a collective allowance for loans not specifically identified in (1) above.

The allowance for these loans is estimated by pooling loans with a similar risk profile and calculating a collective loss rate using the pool’s risk drivers, historical loss experience, and reasonable and supportable future economic forecasts to project lifetime losses.

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Net interest margin currently exceeds interest rate spread because non-interest-bearing sources of funds (“net free funds”), principally demand deposits and stockholders’ equity, also support interest earning assets.

The narrative below discusses net interest income, and net interest margin for the three-month and nine-month periods ended September 30, 2025, and September 30, 2024, respectively.

Net interest income was $13.2 million for the three months ended September 30, 2025, compared to $11.3 million for the three months ended September 30, 2024.

Compared to the third quarter of 2024, the third quarter of 2025 net interest income increased $1.9 million.

The third quarter 2025 increase from the same period in 2024, was largely due to:

(1) $1.3 million in lower liability interest expense due to 50 basis point lower cost of funds;

(2) $0.4 million of interest income recognized on the payoff of nonaccrual loans and loans with purchase credit discounts;

(3) $0.4 million of accretion on the aforementioned payoffs;

and (4) with higher asset yields offsetting a 4% decrease in interest-earning assets.

The net interest margin for the three-month period ended September 30, 2025, increased to 3.20%, compared to 2.63%, for the three-month period ended September 30, 2024.

The narrative below discusses net interest income, and net interest margin for the three-month periods ended March 31, 2026, and March 31, 2025, respectively.

Net interest income was $13.0 million for the three months ended March 31, 2026, compared to $11.6 million for the three months ended March 31, 2025.

Compared to the first quarter of 2025, the first quarter of 2026 net interest income increased $1.4 million.

The first quarter 2026 increase from the same period in 2025 was largely due to:

(1) a 20 basis point

increase in loan yields due to new loan originations and existing loans repricing at higher rates;

and (2) a 28 basis point decrease in deposit rates, largely due to lower short-term interest rates resulting from Federal Open Market Committee

(“ FOMC”) decreases in the overnight Fed Funds rate;

and (3) a reduction in other borrowings largely due to the redemption of subordinated debt on September 1, 2025;

partially offset by a 75 basis point decrease in interest-bearing cash yields due to FOMC decreases in the overnight Fed Funds rate.

The net interest margin for the three-month period ended March 31, 2026, increased to 3.18%, compared to 2.85%, for the three-month period ended March 31, 2025.

The higher net interest margin was due to:

(1) a decrease in liability costs of 30 basis points;

(2) the net favorable impacts of the $0.4 million of payoffs of nonaccrual loans and loans with purchase credit discounts or 10 basis points;

and (3) a net increase of 4 basis points in asset yields in addition to those discussed above.

Net interest income was $38.1 million for the nine-month period ended September 30, 2025, compared to $34.8 million for the nine months ended September 30, 2024.

For the nine months ended September 30, 2025, net interest income increased $3.3 million from the same period in 2024.

The increase in net interest income was largely due to:

(1) lower liability costs of 33 basis points;

(2) income from the payoff of nonaccrual loans and loans with purchase credit discounts, increased $0.8 million;

partially offset by the impact of a 4% decrease in interest-earnings assets.

The net interest margin for the nine-month period ended September 30, 2025, increased to 3.11%, compared to 2.71%, for the nine-month period ended September 30, 2024.

The higher net interest margin was primarily due to:

(1) a decrease in liability costs of 33 basis points;

and (2) the net favorable impact of the $0.74 million payoffs of nonaccrual loans and loans with purchase credit discounts, net of income recognized on loans modified.

(2) a net increase of 20 basis points in loan yields;

partially offset by (3) lower yields on interest-bearing cash at the Federal Reserve;

and (4) the combination of a decrease in average balances of higher yielding loans and an increase in the average balance of lower yielding cash.

Average Balances, Net Interest Income, Yields Earned and Rates Paid.

The following net interest income analysis table presents interest income from average interest earning assets, expressed in dollars and yields, and interest expense on average interest-bearing liabilities, expressed in dollars and rates on a tax equivalent basis.

Shown below is the weighted average tax equivalent yield on interest earning assets, rates paid on interest-bearing liabilities and the resultant spread at or during the three and nine-month periods ended September 30, 2025, and September 30, 2024.

Shown below is the weighted average tax equivalent yield on interest earning assets, rates paid on interest-bearing liabilities and the resultant spread at or during the three-month periods ended March 31, 2026, and March 31, 2025.

Non-accruing loans have been included in the table as loans carrying a zero yield.

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(Dollar amounts in thousands)

Three months ended September 30, 2025, compared to the three months ended September 30, 2024:

Three months ended September 30, 2025

Three months ended September 30, 2024

Three months ended March 31, 2026, compared to the three months ended March 31, 2025:

Three months ended March 31, 2026

Three months ended March 31, 2025

Balance Interest

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Average interest earning assets to average interest-bearing liabilities 1.26 1.25

NET INTEREST INCOME ANALYSIS ON A TAX EQUIVALENT BASIS

(Dollar amounts in thousands)

Nine months ended September 30, 2025, compared to the nine months ended September 30, 2024:

Nine months ended September 30, 2025 Nine months ended September 30, 2024

Balance Interest

Expense Average

Balance Interest

Expense Average

Average interest earning assets:

Cash and cash equivalents $ 51,589 $ 1,710 4.43 % $ 19,073 $ 823 5.76 %

Loans receivable 1,353,030 58,466 5.78 % 1,441,972 60,204 5.58 %

Investment securities 223,985 5,282 3.15 % 240,054 6,038 3.36 %

Other investments 12,423 401 4.32 % 12,983 589 6.06 %

Total interest earning assets $ 1,641,027 $ 65,859 5.37 % $ 1,714,082 $ 67,654 5.27 %

Average interest bearing liabilities:

Savings accounts $ 162,222 $ 1,048 0.86 % $ 173,946 $ 1300 1.00 %

Demand deposits 377,051 6,079 2.16 % 355,356 6,192 2.33 %

Money market accounts 361,944 7,557 2.79 % 378,740 9,005 3.18 %

CD’s 342,077 10,420 4.07 % 364,131 12,215 4.48 %

Total deposits $ 1,243,294 $ 25,104 2.70 % $ 1,272,173 $ 28,712 3.01 %

FHLB advances and other borrowings 60,231 2,636 5.85 % 108,897 4,176 5.12 %

Total interest bearing liabilities $ 1,303,525 $ 27,740 2.85 % $ 1,381,070 $ 32,888 3.18 %

Net interest income $ 38,119 $ 34,766

Interest rate spread 2.52 % 2.09 %

Net interest margin 3.11 % 2.71 %

Average interest earning assets to average interest bearing liabilities 1.26 1.24

Rate/Volume Analysis.

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and (2) changes in rate, which are changes in average interest rates multiplied by the prior period volume (i.e., holding the initial balance constant).

Rate and volume changes have been discussed previously in the net interest income section above.

Rate changes have been discussed previously in the net interest income section above.

Changes in asset volume include an increase in interest-bearing cash, resulting from the cash deployment of the 2025 loan shrinkage as the bank reduced non-strategic relationships, and the reinvestment of investment securities amortization of mortgage-backed certificates, U.S.

government securities and student loan asset-backed securities into interest-bearing cash.

RATE / VOLUME ANALYSIS

(Dollar amounts in thousands)

Three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Three months ended March 31, 2026, compared to the three months ended March 31, 2025.

Increase (decrease) due to

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Net interest income $ (29) $ 1,445 $ 1,416

RATE / VOLUME ANALYSIS

(Dollar amounts in thousands)

Nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Increase (decrease) due to

Volume Rate Net

Interest income:

Cash and cash equivalents $ 1,165 $ (278) $ 887

Loans receivable (3,796) 2,058 (1,738)

Investment securities (390) (366) (756)

Other investments (24) (164) (188)

Total interest earning assets (3,045) 1,250 (1,795)

Interest expense:

Savings accounts (83) (169) (252)

Demand deposits 365 (478) (113)

Money market accounts (386) (1,062) (1,448)

CD’s (711) (1,084) (1,795)

Total deposits (815) (2,793) (3,608)

FHLB advances and other borrowings (787) (753) (1,540)

Total interest bearing liabilities (1,602) (3,546) (5,148)

Net interest income $ (1,443) $ 4,796 $ 3,353

The table below shows the principal balance and current contractual rate of fixed rate certificates of deposit as of September 30, 2025.

The table also shows the principal balance and current contractual rate of fixed rate loans and securities as of September 30, 2025, that mature or reprice.

The table below shows the principal balance and current contractual rate of fixed-rate loans, securities, and certificates of deposits as of March 31, 2026, that mature or reprice for the remaining three quarters of 2026 and the four quarters of 2027.

Portfolio Contractual Repricing:

(in millions, except yields)

Q4 2025 Q1 2026 Q2 2026 Q3 2026 Q4 2026 FY 2027

Maturing Certificate Accounts:

Contractual Balance $ 95 $ 138 $ 63 $ 36 $ 10 $ 3

Contractual Interest Rate 3.90 % 3.98 % 3.97 % 3.93 % 3.85 % 0.84 %

Q2 2026 Q3 2026 Q4 2026 Q1 2027 Q2 2027 Q3 2027 Q4 2027

Maturing or Repricing Loans:

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Contractual interest rate 3.57 % 3.44 % 3.27 % 3.31 % — % 5.93 % — %

Maturing Certificate Accounts:

Contractual balance $ 99 $ 137 $ 52 $ 45 $ 8 $ — $ —

Contractual interest rate 3.84 % 3.77 % 3.74 % 3.56 % 3.44 % 2.39 % 1.71 %

Provision for Credit Losses.

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Lifetime losses on these loans are estimated based on the loans’ individual characteristics.

The third quarter of 2025 provision was largely due to:

(1) the impact of changes in credit quality, i.e.

changes in reserve on impaired loans, and the impact of delinquent loans at June 30, 2025, becoming delinquent at September 30, 2025;

(2) net shrinkage of the loan portfolio of $0.1 million;

(3) $51 thousand of net recoveries;

(4) a decrease in off-balance sheet commitments for new construction loan originations of $0.1 million.

The total benefit, i.e., negative provision, for credit losses for the third quarter ended September 30, 2024, of $0.400 million was due to decreases in ACL related to on-balance sheet ACL of $0.1 million;

and reductions in off-balance sheet reserves to fund commitments of $0.3 million.

The 2025 provision for ACL was primarily due to the impact of higher reserves on impaired loans and the impact of higher delinquencies.

For the nine months ended 2024, the total provision for ACL was a negative provision of $2.725 million.

The decrease was primarily due to:

(1) the $0.9 million impact of loan portfolio decreases and credit quality improvements;

(2) $0.6 million due to improvements in the Moody’s economic scenario assumptions utilized by our third party provider;

(3) reduction in off-balance sheet ACL to fund loan commitments of $0.9 million;

(4) a decrease in the allowance for credit losses of $0.5 million, largely in the first quarter;

and (5) net recoveries.

The first quarter of 2026 provision was largely due to:

(1) a net increase of $0.4 million, with increases in reserves on impaired loans, partially offset by lower loss rates on collectively evaluated loans;

(2) modest charge-offs of $0.2 million;

(3) an increase in economic scenarios based on information provided by our third-party model provider of $0.1 million;

and (4) the net impact of new loan growth, net of a decrease in the portfolio duration of $0.05 million.

The total benefit, i.e., negative provision, for credit losses for the first quarter ended March 31, 2025, of $0.25 million was due to decreases in ACL related to a decrease in on-balance sheet ACL of $0.35 million;

partially offset by an increase in off-balance sheet reserves to fund commitments of $0.1 million.

Continued stable economic conditions in our markets, as evidenced by unemployment rates below the national average in our two largest population centers, have resulted in positive overall economic trends for businesses.

The impact of higher interest rates and the impact of an inverted yield forecast are factors that the third-party model used for economic conditions in computing the ACL level.

The impact of higher interest rates and the impact of an inverted yield forecast are factored into the third-party model used for economic conditions in computing the ACL.

Note that in discussing ACL allocations, the entire ACL balance is available for any loan that, in management’s judgment, should be charged off.

Management believes that the provision recorded for the current year’s three- and nine-month periods is adequate in view of the present condition of our loan portfolio and the sufficiency of collateral supporting our non-performing loans.

Management believes that the provision recorded for the current year’s three-month period is adequate in view of the present condition of our loan portfolio and the sufficiency of collateral supporting our non-performing loans.

We continually monitor non-performing loan relationships and will adjust our provision, as necessary, if changing facts and circumstances require a change in the ACL.

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Non-interest Income .

The following table reflects the various components of non-interest income for the three and nine-month periods ended September 30, 2025 and 2024, respectively.

Three months ended September 30, Nine months ended September 30,

2025 2024 % Change 2025 2024 % Change

The following table reflects the various components of non-interest income for the three-month periods ended March 31, 2026 and 2025, respectively.

Three months ended March 31,

2026 2025 % Change

Non-interest Income:

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Loan fees and service charges 138 120 15.00 %

Net gains (losses) on equity securities (66) (78) N/M 43 (569) N/M

Bank Owned Life Insurance (BOLI) death benefit — — N/M — 184 N/M

Net (losses) gains on equity securities (59) 10 N/M

Other 377 243 55.14 %

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N/M means not meaningful

Service charges on deposit accounts decreased $64 thousand from the third quarter of 2024, compared to the third quarter of 2025, and decreased $170 thousand for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to lower customer activity.

Gain on sale of loans increased in the three-month period ended September 30, 2025, compared to the three-month period ended September 30, 2024.

Higher gains on SBA loan sales account for approximately 2/3 of the increase, with the remainder of the increase also impacted by higher gains on sale of residential loans.

For the nine-month periods ending September 30, 2025, and 2024, loan sale gains increased approximately 60% due to higher SBA loan sales and 40% higher residential gains on sale

Loan fees and services charges were lower in the nine-month period ended September 30, 2025, compared to the same periods in 2024, due to lower customer activity.

Net gains (losses) on equity securities increased for the nine-month period ended September 30, 2025, compared to the same period in 2024.

The change was due to second quarter 2024 losses, partially offset by gains recognized in the first quarter of 2024, due to increased valuations of equity securities.

The decrease in other income for the three- and nine-month periods ending September 30, 2025, compared to the same periods in 2024, is due to changes in annual debit card incentives in 2025, due to lower customer spending.

Loan servicing income increased largely due to servicing income received for semi-annual agricultural loan payments serviced for others.

Gain on sale of loans increased in the three-month period ended March 31, 2026, compared to the three-month period ended March 31, 2025.

Higher gains on SBA loan sales account for approximately two-thirds of the increase, with the remainder of the increase due to higher gains on sale of residential loans.

The increase in other income for the three-month period ending March 31, 2026, compared to the same period in 2025, was primarily due to the termination of the remaining lease obligation on a previously closed branch.

Non-interest Expense.

The following table reflects the various components of non-interest expense for the three and nine-month periods ended September 30, 2025 and 2024, respectively.

Three months ended September 30, Nine months ended September 30,

2025 2024 % Change 2025 2024 % Change

The following table reflects the various components of non-interest expense for the three-month periods ended March 31, 2026 and 2025, respectively.

Three months ended March 31,

2026 2025 % Change

Non-interest Expense:

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Professional services 605 508 19.09 %

Gains on repossessed assets, net (4) 65 N/M — 47 N/M

Gains on repossessed assets, net — 4 N/M

Other 630 664 (5.12) %

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N/M means not meaningful

Compensation expense for the three-month period ended September 30, 2025, increased from the same period in 2024, due to annual employee pay raises, effective late first quarter of 2025, higher incentive accruals, and higher medical costs.

The increase for the nine-month period ending September 30, 2025, was largely due to the same reason as in the third quarter period.

Data processing expense for the three and nine-months ended September 30, 2025, increased from the same 2024 periods, largely due to inflationary pressures and the impact of new software implementation costs to aid in future efficiency efforts.

Amortization of intangibles decreased for both the three and nine-month periods ending September 30, 2025, from the same 2024 periods, as an intangible was fully amortized in the third quarter of 2025.

The decrease in other non-interest expense for the nine-months ended September 30, 2025, compared to the same period in 2024, is largely due to $0.2 million in branch closure costs in the second quarter of 2024 and the establishment of an SBA valuation reserve of $0.4 million in the first quarter of 2024, partially offset by additional SBA costs in 2025 of $0.1 million.

Compensation expense for the three-month period ended March 31, 2026, increased from the same period in 2025, due to annual employee pay raises, effective late first quarter of 2025, higher incentive accruals due to higher pre-tax income, and higher benefit costs.

Data processing expense for the three-months ended March 31, 2026, decreased from the same 2025 period, largely due to contract renegotiations which lowered our costs.

Amortization of intangibles decreased for the three-month period ending March 31, 2026, from the same 2025 period, as an intangible was fully amortized in the third quarter of 2025.

Income Taxes.

Provision for income taxes decreased to $0.85 million in the third quarter of 2025, from $0.9 million in the third quarter of 2024.

For the nine months ended September 30, 2025, income tax expense decreased $0.6 million to $2.4 million, compared to the same period in 2024.

The decrease in both periods is primarily due to lower pre-tax income and to a lesser extent, a lower effective tax rate, due to the positive impact of higher permanent tax deductions in 2025 .

Provision for income taxes increased to $0.88 million in the first quarter of 2026, or an effective tax rate of 18.9%, from $0.78 million in the first quarter of 2025, or an effective tax rate of 19.6%, due to higher pre-tax income.

BALANCE SHEET ANALYSIS

Cash and Cash Equivalents.

Cash and cash equivalents increased $32.2 million to $82.4 million at September 30, 2025, compared to $50.2 million at December 31, 2024.

This increase was primarily due to the net proceeds from loan shrinkage increasing on-balance sheet liquidity and growing interest-bearing cash.

Cash and cash equivalents increased $30.3 million to $149.2 million at March 31, 2026, compared to $118.9 million at December 31, 2025.

This increase was primarily due to an increase in interest-bearing cash provided by deposit growth, partially offset by loan growth.

Investment Securities.

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Our investment portfolio is comprised of securities available-for-sale and securities held-to-maturity.

Securities available-for-sale decreased $5.3 million during the nine months ended September 30, 2025, to $137.6 million from $142.9 million at December 31, 2024.

There were principal repayments of $8.9 million, and a net decrease in the corporate debt portfolio due to calls of $5.0 million and maturities of $2.5 million.

Securities available-for-sale decreased $3.2 million during the three months ended March 31, 2026, to $130.9 million from $134.1 million at December 31, 2025.

There were principal repayments of $3.0 million, and a net decrease in the corporate debt portfolio due to redemptions of $1.3 million.

These reductions were partially offset by purchases of $0.8 million of corporate debt and a decrease in the unrealized loss of $0.3 million.

Securities held-to-maturity decreased $4.0 million to $81.5 million during the nine-month period ended September 30, 2025, from $85.5 million at December 31, 2024, due to principal repayments.

Securities held-to-maturity decreased $1.2 million to $79.0 million during the three-month period ended March 31, 2026, from $80.2 million at December 31, 2025, due to principal repayments.

The amortized cost and market values of our available-for-sale securities by asset categories as of the dates indicated below were as follows:

Available-for-sale securities Amortized

September 30, 2025

March 31, 2026

government agency obligations $ 9,790 $ 9,771

1 unchanged sentence

Corporate debt securities 41,790 40,492

Asset-backed securities 16,566 16,323

Student loan asset-backed securities 15,621 15,456

Totals $ 148,067 $ 130,876

3 unchanged sentences

Corporate debt securities 42,394 40,682

Asset-backed securities 19,058 18,996

Student loan asset-backed securities 16,149 15,964

Totals $ 151,618 $ 134,103

1 unchanged sentence

Held-to-maturity securities Amortized

September 30, 2025

March 31, 2026

Obligations of states and political subdivisions $ 300 $ 290

6 unchanged sentences

The composition of our available-for-sale portfolios by credit rating as of the dates indicated below was as follows:

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Available-for-sale securities Amortized

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The composition of our held-to-maturity portfolio by credit rating as of the dates indicated was as follows:

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Held-to-maturity securities Amortized

3 unchanged sentences

Total $ 79,014 $ 63,020 $ 80,210 $ 64,117

At September 30, 2025, the Bank has pledged certain of its mortgage-backed securities with a carrying value of $32.6 million as collateral to secure a line of credit with the Federal Reserve Bank.

As of September 30, 2025, there were no borrowings outstanding on this Federal Reserve Bank line of credit.

As of September 30, 2025, the Bank has pledged certain of its U.S.

At March 31, 2026, the Bank has pledged certain of its mortgage-backed securities with a carrying value of $31.6 million as collateral to secure a line of credit with the Federal Reserve Bank.

As of March 31, 2026, there were no borrowings outstanding on this Federal Reserve Bank line of credit.

As of March 31, 2026, the Bank has pledged certain of its U.S.

Government Agency securities with a carrying value of $0.1 million and mortgage-backed securities with a carrying value of $1.5 million as collateral against specific municipal deposits.

As of September 30, 2025, the Bank also has mortgage-backed securities with a carrying value of $0.4 million pledged as collateral to the Federal Home Loan Bank of Des Moines.

As of March 31, 2026, the Bank also has mortgage-backed securities with a carrying value of $0.4 million pledged as collateral to the Federal Home Loan Bank of Des Moines.

At December 31, 2025, the Bank has pledged certain of its mortgage-backed securities with a carrying value of $32.1 million as collateral to secure a line of credit with the Federal Reserve Bank.

3 unchanged sentences

As of December 31, 2025, the Bank also has mortgage-backed securities with a carrying value of $0.4 million pledged as collateral to the Federal Home Loan Bank of Des Moines.

Total loans outstanding, net of deferred loan fees and costs and unamortized discount on acquired loans, decreased by $0.05 billion, to $1.32 billion as of September 30, 2025, from $1.37 billion at December 31, 2024.

The following table reflects the composition, of our loan portfolio at September 30, 2025, and December 31, 2024:

September 30, 2025 December 31, 2024

Total loans outstanding, net of deferred loan fees and costs and unamortized discount on acquired loans, increased by $0.02 billion, to $1.36 billion as of March 31, 2026, from $1.34 billion at December 31, 2025.

The following table reflects the composition of our loan portfolio at March 31, 2026, and December 31, 2025:

March 31, 2026 December 31, 2025

Amount Percent Amount Percent

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The level of owner-occupied property versus non-owner-occupied property are tracked and monitored on a regular basis.

The following table lists the portfolio characteristics of our major commercial real estate loan portfolio at September 30, 2025:

The following table lists the portfolio characteristics of our major commercial real estate loan portfolio at March 31, 2026:

Non-Owner Occupied CRE Owner- Occupied CRE Multi-family CRE Construction and Development CRE

3 unchanged sentences

Approximate Weighted Average LTV 52 % 48 % 61 % 71 %

Weighted Average Seasoning in Months 48 47 45 N/A

Weighted Average Seasoning in Months 49 48 49 19

Trailing 12 Month Net Charge-Offs 0.03 % 0.01 % 0.00 % 0.00 %

6 unchanged sentences

Other 30 % 6 % 11 % 34 %

The following table further disaggregates the composition of our commercial real estate loan portfolio by selected industry components at September 30, 2025:

The following table further disaggregates the composition of our commercial real estate loan portfolio by selected industry components at March 31, 2026:

Campground Hotel Restaurant Office

3 unchanged sentences

Approximate Weighted Average LTV 48 % 55 % 52 % 52 %

Weighted Average Seasoning in Months 41 N/A N/A 51

Weighted Average Seasoning in Months 44 47 47 43

Trailing 12 Month Net Charge-Offs 0.00 % 0.00 % 0.00 % 0.00 %

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Approximate Weighted Average LTV 51 % 49 % 61 % 72 %

Weighted Average Seasoning in Months 44 41 41 N/A

Weighted Average Seasoning in Months 48 48 46 17

Trailing 12 Month Net Charge-Offs 0.00 % 0.00 % 0.00 % 0.00 %

63 unchanged sentences

(in thousands, except ratios)

September 30, 2025 and Three Months Ended June 30, 2025 and Three Months Ended December 31, 2024 and Three Months Ended

March 31, 2026 and Three Months Ended December 31, 2025 and Three Months Ended

Allowance for Credit Losses (“ACL”)

20 unchanged sentences

Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Total

Three months ended September 30, 2025

Allowance for Credit Losses - Loans:

ACL - Loans, at beginning of period $ 17,164 $ 1,658 $ 2,347 $ 178 $ 21,347

Charge-offs — (7) — — (7)

Recoveries — 3 52 3 58

Additions/(reversals) to ACL - Loans via provision for credit losses charged to operations 388 490 (76) (18) 784

ACL - Loans, at end of period $ 17,552 $ 2,144 $ 2,323 $ 163 $ 22,182

Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Total

Nine months ended September 30, 2025

Three months ended March 31, 2026

Allowance for Credit Losses - Loans:

15 unchanged sentences

(in thousands, except ratios)

September 30,

2026 December 31,

2 unchanged sentences

ACL - Loans to loans, end of period 1.69 % 1.67 %

In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $0.49 million at September 30, 2025, and $0.33 million at December 31, 2024, classified in other liabilities on the consolidated balance sheets.

In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $0.48 million at March 31, 2026, and $0.49 million at December 31, 2025, classified in other liabilities on the consolidated balance sheets.

Allowance for Credit Losses - Unfunded Commitments:

(in thousands)

September 30, 2025 and Three Months Ended September 30, 2024 and Three Months Ended September 30, 2025 and Nine Months Ended September 30, 2024 and Nine Months Ended

March 31, 2026 and Three Months Ended December 31, 2025 and Twelve Months Ended

ACL - Unfunded commitments, beginning of period $ 490 $ 334

Additions (reductions) to ACL - Unfunded commitments via provision for credit losses charged to operations (134) (252) 159 (790)

Additions (reversals) to ACL - Unfunded commitments via provision for credit losses charged to operations (8) 156

ACL - Unfunded commitments, end of period $ 482 $ 490

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The following table identifies the various components of nonperforming assets and other balance sheet information as of the dates indicated below and changes in the ACL for the periods then ended:

September 30, 2025 and Nine Months Then Ended (1) December 31, 2024 and Twelve Months Then Ended (1)

March 31, 2026 and Three Months Then Ended (1) December 31, 2025 and Twelve Months Then Ended (1)

Nonperforming assets:

31 unchanged sentences

Net loan recoveries/(charge-offs) (“NCOs”) (193) 58

Additions (reductions) to ACL - loans via provision for credit losses charged to operations 1,591 (2,259)

Additions (reversals) to ACL - loans via provision for credit losses charged to operations 758 1,794

ACL - Loans, at end of period $ 22,966 $ 22,401

10 unchanged sentences

Quarter Ended

2026 December 31,

2025 September 30,

1 unchanged sentence

2025 March 31,

2025 December 31,

2024 September 30,

Balance, beginning of period $ 15,853 $ 15,614 $ 11,609 $ 13,091 $ 13,168

1 unchanged sentence

Charge offs (200) — (7) (72) (21)

Transfers to OREO — — — (201) (124)

Payments received (681) (244) (5,934) (1,992) (752)

1 unchanged sentence

Balance, end of period $ 17,303 $ 15,853 $ 15,614 $ 11,609 $ 13,091

Nonperforming assets were $16.7 million at September 30, 2025, compared to $14.3 million at December 31, 2024.

This net increase was largely due to a $9 million multi-family loan moved to nonaccrual in the third quarter due to slower than expected leasing activity, partially offset by decreases largely due to:

(1) a payoff of an agricultural relationship in the second quarter of 2025 and (2) a payoff of a $5.2 million forestry services agricultural loans in the third quarter of 2025.

Nonperforming assets were $18.2 million at March 31, 2026, compared to $16.7 million at December 31, 2025.

This net increase was largely due to the addition of the government guaranteed portion of loans totaling $1.4 million in the quarter ended March 31, 2026.

The government guaranteed portion of loans was $2.4 million at March 31, 2026.

In addition, the unguaranteed portion of loans originated with government guarantees increased $0.6 million in the quarter.

The unguaranteed portion of loans originated with government guarantees was $1.5 million at March 31, 2026.

For the nonaccrual unguaranteed loan portion of $1.5 million, there were specific reserves of approximately 50% of the loan balance at March 31, 2026.

Refer to the “Allowance for Credit Losses - Loans” and “Nonperforming Loans, Potential Problem Loans and Foreclosed Properties” sections above for more information related to nonperforming loans.

There were no Loan Modifications made to Borrowers Experiencing Financial Difficulty during the three months ended September 30, 2025.

The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the three months ended March 31, 2026:

Term Extension

Loan Class Amortized Cost Basis at March 31, 2026 % of Total Class of Financing Receivables

Commercial and industrial $ 750 0.66 %

Other-Than-Insignificant Payment Delay

Loan Class Amortized Cost Basis at March 31, 2026 % of Total Class of Financing Receivables

Agricultural real estate $ 189 0.27 %

Term Extension

Loan Class Financial Effect

Commercial and industrial A weighted average of 6 months was added to the term of the loans

Other-Than-Insignificant Payment Delay

Loan Class Financial Effect

Agricultural real estate Payments were deferred a weighted average of 6 months

The table below shows a summary of criticized loans, split by special mention and substandard loans for the past five quarters.

The increase in special mention loans in 2025 was primarily due to an increase in special mention commercial loans in the first quarter of 2025 largely due to a C&I relationship in the first quarter of 2025 that showed weaker cash flow than expected, and in the second quarter of 2025, one new $9 million multi-family loan that is experiencing slower leasing activity than expected.

In the third quarter, the $9 million special mention loan moved to substandard and nonaccrual, which was partially offset by the payoff of a $5.2 million substandard loan that was on nonaccrual.

Changes in balances over $3 million include changes in special mention commercial loans in the second quarter of 2025, due to one new $9 million multi-family loan that is experiencing slower leasing activity than expected.

In the third quarter of 2025, the $9 million special mention loan moved to substandard and nonaccrual, which was partially offset by the payoff of a $5.2 million substandard loan that was on nonaccrual.

(in thousands)

(Loan balance at unpaid principal balance) September 30,

2025 June 30,

2025 March 31,

(Loan balance at unpaid principal balance) March 31,

2026 December 31,

2025 September 30,

2025 June 30,

2025 March 31,

Special mention loan balances $ 25,894 $ 24,473 $ 12,920 $ 23,201 $ 14,990

10 unchanged sentences

Although management believes that the assumptions used to evaluate the MSRs for impairment are reasonable, future adjustment may be necessary if future economic conditions differ substantially from the economic assumptions used to determine the value of MSRs.

The fair market value of the Company’s MSR asset was $4.8 million at September 30, 2025, compared to $5.0 million at September 30, 2024.

The unpaid balances of one-to-four family residential real estate loans serviced for others as of September 30, 2025, and December 31, 2024, were $475.9 million and $479.6 million, respectively.

The fair market value of the Company’s MSR asset as a percentage of its servicing portfolio at September 30, 2025, and December 31, 2024, was 1.01% and 1.09%, respectively.

Total deposits decreased $7.6 million during the nine months ended September 30, 2025, to $1.48 billion.

The decrease is largely due to the reduction in brokered deposits.

Public deposits are seasonal and the seasonal decrease for the nine months ended September 30, 2025, was largely offset by growth in commercial and consumer deposits.

The fair market value of the Company’s MSR asset was $4.8 million at March 31, 2026, compared to $5.1 million at March 31, 2025.

The unpaid balances of one-to-four family residential real estate loans serviced for others as of March 31, 2026, and December 31, 2025, were $473.0 million and $474.0 million, respectively.

The fair market value of the Company’s MSR asset as a percentage of its servicing portfolio at March 31, 2026, and December 31, 2025, was 1.02% and 0.98%, respectively.

Total deposits increased $41.5 million during the three months ended March 31, 2026, to $1.57 billion.

The increase was largely due to the growth in commercial and public deposits, most of which are seasonal.

Deposits by type for five quarters are detailed below:

2026 December 31,

2025 September 30,

1 unchanged sentence

2025 March 31,

2025 December 31,

2024 September 30,

Consumer deposits $ 887,998 $ 889,109 $ 855,226 $ 856,467 $ 861,746

1 unchanged sentence

Public deposits 217,400 187,777 175,689 190,933 211,261

Brokered deposits 25,977 24,408 26,993 33,250 92,920

Wholesale deposits 26,301 24,608 25,977 24,408 26,993

Total deposits $ 1,565,622 $ 1,524,099 $ 1,480,554 $ 1,478,416 $ 1,523,654

At September 30, 2025, the deposit portfolio composition was 58% consumer, 28% commercial, 12% public, and 2% wholesale deposits compared to 57% consumer, 28% commercial, 13% public and 2% brokered deposits at December 31, 2024.

September 30,

2025 June 30,

2025 March 31, 2025 December 31, 2024 September 30,

At March 31, 2026, the deposit portfolio composition was 57% consumer, 28% commercial, 14% public, and 1% wholesale deposits compared to 57% consumer, 28% commercial, 14% public and 1% wholesale deposits at December 31, 2025.

Deposit composition by type for five quarters are detailed below:

2026 December 31,

2025 September 30, 2025 June 30, 2025 March 31,

Non-interest bearing demand deposits $ 271,396 $ 264,394 $ 262,535 $ 260,248 $ 253,343

4 unchanged sentences

Total deposits $ 1,565,622 $ 1,524,099 $ 1,480,554 $ 1,478,416 $ 1,523,654

Uninsured and uncollateralized deposits were $277.7 million, or 19% of total deposits, at September 30, 2025, and $265.4 million, or 18% of total deposits, at December 31, 2024.

Uninsured deposits alone at September 30, 2025, were $421.5 million, or 28% of total deposits, and $428.0 million, or 29% of total deposits at December 31, 2024.

On-balance sheet liquidity, collateralized new borrowing capacity, and uncommitted federal funds borrowing availability was $741 million, or 267% of uninsured and uncollateralized deposits at September 30, 2025.

At December 31, 2024, on-balance sheet liquidity, collateralized borrowing and uncommitted federal funds availability totaled $724.8 million, or 273% of uninsured and uncollateralized deposits.

Uninsured and uncollateralized deposits were $322.6 million, or 20% of total deposits, at March 31, 2026, and $323.5 million, or 21% of total deposits, at December 31, 2025.

Uninsured deposits alone at March 31, 2026, were $499.6 million, or 32% of total deposits, and $478.4 million, or 31% of total deposits at December 31, 2025.

On-balance sheet liquidity, collateralized new borrowing capacity, and uncommitted federal funds borrowing availability was $799 million, or 248% of uninsured and uncollateralized deposits at March 31, 2026.

At December 31, 2025, on-balance sheet liquidity, collateralized new borrowing capacity and uncommitted federal funds availability totaled $792 million, or 243% of uninsured and uncollateralized deposits.

Federal Home Loan Bank (FHLB) advances and Other Borrowings.

A summary of Federal Home Loan Bank (FHLB) advances and other borrowings at September 30, 2025, and December 31, 2024, is as follows:

September 30, 2025 December 31, 2024

A summary of Federal Home Loan Bank (FHLB) advances and other borrowings at March 31, 2026, and December 31, 2025, is as follows:

March 31, 2026 December 31, 2025

Stated Maturity Amount Range of Stated Rates Stated Maturity Amount Range of Stated Rates

2 unchanged sentences

Senior Notes (4) 2039 $ 12,000 6.00 % 6.00 % 2039 $ 12,000 6.00 % 6.75 %

2040 $ 5,000 6.00 % 6.00 % 2040 $ 5,000 6.00 % 6.25 %

$ 17,000 $ 17,000

Subordinated Notes (5) 2030 $ 0 — % — % 2030 $ 0 — % — %

4 unchanged sentences

Totals $ 51,844 $ 51,804

(1) FHLB advances require interest-only monthly payments and are collateralized by a blanket lien on pre-qualifying first mortgages, home equity lines, multi-family loans and certain other loans which had a pledged balance of $1,028.7 million and $1,075.0 million at September 30, 2025 and December 31, 2024, respectively.

At September 30, 2025, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $414.4 million compared to $424.7 million as of December 31, 2024.

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $5.0 million and $81.0 million, during the nine months ended September 30, 2025 and the twelve months ended December 31, 2024, respectively.

(3) There were no FHLB borrowings outstanding as of September 30, 2025.

The weighted-average interest rate on FHLB borrowings, with maturities less than twelve months, outstanding as of December 31, 2024, was 1.45%.

(4) Senior notes, entered into by the Company in June 2019 consist of the following:

(a) A term note, which was subsequently refinanced in March 2022, modified in February of 2023, requiring quarterly interest-only payments through January 2029, and quarterly principal and interest payments thereafter.

(1) The FHLB advances bear fixed rates, require interest-only monthly payments, and are collateralized by a blanket lien on pre-qualifying first mortgages, home equity lines, multi-family loans, and certain other loans which had pledged balances of $1,039.3 million and $1,017.6 million at March 31, 2026 and December 31, 2025, respectively.

At March 31, 2026, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $410.1 million compared to $433.7 million as of December 31, 2025.

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $0 million and $5.0 million, during the three months ended March 31, 2026 and the twelve months ended December 31, 2025, respectively.

(3) There were no FHLB borrowings outstanding as of March 31, 2026 and December 31, 2025.

(4) Senior notes, entered into by the Company consist of the following:

(a) A term note, which was originally entered into in June of 2019 and subsequently refinanced in March 2022, modified in February of 2023, and refinanced in May 2024, requiring quarterly interest-only payments through January 2029, and quarterly principal and interest payments thereafter.

Interest is variable, based on US Prime rate minus 75 basis points with a floor rate of 3.00%.

(b) A $5.0 million line of credit, maturing August 1, 2026, that remains undrawn upon, and was renewed for a term of one year on August 1, 2025.

(b) A $5.0 term note entered into in October 2025, requiring quarterly interest-only payments through October 2028, and quarterly principal and interest payments thereafter.

Interest is variable, based on US Prime rate minus 75 basis points with a floor rate of 4.00%.

(5) Subordinated notes resulted from the following:

(a) The Company’s Subordinated Note Purchase Agreement entered into with certain purchasers in August 2020, which bore a fixed interest rate of 6.00% for five years.

On July 7, 2025, the Board of Directors approved the redemption of the entire $15,000 balance of the 6% subordinated debentures due September 1, 2030, which were scheduled to reprice on September 1, 2025, to SOFR plus 0.0591 basis points.

The redemption occurred on September 1, 2025.

1 unchanged sentence

In April 2027, the fixed interest rate will be reset quarterly to equal the three-month term SOFR plus 329 basis points.

The note is callable by the Bank when, and anytime after, the floating rate is initially set.

The note is callable by the Bank when, and anytime after, the floating rate is

initially set.

Interest-only payments are due semi-annually each year during the fixed interest period and quarterly during the floating interest period.

FHLB advances decreased to $0 as of September 30, 2025, compared to $5.0 million as of December 31, 2024.

FHLB advances were $0 as of March 31, 2026, and December 31, 2025.

The Bank has an irrevocable Standby Letter of Credit Master Reimbursement Agreement with the Federal Home Loan Bank.

This irrevocable standby letter of credit (“LOC”) is supported by loan collateral as an alternative to directly pledging investment securities on behalf of a municipal customer as collateral for their interest-bearing deposit balances.

The Bank’s current unused borrowing capacity, supported by loan collateral as of September 30, 2025, is approximately $414.4 million.

At September 30, 2025, and December 31, 2024, the Bank had the ability to borrow $24.8 million and $24.9 million from the Federal Reserve Bank of Minneapolis.

The ability to borrow is based on mortgage-backed securities pledged with a carrying value of $32.6 million and $34.0 million as of September 30, 2025, and December 31, 2024, respectively.

There were no related Federal Reserve borrowings outstanding as of September 30, 2025, or December 31, 2024.

The Bank’s current unused borrowing capacity, supported by loan collateral as of March 31, 2026, is approximately $410.1 million.

At March 31, 2026, and December 31, 2025, the Bank had the ability to borrow $24.0 million and $24.9 million from the Federal Reserve Bank of Minneapolis.

The borrowing capacity is based on mortgage-backed securities pledged with a carrying value of $31.6 million and $32.1 million as of March 31, 2026, and December 31, 2025, respectively.

There were no related Federal Reserve borrowings outstanding as of March 31, 2026, or December 31, 2025.

The Bank maintains two unsecured federal funds purchased lines of credit with banking partners which total $70 million.

These lines bear interest at the lender banks announced daily federal funds rate, mature daily, and are revocable at the discretion of the lending institution.

There were no borrowings outstanding on these lines of credit as of September 30, 2025, or December 31, 2024.

Additionally, we have a $5.0 million revolving line of credit which is available as needed for general liquidity purposes.

There were no borrowings outstanding on these lines of credit as of March 31, 2026, or December 31, 2025.

See Note 7, “Federal Home Loan Bank Advances and Other Borrowings” for more information.

Stockholders’ Equity.

Stockholders’ equity was $186.8 million at September 30, 2025, compared to $179.1 million at December 31, 2024.

Stockholders’ equity was $190.9 million at March 31, 2026, compared to $187.9 million at December 31, 2025.

The increase in stockholders’ equity was attributable to:

(1) net income of $10.1 million for the nine-month period ended September 30, 2025;

(1) net income of $3.8 million for the three-month period ended March 31, 2026;

and (2) a decrease from December 31, 2025, in net unrealized losses from the AFS securities portfolio reflected in accumulated other comprehensive income of $0.2 million.

These increases were partially offset by the annual cash dividend paid in February to common stockholders of $0.36 per share, or $3.6 million and repurchases of common stock of $2.0 million.

The Company repurchased approximately 136 thousand shares of common stock in the quarter ended September 30, 2025.

As of September 30, 2025, approximately 363 thousand shares remain available for repurchase under the July 2025 5% share repurchase authorization.

This increase was partially offset by the quarterly cash dividend paid in February to common stockholders of $0.105 per share, or $1 million.

The Company did not repurchase any shares of common stock in the quarter ended March 31, 2026.

As of March 31, 2026, approximately 113 thousand shares remain available for repurchase under the current authorization.

The timing and amount of any share repurchases under the new authorization will be determined by management based on market conditions and other considerations.

4 unchanged sentences

A key metric we monitor is our liquidity ratio, calculated as cash and unpledged securities portfolio divided by total assets.

At September 30, 2025, our on-balance sheet liquidity ratio increased by 1.69% to 13.44% from the December 31, 2024, level.

At March 31, 2026, our on-balance sheet liquidity ratio increased by 1.4% to 16.2% from the December 31, 2025, level.

There are no material customers or industry deposit concentrations.

At September 30, 2025, the deposit portfolio composition was 58% consumer, 28% commercial, 12% public, and 2% brokered deposits compared to 57% consumer, 28% commercial, 13% public and 2% brokered deposits at December 31, 2024 .

Uninsured and uncollateralized deposits were $277.7 million, or 19% of total deposits, at September 30, 2025, and $265.4 million, or 18% of total deposits, at December 31, 2024.

Uninsured deposits alone, i.e., excluding fully secured government deposits, at September 30, 2025, were $421.5 million, or 28% of total deposits, and $428.0 million, or 29% of total deposits at December 31, 2024.

On-balance sheet liquidity collateralized new borrowing capacity and uncommitted federal funds borrowing availability was $741 million, or 267% of uninsured and uncollateralized deposits at September 30, 2025.

At December 31, 2024, on-balance sheet liquidity, collateralized borrowing and uncommitted federal funds availability totaled $724.8 million, or 273% of uninsured and uncollateralized deposits.

At March 31, 2026, the deposit portfolio composition was 57% consumer, 28% commercial, 14% public, and 1% wholesale deposits compared to 57% consumer, 28% commercial, 13% public and 2% wholesale deposits at December 31, 2025.

Uninsured and uncollateralized deposits were $322.6 million, or 20% of total deposits, at March 31, 2026, and $323.5 million, or 21% of total deposits, at December 31, 2025.

Uninsured deposits alone, i.e., excluding fully secured government deposits, at March 31, 2026, were $499.6 million, or 32% of total deposits, and $478.4 million, or 31% of total deposits at December 31, 2025.

Our primary sources of funds are deposits, amortization, prepayments and maturities on the investment and loan portfolios and funds provided from operations.

7 unchanged sentences

Our borrowing arrangement with the FHLB calls for pledging certain qualified real estate, commercial and industrial loans, and borrowing up to 75% of the value of those loans, not to exceed 35% of the Bank’s total assets.

Currently, we have approximately $414.4 million available to borrow under this arrangement, supported by loan collateral as of September 30, 2025.

Currently, we have approximately $410.1 million available to borrow under this arrangement, supported by loan collateral as of March 31, 2026.

We also had borrowing capacity of $24.0 million at the Federal Reserve Bank.

The Bank maintains $70 million of uncommitted federal funds purchased lines with correspondent banks as part of our contingency funding plan.

In addition, we have a $5.0 million revolving line of credit which is available as needed for general liquidity purposes.

While the Bank does not have formal brokered certificate lines of credit with counter parties at September 30, 2025, we believe that the Bank could access this market, which provides an additional potential source of liquidity, as evidenced by access to this market during the past four quarters.

While the Bank does not have formal brokered certificate lines of credit with counterparties at March 31, 2026, we believe that the Bank could access this market based on dialogue with selected brokers used in the past, which provides an additional potential source of liquidity, as further evidenced by access to this market during the past four quarters.

See Note 7, “Federal Home Loan Bank and Other Borrowings” of “Notes to Consolidated Financial Statements” which are included in Part I, Item 1, “Financial Statements and Supplementary Data” of this Form 10-Q, for further detail.

5 unchanged sentences

These instruments include unused commitments for lines of credit, overdraft protection lines of credit and home equity lines of credit, as well as commitments to extend credit.

As of September 30, 2025, the Company had approximately $191.5 million in unused loan commitments, compared to approximately $137.0 million in unused commitments as of December 31, 2024.

In addition, there are $3.5 million of commitments for contributions of capital to an SBIC and an investment company at September 30, 2025.

As of March 31, 2026, the Company had approximately $332.0 million in unused loan commitments, compared to approximately $198.8 million in unused commitments as of December 31, 2025.

In addition, there are $3.0 million of commitments for contributions of capital to an SBIC and an investment company at March 31, 2026.

These commitments totaled $3.2 million at December 31, 2025.

Capital Resources.

As of September 30, 2025, and December 31, 2024, the amounts and ratios for our capital levels are noted below for the Bank and the Company.

As of March 31, 2026, and December 31, 2025, the amounts and ratios for our capital levels are noted below for the Bank and the Company.

Below are the amounts and ratios for our capital levels as of the dates noted below for the Bank:

4 unchanged sentences

Amount Ratio Amount Ratio Amount Ratio

As of September 30, 2025 (Unaudited)

As of March 31, 2026 (Unaudited)

Total capital (to risk weighted assets) $ 217,204 14.4 % $ 120,623 > = 8.0 % $ 150,779 > = 10.0 %

7 unchanged sentences

Tier 1 leverage ratio (to adjusted total assets) 194,639 11.3 % 68,711 > = 4.0 % 85,888 > = 5.0 %

At September 30, 2025, and December 31, 2024, the Bank was categorized as “Well Capitalized” under Prompt Corrective Action Provisions, as determined by the OCC, our primary regulator.

At March 31, 2026, and December 31, 2025, the Bank was categorized as “Well Capitalized” under Prompt Corrective Action Provisions, as determined by the OCC, our primary regulator.

Below are the amounts and ratios for our capital levels as of the dates noted below for the Company:

1 unchanged sentence

Amount Ratio Amount Ratio

As of September 30, 2025 (Unaudited)

As of March 31, 2026 (Unaudited)

Total capital (to risk weighted assets) $ 225,270 14.9 % $ 120,851 > = 8.0 %

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis