What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-02-20 · 92 added, 102 removed, 597 unchanged (25% of the section changed)

46 unchanged sentences

Total assets were $4,142,244 at December 31, 2025, compared to $4,014,991 at December 31, 2024, a 3.2 percent increase.

Our loan portfolio grew to $3,004,860 as of December 31, 2024, from $2,927,535 as of December 31, 2023.

Our loan portfolio declined to $3,001,690 as of December 31, 2025, from $3,004,860 as of December 31, 2024.

Deposits increased to $3,468,470 as of December 31, 2025, from $3,357,596 as of December 31, 2024.

The Company compares three key performance metrics to those of an identified peer group for evaluating its results.

The peer group for 2024 consists of 21 Midwestern, publicly traded financial institutions including Bank First Corporation, Bridgewater Bancshares, Inc., ChoiceOne Financial Services, Inc., Civista Bancshares, Inc., CrossFirst Bankshares, Inc., Equity Bancshares, Inc., Farmers National Banc Corp., Farmers & Merchants Bancorp., First Business Financial Services, Inc., First Financial Corp., First Mid Bancshares, Inc., German American Bancorp, Inc., HBT Financial, Inc., Hills Bancorporation, Isabella Bank Corporation, LCNB Corp., Mercantile Bank Corporation, MidWest One Financial Group, Inc., Nicolet Bankshares, Inc., Peoples Bancorp, Inc., and Southern Missouri Bancorp, Inc.

The peer group for 2025 consists of 20 Midwestern, publicly traded financial institutions including Bank First Corporation, Bridgewater Bancshares, Inc., ChoiceOne Financial Services, Inc., Civista Bancshares, Inc., Equity Bancshares, Inc., Farmers National Banc Corp., Farmers & Merchants Bancorp., First Business Financial Services, Inc., First Financial Corp., First Mid Bancshares, Inc., German American Bancorp, Inc., HBT Financial, Inc., Hills Bancorporation, Isabella Bank Corporation, LCNB Corp., Mercantile Bank Corporation, MidWest One Financial Group, Inc., Nicolet Bankshares, Inc., Peoples Bancorp, Inc., and Southern Missouri Bancorp, Inc.

The Company is in the middle of the group in terms of asset size.

14 unchanged sentences

Results of operations for the year ended December 31, 2025 are compared to the results for the year ended December 31, 2024 and the consolidated financial condition of the Company as of December 31, 2025 is compared to December 31, 2024.

Results of operations and financial condition for the year ended December 31, 2023 compared to the year ended December 31, 2022 can be found in Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s 2023 annual report on Form 10-K/A filed with the SEC on February 23, 2024.

Results of operations and financial condition for the year ended December 31, 2024 compared to the year ended December 31, 2023 can be found in Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s 2024 annual report on Form 10-K filed with the SEC on February 20, 2025.

(dollars in thousands, except per share amounts)

39 unchanged sentences

Tax-equivalent adjustment (1)

182 491 1,122

Net interest income on an FTE basis (non-GAAP)

22 unchanged sentences

Basic and diluted earnings per common share for 2025 were $1.92 and $1.92, respectively, and for 2024 were $1.43 and $1.42, respectively.

The modest decrease in net income in 2024 compared to 2023 was primarily due to an increase in noninterest expense and decrease in noninterest income, partially offset by an increase in net interest income and decrease in income tax expense.

The increase in net income in 2025 compared to 2024 was primarily due to an increase in net interest income, partially offset by a decrease in noninterest income and an increase in noninterest expense.

Net interest income increased $17,619, or 24.7 percent, in 2025 compared to 2024.

The increase in net interest income was primarily due to an increase in interest income on loans and interest-bearing deposits in other financial institutions, partially offset by an increase in interest expense on deposits.

The Company recorded a credit loss expense of $1,000 in 2024, compared to a credit loss expense of $700 in 2023.

The increase in net interest income was primarily due to the increase in interest income on short-term assets consisting of deposits with banks and securities purchased under agreements to resell and decrease in interest expense on deposits and borrowed funds, partially offset by a decrease in interest income on securities.

The Company recorded no credit loss expense in 2025, compared to a credit loss expense of $1,000 in 2024.

The credit loss expense recorded in 2024 included a $2,000 increase in the allowance for credit losses related to loans, which was offset by a $1,000 decrease to the allowance for credit losses related to unfunded commitments.

Noninterest income decreased $1,632, or 16.2 percent, in 2024 compared to 2023, primarily due to an increase in realized losses on the sales of securities, a decrease in loan swap fees, and a nonrecurring gain from bank-owned life insurance in 2023, partially offset by an increase in trust services revenue.

Noninterest expense increased $2,742, or 5.6 percent, in 2024 compared to 2023, primarily due to increases in occupancy and equipment expense, technology and software expense and FDIC insurance, partially offset by a decrease in business development expenses.

The Company’s ratio of nonperforming assets to total assets was 0.00 percent and 0.01 percent as of December 31, 2024 and 2023, respectively.

Noninterest income decreased $2,170, or 25.7 percent, in 2025 compared to 2024, primarily due to an increase in realized losses on the sales of securities, partially offset by a one-time third party contract incentive included in other income.

Noninterest expense increased $2,474, or 4.8 percent, in 2025 compared to 2024, primarily due to increases in salaries and employee benefits, occupancy and equipment expense and technology and software expense, partially offset by a decrease in data processing expense and FDIC insurance.

The Company’s ratio of nonperforming assets to total assets was 0.00 percent as of both December 31, 2025 and 2024.

For more discussion on loan quality, see the “Loan Portfolio” and “Summary of the Allowance for Credit Losses” sections in this Item of this Form 10-K.

Net Interest Income

Net interest income increased to $71,362 for 2024 from $69,031 for 2023, as the impact of the growth of interest-earning assets and increases in average yields on interest-earning assets exceeded the effects of an increase in average balances of interest-bearing liabilities and increase in average rate paid on interest-bearing liabilities.

The net interest margin for 2024 decreased 10 basis points to 1.91 percent, compared to 2.01 percent for 2023.

The average yield on earning assets increased by 44 basis points, while the average rate paid on interest-bearing liabilities increased by 52 basis points.

Net interest income increased to $88,981 for 2025 from $71,362 for 2024, as the impact of the growth in average balances of interest-earning assets and decline in average rate paid on interest-bearing liabilities exceeded the effects of the increase in average balances of interest-bearing liabilities.

The net interest margin for 2025 increased 44 basis points to 2.35 percent, compared to 1.91 percent for 2024.

The average yield on earning assets declined by 2 basis points, while the average rate paid on interest-bearing liabilities decreased by 53 basis points.

For additional analysis of net interest income, see the section captioned “Distribution of Assets, Liabilities and Stockholders’ Equity;

2 unchanged sentences

Credit Loss Expense

A credit loss expense of $1,000 was recorded in 2024, compared to a credit loss expense of $700 in 2023.

No credit loss expense was recorded in 2025, compared to a net credit loss expense of $1,000 in 2024.

1 unchanged sentence

The negative $1,000 credit loss expense recorded in 2024 related to unfunded commitments was primarily due to a decrease in the balance of unfunded commitments, primarily from the funding of construction loans.

The credit loss expense recorded in 2023 included an allocation of $500 to the allowance for credit losses related to loans and $200 to the allowance for credit losses related to unfunded commitments.

The credit loss expense in 2023 was primarily due to growth in loans and unfunded loan commitments.

Management believed the allowance for credit losses at December 31, 2024 was adequate to absorb expected losses in the loan portfolio as of that date.

Management believed the allowance for credit losses on loans at December 31, 2025 was adequate to absorb expected losses in the loan portfolio as of that date.

(dollars in thousands, except per share amounts)

5 unchanged sentences

Service charges on deposit accounts $ 1,941 $ 1,843 $ 98 5.3 %

Debit card usage fees 1,919 1,980 (61) (3.1) %

Debit card interchange income 1,894 1,919 (25) (1.3) %

Trust services 3,436 3,449 (13) (0.4) %

Increase in cash value of bank-owned life insurance 1,202 1,126 76 6.7 %

Gain from bank-owned life insurance — 691 (691) (100.0) %

Loan swap fees — 431 (431) (100.0) %

Realized securities losses, net (3,959) (1,172) (2,787) (237.8) %

1 unchanged sentence

Total noninterest income $ 6,264 $ 8,434 $ (2,170) (25.7) %

Revenue from trust services was higher in 2024 compared to 2023 primarily due to increases in one-time estate fees and the higher market value of trust assets.

The gain from bank-owned life insurance that occurred in 2023 was the result of a death benefit claim.

Loan swap fees in 2023 consisted of fees earned in the back-to-back swap program.

In 2025, the Company sold $63,690 of securities from the available for sale securities portfolio and realized a net loss of $3,959, compared to sales of $11,841 of securities available for sale and a realized net loss of $1,172 in 2024.

The proceeds from both periods were reinvested in the loan portfolio.

The estimated earn back period of the 2024 transaction is approximately two years.

The transaction in 2025 improves balance sheet flexibility and will be used to improve our long-term earnings profile through redeployment of the proceeds into higher-earning assets or repayment of higher-costing borrowings.

The increase in other income was primarily due to a one-time third party contract incentive.

Noninterest Expense

10 unchanged sentences

Professional fees 1,211 1,041 170 16.3 %

Director fees 828 892 (64) (7.2) %

Other expenses:

Insurance expense 821 793 28 3.5 %

Business development 898 803 95 11.8 %

Insurance expense 925 821 104 12.7 %

Director fees 778 828 (50) (6.0) %

Trust 763 663 100 15.1 %

1 unchanged sentence

Marketing 87 97 (10) (10.3) %

Charitable contributions — 180 (180) (100.0) %

Low income housing projects amortization 526 571 (45) (7.9) %

4 unchanged sentences

(dollars in thousands, except per share amounts)

Occupancy and equipment expense increased in 2024 compared to 2023 primarily due to an increase in occupancy costs related to bank buildings, including the Company’s new headquarters building.

Technology and software expense increased in 2024 compared to 2023 due to the addition of new technology, product updates and fraud management and security solutions.

FDIC insurance expense increased in 2024 compared to 2023 primarily due to increases in average assets and the assessment rate.

Salaries and employee benefits increased in 2025 compared to 2024 primarily due to an increase in incentive compensation related accruals and normal merit increases.

Occupancy and equipment expense increased in 2025 compared to 2024, as 2025 was the first full year of occupancy in both the new headquarters building in West Des Moines, Iowa and the new Owatonna, Minnesota office.

Insurance expense increased in 2025 due to increased coverage related to these new bank buildings and general increases in insurance costs.

Data processing expense decreased in 2025 compared to 2024 due to contract adjustments.

Technology and software expense increased in 2025 compared to 2024 due to ongoing updates in information technology and security solutions.

Professional fees increased in 2025 compared to 2024 due to a one-time tax related consulting project.

Consulting fees increased in 2025 compared to 2024 primarily due to a one-time contract consulting fee recorded in the fourth quarter of 2025.

New markets tax credit project amortization declined with the expiration of the related tax credit.

The Company records a provision for income tax expense currently payable, along with a provision for those taxes payable or refundable in the future (deferred taxes).

3 unchanged sentences

In 2024, income tax expense included a $1,842 tax benefit for an energy-related investment tax credit associated with the construction of the Company’s new headquarters building.

The effective income tax rates differ from the federal statutory income tax rates primarily due to tax-exempt interest income, the tax-exempt increase in cash value of bank-owned life insurance, tax-exempt gain from bank-owned life insurance, disallowed interest expense, stock compensation, state income taxes and the investment tax credit mentioned above.

The effective tax rate for both 2024 and 2023 was also impacted by federal income tax credits, including low income housing tax credits and a new markets tax credit from West Bank’s investment in a qualified community development entity, of approximately $1,508 and $1,498, respectively.

In 2025, the Company recorded an additional tax benefit of $614 due to a change in estimate of this same 2024 energy-related investment tax credit.

The effective income tax rates differ from the federal statutory income tax rates primarily due to tax-exempt interest income, the tax-exempt increase in cash value of bank-owned life insurance, disallowed interest expense, stock compensation, state income taxes and the investment tax credit mentioned above.

The effective tax rate for both 2025 and 2024 was also impacted by federal low income housing and new markets tax credits of approximately $660 and $1,508, respectively.

The decrease in these federal income tax credits was primarily due to the expiration of the new markets tax credit at the end of 2024.

The Company continues to maintain a valuation allowance against the tax effect of state net operating losses carryforwards as management believes it is likely that a portion of such carryforwards will expire without being utilized.

24 unchanged sentences

Total securities 542,394 13,505 2.49 % 613,384 16,336 2.66 % 662,852 17,464 2.63 %

Interest-bearing deposits 148,321 7,595 5.12 % 2,856 169 5.94 % 58,426 203 0.35 %

Deposits with banks 217,708 9,359 4.30 % 148,321 7,595 5.12 % 2,856 169 5.94 %

Securities purchased under

agreements to resell 53,527 2,650 4.95 % — — — % — — — %

Total interest-earning assets (3)

41 unchanged sentences

The Company’s largest component of net income is net interest income, which is the difference between interest earned on interest-earning assets, consisting primarily of loans and securities, and interest paid on interest-bearing liabilities, consisting of deposits and borrowings.

Fluctuations in net interest income can result from the combination of changes in the balances of asset and liability categories and changes in interest rates.

Fluctuations in net interest income can result from the combination of changes in the average balances of asset and liability categories and changes in interest rates.

Interest rates earned and paid are also affected by general economic conditions, particularly changes in market interest rates, and by competitive factors, government policies and the actions of regulatory authorities.

The Federal Reserve increased the target federal funds interest rate by a total of 425 basis points in 2022 and an additional 100 basis points in 2023.

In 2024, the Federal Reserve decreased the target federal funds rate by a total of 100 basis points.

The timing and extent of additional interest rate changes by the Federal Reserve is not known at this time.

The FOMC decreased the target federal funds interest rate by a total of 100 basis points from September through December of 2024, and an additional 75 basis points from September through December of 2025, which impacted the comparability of the net interest margin between 2025 and 2024.

Net interest margin on an FTE basis, a non-GAAP financial measure, is a measure of the net return on interest-earning assets and is computed by dividing annualized tax-equivalent net interest income by total average interest-earning assets for the period.

16 unchanged sentences

Total securities (1,824) (1,007) (2,831) (1,335) 207 (1,128)

Interest-bearing deposits 7,452 (26) 7,426 (366) 332 (34)

Deposits with banks 3,129 (1,365) 1,764 7,452 (26) 7,426

Securities purchased under

agreements to resell 2,650 — 2,650 — — —

Total interest income (2)

21 unchanged sentences

Tax-equivalent interest income and fees on loans increased $650 for the year ended December 31, 2025, compared to 2024.

The improvement was driven by a combination of an increase in the average balance of loans and an increase in loan yields in 2024 compared to 2023.

The average balance of loans increased $185,567 in 2024 compared to 2023, while loan yields increased by 46 basis points in 2024 compared to 2023.

Loan originations and renewals in 2024 continued to reprice at prevailing market rates which exceeded the current weighted average portfolio rate.

The improvement was driven by a combination of an increase in the average balance of total loans and an increase in the total loan yield in 2025 compared to 2024.

The average balance of total loans increased $1,130 in 2025 compared to 2024, while total loan yield increased by 2 basis points in 2025 compared to 2024.

Loan originations and renewals for the fixed-rate loan portfolio continued to reprice at prevailing market rates in 2025, which exceeded the current weighted average portfolio rate.

This repricing benefit in the fixed-rate loan portfolio was partially offset by a decrease in loan yields on the variable-rate loan portfolio.

The decrease in the yield on variable-rate loans was primarily due to reductions in the prime rate and Secured Overnight Financing Rates (SOFR) driven by the reductions in the federal funds target rate that occurred in 2024 and 2025.

The yield on the Company’s loan portfolio is affected by the portfolio’s loan mix, the interest rate environment, the effects of competition, the level of nonaccrual loans and reversals of previously accrued interest on charged-off loans.

1 unchanged sentence

In a declining rate environment, the yield on variable-rate loans will decline;

however, as long as market rates remain higher than the yield on the fixed-rate portfolio, renewals and originations will continue to increase the yield on the fixed-rate portfolio.

however, as long as market rates remain higher than the yield on the fixed-rate portfolio, renewals and originations will continue to increase the yield on the fixed-rate portfolio, which is what we experienced in 2025.

The political and economic environments can also influence the volume of new loan originations and the mix of variable-rate versus fixed-rate loans.

Tax-equivalent interest income on securities decreased $2,831 for the year ended December 31, 2025, compared to 2024.

The average balance of securities available for sale in 2024 was $49,468 lower than in 2023, primarily due to principal paydowns on securities, sales of securities, and the decline in fair value of available for sale securities during 2024 resulting from the increase in market interest rates during 2024.

The yield on available for sale securities increased by 3 basis points in 2024 compared to 2023.

Interest income on interest-bearing deposits in other financial institutions increased $7,426 in 2024 compared to 2023.

This was primarily due to the increase in the average balance of interest-bearing deposits in other financial institutions, which was driven by the impact that the increase in average customer deposit balances had on the Company’s cash liquidity.

Interest expense on deposits increased $30,488 for the year ended December 31, 2024, compared to 2023.

The average balance of interest bearing deposits increased $416,483 in 2024 compared to 2023, while the rates paid on deposits increased 68 basis points in 2024 compared to 2023.

The increase in interest expense on deposits was primarily due to the increase in deposit balances, higher deposit rates resulting from higher market rates and increased competition for deposit balances, and changes in deposit mix.

Interest expense on borrowed funds decreased $3,058 for the year ended December 31, 2024, compared to 2023.

The average balance of securities available for sale in 2025 was $70,990 lower than in 2024, primarily due to principal paydowns and sales of securities.

The proceeds from principal paydowns and sales of securities have increased liquidity and improved balance sheet flexibility to allow for improvement in our long-term earnings profile.

Additionally, the yield on available for sale securities decreased by 17 basis points in 2025 compared to 2024.

Interest income on deposits with banks increased $1,764 in 2025 compared to 2024.

This was primarily due to the increase in the average balances of interest-earning deposits with banks, partially offset by a decline in rates.

This increase in balance sheet liquidity was driven by the growth in average customer deposit balances and the decline in average balance of securities available for sale.

Additionally, the Company began investing in securities purchased under agreements to resell in 2025.

These produced interest income of $2,650 in 2025.

Interest expense on deposits decreased $9,534 for the year ended December 31, 2025, compared to 2024.

The rates paid on deposits decreased 55 basis points in 2025 compared to 2024, while the average balance of interest-bearing deposits increased $166,967.

The decrease in cost of deposits was primarily driven by the reductions in the federal funds target rate since September 2024.

Interest expense on borrowed funds decreased $5,926 for the year ended December 31, 2025, compared to 2024, due to a combination of lower average balances of borrowed funds and lower average rate paid on borrowed funds.

The average balance of borrowed funds decreased $122,949 in 2025 compared to 2024.

The average balance of federal funds purchased and other short-term borrowings decreased $119,066 in 2024 compared to 2023 primarily due to increases in deposits.

The average balance of FHLB advances increased by $46,719 in 2024 compared to 2023.

This increase in average balances was primarily due to an increase in rolling one-month FHLB advances that are hedged with long-term interest rate swap agreements to provide fixed-cost wholesale funding.

The average rate paid on FHLB advances increased 40 basis points in 2024 compared to 2023.

The average balance of federal funds purchased and other short-term borrowings decreased $75,736 in 2025 compared to 2024 primarily due to increases in average customer deposits and decline in average balance of securities available for sale.

The average balance of FHLB advances declined by $42,363 in 2025 compared to 2024.

This decline in average balances was primarily due to FHLB advances with a total balance of $45,000 maturing in the fourth quarter of 2024.

(dollars in thousands, except per share amounts)

SECURITIES PORTFOLIO

The balance of securities available for sale decreased by $76,118 as of December 31, 2025, compared to December 31, 2024.

This decrease was primarily due to principal paydowns on securities, a decline in fair value of securities during 2024 resulting from the increase in market interest rates and the sale of $11,841 of securities in the fourth quarter of 2024.

The proceeds from this sale were reinvested into the loan portfolio.

The Company expects the securities portfolio as a percentage of total assets to decrease over time as the proceeds from paydowns and maturities may be used for loan growth or repayment of borrowed funds.

This decrease was primarily due to principal paydowns on securities and the sale of $63,690 of securities in the fourth quarter of 2025, partially offset by a decrease in unrealized losses on securities since December 31, 2024.

The proceeds from the sale in December 2025 improve balance sheet flexibility and will be used to improve our long-term earnings profile through redeployment of the net proceeds into higher-earning assets or repayment of higher-cost borrowings.

As of December 31, 2025, approximately 62 percent of the available for sale securities portfolio consisted of government agency guaranteed collateralized mortgage obligations and mortgage-backed securities.

2 unchanged sentences

The securities issued by state and political subdivisions are diversified among municipalities in 25 states.

(dollars in thousands, except per share amounts)

The following table sets forth the weighted average yield by contractual maturity by security type as of December 31, 2025.

25 unchanged sentences

As of December 31, 2025, total loans were approximately 86.5 percent of total deposits and 72.5 percent of total assets.

Loans outstanding at the end of 2024 increased 2.6 percent compared to the end of 2023.

Changes in the loan portfolio during 2024 included an increase of $94,670 in construction, land and land development loans and decreases of $18,830 in 1-4 family residential first mortgage loans and $17,362 in commercial and industrial loans.

(dollars in thousands, except per share amounts)

Loans outstanding at the end of 2025 decreased 0.1 percent compared to the end of 2024.

Changes in the loan portfolio during 2025 included decreases of $81,314 in construction, land and land development loans and $9,173 in commercial and industrial loans and an increase of $68,571 in commercial real estate loans.

The Company continues to focus on business development efforts in all of its markets.

10 unchanged sentences

As of December 31, 2025 and 2024, there were no loans that were past due 30 days or more.

(dollars in thousands, except per share amounts)

Nonperforming loans declined to $0 at December 31, 2025, compared to $133 at December 31, 2024.

The decrease was due to a payoff on the single loan included in nonperforming loans as of December 31, 2023, partially offset by the addition of one loan as of December 31, 2024.

The decrease was due to a full payoff on the single loan included in nonperforming loans as of December 31, 2024.

The watch classification of loans increased to $52,227 as of December 31, 2025 from $8,349 as of December 31, 2024.

Commercial loans for three borrowers with a total balance of $7,768 were added to the watchlist in 2024 due to a decline in financial performance at the companies.

These loans are considered well collateralized and no required payments are past due.

The increase in the balance of watch classification loans was primarily due to additions of loans within the commercial and commercial real estate loan segments and associated with the transportation and trucking industry.

Loans Secured by Real Estate

18 unchanged sentences

Although the Company’s loan portfolio is heavily concentrated in real estate and its real estate portfolio levels exceed these regulatory guidelines, it has established risk management policies and procedures to regularly monitor the commercial real estate portfolio.

(dollars in thousands, except per share amounts)

The Bank’s Executive Loan Committee (ELC), which is made up of the Chief Executive Officer, Bank President, Chief Risk Officer, Minnesota Group President, Chief Credit Officer and Credit Department Manager, approves all commercial loan relationships in excess of $500 in total credit exposure and annually reviews all commercial loan relationships of $1,000 and greater.

8 unchanged sentences

The internal findings are reported quarterly to the ELC.

(dollars in thousands, except per share amounts)

Commercial loans secured by real estate, including construction, land and land development, totaled $2,356,599, or 78.4 percent of total loans, at December 31, 2025.

27 unchanged sentences

$ 1,861,969 $ 280,228 $ 1,256,993 $ 313,347 $ 11,401 $ — $ —

As of December 31, 2024, there were no non-owner occupied commercial real estate loans that were past due 30 days or more.

(dollars in thousands, except per share amounts)

As of December 31, 2025, there were no non-owner occupied commercial real estate loans that were past due 30 days or more.

Maturities of Loans

78 unchanged sentences

Ratio of allowance for credit losses to total

nonaccrual loans at the end of period 22,881.20 % 9,575.00 % 7,910.87 %

nonaccrual loans at the end of period N/A 22,881.20 % 9,575.00 %

Ratio of net (charge-offs) recoveries to total

1 unchanged sentence

(dollars in thousands, except per share amounts)

Nonperforming loans at December 31, 2024 totaled $133, or 0.00 percent of total loans, a slight decrease from $296, or 0.01 percent of total loans, at December 31, 2023.

The decrease in nonperforming loans at December 31, 2024, compared to December 31, 2023, was due a payoff on the single loan included in the nonaccrual balance on December 31, 2023, partially offset by the addition of one loan as of December 31, 2024.

Nonperforming loans at December 31, 2025 totaled $0, a slight decrease from $133, or 0.00 percent of total loans, at December 31, 2024.

The decrease in nonperforming loans at December 31, 2025, compared to December 31, 2024, was due to a full payoff on the single loan included in the nonaccrual balance on December 31, 2024.

Nonperforming loans include loans on nonaccrual status, loans past due 90 days or more and still accruing interest, and loans that have been considered to be loan restructurings made to borrowers experiencing financial difficulty.

18 unchanged sentences

The portion of the allowance for credit losses related to loans collectively evaluated for credit losses increased to $30,525, or 1.02 percent of outstanding loans as of December 31, 2025, compared to $30,432, or 1.01 percent of outstanding loans as of December 31, 2024.

The increase was primarily due to the credit loss expense of $2,000 for the year ended December 31, 2024.

The credit loss expense for loans in 2024 was primarily due to changes in forecasted loss rates, driven by an increase in forecasted unemployment rate, and an adjustment to qualitative factors within the commercial real estate segment.

The Company recorded a credit loss expense related to loans of $500 in 2023.

The credit loss expense in 2023 was primarily due to growth in loans.

The increase was primarily due to net recoveries for the year ended December 31, 2025.

Management believed the allowance for credit losses as of December 31, 2025 was adequate to absorb the expected losses in the portfolio as of that date.

22 unchanged sentences

$ 3,348,008 $ 3,194,043 $ 2,836,072

Management reduced interest rates on deposits in the fourth quarter of 2024 as a result of the reductions in the target federal funds rate by the Federal Reserve.

Management reduced interest rates on deposits in 2024 and 2025 as a result of the reductions in the target federal funds rate by the Federal Reserve in 2024 and 2025.

Any deposit rate changes in 2026 will be dependent on market rates, liquidity needs and competition for deposit balances.

To limit the Company’s exposure to market interest rate changes, interest rate swaps are in place on $70,000 of deposit balances that effectively convert certain customer deposits with variable rates to fixed-rate instruments.

Additionally, in 2025, the Company entered into three interest rate collar agreements with a total notional amount of $100,000 to mitigate interest rate risk on certain customer deposits.

The structure of the interest rate collars is such that the Company pays the counterparty an incremental amount if the index rate falls below the floor rate.

Conversely, the Company receives an incremental amount if the index rate rises above the cap rate.

Approximately 99 percent of the total time deposits issued by West Bank mature in the next year, including brokered time deposits.

6 unchanged sentences

Over 12 months 1,224

West Bank participates in the IntraFi ® ICS and CDARS reciprocal deposit network, which enables depositors to receive FDIC insurance coverage on deposits otherwise exceeding the maximum insurable amount.

West Bank participates in a reciprocal deposit network, which enables depositors to receive FDIC insurance coverage on deposits otherwise exceeding the maximum insurable amount.

We consider these reciprocal deposits to be in-market deposits as distinguished from traditional out-of-market brokered deposits.

1 unchanged sentence

Included in total deposits as of December 31, 2025 and 2024, were $244,476 and $220,627, respectively, of reciprocal interest-bearing checking and $264,033 and $273,126, respectively, of reciprocal money market deposits.

(dollars in thousands, except per share amounts)

Total estimated uninsured deposits were $1,744,989, $1,562,981 and $1,435,406 as of December 31, 2025, 2024 and 2023, respectively.

4 unchanged sentences

Over 6 through 12 months 81,774

Over 12 months 810

(dollars in thousands, except per share amounts)

BORROWED FUNDS

The fluctuation in the balances of federal funds purchased and other short-term borrowings is based on customer loan and deposit activity and the Company’s balance sheet management objectives, which from time to time may require the Company to draw on the federal funds purchased lines with our correspondent banks or FHLB advances.

Federal funds purchased and other short-term borrowings decreased from $150,270 as of December 31, 2023 to $0 as of December 31, 2024.

This decrease was primarily due to the increase in customer deposits.

The Company had $270,000 of FHLB advances outstanding at December 31, 2024, compared to $315,000 at December 31, 2023.

This decrease was due to two FHLB advances that matured in 2024 and were not renewed.

One advance, with a balance of $20,000, was a term advance and the other advance, with a balance of $25,000, was part of the Company’s rolling funding program and associated with a corresponding interest rate swap agreement that also matured.

The Company had $270,000 of FHLB advances outstanding at December 31, 2025, and 2024.

As of December 31, 2025, all FHLB advances were hedged with long-term interest rate swaps as part of the Company’s rolling funding program.

10 unchanged sentences

The Notes initially bear interest at 5.25 percent per annum, with interest payable semi-annually for the first five years of the Notes.

Beginning June 15, 2027, the interest rate will reset quarterly to a floating rate per annum that will be three-month term Secured Overnight Financing Rate (SOFR) plus 2.41 percent, with payments due quarterly.

Beginning June 15, 2027, the interest rate will reset quarterly to a floating rate per annum that will be three-month term SOFR plus 2.41 percent, with payments due quarterly.

The Company may redeem the Notes, in whole or in part, on and after June 15, 2027 at a price equal to 100 percent of the principal amount of the Notes being redeemed plus accrued and unpaid interest.

The Notes will mature on June 15, 2032 if they are not earlier redeemed.

Proceeds from this debt issuance were used to make a $58,650 capital injection into West Bank, the Company’s subsidiary to fund organic growth.

The Company has an interest rate swap with a notional amount of $20,000 which converts variable-rate subordinated debentures to fixed-rate debt.

The interest rate is a variable rate based on the 3-month term SOFR plus 0.26161 percent tenor spread adjustment plus 3.05 percent.

The Company has $20,619 in junior subordinated debentures which mature in 2033 and carry a variable interest rate.

The Company has an interest rate swap with a notional amount of $20,000 which converts the variable-rate subordinated debentures to fixed-rate debt based on the 3-month term SOFR plus 0.26161 percent tenor spread adjustment plus 3.05 percent.

This interest rate swap has a fixed rate of 4.81 percent and matures in September 2026.

West Bank’s new markets tax credit special purpose subsidiary has a credit agreement for $11,486 as of December 31, 2024.

Interest is payable monthly over the term of the agreement with an interest rate of 1.00 percent.

Monthly principal payments begin in January 2026, and the agreement matures in December 2048.

OFF-BALANCE SHEET ARRANGEMENTS

5 unchanged sentences

Off-balance sheet commitments are more fully discussed in Note 17 of the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.

(dollars in thousands, except per share amounts)

As of December 31, 2024, the allowance for credit losses related to off-balance sheet commitments was $1,544.

In 2024, the Company recorded a credit loss expense of negative $1,000 for unfunded commitments.

The negative credit loss expense was primarily due to the decrease in the balance of unfunded commitments resulting from the funding of construction loans.

As of December 31, 2025, the allowance for credit losses related to off-balance sheet commitments was $1,544, which was unchanged from December 31, 2024.

The allowance for credit losses for off-balance-sheet credit exposures is presented in the “Accrued expenses and other liabilities” line of the Consolidated Balance Sheets.

(dollars in thousands, except per share amounts)

LIQUIDITY AND CAPITAL RESOURCES

1 unchanged sentence

The Company’s principal source of funds is deposits.

Other sources include loan principal repayments, proceeds from the maturity and sale of securities, principal payments on amortizing securities, federal funds purchased, advances from the FHLB and Federal Reserve Bank, other wholesale funding and funds provided by operations.

Other sources include loan principal repayments, proceeds from the maturity and sale of securities, principal payments on amortizing securities, federal funds purchased, advances from the FHLB, other wholesale funding and funds provided by operations.

Liquidity management is conducted on both a daily and a long-term basis.

2 unchanged sentences

Our deposit growth strategy emphasizes core deposit growth.

Deposit inflows and outflows can vary widely and are influenced by prevailing market interest rates, competition, local and national economic conditions, and fluctuations in our business customers’ and municipal customers’ own liquidity needs.

Deposit inflows and outflows can vary widely and are influenced by prevailing market interest rates, competition, local and national economic conditions, operating cycles of public fund deposits and fluctuations in our business customers’ own liquidity needs.

The Company utilizes brokered deposits and other wholesale funding to supplement core deposit fluctuations and loan growth.

Brokered deposits are obtained through various programs administered by IntraFi® and through other third party brokers.

Brokered deposits are obtained through various programs with third party brokers.

At December 31, 2025, the Company had $154,564 in brokered deposits, which included fixed-rate time deposits with maturities through September 2026 and variable-rate deposits with terms through February 2027.

1 unchanged sentence

Net cash from continuing operating activities contributed $46,479, $39,808 and $25,249 to liquidity for the years ended December 31, 2025, 2024 and 2023, respectively.

Management believed that the combination of high levels of potentially liquid assets, unencumbered securities, cash flows from operations and additional borrowing capacity provided the Company with sufficient liquidity as of December 31, 2024.

Management believed that the combination of high levels of liquid and potentially liquid assets, unencumbered securities, cash flows from operations and additional borrowing capacity provided the Company with sufficient liquidity as of December 31, 2025.

The Company’s total stockholders’ equity increased to $265,985 as of December 31, 2025 from $227,875 as of December 31, 2024.

The increase was primarily due to retained income, partially offset by an increase in accumulated other comprehensive loss.

At December 31, 2024, tangible common equity as a percent of tangible assets was 5.68 percent compared to 5.88 percent as of December 31, 2023.

The increase in accumulated other comprehensive loss was driven by the increase in net unrealized losses on available for sale securities between December 31, 2023 and December 31, 2024, due to the increase in market interest rates.

The increase was primarily the result of growth in retained earnings and the increase in the market value of our available for sale investment portfolio.

While accumulated other comprehensive losses reduce tangible common equity, they have no impact on regulatory capital.

At December 31, 2025, tangible common equity as a percent of tangible assets was 6.42 percent compared to 5.68 percent as of December 31, 2024.

As of December 31, 2025 and 2024, the Company had no intangible assets.

7 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-K

Item 7. Management’s Discussion and Analysis