BRIDGEWATER BANCSHARES, INC.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ________

Commission File Number 001-38412

BRIDGEWATER BANCSHARES, INC.

(Exact name of registrant as specified in its charter)


Minnesota (State or other jurisdiction of incorporation or organization)		26-0113412 (I.R.S. Employer Identification No.)

4450 Excelsior Boulevard, Suite 100 St. Louis Park, Minnesota (Address of principal executive offices)		55416 (Zip Code)

(952) 893-6868

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbol	Name of each exchange on which registered:
Common Stock, $0.01 Par Value	BWB	The Nasdaq Stock Market LLC
Depositary Shares, each representing a 1/100^th interest in a share of 5.875% Non-Cumulative Perpetual Preferred Stock, Series A, par value $0.01 per share	BWBBP	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the Common Stock outstanding as of July 28, 2026 was 27,883,823.

Table of Contents

Table of Contents


PART I FINANCIAL INFORMATION	3

Item 1. Consolidated Financial Statements (unaudited)	3
Consolidated Balance Sheets	3
Consolidated Statements of Income	4
Consolidated Statements of Comprehensive Income	5
Consolidated Statements of Shareholders’ Equity	6
Consolidated Statements of Cash Flows	7
Notes to Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
Item 3. Quantitative and Qualitative Disclosures About Market Risk	72
Item 4. Controls and Procedures	73

PART II OTHER INFORMATION	74

Item 1. Legal Proceedings	74
Item 1A. Risk Factors	74
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	74
Item 3. Defaults Upon Senior Securities	75
Item 4. Mine Safety Disclosures	75
Item 5. Other Information	75
Item 6. Exhibits	76

SIGNATURES	77

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollars in thousands, except share data)


		June 30,			December 31,
		2026			2025
		(Unaudited)
ASSETS
Cash and Cash Equivalents		$	169,806		$	123,511
Securities Available for Sale, at Fair Value			605,412			776,441
Loans, Net of Allowance for Credit Losses of $57,418 at June 30, 2026 (unaudited) and $56,443 at December 31, 2025			4,360,502			4,244,108
Federal Home Loan Bank (FHLB) Stock, at Cost			17,979			21,122
Premises and Equipment, Net			52,730			51,576
Accrued Interest			16,946			18,929
Goodwill			11,982			11,982
Other Intangible Assets, Net			6,477			6,930
Bank-Owned Life Insurance			45,671			46,576
Other Assets			102,221			105,827
Total Assets		$	5,389,726		$	5,407,002

LIABILITIES AND EQUITY
LIABILITIES
Deposits:
Noninterest Bearing		$	830,952		$	923,070
Interest Bearing			3,515,252			3,397,299
Total Deposits			4,346,204			4,320,369
FHLB Advances			326,000			399,500
Subordinated Debentures, Net of Issuance Costs			108,882			108,677
Accrued Interest Payable			2,565			3,227
Other Liabilities			58,166			58,134
Total Liabilities			4,841,817			4,889,907

SHAREHOLDERS' EQUITY
Preferred Stock- $0.01 par value; Authorized 10,000,000
Preferred Stock - Issued and Outstanding 27,600 Series A shares ($2,500 liquidation preference) at June 30, 2026 (unaudited) and December 31, 2025			66,514			66,514
Common Stock- $0.01 par value; Authorized 75,000,000
Common Stock - Issued and Outstanding 27,880,830 at June 30, 2026 (unaudited) and 27,759,970 at December 31, 2025			279			278
Additional Paid-In Capital			100,868			98,287
Retained Earnings			380,841			351,455
Accumulated Other Comprehensive Gain (Loss)			(593)			561
Total Shareholders' Equity			547,909			517,095
Total Liabilities and Equity		$	5,389,726		$	5,407,002

See accompanying notes to consolidated financial statements.

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Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

(dollars in thousands, except per share data)

(Unaudited)


		Three Months Ended						Six Months Ended
		June 30,			June 30,			June 30,			June 30,
		2026			2025			2026			2025
INTEREST INCOME
Loans, Including Fees		$	64,146		$	57,888		$	125,872		$	111,708
Investment Securities			6,904			9,200			13,827			18,597
Other			1,606			2,110			2,922			4,601
Total Interest Income			72,656			69,198			142,621			134,906

INTEREST EXPENSE
Deposits			29,711			32,497			58,504			64,600
Federal Funds Purchased			19			16			257			16
Notes Payable			—			260			—			518
FHLB Advances			2,494			2,852			4,932			5,008
Subordinated Debentures			1,866			1,121			3,715			2,104
Total Interest Expense			34,090			36,746			67,408			72,246

NET INTEREST INCOME			38,566			32,452			75,213			62,660
Provision for Credit Losses			550			2,000			1,750			3,500

NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES			38,016			30,452			73,463			59,160

NONINTEREST INCOME
Customer Service Fees			520			496			1,047			991
Net Gain on Sales of Available for Sale Securities			—			474			7,251			475
Letter of Credit Fees			304			323			489			778
Debit Card Interchange Fees			230			152			431			289
Swap Fees			263			938			503			980
Bank-Owned Life Insurance			451			387			898			766
Investment Advisory Fees			260			213			474			538
FHLB Prepayment Income			—			301			—			301
Other Income			296			343			795			588
Total Noninterest Income			2,324			3,627			11,888			5,706

NONINTEREST EXPENSE
Salaries and Employee Benefits			13,916			11,363			27,408			22,734
Occupancy and Equipment			1,360			1,274			2,735			2,508
FDIC Insurance Assessment			595			750			1,375			1,200
Data Processing			692			625			1,303			1,244
Professional and Consulting Fees			1,267			1,110			2,463			2,104
Derivative Collateral Fees			206			372			374			823
Information Technology and Telecommunications			1,258			971			2,325			1,942
Marketing and Advertising			604			435			1,380			762
Intangible Asset Amortization			227			230			453			460
FHLB Prepayment Penalty			—			—			982			—
Other Expense			1,769			1,811			3,266			3,300
Total Noninterest Expense			21,894			18,941			44,064			37,077

INCOME BEFORE INCOME TAXES			18,446			15,138			41,287			27,789
Provision for Income Taxes			4,439			3,618			9,874			6,636
NET INCOME			14,007			11,520			31,413			21,153
Preferred Stock Dividends			(1,014)			(1,014)			(2,027)			(2,027)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS		$	12,993		$	10,506		$	29,386		$	19,126

EARNINGS PER SHARE
Basic		$	0.47		$	0.38		$	1.06		$	0.70
Diluted			0.45			0.38			1.03			0.68

See accompanying notes to consolidated financial statements.

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Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(dollars in thousands)

(Unaudited)


		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2026			2025			2026			2025
Net Income		$	14,007		$	11,520		$	31,413		$	21,153
Other Comprehensive Income (Loss):
Unrealized Gains (Losses) on Available for Sale Securities			5,000			(479)			2,059			7,208
Unrealized Gains (Losses) on Cash Flow Hedges			3,378			(1,455)			5,828			(4,497)
Reclassification Adjustment for Gains Realized in Income			(1,099)			(2,091)			(9,507)			(3,924)
Income Tax Impact			(2,092)			1,156			466			349
Total Other Comprehensive Income (Loss), Net of Tax			5,187			(2,869)			(1,154)			(864)
Comprehensive Income		$	19,194		$	8,651		$	30,259		$	20,289

See accompanying notes to consolidated financial statements.

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Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity

Three and Six Months Ended June 30, 2026 and 2025

(dollars in thousands, except share data)

(Unaudited)


															Accumulated
									Additional						Other
	Preferred			Common Stock					Paid-In			Retained			Comprehensive
Three Months Ended	Stock			Shares		Amount			Capital			Earnings			Income (Loss)			Total
BALANCE March 31, 2025	$	66,514		27,560,150		$	276		$	95,503		$	318,041		$	(11,359)		$	468,975
Stock-based Compensation		—		7,409			—			1,053			—			—			1,053
Comprehensive Income (Loss)		—		—			—			—			11,520			(2,869)			8,651
Stock Options Exercised		—		27,175			—			218			—			—			218
Stock Repurchases		—		(122,704)			(1)			(1,569)			—			—			(1,570)
Vested Restricted Stock Units		—		300			—			—			—			—			—
Restricted Shares Withheld for Taxes		—		(2,047)			—			(31)			—			—			(31)
Preferred Stock Dividend		—		—			—			—			(1,014)			—			(1,014)
BALANCE June 30, 2025	$	66,514		27,470,283		$	275		$	95,174		$	328,547		$	(14,228)		$	476,282

BALANCE March 31, 2026	$	66,514		27,832,867		$	278		$	99,564		$	367,848		$	(5,780)		$	528,424
Stock-based Compensation		—		7,191			—			1,156			—			—			1,156
Comprehensive Income		—		—			—			—			14,007			5,187			19,194
Stock Options Exercised		—		79,431			1			848			—			—			849
Stock Repurchases		—		(38,659)			—			(700)			—			—			(700)
Preferred Stock Dividend		—		—			—			—			(1,014)			—			(1,014)
BALANCE June 30, 2026	$	66,514		27,880,830		$	279		$	100,868		$	380,841		$	(593)		$	547,909


																Accumulated
										Additional						Other
		Preferred			Common Stock					Paid-In			Retained			Comprehensive
Six Months Ended		Stock			Shares		Amount			Capital			Earnings			Income (Loss)			Total
BALANCE December 31, 2024		$	66,514		27,552,449		$	276		$	95,088		$	309,421		$	(13,364)		$	457,935
Stock-based Compensation			—		15,929			—			2,039			—			—			2,039
Comprehensive Income (Loss)			—		—			—			—			21,153			(864)			20,289
Stock Options Exercised			—		42,175			—			395			—			—			395
Stock Repurchases			—		(167,709)			(1)			(2,190)			—			—			(2,191)
Vested Restricted Stock Units			—		38,462			—			—			—			—			—
Restricted Shares Withheld for Taxes			—		(11,023)			—			(158)			—			—			(158)
Preferred Stock Dividend			—		—			—			—			(2,027)			—			(2,027)
BALANCE June 30, 2025		$	66,514		27,470,283		$	275		$	95,174		$	328,547		$	(14,228)		$	476,282

BALANCE December 31, 2025		$	66,514		27,759,970		$	278		$	98,287		$	351,455		$	561		$	517,095
Stock-based Compensation			—		15,493			—			2,426			—			—			2,426
Comprehensive Income (Loss)			—		—			—			—			31,413			(1,154)			30,259
Stock Options Exercised			—		109,831			1			1,173			—			—			1,174
Stock Repurchases			—		(38,659)			—			(700)			—			—			(700)
Vested Restricted Stock Units			—		50,373			—			—			—			—			—
Restricted Shares Withheld for Taxes			—		(16,178)			—			(318)			—			—			(318)
Preferred Stock Dividend			—		—			—			—			(2,027)			—			(2,027)
BALANCE June 30, 2026		$	66,514		27,880,830		$	279		$	100,868		$	380,841		$	(593)		$	547,909

See accompanying notes to consolidated financial statements.

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Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(dollars in thousands)

(Unaudited)


	Six Months Ended
	June 30,
	2026		2025
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	31,413	$	21,153
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Net Amortization on Securities Available for Sale		(2,034)		(1,394)
Net Gain on Sales of Securities Available for Sale		(7,251)		(475)
Provision for Credit Losses on Loans		1,900		3,500
Recovery of Off-Balance Sheet Exposures		(150)		—
Loan Discount Accretion		(495)		(767)
Depreciation of Premises and Equipment		1,310		1,256
Amortization of Other Intangible Assets		453		460
Amortization of Right-of Use Asset		281		280
Cash Surrender Value of Bank-Owned Life Insurance		(898)		(767)
Amortization of Subordinated Debt Issuance Costs		205		171
Stock-based Compensation		2,426		2,039
Deferred Income Taxes		(303)		(1,561)
Remeasurement of Interest Rate Swap		140		—
Changes in Operating Assets and Liabilities:
Accrued Interest Receivable and Other Assets		(2,724)		833
Accrued Interest Payable and Other Liabilities		1,676		(14,036)
Net Cash Provided by Operating Activities		25,949		10,692

CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in Bank-Owned Certificates of Deposit		—		480
Proceeds from Sales of Securities Available for Sale		208,501		59,595
Proceeds from Termination of Interest Rate Swaps		10,403		—
Proceeds from Maturities, Paydowns, Payups and Calls of Securities Available for Sale		57,259		50,531
Purchases of Securities Available for Sale		(90,964)		(73,642)
Net Increase in Loans		(117,799)		(275,886)
Purchase of FHLB Stock		(47,729)		(2,175)
Redemption of FHLB Stock		50,872		—
Purchases of Premises and Equipment		(2,464)		(1,702)
Redemption of Bank-owned Life Insurance		1,803		—
Net Cash Provided (Used) by Investing Activities		69,882		(242,799)

CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Deposits		25,835		149,975
Proceeds from FHLB Advances		490,000		633,500
Principal Payments on FHLB Advances		(563,500)		(588,500)
Issuance of Subordinated Debt, net of Issuance Costs		—		78,828
Redemption of Subordinated Debt, net of Issuance Costs		—		(49,980)
Preferred Stock Dividends Paid		(2,027)		(2,027)
Stock Options Exercised		1,174		365
Stock Repurchases		(700)		(2,191)
Shares Repurchased for Tax Withholdings Upon Vesting of Restricted Stock-Based Awards		(218)		(128)
Shares Repurchased for Tax Withholdings Upon Exercise Stock Options		(100)		—
Net Cash Provided (Used) by Financing Activities		(49,536)		219,842

NET CHANGE IN CASH AND CASH EQUIVALENTS		46,295		(12,265)
Cash and Cash Equivalents Beginning		123,511		229,760
Cash and Cash Equivalents Ending	$	169,806	$	217,495

SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash Paid for Interest	$	67,865	$	71,973
Cash Paid for Income Taxes	$	8,221	$	5,883
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Loans Transferred to Foreclosed Assets		—		185

See accompanying notes to consolidated financial statements.

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Bridgewater Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

Note 1: Description of the Business and Summary of Significant Accounting Policies

Organization

Bridgewater Bancshares, Inc. (the “Company”) is a financial holding company headquartered in St. Louis Park, Minnesota, whose operations consist of the ownership of its wholly-owned subsidiary, Bridgewater Bank (the “Bank”). The Bank commenced operations in 2005 and provides retail and commercial loan and deposit services, principally to customers within the Twins Cities MSA. In 2008, the Bank formed BWB Holdings, LLC, a wholly-owned subsidiary of the Bank, for the purpose of holding repossessed property. In 2018, the Bank formed Bridgewater Investment Management, Inc., a wholly-owned subsidiary of the Bank, for the purpose of holding certain municipal securities and to engage in municipal lending activities.

Recent Developments

In February 2026, the Company opened a new branch location in Lake Elmo, Minnesota to expand the Company’s presence in the eastern side of the Twin Cities market.

On February 27, 2026, the Company and its wholly owned subsidiary, Bridgewater Bank, entered into an equity distribution agreement with Piper Sandler & Co., as distribution agent, pursuant to which the Company may offer and sell, from time to time, shares of its common stock with an aggregate gross sales price of up to $50.0 million, including through “at-the-market” offerings and other permitted methods. The distribution agent is entitled to a commission of 2.5% of the gross sales price of the common stock sold in such offering. The Company is not obligated to sell any shares of its common stock pursuant to the equity distribution agreement, and may suspend or terminate sales thereunder at any time. Any shares sold will be issued pursuant to the Company’s effective shelf registration statement on Form S-3 and related prospectus supplement, and net proceeds, if any, are expected to be used for general corporate purposes, including investments in or advances to the Company’s subsidiaries, working capital, capital expenditures, stock repurchases, debt repayment, or potential acquisitions.

Basis of Presentation

The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include all disclosures necessary for a complete presentation of the consolidated balance sheets, consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of shareholders’ equity and consolidated statements of cash flows in conformity with U.S. generally accepted accounting principles (“GAAP”). However, all normal recurring adjustments which are, in the opinion of management, necessary for the fair presentation of the interim financial statements have been included. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results which may be expected for the entire year. For further information, refer to the consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 26, 2026.

Principles of Consolidation

These consolidated financial statements include the amounts of the Company, the Bank, with locations in Bloomington, Greenwood, Lake Elmo, Minneapolis (2), Minnetonka, Orono, St. Louis Park, and St. Paul, Minnesota, BWB Holdings, LLC, and Bridgewater Investment Management, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.

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Use of Estimates in Preparation of Financial Statements

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Information available which could affect judgements includes, but is not limited to, changes in interest rates, changes in the performance of the economy, including elevated levels of inflation and possible recession, and changes in the financial condition of borrowers.

Material estimates that are particularly susceptible to significant change in the near term include the determination of the allowance for credit losses (“ACL”).

Segment Reporting

An operating segment is generally defined as a component of a business for which discrete financial information is available and whose operating results are regularly reviewed by the chief operating decision maker (“CODM”). Substantially all of the Company’s operations involve the delivery of loan and deposit products to clients. The Company’s CODM makes operating decisions and assesses performance based on an ongoing review of the banking activities, which constitute the Company’s only operating segment for financial reporting purposes. The Company’s single segment is managed on a consolidated basis by the CODM who is the Chief Executive Officer.

The accounting policies of this segment are the same as those described in Note 1 of the Company’s most recent Annual Report on Form 10-K, filed with the SEC on February 26, 2026, concerning significant accounting policies. The CODM assesses performance of the segment and determines the appropriate allocation of Company resources based on consolidated net income, which is reported in the Consolidated Statements of Income. Consolidated net income is used in deciding where to deploy capital, and to monitor how budget compares to actual results. It is also used in benchmarking performance measures to Company peers for compensation related analysis. The measure of segment assets is reported on the Consolidated Balance Sheets as total consolidated assets.

Note 2: Earnings Per Share

Basic earnings per common share are computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share are computed by dividing net income available to common shareholders by the weighted average number of common shares, adjusted for the dilutive effect of stock compensation. For the three and six months ended June 30, 2026, stock options, restricted stock units, and performance stock units totaling 81,703 and 117,241, respectively, were excluded from the calculation because they were deemed to be anti-dilutive. For the three and six months ended June 30, 2025, stock options and restricted stock units totaling 576,788 and 585,885, respectively, were excluded from the calculation because they were deemed to be anti-dilutive.

Table of Contents

The following table presents the numerators and denominators for basic and diluted earnings per share computations for the three and six months ended June 30, 2026 and 2025:


		Three Months Ended						Six Months Ended
		June 30,						June 30,
(dollars in thousands, except per share data)		2026			2025			2026			2025
Net Income Available to Common Shareholders		$	12,993		$	10,506		$	29,386		$	19,126
Weighted Average Common Stock Outstanding:
Weighted Average Common Stock Outstanding (Basic)			27,861,522			27,460,982			27,830,976			27,514,579
Dilutive Effect of Stock Compensation			727,810			537,026			715,745			508,013
Weighted Average Common Stock Outstanding (Dilutive)			28,589,332			27,998,008			28,546,721			28,022,529

Basic Earnings per Common Share		$	0.47		$	0.38		$	1.06		$	0.70
Diluted Earnings per Common Share			0.45			0.38			1.03			0.68

Note 3: Securities

The following tables present the amortized cost and estimated fair value of securities with gross unrealized gains and losses at June 30, 2026 and December 31, 2025:


		June 30, 2026
					Gross			Gross
		Amortized			Unrealized			Unrealized
(dollars in thousands)		Cost			Gains			Losses			Fair Value
Securities Available for Sale:
Municipal Bonds		$	263,990		$	5,633		$	(12,753)		$	256,870
Mortgage-Backed Securities			234,000			2,050			(10,720)			225,330
Corporate Securities			88,221			1,892			(1,979)			88,134
U.S. Government Agency Securities			6,919			61			(24)			6,956
Asset-Backed Securities			28,146			2			(26)			28,122
Total Securities Available for Sale		$	621,276		$	9,638		$	(25,502)		$	605,412


		December 31, 2025
					Gross			Gross
		Amortized			Unrealized			Unrealized
(dollars in thousands)		Cost			Gains			Losses			Fair Value
Securities Available for Sale:
U.S. Treasury Securities		$	155,863		$	—		$	(9,657)		$	146,206
Municipal Bonds			242,995			8,686			(12,513)			239,168
Mortgage-Backed Securities			252,291			3,442			(10,061)			245,672
Corporate Securities			93,080			1,958			(2,631)			92,407
U.S. Government Agency Securities			8,664			73			(30)			8,707
Asset-Backed Securities			44,298			20			(37)			44,281
Total Securities Available for Sale		$	797,191		$	14,179		$	(34,929)		$	776,441

Securities with a carrying value of $104.1 million and $254.3 million were pledged to secure borrowing capacity at the Federal Reserve Discount Window as of June 30, 2026 and December 31, 2025, respectively.

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The following tables present the fair value and gross unrealized losses of securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2026 and December 31, 2025:


				Less Than 12 Months						12 Months or Greater						Total
		Number of					Unrealized						Unrealized						Unrealized
(dollars in thousands, except number of holdings)		Holdings		Fair Value			Losses			Fair Value			Losses			Fair Value			Losses
June 30, 2026
Municipal Bonds		164		$	9,547		$	(54)		$	88,978		$	(12,699)		$	98,525		$	(12,753)
Mortgage-Backed Securities		115			52,004			(159)			103,944			(10,561)			155,948			(10,720)
Corporate Securities		38			12,866			(111)			33,975			(1,868)			46,841			(1,979)
U.S. Government Agency Securities		22			661			(6)			1,269			(18)			1,930			(24)
Asset-Backed Securities		7			8,002			(3)			10,917			(23)			18,919			(26)
Total Securities Available for Sale		346		$	83,080		$	(333)		$	239,083		$	(25,169)		$	322,163		$	(25,502)


				Less Than 12 Months						12 Months or Greater						Total
		Number of					Unrealized						Unrealized						Unrealized
(dollars in thousands, except number of holdings)		Holdings		Fair Value			Losses			Fair Value			Losses			Fair Value			Losses
December 31, 2025
U.S. Treasury Securities		2		$	—		$	—		$	146,206		$	(9,657)		$	146,206		$	(9,657)
Municipal Bonds		185			22,430			(354)			94,839			(12,159)			117,269			(12,513)
Mortgage-Backed Securities		108			4,701			(14)			110,265			(10,047)			114,966			(10,061)
Corporate Securities		45			10,341			(68)			39,318			(2,563)			49,659			(2,631)
U.S. Government Agency Securities		25			800			(3)			1,884			(27)			2,684			(30)
Asset-Backed Securities		7			13,024			(31)			6,150			(6)			19,174			(37)
Total Securities Available for Sale		372		$	51,296		$	(470)		$	398,662		$	(34,459)		$	449,958		$	(34,929)

At June 30, 2026 and December 31, 2025, 346 and 372 debt securities had unrealized losses with aggregate depreciation of approximately 7.3% and 7.2%, respectively, from the Company’s amortized cost. These unrealized losses have not been recognized into income because management does not intend to sell these securities, and it is not more likely than not it will be required to sell the securities before recovery of its amortized cost basis. Furthermore, the unrealized losses are primarily due to changes in interest rates and other market conditions and were not reflective of credit events. To make this determination, consideration is given to such factors as the credit rating of the issuer, level of credit enhancement, changes in credit ratings, market conditions such as current interest rates, any adverse conditions specific to the security, and delinquency status on contractual payments. As of June 30, 2026 and December 31, 2025, there was no allowance for credit losses carried on the Company’s securities portfolio.

Accrued interest receivable on securities, which is recorded within accrued interest on the balance sheet, totaled $4.7 million and $6.2 million at June 30, 2026 and December 31, 2025, respectively, and was excluded from the estimate of credit losses.

The Company has entered into fair value hedging transactions to mitigate the impact of changing interest rates on the fair value of securities within the portfolio. See Note 6 – Derivative Instruments and Hedging Activities for additional information.

There were no net realized gains or losses as a result of sales from the securities portfolio for the three months ended June 30, 2026. There was a $7.3 million net realized gain as a result of sales from the securities portfolio for the six months ended June 30, 2026, which included a net gain of $10.4 million recorded on the termination of fair value hedges on treasury and municipal securities.

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The following table presents a summary of the amortized cost and estimated fair value of debt securities by the earlier of expected call date or contractual maturity as of June 30, 2026. Call date is used when a call of the debt security is expected, as determined by the Company when the security has a market value above its amortized cost. Contractual maturities will differ from expected maturities for mortgage-backed, U.S. government agency securities and asset-backed securities because borrowers may have the right to call or prepay obligations without penalties.


(dollars in thousands)		Amortized Cost			Fair Value
June 30, 2026
Due in One Year or Less		$	39,681		$	41,668
Due After One Year Through Five Years			168,158			171,669
Due After Five Years Through 10 Years			133,781			122,384
Due After 10 Years			10,591			9,283
Subtotal			352,211			345,004
Mortgage-Backed Securities			234,000			225,330
U.S. Government Agency Securities			6,919			6,956
Asset-Backed Securities			28,146			28,122
Totals		$	621,276		$	605,412

The following table presents a summary of the proceeds from sales of securities available for sale, as well as gross gains and losses, for the three and six months ended June 30, 2026 and 2025:


		Three Months Ended						Six Months Ended
		June 30,						June 30,
(dollars in thousands)		2026			2025			2026			2025
Proceeds From Sales of Securities		$	—		$	58,503		$	208,501		$	59,595
Gross Gains on Sales			—			480			6,190			484
Gross Losses on Sales			—			(6)			(9,342)			(9)

Note 4: Loans and Allowance for Credit Losses

The following table presents the components of the loan portfolio at June 30, 2026 and December 31, 2025:


		June 30,			December 31,
(dollars in thousands)		2026			2025
Commercial		$	591,034		$	547,245
Leases			41,802			43,407
Construction and Land Development			186,248			216,163
1-4 Family Construction			46,539			45,152
Real Estate Mortgage:
1-4 Family Mortgage			485,288			496,142
Multifamily			1,690,566			1,587,338
CRE Owner Occupied			191,153			189,754
CRE Nonowner Occupied			1,168,863			1,165,104
Total Real Estate Mortgage Loans			3,535,870			3,438,338
Consumer and Other			24,896			19,212
Total Loans, Gross			4,426,389			4,309,517
Allowance for Credit Losses			(57,418)			(56,443)
Net Deferred Loan Fees			(8,469)			(8,966)
Total Loans, Net		$	4,360,502		$	4,244,108

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The following tables present the aging in past due loans and loans on nonaccrual status, with and without an ACL by loan segment, as of June 30, 2026 and December 31, 2025:


		Accruing Interest
					30-89 Days			90 Days or			Nonaccrual			Nonaccrual
(dollars in thousands)		Current			Past Due			More Past Due			with ACL			without ACL			Total
June 30, 2026
Commercial		$	591,025		$	9		$	—		$	—		$	—		$	591,034
Leases			41,802			—			—			—			—			41,802
Construction and Land Development			186,222			—			—			—			26			186,248
1-4 Family Construction			46,539			—			—			—			—			46,539
Real Estate Mortgage:
1-4 Family Mortgage			484,390			842			—			—			56			485,288
Multifamily			1,678,448			—			—			12,118			—			1,690,566
CRE Owner Occupied			191,153			—			—			—			—			191,153
CRE Nonowner Occupied			1,160,214			—			—			8,649			—			1,168,863
Total Real Estate Mortgage Loans			3,514,205			842			—			20,767			56			3,535,870
Consumer and Other			24,077			20			—			799			—			24,896
Totals		$	4,403,870		$	871		$	—		$	21,566		$	82		$	4,426,389


		Accruing Interest
					30-89 Days			90 Days or			Nonaccrual			Nonaccrual
(dollars in thousands)		Current			Past Due			More Past Due			with ACL			without ACL			Total
December 31, 2025
Commercial		$	546,499		$	746		$	—		$	—		$	—		$	547,245
Leases			43,407			—			—			—			—			43,407
Construction and Land Development			216,129			—			—			—			34			216,163
1-4 Family Construction			45,152			—			—			—			—			45,152
Real Estate Mortgage:
1-4 Family Mortgage			495,922			164			—			—			56			496,142
Multifamily			1,574,043			—			—			13,295			—			1,587,338
CRE Owner Occupied			189,754			—			—			—			—			189,754
CRE Nonowner Occupied			1,156,397			58			—			8,649			—			1,165,104
Total Real Estate Mortgage Loans			3,416,116			222			—			21,944			56			3,438,338
Consumer and Other			19,212			—			—			—			—			19,212
Totals		$	4,286,515		$	968		$	—		$	21,944		$	90		$	4,309,517

The Company aggregates loans into credit quality indicators based on relevant information about the ability of borrowers to service their debt by using internal reviews in which management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which the borrowers operate, and the fair values of collateral securing the loans. The Company analyzes all loans individually to assign a risk rating, grouped into six major categories defined as follows:

Pass: A pass loan is a credit with no known or existing potential weaknesses deserving of management’s close attention.

Watch: Loans classified as watch have a credit where the borrower’s financial strength and performance has

been declining and may pose an elevated level of risk. Watch loans have been identified as having minor deterioration in loan quality or other credit weaknesses/circumstances meriting closer attention of management.

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s

close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. This is a transitional rating and loans should not be classified as special mention for more than one year.

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Substandard: Loans classified as substandard are not adequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. Well defined weaknesses include a borrower’s lack of marketability, inadequate cash flow or collateral support, failure to complete construction on time, or the failure to fulfill economic expectations. They are characterized by the distinct possibility that the Company will sustain loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss: Loans classified as loss are considered uncollectible and charged-off immediately.

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The following tables present loan balances classified by credit quality indicator by year of origination as of June 30, 2026 and December 31, 2025:


		June 30, 2026
(dollars in thousands)		2026		2025		2024		2023		2022		Prior		Revolving		Total
Commercial
Pass	$	121,749	$	120,683	$	66,006	$	14,144	$	25,218	$	31,357	$	199,619	$	578,776
Watch/Special Mention		480		—		477		—		—		120		751		1,828
Substandard		—		—		122		—		10,308		—		—		10,430
Total Commercial		122,229		120,683		66,605		14,144		35,526		31,477		200,370		591,034
Current Period Gross Write-offs		—		639		—		—		—		—		—		639

Leases
Pass		7,809		13,628		8,499		6,256		3,876		1,734		—		41,802
Total Leases		7,809		13,628		8,499		6,256		3,876		1,734		—		41,802
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Construction and Land Development
Pass		31,224		116,990		24,361		98		186		252		13,111		186,222
Substandard		—		—		26		—		—		—		—		26
Total Construction and Land Development		31,224		116,990		24,387		98		186		252		13,111		186,248
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

1-4 Family Construction
Pass		11,792		14,366		765		—		—		184		19,432		46,539
Total 1-4 Family Construction		11,792		14,366		765		—		—		184		19,432		46,539
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Real Estate Mortgage:
1-4 Family Mortgage
Pass		40,556		82,885		64,506		38,586		79,684		92,228		85,315		483,760
Watch/Special Mention		200		—		—		—		—		—		—		200
Substandard		623		649		—		—		56		—		—		1,328
Total 1-4 Family Mortgage		41,379		83,534		64,506		38,586		79,740		92,228		85,315		485,288
Current Period Gross Write-offs		—		9		—		—		—		—		—		9

Multifamily
Pass		234,700		400,253		188,417		73,209		376,051		368,791		10,538		1,651,959
Watch/Special Mention		26,489		—		—		—		—		—		—		26,489
Substandard		1,456		—		—		—		10,645		17		—		12,118
Total Multifamily		262,645		400,253		188,417		73,209		386,696		368,808		10,538		1,690,566
Current Period Gross Write-offs		—		—		—		—		—		709		—		709

CRE Owner Occupied
Pass		13,497		20,503		20,349		21,981		51,509		50,397		2,382		180,618
Watch/Special Mention		—		—		—		1,481		5,699		—		—		7,180
Substandard		—		—		—		—		—		3,355		—		3,355
Total CRE Owner Occupied		13,497		20,503		20,349		23,462		57,208		53,752		2,382		191,153
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

CRE Nonowner Occupied
Pass		163,255		307,687		223,014		63,844		198,761		186,271		7,627		1,150,459
Watch/Special Mention		—		2,582		—		—		—		—		—		2,582
Substandard		2,805		12,124		893		—		—		—		—		15,822
Total CRE Nonowner Occupied		166,060		322,393		223,907		63,844		198,761		186,271		7,627		1,168,863
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Total Real Estate Mortgage Loans		483,581		826,683		497,179		199,101		722,405		701,059		105,862		3,535,870

Consumer and Other
Pass		631		2,591		152		254		154		244		19,871		23,897
Watch/Special Mention		—		—		—		—		—		—		190		190
Substandard		—		—		—		—		—		799		10		809
Total Consumer and Other		631		2,591		152		254		154		1,043		20,071		24,896
Current Period Gross Write-offs		—		—		—		—		—		4		35		39

Total Period Gross Write-offs		—		648		—		—		—		713		35		1,396
Total Loans	$	657,266	$	1,094,941	$	597,587	$	219,853	$	762,147	$	735,749	$	358,846	$	4,426,389

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		December 31, 2025
(dollars in thousands)		2025		2024		2023		2022		2021		Prior		Revolving		Total
Commercial
Pass	$	163,333	$	83,059	$	17,582	$	28,653	$	14,774	$	25,668	$	201,739	$	534,808
Watch/Special Mention		—		—		584		165		—		—		1,234		1,983
Substandard		—		135		—		10,313		6		—		—		10,454
Total Commercial		163,333		83,194		18,166		39,131		14,780		25,668		202,973		547,245
Current Period Gross Write-offs		21		—		1,239		58		186		—		—		1,504

Leases
Pass		15,721		11,057		8,412		5,390		1,749		1,078		—		43,407
Total Leases		15,721		11,057		8,412		5,390		1,749		1,078		—		43,407
Current Period Gross Write-offs		—		—		—		15		—		—		—		15

Construction and Land Development
Pass		158,592		42,019		1,598		222		412		—		13,286		216,129
Substandard		—		34		—		—		—		—		—		34
Total Construction and Land Development		158,592		42,053		1,598		222		412		—		13,286		216,163
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

1-4 Family Construction
Pass		29,621		2,910		—		196		186		—		12,239		45,152
Total 1-4 Family Construction		29,621		2,910		—		196		186		—		12,239		45,152
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Real Estate Mortgage:
1-4 Family Mortgage
Pass		98,718		68,467		43,294		85,577		66,080		47,581		85,425		495,142
Substandard		944		—		—		56		—		—		—		1,000
Total 1-4 Family Mortgage		99,662		68,467		43,294		85,633		66,080		47,581		85,425		496,142
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Multifamily
Pass		440,012		166,790		77,979		405,405		304,191		124,609		10,647		1,529,633
Watch/Special Mention		31,728		—		2,201		—		—		—		—		33,929
Substandard		13,296		—		—		10,480		—		—		—		23,776
Total Multifamily		485,036		166,790		80,180		415,885		304,191		124,609		10,647		1,587,338
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

CRE Owner Occupied
Pass		22,102		20,740		23,532		52,754		28,295		26,910		1,932		176,265
Watch/Special Mention		—		—		1,510		5,823		432		2,171		1,842		11,778
Substandard		—		—		—		—		1,711		—		—		1,711
Total CRE Owner Occupied		22,102		20,740		25,042		58,577		30,438		29,081		3,774		189,754
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

CRE Nonowner Occupied
Pass		367,117		252,912		70,464		216,814		123,618		113,955		4,110		1,148,990
Watch/Special Mention		—		—		—		—		—		—		133		133
Substandard		15,080		901		—		—		—		—		—		15,981
Total CRE Nonowner Occupied		382,197		253,813		70,464		216,814		123,618		113,955		4,243		1,165,104
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Total Real Estate Mortgage Loans		988,997		509,810		218,980		776,909		524,327		315,226		104,089		3,438,338

Consumer and Other
Pass		3,046		198		306		269		44		1,074		14,275		19,212
Substandard		—		—		—		—		—		—		—		—
Total Consumer and Other		3,046		198		306		269		44		1,074		14,275		19,212
Current Period Gross Write-offs		—		—		4		—		—		—		30		34

Total Period Gross Write-offs		21		—		1,243		73		186		—		30		1,553
Total Loans	$	1,359,310	$	649,222	$	247,462	$	822,117	$	541,498	$	343,046	$	346,862	$	4,309,517

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The following tables present the activity in the ACL, by segment, for the three and six months ended June 30, 2026 and 2025:


			Provision for
			(Recovery of)
			Credit Losses		Loans and		Recoveries		Total Ending
	Beginning		for Loans		Leases		of Loans		Allowance
(dollars in thousands)	Balance		and Leases		Charged-off		and Leases		Balance
Three Months Ended June 30, 2026
Commercial	$	6,395	$	(677)	$	—	$	328	$	6,046
Leases		305		(9)		—		—		296
Construction and Land Development		1,696		(296)		—		—		1,400
1-4 Family Construction		355		(42)		—		—		313
Real Estate Mortgage:
1-4 Family Mortgage		2,385		(100)		(9)		—		2,276
Multifamily		24,140		1,588		(709)		—		25,019
CRE Owner Occupied		1,065		(32)		—		—		1,033
CRE Nonowner Occupied		20,677		79		—		—		20,756
Total Real Estate Mortgage Loans		48,267		1,535		(718)		—		49,084
Consumer and Other		259		39		(20)		1		279
Total	$	57,277	$	550	$	(738)	$	329	$	57,418

Six Months Ended June 30, 2026
Commercial	$	5,982	$	237	$	(639)	$	466	$	6,046
Leases		352		(56)		—		—		296
Construction and Land Development		1,687		(287)		—		—		1,400
1-4 Family Construction		316		(3)		—		—		313
Real Estate Mortgage:
1-4 Family Mortgage		2,475		(190)		(9)		—		2,276
Multifamily		23,775		1,953		(709)		—		25,019
CRE Owner Occupied		1,080		(47)		—		—		1,033
CRE Nonowner Occupied		20,595		161		—		—		20,756
Total Real Estate Mortgage Loans		47,925		1,877		(718)		—		49,084
Consumer and Other		181		132		(39)		5		279
Total	$	56,443	$	1,900	$	(1,396)	$	471	$	57,418

Table of Contents


			Provision for
			(Recovery of)
			Credit Losses		Loans and		Recoveries		Total Ending
	Beginning		for Loans		Leases		of Loans		Allowance
(dollars in thousands)	Balance		and Leases		Charged-off		and Leases		Balance
Three Months Ended June 30, 2025
Commercial	$	5,847	$	87	$	—	$	1	$	5,935
Leases		365		16		—		—		381
Construction and Land Development		1,075		29		—		—		1,104
1-4 Family Construction		292		(14)		—		—		278
Real Estate Mortgage:
1-4 Family Mortgage		2,585		(172)		—		—		2,413
Multifamily		23,927		(6)		—		—		23,921
CRE Owner Occupied		1,226		(89)		—		—		1,137
CRE Nonowner Occupied		18,314		2,129		—		—		20,443
Total Real Estate Mortgage Loans		46,052		1,862		—		—		47,914
Consumer and Other		135		20		(6)		4		153
Total	$	53,766	$	2,000	$	(6)	$	5	$	55,765

Six Months Ended June 30, 2025
Commercial	$	5,630	$	304	$	—	$	1	$	5,935
Leases		368		13		—		—		381
Construction and Land Development		866		238		—		—		1,104
1-4 Family Construction		331		(53)		—		—		278
Real Estate Mortgage:
1-4 Family Mortgage		2,795		(382)		—		—		2,413
Multifamily		23,120		801		—		—		23,921
CRE Owner Occupied		1,290		(153)		—		—		1,137
CRE Nonowner Occupied		17,735		2,708		—		—		20,443
Total Real Estate Mortgage Loans		44,940		2,974		—		—		47,914
Consumer and Other		142		24		(18)		5		153
Total	$	52,277	$	3,500	$	(18)	$	6	$	55,765

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The following tables present the balance in the ACL and the recorded investment in loans, by segment, as of June 30, 2026 and December 31, 2025:


	Individually		Collectively
	Evaluated for		Evaluated for
(dollars in thousands)	Credit Loss		Credit Loss		Total
ACL at June 30, 2026
Commercial	$	189	$	5,857	$	6,046
Leases		—		296		296
Construction and Land Development		—		1,400		1,400
1-4 Family Construction		—		313		313
Real Estate Mortgage:
1-4 Family Mortgage		—		2,276		2,276
Multifamily		995		24,024		25,019
CRE Owner Occupied		—		1,033		1,033
CRE Nonowner Occupied		4,019		16,737		20,756
Total Real Estate Mortgage Loans		5,014		44,070		49,084
Consumer and Other		80		199		279
Total	$	5,283	$	52,135	$	57,418


	Individually		Collectively
	Evaluated for		Evaluated for
(dollars in thousands)	Credit Loss		Credit Loss		Total
ACL at December 31, 2025
Commercial	$	134	$	5,848	$	5,982
Leases		—		352		352
Construction and Land Development		—		1,687		1,687
1-4 Family Construction		—		316		316
Real Estate Mortgage:
1-4 Family Mortgage		—		2,475		2,475
Multifamily		789		22,986		23,775
CRE Owner Occupied		—		1,080		1,080
CRE Nonowner Occupied		2,889		17,706		20,595
Total Real Estate Mortgage Loans		3,678		44,247		47,925
Consumer and Other		—		181		181
Total	$	3,812	$	52,631	$	56,443

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	Individually		Collectively
	Evaluated for		Evaluated for
(dollars in thousands)	Credit Loss		Credit Loss		Total
Loans at June 30, 2026
Commercial	$	10,430	$	580,604	$	591,034
Leases		—		41,802		41,802
Construction and Land Development		26		186,222		186,248
1-4 Family Construction		—		46,539		46,539
Real Estate Mortgage:
1-4 Family Mortgage		1,328		483,960		485,288
Multifamily		12,118		1,678,448		1,690,566
CRE Owner Occupied		3,355		187,798		191,153
CRE Nonowner Occupied		15,822		1,153,041		1,168,863
Total Real Estate Mortgage Loans		32,623		3,503,247		3,535,870
Consumer and Other		809		24,087		24,896
Total	$	43,888	$	4,382,501	$	4,426,389


	Individually		Collectively
	Evaluated for		Evaluated for
(dollars in thousands)	Credit Loss		Credit Loss		Total
Loans at December 31, 2025
Commercial	$	10,527	$	536,718	$	547,245
Leases		—		43,407		43,407
Construction and Land Development		34		216,129		216,163
1-4 Family Construction		—		45,152		45,152
Real Estate Mortgage:
1-4 Family Mortgage		1,000		495,142		496,142
Multifamily		23,776		1,563,562		1,587,338
CRE Owner Occupied		3,553		186,201		189,754
CRE Nonowner Occupied		16,867		1,148,237		1,165,104
Total Real Estate Mortgage Loans		45,196		3,393,142		3,438,338
Consumer and Other		—		19,212		19,212
Total	$	55,757	$	4,253,760	$	4,309,517

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The following tables present the amortized cost basis of collateral dependent loans by the primary collateral type, which are individually evaluated to determine expected credit losses, and the related ACL allocated to these loans, as of June 30, 2026 and December 31, 2025:


		Primary Type of Collateral
					Business									ACL
(dollars in thousands)		Real Estate			Assets			Other			Total			Allocation
June 30, 2026
Commercial		$	—		$	252		$	10,178		$	10,430		$	189
Construction and Land Development			26			—			—			26			—
Real Estate Mortgage:
1-4 Family Mortgage			1,328			—			—			1,328			—
Multifamily			12,118			—			—			12,118			995
CRE Owner Occupied			3,355			—			—			3,355			—
CRE Nonowner Occupied			15,822			—			—			15,822			4,019
Total Real Estate Mortgage Loans			32,623			—			—			32,623			5,014
Consumer and Other			—			—			809			809			80
Totals		$	32,649		$	252		$	10,987		$	43,888		$	5,283


		Primary Type of Collateral
					Business									ACL
(dollars in thousands)		Real Estate			Assets			Other			Total			Allocation
December 31, 2025
Commercial		$	72		$	159		$	10,296		$	10,527		$	134
Construction and Land Development			34			—			—			34			—
Real Estate Mortgage:
1-4 Family Mortgage			1,000			—			—			1,000			—
Multifamily			23,776			—			—			23,776			789
CRE Owner Occupied			3,553			—			—			3,553			—
CRE Nonowner Occupied			16,867			—			—			16,867			2,889
Total Real Estate Mortgage Loans			45,196			—			—			45,196			3,678
Totals		$	45,302		$	159		$	10,296		$	55,757		$	3,812

Accrued interest receivable on loans, which is recorded within accrued interest on the balance sheet, totaled $12.2 million and $12.7 million at June 30, 2026 and December 31, 2025, respectively, and was excluded from the estimate of credit losses.

For the three and six months ended June 30, 2026, there were no loans modified to borrowers experiencing financial difficulty. For the three and six months ended June 30, 2025, the Company modified one commercial real estate, or CRE, nonowner occupied loan, with an outstanding balance of $8.6 million, for a borrower experiencing financial difficulty by granting a 3-year extension of the loan at a below market rate.

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Note 5: Deposits

The following table presents the composition of deposits at June 30, 2026 and December 31, 2025:


		June 30,			December 31,
(dollars in thousands)		2026			2025
Transaction Deposits		$	1,775,454		$	1,816,810
Savings and Money Market Deposits			1,435,582			1,380,922
Time Deposits			243,694			312,154
Brokered Deposits			891,474			810,483
Totals		$	4,346,204		$	4,320,369

Brokered deposits included brokered transaction and money market accounts of $145.2 million and $145.5 million as of June 30, 2026 and December 31, 2025, respectively.

The following table presents the scheduled maturities of brokered and time deposits at June 30, 2026:


	June 30,
(dollars in thousands)	2026
Less than 1 Year	$	546,416
1 to 2 Years		92,402
2 to 3 Years		138,635
3 to 4 Years		100,219
4 to 5 Years		112,339
Totals	$	990,011

The aggregate amount of time deposits greater than $250,000 was approximately $107.1 million and $158.7 million at June 30, 2026 and December 31, 2025, respectively.

Note 6: Derivative Instruments and Hedging Activities

The Company uses derivative financial instruments, which consist of interest rate swaps, interest rate caps, and fair value swaps to assist in its interest rate risk management. The notional amount does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual agreements. Derivative financial instruments are reported at fair value in other assets or other liabilities. The accounting for changes in the fair value of a derivative depends on whether it has been designated and qualifies as part of a hedging relationship and classification as either a cash flow hedge or fair value hedge for those derivatives which are designated as part of a hedging relationship. For derivatives not designated as hedges, the gain or loss is recognized in current earnings.

Derivatives Designated as Hedging Instruments

The Company uses derivative instruments to hedge its exposure to economic risks, including interest rate, liquidity and credit risk. Certain hedging relationships are formally designated and qualify for hedge accounting under GAAP. On the date the Company enters into a derivative contract designated as a hedging instrument, the derivative is designated as either a fair value hedge or a cash flow hedge. When a derivative is designated as a fair value or cash flow hedge, the Company performs an assessment, at inception, and at a minimum, quarterly thereafter, to determine the effectiveness of the derivative in offsetting changes in the value or cash flows of the hedged item(s).

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Fair value hedges: For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument, as well as the offsetting gain or loss on the hedged asset or liability attributable to the hedged risk, are recognized in current earnings. The gain or loss on the derivative instrument is presented on the same income statement line item as the earnings effect of the hedged item. The Company utilizes fair value hedges to mitigate the effect of changing interest rates on the fair values of fixed rate available for sale securities. The hedging strategy converts the fixed interest rates to variable interest rates based on Secured Overnight Financing Rate (“SOFR”).

During the six months ended June 30, 2026, the Company terminated certain fair value interest rate swaps with an aggregate notional amount of $195.9 million, resulting in a net gain of $10.4 million. The net gain was recognized in earnings and included in net gains on sales of available for sale securities.

The following table presents a summary of the Company’s interest rate swaps designated as fair value hedges as of June 30, 2026 and December 31, 2025:


(dollars in thousands)		June 30, 2026			December 31, 2025
Notional Amount		$	43,703		$	242,314
Weighted Average Pay Rate			3.82	%		3.55	%
Weighted Average Receive Rate			3.64			4.20
Weighted Average Maturity (Years)			12.98			14.54

Cash flow hedges: For derivative instruments that are designated and qualify as a cash flow hedge, the aggregate fair value of the derivative instrument is recorded in other assets or other liabilities, with any gain or loss related to changes in fair value recorded in accumulated other comprehensive income, net of tax. The gain or loss is reclassified into earnings in the same period during which the hedged asset or liability affects earnings and is presented in the same income statement line item as the earnings effect of the hedged asset or liability. The Company utilizes cash flow hedges to manage interest rate exposure for the brokered deposit and wholesale borrowing portfolios. During the next 12 months, the Company estimates that $5.1 million will be reclassified to interest expense, as a reduction of the expense.

The following table presents a summary of the Company’s interest rate swaps designated as cash flow hedges as of June 30, 2026 and December 31, 2025:


(dollars in thousands)		June 30, 2026			December 31, 2025
Notional Amount		$	278,000		$	263,000
Weighted Average Pay Rate			3.12	%		2.96	%
Weighted Average Receive Rate			3.66	%		3.94	%
Weighted Average Maturity (Years)			3.57			3.90
Net Unrealized Gain		$	4,051		$	1,286

The Company purchases interest rate caps, designated as cash flow hedges, of certain funding liabilities. The interest rate caps require receipt of variable amounts from the counterparties when interest rates rise above the strike price specified in the contracts. For both the three and six months ended June 30, 2026 and 2025, the Company recognized amortization expense on the interest rate caps of $198,000 and $393,000, respectively, which was recorded as a component of interest expense on brokered deposits and FHLB advances.

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The following table presents a summary of the Company’s interest rate caps designated as cash flow hedges as of June 30, 2026 and December 31, 2025:


(dollars in thousands)		June 30, 2026			December 31, 2025
Notional Amount		$	125,000		$	125,000
Unamortized Premium Paid			3,095			3,488
Weighted Average Strike Rate			0.96	%		0.96	%
Weighted Average Maturity (Years)			3.85			4.34

Derivatives Not Designated as Hedging Instruments

Interest rate swaps: The Company enters into interest rate swaps to facilitate client transactions and meet their financing needs. Upon entering into these instruments, the Company enters into offsetting positions with large U.S. financial institutions in order to minimize risk to the Company. These swaps are derivatives, but are not designated as hedging instruments. Interest rate swap contracts involve the risk of dealing with counterparties and their ability to meet contractual terms. When the fair value of a derivative instrument contract is positive, this generally indicates that the counterparty or client owes the Company, and results in credit risk to the Company. When the fair value of a derivative instrument contract is negative, the Company owes the client or counterparty and therefore, the Company has no associated credit risk.

Risk participation agreements (“RPA”): The Company has entered into RPAs to share credit exposure with a counterparty in connection with interest rate swaps associated with loan participations. Under an RPA, the Company either assumes or sells a portion of the underlying credit exposure and, in exchange, pays or receives an upfront fee. When the Company assumes credit exposure, it is entitled to receive payment from the counterparty in the event of a borrower default. Conversely, when the Company sells credit exposure, it is obligated to make a payment to the counterparty if the underlying borrower defaults on its obligations. The notional amount of the RPA reflects the Company’s pro-rata share of the derivative instrument consistent with its share of the related participated loan.

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The following table presents the total notional amounts and gross fair values of the Company’s derivatives as of June 30, 2026 and December 31, 2025:


	Derivative Assets				Derivative Liabilities
	Notional		Estimated		Notional		Estimated
(dollars in thousands)	Amount		Fair Value		Amount		Fair Value
June 30, 2026
Designated as hedging instruments:
Fair Value hedges:
Interest rate swaps	$	43,703	$	332		—	$	—
Cash flow hedges:
Interest rate swaps		233,000		4,186		45,000		135
Interest rate caps		125,000		13,636		—		—
Total derivatives designated as hedging instruments	$	401,703	$	18,154	$	45,000	$	135
Not designated as hedging instruments:
Interest rate swaps	$	343,319	$	7,552	$	343,319	$	7,552
Risk participation agreements		22,762		1		9,816		6
Total derivatives not designated as hedging instruments	$	366,081	$	7,553	$	353,135	$	7,558

December 31, 2025
Designated as hedging instruments:
Fair Value hedges:
Interest rate swaps	$	145,850	$	10,968		96,464	$	419
Cash flow hedges:
Interest rate swaps		185,500		2,012		77,500		725
Interest rate caps		125,000		13,221		—		—
Total derivatives designated as hedging instruments	$	456,350	$	26,201	$	173,964	$	1,144
Not designated as hedging instruments:
Interest rate swaps	$	267,831	$	8,699	$	267,831	$	8,699
Risk participation agreements		12,851		1		9,902		13
Total derivatives not designated as hedging instruments	$	280,682	$	8,700	$	277,733	$	8,712

The Company is party to collateral support agreements with certain derivative counterparties. These agreements require the Company to maintain collateral based on the fair values of derivative transactions. In the event of default by the Company, the counterparty would be entitled to the collateral. As of both June 30, 2026 and December 31, 2025, the Company had pledged no cash collateral for its derivative contracts. As of June 30, 2026 and December 31, 2025, the Company’s counterparties had pledged cash collateral to the Company of $22.8 million and $26.2 million, respectively.

The following table presents the effect of derivative instruments in cash flow hedging relationships on the consolidated statements of income for the three and six months ended June 30, 2026 and 2025:


	Gains (Losses)		Gains (Losses)
	Recognized in		Reclassified from
(dollars in thousands)	OCI		OCI into Earnings
Three Months Ended June 30, 2026
Cash flow hedges:
Interest rate swaps	$	1,725	$	409
Interest rate caps		554		690
Three Months Ended June 30, 2025
Cash flow hedges:
Interest rate swaps	$	(1,365)	$	707
Interest rate caps		(1,707)		910

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	Gains (Losses)		Gains (Losses)
	Recognized in		Reclassified from
(dollars in thousands)	OCI		OCI into Earnings
Six Months Ended June 30, 2026
Cash flow hedges:
Interest rate swaps	$	2,764	$	877
Interest rate caps		808		1,379
Six Months Ended June 30, 2025
Cash flow hedges:
Interest rate swaps	$	(3,829)	$	1,635
Interest rate caps		(4,118)		1,815

No amounts were reclassified from accumulated other comprehensive income into net income related to hedge ineffectiveness for these derivatives during the three and six months ended June 30, 2026 and 2025, and no amounts are expected to be reclassified from accumulated other comprehensive income into net income related to hedge ineffectiveness over the next twelve months.

The effects of the Company’s hedging relationships on the income statement during the three and six months ended June 30, 2026 and 2025 are presented in the table below:


	Location and Amount of Gains (Losses) Recognized in Income
	Interest Income		Interest Expense
	Investment
	Securities -
(dollars in thousands)	Taxable		Deposits		FHLB Advances
Three Months Ended June 30, 2026
Total amounts in the Consolidated Statements of Income	$	6,904	$	29,711	$	2,494
Fair value hedges:
Interest rate swaps		469		—		—
Cash flow hedges:
Interest rate swaps		—		33		376
Interest rate caps		—		337		353
Three Months Ended June 30, 2025
Total amounts in the Consolidated Statements of Income	$	9,200	$	32,497	$	2,852
Fair value hedges:
Interest rate swaps		393		—		—
Cash flow hedges:
Interest rate swaps		—		45		662
Interest rate caps		—		—		910

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	Location and Amount of Gains (Losses) Recognized in Income
	Interest Income		Interest Expense
	Investment
	Securities -
(dollars in thousands)	Taxable		Deposits		FHLB Advances
Six Months Ended June 30, 2026
Total amounts in the Consolidated Statements of Income	$	13,827	$	58,504	$	4,932
Fair value hedges:
Interest rate swaps		356		—		—
Cash flow hedges:
Interest rate swaps		—		67		810
Interest rate caps		—		684		695
Six Months Ended June 30, 2025
Total amounts in the Consolidated Statements of Income	$	18,597	$	64,600	$	5,008
Fair value hedges:
Interest rate swaps		(3,532)		—		—
Cash flow hedges:
Interest rate swaps		—		147		1,488
Interest rate caps		—		—		1,815

The following table presents amounts that were recorded on the balance sheet related to cumulative basis adjustments for fair value hedges at June 30, 2026 and December 31, 2025:


					Cumulative Fair
					Value Hedging
					Adjustment in the
			Carrying Amount		Carrying Amount of
	Notional		of Hedged Assets/		Hedged Assets/
(dollars in thousands)	Amount		Liabilities		Liabilities
June 30, 2026
Available for sale securities	$	43,703	$	44,035	$	332

December 31, 2025
Available for sale securities	$	242,314	$	252,863	$	10,549

The gain recognized on derivatives not designated as hedging relationships for the three and six months ended June 30, 2026 and 2025 was as follows:

(dollars in thousands)

Derivatives not designated

Consolidated Statements

Three Months Ended June 30,

Six Months Ended June 30,

as hedging Instruments

of Income Location

2026

2025

2026

2025

Risk participation agreements

Other Income

(6)

(19)

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The following table summarizes gross and net information about derivative instruments that were eligible for offset on the balance sheet at June 30, 2026 and December 31, 2025:


					Net Amounts of
	Gross Amounts		Gross Amounts		Assets (Liabilities)		Gross Amounts Not Offset in the Balance Sheet
	of Recognized		Offset in the		Presented in the		Financial		Cash Collateral		Net Assets
(dollars in thousands)	Assets (Liabilities)		Balance Sheet		Balance Sheet		Instruments		Received (Paid)		(Liabilities)
June 30, 2026
Assets	$	25,705	$	—	$	25,705	$	—	$	(22,803)	$	2,902
Liabilities		(7,686)		—		(7,686)		—		—		(7,686)

December 31, 2025
Assets	$	34,900	$	—	$	34,900	$	—	$	(26,183)	$	8,717
Liabilities		(9,844)		—		(9,844)		—		—		(9,844)

Note 7: Federal Home Loan Bank Advances and Other Borrowings

Federal Home Loan Bank Advances. The Company has entered into an Advances, Pledge, and Security Agreement with the FHLB whereby specific mortgage loans of the Bank with aggregate principal balances of $1.68 billion and $1.62 billion at June 30, 2026 and December 31, 2025, respectively, were pledged to the FHLB as collateral. FHLB advances are also secured with FHLB stock owned by the Company. Total remaining available capacity under the agreement was $745.8 million and $611.3 million at June 30, 2026 and December 31, 2025, respectively.

The following table presents information regarding FHLB advances, by maturity, at June 30, 2026 and December 31, 2025:


		June 30, 2026					December 31, 2025
		Weighted					Weighted
		Average		Total			Average		Total
(dollars in thousands)		Rate		Outstanding			Rate		Outstanding
Less than 1 Year		3.76	%	$	292,000		4.04	%	$	319,500
1 to 2 Years		3.60			34,000		4.13			27,500
2 to 3 Years		—			—		4.02			30,000
3 to 4 Years		—			—		4.10			15,000
4 to 5 Years		—			—		4.09			7,500
Totals				$	326,000				$	399,500

Line of Credit. The Company has a Loan and Security Agreement and related revolving note with an unaffiliated financial institution that is secured by 100% of the issued and outstanding stock of the Bank. The maximum principal amount of the Company’s revolving line of credit is $40 million. As of June 30, 2026 and December 31, 2025, the Company had two outstanding letters of credit totaling $2.7 million and $6.4 million, respectively, under this facility. The note contains customary representations, warranties, and covenants, including certain financial covenants and capital ratio requirements. The Company believes it was in compliance with all covenants as of June 30, 2026 and December 31, 2025.

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The following table presents information regarding the revolving line of credit at June 30, 2026 and December 31, 2025:

Total Debt

Outstanding

Interest

Name

Maturity Date

June 30, 2026

December 31, 2025

Rate

Coupon Structure

(dollars in thousands)

Revolving Credit Facility

September 1, 2026

—

6.75

Variable with Floor ⁽¹⁾

(1)	The variable interest rate is equal to the greater of Wall Street Journal Prime Rate in effect or a floor of 4.50%.

Note 8: Commitments, Contingencies and Credit Risk

Financial Instruments with Off-Balance Sheet Credit Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets.

The Company’s exposure to credit loss is represented by the contractual, or notional, amount of these commitments. The Company follows the same credit policies in making commitments as it does for on-balance sheet instruments. Since some of the commitments are expected to expire without being drawn upon and some of the commitments may not be drawn upon to the total extent of the commitment, the notional amount of these commitments does not necessarily represent future cash requirements.

The following table presents information regarding commitments outstanding at June 30, 2026 and December 31, 2025:


		June 30,			December 31,
(dollars in thousands)		2026			2025
Unfunded Commitments Under Lines of Credit		$	823,739		$	796,843
Letters of Credit			103,518			124,837
Totals		$	927,257		$	921,680

The Company had outstanding letters of credit with the FHLB of $69.6 million and $109.0 million at June 30, 2026 and December 31, 2025, respectively, on behalf of customers and to secure public deposits.

The ACL for off-balance sheet credit exposures was $3.9 million and $4.0 million at June 30, 2026 and December 31, 2025, respectively, and is separately classified on the balance sheet within other liabilities.

The following table presents the balance and activity in the ACL for off-balance sheet credit exposures for the three and six months ended June 30, 2026 and 2025:


		Three Months Ended				Six Months Ended
		June 30,				June 30,
(dollars in thousands)		2026		2025		2026		2025
Allowance for Credit Losses:
Beginning Balance	$	3,860	$	3,610	$	4,010	$	3,610
Recovery of Off-Balance Sheet Credit Exposures		—		—		(150)		—
Total Ending Balance	$	3,860	$	3,610	$	3,860	$	3,610

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Legal Contingencies

Neither the Company nor any of its subsidiaries is a party, and no property of these entities is subject, to any material pending legal proceedings, other than ordinary routine litigation incidental to the Bank’s business. The Company does not know of any material proceeding contemplated by a governmental authority against the Company or any of its subsidiaries.

Note 9: Stock Options, Restricted Stock, and Performance Stock Units

In 2012, the Company adopted the Bridgewater Bancshares, Inc. 2012 Combined Incentive and Non-Statutory Stock Option Plan (the “2012 Plan”) under which the Company was able to grant options to its directors, officers, and employees for up to 750,000 shares of common stock. Both incentive stock options and nonqualified stock options were granted under the 2012 Plan. The exercise price of each option equals the fair market value of the Company’s stock on the date of grant, and the maximum term of each outstanding option is ten years. All outstanding options have been granted with vesting periods of four or five years. The 2012 Plan expired in March 2022, and awards are no longer able to be granted under the 2012 Plan.

In 2017, the Company adopted the Bridgewater Bancshares, Inc. 2017 Combined Incentive and Non-Statutory Stock Option Plan (the “2017 Plan”). Under the 2017 Plan, the Company may grant options to its directors, officers, employees and consultants for up to 1,500,000 shares of common stock. Both incentive stock options and nonqualified stock options may be granted under the 2017 Plan. The exercise price of each option equals the fair market value of the Company’s stock on the date of grant and the maximum term of each outstanding option is ten years. All outstanding options have been granted with vesting periods of four or five years. As of both June 30, 2026 and December 31, 2025, there were 10,000 shares of the Company’s common stock reserved for future option grants under the 2017 Plan.

In 2019, the Company adopted the Bridgewater Bancshares, Inc. 2019 Equity Incentive Plan (the “2019 EIP”). The types of awards which may be granted under the 2019 EIP include incentive and nonqualified stock options, stock appreciation rights, stock awards, restricted stock units, restricted stock and cash incentive awards. The Company may grant these awards to its directors, officers, employees and certain other service providers for up to 1,000,000 shares of common stock. The exercise price of each option equals the fair market value of the Company’s stock on the date of grant and the maximum term of each award is ten years. All outstanding awards have been granted with a vesting period of four years. As of June 30, 2026 and December 31, 2025, there were 6,222 and 2,192 shares, respectively, of the Company’s common stock reserved for future grants under the 2019 EIP.

In 2023, the Company adopted the Bridgewater Bancshares, Inc. 2023 Equity Incentive Plan (the “2023 EIP”). Under the 2023 EIP, the Company may grant incentive and nonqualified stock options, stock appreciation rights, stock awards, restricted stock units, performance stock units, restricted stock and cash incentive awards. The Company may grant these awards to its directors, officers, employees and certain other service providers for up to 1,500,000 shares of common stock. The exercise price of each option equals the fair market value of the Company’s stock on the date of grant and the maximum term of each award is ten years. Restricted stock units and restricted stock awards have been granted with a vesting period of four years. Performance stock units have been granted with a contingent vesting provision based on the achievement of specified performance goals over a three-year performance period. Performance stock units cliff vest with actual payouts ranging from 0% to 200% of the target award, depending on the level of performance achieved against the pre-established performance goals. As of June 30, 2026 and December 31, 2025, there were 266,131 and 464,751 shares, respectively, of the Company’s common stock reserved for future grants under the 2023 EIP.

In 2026, the Company adopted the Bridgewater Bancshares, Inc. 2026 Equity Incentive Plan (the “2026 EIP”). Under the 2026 EIP, the Company may grant incentive and nonqualified stock options, stock appreciation rights, stock

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awards, restricted stock units, performance stock units, restricted stock and cash incentive awards. The Company may grant these awards to its directors, officers, employees and certain other service providers for up to 1,500,000 shares of common stock. The exercise price of each option equals the fair market value of the Company’s stock on the date of grant and the maximum term of each award is ten years. Restricted stock units and restricted stock awards have been granted with a vesting period of four years. Performance stock units have been granted with a contingent vesting provision based on the achievement of specified performance goals over a three-year performance period. Performance stock units cliff vest with actual payouts ranging from 0% to 200% of the target award, depending on the level of performance achieved against the pre-established performance goals. As of June 30, 2026, there were 1,500,000 shares of the Company’s common stock reserved for future grants under the 2026 EIP.

Stock Options

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected volatilities are based on an industry index as described below. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account the fact that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Historically, the Company has not paid a dividend on its common stock and does not expect to do so in the near future

The Company used the S&P 600 CM Bank Index as its historical volatility index. The S&P 600 CM Bank Index is an index of publicly traded small capitalization, regional, commercial banks located throughout the United States. There were 56 banks in the index ranging in market capitalization from $600.0 million up to $5.0 billion.

The weighted average assumptions used in the model for valuing stock options grants for the six months ended June 30, 2026 are as follows:


		June 30,
		2026
Dividend Yield		—	%
Expected Life		7	Years
Expected Volatility		30.88	%
Risk-Free Interest Rate		4.02	%

The following table presents a summary of the status of the Company’s outstanding stock options for the six months ended June 30, 2026:


		June 30, 2026
				Weighted
				Average
		Shares		Exercise Price
Outstanding at Beginning of Year		1,935,175		$	11.59
Granted		35,000			17.76
Exercised		(109,831)			10.70
Forfeitures		(30,000)			13.24
Outstanding at Period End		1,830,344		$	11.74

Options Exercisable at Period End		1,381,093		$	11.19

For the three months ended June 30, 2026 and 2025, the Company recognized compensation expense for stock options of $220,000 and $313,000, respectively. For the six months ended June 30, 2026 and 2025, the Company recognized compensation expense for stock options of $502,000 and $578,000, respectively.

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The following table presents information pertaining to options outstanding at June 30, 2026:


			Options Outstanding					Options Exercisable
							Weighted Average
			Number of		Weighted Average		Remaining Contractual	Number of		Weighted Average
Range of Exercise Prices			Options		Exercise Price		Life in Years	Options		Exercise Price
$	7.00 - 7.99		622,892		$	7.47	1.3	622,892		$	7.47
	8.00 - 8.99		2,961			8.76	3.8	2,961			8.76
	10.00 - 10.99		173,750			10.65	7.1	69,749			10.65
	11.00 - 11.99		171,125			11.11	6.2	98,375			11.12
	12.00 - 12.99		236,616			12.91	3.1	236,616			12.91
	13.00 - 13.99		252,500			13.77	8.6	65,000			13.75
	17.00 - 17.99		310,500			17.50	5.9	285,500			17.50
	18.00 - 18.99		60,000			18.08	9.5	—			—
	Totals		1,830,344		$	11.74	4.6	1,381,093		$	11.19

As of June 30, 2026, there was $2.0 million of total unrecognized compensation cost related to nonvested stock options that is expected to be recognized over a weighted-average period of 2.2 years.

The following table presents an analysis of nonvested options to purchase shares of the Company’s stock issued and outstanding for the six months ended June 30, 2026:


				Weighted
		Number of		Average Grant
		Shares		Date Fair Value
Nonvested Options at December 31, 2025		584,251		$	5.69
Granted		35,000			7.36
Vested		(140,000)			5.55
Forfeited		(30,000)			5.67
Nonvested Options at June 30, 2026		449,251		$	5.87

Restricted Stock Units

The Company has granted restricted stock units out of the 2019 EIP and 2023 EIP. Restricted stock units represent the right to receive one share of Company stock upon vesting and vest in equal annual installments on the first four anniversaries of the date of the grant. Nonvested restricted stock units have no voting or dividend rights and are not considered outstanding until vested and settled.

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The following table presents an analysis of nonvested restricted stock units outstanding for the six months ended June 30, 2026:


				Weighted
		Number of		Average Grant
		Units		Date Fair Value
Nonvested at December 31, 2025		447,661		$	15.24
Granted		64,419			19.54
Vested		(50,373)			13.93
Forfeited		(12,106)			16.67
Nonvested at June 30, 2026		449,601		$	15.96

Compensation expense associated with the restricted stock units is recognized on a straight-line basis over the period that the restrictions associated with the units lapse based on the total cost of the unit at the grant date. For the three months ended June 30, 2026 and 2025, the Company recognized compensation expense associated with restricted stock units of $639,000 and $623,000, respectively. For the six months ended June 30, 2026 and 2025, the company recognized compensation expense associated with restricted stock units of $1.5 million and $1.2 million, respectively.

As of June 30, 2026, there was $5.6 million of total unrecognized compensation cost related to nonvested restricted stock units granted under the 2019 EIP, 2023 EIP, and 2026 EIP that is expected to be recognized over a weighted-average period of 2.6 years.

Stock Awards

During the six months ended June 30, 2026, the Company issued 15,493 shares of unrestricted common stock to non-employee directors, as a part of their compensation for their annual services on the Company’s board of directors. The aggregate value of the shares issued to non-employee directors of $298,000 was included in stock based compensation expense in the accompanying consolidated statements of shareholders’ equity.

Performance Stock Units

In 2026, the Company granted performance stock units under the 2023 EIP. Each performance stock unit represents the right to receive one share of Company common stock upon vesting. Vesting of the performance stock units is contingent upon achievement of specified performance metrics measured over a three-year performance period. Participants may earn 50%, 100%, or 200% of the target award based on the achievement of metrics at the end of the performance period. No payout will be earned for a performance metric if the applicable threshold level is not achieved. Final payouts are determined based on the level of achievement of both performance metrics at the conclusion of the three-year performance period.

All performance stock units are granted at the fair value of the Company’s common stock on the grant date. Because the number of shares ultimately earned is contingent upon achievement of specified performance conditions, an estimate is made of the number of shares expected to vest based on the probability that the performance criteria will be achieved to determine the amount of compensation expense to be recognized. This estimate is re-evaluated quarterly, and total compensation expense is adjusted for any change in the current period. For the three and six months ended June 30, 2026, the Company recognized compensation expense associated with performance stock units of $146,000. There was no compensation expense associated with performance stock units recognized for the three and six months ended June 30, 2025.

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The following table presents an analysis of nonvested performance stock units outstanding for the six months ended June 30, 2026:


				Weighted
		Number of		Average Grant
		Units		Date Fair Value
Nonvested at December 31, 2025		—		$	—
Granted		121,784			18.75
Vested		—			—
Forfeited		—			—
Nonvested at June 30, 2026		121,784		$	18.75

As of June 30, 2026, there was $2.1 million of total unrecognized compensation cost related to performance stock units granted under the 2023 EIP that is expected to be recognized over a weighted-average period of 2.5 years.

Note 10: Regulatory Capital

The Company and the Bank are subject to various regulatory requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank must also meet certain specific capital guidelines under the regulatory framework for prompt corrective action. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain minimum amounts and ratios of common equity Tier 1 capital, Tier 1 capital and total capital to risk-weighted assets and of Tier 1 capital to average consolidated assets (referred to as the “leverage ratio”), as defined under the applicable regulatory capital rules.

The following tables present the capital amounts and ratios for the Company, on a consolidated basis, and the Bank as of June 30, 2026 and December 31, 2025:


							Minimum Required					For Capital Adequacy					To be Well Capitalized
							For Capital Adequacy					Purposes Plus Capital					Under Prompt Corrective
		Actual					Purposes					Conservation Buffer					Action Regulations
(dollars in thousands)		Amount			Ratio		Amount			Ratio		Amount			Ratio		Amount			Ratio
June 30, 2026
Company (Consolidated):
Total Risk-based Capital		$	702,363		14.48	%	$	388,156		8.00	%	$	509,454		10.50	%		N/A		N/A
Tier 1 Risk-based Capital			532,824		10.98			291,117		6.00			412,415		8.50			N/A		N/A
Common Equity Tier 1 Capital			466,310		9.61			218,337		4.50			339,636		7.00			N/A		N/A
Tier 1 Leverage Ratio			532,824		10.02			212,622		4.00			212,622		4.00			N/A		N/A
Bank:
Total Risk-based Capital		$	676,498		13.98	%	$	387,227		8.00	%	$	508,235		10.50	%	$	484,033		10.00	%
Tier 1 Risk-based Capital			615,984		12.73			290,420		6.00			411,428		8.50			387,227		8.00
Common Equity Tier 1 Capital			615,984		12.73			217,815		4.50			338,823		7.00			314,622		6.50
Tier 1 Leverage Ratio			615,984		11.65			211,574		4.00			211,574		4.00			264,468		5.00

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							Minimum Required					For Capital Adequacy					To be Well Capitalized
							For Capital Adequacy					Purposes Plus Capital					Under Prompt Corrective
		Actual					Purposes					Conservation Buffer					Action Regulations
(dollars in thousands)		Amount			Ratio		Amount			Ratio		Amount			Ratio		Amount			Ratio
December 31, 2025
Company (Consolidated):
Total Risk-based Capital		$	667,814		14.12	%	$	378,356		8.00	%	$	496,593		10.50	%		N/A		N/A
Tier 1 Risk-based Capital			500,002		10.57			283,767		6.00			402,004		8.50			N/A		N/A
Common Equity Tier 1 Capital			433,488		9.17			212,825		4.50			331,062		7.00			N/A		N/A
Tier 1 Leverage Ratio			500,002		9.20			217,505		4.00			217,505		4.00			N/A		N/A
Bank:
Total Risk-based Capital		$	636,973		13.49	%	$	377,687		8.00	%	$	495,715		10.50	%	$	472,109		10.00	%
Tier 1 Risk-based Capital			577,942		12.24			283,266		6.00			401,293		8.50			377,687		8.00
Common Equity Tier 1 Capital			577,942		12.24			212,449		4.50			330,477		7.00			306,871		6.50
Tier 1 Leverage Ratio			577,942		10.65			217,116		4.00			217,116		4.00			271,395		5.00

The Company and the Bank must maintain a capital conservation buffer, as defined by regulatory guidelines, in order to avoid limitations on capital distributions, including dividend payments, stock repurchases and certain discretionary bonus payments to executive officers.

Note 11: Fair Value Measurement

The Company categorizes its assets and liabilities measured at fair value into a three-level hierarchy based on the priority of the inputs to the valuation technique used to determine fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used in the determination of the fair value measurement fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement. Assets and liabilities valued at fair value are categorized based on the inputs to the valuation techniques as follows:

Level 1 – Inputs that utilized quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2 – Inputs that include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instruments. Fair values for these instruments are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows.

Level 3 – Inputs that are unobservable for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity.

Subsequent to initial recognition, the Company may re-measure the carrying value of assets and liabilities measured on a nonrecurring basis to fair value. Adjustments to fair value usually result when certain assets are impaired. Such assets are written down from their carrying amounts to their fair value.

Professional standards allow entities the irrevocable option to elect to measure certain financial instruments and other items at fair value for the initial and subsequent measurement on an instrument-by-instrument basis. The Company adopted the policy to value certain financial instruments at fair value. The Company has not elected to measure any existing financial instruments at fair value; however, it may elect to measure newly acquired financial instruments at fair value in the future.

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Recurring Basis

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. There have been no changes in methodologies used as of June 30, 2026. The following tables present the balances of assets and liabilities measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025:


		June 30, 2026
(dollars in thousands)		Level 1			Level 2			Level 3			Total
Fair Value of Financial Assets:
Securities Available for Sale:
Municipal Bonds			—			256,870			—			256,870
Mortgage-Backed Securities			—			225,330			—			225,330
Corporate Securities			—			88,134			—			88,134
U.S. Government Agency Securities			—			6,956			—			6,956
Asset-Backed Securities			—			28,122			—			28,122
Fair Value Swaps			—			332			—			332
Interest Rate Caps			—			13,636			—			13,636
Interest Rate Swaps			—			11,738			—			11,738
Risk Participation Agreements			—			—			1			1
Total Fair Value of Financial Assets		$	—		$	631,118		$	1		$	631,119
Fair Value of Financial Liabilities:
Interest Rate Swaps			—			7,687			—			7,687
Risk Participation Agreement			—			—			6			6
Total Fair Value of Financial Liabilities		$	—		$	7,687		$	6		$	7,693


		December 31, 2025
(dollars in thousands)		Level 1			Level 2			Level 3			Total
Fair Value of Financial Assets:
Securities Available for Sale:
U.S. Treasury Securities		$	146,206		$	—		$	—		$	146,206
Municipal Bonds			—			239,168			—			239,168
Mortgage-Backed Securities			—			245,672			—			245,672
Corporate Securities			—			92,407			—			92,407
U.S. Government Agency Securities			—			8,707			—			8,707
Asset-Backed Securities			—			44,281			—			44,281
Fair Value Swaps			—			10,968			—			10,968
Interest Rate Caps			—			13,221			—			13,221
Interest Rate Swaps			—			10,711			—			10,711
Risk Participation Agreements			—			—			1			1
Total Fair Value of Financial Assets		$	146,206		$	665,135		$	1		$	811,342
Fair Value of Financial Liabilities:
Fair Value Swaps		$	—		$	419		$	—		$	419
Interest Rate Swaps			—			9,424			—			9,424
Risk Participation Agreements			—			—			13			13
Total Fair Value of Financial Liabilities		$	—		$	9,843		$	13		$	9,856

Investment Securities

When available, the Company uses quoted market prices to determine the fair value of investment securities; such items are classified in Level 1 of the fair value hierarchy.

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For the Company’s investments, when quoted prices are not available for identical securities in an active market, the Company determines fair value utilizing vendors who apply matrix pricing for similar bonds where no price is observable or may compile prices from various sources. These models are primarily industry-standard models that consider various assumptions, including time value, yield curve, volatility factors, prepayment speeds, default rates, loss severity, current market, and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially, all of these assumptions are observable in the marketplace and can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Fair values from these models are verified, where possible, against quoted market prices for recent trading activity of assets with similar characteristics to the security being valued. Such methods are generally classified as Level 2. However, when prices from independent sources vary, or cannot be obtained or corroborated, a security is generally classified as Level 3.

Fair Value Swaps

Fair value swaps are traded in over-the-counter markets where quoted market prices are not readily available. For such fair value swaps, fair value is determined using internally developed models of a third party that uses primarily market observable inputs, such as yield curves and option volatilities, and accordingly are valued using Level 2 inputs.

Interest Rate Caps

The fair value of the caps is calculated by determining the total expected asset or liability exposure of the derivatives. Total expected exposure incorporates both the current and potential future exposure of the derivative, derived from using observable inputs, such as yield curves and volatilities, and accordingly are valued using Level 2 inputs.

Interest Rate Swaps

Interest rate swaps are traded in over-the-counter markets where quoted market prices are not readily available. For those interest rate swaps, fair value is determined using internally developed models of a third party that uses primarily market observable inputs, such as yield curves and option volatilities, and accordingly are valued using Level 2 inputs.

Risk Participation Agreements

The fair value of risk participation agreements is calculated by determining the total expected asset or liability exposure using observable inputs, such as yield curves and volatilities, of the derivative to the borrower and applying an unobservable credit default probability to that exposure, and accordingly are valued using level 3 inputs.

Nonrecurring Basis

Certain assets are measured at fair value on a nonrecurring basis. These assets are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment or a change in the amount of previously recognized impairment.

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The following tables present net credit losses related to nonrecurring fair value measurements of certain assets at June 30, 2026 and December 31, 2025:


		June 30, 2026
(dollars in thousands)		Level 1			Level 2			Level 3			Loss
Individually Evaluated Loans		$	—		$	—		$	16,532		$	5,992
Totals		$	—		$	—		$	16,532		$	5,992


		December 31, 2025
(dollars in thousands)		Level 1			Level 2			Level 3			Loss
Individually Evaluated Loans		$	—		$	—		$	39,043		$	3,812
Totals		$	—		$	—		$	39,043		$	3,812

Individually Evaluated Loans

The Company records certain loans at fair value on a non-recurring basis. Individually evaluated loans for which an allowance is established, or for which a write-down has occurred during the period based on the fair value of collateral, require classification in the fair value hierarchy. The fair value of the loan’s collateral is determined by appraisals, independent valuation and other techniques. When the fair value of the loan’s collateral is based on an observable market price, the Company classifies the fair value of the individually evaluated loans within Level 2 of the valuation hierarchy. For loans in which the valuation has unobservable inputs, the Company classifies such loans within Level 3 of the valuation hierarchy. As of June 30, 2026, collateral values were estimated using a combination of observable inputs, including recent appraisals, and unobservable inputs, including internally determined values based on cost adjusted for depreciation and customized discounting criteria on appraisals. Due to the significance of unobservable inputs, fair values of individually evaluated loans have been classified as Level 3.

The valuation techniques and significant unobservable inputs used to measure Level 3 estimated fair value as of June 30, 2026 and December 31, 2025 were as follows:


			June 30, 2026
(dollars in thousands)	Valuation	Unobservable				Weighted
Asset Type	Technique	Input	Fair Value		Range	Average
Collateral Dependent Loans	Appraisal, Evaluation Value, or Third-Party Sales Contract	Property Specific Adjustment	$	15,803	3% - 13%	6%
Collateral Dependent Loans	Discounted Cash Flows	Discount Rate		729	30%	30%


			December 31, 2025
(dollars in thousands)	Valuation	Unobservable				Weighted
Asset Type	Technique	Input	Fair Value		Range	Average
Collateral Dependent Loans	Appraisal/Evaluation Value	Property Specific Adjustment	$	39,043	1% - 10%	3%

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Fair Value

Disclosure of fair value information about financial instruments, for which it is practicable to estimate that value, is required whether or not recognized in the consolidated balance sheets. In cases where quoted market prices are not available, fair values are based on estimates using present value of cash flow or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimate of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases could not be realized in immediate settlement of the instruments. Certain financial instruments with a fair value that is not practicable to estimate and all non-financial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not necessarily represent the underlying value of the Company.

Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters that could affect the estimates. Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business. Deposits with no stated maturities are defined as having a fair value equivalent to the amount payable on demand. This prohibits adjusting fair value derived from retaining those deposits for an expected future period of time. This component, commonly referred to as a deposit base intangible, is neither considered in the above amounts nor is it recorded as an intangible asset on the balance sheet. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

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The following tables present the carrying amounts and estimated fair values of financial instruments at June 30, 2026 and December 31, 2025:


		June 30, 2026
					Fair Value Hierarchy
		Carrying												Estimated
(dollars in thousands)		Amount			Level 1			Level 2			Level 3			Fair Value
Financial Assets:
Cash and Cash Equivalents		$	169,806		$	169,806		$	—		$	—		$	169,806
Securities Available for Sale			605,412			—			605,412			—			605,412
FHLB Stock, at Cost			17,979			—			17,979			—			17,979
Loans, Net			4,360,502			—			4,292,237			16,532			4,308,769
Accrued Interest Receivable			16,946			—			16,946			—			16,946
Fair Value Swaps			332			—			332			—			332
Interest Rate Caps			13,636			—			13,636			—			13,636
Interest Rate Swaps			11,738			—			11,738			—			11,738
Risk Participation Agreements			1			—			—			1			1

Financial Liabilities:
Deposits		$	4,346,204		$	—		$	4,345,920		$	—		$	4,345,920
FHLB Advances			326,000			—			325,452			—			325,452
Subordinated Debentures			108,882			—			102,969			—			102,969
Accrued Interest Payable			2,565			—			2,565			—			2,565
Interest Rate Swaps			7,687			—			7,687			—			7,687
Risk Participation Agreements			6			—			—			6			6


		December 31, 2025
					Fair Value Hierarchy
		Carrying												Estimated
(dollars in thousands)		Amount			Level 1			Level 2			Level 3			Fair Value
Financial Assets:
Cash and Cash Equivalents		$	123,511		$	123,511		$	—		$	—		$	123,511
Securities Available for Sale			776,441			146,206			630,235			—			776,441
FHLB Stock, at Cost			21,122			—			21,122			—			21,122
Loans, Net			4,244,108			—			4,142,794			39,043			4,181,837
Accrued Interest Receivable			18,929			—			18,929			—			18,929
Fair Value Swaps			10,968			—			10,968			—			10,968
Interest Rate Caps			13,221			—			13,221			—			13,221
Interest Rate Swaps			10,711			—			10,711			—			10,711
Risk Participation Agreements			1			—			—			1			1

Financial Liabilities:
Deposits		$	4,320,369		$	—		$	4,324,551		$	—		$	4,324,551
FHLB Advances			399,500			—			399,760			—			399,760
Subordinated Debentures			108,677			—			102,579			—			102,579
Accrued Interest Payable			3,227			—			3,227			—			3,227
Fair Value Swaps			419			—			419			—			419
Interest Rate Swaps			9,424			—			9,424			—			9,424
Risk Participation Agreements			13			—			—			13			13

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The following methods and assumptions were used by the Company to estimate fair value of financial instruments not previously discussed.

Cash and due from banks – The carrying amount of cash and cash equivalents approximates their fair value.

Bank-owned certificates of deposit – Fair values of bank-owned certificates of deposit are estimated using the discounted cash flow analysis based on current rates for similar types of deposits.

FHLB stock – The carrying amount of FHLB stock approximates its fair value.

Loans, net – Fair values for loans are estimated based on discounted cash flows, using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality.

Accrued interest receivable – The carrying amount of accrued interest receivable approximates its fair value since it is short term in nature and does not present anticipated credit concerns.

Deposits – The fair values disclosed for demand deposits without stated maturities (interest and noninterest transaction, savings, and money market accounts) are equal to the amount payable on demand at the reporting date (their carrying amounts). Fair values for the fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Accrued interest payable – The carrying amount of accrued interest payable approximates its fair value since it is short term in nature.

FHLB advances – The fair values of the Company’s FHLB advances are estimated using discounted cash flow analysis based on the Company’s current incremental borrowing rates for similar types of borrowing agreements.

Subordinated debentures – The fair values of the Company’s notes payable and subordinated debentures are estimated using a discounted cash flow analysis, based on the Company’s current incremental borrowing rate for similar types of borrowing arrangements.

Off-balance sheet instruments – Fair values of the Company’s off-balance sheet instruments (lending commitments and unused lines of credit) are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, the counterparties’ credit standing and discounted cash flow analysis. The fair value of these off-balance sheet items approximates the recorded amounts of the related fees and was not material at June 30, 2026 and December 31, 2025.

Limitations – The fair value of a financial instrument is the current amount that would be exchanged between market participants, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Consequently, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

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Note 12: Accumulated Other Comprehensive Income

The following table presents the components of other comprehensive income for the three and six months ended June 30, 2026 and 2025:


(dollars in thousands)	Before Tax		Tax Effect		Net of Tax
Three Months Ended June 30, 2026
Net Unrealized Gain on Available for Sale Securities	$	5,000	$	(1,437)	$	3,563
Less: Reclassification Adjustment for Net Gains Included in Net Income		—		—		—
Total Unrealized Gain		5,000		(1,437)		3,563

Net Unrealized Gain on Cash Flow Hedge		3,378		(971)		2,407
Less: Reclassification Adjustment for Gains Included in Net Income		(1,099)		316		(783)
Total Unrealized Gain		2,279		(655)		1,624

Other Comprehensive Gain	$	7,279	$	(2,092)	$	5,187

Three Months Ended June 30, 2025
Net Unrealized Loss on Available for Sale Securities	$	(479)	$	138	$	(341)
Less: Reclassification Adjustment for Net Gains Included in Net Income		(474)		136		(338)
Total Unrealized Loss		(953)		274		(679)

Net Unrealized Loss on Cash Flow Hedge		(1,455)		417		(1,038)
Less: Reclassification Adjustment for Gains Included in Net Income		(1,617)		465		(1,152)
Total Unrealized Loss		(3,072)		882		(2,190)

Other Comprehensive Loss	$	(4,025)	$	1,156	$	(2,869)


(dollars in thousands)	Before Tax		Tax Effect		Net of Tax
Six Months Ended June 30, 2026
Net Unrealized Gain on Available for Sale Securities	$	2,059	$	(592)	$	1,467
Less: Reclassification Adjustment for Net Gains Included in Net Income		(7,251)		2,084		(5,167)
Total Unrealized Loss		(5,192)		1,492		(3,700)

Net Unrealized Gain on Cash Flow Hedge		5,828		(1,675)		4,153
Less: Reclassification Adjustment for Gains Included in Net Income		(2,256)		649		(1,607)
Total Unrealized Gain		3,572		(1,026)		2,546

Other Comprehensive Loss	$	(1,620)	$	466	$	(1,154)

Six Months Ended June 30, 2025
Net Unrealized Gain on Available for Sale Securities	$	7,208	$	(2,071)	$	5,137
Less: Reclassification Adjustment for Net Gains Included in Net Income		(475)		137		(338)
Total Unrealized Gain		6,733		(1,934)		4,799

Net Unrealized Loss on Cash Flow Hedge		(4,497)		1,292		(3,205)
Less: Reclassification Adjustment for Gains Included in Net Income		(3,449)		991		(2,458)
Total Unrealized Loss		(7,946)		2,283		(5,663)

Other Comprehensive Loss	$	(1,213)	$	349	$	(864)

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The following table presents the changes in each component of accumulated other comprehensive income, net of tax, for the three and six months ended June 30, 2026 and 2025:


					Accumulated
	Available For				Other Comprehensive
(dollars in thousands)	Sale Securities		Cash Flow Hedge		Income (Loss)
Three Months Ended June 30, 2026
Balance at Beginning of Period	$	(14,556)	$	8,776	$	(5,780)
Other Comprehensive Income Before Reclassifications		3,563		2,407		5,970
Amounts Reclassified from Accumulated Other Comprehensive Income		—		(783)		(783)
Net Other Comprehensive Income During Period		3,563		1,624		5,187
Balance at End of Period	$	(10,993)	$	10,400	$	(593)

Three Months Ended June 30, 2025
Balance at Beginning of Period	$	(22,265)	$	10,906	$	(11,359)
Other Comprehensive Loss Before Reclassifications		(341)		(1,037)		(1,378)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)		(338)		(1,153)		(1,491)
Net Other Comprehensive Loss During Period		(679)		(2,190)		(2,869)
Balance at End of Period	$	(22,944)	$	8,716	$	(14,228)


					Accumulated
	Available For				Other Comprehensive
(dollars in thousands)	Sale Securities		Cash Flow Hedge		Income (Loss)
Six Months Ended June 30, 2026
Balance at Beginning of Period	$	(7,293)	$	7,854	$	561
Other Comprehensive Income Before Reclassifications		1,467		4,153		5,620
Amounts Reclassified from Accumulated Other Comprehensive Income		(5,167)		(1,607)		(6,774)
Net Other Comprehensive Income (Loss) During Period		(3,700)		2,546		(1,154)
Balance at End of Period	$	(10,993)	$	10,400	$	(593)

Six Months Ended June 30, 2025
Balance at Beginning of Period	$	(27,743)	$	14,379	$	(13,364)
Other Comprehensive Income (Loss) Before Reclassifications		5,137		(3,205)		1,932
Amounts Reclassified from Accumulated Other Comprehensive Income		(338)		(2,458)		(2,796)
Net Other Comprehensive Income (Loss) During Period		4,799		(5,663)		(864)
Balance at End of Period	$	(22,944)	$	8,716	$	(14,228)

Note 13: Subsequent Events

On July 21, 2026, the Company’s Board of Directors announced a quarterly cash dividend of $36.72 per share ($0.3672 per depositary share) on its 5.875% Non-Cumulative Perpetual Preferred Stock, Series A (“Series A Preferred Stock”), payable on September 1, 2026, to shareholders of record on the Series A Preferred Stock at the close of business on August 14, 2026.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

The following discussion explains the Company’s financial condition and results of operations as of and for the three and six months ended June 30, 2026. Annualized results for these interim periods may not be indicative of results for the full year or future periods. The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes presented elsewhere in this report and the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission, or the SEC, on February 26, 2026.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meanings of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of the Company. These statements are often, but not always, identified by words such as “may”, “might”, “should”, “could”, “predict”, “potential”, “believe”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would”, “annualized”, “target” and “outlook”, or the negative version of those words or other comparable words of a future or forward-looking nature. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent known and unknown uncertainties, risks, changes in circumstances and other factors that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

●

interest rate risk, including the effects of changes in interest rates;

●

effects on the U.S. economy resulting from actions taken by the federal government, including the threat or implementation of tariffs, immigration enforcement, executive orders, and changes in foreign policy;

●

fluctuations in the values of the securities held in our securities portfolio, including as the result of changes in interest rates;

●

business and economic conditions generally and in the financial services industry, nationally and within our market area, including the level and impact of inflation, and future monetary policies of the Federal Reserve and executive orders in response thereto, and possible recession;

●

credit risk and risks from concentrations (including by type of borrower, geographic area, collateral and industry) within the Company’s loan portfolio or large loans to certain borrowers (including CRE loans);

●

the overall health of the local and national real estate market;

●

our ability to successfully manage credit risk;

●

our ability to maintain an adequate level of allowance for credit losses on loans;

●

new or revised accounting standards as may be adopted by state and federal regulatory agencies, the Financial Accounting Standards Board, Securities and Exchange Commission or Public Company Accounting Oversight Board;

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●

the concentration of large deposits from certain clients, including those who have balances above current Federal Deposit Insurance Corporation insurance limits;

●

our ability to successfully manage liquidity risk, which may increase our dependence on non-core funding sources such as brokered deposits, and negatively impact our cost of funds;

●

our ability to raise additional capital to implement our business plan;

●

our ability to implement our growth strategy and manage costs effectively;

●

the composition of our senior leadership team and our ability to attract and retain key personnel;

●

talent and labor shortages and employee turnover;

●

the occurrence of fraudulent activity, breaches or failures of our or our third-party vendors’ information security controls or cybersecurity-related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools or as a result of insider fraud;

●

interruptions involving our information technology and telecommunications systems or third-party servicers;

●

competition in the financial services industry, including from nonbank competitors such as credit unions, “fintech” companies and digital asset service providers;

●

the effectiveness of our risk management framework;

●

rapid technological changes implemented by us and other parties in the financial services industry, including third-party vendors, which may be more difficult to implement or more expensive than anticipated or which may have unforeseen consequence to us and our customers, including the development and implementation of tools incorporating artificial intelligence;

●

emerging issues related to the development and use of artificial intelligence that could give rise to legal or regulatory action, damage our reputation, or otherwise materially harm our business or customers;

●

the commencement, cost and outcome of litigation and other legal proceedings and regulatory actions against us;

●

the impact of recent and future legislative and regulatory changes, domestic or foreign;

●

risks related to climate change and the negative impact it may have on our customers and their businesses;

●

the imposition of tariffs or other governmental policies impacting the global supply chain and the value of products produced by our commercial borrowers;

●

severe weather, natural disasters, wide spread disease or pandemics, acts of war, military conflicts, or terrorism, changes in foreign relations, or other adverse external events, including the wars in Iran and Ukraine, ongoing conflicts in the Middle East, and other international military conflicts that can increase levels of political economic unpredictability, contribute to rising energy and commodity prices, affect global supply chains, increase the volatility of financial markets, and other matters beyond our control;

●

potential impairment to the goodwill the Company recorded in connection with acquisitions;

●

risks associated with our integration of First Minnetonka City Bank (“FMCB”), and the effect of the merger on the Company’s customer and employee relationships and operating results;

●

the availability of future equity and debt issuances and other capital raising opportunities on favorable terms;

●

changes to U.S. or state tax laws, regulations and governmental policies concerning the Company’s general business, including changes in interpretation or prioritization of such rules and regulations;

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●

the impact of bank failures or adverse developments at other banks and related negative publicity about the banking industry in general on investor and depositor sentiment regarding the stability and liquidity of banks;

●

and any other risks described in the “Risk Factors” sections of reports filed by the Company with the SEC.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this report. In addition, past results of operations are not necessarily indicative of future results. Any forward-looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made. The Company undertakes no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Overview

The Company is a financial holding company headquartered in St. Louis Park, Minnesota. The principal sources of funds for loans and investments are transaction, savings, time, and brokered deposits, and short-term and long-term borrowings. The Company’s principal sources of income are interest and fees collected on loans, interest and dividends earned on investment securities and noninterest income, including service charges, letter of credit fees, and swap fees. The Company’s principal expenses are interest paid on deposit accounts and borrowings, employee compensation and other overhead expenses. The Company’s simple, highly efficient business model of providing responsive support and simple solutions to clients continues to be the underlying principle that drives the Company’s profitable growth.

Critical Accounting Policies and Estimates

The consolidated financial statements of the Company are prepared based on the application of certain accounting policies, the most significant of which are described in “Note 1 – Description of the Business and Summary of Significant Accounting Policies” of the notes to the consolidated financial statements included as a part of the Company’s most recent Annual Report on Form 10-K, filed with the SEC on February 26, 2026. There have been no significant changes in the critical accounting policies or the assumptions and judgments utilized in applying these policies since December 31, 2025. Certain policies require numerous estimates and strategic or economic assumptions that may prove inaccurate or subject to variation and may significantly affect the reported results and financial position for the current period or in future periods. Changes in underlying factors, assumptions or estimates in any of these areas could have a material impact on the future financial condition and results of operations. Management has discussed each critical accounting policy and the methodology for the identification and determination of critical accounting policies with the Company’s Audit Committee.

Recent Developments

In February 2026, the Company opened a new branch location in Lake Elmo, Minnesota to expand the Company’s presence in the eastern side of the Twin Cities market.

On February 27, 2026, the Company and the Bank entered into an equity distribution agreement with Piper Sandler & Co., as distribution agent, pursuant to which the Company may offer and sell, from time to time, shares of its common stock with an aggregate gross sales price of up to $50.0 million, including through “at-the-market” offerings and other permitted methods. The distribution agent is entitled to a commission of 2.5% of the gross sales price of the common stock sold in such offering. The Company is not obligated to sell any shares of its common stock pursuant to the equity distribution agreement, and may suspend or terminate sales thereunder at any time. Any shares sold will be issued pursuant to the Company’s effective shelf registration statement on Form S-3 and related prospectus supplement, and net proceeds, if any, are expected to be used for general corporate purposes, including investments in or advances to the Company’s subsidiaries, working capital, capital expenditures, stock repurchases, debt repayment, or potential acquisitions.

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Operating Results Overview

The following table summarizes certain key financial results as of and for the periods indicated:


	As of and for the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
(dollars in thousands, except per share data)	2026			2026			2025			2025			2025
Income Statement
Net Interest Income	$	38,566		$	36,647		$	35,687		$	34,091		$	32,452
Provision for Credit Losses		550			1,200			1,450			1,100			2,000
Noninterest Income		2,324			9,564			3,148			2,061			3,627
Noninterest Expense		21,894			22,170			20,238			19,956			18,941
Net Income		14,007			17,406			13,334			11,601			11,520
Net Income Available to Common Shareholders		12,993			16,393			12,320			10,588			10,506

Per Common Share Data
Basic Earnings Per Share	$	0.47		$	0.59		$	0.45		$	0.38		$	0.38
Diluted Earnings Per Share		0.45			0.58			0.43			0.38			0.38
Adjusted Diluted Earnings Per Share ⁽¹⁾		0.45			0.41			0.44			0.39			0.37
Book Value Per Share		17.27			16.60			16.23			15.62			14.92
Tangible Book Value Per Share ⁽¹⁾		16.61			15.93			15.55			14.93			14.21
Basic Weighted Average Shares Outstanding		27,861,522			27,800,091			27,641,138			27,504,840			27,460,982
Diluted Weighted Average Shares Outstanding		28,589,332			28,490,176			28,354,756			28,190,406			27,998,008
Shares Outstanding at Period End		27,880,830			27,832,867			27,759,970			27,584,732			27,470,283

Selected Performance Ratios
Return on Average Assets ⁽²⁾		1.06	%		1.35	%		0.97	%		0.86	%		0.90	%
Pre-Provision Net Revenue Return on Average Assets ⁽¹⁾⁽²⁾		1.43			1.30			1.35			1.19			1.27
Return on Average Shareholders' Equity ⁽²⁾		10.17			13.45			10.38			9.47			9.80
Return on Average Tangible Common Equity⁽¹⁾⁽²⁾		11.15			15.13			11.53			10.50			10.93
Average Shareholders' Equity to Average Assets		10.39			10.01			9.37			9.04			9.14
Net Interest Margin ⁽³⁾		3.07			2.99			2.75			2.63			2.62
Core Net Interest Margin ⁽¹⁾⁽³⁾		2.94			2.86			2.62			2.52			2.49
Yield on Interest Earning Assets⁽³⁾		5.73			5.65			5.58			5.63			5.56
Yield on Total Loans, Gross⁽³⁾		5.91			5.81			5.78			5.79			5.74
Cost of Interest Bearing Liabilities		3.51			3.53			3.73			3.89			3.83
Cost of Total Deposits		2.80			2.79			2.97			3.19			3.16
Cost of Funds		2.91			2.90			3.07			3.25			3.19
Efficiency Ratio⁽¹⁾		53.0			56.3			51.6			54.7			52.6
Noninterest Expense to Average Assets ⁽²⁾		1.65			1.71			1.48			1.47			1.47

Adjusted Financial Ratios ⁽¹⁾
Adjusted Return on Average Assets⁽²⁾		1.06	%		0.98	%		0.99	%		0.88	%		0.88	%
Adjusted Pre-Provision Net Revenue Return on Average Assets ⁽²⁾		1.43			1.37			1.38			1.23			1.31
Adjusted Return on Average Shareholders' Equity		10.17			9.76			10.54			9.77			9.64
Adjusted Return on Average Tangible Common Equity		11.15			10.72			11.72			10.86			10.74
Adjusted Efficiency Ratio		53.0			53.8			50.7			53.2			51.5
Adjusted Noninterest Expense to Average Assets		1.65			1.64			1.45			1.43			1.43

Balance Sheet
Total Assets	$	5,389,726		$	5,335,396		$	5,407,002		$	5,359,994		$	5,296,673
Total Loans, Gross		4,426,389			4,368,042			4,309,517			4,214,554			4,145,799
Deposits		4,346,204			4,305,511			4,320,369			4,292,764			4,236,742
Total Shareholders' Equity		547,909			528,424			517,095			497,463			476,282
Loan to Deposit Ratio		101.8	%		101.5	%		99.7	%		98.2	%		97.9	%
Core Deposits to Total Deposits ⁽⁴⁾		77.0			78.4			77.6			76.4			75.2
Uninsured Deposits to Total Deposits		26.2			26.6			29.8			29.2			30.5

Capital Ratios (Consolidated) ⁽⁵⁾
Tier 1 Leverage Ratio		10.02	%		9.89	%		9.20	%		9.02	%		9.14	%
Common Equity Tier 1 Risk-based Capital Ratio		9.61			9.53			9.17			9.08			9.03
Tier 1 Risk-based Capital Ratio		10.98			10.94			10.57			10.52			10.51
Total Risk-based Capital Ratio		14.48			14.48			14.12			14.12			14.17
Tangible Common Equity to Tangible Assets ⁽¹⁾		8.62			8.34			8.01			7.71			7.40

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	As of and for the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
(dollars in thousands)	2026			2026			2025			2025			2025
Selected Asset Quality Data
Loans 30-89 Days Past Due	$	871		$	494		$	968		$	2,906		$	12,492
Loans 30-89 Days Past Due to Total Loans		0.02	%		0.01	%		0.02	%		0.07	%		0.30	%
Nonperforming Loans	$	21,648		$	11,715		$	22,034		$	9,991		$	10,134
Nonperforming Loans to Total Loans		0.49	%		0.27	%		0.51	%		0.24	%		0.24	%
Nonaccrual Loans to Total Loans		0.49			0.27			0.51			0.24			0.24
Nonaccrual Loans and Loans Past Due 90 Days and Still Accruing to Total Loans		0.49			0.27			0.51			0.24			0.24
Foreclosed Assets	$	—		$	—		$	—		$	—		$	185
Nonperforming Assets ⁽⁶⁾		21,648			11,715			22,034			9,991			10,319
Nonperforming Assets to Total Assets ⁽⁶⁾		0.40	%		0.22	%		0.41	%		0.19	%		0.19	%
Allowance for Credit Losses on Loans to Total Loans		1.30			1.31			1.31			1.34			1.35
Allowance for Credit Losses on Loans to Nonaccrual Loans		265.23			488.92			256.16			564.41			550.28
Net Loan Charge-Offs to Average Loans ⁽²⁾		0.04			0.05			0.11			0.03			0.00
Watchlist/Special Mention Risk Rating Loans	$	38,469		$	47,681		$	47,823		$	40,642		$	53,282
Substandard Risk Rating Loans		43,888			43,074			52,956			58,074			44,986

(1)	Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details.

(2)	Annualized.

(3)	Amounts calculated on a tax-equivalent basis using the statutory federal tax rate of 21%.

(4)	Core deposits are defined as total deposits less brokered deposits and certificates of deposit greater than $250,000.

(5)	Preliminary data. Current period subject to change prior to filing with applicable regulatory filings.

(6)	Nonperforming assets are defined as nonaccrual loans plus 90 days past due plus foreclosed assets.

Discussion and Analysis of Results of Operations

Net Income

Net income was $14.0 million for the second quarter of 2026, compared to net income of $11.5 million for the second quarter of 2025. Earnings per diluted common share for the second quarter of 2026 were $0.45, compared to $0.38 per diluted common share for the second quarter of 2025.

Net Interest Income

The Company’s primary source of revenue is net interest income, which is impacted by the level of interest earning assets and related funding sources, as well as changes in interest rates. The difference between the average yield on earning assets and the average rate paid for interest bearing liabilities is the net interest spread. Noninterest bearing sources of funds, such as demand deposits and shareholders’ equity, also support earning assets. The impact of the noninterest bearing sources of funds is captured in the net interest margin, which is calculated as net interest income divided by average earning assets. Both the net interest margin and net interest spread are presented on a tax-equivalent basis, which means that tax-free interest income has been adjusted to pretax-equivalent income, assuming a 21% federal tax rate. Management’s ability to respond to changes in interest rates by using effective asset-liability management techniques is critical to managing net interest margin and the Company’s primary source of earnings.

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Average Balances and Yields

The following table presents, for the three and six months ended June 30, 2026 and 2025, the average balances of each principal category of assets, liabilities and shareholders’ equity, and an analysis of net interest income. The average balances are principally daily averages and, for loans, include both performing and nonperforming balances. Interest income on loans includes the effects of net deferred loan origination fees and costs accounted for as yield adjustments. These tables are presented on a tax-equivalent basis, if applicable.


		For the Three Months Ended
		June 30, 2026								June 30, 2025
		Average			Interest			Yield/		Average			Interest			Yield/
(dollars in thousands)		Balance			& Fees			Rate		Balance			& Fees			Rate
Interest Earning Assets:
Cash Investments		$	140,738		$	1,167		3.33	%	$	166,164		$	1,681		4.06	%
Investment Securities:
Taxable Investment Securities			460,567			5,233		4.56			734,998			8,883		4.85
Tax-Exempt Investment Securities⁽¹⁾			144,241			2,115		5.88			31,940			401		5.04
Total Investment Securities			604,808			7,348		4.87			766,938			9,284		4.86
Loans ⁽¹⁾⁽²⁾			4,380,477			64,537		5.91			4,064,540			58,122		5.74
Federal Home Loan Bank Stock			18,692			438		9.39			21,416			429		8.03
Total Interest Earning Assets			5,144,715			73,490		5.73	%		5,019,058			69,516		5.56	%
Noninterest Earning Assets			172,500								143,124
Total Assets		$	5,317,215							$	5,162,182
Interest Bearing Liabilities:
Deposits:
Interest Bearing Transaction Deposits		$	931,588		$	7,504		3.23	%	$	813,906		$	7,769		3.83	%
Savings and Money Market Deposits			1,436,829			11,650		3.25			1,370,831			12,692		3.71
Time Deposits			230,949			2,089		3.63			326,024			3,268		4.02
Brokered Deposits			843,456			8,468		4.03			833,629			8,768		4.22
Total Interest Bearing Deposits			3,442,822			29,711		3.46			3,344,390			32,497		3.90
Federal Funds Purchased			1,901			19		3.90			1,369			16		4.64
Notes Payable			—			—		—			13,750			260		7.58
FHLB Advances			340,341			2,494		2.94			404,473			2,852		2.83
Subordinated Debentures			108,835			1,866		6.87			83,892			1,121		5.36
Total Interest Bearing Liabilities			3,893,899			34,090		3.51	%		3,847,874			36,746		3.83	%
Noninterest Bearing Liabilities:
Noninterest Bearing Transaction Deposits			808,295								774,424
Other Noninterest Bearing Liabilities			62,446								68,184
Total Noninterest Bearing Liabilities			870,741								842,608
Shareholders' Equity			552,575								471,700
Total Liabilities and Shareholders' Equity		$	5,317,215							$	5,162,182
Net Interest Income / Interest Rate Spread						39,400		2.22	%					32,770		1.73	%
Net Interest Margin ⁽³⁾								3.07	%							2.62	%
Taxable Equivalent Adjustment:
Tax-Exempt Investment Securities and Loans						(834)								(318)
Net Interest Income					$	38,566							$	32,452

(1)	Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%.

(2)	Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.

(3)	Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.

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		For the Six Months Ended
		June 30, 2026								June 30, 2025
		Average			Interest			Yield/		Average			Interest			Yield/
(dollars in thousands)		Balance			& Fees			Rate		Balance			& Fees			Rate
Interest Earning Assets:
Cash Investments		$	119,232		$	1,938		3.28	%	$	185,850		$	3,737		4.06	%
Investment Securities:
Taxable Investment Securities			483,235			10,763		4.49			751,702			17,916		4.81
Tax-Exempt Investment Securities⁽¹⁾			131,980			3,879		5.93			33,734			862		5.15
Total Investment Securities			615,215			14,642		4.80			785,436			18,778		4.82
Loans ⁽¹⁾⁽²⁾			4,358,793			126,639		5.86			3,982,389			112,101		5.68
Federal Home Loan Bank Stock			19,012			984		10.43			20,209			864		8.62
Total Interest Earning Assets			5,112,252			144,203		5.69	%		4,973,884			135,480		5.49	%
Noninterest Earning Assets			167,942								143,115
Total Assets		$	5,280,194							$	5,116,999
Interest Bearing Liabilities:
Deposits:
Interest Bearing Transaction Deposits		$	910,253		$	14,440		3.20	%	$	834,537		$	15,958		3.86	%
Savings and Money Market Deposits			1,424,031			23,073		3.27			1,336,632			24,627		3.72
Time Deposits			241,628			4,422		3.69			327,613			6,577		4.05
Brokered Deposits			824,144			16,569		4.05			834,244			17,438		4.22
Total Interest Bearing Deposits			3,400,056			58,504		3.47			3,333,026			64,600		3.91
Federal Funds Purchased			13,127			257		3.94			688			16		4.64
Notes Payable			—			—		—			13,750			518		7.60
FHLB Advances			338,417			4,932		2.94			379,652			5,008		2.66
Subordinated Debentures			108,783			3,715		6.89			81,813			2,104		5.19
Total Interest Bearing Liabilities			3,860,383			67,408		3.52	%		3,808,929			72,246		3.82	%
Noninterest Bearing Liabilities:
Noninterest Bearing Transaction Deposits			821,342								770,849
Other Noninterest Bearing Liabilities			59,692								68,607
Total Noninterest Bearing Liabilities			881,034								839,456
Shareholders' Equity			538,777								468,614
Total Liabilities and Shareholders' Equity		$	5,280,194							$	5,116,999
Net Interest Income / Interest Rate Spread						76,795		2.17	%					63,234		1.67	%
Net Interest Margin ⁽³⁾								3.03	%							2.56	%
Taxable Equivalent Adjustment:
Tax-Exempt Investment Securities and Loans						(1,582)								(574)
Net Interest Income					$	75,213							$	62,660

(1)	Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%.

(2)	Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.

(3)	Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.

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Interest Rates and Operating Interest Differential

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest earning assets and interest bearing liabilities, as well as changes in average interest rates. The following table presents the effect that these factors had on the interest earned on interest earning assets and the interest incurred on interest bearing liabilities. The effect of changes in volume is determined by multiplying the change in volume by the previous period’s average rate. Similarly, the effect of rate changes is calculated by multiplying the change in average rate by the previous period’s volume. The changes not attributable specifically to either volume or rate have been allocated to the changes due to volume. The following tables present the changes in the volume and rate of interest bearing assets and liabilities for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, and for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:


		Three Months Ended June 30, 2026
		Compared with
		Three Months Ended June 30, 2025
		Change Due To:						Interest
(dollars in thousands)		Volume			Rate			Variance
Interest Earning Assets:
Cash Investments		$	(210)		$	(304)		$	(514)
Investment Securities:
Taxable Investment Securities			(3,119)			(531)			(3,650)
Tax-Exempt Investment Securities			1,647			67			1,714
Total Securities			(1,472)			(464)			(1,936)
Loans			4,657			1,758			6,415
Federal Home Loan Bank Stock			(63)			72			9
Total Interest Earning Assets		$	2,912		$	1,062		$	3,974

Interest Bearing Liabilities:
Interest Bearing Transaction Deposits		$	949		$	(1,214)		$	(265)
Savings and Money Market Deposits			536			(1,578)			(1,042)
Time Deposits			(860)			(319)			(1,179)
Brokered Deposits			98			(398)			(300)
Total Deposits			723			(3,509)			(2,786)
Federal Funds Purchased			5			(2)			3
Notes Payable			(260)			—			(260)
FHLB Advances			(470)			112			(358)
Subordinated Debentures			427			318			745
Total Interest Bearing Liabilities			425			(3,081)			(2,656)
Net Interest Income		$	2,487		$	4,143		$	6,630

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		Six Months Ended June 30, 2026
		Compared with
		Six Months Ended June 30, 2025
		Change Due To:						Interest
(dollars in thousands)		Volume			Rate			Variance
Interest Earning Assets:
Cash Investments		$	(1,082)		$	(717)		$	(1,799)
Investment Securities:
Taxable Investment Securities			(5,980)			(1,173)			(7,153)
Tax-Exempt Investment Securities			2,888			129			3,017
Total Securities			(3,092)			(1,044)			(4,136)
Loans			10,942			3,596			14,538
Federal Home Loan Bank Stock			(61)			181			120
Total Interest Earning Assets		$	6,707		$	2,016		$	8,723

Interest Bearing Liabilities:
Interest Bearing Transaction Deposits		$	1,201		$	(2,719)		$	(1,518)
Savings and Money Market Deposits			1,416			(2,970)			(1,554)
Time Deposits			(1,574)			(581)			(2,155)
Brokered Deposits			(203)			(666)			(869)
Total Deposits			840			(6,936)			(6,096)
Federal Funds Purchased			243			(2)			241
Notes Payable			(518)			—			(518)
FHLB Advances			(601)			525			(76)
Subordinated Debentures			921			690			1,611
Total Interest Bearing Liabilities			885			(5,723)			(4,838)
Net Interest Income		$	5,822		$	7,739		$	13,561

Comparison of Net Interest Margin, Interest Income, and Interest Expense

Second Quarter of 2026 Compared to Second Quarter of 2025

Net interest income was $38.6 million for the second quarter of 2026, an increase of $6.1 million compared to net interest income of $32.5 million for the second quarter of 2025. The increase in net interest income was primarily due to growth in the loan portfolio and lower rates paid on deposits, offset partially by lower investment securities balances following the sale of $208.5 million of securities in the first quarter of 2026, and higher balances and rates paid on subordinated debt.

Net interest margin (on a fully tax-equivalent basis), the second quarter of 2026 was 3.07%, a 45 basis point increase from 2.62% in the second quarter of 2025. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and purchase accounting accretion attributable to the acquisition of FMCB, was 2.94% for the second quarter of 2026, a 45 basis point increase from 2.49% in the second quarter of 2025. The increase in net interest margin (on a fully tax-equivalent basis) was primarily due to growth and repricing of the loan portfolio at higher yields and lower rates paid on deposits.

Average interest earning assets were $5.14 billion for the second quarter of 2026, an increase of $125.7 million, or 2.5%, compared to $5.02 billion for the second quarter of 2025. The increase in average interest earning assets was primarily due to growth in the loan portfolio, offset partially by lower investment securities balances. Average interest bearing liabilities were $3.89 billion for the second quarter of 2026, an increase of $46.0 million, or

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1.2%, compared to $3.85 billion for the second quarter of 2025. The increase in average interest bearing liabilities was primarily due to higher deposit balances, offset partially by a decrease in FHLB advances.

Average interest earning assets produced a tax-equivalent yield of 5.73% for the second quarter of 2026, compared to 5.56% for the second quarter of 2025. The increase in the yield on interest earning assets was primarily due to growth and repricing of the loan portfolio at accretive yields. The average rate paid on interest bearing liabilities was 3.51% for the second quarter of 2026, compared to 3.83% for the second quarter of 2025. The decrease was primarily due to lower rates paid on deposits following interest rate cuts in 2025.

Interest Income. Total interest income, on a tax-equivalent basis, was $73.5 million for the second quarter of 2026, compared to $69.5 million for the second quarter of 2025. The $4.0 million, or 5.7%, increase in total interest income, on a tax-equivalent basis, was primarily due to growth and repricing of the loan portfolio at higher yields.

Interest income on the investment securities portfolio, on a tax-equivalent basis, decreased $1.9 million for the second quarter of 2026, compared to the second quarter of 2025, primarily due to a $162.1 million, or 21.1%, decrease in average balances between the two periods. The decrease in securities was due to the Company selling $208.5 million of securities for a pre-tax gain of $7.3 million in the first quarter of 2026.

Interest income on loans, on a tax-equivalent basis, was $64.5 million for the second quarter of 2026, compared to $58.1 million for the second quarter of 2025. The $6.4 million, or 11.0%, increase was primarily due to growth and repricing of the loan portfolio.

The aggregate loan yield, on a tax-equivalent basis, was 5.91% in the second quarter of 2026, a 17 basis point increase, compared to 5.74% in the second quarter of 2025. Core loan yield, a non-GAAP financial measure which excludes the impact of loan fees and purchase accounting accretion attributable to the acquisition of FMCB, continued to rise as new loans originated at higher yields and the existing portfolio repriced in the higher interest rate environment.

The following table presents a summary of interest, fees and accretion recognized on loans for the periods indicated:


	Three Months Ended
	June 30, 2026		March 31, 2026		December 31, 2025		September 30, 2025		June 30, 2025
Interest	5.76	%	5.66	%	5.63	%	5.66	%	5.59	%
Fees	0.13		0.12		0.10		0.09		0.11
Accretion	0.02		0.03		0.05		0.04		0.04
Yield on Loans	5.91	%	5.81	%	5.78	%	5.79	%	5.74	%

Interest Expense. Interest expense was $34.1 million for the second quarter of 2026, a decrease of $2.7 million, or 7.2%, from $36.7 million for the second quarter of 2025. The decrease was primarily due to lower rates paid on deposits, offset partially by higher balances and rates paid on subordinated debentures.

Interest expense on deposits was $29.7 million for the second quarter of 2026, a decrease of $2.8 million, or 8.6%, from $32.5 million for the second quarter of 2025. The decrease in interest expense on deposits was primarily due to lower rates paid on deposits and lower average balances of time deposits. The cost of total deposits was 2.80% in the second quarter of 2026, a 36 basis point decrease, compared to 3.16% in the second quarter of 2025. The decrease was primarily due to lower rates paid on deposits following interest rate cuts in 2025 and an increase in noninterest bearing deposits.

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Interest expense on borrowings was $4.4 million for the second quarter of 2026, an increase of $130,000, compared to $4.2 million for the second quarter of 2025. The increase was primarily due to higher balances and rates on subordinated debentures due to the subordinated debt refinancing in the second quarter of 2025.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Net interest income was $75.2 million for the six months ended June 30, 2026, an increase of $12.6 million, or 20.0%, compared to $62.7 million for the six months ended June 30, 2025. The increase in net interest income was primarily due to growth and higher yields in the loan portfolio and lower rates paid on deposits, offset partially by lower investment securities balances following the sale of $208.5 million of securities in the first quarter of 2026, and lower cash balances.

Net interest margin (on a fully tax-equivalent basis) for the six months ended June 30, 2026 was 3.03%, a 47 basis point increase from 2.56% for the six months ended June 30, 2025. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and purchase accounting accretion, was 2.90% for the six months ended June 30, 2026, a 47 basis point increase from 2.43% for the six months ended June 30, 2025.

Average interest earning assets were $5.11 billion for the six months ended June 30, 2026, an increase of $138.4 million, or 2.8%, compared to $4.97 billion for the six months ended June 30, 2025. The increase in average interest earning assets was primarily due to growth in the loan portfolio, offset partially by lower investment securities and cash balances. Average interest bearing liabilities were $3.86 billion for the six months ended June 30, 2026, an increase of $51.5 million, or 1.4%, compared to $3.81 billion for the six months ended June 30, 2025. The increase in average interest bearing liabilities was primarily due to higher deposit balances, federal funds purchased, and subordinated debentures, offset partially by a decrease in FHLB advances and notes payable.

Average interest earning assets produced a tax-equivalent yield of 5.69% for the six months ended June 30, 2026, compared to 5.49% for the six months ended June 30, 2025. The average rate paid on interest bearing liabilities was 3.52% for the six months ended June 30, 2026, compared to 3.82% for the six months ended June 30, 2025.

Interest Income. Total interest income on a tax-equivalent basis was $144.2 million for the six months ended June 30, 2026, compared to $135.5 million for the six months ended June 30, 2025. The $8.7 million increase in total interest income on a tax-equivalent basis was primarily due to growth and repricing in the loan portfolio.

Interest income on the investment securities portfolio, on a tax-equivalent basis, decreased $4.1 million during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to a $170.2 million, or 21.7%, decrease in average balances between the two periods. The decrease was primarily attributable to the sale of $208.5 million of securities for a pre-tax gain of $7.3 million in the first quarter of 2026.

Interest income on loans, on a tax-equivalent basis, for the six months ended June 30, 2026 was $126.6 million, compared to $112.1 million for the six months ended June 30, 2025. The $14.5 million, or 13.1%, increase was primarily due to growth and repricing of the loan portfolio in the higher interest rate environment.

Interest Expense. Interest expense on interest bearing liabilities was $67.4 million for the six months ended June 30, 2026, a decrease of $4.8 million, compared to $72.2 million for the six months ended June 30, 2025. The decrease was primarily due to lower rates paid on deposits, offset partially by higher balances and rates paid on subordinated debentures.

Interest expense on deposits decreased to $58.5 million for the six months ended June 30, 2026, compared to $64.6 million for the six months ended June 30, 2025. The $6.1 million decrease in interest expense on deposits was

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primarily due to lower rates paid on deposits, lower time deposit balances, and an increase in noninterest bearing deposits.

Interest expense on borrowings was $8.9 million for the six months ended June 30, 2026, compared to $7.6 million for the six months ended June 30, 2025. The $1.3 million increase was primarily due to higher balances and rates on subordinated debentures due to the subordinated debt refinancing in the second quarter of 2025, offset partially by paying down the notes payable balance.

Provision for Credit Losses

The provision for credit losses on loans and leases was $550,000 for the second quarter of 2026, compared to $2.0 million for the second quarter of 2025. The provision for credit losses on loans and leases was $1.9 million for the six months ended June 30, 2026, compared to $3.5 million for the six months ended June 30, 2025. The provision for credit losses on loans and leases recorded in the second quarter of 2026 was primarily attributable to growth in the loan portfolio, offset partially by changes to qualitative factors. The allowance for credit losses on loans and leases to total loans was 1.30% at June 30, 2026, compared to 1.35% at June 30, 2025.

The following table presents a summary of the activity in the allowance for credit losses on loans and leases for the periods indicated:


	Three Months Ended					Six Months Ended
	June 30,					June 30,
(dollars in thousands)	2026			2025		2026			2025
Balance at Beginning of Period	$	57,277		$	53,766	$	56,443		$	52,277
Provision for Credit Losses		550			2,000		1,900			3,500
Charge-offs		(738)			(6)		(1,396)			(18)
Recoveries		329			5		471			6
Balance at End of Period	$	57,418		$	55,765	$	57,418		$	55,765

The provision for credit losses for off-balance sheet credit exposures was $-0- for each of the second quarter of 2026 and 2025. No provision was recorded during the second quarter of 2026 due to unfunded commitments remaining stable as the migration to funded loans was offset by the volume of newly originated loans with unfunded commitments. The provision for credit losses for off-balance sheet credit exposures was a negative provision of $150,000 for the six months ended June 30, 2026, compared to $-0- for the six months ended June 30, 2025. The allowance for credit losses on off-balance sheet credit exposures was $3.9 million as of June 30, 2026, compared to $4.0 million as of December 31, 2025.

The following table presents a summary of the activity in the provision for credit losses for the periods indicated:


	Three Months Ended								Six Months Ended
	June 30,						Increase/		June 30,						Increase/
(dollars in thousands)	2026			2025			(Decrease)		2026			2025			(Decrease)
Provision for Credit Losses on Loans and Leases	$	550		$	2,000		$	(1,450)	$	1,900		$	3,500		$	(1,600)
Recovery of Credit Losses for Off-Balance Sheet Credit Exposures		—			—			—		(150)			—			(150)
Provision for Credit Losses	$	550		$	2,000		$	(1,450)	$	1,750		$	3,500		$	(1,750)

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Noninterest Income

Noninterest income was $2.3 million for the second quarter of 2026, a decrease of $1.3 million from $3.6 million for the second quarter of 2025. The decrease was primarily due to lower swap fees, net gain on sale of securities, and FHLB prepayment income. Noninterest income was $11.9 million for the six months ended June 30, 2026, an increase of $6.2 million from $5.7 million for the six months ended June 30, 2025. The increase was primarily due to higher net gain on sale of securities, offset partially by lower swap fees and FHLB prepayment income.

The following table presents the major components of noninterest income for the periods indicated:


	Three Months Ended									Six Months Ended
	June 30,						Increase/			June 30,						Increase/
(dollars in thousands)	2026			2025			(Decrease)			2026			2025			(Decrease)
Noninterest Income:
Customer Service Fees	$	520		$	496		$	24		$	1,047		$	991		$	56
Net Gain on Sales of Securities		—			474			(474)			7,251			475			6,776
Letter of Credit Fees		304			323			(19)			489			778			(289)
Debit Card Interchange Fees		230			152			78			431			289			142
Swap Fees		263			938			(675)			503			980			(477)
Bank-Owned Life Insurance		451			387			64			898			766			132
Investment Advisory Fees		260			213			47			474			538			(64)
FHLB Prepayment Income		—			301			(301)			—			301			(301)
Other Income		296			343			(47)			795			588			207
Totals	$	2,324		$	3,627		$	(1,303)		$	11,888		$	5,706		$	6,182

Noninterest Expense

Second Quarter of 2026 Compared to Second Quarter of 2025

Noninterest expense was $21.9 million for the second quarter of 2026, an increase of $3.0 million from $18.9 million for the second quarter of 2025. The increase was primarily attributable to increases in salaries and employee benefits and information technology expense.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Noninterest expense was $44.1 million for the six months ended June 30, 2026, an increase of $7.0 million from $37.1 million for the six months ended June 30, 2025. The increase was primarily attributable to increases in salaries and employee benefits, an FHLB advance prepayment penalty, and marketing and advertising expenses.

The Company had 355 full-time equivalent employees at the end of the second quarter of 2026, compared to 308 at the end of the second quarter of 2025. The increase was largely driven by the hiring of key talent across the organization amidst continued M&A disruption.

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Efficiency Ratio. The efficiency ratio (on a fully tax-equivalent basis), a non-GAAP financial measure, reports total noninterest expense, less amortization of intangible assets, as a percentage of net interest income plus total noninterest income, less gains (losses) on sales of securities. Management believes this non-GAAP financial measure provides a meaningful comparison of operational performance and facilitates investors’ assessments of business performance and trends in comparison to peers in the banking industry.

The efficiency ratio (on a fully tax-equivalent basis) was 53.0% for the second quarter of 2026, compared to 52.6% for the second quarter of 2025. The efficiency ratio was 54.6% and 53.9%, respectively, for the six months ended June 30, 2026 and June 30, 2025. The Company’s efficiency ratio has remained consistently below the industry median due in part to its “branch-light” model.

The following table presents the major components of noninterest expense for the periods indicated:


	Three Months Ended									Six Months Ended
	June 30,						Increase/			June 30,						Increase/
(dollars in thousands)	2026			2025			(Decrease)			2026			2025			(Decrease)
Noninterest Expense:
Salaries and Employee Benefits	$	13,916		$	11,363		$	2,553		$	27,408		$	22,734		$	4,674
Occupancy and Equipment		1,360			1,274			86			2,735			2,508			227
FDIC Insurance Assessment		595			750			(155)			1,375			1,200			175
Data Processing		692			625			67			1,303			1,244			59
Professional and Consulting Fees		1,267			1,110			157			2,463			2,104			359
Derivative Collateral Fees		206			372			(166)			374			823			(449)
Information Technology and Telecommunications		1,258			971			287			2,325			1,942			383
Marketing and Advertising		604			435			169			1,380			762			618
Intangible Asset Amortization		227			230			(3)			453			460			(7)
FHLB Prepayment Penalty		—			—			—			982			—			982
Other Expense		1,769			1,811			(42)			3,266			3,300			(34)
Totals	$	21,894		$	18,941		$	2,953		$	44,064		$	37,077		$	6,987

Income Tax Expense

The provision for income taxes includes both federal and state taxes. Fluctuations in effective tax rates reflect the differences in the inclusion or deductibility of certain income and expenses for income tax purposes and the recognition of tax credits. The Company’s future effective income tax rate will fluctuate based on the mix of taxable and tax-free investments and loans, the recognition and availability of tax credit investments, and overall taxable income.

Income tax expense was $4.4 million for the second quarter of 2026, compared to $3.6 million for the second quarter of 2025. The effective combined federal and state income tax rate for the second quarter of 2026 was 24.1%, compared to 23.9% for the second quarter of 2025. Income tax expense was $9.9 million for the six months ended June 30, 2026, compared to $6.6 million for the six months ended June 30, 2025. The effective combined federal and state income tax rate for each of the six months ended June 30, 2026 and 2025 was 23.9%. The effective tax rate remained stable across both periods.

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Financial Condition

Assets

Total assets at June 30, 2026 were $5.39 billion, a decrease of $17.3 million, or 0.3%, compared to total assets of $5.41 billion at December 31, 2025, and an increase of $93.1 million, or 1.8%, compared to total assets of $5.30 billion at June 30, 2025. The year-to-date decrease was primarily due to the sale of investment securities and pre-payment of FHLB advances. The Company sold $208.5 million of securities in the first quarter of 2026 as part of a strategic balance sheet repositioning to enhance efficiency and drive future earnings. The year-over-year increase was primarily due to growth in the loan portfolio, offset partially by the sale of investment securities.

Investment Securities Portfolio

The investment securities portfolio is used to make various term investments and is intended to provide the Company with adequate liquidity, a source of stable income, and at times, serve as collateral for certain types of deposits or borrowings. Investment balances in the investment securities portfolio are subject to change over time based on funding needs and interest rate risk management objectives. The liquidity levels take into account anticipated future cash flows and are maintained at levels management believes are appropriate to ensure future flexibility in meeting anticipated funding needs. All investment securities are held available for sale.

Securities available for sale were $605.4 million at June 30, 2026, a decrease of $171.0 million, or 22.0%, compared to $776.4 million at December 31, 2025. The decrease was primarily due to the sale of investment securities in the first quarter of 2026, a strategic move taken to enhance the Company’s balance sheet efficiency and positioning the Company for improved profitability moving forward.

The following table presents the amortized cost and fair value of securities available for sale, by type, at June 30, 2026 and December 31, 2025:


		June 30, 2026								December 31, 2025
		Amortized			Fair					Amortized			Fair
(dollars in thousands)		Cost			Value			Percent		Cost			Value		Percent
U.S. Treasury Securities		$	—		$	—		—	%	$	155,863		$	146,206	18.8	%
U.S. Government Agency Securities			6,919			6,956		1.1			8,664			8,707	1.1
Mortgage-Backed Securities Issued or Guaranteed by U.S. Agencies (MBS):
Residential Pass-Through:
Guaranteed by GNMA			42,303			41,717		6.9			44,133			44,124	5.7
Issued by FNMA and FHLMC			20,469			18,521		3.1			21,166			19,326	2.5
Other Residential Mortgage-Backed Securities			74,058			67,279		11.1			73,596			67,322	8.7
Commercial Mortgage-Backed Securities			4,207			3,980		0.7			6,226			6,034	0.8
All Other Commercial MBS			92,963			93,833		15.5			107,170			108,866	14.0
Total MBS			234,000			225,330		37.3			252,291			245,672	31.7
Municipal Securities			263,990			256,870		42.4			242,995			239,168	30.8
Corporate Securities			88,221			88,134		14.6			93,080			92,407	11.9
Asset-Backed Securities			28,146			28,122		4.6			44,298			44,281	5.7
Total		$	621,276		$	605,412		100.0	%	$	797,191		$	776,441	100.0	%

Loan Portfolio

The Company focuses on lending to borrowers located or investing in the Twin Cities MSA across a diverse range of industries and property types. The Company lends primarily to commercial clients, consisting of loans secured by nonfarm, nonresidential properties, multifamily residential properties, land, and non-real estate business assets. Responsive service, local decision making, and an efficient turnaround time from application to closing have been significant factors in growing the loan portfolio.

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The Company manages concentrations of credit exposure through a risk management program which implements formalized processes and procedures specifically for managing and mitigating risk within the loan portfolio. The processes and procedures include oversight by the board of directors and management, commercial real estate exposure limits, portfolio monitoring tools, management information systems, market reports, underwriting standards, internal and external loan review, and stress testing.

Total gross loans at June 30, 2026 were $4.43 billion, an increase of $116.9 million, or 5.5% annualized, over total gross loans of $4.31 billion at December 31, 2025, and an increase of $280.6 million, or 6.8%, over total gross loans of $4.15 billion at June 30, 2025. Both the year-to-date and the year-over-year increases in the loan portfolio were primarily due to increased loan originations and more favorable market conditions.

The following table presents the dollar and percentage composition of the loan portfolio by category, at the dates indicated:


		June 30, 2026					March 31, 2026					December 31, 2025					September 30, 2025					June 30, 2025
(dollars in thousands)		Amount			Percent		Amount			Percent		Amount			Percent		Amount			Percent		Amount			Percent
Commercial		$	591,034		13.4	%	$	593,406		13.6	%	$	547,245		12.7	%	$	533,476		12.7	%	$	549,259		13.3	%
Leases			41,802		0.9			41,791		1.0			43,407		1.0			43,186		1.0			44,817		1.1
Construction and Land Development			186,248		4.2			209,421		4.8			216,163		5.0			159,991		3.8			136,438		3.3
1-4 Family Construction			46,539		1.0			50,629		1.1			45,152		1.1			41,739		1.0			39,095		0.9
Real Estate Mortgage:
1-4 Family Mortgage			485,288		11.0			488,029		11.2			496,142		11.5			487,297		11.6			474,269		11.4
Multifamily			1,690,566		38.2			1,590,091		36.4			1,587,338		36.8			1,578,223		37.4			1,555,731		37.5
CRE Owner Occupied			191,153		4.3			188,588		4.3			189,754		4.4			192,966		4.6			192,837		4.7
CRE Nonowner Occupied			1,168,863		26.4			1,185,371		27.1			1,165,104		27.0			1,158,622		27.5			1,137,007		27.4
Total Real Estate Mortgage Loans			3,535,870		79.9			3,452,079		79.0			3,438,338		79.7			3,417,108		81.1			3,359,844		81.0
Consumer and Other			24,896		0.6			20,716		0.5			19,212		0.5			19,054		0.4			16,346		0.4
Total Loans, Gross			4,426,389		100.0	%		4,368,042		100.0	%		4,309,517		100.0	%		4,214,554		100.0	%		4,145,799		100.0	%
Allowance for Credit Losses			(57,418)					(57,277)					(56,443)					(56,390)					(55,765)
Net Deferred Loan Fees			(8,469)					(8,633)					(8,966)					(8,282)					(7,629)
Total Loans, Net		$	4,360,502				$	4,302,132				$	4,244,108				$	4,149,882				$	4,082,405

The Company primarily focuses on real estate mortgage lending, which constituted 79.9% of the portfolio at June 30, 2026. The composition of the portfolio has remained relatively consistent with prior periods, and the Company does not expect any significant changes in the composition of the loan portfolio or the emphasis on real estate lending in the foreseeable future.

As of June 30, 2026, investor CRE loans totaled $3.09 billion, consisting of $1.69 billion of loans secured by multifamily residential properties, $1.17 billion of loans secured by nonowner occupied CRE, $186.2 million of construction and land development loans, and $46.5 million of 1-4 family construction loans. Investor CRE loans represented 69.9% of the total gross loan portfolio and 457.1% of the Bank’s total risk-based capital at June 30, 2026, compared to 69.9% and 473.1%, respectively, at December 31, 2025.

The following table provides a breakdown of CRE nonowner occupied loans by collateral types as of June 30, 2026 and December 31, 2025:


	June 30, 2026						December 31, 2025
			Percent of		Percent of				Percent of		Percent of
			CRE Nonowner		Total Loan				CRE Nonowner		Total Loan
(dollars in thousands)	Balance		Occupied Portfolio		Portfolio		Balance		Occupied Portfolio		Portfolio
Collateral Type:
Industrial	$	330,511	28.3	%	7.5	%	$	320,107	27.5	%	7.4	%
Office		228,246	19.5		5.2			212,926	18.3		4.9
Retail		218,634	18.7		4.9			202,904	17.4		4.7
Mini Storage Facility		108,104	9.2		2.4			109,324	9.4		2.5
Nursing/Assisted Living		95,958	8.2		2.2			119,738	10.3		2.8
Medical Office		42,443	3.6		1.0			65,527	5.6		1.5
Other		144,967	12.5		3.2			134,578	11.5		3.2
Total CRE Nonowner Occupied	$	1,168,863	100.0	%	26.4	%	$	1,165,104	100.0	%	27.0	%

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The following tables present time to contractual maturity and sensitivity to interest rate changes for the loan portfolio as of June 30, 2026 and December 31, 2025:


		As of June 30, 2026
		Due in One Year			More Than One			More Than Five		After
(dollars in thousands)		or Less			Year to Five Years			Year to Fifteen Years		Fifteen Years
Commercial		$	248,507		$	255,764		$	83,960	$	2,803
Leases			4,941			35,800			1,061		—
Construction and Land Development			89,386			79,538			17,324		—
1-4 Family Construction			34,494			12,045			—		—
Real Estate Mortgage:
1-4 Family Mortgage			129,717			279,957			53,361		22,253
Multifamily			333,727			918,202			351,516		87,121
CRE Owner Occupied			31,706			120,992			36,230		2,225
CRE Nonowner Occupied			205,774			761,841			200,835		413
Total Real Estate Mortgage Loans			700,924			2,080,992			641,942		112,012
Consumer and Other			20,330			4,153			110		303
Total Loans, Gross		$	1,098,582		$	2,468,292		$	744,397	$	115,118
Interest Rate Sensitivity:
Fixed Interest Rates		$	630,687		$	1,802,736		$	360,576	$	22,557
Floating or Adjustable Rates			467,895			665,556			383,821		92,561
Total Loans, Gross		$	1,098,582		$	2,468,292		$	744,397	$	115,118


		As of December 31, 2025
		Due in One Year			More Than One			More Than Five		After
(dollars in thousands)		or Less			Year to Five Years			Year to Fifteen Years		Fifteen Years
Commercial		$	231,121		$	237,328		$	75,966	$	2,830
Leases			4,514			38,351			542		—
Construction and Land Development			123,801			82,397			9,965		—
1-4 Family Construction			37,784			7,171			197		—
Real Estate Mortgage:
1-4 Family Mortgage			105,250			308,347			59,085		23,460
Multifamily			202,007			891,088			408,779		85,464
CRE Owner Occupied			13,483			123,336			50,239		2,696
CRE Nonowner Occupied			274,244			693,610			196,828		422
Total Real Estate Mortgage Loans			594,984			2,016,381			714,931		112,042
Consumer and Other			9,594			9,149			156		313
Total Loans, Gross		$	1,001,798		$	2,390,777		$	801,757	$	115,185
Interest Rate Sensitivity:
Fixed Interest Rates		$	636,867		$	1,772,310		$	389,099	$	23,773
Floating or Adjustable Rates			364,931			618,467			412,658		91,412
Total Loans, Gross		$	1,001,798		$	2,390,777		$	801,757	$	115,185

Asset Quality

The Company emphasizes credit quality in the originating and monitoring of the loan portfolio, and success in underwriting is measured by the levels of classified and nonperforming assets and net charge-offs. Federal regulations and internal policies require the use of an asset classification system as a means of managing and reporting problem and potential problem assets. The Company has incorporated an internal asset classification system, substantially consistent with federal banking regulations, as a part of the credit monitoring system. Federal banking regulations set forth a classification scheme for problem and potential problem assets as “special mention,” “substandard,” “doubtful” or “loss” assets. An asset identified as “special mention” is not adversely classified but has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the payment prospects of the asset. An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. A financial institution with assets classified as “special mention” is not expected to sustain losses of principal or interest from these assets and should not classify assets under this category for more than a year. “Substandard” assets include those characterized by the “distinct possibility” that the financial institution will sustain “some loss” if the deficiencies are not corrected.

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Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are required to be designated “watch.”

The following table presents information on loan classifications at June 30, 2026. The Company had no assets classified as doubtful or loss at June 30, 2026.


	Risk Category
(dollars in thousands)	Watch/Special Mention		Substandard			Total
Commercial	$	1,828	$	10,430		$	12,258
Construction and Land Development		—		26			26
Real Estate Mortgage:
1-4 Family Mortgage		200		1,328			1,528
Multifamily		26,489		12,118			38,607
CRE Owner Occupied		7,180		3,355			10,535
CRE Nonowner Occupied		2,582		15,822			18,404
Total Real Estate Mortgage Loans		36,451		32,623			69,074
Consumer and Other		190		809			999
Totals	$	38,469	$	43,888		$	82,357

Loans that had potential weaknesses that warranted a watch or special mention risk rating at June 30, 2026 totaled $38.5 million, compared to $47.8 million at December 31, 2025. Loans that warranted a substandard risk rating at June 30, 2026 totaled $43.9 million, compared to $53.0 million at December 31, 2025. Management continues to actively work with these borrowers and closely monitor substandard credits.

Nonperforming Assets

Nonperforming loans include loans accounted for on a nonaccrual basis and loans 90 days past due and still accruing. Nonaccrual loans totaled $21.6 million as of June 30, 2026 and $22.0 million as of December 31, 2025. There were no loans 90 days past due and still accruing as of either June 30, 2026 and December 31, 2025. There were also no foreclosed assets as of either June 30, 2026 and December 31, 2025.

The following table presents a summary of nonperforming assets, by category, at the dates indicated:


	June 30,			December 31,
(dollars in thousands)	2026			2025
Total Nonaccrual Loans	$	21,648		$	22,034
Total Nonperforming Loans	$	21,648		$	22,034
Total Nonperforming Assets ⁽¹⁾	$	21,648		$	22,034
Nonaccrual Loans to Total Loans		0.49	%		0.51	%
Nonperforming Loans to Total Loans		0.49			0.51
Nonperforming Assets to Total Loans Plus Foreclosed Assets ⁽¹⁾		0.49			0.51

(1)	Nonperforming assets are defined as nonaccrual loans and loans greater than 90 days past due still accruing plus foreclosed assets. There were no loans greater than 90 days past due still accruing or modified accruing loans for any period shown.

The balance of nonperforming assets can fluctuate due to changes in economic conditions. The Company has established a policy to discontinue accruing interest on a loan (that is, to place the loan on nonaccrual status) after it

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has become 90 days delinquent as to payment of principal or interest, unless the loan is considered to be well-collateralized and is actively in the process of collection. In addition, a loan will be placed on nonaccrual status before it becomes 90 days delinquent unless management believes that the collection of interest is expected. Interest previously accrued but uncollected on such loans is reversed and charged against current income when the receivable is determined to be uncollectible. If management believes that a loan will not be collected in full, an increase to the allowance for credit losses on loans is recorded to reflect management’s estimate of any potential exposure or loss. Generally, payments received on nonaccrual loans are applied directly to principal. There are no loans, outside of those included in the tables above, that cause management to have serious doubts as to the ability of borrowers to comply with present repayment terms. Gross income that would have been recorded on nonaccrual loans for the three and six months ended June 30, 2026 was $166,000 and $229,000, respectively. Gross income that would have been recorded on nonaccrual loans for the three and six months ended June 30, 2025 was $169,000 and $342,000, respectively.

Allowance for Credit Losses

The allowance for credit losses on loans and leases is a reserve established through charges to earnings in the form of a provision for credit losses. The Company maintains an allowance for credit losses at a level management considers adequate to provide for expected lifetime losses in the portfolio. Although management strives to maintain an allowance it deems adequate, future economic changes, deterioration of borrowers’ creditworthiness, and the impact of examinations by regulatory agencies, among other factors, all could cause changes to the allowance for credit losses on loans and leases.

At June 30, 2026, the allowance for credit losses on loans and leases was $57.4 million, an increase of $975,000 from $56.4 million at December 31, 2025. Net charge-offs totaled $409,000 during the second quarter of 2026 and $1,000 during the second quarter of 2025. Net charge-offs totaled $925,000 for the six months ended June 30, 2026, and $12,000 for the six months ended June 30, 2025. The allowance for credit losses on loans and leases as a percentage of total loans was 1.30% at June 30, 2026 and 1.31% December 31, 2025.

The following table presents a summary of net charge-offs for the periods indicated:


		Three Months Ended						Six Months Ended
		June 30,						June 30,
(dollars in thousands)		2026			2025			2026			2025
Net Charge-offs (Recoveries)
Commercial		$	(328)		$	(1)		$	173		$	(1)
Real Estate Mortgage:
1-4 Family Mortgage			9			—			9			—
Multifamily			709			—			709			—
Total Real Estate Mortgage Loans			718			—			718			—
Consumer and Other			19			2			34			13
Total Net Charge-offs (Recoveries)		$	409		$	1		$	925		$	12
Net Charge-offs (Recoveries) to Average Loans
Commercial			(0.23)	%		0.00	%		0.06	%		0.00	%
Real Estate Mortgage:
1-4 Family Mortgage			0.01			0.00			0.00			0.00
Multifamily			0.17			0.00			0.09			0.00
Total Real Estate Mortgage Loans			0.08			0.00			0.04			0.00
Consumer and Other			0.34			0.05			0.33			0.18
Total Net Charge-offs (Recoveries) (Annualized) to Average Loans			0.04	%		0.00	%		0.04	%		0.03	%
Gross Loans, End of Period		$	4,426,389		$	4,145,799		$	4,426,389		$	4,145,799
Average Loans			4,380,477			4,064,540			4,358,793			3,982,389
Allowance for Credit Losses to Total Gross Loans			1.30	%		1.35	%		1.30	%		1.35	%

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The following table presents a summary of the allocation of the allowance for credit losses on loans by loan portfolio segment as of the dates indicated:


		June 30,					December 31,
		2026					2025
(dollars in thousands)		Amount			Percent		Amount			Percent
Commercial		$	6,046		10.5	%	$	5,982		10.6	%
Leases			296		0.5			352		0.6
Construction and Land Development			1,400		2.4			1,687		3.0
1-4 Family Construction			313		0.5			316		0.6
Real Estate Mortgage:
1 - 4 Family Mortgage			2,276		4.0			2,475		4.4
Multifamily			25,019		43.7			23,775		42.1
CRE Owner Occupied			1,033		1.8			1,080		1.9
CRE Nonowner Occupied			20,756		36.1			20,595		36.5
Total Real Estate Mortgage Loans			49,084		85.6			47,925		84.9
Consumer and Other			279		0.5			181		0.3
Total Allowance for Credit Losses		$	57,418		100.0	%	$	56,443		100.0	%

Deposits

The principal sources of funds for the Company are deposits, consisting of demand deposits, money market accounts, savings accounts, and certificates of deposit. The following table presents the dollar and percentage composition of the deposit portfolio, by category, at the dates indicated:


		June 30, 2026					March 31, 2026					December 31, 2025					September 30, 2025					June 30, 2025
(dollars in thousands)		Amount			Percent		Amount			Percent		Amount			Percent		Amount			Percent		Amount			Percent
Noninterest Bearing Transaction Deposits		$	830,952		19.1	%	$	828,845		19.3	%	$	923,070		21.4	%	$	822,632		19.1	%	$	787,868		18.6	%
Interest Bearing Transaction Deposits			944,502		21.7			899,911		20.9			893,740		20.7			860,774		20.1			791,748		18.7
Savings and Money Market Deposits			1,435,582		33.1			1,497,517		34.7			1,380,922		31.9			1,428,726		33.3			1,441,694		34.0
Time Deposits			243,694		5.6			232,959		5.4			312,154		7.2			346,214		8.1			344,882		8.1
Brokered Deposits			891,474		20.5			846,279		19.7			810,483		18.8			834,418		19.4			870,550		20.6
Total Deposits		$	4,346,204		100.0	%	$	4,305,511		100.0	%	$	4,320,369		100.0	%	$	4,292,764		100.0	%	$	4,236,742		100.0	%

Total deposits at June 30, 2026 were $4.35 billion, an increase of $25.8 million, or 0.6%, compared to total deposits of $4.32 billion at December 31, 2025, and an increase of $109.5 million, or 2.6%, compared to total deposits of $4.24 billion at June 30, 2025. Core deposits, defined as total deposits excluding brokered deposits and time deposits greater than $250,000, decreased $3.6 million, or 0.2% annualized, from December 31, 2025. Based on the nature of the Company’s client base, management believes core deposits will fluctuate periods as deposit growth is not always linear.

The Company relies on increasing the deposit base to fund loans and other asset growth. The Company is in a highly competitive market and competes for local deposits by offering attractive products with competitive rates. The Company expects to have a higher average cost of funds for local deposits compared to competitor banks due to the lack of an extensive branch network. The Company’s strategy is to offset the higher cost of funding with a lower level of operating expense. When appropriate, the Company utilizes alternative funding sources such as brokered deposits. The brokered deposit market provides flexibility in structure, optionality and efficiency not afforded in traditional retail deposit channels. As of June 30, 2026, total brokered deposits were $891.5 million, an increase of $81.0 million, compared to total brokered deposits of $810.5 million at December 31, 2025. Brokered deposits continue to be used as a supplemental funding source, as needed, to support loan portfolio growth.

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The following table presents the average balance and average rate paid on each of the following deposit categories as of and for the three months ended June 30, 2026 and 2025:


		As of and for the					As of and for the
		Three Months Ended					Three Months Ended
		June 30, 2026					June 30, 2025
		Average			Average		Average			Average
(dollars in thousands)		Balance			Rate		Balance			Rate
Noninterest Bearing Transaction Deposits		$	808,295		—	%	$	774,424		—	%
Interest Bearing Transaction Deposits			931,588		3.23			813,906		3.83
Savings and Money Market Deposits			1,436,829		3.25			1,370,831		3.71
Time Deposits < $250,000			139,463		3.52			163,946		3.55
Time Deposits > $250,000			91,486		3.79			162,078		4.13
Brokered Deposits			843,456		4.03			833,629		4.22
Total Deposits		$	4,251,117		2.80	%	$	4,118,814		3.16	%

The Company’s total uninsured deposits, which are the amounts of deposit accounts that exceed the FDIC insurance limit, currently $250,000, were approximately $1.14 billion, or 26.2% of total deposits, at June 30, 2026 and $1.29 billion, or 29.8% of total deposits, at December 31, 2025. These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes.

Borrowed Funds

Other Borrowings

At June 30, 2026, the Company had outstanding FHLB advances of $326.0 million, compared to $399.5 million at December 31, 2025. During the six months ended June 30, 2026, the Company prepaid $97.5 million of fixed rate FHLB term advances with an average cost of 4.08% and incurred a prepayment fee of $982,000. The Company’s borrowing capacity at the FHLB is determined based on collateral pledged, generally consisting of loans. The Company had additional borrowing capacity under this credit facility of $745.8 million and $611.3 million at June 30, 2026 and December 31, 2025, respectively.

The Company has an outstanding Loan and Security Agreement and revolving note with a third party correspondent lender, which is secured by 100% of the issued and outstanding stock of the Bank. The maximum principal amount of the revolving line of credit is $40.0 million, and the facility matures on September 1, 2026. As of both June 30, 2026 and December 31, 2025, the Company had no outstanding balances under the revolving line of credit. The Company had two outstanding letters of credit totaling $2.7 million and $6.4 million under this facility as of June 30, 2026 and December 31, 2025, respectively, which reduce the availability under the facility by the amounts of the letters of credit so long as they remain outstanding.

Additionally, the Company has borrowing capacity from other sources. As of June 30, 2026, the Bank was eligible to use the Federal Reserve discount window for borrowings. Based on assets pledged as collateral as of the applicable date, the Bank’s borrowing availability was approximately $1.08 billion and $1.03 billion at June 30, 2026 and December 31, 2025, respectively. As of June 30, 2026 and December 31, 2025, the Company had no outstanding advances from the discount window.

Subordinated Debentures

As of June 30, 2026 and December 31, 2025, the Company had subordinated debentures, net of issuance costs, of $108.9 million and $108.7 million, respectively.

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Contractual Obligations

The following table presents supplemental information regarding total contractual obligations at June 30, 2026:


		Within			One to			Three to			After
(dollars in thousands)		One Year			Three Years			Five Years			Five Years			Total
Deposits Without a Stated Maturity		$	3,356,193		$	—		$	—		$	—		$	3,356,193
Time Deposits			546,416			231,037			212,558			—			990,011
FHLB Advances			292,000			34,000			—			—			326,000
Subordinated Debentures			—			—			—			110,000			110,000
Commitment to Fund Tax Credit Investments			15,725			—			—			—			15,725
Operating Lease Obligations			439			626			140			—			1,205
Totals		$	4,210,773		$	265,663		$	212,698		$	110,000		$	4,799,134

The Company believes that it will be able to meet all contractual obligations as they come due through the maintenance of adequate cash levels. The Company expects to maintain adequate cash levels through earnings, loan and securities repayments and maturity activity and continued deposit gathering activities. As described above, the Company has in place various borrowing mechanisms for both short-term and long-term liquidity needs.

Capital

Total shareholders’ equity at June 30, 2026 was $547.9 million, an increase of $30.8 million, or 6.0%, compared to total shareholders’ equity of $517.1 million at December 31, 2025. The increase was primarily due to net income retained and an increase in unrealized gains in the derivatives portfolio, offset partially by an increase in unrealized losses in the securities portfolio and preferred stock dividends.

Tangible book value per share, a non-GAAP financial measure, was $16.61 as of June 30, 2026, an increase of 6.8% from $15.55 as of December 31, 2025. Tangible common equity as a percentage of tangible assets, a non-GAAP financial measure, was 8.62% at June 30, 2026, compared to 8.01% at December 31, 2025.

Stock Repurchase Program. During the three and six months ended June 30, 2026, the Company repurchased 38,659 shares of its common stock, representing 0.01% of the Company’s issued and outstanding shares. Shares were repurchased during this period at a weighted average price of $18.12 per share, for a total of approximately $700,000. All shares repurchased under the stock repurchase program were converted to authorized but unissued shares. As of June 30, 2026, the remaining amount that could be used to repurchase shares under the 2022 Stock Repurchase Program was $12.4 million. The Company remains committed to maintaining strong capital levels while enhancing shareholder value as it strategically executes its stock repurchase program based on various factors including valuation, capital levels and other uses of capital.

At-the-Market Common Stock Offering Program. The Company maintains an effective shelf registration statement on file with the SEC (the “Registration Statement”), which authorizes the Company to offer and sell shares of its common stock from time to time. Under the Registration Statement, the Company has established an at-the-market common stock offering program (the “ATM Program”) permitting the sale of common stock up to an aggregate gross sales price of $50 million.

The ATM Program provides the Company with additional flexibility to access the capital markets efficiently and is intended to be used for general corporate purposes, including growth, investments in or advances to subsidiaries, working capital, capital expenditures, stock repurchases, debt repayment, or potential acquisitions. During the three and six months ended June 30, 2026, the Company did not sell any shares pursuant to the ATM Program.

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Regulatory Capital. The Company and the Bank are subject to various regulatory capital requirements administered by federal banking regulators. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by federal banking regulators that, if undertaken, could have a direct material effect on the Company’s and Bank’s business.

Management believes the Company and the Bank met all capital adequacy requirements to which they were subject as of June 30, 2026. The regulatory capital ratios necessary for the Company and the Bank to meet minimum capital adequacy standards, and for the Bank to be considered well capitalized under the prompt corrective action framework, are set forth in the following tables. The Company’s and the Bank’s actual capital amounts and ratios as of the dates indicated are presented in the following tables:


							Minimum Required					For Capital Adequacy					To be Well Capitalized
							For Capital Adequacy					Purposes Plus Capital					Under Prompt Corrective
		Actual					Purposes					Conservation Buffer					Action Regulations
(dollars in thousands)		Amount			Ratio		Amount			Ratio		Amount			Ratio		Amount			Ratio
June 30, 2026
Company (Consolidated):
Total Risk-based Capital		$	702,363		14.48	%	$	388,156		8.00	%	$	509,454		10.50	%		N/A		N/A
Tier 1 Risk-based Capital			532,824		10.98			291,117		6.00			412,415		8.50			N/A		N/A
Common Equity Tier 1 Capital			466,310		9.61			218,337		4.50			339,636		7.00			N/A		N/A
Tier 1 Leverage Ratio			532,824		10.02			212,622		4.00			212,622		4.00			N/A		N/A
Bank:
Total Risk-based Capital		$	676,498		13.98	%	$	387,227		8.00	%	$	508,235		10.50	%	$	484,033		10.00	%
Tier 1 Risk-based Capital			615,984		12.73			290,420		6.00			411,428		8.50			387,227		8.00
Common Equity Tier 1 Capital			615,984		12.73			217,815		4.50			338,823		7.00			314,622		6.50
Tier 1 Leverage Ratio			615,984		11.65			211,574		4.00			211,574		4.00			264,468		5.00


							Minimum Required					For Capital Adequacy					To be Well Capitalized
							For Capital Adequacy					Purposes Plus Capital					Under Prompt Corrective
		Actual					Purposes					Conservation Buffer					Action Regulations
(dollars in thousands)		Amount			Ratio		Amount			Ratio		Amount			Ratio		Amount			Ratio
December 31, 2025
Company (Consolidated):
Total Risk-based Capital		$	667,814		14.12	%	$	378,356		8.00	%	$	496,593		10.50	%		N/A		N/A
Tier 1 Risk-based Capital			500,002		10.57			283,767		6.00			402,004		8.50			N/A		N/A
Common Equity Tier 1 Capital			433,488		9.17			212,825		4.50			331,062		7.00			N/A		N/A
Tier 1 Leverage Ratio			500,002		9.20			217,505		4.00			217,505		4.00			N/A		N/A
Bank:
Total Risk-based Capital		$	636,973		13.49	%	$	377,687		8.00	%	$	495,715		10.50	%	$	472,109		10.00	%
Tier 1 Risk-based Capital			577,942		12.24			283,266		6.00			401,293		8.50			377,687		8.00
Common Equity Tier 1 Capital			577,942		12.24			212,449		4.50			330,477		7.00			306,871		6.50
Tier 1 Leverage Ratio			577,942		10.65			217,116		4.00			217,116		4.00			271,395		5.00

Regulations include a capital conservation buffer of 2.5% that is added to the minimum requirements for capital adequacy purposes. A banking organization with a conservation buffer of less than the required amount is subject to limitations on capital distributions, including dividend payments, stock repurchases and certain discretionary bonus payments to executive officers. At June 30, 2026, the ratios for the Company and the Bank were sufficient to meet the conservation buffer.

Off-Balance Sheet Arrangements

In the normal course of business, the Company enters into various transactions to meet the financing needs of clients, which, in accordance with GAAP, are not included in the consolidated balance sheets. These transactions include commitments to extend credit, standby letters of credit, and commercial letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. Most of these commitments mature within two years and the standby letters of credit are expected to expire without being drawn upon. All off-balance sheet commitments are included in the determination of the amount of risk-based capital that the Company and the Bank are required to hold.

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The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit, standby letters of credit, and commercial letters of credit is represented by the contractual or notional amount of those instruments. The Company decreases its exposure to losses under these commitments by subjecting them to credit approval and monitoring procedures. The Company assesses the credit risk associated with certain commitments to extend credit and establishes a liability for probable credit losses.

The following table presents credit arrangements and financial instruments whose contract amounts represented credit risk as of June 30, 2026 and December 31, 2025:


		June 30, 2026						December 31, 2025
		Fixed			Variable			Fixed			Variable
(dollars in thousands)
Unfunded Commitments Under Lines of Credit		$	269,188		$	554,551		$	245,571		$	551,272
Letters of Credit			16,536			86,982			13,074			111,763
Totals		$	285,724		$	641,533		$	258,645		$	663,035

Liquidity

Liquidity is the Company’s capacity to meet cash and collateral obligations at a reasonable cost. Maintaining an adequate level of liquidity depends on the Company’s ability to efficiently meet both expected and unexpected cash flow and collateral needs without adversely affecting either daily operations or financial condition. The Bank’s Asset Liability Management, or ALM, Committee, is responsible for managing commitments to meet the needs of customers while achieving the Company’s financial objectives. The ALM Committee meets regularly to review balance sheet composition, funding capacities, and current and forecasted loan demand.

The Company manages liquidity by maintaining adequate levels of cash and other assets from on- and off-balance sheet arrangements. Specifically, on-balance sheet liquidity consists of cash and due from banks and unpledged investment securities available for sale, which are referred to as primary liquidity. In regards to off-balance sheet capacity, the Company maintains available borrowing capacity under secured borrowing lines with the FHLB, the Federal Reserve Bank of Minneapolis, and a correspondent lender, as well as unsecured lines of credit for the purpose of overnight funds with various correspondent banks, which the Company refers to as secondary liquidity.

Total on- and off-balance sheet liquidity was $2.73 billion as of June 30, 2026, compared to $2.51 billion at December 31, 2025.

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The following tables present a summary of primary and secondary liquidity levels as of the dates indicated:


Primary Liquidity—On-Balance Sheet		June 30, 2026			December 31, 2025
(dollars in thousands)
Cash and Cash Equivalents		$	146,372		$	96,997
Securities Available for Sale			605,412			776,441
Less: Pledged Securities			(104,089)			(254,334)
Total Primary Liquidity		$	647,695		$	619,104
Ratio of Primary Liquidity to Total Deposits			14.9	%		14.3	%

Secondary Liquidity—Off-Balance Sheet
(dollars in thousands)
Net Secured Borrowing Capacity with the FHLB		$	745,818		$	611,349
Net Secured Borrowing Capacity with the Federal Reserve Bank			1,081,280			1,026,415
Unsecured Borrowing Capacity with Correspondent Lenders			220,000			220,000
Secured Borrowing Capacity with Correspondent Lender			37,348			33,605
Total Secondary Liquidity			2,084,446			1,891,369
Total Primary and Secondary Liquidity		$	2,732,141		$	2,510,473
Ratio of Primary and Secondary Liquidity to Total Deposits			62.9	%		58.1	%

During the six months ended June 30, 2026, primary liquidity increased by $28.6 million due to a $150.2 million decrease in pledged securities and a $49.4 million increase in cash and cash equivalents, offset partially by a $171.0 million decrease in securities available for sale, when compared to December 31, 2025. Secondary liquidity increased by $193.1 million as of June 30, 2026, due to a $134.5 million increase in borrowing capacity with the FHLB, a $54.9 million increase in the borrowing capacity with the Federal Reserve Bank, and a $3.7 million increase in the borrowing capacity with a secured lender, when compared to December 31, 2025.

In addition to primary liquidity, the Company generates liquidity from cash flows from the loan and securities portfolios and from the large base of core deposits, defined as noninterest bearing transaction, interest bearing transaction, savings, non-brokered money market accounts and non-brokered time deposits less than $250,000. At June 30, 2026, core deposits totaled approximately $3.35 billion and represented 77.0% of total deposits. These core deposits are normally less volatile, often with customer relationships tied to other products offered by the Company, which promote long-standing relationships and stable funding sources.

The Company uses brokered deposits, the availability of which is uncertain and subject to competitive market forces and regulation, for liquidity and interest rate risk management purposes. At June 30, 2026, brokered deposits totaled $891.5 million, consisting of $746.3 million of brokered time deposits and $145.2 million of non-maturity brokered money market and transaction accounts. At December 31, 2025, brokered deposits totaled $810.5 million, consisting of $665.0 million of brokered time deposits and $145.5 million of non-maturity brokered money market and transaction accounts.

The Company’s liquidity policy includes guidelines for On-Balance Sheet Liquidity (a measurement of primary liquidity to total deposits plus borrowings), Total On-Balance Sheet Liquidity with Borrowing Capacity (a measurement of primary and secondary liquidity to total deposits plus borrowings), Wholesale Funding Ratio (a measurement of total wholesale funding to total deposits plus borrowings), and other guidelines developed for measuring and maintaining liquidity.

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Non-GAAP Financial Measures

In addition to financial measures presented in accordance with GAAP, the Company routinely supplements its evaluation with an analysis of certain non-GAAP financial measures. The Company believes these non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors to help them understand the Company’s operating performance and trends, and to facilitate comparisons with the performance of peers. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of non-GAAP disclosures used in this report to the comparable GAAP measures are provided in the following tables:


	For the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
(dollars in thousands)	2026			2026			2025			2025			2025
Pre-Provision Net Revenue
Noninterest Income	$	2,324		$	9,564		$	3,148		$	2,061		$	3,627
Less: Gain on Sales of Securities		—			(7,251)			(80)			(59)			(474)
Less: FHLB Advance Prepayment Income		—			—			—			—			(301)
Total Operating Noninterest Income		2,324			2,313			3,068			2,002			2,852
Plus: Net Interest Income		38,566			36,647			35,687			34,091			32,452
Net Operating Revenue	$	40,890		$	38,960		$	38,755		$	36,093		$	35,304

Noninterest Expense	$	21,894		$	22,170		$	20,238		$	19,956		$	18,941
Total Operating Noninterest Expense	$	21,894		$	22,170		$	20,238		$	19,956		$	18,941

Pre-Provision Net Revenue	$	18,996		$	16,790		$	18,517		$	16,137		$	16,363

Plus:
Non-Operating Revenue Adjustments		—			7,251			80			59			775
Less:
Provision for Credit Losses		550			1,200			1,450			1,100			2,000
Provision for Income Taxes		4,439			5,435			3,813			3,495			3,618
Net Income	$	14,007		$	17,406		$	13,334		$	11,601		$	11,520

Average Assets	$	5,317,215		$	5,242,761		$	5,438,555		$	5,372,443		$	5,162,182
Pre-Provision Net Revenue Return on Average Assets		1.43	%		1.30	%		1.35	%		1.19	%		1.27	%

Adjusted Pre-Provision Net Revenue
Net Operating Revenue	$	40,890		$	38,960		$	38,755		$	36,093		$	35,304

Noninterest Expense	$	21,894		$	22,170		$	20,238		$	19,956		$	18,941
Less: Merger-related Expenses		—			—			(346)			(530)			(540)
Less: FHLB Advance Prepayment Penalty		—			(982)			—			—			—
Adjusted Total Operating Noninterest Expense	$	21,894		$	21,188		$	19,892		$	19,426		$	18,401

Adjusted Pre-Provision Net Revenue	$	18,996		$	17,772		$	18,863		$	16,667		$	16,903
Adjusted Pre-Provision Net Revenue Return on Average Assets		1.43	%		1.37	%		1.38	%		1.23	%		1.31	%

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	For the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
(dollars in thousands)	2026			2026			2025			2025			2025
Core Net Interest Margin
Net Interest Income (Tax-equivalent Basis)	$	39,400		$	37,395		$	36,447		$	34,614		$	32,770
Less:
Loan Fees		(1,464)			(1,257)			(1,041)			(966)			(1,019)
Purchase Accounting Accretion:
Loan Accretion		(171)			(324)			(546)			(380)			(425)
Bond Accretion		(17)			(22)			(33)			(89)			(152)
Bank-Owned Certificates of Deposit Accretion		—			—			(16)			(6)			(4)
Deposit Certificates of Deposit Accretion		—			—			—			(13)			(37)
Total Purchase Accounting Accretion		(188)			(346)			(595)			(488)			(618)
Core Net Interest Income (Tax-equivalent Basis)	$	37,748		$	35,792		$	34,811		$	33,160		$	31,133

Average Interest Earning Assets	$	5,144,715		$	5,079,430		$	5,264,700		$	5,223,139		$	5,019,058
Core Net Interest Margin		2.94	%		2.86	%		2.62	%		2.52	%		2.49	%

Core Loan Yield
Loan Interest Income (Tax-equivalent Basis)	$	64,537		$	62,102		$	61,746		$	60,317		$	58,122
Less:
Loan Fees		(1,464)			(1,257)			(1,041)			(966)			(1,019)
Loan Accretion		(171)			(324)			(546)			(380)			(425)
Core Loan Interest Income	$	62,902		$	60,521		$	60,159		$	58,971		$	56,678

Average Loans	$	4,380,477		$	4,336,869		$	4,239,936		$	4,132,987		$	4,064,540
Core Loan Yield		5.76	%		5.66	%		5.63	%		5.66	%		5.59	%

Efficiency Ratio
Noninterest Expense	$	21,894		$	22,170		$	20,238		$	19,956		$	18,941
Less: Amortization of Intangible Assets		(227)			(226)			(231)			(230)			(230)
Adjusted Noninterest Expense	$	21,667		$	21,944		$	20,007		$	19,726		$	18,711

Net Interest Income	$	38,566		$	36,647		$	35,687		$	34,091		$	32,452
Noninterest Income		2,324			9,564			3,148			2,061			3,627
Less: Gain on Sales of Securities		—			(7,251)			(80)			(59)			(474)
Adjusted Operating Revenue	$	40,890		$	38,960		$	38,755		$	36,093		$	35,605
Efficiency Ratio		53.0	%		56.3	%		51.6	%		54.7	%		52.6	%

Adjusted Efficiency Ratio
Noninterest Expense	$	21,894		$	22,170		$	20,238		$	19,956		$	18,941
Less: Amortization of Intangible Assets		(227)			(226)			(231)			(230)			(230)
Less: Merger-related Expenses		—			—			(346)			(530)			(540)
Less: FHLB Advance Prepayment Penalty		—			(982)			—			—			—
Adjusted Noninterest Expense	$	21,667		$	20,962		$	19,661		$	19,196		$	18,171

Net Interest Income	$	38,566		$	36,647		$	35,687		$	34,091		$	32,452
Noninterest Income		2,324			9,564			3,148			2,061			3,627
Less: Gain on Sales of Securities		—			(7,251)			(80)			(59)			(474)
Less: FHLB Advance Prepayment Income		—			—			—			—			(301)
Adjusted Operating Revenue	$	40,890		$	38,960		$	38,755		$	36,093		$	35,304
Adjusted Efficiency Ratio		53.0	%		53.8	%		50.7	%		53.2	%		51.5	%

Adjusted Noninterest Expense to Average Assets (Annualized)
Noninterest Expense	$	21,894		$	22,170		$	20,238		$	19,956		$	18,941
Less: Merger-related Expenses		—			—			(346)			(530)			(540)
Less: FHLB Advance Prepayment Penalty		—			(982)			—			—			—
Adjusted Noninterest Expense	$	21,894		$	21,188		$	19,892		$	19,426		$	18,401

Average Assets	$	5,317,215		$	5,242,761		$	5,438,555		$	5,372,443		$	5,162,182
Adjusted Noninterest Expense to Average Assets (Annualized)		1.65	%		1.64	%		1.45	%		1.43	%		1.43	%

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	For the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
(dollars in thousands)	2026			2026			2025			2025			2025
Tangible Common Equity and Tangible Common Equity/Tangible Assets
Total Shareholders' Equity	$	547,909		$	528,424		$	517,095		$	497,463		$	476,282
Less: Preferred Stock		(66,514)			(66,514)			(66,514)			(66,514)			(66,514)
Total Common Shareholders' Equity		481,395			461,910			450,581			430,949			409,768
Less: Intangible Assets		(18,459)			(18,685)			(18,912)			(19,142)			(19,372)
Tangible Common Equity	$	462,936		$	443,225		$	431,669		$	411,807		$	390,396

Total Assets	$	5,389,726		$	5,335,396		$	5,407,002		$	5,359,994		$	5,296,673
Less: Intangible Assets		(18,459)			(18,685)			(18,912)			(19,142)			(19,372)
Tangible Assets	$	5,371,267		$	5,316,711		$	5,388,090		$	5,340,852		$	5,277,301
Tangible Common Equity/Tangible Assets		8.62	%		8.34	%		8.01	%		7.71	%		7.40	%

Tangible Book Value Per Share
Book Value Per Common Share	$	17.27		$	16.60		$	16.23		$	15.62		$	14.92
Less: Effects of Intangible Assets		(0.66)			(0.67)			(0.68)			(0.69)			(0.71)
Tangible Book Value Per Common Share	$	16.61		$	15.93		$	15.55		$	14.93		$	14.21

Return on Average Tangible Common Equity
Net Income Available to Common Shareholders	$	12,993		$	16,393		$	12,320		$	10,588		$	10,506

Average Shareholders' Equity	$	552,575		$	524,825		$	509,655		$	485,869		$	471,700
Less: Average Preferred Stock		(66,514)			(66,514)			(66,514)			(66,514)			(66,514)
Average Common Equity		486,061			458,311			443,141			419,355			405,186
Less: Effects of Average Intangible Assets		(18,588)			(18,816)			(19,042)			(19,274)			(19,504)
Average Tangible Common Equity	$	467,473		$	439,495		$	424,099		$	400,081		$	385,682
Return on Average Tangible Common Equity		11.15	%		15.13	%		11.53	%		10.50	%		10.93	%

Adjusted Diluted Earnings Per Common Share
Net Income Available to Common Shareholders	$	12,993		$	16,393		$	12,320		$	10,588		$	10,506

Add: Merger-related Expenses		—			—			346			530			540
Add: FHLB Advance Prepayment Penalty		—			982			—			—			—
Less: FHLB Advance Prepayment Income		—			—			—			—			(301)
Less: Gain on Sales of Securities		—			(7,251)			(80)			(59)			(474)
Total Adjustments		—			(6,269)			266			471			(235)
Less: Tax Impact of Adjustments		—			1,492			(59)			(110)			56
Adjusted Net Income Available to Common Shareholders	$	12,993		$	11,616		$	12,527		$	10,949		$	10,327

Diluted Weighted Average Shares Outstanding		28,589,332			28,490,176			28,354,756			28,190,406			27,998,008
Adjusted Diluted Earnings Per Common Share	$	0.45		$	0.41		$	0.44		$	0.39		$	0.37

Adjusted Return on Average Assets
Net Income	$	14,007		$	17,406		$	13,334		$	11,601		$	11,520
Add: Total Adjustments		—			(6,269)			266			471			(235)
Less: Tax Impact of Adjustments		—			1,492			(59)			(110)			56
Adjusted Net Income	$	14,007		$	12,629		$	13,541		$	11,962		$	11,341

Average Assets	$	5,317,215		$	5,242,761		$	5,438,555		$	5,372,443		$	5,162,182
Adjusted Return on Average Assets		1.06	%		0.98	%		0.99	%		0.88	%		0.88	%

Adjusted Return on Average Shareholders' Equity
Adjusted Net Income	$	14,007		$	12,629		$	13,541		$	11,962		$	11,341

Average Shareholders' Equity	$	552,575		$	524,825		$	509,655		$	485,869		$	471,700
Adjusted Return on Average Shareholders' Equity		10.17	%		9.76	%		10.54	%		9.77	%		9.64	%

Adjusted Return on Average Tangible Common Equity
Adjusted Net Income Available to Common Shareholders	$	12,993		$	11,616		$	12,527		$	10,949		$	10,327

Average Tangible Common Equity	$	467,473		$	439,495		$	424,099		$	400,081		$	385,682
Adjusted Return on Average Tangible Common Equity		11.15	%		10.72	%		11.72	%		10.86	%		10.74	%

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

As a financial institution, the Company’s primary market risk is interest rate risk, which is defined as the risk of loss of net interest income or net interest margin because of changes in interest rates. The Company continually seeks to measure and manage the potential impact of interest rate risk. Interest rate risk occurs when interest earning assets and interest bearing liabilities mature or re-price at different times, on a different basis or in unequal amounts. Interest rate risk also arises when assets and liabilities each respond differently to changes in interest rates.

The Company’s management of interest rate risk is overseen by its ALM Committee, based on a risk management infrastructure approved by the board of directors that outlines reporting and measurement requirements. In particular, this infrastructure sets limits and management targets for various metrics, including net interest income simulation involving parallel shifts in interest rate curves, steepening and flattening yield curves, and various prepayment and deposit duration assumptions. The Company’s risk management infrastructure also requires a periodic review of all key assumptions used, such as identifying appropriate interest rate scenarios, setting loan prepayment rates based on historical analysis and noninterest bearing and interest bearing transaction deposit durations based on historical analysis. The Company does not engage in speculative trading activities relating to interest rates, foreign exchange rates, commodity prices, equities or credit.

The Company manages the interest rate risk associated with interest earning assets by managing the interest rates and terms associated with the investment securities portfolio by purchasing and selling investment securities from time to time. The Company manages the interest rate risk associated with interest bearing liabilities by managing the interest rates and terms associated with wholesale borrowings and deposits from customers which the Company relies on for funding. For example, the Company occasionally uses special offers on deposits to alter the interest rates and terms associated with interest bearing liabilities.

The Company has entered into certain hedging transactions including fair value swaps and interest rate swaps and caps, which are designed to lessen elements of the Company’s interest rate exposure. Cash flow hedge relationships mitigate exposure to the variability of future cash flows or other forecasted transactions. The Company utilizes cash flow hedges to manage interest rate exposure for the brokered deposit and wholesale borrowing portfolios. These cash flow hedges had a total notional amount of $403.0 million at June 30, 2026 and $388.0 million at December 31, 2025, respectively. Fair value hedge relationships mitigate the effects of changing interest rates on the fair values of fixed rate available for sale securities. The Company utilizes fair value hedges to manage fair value exposure for the U.S. treasury security, mortgage-backed security, and municipal security portfolios. These fair value hedges had a total notional amount of $43.7 million and $242.3 million at June 30, 2026 and December 31, 2025, respectively. In the event that interest rates do not change in the manner anticipated, such transactions may adversely affect the Company’s results of operations.

Net Interest Income Simulation

The Company uses a net interest income simulation model to measure and evaluate potential changes in net interest income that would result over the next 12 months from immediate and sustained changes in interest rates as of the measurement date. This model has inherent limitations and the results are based on a given set of rate changes and assumptions as of a certain point in time. For purposes of the simulation, the Company assumes no growth in either interest-sensitive assets or liabilities over the next 12 months; therefore, the model’s results reflect an interest rate shock to a static balance sheet. The simulation model also incorporates various other assumptions, which the Company believes are reasonable but which may have a significant impact on results, such as: (1) the timing of changes in interest rates, (2) shifts or rotations in the yield curve, (3) re-pricing characteristics for market-rate-sensitive instruments, (4) differing sensitivities of financial instruments due to differing underlying rate indices, (5) varying loan prepayment speeds for different interest rate scenarios, (6) the effect of interest rate limitations in assets, such as

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floors and caps, and (7) overall growth and repayment rates and product mix of assets and liabilities. Because of the limitations inherent in any approach used to measure interest rate risk, simulation results are not intended as a forecast of the actual effect of a change in market interest rates on the results, but rather as a means to better plan and execute appropriate asset-liability management strategies and to manage interest rate risk.

Potential changes to the Company’s net interest income in hypothetical rising and declining rate scenarios calculated as of June 30, 2026 and December 31, 2025 are presented in the table below. The projections assume an immediate, parallel shift downward of the yield curve of 100, 200, 300, and 400 basis points and immediate, parallel shifts upward of the yield curve of 100, 200, 300 and 400 basis points.


(dollars in thousands)		June 30, 2026					December 31, 2025
Change (basis points)		Forecasted		Percentage			Forecasted		Percentage
in Interest Rates		Net Interest		Change			Net Interest		Change
(12-Month Projection)		Income		from Base			Income		from Base
+400		$	157,663	(5.46)	%		$	156,625	(6.09)	%
+300			160,436	(3.80)				159,606	(4.30)
+200			162,706	(2.43)				162,132	(2.79)
+100			164,975	(1.07)				164,454	(1.40)
0			166,766	—				166,785	—
−100			173,899	4.28				173,029	3.74
−200			189,017	13.34				182,394	9.36
−300			211,709	26.95				193,779	16.18
−400			216,607	29.89				199,357	19.53

The table above indicates that as of June 30, 2026, in the event of an immediate and sustained 400 basis point increase in interest rates, the Company would experience a 5.46% decrease in net interest income. In the event of an immediate 400 basis point decrease in interest rates, the Company would experience a 29.89% increase in net interest income.

The results of this simulation analysis are hypothetical, and a variety of factors might cause actual results to differ substantially from what is depicted. For example, if the timing and magnitude of interest rate changes differ from those projected, net interest income might vary significantly. Non-parallel yield curve shifts such as a flattening or steepening of the yield curve or changes in interest rate spreads would also cause net interest income to be different from that depicted. An increasing interest rate environment could reduce projected net interest income if deposits and other short-term liabilities re-price faster than expected or re-price faster than the Company’s assets. Actual results could differ from those projected if the Company grows assets and liabilities faster or slower than estimated, if the Company experienced a net outflow of deposit liabilities, or if the mix of assets and liabilities otherwise changes. Actual results could also differ from those projected if the Company experienced substantially different repayment speeds in the loan portfolio than those assumed in the simulation model. Finally, these simulation results do not contemplate all the actions that the Company may undertake in response to potential or actual changes in interest rates, such as changes to the Company’s loan, investment, deposit, or funding strategies.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as that term is defined in Rule 13a-15(e) under the Exchange Act) as of June 30, 2026, the end of the fiscal quarter covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2026, the Company’s disclosure controls and procedures were effective to ensure that the

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information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Neither the Company nor any of its subsidiaries is a party, and no property of these entities is subject, to any material pending legal proceedings, other than ordinary routine litigation incidental to the Bank’s business. The Company does not know of any proceeding contemplated by a governmental authority against the Company or any of its subsidiaries.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in the Company’s Annual Report on Form 10-K filed with the SEC on February 26, 2026.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Repurchases of Equity Securities

The following table presents stock purchases made during the second quarter of 2026:


Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 - 30, 2026	—	$	—	—	$	13,089,198
May 1 - 31, 2026	38,659		18.12	38,659		12,388,743
June 1 - 30, 2026	—		—	—		12,388,743
Total	38,659	$	18.12	38,659	$	12,388,743

(1)

The total number of shares repurchased during the periods indicated includes shares repurchased as part of the Company’s stock repurchase program and shares withheld for income tax purposes in connection with vesting of restricted stock and stock options. The shares were purchased or otherwise valued at the closing price of the Company’s common stock on the date of purchase and/or withholding.

(2)

On August 17, 2022, the Company’s board of directors approved the 2022 Stock Repurchase Program, which authorizes the Company to repurchase up to $25.0 million of its common stock, subject to certain limitations and conditions. On July 22, 2025, the Company’s board of directors extended the expiration date of the 2022 Stock Repurchase Program from August 20, 2025 to August 26, 2026. The 2022 Stock Repurchase Program does not obligate the Company to repurchase any shares of its common stock, and other than repurchases that have been completed to date, there is no assurance that the Company will do so.

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Unregistered Sales of Equity Securities

None.

Use of Proceeds from Registered Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Rule 10b5-1 Trading Plans

During the quarter ended June 30, 2026, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule10b5-1(c) or any non-Rule 10b5-1 trading arrangement.

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Item 6. Exhibits


Exhibit Number		Description
3.1		Third Amended and Restated Articles of Incorporation of Bridgewater Bancshares, Inc. (incorporated herein by reference to Exhibit 3.1 on Form 8-K filed on April 27, 2023)
3.2		Second Amended and Restated Bylaws of Bridgewater Bancshares, Inc. (incorporated herein by reference to Exhibit 3.2 on Form 8-K filed on April 27, 2023)
3.3		Statement of Designation of 5.875% Non-Cumulative Perpetual Preferred Stock, Series A (incorporated herein by reference to Exhibit 3.1 on Form 8-K filed on August 17, 2021)
10.1		Form of Performance-Based Restricted Stock Unit Award Agreement under the Bridgewater Bancshares, Inc. 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 on Form 10-Q filed on April 30, 2026)†
10.2		Bridgewater Bancshares, Inc. 2026 Equity Incentive Plan (incorporated herein by reference to Appendix A to the definitive proxy statement filed on March 16, 2026)†
10.3		Form of Restricted Stock Award Agreement under the Bridgewater Bancshares, Inc. 2026 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.4 on Form S-8 filed on May 1, 2026)†
10.4		Form of Restricted Stock Unit Award Agreement under the Bridgewater Bancshares, Inc. 2026 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.5 on Form S-8 filed on May 1, 2026)†
10.5		Form of Nonqualified Stock Option Award Agreement under the Bridgewater Bancshares, Inc. 2026 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.6 on Form S-8 filed on May 1, 2026)†
10.6		Form of Incentive Stock Option Award Agreement under the Bridgewater Bancshares, Inc. 2026 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.7 on Form S-8 filed on May 1, 2026)†
10.7		Form of Performance Based Restricted Stock Unit Award Agreement under the Bridgewater Bancshares, Inc. 2026 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.8 on Form S-8 filed on May 1, 2026)†
31.1		Certification of the Chief Executive Officer required, by Rule 13a-14(a) of the Securities Exchange Act of 1934, and Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of the Chief Financial Officer required by Rule 13a-14(a) of the Securities Exchange Act of 1934, and Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.1		Financial information from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026, formatted in inline XBRL interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii) Consolidated Statements of Comprehensive Income; (iv) Consolidated Statements of Shareholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements
104		The cover page for Bridgewater Bancshares, Inc’s Form 10-Q Report for the quarterly period ended June 30, 2026 formatted in inline XBRL and contained in Exhibit 101 ________________ † Indicates a management contract or compensatory plan.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Bridgewater Bancshares, Inc.

Date: July 30, 2026	By:	/s/ Jerry J. Baack
	Name:	Jerry J. Baack
	Title:	Chairman and Chief Executive Officer (Principal Executive Officer)

Date: July 30, 2026	By:	/s/ Joe M. Chybowski
	Name:	Joe M. Chybowski
	Title:	President and Chief Financial Officer (Principal Financial Officer)